Self-Regulatory Organizations; Cboe BZX 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, 67763-67765 [2021-25880]
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by
December 20, 2021. Rebuttal comments
should be submitted by January 3, 2022.
Although there do not appear to be any
issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.74
The Commission asks that
commenters address the sufficiency and
merit of the Exchanges’ statements in
support of the proposals, in addition to
any other comments they may wish to
submit about the proposed rule changes.
Interested persons are invited to
submit written data, views, and
arguments concerning the proposed rule
changes, including whether the
proposals are 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 Nos. SR–
MIAX–2021–41 and SR–PEARL–2021–
45 on the subject line.
Paper Comments
khammond on DSKJM1Z7X2PROD with NOTICES
• 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
Numbers SR–MIAX–2021–41 and SR–
PEARL–2021–45. These file numbers
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
changes that are filed with the
Commission, and all written
communications relating to the
proposed rule changes between the
Commission and any person, other than
74 15
U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
VerDate Sep<11>2014
16:55 Nov 26, 2021
Jkt 256001
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
filings also will be available for
inspection and copying at the principal
office of each 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
Numbers SR–MIAX–2021–41 and SR–
PEARL–2021–45 and should be
submitted on or before December 20,
2021. Rebuttal comments should be
submitted by January 3, 2022.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,75 that File
Numbers SR–MIAX–2021–41 and SR–
PEARL–2021–45 be, and hereby are,
temporarily suspended. In addition, the
Commission is instituting proceedings
to determine whether the proposed rule
changes should be approved or
disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.76
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25878 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93641; File No. SR–
CboeBZX–2021–076]
Self-Regulatory Organizations; Cboe
BZX 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
U.S.C. 78s(b)(3)(C).
CFR 200.30–3(a)(57) and (58).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
67763
8, 2021, Cboe BZX 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (‘‘BZX’’ 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/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 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,
75 15
76 17
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
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).
E:\FR\FM\29NON1.SGM
29NON1
67764
Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
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
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
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).
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).
VerDate Sep<11>2014
16:55 Nov 26, 2021
Jkt 256001
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
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
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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).
7 15
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
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.
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 rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2021–076 on the subject line.
10 Id.
E:\FR\FM\29NON1.SGM
29NON1
Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
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–2021–076. 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–CboeBZX–2021–076 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. 2021–25880 Filed 11–26–21; 8:45 am]
khammond on DSKJM1Z7X2PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93642; File No. SR–
CboeEDGA–2021–024]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
of a Proposed Rule Change To Amend
Interpretation and Policy .01 to Rule
11.10 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
18, 2021, Cboe EDGA 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (‘‘EDGA’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposal to
amend Interpretation and Policy .01 to
Rule 11.10 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/edga/),
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
1 15
U.S.C. 78s(b)(1).
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 11.10. See Rule 1.5(ee).
2 17
11 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
16:55 Nov 26, 2021
Jkt 256001
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
67765
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 11.10 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 11.10, 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 11.10, 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
4 See Securities Exchange Act Release No. 34–
88727 (April 22, 2020) 85 FR 23560 (April 28, 2020)
(SR–CboeEDGA–2020–12).[sic]
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,
E:\FR\FM\29NON1.SGM
Continued
29NON1
]]>Agencies
[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Notices]
[Pages 67763-67765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25880]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93641; File No. SR-CboeBZX-2021-076]
Self-Regulatory Organizations; Cboe BZX 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 BZX 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 BZX Exchange, Inc. (``BZX'' 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/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 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,
[[Page 67764]]
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 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).
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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.
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\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.
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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.
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\9\ 15 U.S.C. 78k-1(a)(1).
\10\ Id.
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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-CboeBZX-2021-076 on the subject line.
[[Page 67765]]
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-2021-076. 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-CboeBZX-2021-076 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\
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\11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25880 Filed 11-26-21; 8:45 am]
BILLING CODE 8011-01-P
