Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 17, To Decommission the Exchange's Quote Removal Kill Switch Functionality, 52540-52542 [2021-20337]
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Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices
institute proceedings to determine
whether to disapprove, the proposed
rule change (File No. SR–NYSEArca–
2021–53).
SECURITIES AND EXCHANGE
COMMISSION
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–20330 Filed 9–20–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Notice is hereby given,
pursuant to the provisions of the
Government in the Sunshine Act, Public
Law 94–409, that the Securities and
Exchange Commission Small Business
Capital Formation Advisory Committee
will hold a public meeting on Monday,
September 27, 2021, via
videoconference.
TIME AND DATE:
The meeting will begin at 10:00
a.m. (ET) and will be open to the public.
The meeting will be conducted by
remote means (videoconference) and/or
at the Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
Members of the public may watch the
webcast of the meeting on the
Commission’s website at www.sec.gov.
PLACE:
On September 2, 2021, the
Commission published notice of the
Committee meeting (Release No. 33–
10976), indicating that the meeting is
open to the public and inviting the
public to submit written comments to
the Committee. This Sunshine Act
notice is being issued because a majority
of the Commission may attend the
meeting.
STATUS:
The agenda
for the meeting includes matters relating
to rules and regulations affecting small
and emerging businesses and their
investors under the federal securities
laws.
MATTERS TO BE CONSIDERED:
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
lotter on DSK11XQN23PROD with NOTICES1
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 3,
Section 17, To Decommission the
Exchange’s Quote Removal Kill Switch
Functionality
September 15, 2021.
Sunshine Act Meetings
Dated: September 17, 2021.
Vanessa A. Countryman,
Secretary.
[Release No. 34–93011; File No. SR–BX–
2021–037]
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 2, 2021, Nasdaq BX, Inc.
(‘‘BX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to
decommission the Exchange’s quote
removal Kill Switch functionality at
Options 3, Section 17.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/bx/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.
[FR Doc. 2021–20533 Filed 9–17–21; 4:15 pm]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
7 17
CFR 200.30–3(a)(31).
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Options 3, Section 17 to decommission
the Exchange’s quote removal Kill
Switch functionality, which is an
optional tool that allows Market
Makers 4 to initiate a message (or
messages) 5 to the System 6 to promptly
remove their quotes from the market.
Market Makers may submit a request to
the System to remove quotes based on
certain identifier(s) on either a user or
group level (‘‘Identifier’’).7 If quotes are
cancelled by the Market Maker using
Kill Switch, it will result in the removal
of all quotes requested for the
Identifier(s). The Market Maker will be
unable to enter any additional quotes for
the affected Identifier(s) until the
Market Maker sends a re-entry request
to the Exchange.8
Due to the lack of demand for the
quote removal Kill Switch by Market
Makers, the Exchange proposes to
decommission this optional tool by the
end of Q4 2021.9 Through consultation
with individual Market Maker firms
prior to filing this rule change, the
Exchange did not receive any negative
feedback for its proposal to
decommission the quote removal Kill
Switch functionality. The Exchange has
also provided all market participants
with advance notice that it will
decommission this functionality in Q4
2021.10 With the proposed changes, the
Exchange seeks to streamline its product
offerings and to reallocate Exchange
resources to other business and risk
management initiatives. While the
4 For purposes of this filing, Market Makers
include BX Options Market Makers and Options
Market Makers. See Options 1, Section 1(a)(10).
5 Today, Market Makers can log into an interface
to send a message to the Exchange to initiate the
Kill Switch.
6 For purposes of this filing, the term ‘‘System’’
means the automated system for order execution
and trade reporting owned and operated by BX as
the BX Options market. See Options 1, Section
1(a)(59).
7 Identifiers include Exchange accounts, ports,
and/or badges or mnemonics. Thus, a Market Maker
using Kill Switch may elect to remove quotes for
an individual Identifier (e.g., badge) or any group
of Identifiers (e.g., all badges within one Market
Maker firm). Permissible groups must reside within
a single member firm.
8 See Options 3, Section 17. The Kill Switch tool
also currently allows BX Participants to cancel open
orders and prevent new order submission. The
Exchange is not proposing to decommission the
order cancellation portion of the Kill Switch tool at
this time.
9 No Market Makers have used the Kill Switch for
quote removal in 2021.
10 See Options Trader Alert #2021–49.
E:\FR\FM\21SEN1.SGM
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Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices
lotter on DSK11XQN23PROD with NOTICES1
Exchange will no longer offer this
optional functionality to Market Makers,
it will continue to offer similar quote
management tools that would assist
Market Makers with their efforts to
manage their risk with respect to quotes
on the Exchange. For example, Market
Makers are currently able to send a mass
purge request through Specialized
Quote Feed (‘‘SQF’’) to pull their
existing quotes from the market and
inhibit the entry of new quotes until the
Market Maker sends a message to the
Exchange to re-enter the System.11
Indeed, the Exchange has found that
Market Makers utilize this SQF purge
functionality instead of the Kill Switch
quote removal tool when they want to
remove their quotes from the market.
In addition, all Participants, including
Market Makers, may contact the
Exchange’s market operations staff to
request that the Exchange cancel any of
their existing bids, offers, or orders in
any series of options.12 Furthermore, the
Exchange will continue to have
mandatory System-enforced risk
mechanisms that automatically remove
quotes for the Market Maker once
certain pre-set thresholds or conditions
are met. This includes risk protections
such as rapid fire risk controls 13 and
cancel on disconnect.14
To effect the decommissioning of the
quote removal Kill Switch, the
Exchange proposes to amend Options 3,
Section 17 by eliminating all references
to quote removal within this Rule. In
11 ‘‘SQF’’ is an interface that allows Market
Makers to connect, send, and receive messages
related to quotes, Immediate-or-Cancel Orders, and
auction responses into and from the Exchange.
Features include the following: (1) Options symbol
directory messages (e.g., underlying instruments);
(2) system event messages (e.g., start of trading
hours messages and start of opening); (3) trading
action messages (e.g., halts and resumes); (4)
execution messages; (5) quote messages; (6)
Immediate-or-Cancel Order messages; (7) risk
protection triggers and purge notifications; (8)
opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF
Purge Interface only receives and notifies of purge
requests from the Market Maker. Market Makers
may only enter interest into SQF in their assigned
options series. See Options 3, Section 7(e)(1)(B).
12 See Options 3, Section 19.
13 The rapid fire risk controls automatically
remove Market Maker quotes submitted over SQF
when certain firm-set thresholds are met. Once the
thresholds are triggered, the Market Maker must
send a re-entry indicator to re-enter the System. See
Options 3, Section 15(c)(2).
14 When the SQF Port detects the loss of
communication with a Participant’s Client
Application because the Exchange’s server does not
receive a Heartbeat message for a certain time
period (‘‘nn’’ seconds), the Exchange will
automatically logoff the Participant’s affected Client
Application and automatically cancel all of the
Participant’s open quotes. Quotes will be cancelled
across all Client Applications that are associated
with the same BX Options Market Maker ID and
underlying issues. See Options 3, Section 18(a).
VerDate Sep<11>2014
21:03 Sep 20, 2021
Jkt 253001
connection with this change, the
Exchange will also renumber current
Options 3, Section 17(a)(ii) and (a)(iii)
as Options 3, Section 17(a)(i) and (a)(ii),
respectively.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,15 in general, and furthers the
objectives of Section 6(b)(5) of the Act,16
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.
Additionally, the Exchange believes that
the proposed rule change is consistent
with the Section 6(b)(5) requirement
that the rules of an exchange not be
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
Specifically, the Exchange does not
believe that the proposed rule change
will affect the protection of investors or
the public interest or the maintenance of
a fair and orderly market because no
Market Makers have used the quote
removal Kill Switch risk control in
2021. In addition, the Exchange notes
that the use of this tool is completely
optional, and the Exchange will
continue to offer Market Makers similar
risk management tools such as the SQF
mass quote purge functionality. As
discussed above, the Exchange has
found that Market Makers use the SQF
purge functionality much more
frequently than the quote removal Kill
Switch to pull their quotes from the
market. Furthermore, Market Makers
will retain the ability to contact market
operations staff to manually purge their
quotes from the market. In addition, the
Exchange will continue to implement
mandatory System-enforced risk
mechanisms that automatically remove
quotes for the Market Maker once
certain pre-set thresholds or conditions
are met (i.e., rapid fire and cancel on
disconnect).
Also, the Exchange believes that the
low usage rate for the quote removal Kill
Switch does not warrant the continuous
resources necessary for System support
of such tools. As a result, the Exchange
also believes that the proposal will
remove impediments to and perfect the
mechanism of a free and open market
and a national market system by
allowing the Exchange to reallocate
System capacity and resources currently
used to maintain this functionality to
15 15
16 15
PO 00000
Fmt 4703
the development and maintenance of
other business initiatives and risk
management products.
As noted above, the Exchange will
retain the ability for Participants to
utilize Kill Switch to cancel orders and
prevent new order submission. The
Exchange does not believe that
decommissioning the quote removal
portion of the Kill Switch tool for
Market Makers is unfairly
discriminatory because Market Makers
are professional traders with their own
risk settings, and have more
sophisticated infrastructures than most
other market participants. Furthermore,
as discussed above, the Exchange has
determined that Market Makers
currently use the mass purge
functionality on SQF to pull their
quotes from the market instead of using
the quote removal Kill Switch tool to
achieve the same result.
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. The
proposed rule change will allow the
Exchange to decommission a risk
management tool that is rarely, if ever,
used on the Exchange. As discussed
above, Market Makers currently have a
variety of similar tools like the quote
removal Kill Switch that allow them to
pull their quotes from the market and
inhibit the entry of new quotes,
including the mass quote purge
functionality on SQF that the Exchange
has found Market Makers use much
more frequently than the quote removal
Kill Switch to achieve the same result.
As noted above, the Exchange will
retain the ability for Participants to
utilize Kill Switch to cancel orders and
prevent new order submission. The
Exchange does not believe that
decommissioning the quote removal
portion of the Kill Switch tool for
Market Makers will impose an undue
burden on competition because Market
Makers are professional traders with
their own risk settings, and have more
sophisticated infrastructures than most
other market participants.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00104
52541
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Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices
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) of the Act 17 and Rule 19b–
4(f)(6) thereunder.18
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.
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 rule-comments@
sec.gov. Please include File Number SR–
BX–2021–037 on the subject line.
lotter on DSK11XQN23PROD with NOTICES1
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–2021–037. 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
17 15
U.S.C. 78s(b)(3)(A).
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.
18 17
VerDate Sep<11>2014
21:03 Sep 20, 2021
Jkt 253001
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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–BX–2021–037 and should
be submitted on or before October 12,
2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–20337 Filed 9–20–21; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
Notice of Receipt of Request From the
Former Government of the Islamic
Republic of Afghanistan Under Article
9 of the 1970 UNESCO Convention on
the Means of Prohibiting and
Preventing the Illicit Import, Export and
Transfer of Ownership of Cultural
Property
Department of State.
Public notice.
AGENCY:
Notice of receipt of request
from Afghanistan for cultural property
protection.
FOR FURTHER INFORMATION CONTACT:
Anne Compton, Cultural Heritage
Center, Bureau of Educational and
Cultural Affairs: 202–632–6571;
culprop@state.gov; include
‘‘Afghanistan’’ in the subject line.
SUPPLEMENTARY INFORMATION: The
former Government of the Islamic
Republic of Afghanistan made a request
to the Government of the United States
under Article 9 of the 1970 UNESCO
Convention on the Means of Prohibiting
SUMMARY:
19 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00105
Fmt 4703
Sfmt 4703
Allison Davis,
Executive Director CPAC, Bureau of
Educational and Cultural Affairs, Department
of State.
[FR Doc. 2021–20341 Filed 9–20–21; 8:45 am]
BILLING CODE 4710–05–P
DEPARTMENT OF STATE
[Public Notice 11541]
Notice of Determinations; Culturally
Significant Objects Being Imported for
Exhibition—Determinations: ‘‘AfroAtlantic Histories’’ Exhibition
Notice is hereby given of the
following determinations: I hereby
determine that certain objects being
imported from abroad pursuant to
agreements with their foreign owners or
custodians for temporary display in the
exhibition ‘‘Afro-Atlantic Histories’’ at
the Museum of Fine Arts, Houston, in
Houston, Texas; the National Gallery of
Art, Washington, District of Columbia;
the Los Angeles County Museum of Art,
Los Angeles, California; and at possible
additional exhibitions or venues yet to
be determined, are of cultural
significance, and, further, that their
temporary exhibition or display within
the United States as aforementioned is
in the national interest. I have ordered
that Public Notice of these
determinations be published in the
Federal Register.
FOR FURTHER INFORMATION CONTACT: Chi
D. Tran, Program Administrator, Office
of the Legal Adviser, U.S. Department of
State (telephone: 202–632–6471; email:
section2459@state.gov). The mailing
address is U.S. Department of State,
L/PD, 2200 C Street NW (SA–5), Suite
5H03, Washington, DC 20522–0505.
SUPPLEMENTARY INFORMATION: The
foregoing determinations were made
SUMMARY:
[Public notice 11545]
ACTION:
and Preventing the Illicit Import, Export
and Transfer of Ownership of Cultural
Property. The United States Department
of State received this request on April,
28, 2021. The former Government of
Afghanistan’s request seeks U.S. import
restrictions on archaeological and
ethnological material representing
Afghanistan’s cultural patrimony.
Pursuant to the authority vested in the
Assistant Secretary of State for
Educational and Cultural Affairs, and
pursuant to 19 U.S.C. 2602(f)(1),
notification of the request is hereby
published. A public summary of the
former Government of Afghanistan’s
request and information about U.S.
implementation of the 1970 UNESCO
Convention will be available at the
Cultural Heritage Center website: https://
culturalheritage.state.gov.
E:\FR\FM\21SEN1.SGM
21SEN1
Agencies
[Federal Register Volume 86, Number 180 (Tuesday, September 21, 2021)]
[Notices]
[Pages 52540-52542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20337]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93011; File No. SR-BX-2021-037]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 3,
Section 17, To Decommission the Exchange's Quote Removal Kill Switch
Functionality
September 15, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on September 2, 2021, Nasdaq BX, Inc. (``BX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to decommission the Exchange's quote removal
Kill Switch functionality at Options 3, Section 17.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/bx/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
The Exchange proposes to amend Options 3, Section 17 to
decommission the Exchange's quote removal Kill Switch functionality,
which is an optional tool that allows Market Makers \4\ to initiate a
message (or messages) \5\ to the System \6\ to promptly remove their
quotes from the market. Market Makers may submit a request to the
System to remove quotes based on certain identifier(s) on either a user
or group level (``Identifier'').\7\ If quotes are cancelled by the
Market Maker using Kill Switch, it will result in the removal of all
quotes requested for the Identifier(s). The Market Maker will be unable
to enter any additional quotes for the affected Identifier(s) until the
Market Maker sends a re-entry request to the Exchange.\8\
---------------------------------------------------------------------------
\4\ For purposes of this filing, Market Makers include BX
Options Market Makers and Options Market Makers. See Options 1,
Section 1(a)(10).
\5\ Today, Market Makers can log into an interface to send a
message to the Exchange to initiate the Kill Switch.
\6\ For purposes of this filing, the term ``System'' means the
automated system for order execution and trade reporting owned and
operated by BX as the BX Options market. See Options 1, Section
1(a)(59).
\7\ Identifiers include Exchange accounts, ports, and/or badges
or mnemonics. Thus, a Market Maker using Kill Switch may elect to
remove quotes for an individual Identifier (e.g., badge) or any
group of Identifiers (e.g., all badges within one Market Maker
firm). Permissible groups must reside within a single member firm.
\8\ See Options 3, Section 17. The Kill Switch tool also
currently allows BX Participants to cancel open orders and prevent
new order submission. The Exchange is not proposing to decommission
the order cancellation portion of the Kill Switch tool at this time.
---------------------------------------------------------------------------
Due to the lack of demand for the quote removal Kill Switch by
Market Makers, the Exchange proposes to decommission this optional tool
by the end of Q4 2021.\9\ Through consultation with individual Market
Maker firms prior to filing this rule change, the Exchange did not
receive any negative feedback for its proposal to decommission the
quote removal Kill Switch functionality. The Exchange has also provided
all market participants with advance notice that it will decommission
this functionality in Q4 2021.\10\ With the proposed changes, the
Exchange seeks to streamline its product offerings and to reallocate
Exchange resources to other business and risk management initiatives.
While the
[[Page 52541]]
Exchange will no longer offer this optional functionality to Market
Makers, it will continue to offer similar quote management tools that
would assist Market Makers with their efforts to manage their risk with
respect to quotes on the Exchange. For example, Market Makers are
currently able to send a mass purge request through Specialized Quote
Feed (``SQF'') to pull their existing quotes from the market and
inhibit the entry of new quotes until the Market Maker sends a message
to the Exchange to re-enter the System.\11\ Indeed, the Exchange has
found that Market Makers utilize this SQF purge functionality instead
of the Kill Switch quote removal tool when they want to remove their
quotes from the market.
---------------------------------------------------------------------------
\9\ No Market Makers have used the Kill Switch for quote removal
in 2021.
\10\ See Options Trader Alert #2021-49.
\11\ ``SQF'' is an interface that allows Market Makers to
connect, send, and receive messages related to quotes, Immediate-or-
Cancel Orders, and auction responses into and from the Exchange.
Features include the following: (1) Options symbol directory
messages (e.g., underlying instruments); (2) system event messages
(e.g., start of trading hours messages and start of opening); (3)
trading action messages (e.g., halts and resumes); (4) execution
messages; (5) quote messages; (6) Immediate-or-Cancel Order
messages; (7) risk protection triggers and purge notifications; (8)
opening imbalance messages; (9) auction notifications; and (10)
auction responses. The SQF Purge Interface only receives and
notifies of purge requests from the Market Maker. Market Makers may
only enter interest into SQF in their assigned options series. See
Options 3, Section 7(e)(1)(B).
---------------------------------------------------------------------------
In addition, all Participants, including Market Makers, may contact
the Exchange's market operations staff to request that the Exchange
cancel any of their existing bids, offers, or orders in any series of
options.\12\ Furthermore, the Exchange will continue to have mandatory
System-enforced risk mechanisms that automatically remove quotes for
the Market Maker once certain pre-set thresholds or conditions are met.
This includes risk protections such as rapid fire risk controls \13\
and cancel on disconnect.\14\
---------------------------------------------------------------------------
\12\ See Options 3, Section 19.
\13\ The rapid fire risk controls automatically remove Market
Maker quotes submitted over SQF when certain firm-set thresholds are
met. Once the thresholds are triggered, the Market Maker must send a
re-entry indicator to re-enter the System. See Options 3, Section
15(c)(2).
\14\ When the SQF Port detects the loss of communication with a
Participant's Client Application because the Exchange's server does
not receive a Heartbeat message for a certain time period (``nn''
seconds), the Exchange will automatically logoff the Participant's
affected Client Application and automatically cancel all of the
Participant's open quotes. Quotes will be cancelled across all
Client Applications that are associated with the same BX Options
Market Maker ID and underlying issues. See Options 3, Section 18(a).
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To effect the decommissioning of the quote removal Kill Switch, the
Exchange proposes to amend Options 3, Section 17 by eliminating all
references to quote removal within this Rule. In connection with this
change, the Exchange will also renumber current Options 3, Section
17(a)(ii) and (a)(iii) as Options 3, Section 17(a)(i) and (a)(ii),
respectively.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\15\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\16\ 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. Additionally, the Exchange believes that the proposed rule
change is consistent with the Section 6(b)(5) requirement that the
rules of an exchange not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange does not believe that the proposed rule
change will affect the protection of investors or the public interest
or the maintenance of a fair and orderly market because no Market
Makers have used the quote removal Kill Switch risk control in 2021. In
addition, the Exchange notes that the use of this tool is completely
optional, and the Exchange will continue to offer Market Makers similar
risk management tools such as the SQF mass quote purge functionality.
As discussed above, the Exchange has found that Market Makers use the
SQF purge functionality much more frequently than the quote removal
Kill Switch to pull their quotes from the market. Furthermore, Market
Makers will retain the ability to contact market operations staff to
manually purge their quotes from the market. In addition, the Exchange
will continue to implement mandatory System-enforced risk mechanisms
that automatically remove quotes for the Market Maker once certain pre-
set thresholds or conditions are met (i.e., rapid fire and cancel on
disconnect).
Also, the Exchange believes that the low usage rate for the quote
removal Kill Switch does not warrant the continuous resources necessary
for System support of such tools. As a result, the Exchange also
believes that the proposal will remove impediments to and perfect the
mechanism of a free and open market and a national market system by
allowing the Exchange to reallocate System capacity and resources
currently used to maintain this functionality to the development and
maintenance of other business initiatives and risk management products.
As noted above, the Exchange will retain the ability for
Participants to utilize Kill Switch to cancel orders and prevent new
order submission. The Exchange does not believe that decommissioning
the quote removal portion of the Kill Switch tool for Market Makers is
unfairly discriminatory because Market Makers are professional traders
with their own risk settings, and have more sophisticated
infrastructures than most other market participants. Furthermore, as
discussed above, the Exchange has determined that Market Makers
currently use the mass purge functionality on SQF to pull their quotes
from the market instead of using the quote removal Kill Switch tool to
achieve the same result.
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. The proposed rule change will
allow the Exchange to decommission a risk management tool that is
rarely, if ever, used on the Exchange. As discussed above, Market
Makers currently have a variety of similar tools like the quote removal
Kill Switch that allow them to pull their quotes from the market and
inhibit the entry of new quotes, including the mass quote purge
functionality on SQF that the Exchange has found Market Makers use much
more frequently than the quote removal Kill Switch to achieve the same
result.
As noted above, the Exchange will retain the ability for
Participants to utilize Kill Switch to cancel orders and prevent new
order submission. The Exchange does not believe that decommissioning
the quote removal portion of the Kill Switch tool for Market Makers
will impose an undue burden on competition because Market Makers are
professional traders with their own risk settings, and have more
sophisticated infrastructures than most other market participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
[[Page 52542]]
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) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\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.
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-2021-037 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-2021-037. 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-BX-2021-037 and should be submitted on
or before October 12, 2021.
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\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-20337 Filed 9-20-21; 8:45 am]
BILLING CODE 8011-01-P