Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 21.1 in Connection With Time-In-Force Instructions Available for Bulk Messages and To Make a Clarifying Change, 57205-57208 [2021-22276]
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Federal Register / Vol. 86, No. 196 / Thursday, October 14, 2021 / Notices
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I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s): CP2022–4; Filing
Title: Notice of United States Postal
Service of Filing a Functionally
Equivalent Global Reseller Expedited
Package 2 Negotiated Service Agreement
and Application for Non-Public
Treatment of Materials Filed Under
Seal; Filing Acceptance Date: October 7,
2021; Filing Authority: 39 CFR
3035.105; Public Representative:
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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Gregory Stanton; Comments Due:
October 15, 2021.
2. Docket No(s).: MC2022–4 and
CP2022–5; Filing Title: USPS Request to
Add Priority Mail & First-Class Package
Service Contract 204 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 7, 2021; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Kenneth R.
Moeller; Comments Due: October 15,
2021.
3. Docket No(s).: MC2022–5 and
CP2022–6; Filing Title: USPS Request to
Add Priority Mail Express, Priority Mail
& First-Class Package Service Contract
77 to Competitive Product List and
Notice of Filing Materials Under Seal;
Filing Acceptance Date: October 7,
2021; Filing Authority: 39 U.S.C. 3642,
39 CFR 3040.130 through 3040.135, and
39 CFR 3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
October 15, 2021.
4. Docket No(s).: MC2022–6 and
CP2022–7; Filing Title: USPS Request to
Add Priority Mail & First-Class Package
Service Contract 205 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 7, 2021; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Kenneth R.
Moeller; Comments Due: October 15,
2021.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2021–22291 Filed 10–13–21; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93270; File No. SR–
CboeBZX–2021–065]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Rule
21.1 in Connection With Time-In-Force
Instructions Available for Bulk
Messages and To Make a Clarifying
Change
October 7, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00083
Fmt 4703
September 24, 2021, Cboe BZX
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘BZX’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 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 the Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX Options’’)
proposes to amend Rule 21.1 in
connection with Time-in-Force
instructions available for bulk messages
and to make a clarifying change. 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 (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), 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
The Exchange proposes to amend
Rules 21.1(f) and (l) to allow Users to
instruct bulk messages with a Time-inForce of Immediate or Cancel (‘‘IOC’’).
Currently, Users may not designate bulk
messages as IOC, which, pursuant to
Rule 21.1(f)(2), instructs a limit order to
be executed in whole or in part as soon
3 15
4 17
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57205
E:\FR\FM\14OCN1.SGM
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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as such order is received. The portion
not so executed immediately on the
Exchange or another options exchange
is cancelled and is not posted to the
BZX Options Book. A bulk message is
a bid or offer included in a single
electronic message a User submits with
an M Capacity (i.e., for the account of
a Market Maker) to the Exchange in
which the User may enter, modify, or
cancel up to an Exchange-specified
number of bids and offers. More,
specifically, bulk message functionality
is available to Market Makers and
permits them to update their electronic
quotes in block quantities across series
in a class. Rule 21.1(l)(3)(A)(i) currently
provides that a bulk message submitted
through a dedicated logical port (i.e., a
‘‘bulk port’’) has a Time-in-Force of Day.
Pursuant to Rule 21.1(f)(3), the term
‘‘Day’’ means, for an order so
designated, a limit order to buy or sell
which, if not executed expires at the
RTH market close. All bulk messages
have a Time in Force of DAY, as set
forth in Rule 21.1(l).
The Exchange proposes to allow
Market Makers to designate bulk
messages as IOC by amending the
following: Rule 21.1(l)(3)(A)(i) to
provide that a bulk message submitted
through a bulk port has a Time-in-Force
of Day or IOC; the definition of IOC in
Rule 21.1(f)(2) to provide that Users may
designate bulk messages as IOC; and the
definition of ‘‘Day’’ in Rule 21.1(f)(3) to
remove the language that all bulk
messages have a Time-in-Force of DAY,
as set forth in Rule 21.1(l), and instead
provide that Users may designate bulk
messages as Day.
A Market Maker’s primary purpose is
to provide liquidity to the market,
which it may do in various ways,
including resting quotes on the Book as
well as submitting quotes to trade
against other resting interest on the
Book. In addition to providing liquidity
via continuous quotes in a Market
Maker’s appointed classes,5 as part of its
quoting obligations, a Market Maker is
also required to maintain active markets
in its appointed classes, update
quotations in response to changed
market conditions in its appointed
classes and compete with other Market
Makers in its appointed classes.6 As part
of a Market Maker’s efforts to satisfy
these obligations, a Market Maker may
update quotes with the specific purpose
of removing interest resting in the Book.
This may provide additional execution
opportunities for customers, thereby
5 See
6 See
Rule 22.5(a)(1).
Rule 22.5(a)(3),(5) and (6).
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encouraging an increase in overall
participation in an appointed class.
Currently, if a Market Maker wishes to
execute against interest in the Book, a
Market Maker will enter a Book Only
bulk message or modify an existing bulk
message to attempt to execute against
such interest, followed immediately by
a bulk message to cancel the preceding
bulk message (or unexecuted portion) so
that no portion of that bulk message will
remain displayed on the Book.
Essentially, in order to execute against
interest on the Book, Market Makers
may currently send a sequence of bulk
messages that mimic the result of an
IOC instruction—ultimately the bulk
message is cancelled and does not post
to the Book if it is not executed
immediately against resting interest.
Sending a bulk message to cancel
immediately following the submission
of a bulk message or a bulk message
modification to execute against resting
interest creates an extra step for MarketMakers (compared to Options Members
that may use IOC orders to accomplish
this) using bulk message functionality
and requires the System to process
additional messages. As such, the
proposed rule change to permit Market
Makers to designate their bulk messages
as IOC would allow them to attempt
more effectively and efficiently to
execute against interest in the Book and
would reduce message traffic by
eliminating the need for Market Makers
to send multiple messages to attempt
this. The Exchange notes that Market
Makers may already use bulk messages
to remove liquidity from the Book (if
they so elect) using the ‘‘Book Only’’
instruction and, as described above,
Market Makers may already use bulk
messages to remove liquidity without
letting nonexecuted size rest on the
Book. The proposed rule change merely
streamlines the manner in which Market
Makers may already utilize bulk
messages to execute against interest on
the Book without sending an
unexecuted bulk message (or
unexecuted portion) to the Book
thereafter. Also, Market Makers may
already designate their quotes submitted
in an order as IOC.7
The Exchange notes that bulk message
functionality is designed to facilitate
Market Makers quoting on the Exchange
in connection with their responsibility
7 The Exchange notes that a Market-Maker may
submit their quotes electronically in an order or
bulk message. The Exchange also notes that, while
Market-Makers may currently instruct their orders,
including quotes submitted as orders, as IOC, the
Exchange understands that Market-Makers
predominantly conduct their trading activity
through and design their business models around
the use bulk messages.
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
as liquidity providers. For example, the
current requirement that bulk messages
have a Time-in-Force of Day is
consistent with general practice of
Market Makers to enter new quotes at
the beginning of each trading day, as
well as a Market Maker’s obligation to
update its quotes in response to changed
market conditions in its appointed
classes. The provision that allows
Market Makers to designate their bulk
messages as Post Only or Book Only is
intended to provide Market Makers with
flexibility to use these instructions to
permit them to execute against resting
interest upon entry or add liquidity to
the Book in connection with their
various obligations in a manner they
deem appropriate.8 The Exchange
believes that the proposed rule change
likewise permits Market Makers to use
an instruction with respect to their bulk
messages as an additional tool to
provide liquidity to the market and meet
their various obligations (such as
maintaining active markets in an
appointed class, updating quotations in
response to changed market conditions
in an appointed class and competing
with other Market Makers in an
appointed class) in a manner they deem
appropriate, which may include
removing interest in the Book to
subsequently post updated quotes at
potentially tighter spreads and to
provide additional execution
opportunities at potentially improved
prices. The Exchange also believes that
the proposed rule change enhances a
current means by which Market Makers
use bulk messages to facilitate the
provision of liquidity on the Exchange.
That is, Market Makers using bulk
messages with an IOC instruction, as
proposed, may more efficiently execute
against resting interest, thereby
increasing execution opportunities for
orders resting on the Book. An increase
in transactions on the Exchange may
facilitate tighter spreads and price
discovery, and, as a result, encourage
increased participation and additional
order flow from other market
participants. The Exchange notes that
8 See Securities Exchange Release Nos. 84928
(December 21, 2018) 83 FR 67794 (December 31,
2018) (SR–CboeBZX–2018–092); and 88817 (May 6,
2020), 85 FR 28112 (May 12, 2020) (SR–CboeBZX–
2020–037). The Exchange notes that SR–CboeBZX–
2018–092 implemented bulk message functionality
to be consistent with the bulk message
functionality, also adopted at that time, by its
affiliated options exchange, Cboe Exchange, Inc.
(‘‘Cboe Options’’). The Exchange notes that Cboe
Option’s bulk message functionality replaced its
prior block quoting functionality, which likewise
allowed a Market Maker to submit a single message
containing bids and offers in multiple series;
however, Cboe Options Rules did not prohibit an
IOC designation for quotes submitted in block
quantities.
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the submission of bulk messages to the
Exchange is voluntary and that Market
Makers may continue to elect to use
bulk messages designated as Day in the
same manner as they do today,
including sending a bulk message
immediately followed by a cancel to
attempt to execute against resting
interest.
The proposed rule change also
updates Rule 21.1(d), which defines the
term ‘‘Order Type’’, and Rule 21.1(f),
which defines the term ‘‘Time-inForce’’, to clarify the manner in which
an Order Type or Time-in-Force,
respectively, applies to a bulk message.
Currently, an Order Type or Time-inForce applied to a bulk message applies
to each bid and offer within that bulk
message. The proposed rule change
updates Rules 21.1(d) and (f) to make
this explicit for Order Type and Timein-Force designations, respectively. The
proposed rule change does not alter any
current functionality, but instead adds
clarity to the definition of Order Type
and Time-in Force by more accurately
reflecting the current application of
such designations to bulk messages.
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.9 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 10 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) 11 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
that the proposed rule change allowing
Market Makers to designate their bulk
messages as IOC will remove
impediments to and perfect the
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
11 Id.
10 15
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mechanism of a free and open market
and national market system and benefit
investors by permitting Market Makers
to more effectively and efficiently
execute bulk messages against specific
interest on the Book without posting an
unexecuted bulk message (or
unexecuted portion) to the Book
thereafter. As described above, Market
Makers already submit bulk messages in
a manner that mimics an IOC
instruction; the proposed rule change
merely streamlines this process for
Market Makers by allowing them to use
a Time-in-Force instruction currently
available for their orders (which may
also contain a Market Maker’s quotes)
on the Exchange today. In addition to
this, Market Makers may already
include Book Only instructions that
permit their bulk messages to remove
liquidity from the Book. The proposed
rule change is designed to benefit
market participants by increasing
efficiency and reducing additional
message traffic by eliminating the need
for Market Makers to send an additional
bulk message to cancel along with their
bulk messages in instances in which
they wish to execute against interest
that appears on the Book. The proposed
rule change allows Market Makers to
elect to use their bulk messages as
additional tools to meet their various
obligations in a manner they deem
appropriate, consistent with the purpose
of bulk message functionality to
facilitate Market Makers’ provision of
liquidity, which may include removing
interest in the Book to subsequently
post updated quotes at potentially
tighter spreads and to provide
additional execution opportunities at
potentially improved prices. Also, the
use of IOC bulk messages for Market
Makers may ultimately facilitate the
provision of additional liquidity on the
by increasing execution opportunities
on the Exchange, as an increase in
transactions on the Exchange may
facilitate tighter spreads and price
discovery, thereby encouraging
increased participation and additional
order flow from other market
participants, to the benefit of all
investors. Market Makers may continue
to elect to use bulk messages designated
as Day in the same manner as they do
today, including sending a bulk message
immediately followed by a cancel to
attempt to execute against resting
interest.
Additionally, the Exchange does not
believe that the proposed rule change
would permit unfair discrimination as
bulk message functionality is
principally designed to facilitate the
provision of liquidity by Market Makers
PO 00000
Frm 00085
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57207
to the Exchange and help Market
Makers satisfy their obligations. The
Exchange believes that Market Makers
play a unique and critical role in the
options market by providing liquid and
active markets and are subject to various
quoting obligations (which other market
participants are not), including an
obligation to maintain active markets, to
update quotations in response to
changed market conditions and to
compete with other Market Makers in its
appointed classes. Bulk message
functionality, including an IOC bulk
message, provides Market Makers with
a means to help them satisfy these
obligations. As noted above, Market
Makers are already able to use Book
Only bulk messages to execute against
resting liquidity in multiple series
across a class and to cancel quotes in
multiple series across a class. The
proposed rule change simply allows
Market Makers to utilize their bulk
messages in the same manner, just with
a single message.
Additionally, the Exchange believes
that the proposed rule change regarding
the manner in which an Order Type and
Time-in-Force instruction is applied to
bulk messages removes impediments to
and perfects the mechanism of a free
and open market and national market
system by amending Rules 21.1(d) and
(f) to reflect current functionality. The
proposed rule change is merely a
clarification in the Rule intended to
more accurately reflect how bulk
message functionality currently works,
thereby increasing transparency in the
Rule and ultimately benefitting
investors. The proposed clarification
does not alter any current functionality
and is simply intended to provide
clarity to the Rule.
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. The
Exchange does not believe that the
proposed rule change in connection
with IOC bulk messages will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because the IOC instruction for bulk
messages will be available for all Market
Makers that choose to submit bulk
messages. Use of the IOC instruction for
bulk messages is voluntary, and Market
Makers may choose to continue to only
apply the Day Time-in-Force to bulk
messages and continue to attempt to
execute bulk messages against resting
interest using multiple messages as they
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Federal Register / Vol. 86, No. 196 / Thursday, October 14, 2021 / Notices
do today. The proposed rule change
permits Market Makers to use a Timein-Force that is already available to all
Options Members, including Market
Makers, to apply to their orders. While
only Market Makers may submit IOC
bulk messages (as only Market Makers
may currently submit any bulk
messages), the Exchange believes this is
appropriate given the various
obligations Market Makers must satisfy
under the Rules and the unique and
critical role Market Makers play in the
options market by providing liquid and
active markets. The Exchange believes
providing Market Makers with
flexibility to use the IOC instruction
with respect to bulk messages will
provide Market Makers with an
enhanced tool to provide liquidity to the
market and satisfy their obligations in a
manner they deem appropriate, as they
are similarly able to do today by electing
the Book Only and Post Only
instructions for their bulk messages.
The Exchange does not believe that
the proposed rule change in connection
with IOC bulk messages will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
as it relates to quoting functionality
available to Market Makers on the
Exchange. The Exchange notes that
market participants on other exchanges
are welcome to become Market Makers
on the Exchange if they determine that
this proposed rule change has made
participation as a Market Maker on the
Exchange more attractive or favorable.
The proposed rule change in
connection with the application of
Order Type and Time-in-Force
instructions to bulk messages is not
competitive in nature but is merely a
clarification in the Rule, consistent with
existing bulk message functionality and
intended to provide clarity to the Rule
by more accurately reflecting the current
bulk message functionality. All Order
Type and Time-in-Force instructions
will continue to apply to bulk messages
in the same manner as they do today.
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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
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
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17:44 Oct 13, 2021
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B. impose any significant burden on
competition; and
C. 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 12 and Rule 19b–4(f)(6) 13
thereunder. 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 will institute proceedings
to determine whether the proposed rule
change 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 rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2021–065 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–CboeBZX–2021–065. 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
12 15
13 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
Frm 00086
Fmt 4703
Sfmt 4703
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 such
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-CboeBZX–2021–065, and
should be submitted on or before
November 4, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–22276 Filed 10–13–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93280; File No. SR–FICC–
2021–004]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Approving the Proposed Rule Change
Relating to Confidential Information,
Market Disruption Events, and Other
Changes
October 8, 2021.
I. Introduction
On June 25, 2021, Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2021–004 (the
‘‘Proposed Rule Change’’) pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder 2 to amend FICC’s
Government Securities Division
(‘‘GSD’’) rules and Mortgage-Backed
Securities Division (‘‘MBSD’’) rules
relating to confidentiality requirements,
Market Disruption Events, and
procedures for disconnecting a
participant from FICC’s network, among
other changes.3 The Proposed Rule
Change was published for comment in
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 See Notice of Filing, infra note 4, at 86 FR
36799.
1 15
E:\FR\FM\14OCN1.SGM
14OCN1
]]>Agencies
[Federal Register Volume 86, Number 196 (Thursday, October 14, 2021)]
[Notices]
[Pages 57205-57208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22276]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93270; File No. SR-CboeBZX-2021-065]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 21.1 in Connection With Time-In-Force Instructions Available for
Bulk Messages and To Make a Clarifying Change
October 7, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 24, 2021, Cboe BZX Exchange, Inc. (the ``Exchange''
or ``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Exchange filed the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'')
proposes to amend Rule 21.1 in connection with Time-in-Force
instructions available for bulk messages and to make a clarifying
change. 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 (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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
The Exchange proposes to amend Rules 21.1(f) and (l) to allow Users
to instruct bulk messages with a Time-in-Force of Immediate or Cancel
(``IOC''). Currently, Users may not designate bulk messages as IOC,
which, pursuant to Rule 21.1(f)(2), instructs a limit order to be
executed in whole or in part as soon
[[Page 57206]]
as such order is received. The portion not so executed immediately on
the Exchange or another options exchange is cancelled and is not posted
to the BZX Options Book. A bulk message is a bid or offer included in a
single electronic message a User submits with an M Capacity (i.e., for
the account of a Market Maker) to the Exchange in which the User may
enter, modify, or cancel up to an Exchange-specified number of bids and
offers. More, specifically, bulk message functionality is available to
Market Makers and permits them to update their electronic quotes in
block quantities across series in a class. Rule 21.1(l)(3)(A)(i)
currently provides that a bulk message submitted through a dedicated
logical port (i.e., a ``bulk port'') has a Time-in-Force of Day.
Pursuant to Rule 21.1(f)(3), the term ``Day'' means, for an order so
designated, a limit order to buy or sell which, if not executed expires
at the RTH market close. All bulk messages have a Time in Force of DAY,
as set forth in Rule 21.1(l).
The Exchange proposes to allow Market Makers to designate bulk
messages as IOC by amending the following: Rule 21.1(l)(3)(A)(i) to
provide that a bulk message submitted through a bulk port has a Time-
in-Force of Day or IOC; the definition of IOC in Rule 21.1(f)(2) to
provide that Users may designate bulk messages as IOC; and the
definition of ``Day'' in Rule 21.1(f)(3) to remove the language that
all bulk messages have a Time-in-Force of DAY, as set forth in Rule
21.1(l), and instead provide that Users may designate bulk messages as
Day.
A Market Maker's primary purpose is to provide liquidity to the
market, which it may do in various ways, including resting quotes on
the Book as well as submitting quotes to trade against other resting
interest on the Book. In addition to providing liquidity via continuous
quotes in a Market Maker's appointed classes,\5\ as part of its quoting
obligations, a Market Maker is also required to maintain active markets
in its appointed classes, update quotations in response to changed
market conditions in its appointed classes and compete with other
Market Makers in its appointed classes.\6\ As part of a Market Maker's
efforts to satisfy these obligations, a Market Maker may update quotes
with the specific purpose of removing interest resting in the Book.
This may provide additional execution opportunities for customers,
thereby encouraging an increase in overall participation in an
appointed class.
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\5\ See Rule 22.5(a)(1).
\6\ See Rule 22.5(a)(3),(5) and (6).
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Currently, if a Market Maker wishes to execute against interest in
the Book, a Market Maker will enter a Book Only bulk message or modify
an existing bulk message to attempt to execute against such interest,
followed immediately by a bulk message to cancel the preceding bulk
message (or unexecuted portion) so that no portion of that bulk message
will remain displayed on the Book. Essentially, in order to execute
against interest on the Book, Market Makers may currently send a
sequence of bulk messages that mimic the result of an IOC instruction--
ultimately the bulk message is cancelled and does not post to the Book
if it is not executed immediately against resting interest. Sending a
bulk message to cancel immediately following the submission of a bulk
message or a bulk message modification to execute against resting
interest creates an extra step for Market-Makers (compared to Options
Members that may use IOC orders to accomplish this) using bulk message
functionality and requires the System to process additional messages.
As such, the proposed rule change to permit Market Makers to designate
their bulk messages as IOC would allow them to attempt more effectively
and efficiently to execute against interest in the Book and would
reduce message traffic by eliminating the need for Market Makers to
send multiple messages to attempt this. The Exchange notes that Market
Makers may already use bulk messages to remove liquidity from the Book
(if they so elect) using the ``Book Only'' instruction and, as
described above, Market Makers may already use bulk messages to remove
liquidity without letting nonexecuted size rest on the Book. The
proposed rule change merely streamlines the manner in which Market
Makers may already utilize bulk messages to execute against interest on
the Book without sending an unexecuted bulk message (or unexecuted
portion) to the Book thereafter. Also, Market Makers may already
designate their quotes submitted in an order as IOC.\7\
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\7\ The Exchange notes that a Market-Maker may submit their
quotes electronically in an order or bulk message. The Exchange also
notes that, while Market-Makers may currently instruct their orders,
including quotes submitted as orders, as IOC, the Exchange
understands that Market-Makers predominantly conduct their trading
activity through and design their business models around the use
bulk messages.
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The Exchange notes that bulk message functionality is designed to
facilitate Market Makers quoting on the Exchange in connection with
their responsibility as liquidity providers. For example, the current
requirement that bulk messages have a Time-in-Force of Day is
consistent with general practice of Market Makers to enter new quotes
at the beginning of each trading day, as well as a Market Maker's
obligation to update its quotes in response to changed market
conditions in its appointed classes. The provision that allows Market
Makers to designate their bulk messages as Post Only or Book Only is
intended to provide Market Makers with flexibility to use these
instructions to permit them to execute against resting interest upon
entry or add liquidity to the Book in connection with their various
obligations in a manner they deem appropriate.\8\ The Exchange believes
that the proposed rule change likewise permits Market Makers to use an
instruction with respect to their bulk messages as an additional tool
to provide liquidity to the market and meet their various obligations
(such as maintaining active markets in an appointed class, updating
quotations in response to changed market conditions in an appointed
class and competing with other Market Makers in an appointed class) in
a manner they deem appropriate, which may include removing interest in
the Book to subsequently post updated quotes at potentially tighter
spreads and to provide additional execution opportunities at
potentially improved prices. The Exchange also believes that the
proposed rule change enhances a current means by which Market Makers
use bulk messages to facilitate the provision of liquidity on the
Exchange. That is, Market Makers using bulk messages with an IOC
instruction, as proposed, may more efficiently execute against resting
interest, thereby increasing execution opportunities for orders resting
on the Book. An increase in transactions on the Exchange may facilitate
tighter spreads and price discovery, and, as a result, encourage
increased participation and additional order flow from other market
participants. The Exchange notes that
[[Page 57207]]
the submission of bulk messages to the Exchange is voluntary and that
Market Makers may continue to elect to use bulk messages designated as
Day in the same manner as they do today, including sending a bulk
message immediately followed by a cancel to attempt to execute against
resting interest.
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\8\ See Securities Exchange Release Nos. 84928 (December 21,
2018) 83 FR 67794 (December 31, 2018) (SR-CboeBZX-2018-092); and
88817 (May 6, 2020), 85 FR 28112 (May 12, 2020) (SR-CboeBZX-2020-
037). The Exchange notes that SR-CboeBZX-2018-092 implemented bulk
message functionality to be consistent with the bulk message
functionality, also adopted at that time, by its affiliated options
exchange, Cboe Exchange, Inc. (``Cboe Options''). The Exchange notes
that Cboe Option's bulk message functionality replaced its prior
block quoting functionality, which likewise allowed a Market Maker
to submit a single message containing bids and offers in multiple
series; however, Cboe Options Rules did not prohibit an IOC
designation for quotes submitted in block quantities.
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The proposed rule change also updates Rule 21.1(d), which defines
the term ``Order Type'', and Rule 21.1(f), which defines the term
``Time-in-Force'', to clarify the manner in which an Order Type or
Time-in-Force, respectively, applies to a bulk message. Currently, an
Order Type or Time-in-Force applied to a bulk message applies to each
bid and offer within that bulk message. The proposed rule change
updates Rules 21.1(d) and (f) to make this explicit for Order Type and
Time-in-Force designations, respectively. The proposed rule change does
not alter any current functionality, but instead adds clarity to the
definition of Order Type and Time-in Force by more accurately
reflecting the current application of such designations to bulk
messages.
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.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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In particular, the Exchange believes that the proposed rule change
allowing Market Makers to designate their bulk messages as IOC will
remove impediments to and perfect the mechanism of a free and open
market and national market system and benefit investors by permitting
Market Makers to more effectively and efficiently execute bulk messages
against specific interest on the Book without posting an unexecuted
bulk message (or unexecuted portion) to the Book thereafter. As
described above, Market Makers already submit bulk messages in a manner
that mimics an IOC instruction; the proposed rule change merely
streamlines this process for Market Makers by allowing them to use a
Time-in-Force instruction currently available for their orders (which
may also contain a Market Maker's quotes) on the Exchange today. In
addition to this, Market Makers may already include Book Only
instructions that permit their bulk messages to remove liquidity from
the Book. The proposed rule change is designed to benefit market
participants by increasing efficiency and reducing additional message
traffic by eliminating the need for Market Makers to send an additional
bulk message to cancel along with their bulk messages in instances in
which they wish to execute against interest that appears on the Book.
The proposed rule change allows Market Makers to elect to use their
bulk messages as additional tools to meet their various obligations in
a manner they deem appropriate, consistent with the purpose of bulk
message functionality to facilitate Market Makers' provision of
liquidity, which may include removing interest in the Book to
subsequently post updated quotes at potentially tighter spreads and to
provide additional execution opportunities at potentially improved
prices. Also, the use of IOC bulk messages for Market Makers may
ultimately facilitate the provision of additional liquidity on the by
increasing execution opportunities on the Exchange, as an increase in
transactions on the Exchange may facilitate tighter spreads and price
discovery, thereby encouraging increased participation and additional
order flow from other market participants, to the benefit of all
investors. Market Makers may continue to elect to use bulk messages
designated as Day in the same manner as they do today, including
sending a bulk message immediately followed by a cancel to attempt to
execute against resting interest.
Additionally, the Exchange does not believe that the proposed rule
change would permit unfair discrimination as bulk message functionality
is principally designed to facilitate the provision of liquidity by
Market Makers to the Exchange and help Market Makers satisfy their
obligations. The Exchange believes that Market Makers play a unique and
critical role in the options market by providing liquid and active
markets and are subject to various quoting obligations (which other
market participants are not), including an obligation to maintain
active markets, to update quotations in response to changed market
conditions and to compete with other Market Makers in its appointed
classes. Bulk message functionality, including an IOC bulk message,
provides Market Makers with a means to help them satisfy these
obligations. As noted above, Market Makers are already able to use Book
Only bulk messages to execute against resting liquidity in multiple
series across a class and to cancel quotes in multiple series across a
class. The proposed rule change simply allows Market Makers to utilize
their bulk messages in the same manner, just with a single message.
Additionally, the Exchange believes that the proposed rule change
regarding the manner in which an Order Type and Time-in-Force
instruction is applied to bulk messages removes impediments to and
perfects the mechanism of a free and open market and national market
system by amending Rules 21.1(d) and (f) to reflect current
functionality. The proposed rule change is merely a clarification in
the Rule intended to more accurately reflect how bulk message
functionality currently works, thereby increasing transparency in the
Rule and ultimately benefitting investors. The proposed clarification
does not alter any current functionality and is simply intended to
provide clarity to the Rule.
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. The Exchange does not
believe that the proposed rule change in connection with IOC bulk
messages will impose any burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because the IOC instruction for bulk messages will be available for all
Market Makers that choose to submit bulk messages. Use of the IOC
instruction for bulk messages is voluntary, and Market Makers may
choose to continue to only apply the Day Time-in-Force to bulk messages
and continue to attempt to execute bulk messages against resting
interest using multiple messages as they
[[Page 57208]]
do today. The proposed rule change permits Market Makers to use a Time-
in-Force that is already available to all Options Members, including
Market Makers, to apply to their orders. While only Market Makers may
submit IOC bulk messages (as only Market Makers may currently submit
any bulk messages), the Exchange believes this is appropriate given the
various obligations Market Makers must satisfy under the Rules and the
unique and critical role Market Makers play in the options market by
providing liquid and active markets. The Exchange believes providing
Market Makers with flexibility to use the IOC instruction with respect
to bulk messages will provide Market Makers with an enhanced tool to
provide liquidity to the market and satisfy their obligations in a
manner they deem appropriate, as they are similarly able to do today by
electing the Book Only and Post Only instructions for their bulk
messages.
The Exchange does not believe that the proposed rule change in
connection with IOC bulk messages will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act as it relates to quoting functionality available to
Market Makers on the Exchange. The Exchange notes that market
participants on other exchanges are welcome to become Market Makers on
the Exchange if they determine that this proposed rule change has made
participation as a Market Maker on the Exchange more attractive or
favorable.
The proposed rule change in connection with the application of
Order Type and Time-in-Force instructions to bulk messages is not
competitive in nature but is merely a clarification in the Rule,
consistent with existing bulk message functionality and intended to
provide clarity to the Rule by more accurately reflecting the current
bulk message functionality. All Order Type and Time-in-Force
instructions will continue to apply to bulk messages in the same manner
as they do today.
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
Because the foregoing proposed rule change does not:
A. Significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. 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 \12\ and
Rule 19b-4(f)(6) \13\ thereunder. 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 will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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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-CboeBZX-2021-065 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-CboeBZX-2021-065. 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 such 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-CboeBZX-2021-065, and should be
submitted on or before November 4, 2021.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22276 Filed 10-13-21; 8:45 am]
BILLING CODE 8011-01-P
