Self-Regulatory Organizations; Cboe EDGX 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, 67774-67776 [2021-25882]
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khammond on DSKJM1Z7X2PROD with NOTICES
67774
Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
(i) The amount of the opportunity is
not based on the Regulated Funds’ and
the Affiliated Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the Adviser (or
Advisers if there are more than one) to
a Regulated Fund to be invested by the
Regulated Fund in the Follow-On
Investment, together with the amount
proposed to be invested by the other
participating Regulated Funds and the
Affiliated Funds in the same
transaction, exceeds the amount of the
opportunity; then the amount invested
by each such party will be allocated
among them pro rata based on each
participant’s capital available for
investment in the asset class being
allocated, up to the amount proposed to
be invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that a Regulated Fund
considered but declined to participate
in, so that the Non-Interested Directors
may determine whether all investments
made during the preceding quarter,
including those investments that the
Regulated Fund considered but declined
to participate in, comply with the
conditions of the Order. In addition, the
Non-Interested Directors will consider
at least annually the continued
appropriateness for such Regulated
Fund of participating in new and
existing Co-Investment Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a BDC and each
of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f) of
the Act.
11. No Non-Interested Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act), of any
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
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16:55 Nov 26, 2021
Jkt 256001
registered for sale under the Securities
Act) will, to the extent not payable by
the applicable Adviser(s) under their
respective investment advisory
agreements with the Affiliated Funds
and the Regulated Funds, be shared by
the Regulated Funds and the Affiliated
Funds in proportion to the relative
amounts of the securities held or to be
acquired or disposed of, as the case may
be.
13. Any transaction fee 17 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable) received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by the Adviser at a bank or
banks having the qualifications
prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive
rate of interest that will also be divided
pro rata among the participating
Regulated Funds and Affiliated Funds
based on the amounts they invest in
such Co-Investment Transaction. None
of the Affiliated Funds, the applicable
Adviser(s), the other Regulated Funds or
any affiliated person of the Regulated
Funds or Affiliated Funds will receive
additional compensation or
remuneration of any kind as a result of
or in connection with a Co-Investment
Transaction (other than (a) in the case
of the Regulated Funds and the
Affiliated Funds, the pro rata
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(C); and (b) in the case
of the Advisers, investment advisory
fees paid in accordance with the
Regulated Funds’ and the Affiliated
Funds’ investment advisory
agreements).
14. If the Holders own in the aggregate
more than 25 percent of the Shares of
a Regulated Fund, then the Holders will
vote such Shares in the same
percentages as the Regulated Fund’s
other shareholders (not including the
Holders) when voting on (1) the election
of directors; (2) the removal of one or
more directors; or (3) any other matter
under either the Act or applicable State
law affecting the Board’s composition,
size or manner of election.
15. Each Regulated Fund’s chief
compliance officer, as defined in rule
38a-1(a)(4), will prepare an annual
report for its Board each year that
evaluates (and documents the basis of
that evaluation) the Regulated Fund’s
compliance with the terms and
conditions of the application and the
procedures established to achieve such
compliance.
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25862 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93643; File No. SR–
CboeEDGX–2021–048]
Self-Regulatory Organizations; Cboe
EDGX 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 EDGX 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 EDGX Exchange, Inc. (‘‘EDGX’’
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.
1 15
17 Applicants
are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
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
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
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/
options/regulation/rule_filings/edgx/),
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
khammond on DSKJM1Z7X2PROD with NOTICES
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
4 See Securities Exchange Act Release No. 34–
88727 (April 22, 2020) 85 FR 23560 (April 28, 2020)
(SR–CboeEDGA–2020–12).[sic]
VerDate Sep<11>2014
16:55 Nov 26, 2021
Jkt 256001
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
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
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).
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
67775
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
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.
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.
E:\FR\FM\29NON1.SGM
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67776
Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
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–
CboeEDGX–2021–048 on the subject
line.
khammond on DSKJM1Z7X2PROD with 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–CboeEDGX–2021–048. 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
VerDate Sep<11>2014
16:55 Nov 26, 2021
Jkt 256001
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–CboeEDGX–2021–048 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. 2021–25882 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–437, OMB Control No.
3235–0494]
Proposed Collection; Comment
Request, Extension: Rule 30e–2
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘Paperwork
Reduction Act’’), the Securities and
Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 30e–2 (17 CFR 270.30e–2) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) (‘‘Investment
Company Act’’) requires registered unit
investment trusts (‘‘UITs’’) that invest
substantially all of their assets in shares
of a management investment company
11 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00103
Fmt 4703
Sfmt 4703
(‘‘fund’’) to send their unitholders
annual and semiannual reports
containing financial information on the
underlying company. Specifically, rule
30e–2 requires that the report contain
all the applicable information and
financial statements or their equivalent,
required by rule 30e–1 under the
Investment Company Act (17 CFR
270.30e–1) to be included in reports of
the underlying fund for the same fiscal
period. Rule 30e–1 requires that the
underlying fund’s report contain, among
other things, the information that is
required to be included in such reports
by the fund’s registration statement form
under the Investment Company Act.
The purpose of this requirement is to
apprise current shareholders of the
operational and financial condition of
the UIT. Absent the requirement to
disclose all material information in
reports, investors would be unable to
obtain accurate information upon which
to base investment decisions and
consumer confidence in the securities
industry might be adversely affected.
Requiring the submission of these
reports to the Commission permits us to
verify compliance with securities law
requirements.
Rule 30e–2, however, permits, under
certain conditions, delivery of a single
shareholder report to investors who
share an address (‘‘householding’’).
Specifically, rule 30e–2 permits
householding of annual and semiannual reports by UITs to satisfy the
delivery requirements of rule 30e–2 if,
in addition to the other conditions set
forth in the rule, the UIT has obtained
from each applicable investor written or
implied consent to the householding of
shareholder reports at such address. The
rule requires UITs that wish to
household shareholder reports with
implied consent to send a notice to each
applicable investor stating that the
investors in the household will receive
one report in the future unless the
investors provide contrary instructions.
In addition, at least once a year, UITs
relying on the rule for householding
must explain to investors who have
provided written or implied consent
how they can revoke their consent. The
purpose of the notice and annual
explanation requirements associated
with the householding provisions of the
rule is to ensure that investors who wish
to receive individual copies of
shareholder reports are able to do so.
The Commission estimates that the
annual burden associated with rule 30e–
2 is 125 hours per respondent. The
Commission estimates that there are
currently approximately 660 UITs that
file 1320 reports per year. Therefore, the
Commission estimates that the total
E:\FR\FM\29NON1.SGM
29NON1
]]>Agencies
[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Notices]
[Pages 67774-67776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25882]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93643; File No. SR-CboeEDGX-2021-048]
Self-Regulatory Organizations; Cboe EDGX 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 EDGX 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 EDGX Exchange, Inc. (``EDGX'' 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.
[[Page 67775]]
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 11.10.
See Rule 1.5(ee).
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), 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 11.10 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\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 34-88727 (April 22,
2020) 85 FR 23560 (April 28, 2020) (SR-CboeEDGA-2020-12).[sic]
---------------------------------------------------------------------------
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\ 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).
---------------------------------------------------------------------------
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.
[[Page 67776]]
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-CboeEDGX-2021-048 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-CboeEDGX-2021-048. 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-CboeEDGX-2021-048 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. 2021-25882 Filed 11-26-21; 8:45 am]
BILLING CODE 8011-01-P
