Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Interpretation and Policy .01 to Rule 11.13 in Connection With a Risk Setting That Users May Elect To Apply to Their Orders in Hard To Borrow Securities, 67767-67768 [2021-25877]

Download as PDF Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change J. Matthew DeLesDernier, Assistant Secretary. 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. 2021–25881 Filed 11–26–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93638; File No. SR– CboeBYX–2021–027] Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Interpretation and Policy .01 to Rule 11.13 in Connection With a Risk Setting That Users May Elect To Apply to Their Orders in Hard To Borrow Securities November 22, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 8, 2021, Cboe BYX Exchange, Inc. filed with the Securities and Exchange Commission the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. khammond on DSKJM1Z7X2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BYX Exchange, Inc. (‘‘BYX’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (the ‘‘Commission’’) a proposal to amend Interpretation and Policy .01 to Rule 11.13 in connection with a risk setting that Users 3 may elect to apply to their orders in hard to borrow securities. 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/byx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposal is to amend Interpretation and Policy .01 to Rule 11.13 to allow the Exchange to offer its Users a hard to borrow risk setting (‘‘Hard to Borrow List’’) that Users may elect to apply to their short sale orders in U.S. equity securities. Pursuant to Interpretation and Policy .01 to Rule 11.13, the Exchange currently offers certain optional risk settings applicable to a User’s activities on the Exchange. Specifically, Interpretation and Policy .01(d) currently provides Users with controls to restrict the types of securities transacted, including restricted securities and easy to borrow securities, as well as restricting activity to test symbols only. When utilized, these optional risk tools act as a risk filter by evaluating a User’s orders to determine whether the orders comply with certain criteria established by the User.4 The Exchange now proposes to amend Interpretation and Policy .01(d) to Exchange Rule 11.13, to also include a Hard to Borrow List. Like the existing risk settings, the proposed rule change offers Users an optional tool to evaluate whether their orders comply with User established criteria. Specifically, orders submitted in securities included on a User’s Hard to Borrow List will be rejected back to the User. The Hard to Borrow List resides at a User’s port level, a User-specific logical session used to access the Exchange. Users may upload a Hard to Borrow List 4 See 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 A User is any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.13. See Rule 1.5(cc). 1 15 VerDate Sep<11>2014 16:55 Nov 26, 2021 Jkt 256001 Securities Exchange Act Release No. 60236 (July 2, 2009) 74 FR 34068 (July 14, 2009) (SR– BATS–2009–019) (notice of filing and immediate effectiveness of proposed rule change to establish a Sponsored Access Risk Management Tool). See also Securities Exchange Act Release No. 34–68330 (November 30, 2012) 77 FR 72894 (December 6, 2012) (SR–BATS–2012–045). PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 67767 to their preferred port(s) via a web-based application programming interface. When uploaded to the port, Users may apply the setting to some or all of the market-participant identifiers (MPID) that they use to access the Exchange via the specified port. As is the case with the Exchange’s existing risk settings, the User, and not the Exchange, will have the full responsibility for ensuring that their orders comply with applicable securities rules, laws, and regulations, and may not rely on the Hard to Borrow List for any such purpose.5 Furthermore, use of the Hard to Borrow List does not automatically constitute compliance with Exchange Rules. As is the case with the Exchange’s existing risk settings, the Exchange does not believe that the use of the Hard to Borrow List can replace User-managed risk management solutions. The Exchange proposes to make the risk setting available to its Users upon request and will not require Users to utilize the Hard to Borrow List. The Exchange will not provide preferential treatment to Users using the Hard to Borrow List. However, the Exchange believes the Hard to Borrow List will offer Exchange Users another option in efficient risk management of its access to the Exchange. For instance, the Hard to Borrow List may assist some Users in managing borrowing costs for their short sale transactions. Generally, day over day borrowing costs in hard to borrow securities may be costly, and while a locate may be secured by a User prior to routing their short sale transactions to the Exchange, borrowing costs may make such transactions less desirable. By utilizing the Hard to Borrow List, Users have a tool that enables them to manage their costs by rejecting orders in such securities. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the requirements of Section 6(b) of the Act,6 in general, and Section 6(b)(5) of the Act,7 in particular, in that it is 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 facilitating transactions in securities, to remove impediments to, and perfect the 5 See Securities and Exchange Commission Release No. 34–50103 (July 28, 2004) 69 FR 48007 (August 6, 2004) (Final Rule: Short Sales) at 48014, regarding hard to borrow lists and the locate requirements under 17 CFR 242.203 (Regulation SHO Rule 203—Borrowing and delivery requirements). 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). E:\FR\FM\29NON1.SGM 29NON1 67768 Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest. Specifically, the Exchange believes that the proposed rule change is consistent with these principles because, like the current risk settings, the Hard to Borrow List fosters competition by providing another option in the efficient risk management of trading on the Exchange. Users are free to use the Exchange’s Hard to Borrow List, or other risk management offerings. Moreover, as noted by the Commission, even when shares can be borrowed short sellers may find it costly to borrow stock to enter or maintain a short position.8 In this regard, the Hard to Borrow List provides Users with a tool to help manage such costs by rejecting orders in hard to borrow securities and thus providing a mechanism of financial protection to Exchange Users. The proposed rule change also is designed to support the principles of Section 11A(a)(1) 9 in that it seeks to assure economically efficient execution of securities transactions, makes it practicable for brokers to execute investors’ orders in the best market, and provides an opportunity for investors’ orders to be executed without the participation of a dealer. Additionally, the rule proposal is consistent with Section 11(a)(1) 10 in that makes the Hard to Borrow List available to all Users, regardless of their size. khammond on DSKJM1Z7X2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change imposes any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the proposed rule change is not designed to address any competitive issues and does not pose an undue burden on Users, as the Hard to Borrow List is an optional risk setting offered to all Users. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposal. No written comments were solicited or received on the proposed rule change. 8 See Staff of the U.S. Securities and Exchange Commission, Staff Report on Equity And Options Market Structure Conditions in Early 2021, (October 14, 2021) at 30, footnote 84. 9 15 U.S.C. 78k–1(a)(1). 10 Id. VerDate Sep<11>2014 16:55 Nov 26, 2021 Jkt 256001 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. By order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. 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 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–CboeBYX–2021–027 and should be submitted on or before December 20, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–25877 Filed 11–26–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 34422; File No. 812–15222] • 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– CboeBYX–2021–027 on the subject line. Bain Capital Specialty Finance, Inc., et al. Paper Comments Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ‘‘Act’’) and rule 17d–1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d–1 under the Act. SUMMARY OF APPLICATION: Applicants request an order to permit business development companies (‘‘BDCs’’) to coinvest in portfolio companies with each other and with certain affiliated investment funds and accounts. APPLICANTS: Bain Capital Specialty Finance, Inc. (‘‘BCSF’’); BCSF Advisors, LP (‘‘BCSFA’’), on behalf of itself and its successors; 1 Bain Capital Credit (Asia), Limited, Bain Capital Credit (Australia) Pty. Ltd, Bain Capital Credit CLO Advisors, LP, Bain Capital Credit, LP (‘‘Bain’’), Bain Capital Credit, Ltd., Bain Capital Investments (Europe) Limited, Bain Capital Investments (Ireland) Limited (together with BCSFA, the ‘‘Existing Bain Advisers’’), on behalf of themselves and their successors; Avery • 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–CboeBYX–2021–027. 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 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 November 22, 2021. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. AGENCY: 11 17 CFR 200.30–3(a)(12). term ‘‘successor,’’ as applied to each Adviser (defined below), means an entity that results from a reorganization into another jurisdiction or change in the type of business organization. 1 The E:\FR\FM\29NON1.SGM 29NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Notices]
[Pages 67767-67768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25877]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93638; File No. SR-CboeBYX-2021-027]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend Interpretation and Policy .01 
to Rule 11.13 in Connection With a Risk Setting That Users May Elect To 
Apply to Their Orders in Hard To Borrow Securities

November 22, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 8, 2021, Cboe BYX Exchange, Inc. filed with the Securities 
and Exchange Commission the proposed rule change as described in Items 
I, II, and III below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BYX Exchange, Inc. (``BYX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (the ``Commission'') a 
proposal to amend Interpretation and Policy .01 to Rule 11.13 in 
connection with a risk setting that Users \3\ may elect to apply to 
their orders in hard to borrow securities. The text of the proposed 
rule change is provided in Exhibit 5.
---------------------------------------------------------------------------

    \3\ A User is any Member or Sponsored Participant who is 
authorized to obtain access to the System pursuant to Rule 11.13. 
See Rule 1.5(cc).
---------------------------------------------------------------------------

    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/byx/), 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 purpose of this proposal is to amend Interpretation and Policy 
.01 to Rule 11.13 to allow the Exchange to offer its Users a hard to 
borrow risk setting (``Hard to Borrow List'') that Users may elect to 
apply to their short sale orders in U.S. equity securities. Pursuant to 
Interpretation and Policy .01 to Rule 11.13, the Exchange currently 
offers certain optional risk settings applicable to a User's activities 
on the Exchange. Specifically, Interpretation and Policy .01(d) 
currently provides Users with controls to restrict the types of 
securities transacted, including restricted securities and easy to 
borrow securities, as well as restricting activity to test symbols 
only. When utilized, these optional risk tools act as a risk filter by 
evaluating a User's orders to determine whether the orders comply with 
certain criteria established by the User.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 60236 (July 2, 2009) 
74 FR 34068 (July 14, 2009) (SR-BATS-2009-019) (notice of filing and 
immediate effectiveness of proposed rule change to establish a 
Sponsored Access Risk Management Tool). See also Securities Exchange 
Act Release No. 34-68330 (November 30, 2012) 77 FR 72894 (December 
6, 2012) (SR-BATS-2012-045).
---------------------------------------------------------------------------

    The Exchange now proposes to amend Interpretation and Policy .01(d) 
to Exchange Rule 11.13, to also include a Hard to Borrow List. Like the 
existing risk settings, the proposed rule change offers Users an 
optional tool to evaluate whether their orders comply with User 
established criteria. Specifically, orders submitted in securities 
included on a User's Hard to Borrow List will be rejected back to the 
User.
    The Hard to Borrow List resides at a User's port level, a User-
specific logical session used to access the Exchange. Users may upload 
a Hard to Borrow List to their preferred port(s) via a web-based 
application programming interface. When uploaded to the port, Users may 
apply the setting to some or all of the market-participant identifiers 
(MPID) that they use to access the Exchange via the specified port. As 
is the case with the Exchange's existing risk settings, the User, and 
not the Exchange, will have the full responsibility for ensuring that 
their orders comply with applicable securities rules, laws, and 
regulations, and may not rely on the Hard to Borrow List for any such 
purpose.\5\ Furthermore, use of the Hard to Borrow List does not 
automatically constitute compliance with Exchange Rules. As is the case 
with the Exchange's existing risk settings, the Exchange does not 
believe that the use of the Hard to Borrow List can replace User-
managed risk management solutions.
---------------------------------------------------------------------------

    \5\ See Securities and Exchange Commission Release No. 34-50103 
(July 28, 2004) 69 FR 48007 (August 6, 2004) (Final Rule: Short 
Sales) at 48014, regarding hard to borrow lists and the locate 
requirements under 17 CFR 242.203 (Regulation SHO Rule 203--
Borrowing and delivery requirements).
---------------------------------------------------------------------------

    The Exchange proposes to make the risk setting available to its 
Users upon request and will not require Users to utilize the Hard to 
Borrow List. The Exchange will not provide preferential treatment to 
Users using the Hard to Borrow List. However, the Exchange believes the 
Hard to Borrow List will offer Exchange Users another option in 
efficient risk management of its access to the Exchange. For instance, 
the Hard to Borrow List may assist some Users in managing borrowing 
costs for their short sale transactions. Generally, day over day 
borrowing costs in hard to borrow securities may be costly, and while a 
locate may be secured by a User prior to routing their short sale 
transactions to the Exchange, borrowing costs may make such 
transactions less desirable. By utilizing the Hard to Borrow List, 
Users have a tool that enables them to manage their costs by rejecting 
orders in such securities.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of Section 6(b) of the Act,\6\ in general, and Section 
6(b)(5) of the Act,\7\ in particular, in that it is 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 facilitating transactions in securities, to 
remove impediments to, and perfect the

[[Page 67768]]

mechanism of, a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposed rule change 
is consistent with these principles because, like the current risk 
settings, the Hard to Borrow List fosters competition by providing 
another option in the efficient risk management of trading on the 
Exchange. Users are free to use the Exchange's Hard to Borrow List, or 
other risk management offerings.
    Moreover, as noted by the Commission, even when shares can be 
borrowed short sellers may find it costly to borrow stock to enter or 
maintain a short position.\8\ In this regard, the Hard to Borrow List 
provides Users with a tool to help manage such costs by rejecting 
orders in hard to borrow securities and thus providing a mechanism of 
financial protection to Exchange Users.
---------------------------------------------------------------------------

    \8\ See Staff of the U.S. Securities and Exchange Commission, 
Staff Report on Equity And Options Market Structure Conditions in 
Early 2021, (October 14, 2021) at 30, footnote 84.
---------------------------------------------------------------------------

    The proposed rule change also is designed to support the principles 
of Section 11A(a)(1) \9\ in that it seeks to assure economically 
efficient execution of securities transactions, makes it practicable 
for brokers to execute investors' orders in the best market, and 
provides an opportunity for investors' orders to be executed without 
the participation of a dealer. Additionally, the rule proposal is 
consistent with Section 11(a)(1) \10\ in that makes the Hard to Borrow 
List available to all Users, regardless of their size.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78k-1(a)(1).
    \10\ Id.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Rather, the proposed rule 
change is not designed to address any competitive issues and does not 
pose an undue burden on Users, as the Hard to Borrow List is an 
optional risk setting offered to all Users.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposal. No written comments were solicited or 
received on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-CboeBYX-2021-027 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-CboeBYX-2021-027. 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-CboeBYX-2021-027 and should be submitted 
on or before December 20, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25877 Filed 11-26-21; 8:45 am]
BILLING CODE 8011-01-P

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