Notice2025-13733
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 11.23
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
July 22, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 138 (Tuesday, July 22, 2025)</title>
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[Federal Register Volume 90, Number 138 (Tuesday, July 22, 2025)]
[Notices]
[Pages 34542-34550]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13733]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103492; File No. SR-CboeBZX-2025-086]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Amend Rule 11.23
July 17, 2025.
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 July 10. 2025, Cboe BZX Exchange, Inc.
[[Page 34543]]
(``Exchange'' or ``BZX'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
(i) amend Rule 11.23(a)(11) to revise how Late-Limit-On-Close orders
are priced; (ii) amend Rule 11.23(a)(13) to revise how Limit-on-Close
orders are priced in BZX-listed corporate securities between 3:55 p.m.
and 3:59 p.m.; and (iii) amend Rule 11.23(c)(1)(A) to revise the entry,
modification, and cancellation times applicable to Limit-On-Close and
Late-Limit-On-Close orders. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
As a primary listing market, BZX is responsible for establishing a
daily closing price for each of its listed securities. Pursuant to
Exchange Rule 11.23(c), the Exchange conducts a Closing Auction in
order to establish the BZX Official Closing Price.\3\ In order to
conduct the Closing Auction in an orderly manner, the Exchange has set
forth detailed parameters around the ability of Users \4\ to submit and
cancel orders prior to conducting the Closing Auction. The Exchange now
proposes to (i) amend Rule 11.23(a)(11) to revise how Late-Limit-On-
Close (``LLOC'') orders are priced; (ii) amend Rule 11.23(a)(13) to
revise how Limit-on-Close (``LOC'') orders are priced in BZX-listed
corporate securities between 3:55 p.m. and 3:59 p.m.; and (iii) amend
Rule 11.23(c)(1)(A) to revise the entry, modification, and cancellation
times applicable to LOC and LLOC orders (LLOC orders and LOC orders are
discussed in detail infra).
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\3\ See Rule 11.23(a)(3). The term ``BZX Official Closing
Price'' shall mean the price disseminated to the consolidated tape
as the market center closing trade.
\4\ See Exchange Rule 1.5(cc). The term ``User'' shall mean any
Member or Sponsored Participant who is authorized to obtain access
to the System pursuant to Rule 11.3.
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Today, various market participants submit orders to the Exchange
ahead of the Closing Auction for various reasons. A review of Exchange
data (year-to-date, beginning January 1, 2025) found that market makers
accounted for the submission of approximately 69% of LOC orders and
approximately 55% of LLOC orders.\5\ Market makers are responsible for
assisting in the maintenance of fair and orderly markets in BZX-listed
securities through quoting and pricing obligations, including the
requirement to maintain continuous, two-sided quotations.\6\ Lead
market makers (``LMMs'') have additional performance standards,
including auction participation requirements.\7\ While market makers
submitted the highest percentage of LLOC orders by count to the
Exchange, agency broker-dealers \8\ had the highest percentage of LLOC
orders executed by volume (approximately 68%) on the Exchange. Market
makers, on the other hand, had approximately 14% of LLOC orders
executed by volume to the Exchange. Agency broker-dealers accounted for
approximately 34% of LOC orders executed by volume on the Exchange and
market makers accounted for approximately 54% of LOC orders executed by
volume on the Exchange. The data shows that market makers and agency
broker-dealers utilize LOC orders and LLOC orders in different manners.
While market makers submitted the highest number of LLOC orders to the
Exchange, agency broker-dealers executed over 4.5X more volume
(approximately 68%) in LLOC orders than market makers (approximately
14%) while submitting only 20% of the amount of LLOC orders as market
makers. For LOC orders the data shows that agency broker-dealers
submitted a significantly lower number (approximately 10%) of the total
number of LOC orders to the Exchange than market makers (approximately
69%), but accounted for approximately 34% of all executions in LOC
orders (market makers accounted for approximately 54% of all executions
in LOC orders on the Exchange).
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\5\ The Exchange data shows that LOC orders are more frequently
utilized than LLOC orders. During the review period, a total of
714,544 LOC orders were submitted to the Exchange, resulting in a
total executed volume of 142,159,373 shares. In contrast, a total of
121,659 LLOC orders were submitted to the Exchange, resulting in a
total executed volume of 15,877,734 shares.
\6\ See Exchange Rule 11.8(a) and Exchange Rule 11.8(d).
\7\ See Exchange Rule 11.8(e) and Exchange Rule
11.8(e)(1)(E)(i)(c).
\8\ An agency broker-dealer is a Member of the Exchange who also
has numerous customers of its own.
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The Exchange believes that the proposed changes will reduce
volatility leading up to the Closing Auction by assisting market makers
in meeting Closing Auction quoting obligations and providing other
Users with additional information about the potential price at which an
order designated for execution in the Closing Auction may execute.
While those who submit LOC order and LLOC orders may encounter
additional restrictions should the Exchange's proposal be approved, the
Exchange believes that the additional clarity around the possible
closing price and less frequent price updates ahead of the Closing
Auction will provide greater benefits than the proposed limitations
conferred on those who submit LOC orders and LLOC orders.
Current Closing Auction Orders
The Exchange offers three order types that are designed
specifically to participate in the Closing Auction. A Market-On-Close
(``MOC'') \9\ order is a BZX market order that is designated for
execution only in the Closing Auction or Cboe Market Close.\10\ An LOC
order is a BZX limit order that is designated for execution only in the
Closing Auction.\11\ An LLOC order is a BZX limit order that is
designated for execution only in the Closing Auction, but if an LLOC
bid or offer has a limit price that is more aggressive than the NBB
\12\ or NBO,\13\ the price of such bid or offer is adjusted to be equal
to the NBB or NBO, respectively, at the time
[[Page 34544]]
of receipt by the Exchange.\14\ Where the NBB or NBO becomes more
aggressive, the limit price of the LLOC bid or offer will be adjusted
to the more aggressive price, provided that the more aggressive price
is not more aggressive than the original User entered limit price.\15\
The limit price of an LLOC order will not be adjusted to a less
aggressive price, unless otherwise provided by Exchange Rules.\16\ If
there is no NBB or NBO, the LLOC bid or offer will assume its entered
limit price.\17\ Each of the three aforementioned order types is also
defined as an Eligible Auction Order under Rule 11.23(a)(8).
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\9\ See Exchange Rule 11.23(a)(15).
\10\ See Exchange Rule 11.28. Cboe Market Close is a closing
match process for non-BZX-listed securities. The proposed changes do
not affect the operation of Cboe Market Close.
\11\ See Exchange Rule 11.23(a)(13).
\12\ See Exchange Rule 1.5(o).
\13\ Id.
\14\ See Exchange Rule 11.23(a)(11).
\15\ Id.
\16\ Id. For example, assume a short sale LLOC order was entered
at a price less than the NBB while a short sale circuit breaker
pursuant to Regulation SHO was in effect. Pursuant to Rules
11.9(g)(5) and (6), the LLOC order would be re-priced by the System
at one minimum price variation above the NBB. If the NBB then
increased, the limit price of the LLOC would again be re-priced by
the System to the less aggressive price of one minimum price
variation above the new NBB.
\17\ Id.
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Closing Auction Process
The Closing Auction occurs at approximately 4:00 p.m. ET \18\ on
each day that BZX is open for trading. The Exchange has set forth
various rules regarding the ability of Users to submit, modify, and
cancel orders in the period leading up to the Closing Auction in order
to facilitate the Closing Auction in a deliberate manner and arrive at
the BZX Official Closing Price. Users may submit orders to the Exchange
in accordance with Rule 11.1 (Hours of Trading and Trading Days). Any
order that qualifies as an Eligible Auction Order \19\ designated for
the Closing Auction will be queued until 4:00 p.m., at which time those
orders will be eligible for execution in the Closing Auction.
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\18\ Hereinafter, all times referenced shall be in Eastern Time
(ET).
\19\ See Exchange Rule 11.23(a)(8). The term ``Eligible Auction
Order'' shall mean any . . . Market-on-Close, LOC, or LLOC order
that is entered in compliance with its respective cutoff for a[n] .
. . Closing Auction[.] The Exchange notes that additional order
types qualify as Eligible Auction Orders for the Opening Auction,
but as this proposal is limited to the Closing Auction the Exchange
did not include or discuss Eligible Auction Orders that are not
applicable to the Closing Auction.
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Currently, Rule 11.23(c)(1)(A) states that Users may submit LOC
orders until 3:59 p.m.\20\ Users may submit LLOC orders between 3:59
p.m. and 4:00 p.m. Any LLOC orders submitted prior to 3:59 p.m. or
after 4:00 p.m. will be rejected. Under Rule 11.23(c)(1)(B), LOC and
LLOC orders may not be cancelled or modified between 3:59 p.m. and 4:00
p.m. Orders eligible for execution during Regular Trading Hours \21\
may be cancelled at any time prior to execution pursuant to Rule
11.23(c)(1)(C).
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\20\ The Exchange notes that it recently amended the cutoff time
for MOC orders from 3:59 p.m. to 3:55 p.m. See Securities Exchange
Act Release No. 34-102990 (May 5, 2025), 90 FR 19764 (May 9, 2025),
SR-CboeBZX-2025-058 (``MOC Cutoff Time Filing'').
\21\ See Exchange Rule 1.5(w). The term ``Regular Trading
Hours'' means the time between 9:30 a.m. and 4:00 p.m. ET.
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Rule 11.23(c)(2)(B) provides that the Closing Auction price will be
established by determining the price level within the Collar Price
Range \22\ that maximizes the number of shares executed between the
Continuous Book \23\ and Auction Book \24\ in the Closing Auction.
Pursuant to Rule 11.23(c)(2)(B), in the event of a volume based tie at
multiple price levels, the Closing Auction price will be the price
which results in the minimum total imbalance. In the event of a volume
based tie and a tie in minimum total imbalance at multiple price
levels, the Closing Auction price will be the price closest to the
Volume Based Tie Breaker.\25\ For a BZX-listed corporate security,\26\
the Closing Auction price will be the BZX Official Closing Price.\27\
In the event that there is no Closing Auction for a BZX-listed
corporate security, the BZX Official Closing Price will be the price of
the Final Last Sale Eligible Trade.\28\ \29\ For all other BZX-listed
securities, the BZX Official Closing Price will be determined as
follows:
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\22\ See Exchange Rule 11.23(a)(6). The term ``Collar Price
Range'' shall mean the range from a set percentage below the Collar
Midpoint (as defined below) to above the Collar Midpoint, such set
percentage being dependent on the value of the Collar Midpoint at
the time of the auction, as described below. The Collar Midpoint
will be the Volume Based Tie Breaker for all applicable auctions,
except for IPO Auctions in ETPs (as defined in Rule 11.8,
Interpretation and Policy .02(d)(2)), for which the Collar Midpoint
will be the issue price. Specifically, the Collar Price Range will
be determined as follows: where the Collar Midpoint is $25.00 or
less, the Collar Price Range shall be the range from 10% below the
Collar Midpoint to 10% above the Collar Midpoint; where the Collar
Midpoint is greater than $25.00 but less than or equal to $50.00,
the Collar Price Range shall be the range from 5% below the Collar
Midpoint to 5% above the Collar Midpoint; and where the Collar
Midpoint is greater than $50.00, the Collar Price Range shall be the
range from 3% below the Collar Midpoint to 3% above the Collar
Midpoint.
\23\ See Exchange Rule 11.23(a)(7). The term ``Continuous Book''
shall mean all orders on the BZX Book that are not Eligible Auction
Orders.
\24\ See Exchange Rule 11.23(a)(1). The term ``Auction Book''
shall mean all Eligible Auction Orders on the BZX Book.
\25\ See Exchange Rule 11.23(a)(23). The term ``Volume based Tie
Breaker'' shall mean the midpoint of the NBBO for a particular
security where the NBBO is a valid NBBO. A NBBO is a Valid NBBO
where: (i) there is both a NBB and NBO for the security; (ii) the
NBBO is not crossed; and (iii) the midpoint of the NBBO is less than
the Maximum Percentage away from both the NBB and the NBO. The
Maximum Percentage will be determined by the Exchange and will be
published in a circular distributed to Members with reasonable
advance notice prior to initial implementation and any change
thereto. Where the NBBO is not a Valid NBBO, the price of the Final
Last Sale Eligible Trade will be used. See also Exchange Rule
11.23(c)(2)(B).
\26\ Infra note 50.
\27\ Id.
\28\ Id.
\29\ See Exchange Rule 11.23(a)(9). The term ``Final Last Sale
Eligible Trade'' shall mean the last round lot trade occurring
during Regular Trading Hours on the Exchange if the trade was
executed within the last one second prior to either the Closing
Auction or, for Halt Auctions, trading in the security being halted.
Where the trade was not executed within the last one second, the
last round lot trade reported to the consolidated tape received by
the Exchange during Regular Trading Hours and, where applicable,
prior to trading in the security being halted will be used. If there
is no qualifying trade for the current day, the BZX Official Closing
Price from the previous trading day will be used.
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<bullet> Where at least one round lot is executed in the Closing
Auction, the Closing Auction price will be the BZX Official Closing
Price; \30\
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\30\ See Exchange Rule 11.23(c)(2)(B)(i).
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<bullet> In the event that less than a round lot is executed in the
Closing Auction, the BZX Official Closing Price for such security will
depend on when the last consolidated last-sale eligible trade occurs.
If a trade that would qualify as a Final Last Sale Eligible Trade
occurred:
[cir] Within the final five minutes before the end of Regular
Trading Hours, the Final Last Sale Eligible Trade will be the BZX
Official Closing Price; \31\ or
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\31\ See Exchange Rule 11.23(c)(2)(B)(ii)(a).
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[cir] Prior to five minutes before the end of Regular Trading
Hours, the time-weighted average price of the NBBO midpoint measured
over the last 5 minutes before the end of Regular Trading Hours will be
the BZX Official Closing Price. For purposes of this paragraph, the
Exchange will exclude a quote from the NBBO midpoint calculation if the
spread of the quote is greater than 10% of the midpoint price. A
Crossed NBBO would also be excluded from the calculation; \32\ or
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\32\ See Exchange Rule 11.23(c)(2)(B)(ii)(b).
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<bullet> If the BZX Official Closing Price cannot be determined
under paragraphs (B)(i) or (B)(ii) of this Rule, the Final Last Sale
Eligible Trade will be the BZX Official Closing Price.\33\
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\33\ See Exchange Rule 11.23(c)(2)(B)(iii).
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MOC orders have priority over all other Closing Auction Eligible
Orders and to the extent there is executable contra side interest, such
MOC orders will be executed at the BZX Official Closing Price according
to time priority.\34\ After the execution of all
[[Page 34545]]
MOC orders, the remaining orders priced at or more aggressively than
the BZX Official Closing Price on the Auction Book and the Continuous
Book will be executed on the basis of price priority.\35\ Equally
priced trading interest shall execute in time priority in the following
order: (i) the displayed portion of limit orders, LOC orders, LLOC
orders, and limit RHO orders \36\ (all such orders to have equal
priority after execution of all orders identified in Rule
11.23(c)(2)(C); (ii) non-displayed orders; and (iii) the reserve
portion of limit orders.\37\ Limit order shares on the Continuous Book
that are not executed in the Closing Auction will remain on the
Continuous Book during the After Hours Trading Session,\38\ subject to
the User's instructions.\39\ RHO, LOC, LLOC, and MOC order shares that
are not executed in the Closing Auction will be cancelled at the
conclusion of the Closing Auction.\40\
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\34\ See Exchange Rule 11.23(c)(2)(C).
\35\ Id.
\36\ See Exchange Rule 11.9(b)(7). A Regular Hours Only
(``RHO'') order is a limit or market order that is designated for
execution only during Regular Trading Hours, which includes the
Opening Auction, Closing Auction, and IPO/Halt Auctions for BZX
listed securities and the Opening Process for non-BZX-listed
securities (as such terms are defined in Rule 11.23 and 11.24). Any
portion of a market RHO order will be cancelled immediately
following any auction in which it is not executed.
\37\ See Exchange Rule 11.23(c)(2)(C)(i)-(iii).
\38\ See Exchange Rule 1.5(c), The term ``After Hours Trading
Session'' shall mean the time between 4:00 p.m. and 8:00 p.m.
\39\ See Exchange Rule 11.23(c)(3)(A).
\40\ See Exchange Rule 11.23(c)(3)(B).
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Proposed Changes to Closing Auction Orders
The Exchange now proposes to amend Rule 11.23(a)(11) and Rule
11.23(a)(13) to revise how LLOC and LOC orders are priced.
Additionally, the Exchange proposes to amend Rule 11.23(c)(1)(A) and
Rule 11.23(c)(1)(B) to change the time by which market makers and other
Users must submit, modify, or cancel their LLOC and LOC orders. The
Exchange believes these proposed changes will help facilitate the
completion of an orderly Closing Auction, assist market makers in
meeting quoting obligations, and provide market makers and Users with
additional information about the potential price at which an order
designated for execution in the Closing Auction may execute.
Late-Limit-On-Close Orders
As described above, an LLOC order currently has its price adjusted
to the NBB or NBO if the limit price of the LLOC order is more
aggressive than the NBB or NBO upon the Exchange's receipt of the LLOC
order.\41\ If the NBB or NBO becomes more aggressive, the price of the
LLOC order will be adjusted to the more aggressive price, so long as
that price is not more aggressive than the original limit price entered
by the User.\42\ The limit price of an LLOC order will not be adjusted
to a less aggressive price unless otherwise provided by Exchange
Rules.\43\ The Exchange now proposes to permit an LLOC order to have
its limit price adjusted to both more aggressive prices and less
aggressive prices, so long as the adjusted price is not priced higher
(for buy orders) or lower (for sell orders) than its User-entered limit
price. To better describe the proposed order functionality, the
Exchange has included the following examples:
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\41\ Supra note 14.
\42\ Id.
\43\ Id.
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Example 1
The below example demonstrates an LLOC order to buy with a limit
price that is adjusted to the price of the NBB.
<bullet> NBBO: $10.00 x $10.05.
<bullet> Order 1 to buy 1000 at $10.05 LLOC is received by the
Exchange.
[cir] Order 1 is adjusted to a price of $10.00.\44\
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\44\ The adjusted price of 1000 shares to buy at $10.00 is what
will be disseminated by the Exchange in its Cboe Auction Feed. The
Cboe Auction Feed is an uncompressed data product that provides
information regarding the current status of price and size
information related to auctions conducted by the Exchange. See
Exchange Rule 11.22(i) and Exchange Rule 11.23(c)(2)(A).
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<bullet> NBBO adjusts to $10.03 x $10.07
[cir] Order 1 is adjusted to a price of $10.03.
<bullet> NBBO adjusts to $10.02 x $10.04. This is the last NBBO
change prior to the Closing Auction.
[cir] Order 1 is adjusted to a price of $10.02 ahead of the Closing
Auction.
When Order 1 is received by the Exchange, its price is adjusted to
$10.00 for purposes of the Closing Auction Feed as Order 1's limit
price ($10.05) is higher than the NBB ($10.00). When the NBB later
adjusts to a price of $10.03, Order 1's price is also adjusted to
$10.03 as the NBB moved to a higher price. Current Rule 11.23(a)(11)
would prohibit the LLOC order from later adjusting from a price of
$10.03 to the lower price of $10.02 after the NBB declined from $10.03
to $10.02. However, the Exchange's proposed amendment to Rule
11.23(a)(11) permits the LLOC order to buy to adjust to a less
aggressive price, which is shown in the above example. Order 1 would be
priced at $10.02 for purposes of executing in the Closing Auction.
Example 2
The below example demonstrates an LLOC order to buy with a limit
price that is adjusted to the price of the NBB and subsequently unable
to adjust to a more aggressive price due to being constrained by its
original, User-entered limit price.
<bullet> NBBO: $10.00 x $10.05.
<bullet> Order 1 to buy 1000 at $10.05 LLOC is received by the
Exchange.
[cir] Order 1 is adjusted to a price of $10.00.
<bullet> NBBO adjusts to $10.08 x $10.10.
[cir] Order 1 is adjusted to a price of $10.05 (its original limit
price).
<bullet> NBBO adjusts to $10.02 x $10.04. This is the last NBBO
change prior to the Closing Auction.
[cir] Order 1 is adjusted to a price of $10.02.
When Order 1 is received by the Exchange, its price is adjusted to
$10.00 for purposes of the Closing Auction Feed as Order 1's limit
price ($10.05) is higher than the NBB ($10.00). The NBB subsequently
adjusts to a price of $10.08, which is higher than Order 1's limit
price of $10.05. As the NBB is priced higher than Order 1's User-
entered limit price, Order 1's price is only adjusted to $10.05, its
original User-entered limit price. When the NBB adjusts again to a
price that is lower ($10.02) than the original User-entered limit price
of $10.05, Order 1 has its price adjusted to $10.02 for purposes of the
Closing Auction. Current Rule 11.23(a)(11) would prohibit the LLOC
order from later adjusting from a price of $10.05 to the lower price of
$10.02 after the NBB declined from $10.08 to $10.02. However, the
Exchange's proposed amendment to Rule 11.23(a)(11) permits the LLOC
order to buy to adjust to a less aggressive price, which is shown in
the above example. Order 1 would be priced at $10.02 for purposes of
executing in the Closing Auction.
Example 3
The below example demonstrates an LLOC order to sell with a limit
price that is adjusted to the price of the NBO.
<bullet> NBBO: $10.00 x $10.05.
<bullet> Order 1 to sell 1000 at $10.00 LLOC is received by the
Exchange.
[cir] Order 1 is adjusted to a price of $10.05.
<bullet> NBBO adjusts to $10.03 x $10.07.
[cir] Order 1 is adjusted to a price of $10.07.
<bullet> NBBO adjusts to $10.02 x $10.04. This is the last NBBO
change prior to the Closing Auction.
[cir] Order 1 is adjusted to a price of $10.04 ahead of the Closing
Auction.
[[Page 34546]]
When Order 1 is received by the Exchange, its price is adjusted to
$10.05 for purposes of the Closing Auction Feed as Order 1's limit
price ($10.00) is lower than the NBO ($10.05). When the NBO later
adjusts to a price of $10.07, Order 1's price is also adjusted to
$10.07 as the NBO moved to a higher price. Current Rule 11.23(a)(11)
would prohibit the LLOC order from later adjusting from a price of
$10.07 to the lower price of $10.04 after the NBO declined from $10.07
to $10.04. However, the Exchange's proposed amendment to Rule
11.23(a)(11) permits the LLOC order to sell to adjust to a less
aggressive price, which is shown in the above example. Order 1 would be
priced at $10.04 for purposes of executing in the Closing Auction.
Example 4
The below example demonstrates an LLOC order to sell with a limit
price that is adjusted to the price of the NBO and subsequently unable
to adjust to a less aggressive price due to being constrained by its
original, User-entered limit price.
<bullet> NBBO: $10.00 x $10.05.
<bullet> Order 1 to sell 1000 at $10.02 LLOC is received by the
Exchange.
[cir] Order 1 is adjusted to a price of $10.05.
<bullet> NBBO adjusts to $9.99 x $10.00.
[cir] Order 1 is adjusted to a price of $10.02 (its original limit
price).
<bullet> NBBO adjusts to $10.02 x $10.04. This is the last NBBO
change prior to the Closing Auction.
[cir] Order 1 is adjusted to a price of $10.04.
When Order 1 is received by the Exchange, its price is adjusted to
$10.05 for purposes of the Closing Auction Feed as Order 1's limit
price ($10.02) is lower than the NBO ($10.05). The NBO subsequently
adjusts to a price of $10.00, which is lower than Order 1's limit price
of $10.02. As the NBO is priced lower than Order 1's User-entered limit
price, Order 1's price is only adjusted to $10.02, its original User-
entered limit price. When the NBO adjusts again to a price that is
higher ($10.04) than the original User-entered limit price of $10.02,
Order 1 has its price adjusted to $10.04 for purposes of the Closing
Auction. Current Rule 11.23(a)(11) would prohibit the LLOC order from
later adjusting from a price of $10.02 to the higher price of $10.04
after the NBO declined from $10.07 to $10.04. However, the Exchange's
proposed amendment to Rule 11.23(a)(11) permits the LLOC order to sell
to adjust to a less aggressive price, which is shown in the above
example.
The Exchange also proposes to introduce language that better
describes the behavior of LLOC orders when the NBB or NBO,
respectively, is not available. The Exchange proposes that if there is
no NBB or NBO available upon receipt of the LLOC bid or offer by the
Exchange, that LLOC bid or offer, respectively, will assume its entered
limit price. Additionally, if the NBB or NBO becomes unavailable after
the respective LLOC bid or offer has been adjusted to the NBB or NBO
before it becomes unavailable, the respective LLOC bid or offer will
maintain its most recent adjusted price and would not have its price
adjusted until the NBB or NBO, respectively, was available.
LLOC orders contribute to price formation in the Closing Auction.
Thus, the Exchange's proposal to permit LLOC orders to adjust to both
higher and lower prices so long as the NBB or NBO is not priced higher
(for buy orders) or lower (for sell orders) than the LLOC order's limit
price will better enable an LLOC order to be more accurately priced
ahead of the Closing Auction. As LLOC orders are currently prohibited
from being adjusted to a less aggressive price unless otherwise
provided by Exchange rules,\45\ there is a chance that once an LLOC
order is received by the Exchange that the NBB or NBO will move to a
lower price (for buy orders) or higher price (for sell orders) and the
LLOC order will remain priced at either its limit price or the price of
the NBB or NBO to which it was adjusted prior to the NBB or NBO moving
to a lower (for buy orders) or higher (for sell orders) price. This
could result in price-forming LLOC orders being priced away from the
market price of the security and the resulting BZX Official Closing
Price not accurately reflecting the price of the security. In this
regard, the Exchange believes that allowing LLOC orders to move in-line
with the NBB and NBO is therefore an important mechanism for accurate
price formation ahead of the Closing Auction and will provide investors
with more accurate information about where the LLOC order may execute
during the Closing Auction. The Exchange does not believe that
counterparties will be negatively affected by this proposal but instead
would benefit from the more accurate pricing that stems from LLOC
orders moving in-line with the NBB and NBO.
---------------------------------------------------------------------------
\45\ Supra note 14.
---------------------------------------------------------------------------
In instances where there is no NBB or NBO, respectively, the
Exchange believes that it is more appropriate to have the LLOC order
retain its limit price (if the NBB or NBO is not available upon the
Exchange's receipt of the LLOC order) or maintain its most recent
adjusted price if the NBB or NBO becomes unavailable after the LLOC
order has had its price adjusted due to movement in the NBB or NBO.
LLOC orders are utilized to offset order imbalances ahead of the
Closing Auction. Thus, if the price of an LLOC order is adjusted when
the NBB or NBO becomes unavailable \46\ then there would be the
potential for large order imbalance changes, which would be detrimental
to the calculation of the BZX Official Closing Price. Therefore, the
Exchange believes that allowing the LLOC order to retain its limit
price if the NBB or NBO, respectively, is unavailable upon the
Exchange's receipt of the LLOC order or allowing the LLOC order to
remain at its most recent adjusted price if the NBB or NBO,
respectively, becomes unavailable after the price of the LLOC order has
been adjusted is appropriate in order for the Exchange to calculate an
accurate BZX Official Closing Price.
---------------------------------------------------------------------------
\46\ The NBB or NBO becomes unavailable when there are no limit
orders to establish an NBB or NBO.
---------------------------------------------------------------------------
In addition to permitting LLOC orders to be re-priced to both
higher and lower prices as described above, the Exchange also proposes
to amend the time at which Users, including those serving as LMMs, may
begin to submit LLOC orders to the Exchange. Currently, LLOC orders may
not be submitted before 3:59 p.m. and any LLOC order submitted prior to
3:59 p.m. will be rejected. Now, the Exchange proposes to amend Rule
11.23(c)(1)(A) to permit LMMs and other Users to submit LLOC orders to
the Exchange beginning at 3:55 p.m. The Exchange also proposes that
once entered, Users may not modify or cancel an LLOC order. LLOC orders
will continue to be accepted until 4:00 p.m. The Exchange believes that
moving the LLOC acceptance time from 3:59 p.m. to 3:55 p.m. will
benefit all Users, particularly those serving as LMMs, by providing an
additional four minutes to offset any order imbalances that may be
present heading into the Closing Auction. The movement of the LLOC
order acceptance time from 3:59 p.m. to 3:55 p.m. aligns with the
Exchange's previous change to alter the cutoff time for the submission
of MOC orders from 3:59 p.m. to 3:55 p.m.\47\ and serves to provide
Users, including LMMs, with an additional order type to submit between
3:55 p.m. and 4:00 p.m. that can offset any order imbalance in BZX-
listed securities prior to the Closing Auction. The Exchange notes that
while LLOC orders may now be entered beginning at
[[Page 34547]]
the same time as LOC orders (3:55 p.m.), Users will have the ability to
enter LLOC orders up until 4:00 p.m., while LOC orders will only be
permitted to be entered until 3:59 p.m. Previously, LLOC orders could
not be entered until 3:59 p.m., which led to the name ``Late-Limit-On-
Close'' order. As proposed, the distinction between LLOC order and LOC
order will arise from the ability to enter LLOC orders until 4:00 p.m.
rather than the 3:59 p.m. cutoff for LOC orders.
---------------------------------------------------------------------------
\47\ Supra note 20.
---------------------------------------------------------------------------
Limit-On-Close Orders
As previously discussed, a LOC order is a BZX limit order that is
designated for execution only in the Closing Auction.\48\ Today, LOC
orders may be entered until 3:59 p.m. for participation in the Closing
Auction, with no limits on an LMM or other User's ability to modify or
cancel an LOC order prior to 3:59 p.m.\49\ The Exchange now proposes to
amend Rule 11.23(c)(1)(A) to limit the ability of LMMs and other Users
to modify or cancel LOC orders between 3:55 p.m. and 3:59 p.m. While
LMMs and other Users will retain the ability to submit LOC orders until
3:59 p.m., the Exchange proposes that LOC orders cannot be modified or
cancelled between 3:55 p.m. and 3:59 p.m., regardless of when the LOC
order was received by the Exchange.
---------------------------------------------------------------------------
\48\ Supra note 9.
\49\ See Exchange Rule 11.23(c)(1)(A).
---------------------------------------------------------------------------
In addition, the Exchange proposes to amend Rule 11.23(a)(13) to
introduce re-pricing behavior for LOC orders entered in BZX-listed
corporate securities (as described in Rule 14.8 and Rule 14.9).\50\ As
proposed, an LOC order in a BZX-listed corporate security entered
between 3:55 p.m. and 3:59 p.m. will be accepted at its limit price,
unless the limit price is higher (for buy orders) or lower (for sell
orders) than the 3:55 p.m. Reference Price.\51\ LOC orders in BZX-
listed corporate securities that have a limit price that is priced
higher (for buy orders) or lower (for sell orders) than the 3:55 p.m.
Reference Price will be re-priced to the 3:55 p.m. Reference Price.\52\
If there is no Reference Price available in a particular security due
to a lack of liquidity on the BZX Book, the LOC order will not be re-
priced and will maintain its original limit price. The Exchange does
not propose to amend the price of LOC orders entered in BZX-listed
ETPs. An LOC order entered in a BZX-listed ETP will be accepted at its
limit price and will not have its price adjusted by the System.
---------------------------------------------------------------------------
\50\ See Exchange Rule 14.8 (General Listing Requirements--Tier
I) and Exchange Rule 14.9 (General Listing Requirements--Tier II). A
BZX-listed corporate security includes a Company's Primary Equity
Security as well as rights, warrants, preferred and secondary
classes of stock, and closed-end management investment companies
registered under the Investment Company Act of 1940 (``Closed-End
Funds'').
\51\ See Exchange Rule 11.23(a)(19). The term ``Reference
Price'' shall mean the price within the Reference Price Range that
maximizes the number of Eligible Auction Order shares associated
with the less of the Reference Buy Shares and the Reference Sell
Shares as determined at each price level within the Reference Price
Range, that minimizes the absolute difference between Reference Buy
Shares and Reference Sell Shares, and minimizes the distance from
the Volume Based Tie Breaker.
\52\ If the System is not able to ingest the 3:55 p.m. Reference
Price due to a technical or systems issue at the Exchange, the LOC
order will be re-priced upon receipt of the first available
Reference Price after System recovery. If the Closing Auction cannot
be completed due to a technical or systems issue at the Exchange,
the LOC order will not be re-priced and will maintain its original,
User-entered limit price.
---------------------------------------------------------------------------
The Exchange believes that the proposed changes to LOC orders are
necessary in order to better ensure that the Closing Auction operates
efficiently and provides an accurate BZX Official Closing Price. First,
the proposed change that would limit the ability of LMMs and other
Users to modify or cancel LOC orders between 3:55 p.m. and 3:59 p.m. is
designed to provide LMMs and other Users an appropriate balance between
having the ability to control price-forming orders submitted to the
Exchange ahead of the Closing Auction while simultaneously seeking to
reduce the amount of price volatility ahead of the Closing Auction. As
LOC orders are price-forming orders, the Exchange recognizes the need
for LMMs and other Users to maintain the ability to submit LOC orders
until 3:59 p.m. As discussed in the Exchange's recent proposal to amend
the MOC order submission cutoff time from 3:59 p.m. to 3:55 p.m.,\53\
MOC orders cannot be submitted to the Exchange at 3:55 p.m. or later.
As such, the Exchange is ensuring that LMMs and other Users will
continue to have four minutes to submit LOC orders to execute in the
Closing Auction albeit with the inability to modify or cancel orders
between 3:55 p.m. and 3:59 p.m. This change is intended to reduce the
amount of price volatility that modifications and cancellations may
cause when entered ahead of the Closing Auction.
---------------------------------------------------------------------------
\53\ Supra note 20.
---------------------------------------------------------------------------
Second, the proposed change that allows for the re-pricing of LOC
orders in BZX-listed corporate securities submitted between 3:55 p.m.
and 3:59 p.m. if the limit price is higher (for buy orders) or lower
(for sell orders) than the 3:55 p.m. Reference Price is similarly
designed to minimize the amount of price volatility ahead of the
Closing Auction. Combined with the previously discussed proposal to
prohibit the modification and cancellation of LOC orders between 3:55
p.m. and 3:59 p.m., the Exchange believes that automatically re-pricing
those LOC orders with limit prices that are higher (for buy orders) or
lower (for sell orders) than the 3:55 p.m. Reference Price will lessen
the frequency with which the Reference Price updates, thus providing
additional clarity to Users about the expected price of the Closing
Auction in BZX-listed corporate securities. The proposed change is
designed to prevent LMMs and other Users from using LOC orders that are
priced higher (for buy orders) or lower (for sell orders) as a proxy
for MOC orders, which are no longer permitted to be entered after 3:55
p.m.\54\ While LMMs and Users choosing to submit LOC orders between
3:55 p.m. and 3:59 p.m. will be subject to order cancellation and
modification restrictions and will have an LOC order re-priced if it is
priced higher (for buy orders) or lower (for sell orders) than the 3:55
p.m. Reference Price, the Exchange believes this tradeoff is necessary
in order to provide the marketplace with stability ahead of the Closing
Auction. The Exchange does not believe that counterparties are
negatively affected by the proposed change, but instead will benefit
from having less frequent updates to the Reference Price and additional
clarity around the expected price of the Closing Auction in BZX-listed
corporate securities.
---------------------------------------------------------------------------
\54\ Id.
---------------------------------------------------------------------------
While the Exchange proposes to introduce this re-pricing behavior
only for BZX-listed corporate securities rather than all BZX-listed
securities, the Exchange does not believe this segmentation harms
either corporate securities or all other securities listed on BZX. In
fact, the Exchange notes that segmentation between corporate securities
and all other securities already exists under Rule 11.23(c)(2)(B) in
that securities other than BZX-listed corporate securities have
alternative methods in determining the BZX Official Closing Price that
are not available to BZX-listed corporate securities.\55\ The
Exchange's proposal seeks to balance feedback from the LMMs and other
Users who trade BZX-listed corporate securities that desire less price
volatility approaching the Closing Auction with the needs of the LMMs
responsible for submitting price-forming LOC orders ahead of the
Closing Auction in ETPs, some of which tend to have volatile price
swings that are anticipated based on the underlying holdings and makeup
of the product.
---------------------------------------------------------------------------
\55\ Supra notes 30-33.
---------------------------------------------------------------------------
[[Page 34548]]
The Exchange notes that Nasdaq similarly prohibits modifications
and cancellations to MOC, LOC, and Imbalance-Only (``IO'') orders, but
the prohibition of modifications and cancellations begins at 3:50 p.m.
rather than the Exchange's proposed time of 3:55 p.m.\56\ Nasdaq also
prohibits the entry of MOC, LOC, and IO orders after 3:58 p.m.,\57\
while the Exchange is proposing to allow LOC orders to continue to be
entered until 3:59 p.m. and LLOC orders to be entered until 4:00 p.m.
NYSE Arca prohibits modifications and cancellations of MOC and LOC
orders at 3:59 p.m., but will continue to accept these order types
until the end of its core trading session under certain conditions.\58\
The Exchange believes its proposal to limit the modification and
cancellation of LOC orders beginning at 3:55 p.m. while continuing to
allow the entry of LOC orders until 3:59 p.m. as well as its proposal
to allow LLOC orders to be entered beginning at 3:55 p.m. does not
introduce behavior that LMMs and other Users will be unable to
accommodate, as LMMs and other Users are already accustomed to having
different times related to the entry, modification, and cancellation of
auction orders on BZX and on other exchanges. The proposal seeks to
strike the appropriate balance of allowing all Users, but in particular
LMMs responsible for submitting price forming orders ahead of the
Closing Auction, the ability to submit LOC orders until 3:59 p.m. and
LLOC orders until 4:00 p.m. while at the same time limiting the amount
of price volatility ahead of the Closing Auction.
---------------------------------------------------------------------------
\56\ See Nasdaq Equity 4, Rule 4702(b)(11)(A) (``Market On Close
Order''); Nasdaq Equity 4, Rule 4702(b)(12)(A) (``Limit On Close
Order''); Nasdaq Equity 4, Rule 4702(13)(A) (``Imbalance Only
Order'').
\57\ Id.
\58\ See NYSE Arca Rule 7.35-E(d)(2)(A)-(B).
---------------------------------------------------------------------------
In total, the proposed changes seek to minimize price volatility
ahead of the Closing Auction while also providing LMMs and other Users
with additional information about the potential price at which an LOC
or LLOC order designated for execution in the Closing Auction may
execute. By limiting price movement through the prohibition of order
modifications and cancellations during certain time periods ahead of
the Closing Auction, extending the time which Users have to submit LLOC
orders, and amending how LOC orders and LLOC orders are re-priced under
certain circumstances, the Exchange believes it will be better
positioned to conduct a Closing Auction that provides the most accurate
price as the BZX Official Closing Price, which benefits the market as a
whole.
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.\59\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \60\ 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) \61\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\59\ 15 U.S.C. 78f(b).
\60\ 15 U.S.C. 78f(b)(5).
\61\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that its proposal to (i)
revise how LLOC orders are priced; (ii) revise how LOC orders in BZX-
listed corporate securities are priced when entered between 3:55 p.m.
and 3:59 p.m.; and (iii) amend the times for LMMs and other Users to
submit, modify or cancel LLOC orders and LOC orders are designed to
promote just and equitable principles of trade, help to facilitate
transactions in securities and remove impediments to and perfect the
mechanism of a free and open market and national market system by
providing Users with additional transparency into the potential price
of a security nearing the Closing Auction. The goal of the Closing
Auction is to ascertain the BZX Official Closing Price in BZX-listed
securities, which is broadly communicated to market participants. As
such, by minimizing price volatility ahead of the Closing Auction, the
Exchange believes the BZX Official Closing Price will more accurately
reflect the market price of the security, which benefits the market as
a whole.
In particular, the Exchange's proposal to allow LLOC orders to be
re-priced to both higher and lower prices promotes just and equitable
principles of trade, helps to facilitate transactions in securities,
and removes impediments to and perfects the mechanism of a free and
open market and national market system by allowing price forming orders
to move in-line with the NBB or NBO rather than only being permitted to
move to a higher (for buy orders) or lower (for sell orders) price
under the current rule. Allowing LLOC orders to be re-priced as the NBB
or NBO moves higher and lower, so long as the NBB or NBO is not priced
higher (lower) than the LLOC order's limit price, will ensure that an
LLOC order is able to provide support in offsetting imbalances while
more accurately reflecting the market price of the security. Similarly,
allowing an LLOC order to retain its limit price if the NBB or NBO is
not available when the LLOC order is received by the Exchange and
allowing an LLOC order to maintain its most recent adjusted price if
the NBB or NBO becomes unavailable after the LLOC order has been
adjusted will prevent large order imbalance swings ahead of the Closing
Auction, which could be detrimental to the calculation of the BZX
Official Closing Price. Accurately priced price forming orders are
essential to ensuring that the BZX Official Closing Price is correctly
calculated.
Similarly, the Exchange's proposal to revise how LOC orders entered
between 3:55 p.m. and 3:59 p.m. are priced in BZX-listed corporate
securities by re-pricing the limit price of an LOC order to the 3:55
p.m. Reference Price if the limit price upon entry is higher (for buy
orders) or lower (for sell orders) than the 3:55 p.m. Reference Price
promotes just and equitable principles of trade, helps to facilitate
transactions in securities, and removes impediments to and perfects the
mechanism of a free and open market and national market system because
it will lessen the frequency of late arriving, aggressively priced LOC
orders, thus providing additional clarity to LMMs and other Users about
the expected price and order imbalances of the Closing Auction in BZX-
listed corporate securities. The Exchange believes that less frequent
updates to the LOC order caused by User modifications and cancellations
ahead of the Closing Auction will lead to a smoother Closing Auction
process and more certainty to Users about the expected BZX Official
Closing Price.
Further, the Exchange's proposal to amend the time when LMMs and
other Users may begin submitting LLOC orders from 3:59 p.m. to 3:55
p.m. promotes just and equitable principles of trade, helps to
facilitate transactions in securities, and removes impediments to and
perfects the mechanism of a free
[[Page 34549]]
and open market and national market system because it aligns with the
Exchange's MOC Cutoff Time Filing that amended the cutoff time for the
submission of MOC orders from 3:59 p.m. to 3:55 p.m. As the MOC Cutoff
Time Filing limits the ability of Users to submit an Eligible Auction
Order ahead of the Closing Auction, the Exchange is now proposing to
allow LMMs and other Users an additional order type that may be
submitted between 3:55 p.m. and 4:00 p.m. in order to receive an
execution at the closing price as well as potentially assist in
offsetting any imbalance created by the presence of MOC orders
submitted prior to 3:55 p.m. Providing LMMs and other Users an extra
four minutes to submit LLOC orders ahead of the Closing Auction after
adjusting the MOC cutoff time from 3:59 p.m. to 3:55 p.m. will help
ensure that LMMs and other Users have sufficient opportunities to
submit imbalance offsetting orders ahead of the Closing Auction, which
will lead to less price volatility immediately ahead of the Closing
Auction.
As noted above, the Exchange's proposal to amend the times for LMMs
and other Users to submit, modify or cancel LLOC orders and LOC orders
is not significantly different than the prohibitions on modifications
and cancellations of closing auction orders types imposed by competitor
exchanges. For example, Nasdaq prohibits the modification and
cancellation of MOC, LOC, and IO orders beginning at 3:50 p.m.\62\
while the Exchange is proposing a time of 3:55 p.m., which grants LMMs
and other Users an additional five minutes of control over their price
forming orders than is given by Nasdaq. NYSE Arca prohibits the
modification and cancellation of closing auction orders beginning at
3:59 p.m., which is more generous than the Exchange's proposal.\63\ The
Exchange believes that its proposed changes regarding the modification
and cancellation of LOC and LLOC orders continues to promote just and
equitable principles of trade by balancing the ability of LMMs and
other Users to control price forming orders with the Exchange's desire
to minimize price volatility ahead of its Closing Auction.
---------------------------------------------------------------------------
\62\ Supra note 56.
\63\ Supra note 58.
---------------------------------------------------------------------------
The Exchange's proposals to (i) revise how LLOC orders are priced;
(ii) revise how LOC orders in BZX-listed corporate securities are
priced when entered between 3:55 p.m. and 3:59 p.m.; and (iii) amend
the times for LMMs and other Users to submit, modify, or cancel LLOC
orders and LOC orders are also not unfairly discriminatory. The
proposed changes to revise how LLOC orders and LOC orders are priced
and the proposed amended times for LMMs and other Users to submit,
modify, or cancel LLOC orders and LOC orders apply equally to all LMMs
and other Users that submit LOC and LLOC orders, regardless of size or
trading volume. While the Exchange is proposing to re-price LOC orders
in BZX-listed corporate securities different from how it would re-price
LOC orders in all other BZX-listed securities if certain conditions are
met, the Exchange does not believe this difference is unfairly
discriminatory. In this proposal, the Exchange seeks to balance
feedback from the LMMs and other Users who trade BZX-listed corporate
securities that desire less price volatility approaching the Closing
Auction with the needs of the LMMs responsible for submitting price-
forming LOC orders ahead of the Closing Auction in ETPs, some of which
tend to have volatile price swings that are anticipated based on the
underlying holdings and makeup of the product.
Additionally, as discussed above, BZX-listed ETPs have the ability
to utilize different pricing methods in order to arrive at the BZX
Official Closing Price that are not available to BZX-listed corporate
securities. The Exchange views the segmentation and different re-
pricing strategy of LOC orders between BZX-listed corporate securities
and all other BZX-listed securities as appropriate given the different
composition of ETPs and corporate securities. While price volatility
may occur in any BZX-listed security, a BZX-listed corporate security
is particularly susceptible to movements in the Reference Price because
the closing price is directly related to the price-forming orders
submitted to the Exchange. An ETP, on the other hand, may be composed
of a basket of securities and therefore the closing price of an ETP is
related not just to the price-forming orders submitted to the Exchange,
but also the price-forming orders of the underlying securities that
comprise an ETP. Given that an ETP may be made up of hundreds of
underlying securities, each of which has its own closing price
established by its primary listing exchange, there are more data points
that Users may rely on when submitting their orders ahead of the
Closing Auction and less opportunities for price volatility caused by
orders priced significantly away from the market of the ETP.
Furthermore, the Exchange's proposals do not unfairly discriminate
against LMMs and other Users. Prior to submitting this proposal, the
Exchange spoke with Exchange Users, LMMs, and issuers of BZX-listed
ETPs and did not receive feedback that any of the proposed changes were
undesirable or that doing so would cause them undue burden. LMMs and
other Users are free to submit Continuous Book orders ahead of the
Closing Auction that are not subject to the proposed changes.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the Exchange
believes that its proposed changes will help to foster competition by
further improving BZX's well-functioning Closing Auction process,
making BZX a more attractive venue for trading Eligible Auction Orders.
By amending how LLOC orders and LOC orders in BZX-listed corporate
securities are priced, as well as adjusting the times during which LMMs
and other Users may modify or cancel LLOC and LOC orders, the Exchange
believes that it will see less price volatility ahead of its Closing
Auction, thus providing LMMs and other Users additional clarity into
the expected BZX Official Closing Price. The Exchange believes its
proposed changes, which are designed to limit price volatility, will
foster competition by encouraging LMMs and other Users to enter their
orders destined for execution in the Closing Auction on BZX rather than
competitor exchanges.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
[[Page 34550]]
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#ee9c9b828bc38d8183838b809a9dae9d8b8dc0898198"><span class="__cf_email__" data-cfemail="394b4c555c145a5654545c574d4a794a5c5a175e564f">[email protected]</span></a>. Please include
file number SR-CboeBZX-2025-086 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CboeBZX-2025-086. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CboeBZX-2025-086 and should
be submitted on or before August 12, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\64\
---------------------------------------------------------------------------
\64\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13733 Filed 7-21-25; 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.