[Federal Register Volume 89, Number 140 (Monday, July 22, 2024)]
[Notices]
[Pages 59174-59179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15999]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100542; File No. SR-BX-2024-023]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 2,
Sections 6 and 10
July 16, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 2, 2024, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``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
The Exchange proposes to amend Options 2, Sections 6 and 10.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
BX proposes to amend Options 2, Section 6, Market Maker Orders, to
add an exception to the rule. Additionally, the Exchange proposes to
amend Options 2, Section 10, Directed Market Makers, to amend the
current quoting obligations for Directed Market Makers.\3\
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\3\ A Directed Market Maker is a Market Maker that may be
entitled to an allocation in accordance with Options 3, Section 10
provided the Directed Market Maker was quoting at the better of the
internal BBO or the NBBO at the time of receipt of the Directed
Order. See Options 2, Section 10.
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Options 2, Section 6
Options 2, Section 6(a) currently states that Market Makers may
enter all order types defined in Options 3, Section 7 in the options
classes to which they are appointed and non-appointed. Today, Market
Makers are unable to enter a Customer Cross Order pursuant to Options
3, Section 7(a)(10). Customer Cross Orders are a Public Customer-to-
Public Customer Cross Order by definition \4\ and therefore cannot be
entered by a Market Maker. The Exchange believes noting this exception,
which is clear from Options 3, Section 12(a), will bring greater
transparency to Options 2, Section 6.
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\4\ See Options 3, Section 12(a).
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Options 2, Section 10
In 2021, the Exchange filed to amend the expiration timeframe of
Long-Term Options Series or ``LEAPs'' in Options 4A, Section 12(b) and
amended the bid/ask differentials in Options 2, Sections 4 and 5 \5\ to
reflect the change to Options 4A, Section 12(b) regarding LEAPs.\6\
[[Page 59175]]
Specifically, in 2021, the Exchange amended the expiration timeframe of
LEAPs to lengthen the expiration term on index options from nine to
sixty months to twelve to sixty months.\7\ The Exchange amended BX
Options 2, Sections 4(j) and 5(d)(1), applicable to Market Makers and
Lead Market Makers, respectively, to note the timeframes for index
options that are considered LEAPs to carve out those quoting
requirements as an exception. A similar timeframe is currently carved
out for options on equities and exchange-traded funds (``ETFs'').
Today, Market Markets and Lead Market Makers are currently not required
to make two-sided markets in Quarterly Option Series, any Adjusted
Option Series, and any option series with an expiration of nine months
or greater in equities, and ETFs.\8\ Also, today, with respect to
indexes, Market Makers and Lead Market Makers are not required to make
two-sided markets in Quarterly Option Series, any Adjusted Option
Series, and any option series with an expiration of twelve months or
greater, although the rule text does not reflect the timeframe
associated with LEAPs on index options. The Exchange notes that these
same obligations would apply to a Market Maker or Lead Market Maker
that received a Directed Order.
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\5\ Options 2, Sections 4 and 5 describe quoting obligations for
Market Makers and Lead Market Makers.
\6\ See Securities Exchange Act Release No. 92664 (August 13,
2021), 86 FR 46724 (August 19, 2021) (SR-BX-2021-034) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
the Expiration Timeframe of Long-Term Index Options Series).
\7\ Id.
\8\ See BX Options 2, Sections 4(j) and 5(d)(1).
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At this time, the Exchange proposes to make a conforming amendment
to Options 2, Section 10(a)(3)(A) and (B), similar to the current rule
text applicable to Market Makers and Lead Market Makers in Options 2,
Sections 4(j) and 5(d)(1), to reflect that Directed Market Makers are
not required to make two-sided markets in any Quarterly Option Series,
any Adjusted Option Series, and any option series with an expiration of
twelve months or greater for index options. Options 2, Section
10(a)(3)(A) and (B) currently provides that an Options Participant
shall not be required to make two-sided markets in any Quarterly Option
Series, any Adjusted Option Series, and any option series with an
expiration of nine months or greater. The addition of this language
concerning the current quoting requirement for Market Makers and Lead
Market Makers who receive Directed Orders with respect to LEAPs in
index options brings greater clarity to the Rule and conforms the
requirements applicable to Market Makers and Lead Market Makers to
those requirements noted in current Options 2, Sections 4(j)(1) and
5(d)(1)(A).
Additionally, the Exchange proposes to amend Options 2, Section
10(a)(3)(A) related to the quoting obligations applicable to a Directed
Market Maker. The current rule text states that Directed Market Makers,
associated with the same Options Participant, are collectively required
to provide two-sided quotations in 90% of the cumulative number of
seconds, or such higher percentage as BX may announce in advance, for
which that Options Participant's assigned options series are open for
trading. With respect to a Directed Market Maker, BX currently requires
that the Directed Market Maker provide two-sided quotations in 90% of
the cumulative number of seconds, or such higher percentage as BX may
announce in advance, among all options series in which the Directed
Market Maker has executed a Directed Order on a daily basis. BX
requires the Market Maker to fulfill this requirement in addition to
its requirement to quote as a Market Maker or a Lead Market Maker.
Below the Exchange presents examples of how the new rule text would
operate.
Example 1
[ssquf] Assume a Market Maker was assigned in options overlying
AAPL, SPY, NFLX, ORCL and ADBE.
[ssquf] Assume this Market Maker had previously executed a Directed
Order and executes a Directed Order in NFLX and ADBE on February 27,
2024.
[ssquf] The Directed Market Maker obligation is a daily obligation
once triggered and continues until the Directed Market Maker notifies
the Exchange that it no longer desires to be a part of the Directed
Order program.
[ssquf] Moreover, on February 28, 2024 and each day thereafter the
Directed Market Maker is required to provide two-sided quotations in
90% of the cumulative number of seconds among all options series in
which the Directed Market Maker has executed a Directed Order on a
daily basis until a Directed Market Maker notifies the Exchange that it
is no longer directed. Therefore, the Directed Market Maker would be
required to quote at 90% of the cumulative number of seconds among all
options series in which the Directed Market Maker has executed a
Directed Order each day, regardless of whether the Directed Market
Maker executed a Directed Order that day.
Obligations
This Market Maker is required to provide two-sided quotations in
60% of the cumulative number of seconds, or such higher percentage as
BX may announce in advance, for which that Options Participant's
assigned options series are open for trading among AAPL, SPY, and ORCL
to fulfill its Market Maker obligation.
Separately, this Market Maker would be obligated, separate and
apart from its Market Maker obligations described in this example, to
provide two-sided quotations in 90% of the cumulative number of
seconds, or such higher percentage as BX may announce in advance, among
NFLX and ADBE to fulfill its Directed Market Maker Obligation.
This Market Maker would not be required to make two-sided markets
in any Quarterly Option Series, any Adjusted Option Series, and any
option series with an expiration of nine months or greater for options
on equities and ETFs or with an expiration of twelve months or greater
for index options in AAPL, SPY, NFLX, ORCL and ADBE when meeting its
Market Maker or Directed Market Maker requirements.
Example 2
[ssquf] Assume a Lead Market Maker was assigned in options
overlying AAPL, SPY, NFLX, ORCL and ADBE.
[ssquf] Assume this Lead Market Maker had previously executed a
Directed Order and executes a Directed Order in NFLX and ADBE on
February 27, 2024. The Directed Market Maker obligation is a daily
obligation once triggered and continues until the Directed Market Maker
notifies the Exchange that it no longer desires to be a part of the
Directed Order program.
[ssquf] The Directed Market Maker obligation is a daily obligation
once triggered and continues until the Directed Market Maker notifies
the Exchange that it no longer desires to be a part of the Directed
Order program.
[ssquf] Moreover, on February 28, 2024 and each day thereafter the
Directed Market Maker is required to provide two-sided quotations in
90% of the cumulative number of seconds among all options series in
which the Directed Market Maker has executed a Directed Order on a
daily basis until a Directed Market Maker notifies the Exchange that it
is no longer directed. Therefore, the Directed Market Maker would be
required to quote at 90% of the cumulative number of seconds among all
options series in which the Directed Market Maker has executed a
Directed Order each day, regardless of whether the Directed Market
Maker executed a Directed Order that day.
[[Page 59176]]
Obligations
This Lead Market Maker, associated with the same Options
Participant, is collectively required to provide two-sided quotations
in 90% of the cumulative number of seconds, or such higher percentage
as BX may announce in advance, among AAPL, SPY, and ORCL to fulfill its
Lead Market Maker obligation.\9\
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\9\ See Options 2, Section 4(j)(1).
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Separately, this Lead Market Maker would be obligated, separate and
apart from its Lead Market Maker obligations described in this example,
to provide two-sided quotations in 90% of the cumulative number of
seconds, or such higher percentage as BX may announce in advance, among
NFLX and ADBE to fulfill its Directed Market Maker obligation.
This Market Maker would not be required to make two-sided markets
in any Quarterly Option Series, any Adjusted Option Series, and any
option series with an expiration of nine months or greater for options
on equities and ETFs or with an expiration of twelve months or greater
for index options in AAPL, SPY, NFLX, ORCL and ADBE when meeting its
Lead Market Maker or Directed Market Maker requirements.
The Exchange proposes to amend the rule text in Options 2, Section
10(a)(3)(A) to require Directed Market Makers, collectively, to provide
two-sided quotations in 90% of the cumulative number of seconds, or
such higher percentage as BX may announce in advance, among all options
series in which the Directed Market Maker has executed a Directed Order
on a daily basis, except that a Directed Market Maker shall not be
required to make two-sided markets in any Quarterly Option Series, any
Adjusted Option Series, and any options series with an expiration of
nine months or greater for options on equities and exchange-traded
funds (``ETFs'') or with an expiration of twelve months or greater for
index options. The Exchange notes that the proposed requirements are
similar to requirements imposed by other options exchanges. NYSE Arca,
Inc. (``NYSE Arca'') and NYSE American LLC (``NYSE American'') require
that their lead market makers and market makers provide continuous two-
sided quotations throughout the trading day in issues for which it
receives Directed Orders for 90% of the time the Exchange is open for
trading in each issue.\10\
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\10\ See NYSE Arca Rule 6.88-O and NYSE American Rule 964.1NY.
NYSE Arca Rule 6.88-O(iv) states that these obligations will apply
collectively to all series in all of the issues for which the
Directed Order Market Maker receives Directed Orders, rather than on
an issue-by-issue basis.
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The Exchange also proposes to relocate certain rule text within
Options 2, Section 10(a)(3)(A) to make clear the requirements
applicable to a Directed Market Maker and make other amendments as
well. The Exchange proposes to amend the timeframe in which a Directed
Market Maker is obligated to commence complying with the quoting
obligations of Options 2, Section 10(a)(3)(A).\11\ Today, a Directed
Market Maker must commence complying with the quoting obligations
specified in Options 2, Section 10(a)(3)(A) when a Directed Market
Maker receives a Directed Order in any option in which they are
assigned until such time as the Directed Market Maker notifies the
Exchange that they are no longer directed. Pursuant to Options 2,
Section 10(a)(1), ``[w]hen the Exchange's disseminated price is the
NBBO at the time of receipt of the Directed Order, and the Directed
Market Maker is quoting at the better of the internal BBO or the NBBO,
the Directed Order shall be automatically executed and allocated in
accordance with Options 3, Section 10 such that the Directed Market
Maker shall receive a Directed Market Maker participation entitlement
provided for therein.'' The Exchange proposes to amend Options 2,
Section 10(a)(3)(A) to instead begin requiring a Directed Market Maker
to comply with the Directed Market Maker quoting obligations in Options
2, Section 10(a)(3)(A) when the Directed Market Maker executes its
first Directed Order in any option in which they are assigned. A
Directed Market Maker has the ongoing quoting obligation from the time
a Directed Market Maker executes its first Directed Order in the
options in which the Directed Market Maker is assigned until a Directed
Market Maker notifies the Exchange that the Directed Market Maker is no
longer directed. Because Directed Market Makers are unaware if an order
is directed to them until such time as they execute the Directed Order
and receive an allocation pursuant to Options 3, Section 10, the
Exchange believes that starting the quoting obligation once a Directed
Order is executed is a practical approach to ensuring that Directed
Market Makers comply with their quoting obligations.
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\11\ Currently, Options 2, Section 10(a)(3)(A) provides that an
Options Participant shall be considered directed in all assigned
options once the Options Participant receives a Directed Order in
any option in which they are assigned and shall be considered a
Directed Market Maker until such time as an Options Participant
notifies the Exchange that they are no longer directed.
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The proposed rule text would provide,
Directed Market Makers, associated with the same Options
Participant, are collectively required to provide two-sided
quotations in 90% of the cumulative number of seconds, or such
higher percentage as BX may announce in advance, among all options
series in which the Directed Market Maker has executed a Directed
Order on a daily basis, except that a Directed Market Maker shall
not be required to make two-sided markets in any Quarterly Options
Series, any Adjusted Options Series, and any options series with an
expiration of nine months or greater for options on equities and
ETFs or with an expiration of twelve months or greater for index
options. A Directed Market Maker has the ongoing quoting obligation
from the time a Directed Market Maker executes its first Directed
Order in the options in which the Directed Market Maker is assigned
until a Directed Market Maker notifies the Exchange that the
Directed Market Maker is no longer directed.
A Directed Market Maker shall not be required to make two-sided
markets in any Quarterly Options Series, any Adjusted Options
Series, and any options series with an expiration of nine months or
greater for options on equities and ETFs or with an expiration of
twelve months or greater for index options and would receive a
participation entitlement in the Quarterly Options Series, the
Adjusted Options Series, and an options series with an expiration of
nine months or greater for options on equities and ETFs or with an
expiration of twelve months or greater for index options for the
Directed Order, only if it complies with the heightened 90% quoting
requirement.
As is the case today, a Directed Market Maker must be quoting at
the better of the internal BBO or the NBBO at the time of receipt of
the Directed Order to be entitled to the allocation in accordance with
Options 3, Section 10.
Finally, the Exchange proposes to amend Options 2, Section 10 to
adopt a new Supplementary Material .01 to Options 2, Section 10.
Specifically, the Exchange proposes to adopt definitions related to
Directed Order. The Exchange proposes to define a ``Directed Order'' as
any order to buy or sell which has been directed to a particular Market
Maker by an Order Flow Provider. The Exchange proposes to define an
``Order Flow Provider'' as any Participant that submits, as agent,
orders to the Exchange. Finally, the Exchange proposes to adopt a new
Supplementary Material .02 to Options 2, Section 10 which would provide
that ``A Directed Market Maker may be the Lead Market Maker appointed
to the options class or any Market Maker appointed to the options
class.'' The Exchange believes that the definitions and clarity about
who can be a Directed Market Maker will provide additional background
to Options Participants regarding Directed
[[Page 59177]]
Orders. The definitions and description of who can be a Directed Market
Maker are consistent with the Exchange's current practice and harmonize
BX's definitions to those of Phlx Options 2, Section 10.
The Exchange notes that its Directed Order functionality is
currently not offered on BX. The Exchange proposes to add rule text at
the beginning of Options 2, Section 10 that states, ``The Directed
Order functionality is not operative on BX at this time. If the
Exchange proposes to commence offering this functionality, it will file
a rule change with the Commission specifying the implementation date.''
The Exchange would file a rule change with the Commission when it
determines to commence offering the Directed Order functionality to
Participants and will specify the implementation date in that rule
change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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Options 2, Section 6
The Exchange's proposal to amend Options 2, Section 6(a) to note
that Market Makers may not enter a Customer Cross Order, which are a
Public Customer-to-Public Customer Cross Order by definition,\14\ is
consistent with the Act and the protection of investors and the general
public. It is clear from Options 3, Section 12(a) that Market Makers
cannot enter this order type. The Exchange believes noting this
exception will bring greater transparency to Options 2, Section 6.
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\14\ See Options 3, Section 12(a).
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Options 2, Section 10
The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) and
(B) to reflect the current quoting requirements for Directed Market
Makers with respect to LEAPs in index options is consistent with the
Act because, today, Market Makers and Lead Market Makers are not
required to make two-sided markets in any Quarterly Option Series, any
Adjusted Option Series, and any option series with an expiration of
twelve months or greater for index options, pursuant to Options 2,
Sections 4(j) and 5(d)(1). The addition of this language concerning the
current quoting requirement for Market Makers and Lead Market Makers
who receive Directed Orders with respect to LEAPs in index options
brings greater clarity to the Rule and conforms the requirements
applicable to Market Makers and Lead Market Makers to those
requirements noted in current Options 2, Sections 4(j)(1) and
5(d)(1)(A).
The Exchange's proposal to amend the Directed Market Maker quoting
obligations in Options 2, Section 10(a)(3)(A) is consistent with the
Act. Other options exchanges today require Directed Market Makers,
collectively, to provide two-sided quotations in 90% of the cumulative
number of seconds among all options series in which the Directed Market
Maker has received a Directed Order on a daily basis. The proposed
Directed Market Maker quoting obligations would require Directed Market
Makers, collectively, to provide two-sided quotations in 90% of the
cumulative number of seconds or such higher percentage as BX may
announce in advance, among all options series in which the Directed
Market Maker has executed a Directed Order on a daily basis in addition
to their quoting requirements as Market Makers and Lead Market Makers.
The Exchange believes that these quoting requirements create a
direct nexus between the allocation that would be received by a
Directed Market Maker pursuant to Options 3, Section 10 and the
liquidity that the Directed Market Maker would be required to provide
to the market in that particular options series. The Exchange notes
that any Directed Market Maker quoting at the NBBO would need to
provide two-sided quotations in 90% of the cumulative number of seconds
among all options series in which the Directed Market Maker has
executed a Directed Order for the entire day in which the Directed
Market Maker received the Directed Order and each day thereafter, on a
daily basis, until a Directed Market Maker notifies the Exchange that
it is no longer directed. The Exchange believes that this quoting
obligation is designed to promote just and equitable principles of
trade by ensuring that Directed Market Makers quote competitively in as
many series as possible to attract Directed Orders so that they may
receive an enhanced allocation as a Directed Market Maker.
The proposed rule text would harmonize the Directed Market Maker's
quoting obligations with other options exchanges, such as NYSE Arca and
NYSE American which require that their lead market makers and market
makers provide continuous two-sided quotations throughout the trading
day in issues for which it receives Directed Orders for 90% of the time
the Exchange is open for trading in each issue.\15\
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\15\ See supra note 10.
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The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) to
require a Directed Market Maker to commence complying with the Options
2, Section 10(a)(3)(A) quoting obligations when the Directed Market
Maker executes its first Directed Order in any option in which they are
assigned is a practical approach to ensuring that Directed Market
Makers comply with their quoting obligations. Directed Market Makers
are unaware if an order is directed to them until such time as they
execute the Directed Order and receive an allocation pursuant to
Options 3, Section 10. Further, the Exchange notes that a Directed
Market Maker must be quoting at the better of the internal BBO or the
NBBO at the time of receipt of the Directed Order to be entitled to the
allocation in accordance with Options 3, Section 10.
The Exchange's proposal to amend Options 2, Section 10 to adopt a
new Supplementary Material .01 to Options 2, Section 10 is consistent
with the Act as the proposed definitions and clarity about who can be a
Directed Market Maker will provide additional background to Options
Participants regarding Directed Orders. The definitions and description
of who can be a Directed Market Maker are consistent with the
Exchange's current practice and harmonize BX's definitions to those of
Phlx Options 2, Section 10.
The Exchange's proposal to note that its Directed Order
functionality is currently not offered on BX and to commit to file a
rule change with the Commission when it determines to commence offering
the Directed Order functionality to Participants with the
implementation date, will bring greater transparency to the
availability of this functionality.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Options 2, Section 6
The Exchange's proposal to amend Options 2, Section 6(a) to note
that Market Makers may not enter a
[[Page 59178]]
Customer Cross Order, which are a Public Customer-to-Public Customer
Cross Order by definition,\16\ does not impose an undue burden on
competition. No Market Maker may enter a Customer Cross Order; only
Public Customers may enter a Customer Cross Order by definition. The
proposal does not impose a burden on inter-market competition as other
options markets may similarly copy BX's order types and impose similar
restrictions.
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\16\ See Options 3, Section 12(a).
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Options 2, Section 10
The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) and
(B) to reflect the current quoting requirements for Directed Market
Makers with respect to LEAPs in index options does not impose an undue
burden on competition because all Market Makers, Lead Market Makers and
Directed Market Makers are subject to the same quoting requirements
with respect to LEAPs in index options in that they are not required to
make two-sided markets in any Quarterly Option Series, any Adjusted
Option Series, and any option series with an expiration of twelve
months or greater for index options. The proposed rule text would
conform the requirements applicable to Market Makers and Lead Market
Makers to those requirements noted in current Options 2, Sections
4(j)(1) and 5(d)(1)(A). The proposal does not impose a burden on inter-
market competition as other options markets may impose similar quoting
obligations.
The Exchange's proposal to amend the Directed Market Maker quoting
obligations in Options 2, Section 10(a)(3)(A) does not impose an undue
burden on competition as every Directed Market Maker would be required,
collectively, to provide two-sided quotations in 90% of the cumulative
number of seconds or such higher percentage as BX may announce in
advance, among all options series in which the Directed Market Maker
has executed a Directed Order for the entire day in which the Directed
Market Maker received the Directed Order, on a daily basis, until a
Directed Market Maker notifies the Exchange that it is no longer
directed. The proposal does not impose a burden on inter-market
competition as other options markets today impose similar quoting
obligations.
The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) to
require a Directed Market Maker to commence complying with the Options
2, Section 10(a)(3)(A) quoting obligations when the Directed Market
Maker executes its first Directed Order in any option in which they are
assigned does not impose an undue burden on competition because all
Directed Market Makers will be required to commence complying with
Options 2, Section 10(a)(3)(A) when the Directed Market Maker executes
its first Directed Order in any option in which they are assigned. The
proposal does not impose a burden on inter-market competition as other
options markets today impose similar quoting obligations and may amend
their rules to mirror those of BX.
The Exchange's proposal to amend Options 2, Section 10 to adopt a
new Supplementary Material .01 to Options 2, Section 10 does not impose
an undue burden on competition as the proposed definitions and clarity
about who can be a Directed Market Maker will be uniformly applied to
all Options Participants. The definitions and description of who can be
a Directed Market Maker are consistent with the Exchange's current
practice and harmonize BX's definitions to those of Phlx Options 2,
Section 10. The proposal does not impose a burden on inter-market
competition as other options markets today offer similar functionality
and apply it similar BX.
The Exchange's proposal to note that its Directed Order
functionality is currently not offered on BX and commit to filing a
rule change with the Commission when it determines to commence offering
the Directed Order functionality to Participants and will specify the
implementation date in that rule change does not impose an undue burden
competition as no Participant would be able to utilize this
functionality at this time. The proposal does not impose a burden on
inter-market competition as other options markets today offer similar
functionality.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \17\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-BX-2024-023 on the subject line.
Paper Comments
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-2024-023. 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 (https://www.sec.gov/rules/sro.shtml). 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
[[Page 59179]]
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-2024-023
and should be submitted on or before August 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15999 Filed 7-19-24; 8:45 am]
BILLING CODE 8011-01-P