Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing of Proposed Rule Change To Amend Exchange Rule 531 To Provide for a New Service Called the “High Precision Network Time Signal Service”, 69301-69306 [2021-26451]

Download as PDF Federal Register / Vol. 86, No. 232 / Tuesday, December 7, 2021 / Notices B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposal will promote competition by permitting the Exchange to offer data products similar to those offered by other competitor equities exchanges.14 The Exchange is proposing to introduce the Short Volume Report in order to keep pace with changes in the industry and evolving customer needs, and believes this proposed rule change would contribute to robust competition among national securities exchanges. As noted, at least two other U.S. equity exchanges offer a market data product that is substantially similar to the proposed Short Volume Report.15 As a result, the Exchange believes this proposed rule change permits fair competition among national securities exchanges. Therefore, the Exchange does not believe the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. lotter on DSK11XQN23PROD with NOTICES1 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– CboeEDGA–2021–025 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–CboeEDGA–2021–025. 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–CboeEDGA–2021–025, and should be submitted on or before December 28, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–26449 Filed 12–6–21; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93698; File No. SR– EMERALD–2021–38] Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing of Proposed Rule Change To Amend Exchange Rule 531 To Provide for a New Service Called the ‘‘High Precision Network Time Signal Service’’ December 1, 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 19, 2021, MIAX Emerald, LLC (‘‘MIAX Emerald’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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 The Exchange proposes to amend Exchange Rule 531 to provide for the new service called the ‘‘High Precision Network Time Signal Service’’. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/emerald, at MIAX Emerald’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange provides a resilient and robust technology platform, BILLING CODE 8011–01–P 14 See Supra notes 3 and 4. 1 15 Id. VerDate Sep<11>2014 16 17 17:30 Dec 06, 2021 Jkt 256001 PO 00000 CFR 200.30–3(a)(12). Frm 00083 Fmt 4703 Sfmt 4703 69301 2 15 U.S.C. 78s(b)(1). 17 CFR 240.19b–4. E:\FR\FM\07DEN1.SGM 07DEN1 69302 Federal Register / Vol. 86, No. 232 / Tuesday, December 7, 2021 / Notices lotter on DSK11XQN23PROD with NOTICES1 deterministic functionality, transparent trading platform, and a culture of technological innovation to the U.S. options market. In keeping with its culture of innovation, the Exchange proposes to amend Exchange Rule 531, Reports and Market Data Products, to provide for the new service called the ‘‘High Precision Network Time Signal Service’’ (hereinafter referred to as ‘‘HPNTSS’’ or the ‘‘Service’’).3 The Service is an optional product 4 available to Members.5 In sum, Members would be able to utilize the proposed Service to synchronize their systems to the Exchange’s Global Positioning Satellite (‘‘GPS’’) clock 6 at sub-nanosecond level accuracy for correlated latency measurements between the Exchange’s and the Member systems’ time measurements related to the same message or order. Time synchronization services are well established in the U.S. and utilized in many areas of the U.S. economy and infrastructure. The proposed Service is not novel to the securities markets and it is similar to other network time synchronization services currently available to U.S. registered brokerdealers by two U.S. exchange groups 7 3 The Exchange also proposes to amend the title of Exchange Rule 531 to include the phrase ‘‘and Services’’ so the title would read as ‘‘Reports, Market Data Products, and Services.’’ 4 The Exchange intends to submit a separate filing with the Commission pursuant to Section 19(b)(1) to propose fees for the Service. 5 The term ‘‘Member’’ means an individual or organization approved to exercise the trading rights associated with a Trading Permit. Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. 6 For a description of the GPS clock, see Official U.S. Government Information About the Global Positioning System (GPS) and Related Topic, available at https://www.gps.gov/applications/ timing/ (providing that ‘‘[i]n addition to longitude, latitude, and altitude, the Global Positioning System (GPS) provides a critical fourth dimension—time. Each GPS satellite contains multiple atomic clocks that contribute very precise time data to the GPS signals. GPS receivers decode these signals, effectively synchronizing each receiver to the atomic clocks. This enables users to determine the time to within 100 billionths of a second, without the cost of owning and operating atomic clocks.’’). 7 ICE Data Services offers a variety of timing solutions in its colocation centers, allowing market participants to effectively timestamp their order flow by synching their primary clock devices to the primary clock devices in ICE Data Services’ network. See ICE Global Network Timing Services, available at Timing Services | ICE (theice.com) (last visited November 9, 2021). A similar service is also offered by Nasdaq in its colocation centers. See NIST Enables Precision Time-stamping of Financial Transactions, by the National Institute of Standards and Technology, U.S. Department of Commerce, available at https://www.nist.gov/news-events/ news/2014/12/nist-enables-precision-timestamping-financial-transactions (last visited November 9, 2021), https://www.traders magazine.com/departments/technology/nasdaqlaunches-ultra-high-precision-time-stamping/ (last VerDate Sep<11>2014 17:30 Dec 06, 2021 Jkt 256001 and a service currently offered by at least two foreign securities exchanges.8 GPS network time is the benchmark by which most, if not all, Members use to synchronize their internal primary clock devices. Using the time signals publicly available through the GPS network is a de facto standard for high precision time synchronization across geographically diverse locations. Typically, a GPS antenna serves as a time signal receiver and feeds a primary clock device the Coordinated Universal Time (referred to as ‘‘UTC’’) using Precision Time Protocol (‘‘PTP’’).9 Coordinated Universal Time is the primary time standard by which the world regulates clocks and time.10 Today, the Exchange understands many Members attempt to sync their primary clock devices to the GPS clock. By getting the GPS signal through a GPS capable antenna, Members can synchronize their primary clock device to the GPS network time to within an accuracy of approximately 30 nanoseconds. From there, by using a PTP time synchronization protocol, Members can synchronize their internal devices to their primary clock devices. Through this method, the Members’ internal devices can be synchronized to within a few billionths of a second (nanoseconds) of one another. This is the same method the Exchange uses today to synchronize its primary clock device to the GPS network time, i.e., the Exchange gets the GPS signal through a GPS capable antenna. By using this method, however, measurement times of market events may oscillate by approximately 30 or more nanoseconds between the Member and an exchange.11 visited November 9, 2021), and https:// www.gpsworld.com/nasdaq-offers-precision-timeservice-for-trading/ (last visited November 9, 2021). 8 A similar service is currently offered by Deutche Bo¨rse Group and Nasdaq. See a description of Deutsche Bo¨rse Group’s Time Services, available at https://www.deutsche-boerse.com/dbg-en/productsservices/ps-technology/ps-connectivity-services/psconnectivity-services-time-services (last visited September 29, 2021), and a description of Nasdaq Nordic PTP Services, available at https:// www.nasdaq.com/docs/nasdaq-nordic-ptp-servicesfs.pdf (last visited November 9, 2021)/. See also slides 28–39 of ‘‘Precise Timing in Financial Markets’’, by Deutche Bo¨rse Group, available at White Rabbit in Financial Markets (stanford.edu) (last visited October 4, 2021). See also slides 11– 13 of ‘‘Wall Street Clock’’, by Seven Solutions, available at White Rabbit synchronization use cases (atis.org) (last visited October 4, 2021). 9 The term ‘‘Coordinated Universal Time’’ is defined as the ‘‘international standard of time that is kept by atomic clocks around the world.’’ See Merriam-Webster Dictionary, available at https:// www.merriam-webster.com/dictionary/ Coordinated%20Universal%20Time (last visited November 10, 2021). 10 See https://www.timeanddate.com/time/ aboututc.html (last visited October 5, 2021). 11 See slide 11–13 of ‘‘Wall Street Clock’’, by Seven Solutions, available at White Rabbit PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 This may, in turn, lead to incorrect latency measurements that may adversely affect a Member’s time calculations in determining how long it took for their order or message to leave their systems and reach the trading center to which it was sent. As stated above, time synchronization services are well established in the U.S. and utilized in many areas of the U.S. economy and infrastructure. The proposed Service simply provides time synchronization signals to align the subscribing Member’s clock to the Exchange’s clock at the more acute nanosecond level. This will allow Members to timestamp messages or orders within their infrastructure and leverage various Exchange clock provided timestamp information to provide more precise network telemetry information to assess the health and efficiency of their network. The proposed Service would enable Members to more accurately synchronize their primary clock devices and/or timestamping devices to the Exchange’s primary clock devices at the more accurate, sub-nanosecond level. The Exchange’s primary clock currently feeds a time signal to the Exchange’s timestamping devices and provides subnanosecond level synchronization using an enhanced PTP (‘‘Enhanced PTP’’). This sub-nanosecond time signal is used to synchronize the Exchange’s network packet/order/message capture devices. Some Members may also currently utilize Enhanced PTP with their primary clock devices that feed their own timestamping devices at a subnanosecond level. However, despite the Exchange and some Members utilizing separate Enhanced PTP devices, the timestamps between the Exchange and those Members may still oscillate up to 30 nanoseconds due to GPS time precision limitations. Under the proposed Service, Members would be able to synchronize their own primary clock devices to the Exchange’s primary clock device, by receiving time signals from the Exchange, at a sub-nanosecond level, reducing or eliminating the potential for those timestamps to differ. The sub-nanosecond time signal would synchronization use cases (atis.org) (last visited October 4, 2021). See also How Accurate is GPS for Timing, available at GPS.gov: GPS Accuracy (last visited November 11, 2021) (providing that ‘‘GPS time transfer is a common method for synchronizing clocks and networks to Coordinated Universal Time (UTC). The government distributes UTC as maintained by the U.S. Naval Observatory (USNO) via the GPS signal in space with a time transfer accuracy relative to UTC (USNO) of ≤30 nanoseconds (billionths of a second), 95% of the time. This performance standard assumes the use of a specialized time transfer receiver at a fixed location.’’). E:\FR\FM\07DEN1.SGM 07DEN1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 86, No. 232 / Tuesday, December 7, 2021 / Notices simply tell the Member the Exchange’s time at a sub-nanosecond level at a particular point in time. Members may, in turn, use this time signal to calculate the time an order or message traveled between their network and that of the Exchange at a more granular subnanosecond level. The Service would operate as follows. As stated above, some Members may currently utilize Enhanced PTP with their primary clock devices that feed their own timestamping devices at a sub-nanosecond level. A Member may utilize these existing compatible clock synchronization device or install one within their network. This device is not provided by the Exchange and would need to be built by the Member or acquired from a third party. This device would be synchronized, via the HPNTSS, to the Exchange’s primary clock device, and ultimately provide to them the Exchange’s single view of the GPS clock time, at a sub-nanosecond level, at a particular point in time. The Member’s clock synchronization device would then be used to synchronize the clocks within the Member’s computer and network infrastructure, as appropriate. This enables the Member to record certain times an order or message traveled through and leaves the Member’s system at a sub-nanosecond level. The Exchange’s computer and network infrastructure, synchronized via the HPNTSS device(s) records the times the order or message reached certain points within the Exchange’s network/systems. Members may use the proposed Service for numerous purposes. The proposed Service would allow Members to better understand the times at which their order or message reached certain points when traveling from their network to the Exchange allowing them to better understand the latency of their orders and messages when traveling between their network and that of the Exchange. The proposed Service will provide greater visibility into the latency between their network and the Exchange, which will allow Members to optimize their network, models, and trading patterns to potentially improve the timeliness of their interactions with the Exchange. The Exchange believes the Service will provide Members with an opportunity to learn more about better opportunities to access liquidity and receive better execution rates. However, the utility of the proposed Service is not limited to evaluating the timeliness of Members’ orders and may be used for other purposes, including, but not limited to the following use cases discussed below. Members may use the VerDate Sep<11>2014 17:30 Dec 06, 2021 Jkt 256001 proposed Service to analyze the efficiency of their network and connections when not only routing orders to the Exchange, but also when receiving messages back from the Exchange. These messages include communications regarding whether their order was accepted, rejected, or executed. Therefore, Members may measure message traversal times by comparing their message (e.g., order, quote, cancellation, etc.) timestamp to the Exchange’s matching engine timestamp on acknowledgement messages (e.g., order acknowledgment, quote acknowledgment, cancellation acknowledgment, etc.). Members may also measure the time it takes for any message to be received by the Exchange’s matching engine. Members may also measure the traversal times by comparing their message timestamp to the matching engine timestamp on the Exchange’s proprietary market data feed messages and measure the time it takes for any message to be published to the Exchange’s proprietary market data feeds by the Exchange’s matching engine. Members may then use this information to further enhance their own systems to receive such communications in a timelier manner to verify that their systems are working as intended. Members may also use the Service for other purposes, such as determining compliance with certain regulatory requirements 12 and trading surveillance. Members may also utilize time synchronization to assist them in evaluating compliance with certain clock synchronization requirements.13 Specifically, the Service would be described under proposed Exchange Rule 531(c), which would provide that: HPNTSS is an enhanced Precision Time Protocol (‘‘PTP’’) Ethernet-based service for synchronizing device clocks to within subnanosecond accuracy of one another. HPNTSS enables Members to synchronize their internal devices to the same time as the Exchange devices with high precision. Tightly synchronized clocks enable the ability to correlate event timestamps from within their own systems to those within the Exchange’s network. For example, HPNTSS allows Members to precision timestamp a quote sent from their system to the very same quote timestamped by the Exchange and 12 See, e.g., Chapter III of the Exchange’s Rules, which incorporates by reference Rule 301, Interpretation and Policy .02 (Just and Equitable Principles of Trade), of Miami International Securities Exchange, LLC (‘‘MIAX’’); and Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) Rule 5320. 13 See Chapter XVII of the Exchange’s Rules, which incorporates by reference MIAX Rule 1707 (Consolidated Audit Trail Compliance Rule—Clock Synchronization Rule Violation); and FINRA Rule 6820. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 69303 accurately measure the time delta between the timestamps to less than one nanosecond. The proposed rule text includes an example related to comparing a quote timestamps at a sub-nanosecond level. However, this example is included for illustrative purposes only and is one of may use cases in which the proposed Service may be used by Members. Additional examples of use cases are described above. The Exchange proposes to provide the Service in response to Member demand for tighter and more accurate clock synchronization options with the Exchange’s network. The purpose of the proposed Service is to provide Members an additional, optional tool to aid in them in [sic] synchronizing their systems with the Exchange’s network to ensure more accurate clock synchronization and timestamp calculations. As discussed above, Members may currently have their own GPS clock and synchronization devices that allow them to determine the timeliness and speed of their orders and messages. They may also currently have those GPS devices synchronized with the GPS clocks of other trading centers or other third parties that they engage with. The Exchange proposes to allow all Members to do the same here and synchronize their GPS devices with the Exchange’s GPS clock. The Exchange simply proposes to provide the Service in response to Member demand for data concerning the timeliness of their incoming orders and messages that now wish to sync their own devices with the Exchange’s GPS clock at a subnanosecond level. Again, the proposed Service is an optional product and no Member is required to subscribe to the Service to trade or participate on the Exchange. Change to Title of Exchange Rule 531 With the proposed change to add the new Service, the Exchange also proposes to amend the title of Exchange Rule 531, which is currently titled ‘‘Reports and Market Data Products.’’ With the addition of the Service, the Exchange proposes to place a comma after the word ‘‘Reports’’ in the title of Exchange Rule 531, and add the phrase ‘‘and Services’’ at the end. Accordingly, with the proposed changes, the title of Exchange Rule 531 will be as follows: ‘‘Reports, Market Data Products and Services.’’ The purpose of this change is to provide clarity within the Exchange’s rules. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act E:\FR\FM\07DEN1.SGM 07DEN1 lotter on DSK11XQN23PROD with NOTICES1 69304 Federal Register / Vol. 86, No. 232 / Tuesday, December 7, 2021 / Notices and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.14 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 15 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. This proposal is in keeping with those principles in that it promotes improved technology management and optimization by providing an optional Service to those Members interested in synchronizing their system’s GPS clocks and timestamps with those of the Exchange at a sub-nanosecond level. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 16 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers as it will be available to all Members who chose [sic] to subscribe. Members that chose [sic] not to subscribe to the proposed Service are free to utilize existing time synchronization methods described above or utilize some other services that may assist them in time synchronization of their systems at a more granular level. Today, GPS clocks contribute very precise time data to the GPS signals. GPS receivers decode these signals, effectively synchronizing each receiver to the atomic clocks. This enables users to determine the time to within 30 nanoseconds.17 These precise time measurements are crucial to a variety of economic activities. Communication systems and financial networks all rely on precision timing for synchronization and operational efficiency. These benefits include precise synchronization of communications systems, financial networks, and other critical infrastructure, as well as improved network management and optimization, making traceable timestamps possible for financial transactions and billing.18 15 U.S.C. 78f(b). 15 U.S.C. 78f(b)(5). 16 Id. 17 See supra note 11. 18 See GPS.gov: Timing Applications (last visited November 12, 2021). 14 15 VerDate Sep<11>2014 17:30 Dec 06, 2021 Jkt 256001 The proposed Service, therefore, perfects the mechanism of a free and open market and a national market system by providing an additional, optional tool for Members to further enhance their timestamp calculations at a sub-nanosecond level. The proposed Service is also not novel to the securities markets and it is similar to other network time services currently available to U.S. registered brokerdealers by two U.S. exchange groups and currently offered by at least two foreign securities exchanges.19 The Exchange believes the proposed Service removes impediments to and perfects the mechanism of a free and open market and a national market system by providing Members an optional tool that would enable them to better time synchronize their systems to the Exchange. The proposed Service would be beneficial in multiple areas, one of which is enabling Members to better understand the latency of their incoming orders and messages. Members may also use the proposed Service to analyze the efficiency of their networks when receiving messages from the Exchange, such as whether their order or quote was accepted, rejected, or executed. Members may also use the proposed Service to measure the time it takes for their message, such as an instruction to cancel a resting order, to be received by the Exchange’s matching engine, not just at the outside wall of the Exchange’s network. The proposed Service may also be used by Members to measure traversal times by comparing their message timestamp to the Exchange’s matching engine timestamp, which is published on the Exchange’s proprietary data feeds. Members may then, in turn, measure the time it takes for a message or order to be published to the Exchange’s proprietary data feed by the matching engine. Based on the above use cases, the proposed Service would facilitate transactions in securities by providing Members with an optional tool that enables them to further enhance their systems to send and receive such communications to the Exchange in a timelier manner and to verify that their systems are performing correctly. The proposed Service is designed for Members that are interested in gaining insight into latency by providing those Members with an optional service to better calculate the time it took for their orders or messages to travel between their network and that of the Exchange. The Exchange believes providing this optional clock synchronization service to interested Members is consistent with facilitating transactions in securities, removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest because it provides greater visibility into the latency of Members’ orders, messages, and interactions with the Exchange. Members may use the proposed Service to optimize their models and trading patterns in an effort to yield better execution results by better understanding the time their order left their network and was received by the Exchange. This would, in turn, benefit other market participants who may experience better executions when sending orders to Members that utilize the Service. The proposed Service also enables Members to further enhance their own systems to send and receive communications to and from the Exchange in a timelier manner and to verify that their systems are working as intended. The proposed Service also promotes just and equitable principles of trade because Members may use the Service for determining compliance with certain regulatory requirements,20 trading surveillance, and to assist them in evaluating compliance with certain clock synchronization requirements.21 The proposed Service is not a market data product or access/connectivity service and the Exchange does not propose to include additional connectivity options or modify existing connectivity options as part of this proposal. Members may use their existing methods to connect to and send orders to the Exchange. The proposed Service is simply a clock synchronization service, requested by Members, that would allow Members to better understand the time by which their orders travel from their systems to those of the Exchange. It is simply an additional, optional tool that Members may use to calculate time measurements at a sub-nanosecond level. The proposed Service will not include any trading data regarding the Member’s activity on the Exchange or include any data from other trading activity on the Exchange. The proposed Service may not provide utility to all Members based on their business model, use of existing time synchronization methods, or reliance on other methods to test their system’s performance to ensure it is operating as intended. Nonetheless, the Exchange understands that some Members may view the proposed 20 19 PO 00000 See supra notes 7 and 8. Frm 00086 Fmt 4703 Sfmt 4703 21 See supra note 12. See supra note 13. E:\FR\FM\07DEN1.SGM 07DEN1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 86, No. 232 / Tuesday, December 7, 2021 / Notices Service as critical in that it would assist them in better calculating time measurements of their orders at a subnanosecond level and further enhance their trading systems to perform with minimal latency as compare [sic] to other market participants that participate on the Exchange. However, the Exchange notes that use of the proposed Service will be on voluntary basis and no Member will be required to subscribe to the Service. Members may utilize existing time synchronization methods described above or utilize some other services that may assist them in time synchronization of their systems. Members may view these alternatives as more in line with their business needs or chose [sic] an alternative that is more compatible with their existing technology. As noted above, other Members may also not think the proposed Service is necessary or in line with their business need because they are not latency sensitive or have developed other methods to test and ensure that their network is operating as they intend. Again, the Exchange notes that there is no rule or regulation that requires the Exchange to provide, or that a Member elect to subscribe to, the Service. It is entirely a business decision of each Member to subscribe to the Service. Members that do not chose to subscribe to the Service may avail themselves to other products that assist them in better calculating time measurements related to their messages or orders. The Exchange proposes to offer the Service as a convenience to Members to provide them with additional information regarding trading activity on the Exchange. A Member that chooses to subscribe to the Service may discontinue the Service at any time if that Member determines that the Service is no longer useful or that alternatives better meet their business or system needs. In summary, the proposed Service will help to protect a free and open market by providing an additional tool (offered on an optional basis) to the marketplace and by providing investors with greater choices. Additionally, the proposal would not permit unfair discrimination because the proposed Service will be available to all Exchange Members. Lastly, the Exchange believes the proposed changes to the title of Exchange Rule 531 promote just and equitable principles of trade and remove impediments to and perfect the mechanism of a free and open market and a national market system because the proposed rule changes will provide greater clarity to Members and the VerDate Sep<11>2014 17:30 Dec 06, 2021 Jkt 256001 public regarding the Exchange’s Rules. It is in the public interest for rules to be accurate and concise so as to eliminate the potential for confusion. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. In this instance, the proposed rule change to offer the optional Service is in response to Member interest and requests for tools that would enable them to better measure traversal times between their network and that of the Exchange at a more granular level. The Exchange does not believe the proposed Service will have an inappropriate burden on intra-market competition between Members that choose to subscribe to the Service and those Members that do not. As discussed above, other latency measurement tools are available to U.S. registered brokerdealers, alternative trading systems, and currently offered by at least two foreign securities exchanges.22 Like the proposed Service, these tools also provide market participants the ability to further enhance their systems to send and receive such communications to the Exchange in a timelier manner and to verify that their systems are performing correctly. Additionally, some Members may be able to enhance their own traversal time calculations without subscribing to the proposed Service by using existing time synchronization methods described above or utilize some other services that may assist them in time synchronization of their systems. Members may view these alternatives as more in line with their business needs or chose [sic] an alternative that is more compatible with their existing technology. The Exchange does not believe the proposed Service will have an inappropriate burden on inter-market competition as similar services are currently available to brokers-dealers by at least two other U.S. exchange groups.23 The proposed Service would therefore serve to enhance competition by allowing the Exchange to offer a time synchronization service that is similar to those currently available on other U.S. securities exchanges. The proposed rule change should enhance competition by promoting further initiatives and innovation among market centers and market participants as it concerns time measurements and 22 23 PO 00000 See supra notes 7 and 8. See supra note 7. Frm 00087 Fmt 4703 Sfmt 4703 69305 synchronization among trading platforms. Lastly, if the proposed Service is unattractive to Members, Members will opt not to subscribe to it. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. 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 (i) as the Commission may designate up to 90 days of such date 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 shall: (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– EMERALD–2021–38 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–EMERALD–2021–38. 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 E:\FR\FM\07DEN1.SGM 07DEN1 69306 Federal Register / Vol. 86, No. 232 / Tuesday, December 7, 2021 / Notices 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–EMERALD–2021–38, and should be submitted on or before December 28, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–26451 Filed 12–6–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93696; File No. SR– CboeEDGX–2021–049] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Introduce a New Data Product To Be Known as the Short Volume Report, Modify the Name of Rule 13.8 to ‘‘Data Products’’, and Add a Preamble to Rule 13.8 lotter on DSK11XQN23PROD with NOTICES1 December 1, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 17, 2021, Cboe EDGX Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The 17:30 Dec 06, 2021 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) is filing with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change to adopt Exchange Rule 13.8(h) to introduce a new data product to be known as the Short Volume Report, modify the name of Rule 13.8 to ‘‘Data Products’’, and add a preamble to Rule 13.8. 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 1. Purpose The Exchange proposes to adopt Rule 13.8(h) to provide for a new data product to be known as the Short Volume Report. The proposal introduces the Short Volume Report which will be available for purchase to EDGX Members (‘‘Members’’) and nonMembers. The Exchange notes that the proposed data product is substantially similar to information included in the short sale volume report offered by the Nasdaq Stock Market LLC (‘‘Nasdaq’’) 3 and the TAQ Group Short Volume file offered by the New York Stock 3 See the Nasdaq Price List—Equities, Nasdaq Web-based Reports, Nasdaq Short Sale Volume Reports at Price List—NASDAQ Global Data Products (nasdaqtrader.com). 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 24 VerDate Sep<11>2014 Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. Jkt 256001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 Exchange LLC (‘‘NYSE’’),4 with the exception that the proposed product will include buy and sell volume as well as trade counts for buy, sell, sell short, and sell short exempt volume. The Exchange also proposes to change the name of Rule 13.8 to ‘‘Data Products’’ and add a preamble to Rule 13.8 to conform to Cboe BZX Exchange, Inc. (‘‘BZX’’) and Cboe BYX Exchange, Inc. (‘‘BYX’’) Rule 11.22. A description of each market data product offered by the Exchange is described in Exchange Rule 13.8. The Exchange proposes to amend Rule 13.8(h) to introduce and add a description of the Short Volume Report. The Exchange proposes to describe the Short Volume Report as ‘‘an end-of-day report that summarizes equity trading activity on the Exchange, including trade count and volume by symbol for buy, sell, sell short, and sell short exempt trades.’’ Specifically, the end-ofday report will include the following information: Trade date, symbol, total volume, buy volume, buy trade count, sell volume, sell trade count, sell short volume, sell short trade count, sell short exempt volume, and sell short exempt trade count. The Exchange notes that the proposed product includes substantially similar information as that included in comparable products offered on Nasdaq and NYSE except that the Exchange proposes to also include buy and sell volume as well as trade counts for buy, sell, sell short, and sell short exempt volume.5 The Exchange believes the additional data points will benefit market participants because they will allow market participants to better understand the changing risk environment on a daily basis. The Short Volume Report will be available for purchase 6 on a monthly subscription basis for which subscribers will receive a daily end-of-day file that will be delivered after the conclusion of the Post-Closing Session.7 Additionally, historical Short Volume Reports dating as far back as January 2, 2015 will be available for purchase on an ad hoc basis in monthly increments. The 4 See the NYSE Historical Proprietary Market Data Pricing, NYSE Group Summary Data Products, TAQ NYSE Group Short Volume (Daily File) at https:// www.nyse.com/publicdocs/nyse/data/NYSE_ Historical_Market_Data_Pricing.pdf. 5 The Exchange notes that the Nasdaq and NYSE comparable products reflect aggregate information across their affiliated equity exchanges. The Exchange is not proposing an aggregated Short Volume Report across its affiliated equity exchanges; thus, the proposal is only applicable to trades executed on BZX [sic]. 6 The Exchange intends to submit a separate rule filing to adopt fees for the Short Volume Report product. 7 See Exchange Rule 1.5(r). E:\FR\FM\07DEN1.SGM 07DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 232 (Tuesday, December 7, 2021)]
[Notices]
[Pages 69301-69306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26451]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93698; File No. SR-EMERALD-2021-38]

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing of Proposed Rule Change To Amend Exchange Rule 531 To Provide
for a New Service Called the ``High Precision Network Time Signal
Service''

December 1, 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 19, 2021, MIAX Emerald, LLC (``MIAX Emerald'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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

The Exchange proposes to amend Exchange Rule 531 to provide for the
new service called the ``High Precision Network Time Signal Service''.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/emerald, at MIAX
Emerald's principal office, and at the Commission's Public Reference
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange provides a resilient and robust technology platform,

[[Page 69302]]

deterministic functionality, transparent trading platform, and a
culture of technological innovation to the U.S. options market. In
keeping with its culture of innovation, the Exchange proposes to amend
Exchange Rule 531, Reports and Market Data Products, to provide for the
new service called the ``High Precision Network Time Signal Service''
(hereinafter referred to as ``HPNTSS'' or the ``Service'').\3\ The
Service is an optional product \4\ available to Members.\5\ In sum,
Members would be able to utilize the proposed Service to synchronize
their systems to the Exchange's Global Positioning Satellite (``GPS'')
clock \6\ at sub-nanosecond level accuracy for correlated latency
measurements between the Exchange's and the Member systems' time
measurements related to the same message or order. Time synchronization
services are well established in the U.S. and utilized in many areas of
the U.S. economy and infrastructure. The proposed Service is not novel
to the securities markets and it is similar to other network time
synchronization services currently available to U.S. registered broker-
dealers by two U.S. exchange groups \7\ and a service currently offered
by at least two foreign securities exchanges.\8\
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\3\ The Exchange also proposes to amend the title of Exchange
Rule 531 to include the phrase ``and Services'' so the title would
read as ``Reports, Market Data Products, and Services.''
\4\ The Exchange intends to submit a separate filing with the
Commission pursuant to Section 19(b)(1) to propose fees for the
Service.
\5\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\6\ For a description of the GPS clock, see Official U.S.
Government Information About the Global Positioning System (GPS) and
Related Topic, available at https://www.gps.gov/applications/timing/
(providing that ``[i]n addition to longitude, latitude, and
altitude, the Global Positioning System (GPS) provides a critical
fourth dimension--time. Each GPS satellite contains multiple atomic
clocks that contribute very precise time data to the GPS signals.
GPS receivers decode these signals, effectively synchronizing each
receiver to the atomic clocks. This enables users to determine the
time to within 100 billionths of a second, without the cost of
owning and operating atomic clocks.'').
\7\ ICE Data Services offers a variety of timing solutions in
its colocation centers, allowing market participants to effectively
timestamp their order flow by synching their primary clock devices
to the primary clock devices in ICE Data Services' network. See ICE
Global Network Timing Services, available at Timing Services
[verbar] ICE (theice.com) (last visited November 9, 2021). A similar
service is also offered by Nasdaq in its colocation centers. See
NIST Enables Precision Time-stamping of Financial Transactions, by
the National Institute of Standards and Technology, U.S. Department
of Commerce, available at https://www.nist.gov/news-events/news/2014/12/nist-enables-precision-time-stamping-financial-transactions
(last visited November 9, 2021), https://www.tradersmagazine.com/departments/technology/nasdaq-launches-ultra-high-precision-time-stamping/ (last visited November 9, 2021), and https://www.gpsworld.com/nasdaq-offers-precision-time-service-for-trading/
(last visited November 9, 2021).
\8\ A similar service is currently offered by Deutche B[ouml]rse
Group and Nasdaq. See a description of Deutsche B[ouml]rse Group's
Time Services, available at https://www.deutsche-boerse.com/dbg-en/products-services/ps-technology/ps-connectivity-services/ps-connectivity-services-time-services (last visited September 29,
2021), and a description of Nasdaq Nordic PTP Services, available at
https://www.nasdaq.com/docs/nasdaq-nordic-ptp-services-fs.pdf (last
visited November 9, 2021)/. See also slides 28-39 of ``Precise
Timing in Financial Markets'', by Deutche B[ouml]rse Group,
available at White Rabbit in Financial Markets (stanford.edu) (last
visited October 4, 2021). See also slides 11-13 of ``Wall Street
Clock'', by Seven Solutions, available at White Rabbit
synchronization use cases (atis.org) (last visited October 4, 2021).
---------------------------------------------------------------------------

GPS network time is the benchmark by which most, if not all,
Members use to synchronize their internal primary clock devices. Using
the time signals publicly available through the GPS network is a de
facto standard for high precision time synchronization across
geographically diverse locations. Typically, a GPS antenna serves as a
time signal receiver and feeds a primary clock device the Coordinated
Universal Time (referred to as ``UTC'') using Precision Time Protocol
(``PTP'').\9\ Coordinated Universal Time is the primary time standard
by which the world regulates clocks and time.\10\
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\9\ The term ``Coordinated Universal Time'' is defined as the
``international standard of time that is kept by atomic clocks
around the world.'' See Merriam-Webster Dictionary, available at
https://www.merriam-webster.com/dictionary/Coordinated%20Universal%20Time (last visited November 10, 2021).
\10\ See https://www.timeanddate.com/time/aboututc.html (last
visited October 5, 2021).
---------------------------------------------------------------------------

Today, the Exchange understands many Members attempt to sync their
primary clock devices to the GPS clock. By getting the GPS signal
through a GPS capable antenna, Members can synchronize their primary
clock device to the GPS network time to within an accuracy of
approximately 30 nanoseconds. From there, by using a PTP time
synchronization protocol, Members can synchronize their internal
devices to their primary clock devices. Through this method, the
Members' internal devices can be synchronized to within a few
billionths of a second (nanoseconds) of one another. This is the same
method the Exchange uses today to synchronize its primary clock device
to the GPS network time, i.e., the Exchange gets the GPS signal through
a GPS capable antenna. By using this method, however, measurement times
of market events may oscillate by approximately 30 or more nanoseconds
between the Member and an exchange.\11\ This may, in turn, lead to
incorrect latency measurements that may adversely affect a Member's
time calculations in determining how long it took for their order or
message to leave their systems and reach the trading center to which it
was sent.
---------------------------------------------------------------------------

\11\ See slide 11-13 of ``Wall Street Clock'', by Seven
Solutions, available at White Rabbit synchronization use cases
(atis.org) (last visited October 4, 2021). See also How Accurate is
GPS for Timing, available at GPS.gov: GPS Accuracy (last visited
November 11, 2021) (providing that ``GPS time transfer is a common
method for synchronizing clocks and networks to Coordinated
Universal Time (UTC). The government distributes UTC as maintained
by the U.S. Naval Observatory (USNO) via the GPS signal in space
with a time transfer accuracy relative to UTC (USNO) of <=30
nanoseconds (billionths of a second), 95% of the time. This
performance standard assumes the use of a specialized time transfer
receiver at a fixed location.'').
---------------------------------------------------------------------------

As stated above, time synchronization services are well established
in the U.S. and utilized in many areas of the U.S. economy and
infrastructure. The proposed Service simply provides time
synchronization signals to align the subscribing Member's clock to the
Exchange's clock at the more acute nanosecond level. This will allow
Members to timestamp messages or orders within their infrastructure and
leverage various Exchange clock provided timestamp information to
provide more precise network telemetry information to assess the health
and efficiency of their network. The proposed Service would enable
Members to more accurately synchronize their primary clock devices and/
or timestamping devices to the Exchange's primary clock devices at the
more accurate, sub-nanosecond level. The Exchange's primary clock
currently feeds a time signal to the Exchange's timestamping devices
and provides sub-nanosecond level synchronization using an enhanced PTP
(``Enhanced PTP''). This sub-nanosecond time signal is used to
synchronize the Exchange's network packet/order/message capture
devices. Some Members may also currently utilize Enhanced PTP with
their primary clock devices that feed their own timestamping devices at
a sub-nanosecond level. However, despite the Exchange and some Members
utilizing separate Enhanced PTP devices, the timestamps between the
Exchange and those Members may still oscillate up to 30 nanoseconds due
to GPS time precision limitations. Under the proposed Service, Members
would be able to synchronize their own primary clock devices to the
Exchange's primary clock device, by receiving time signals from the
Exchange, at a sub-nanosecond level, reducing or eliminating the
potential for those timestamps to differ. The sub-nanosecond time
signal would

[[Page 69303]]

simply tell the Member the Exchange's time at a sub-nanosecond level at
a particular point in time. Members may, in turn, use this time signal
to calculate the time an order or message traveled between their
network and that of the Exchange at a more granular sub-nanosecond
level.
The Service would operate as follows. As stated above, some Members
may currently utilize Enhanced PTP with their primary clock devices
that feed their own timestamping devices at a sub-nanosecond level. A
Member may utilize these existing compatible clock synchronization
device or install one within their network. This device is not provided
by the Exchange and would need to be built by the Member or acquired
from a third party. This device would be synchronized, via the HPNTSS,
to the Exchange's primary clock device, and ultimately provide to them
the Exchange's single view of the GPS clock time, at a sub-nanosecond
level, at a particular point in time. The Member's clock
synchronization device would then be used to synchronize the clocks
within the Member's computer and network infrastructure, as
appropriate. This enables the Member to record certain times an order
or message traveled through and leaves the Member's system at a sub-
nanosecond level. The Exchange's computer and network infrastructure,
synchronized via the HPNTSS device(s) records the times the order or
message reached certain points within the Exchange's network/systems.
Members may use the proposed Service for numerous purposes. The
proposed Service would allow Members to better understand the times at
which their order or message reached certain points when traveling from
their network to the Exchange allowing them to better understand the
latency of their orders and messages when traveling between their
network and that of the Exchange. The proposed Service will provide
greater visibility into the latency between their network and the
Exchange, which will allow Members to optimize their network, models,
and trading patterns to potentially improve the timeliness of their
interactions with the Exchange.
The Exchange believes the Service will provide Members with an
opportunity to learn more about better opportunities to access
liquidity and receive better execution rates. However, the utility of
the proposed Service is not limited to evaluating the timeliness of
Members' orders and may be used for other purposes, including, but not
limited to the following use cases discussed below. Members may use the
proposed Service to analyze the efficiency of their network and
connections when not only routing orders to the Exchange, but also when
receiving messages back from the Exchange. These messages include
communications regarding whether their order was accepted, rejected, or
executed. Therefore, Members may measure message traversal times by
comparing their message (e.g., order, quote, cancellation, etc.)
timestamp to the Exchange's matching engine timestamp on
acknowledgement messages (e.g., order acknowledgment, quote
acknowledgment, cancellation acknowledgment, etc.). Members may also
measure the time it takes for any message to be received by the
Exchange's matching engine. Members may also measure the traversal
times by comparing their message timestamp to the matching engine
timestamp on the Exchange's proprietary market data feed messages and
measure the time it takes for any message to be published to the
Exchange's proprietary market data feeds by the Exchange's matching
engine. Members may then use this information to further enhance their
own systems to receive such communications in a timelier manner to
verify that their systems are working as intended. Members may also use
the Service for other purposes, such as determining compliance with
certain regulatory requirements \12\ and trading surveillance. Members
may also utilize time synchronization to assist them in evaluating
compliance with certain clock synchronization requirements.\13\
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\12\ See, e.g., Chapter III of the Exchange's Rules, which
incorporates by reference Rule 301, Interpretation and Policy .02
(Just and Equitable Principles of Trade), of Miami International
Securities Exchange, LLC (``MIAX''); and Financial Industry
Regulatory Authority, Inc. (``FINRA'') Rule 5320.
\13\ See Chapter XVII of the Exchange's Rules, which
incorporates by reference MIAX Rule 1707 (Consolidated Audit Trail
Compliance Rule--Clock Synchronization Rule Violation); and FINRA
Rule 6820.
---------------------------------------------------------------------------

Specifically, the Service would be described under proposed
Exchange Rule 531(c), which would provide that:

HPNTSS is an enhanced Precision Time Protocol (``PTP'')
Ethernet-based service for synchronizing device clocks to within
sub-nanosecond accuracy of one another. HPNTSS enables Members to
synchronize their internal devices to the same time as the Exchange
devices with high precision. Tightly synchronized clocks enable the
ability to correlate event timestamps from within their own systems
to those within the Exchange's network. For example, HPNTSS allows
Members to precision timestamp a quote sent from their system to the
very same quote timestamped by the Exchange and accurately measure
the time delta between the timestamps to less than one nanosecond.

The proposed rule text includes an example related to comparing a
quote timestamps at a sub-nanosecond level. However, this example is
included for illustrative purposes only and is one of may use cases in
which the proposed Service may be used by Members. Additional examples
of use cases are described above.
The Exchange proposes to provide the Service in response to Member
demand for tighter and more accurate clock synchronization options with
the Exchange's network. The purpose of the proposed Service is to
provide Members an additional, optional tool to aid in them in [sic]
synchronizing their systems with the Exchange's network to ensure more
accurate clock synchronization and timestamp calculations.
As discussed above, Members may currently have their own GPS clock
and synchronization devices that allow them to determine the timeliness
and speed of their orders and messages. They may also currently have
those GPS devices synchronized with the GPS clocks of other trading
centers or other third parties that they engage with. The Exchange
proposes to allow all Members to do the same here and synchronize their
GPS devices with the Exchange's GPS clock. The Exchange simply proposes
to provide the Service in response to Member demand for data concerning
the timeliness of their incoming orders and messages that now wish to
sync their own devices with the Exchange's GPS clock at a sub-
nanosecond level. Again, the proposed Service is an optional product
and no Member is required to subscribe to the Service to trade or
participate on the Exchange.
Change to Title of Exchange Rule 531
With the proposed change to add the new Service, the Exchange also
proposes to amend the title of Exchange Rule 531, which is currently
titled ``Reports and Market Data Products.'' With the addition of the
Service, the Exchange proposes to place a comma after the word
``Reports'' in the title of Exchange Rule 531, and add the phrase ``and
Services'' at the end. Accordingly, with the proposed changes, the
title of Exchange Rule 531 will be as follows: ``Reports, Market Data
Products and Services.'' The purpose of this change is to provide
clarity within the Exchange's rules.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act

[[Page 69304]]

and the rules and regulations thereunder applicable to the Exchange
and, in particular, the requirements of Section 6(b) of the Act.\14\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \15\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
This proposal is in keeping with those principles in that it promotes
improved technology management and optimization by providing an
optional Service to those Members interested in synchronizing their
system's GPS clocks and timestamps with those of the Exchange at a sub-
nanosecond level. Additionally, the Exchange believes the proposed rule
change is consistent with the Section 6(b)(5) \16\ requirement that the
rules of an exchange not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers as it will be available
to all Members who chose [sic] to subscribe. Members that chose [sic]
not to subscribe to the proposed Service are free to utilize existing
time synchronization methods described above or utilize some other
services that may assist them in time synchronization of their systems
at a more granular level.
---------------------------------------------------------------------------

\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ Id.
---------------------------------------------------------------------------

Today, GPS clocks contribute very precise time data to the GPS
signals. GPS receivers decode these signals, effectively synchronizing
each receiver to the atomic clocks. This enables users to determine the
time to within 30 nanoseconds.\17\ These precise time measurements are
crucial to a variety of economic activities. Communication systems and
financial networks all rely on precision timing for synchronization and
operational efficiency. These benefits include precise synchronization
of communications systems, financial networks, and other critical
infrastructure, as well as improved network management and
optimization, making traceable timestamps possible for financial
transactions and billing.\18\ The proposed Service, therefore, perfects
the mechanism of a free and open market and a national market system by
providing an additional, optional tool for Members to further enhance
their timestamp calculations at a sub-nanosecond level. The proposed
Service is also not novel to the securities markets and it is similar
to other network time services currently available to U.S. registered
broker-dealers by two U.S. exchange groups and currently offered by at
least two foreign securities exchanges.\19\
---------------------------------------------------------------------------

\17\ See supra note 11.
\18\ See GPS.gov: Timing Applications (last visited November 12,
2021).
\19\ See supra notes 7 and 8.
---------------------------------------------------------------------------

The Exchange believes the proposed Service removes impediments to
and perfects the mechanism of a free and open market and a national
market system by providing Members an optional tool that would enable
them to better time synchronize their systems to the Exchange. The
proposed Service would be beneficial in multiple areas, one of which is
enabling Members to better understand the latency of their incoming
orders and messages. Members may also use the proposed Service to
analyze the efficiency of their networks when receiving messages from
the Exchange, such as whether their order or quote was accepted,
rejected, or executed. Members may also use the proposed Service to
measure the time it takes for their message, such as an instruction to
cancel a resting order, to be received by the Exchange's matching
engine, not just at the outside wall of the Exchange's network. The
proposed Service may also be used by Members to measure traversal times
by comparing their message timestamp to the Exchange's matching engine
timestamp, which is published on the Exchange's proprietary data feeds.
Members may then, in turn, measure the time it takes for a message or
order to be published to the Exchange's proprietary data feed by the
matching engine. Based on the above use cases, the proposed Service
would facilitate transactions in securities by providing Members with
an optional tool that enables them to further enhance their systems to
send and receive such communications to the Exchange in a timelier
manner and to verify that their systems are performing correctly.
The proposed Service is designed for Members that are interested in
gaining insight into latency by providing those Members with an
optional service to better calculate the time it took for their orders
or messages to travel between their network and that of the Exchange.
The Exchange believes providing this optional clock synchronization
service to interested Members is consistent with facilitating
transactions in securities, removing impediments to and perfecting the
mechanism of a free and open market and a national market system, and,
in general, protecting investors and the public interest because it
provides greater visibility into the latency of Members' orders,
messages, and interactions with the Exchange. Members may use the
proposed Service to optimize their models and trading patterns in an
effort to yield better execution results by better understanding the
time their order left their network and was received by the Exchange.
This would, in turn, benefit other market participants who may
experience better executions when sending orders to Members that
utilize the Service.
The proposed Service also enables Members to further enhance their
own systems to send and receive communications to and from the Exchange
in a timelier manner and to verify that their systems are working as
intended. The proposed Service also promotes just and equitable
principles of trade because Members may use the Service for determining
compliance with certain regulatory requirements,\20\ trading
surveillance, and to assist them in evaluating compliance with certain
clock synchronization requirements.\21\
---------------------------------------------------------------------------

\20\ See supra note 12.
\21\ See supra note 13.
---------------------------------------------------------------------------

The proposed Service is not a market data product or access/
connectivity service and the Exchange does not propose to include
additional connectivity options or modify existing connectivity options
as part of this proposal. Members may use their existing methods to
connect to and send orders to the Exchange. The proposed Service is
simply a clock synchronization service, requested by Members, that
would allow Members to better understand the time by which their orders
travel from their systems to those of the Exchange. It is simply an
additional, optional tool that Members may use to calculate time
measurements at a sub-nanosecond level. The proposed Service will not
include any trading data regarding the Member's activity on the
Exchange or include any data from other trading activity on the
Exchange.
The proposed Service may not provide utility to all Members based
on their business model, use of existing time synchronization methods,
or reliance on other methods to test their system's performance to
ensure it is operating as intended. Nonetheless, the Exchange
understands that some Members may view the proposed

[[Page 69305]]

Service as critical in that it would assist them in better calculating
time measurements of their orders at a sub-nanosecond level and further
enhance their trading systems to perform with minimal latency as
compare [sic] to other market participants that participate on the
Exchange. However, the Exchange notes that use of the proposed Service
will be on voluntary basis and no Member will be required to subscribe
to the Service. Members may utilize existing time synchronization
methods described above or utilize some other services that may assist
them in time synchronization of their systems. Members may view these
alternatives as more in line with their business needs or chose [sic]
an alternative that is more compatible with their existing technology.
As noted above, other Members may also not think the proposed Service
is necessary or in line with their business need because they are not
latency sensitive or have developed other methods to test and ensure
that their network is operating as they intend.
Again, the Exchange notes that there is no rule or regulation that
requires the Exchange to provide, or that a Member elect to subscribe
to, the Service. It is entirely a business decision of each Member to
subscribe to the Service. Members that do not chose to subscribe to the
Service may avail themselves to other products that assist them in
better calculating time measurements related to their messages or
orders. The Exchange proposes to offer the Service as a convenience to
Members to provide them with additional information regarding trading
activity on the Exchange. A Member that chooses to subscribe to the
Service may discontinue the Service at any time if that Member
determines that the Service is no longer useful or that alternatives
better meet their business or system needs.
In summary, the proposed Service will help to protect a free and
open market by providing an additional tool (offered on an optional
basis) to the marketplace and by providing investors with greater
choices. Additionally, the proposal would not permit unfair
discrimination because the proposed Service will be available to all
Exchange Members.
Lastly, the Exchange believes the proposed changes to the title of
Exchange Rule 531 promote just and equitable principles of trade and
remove impediments to and perfect the mechanism of a free and open
market and a national market system because the proposed rule changes
will provide greater clarity to Members and the public regarding the
Exchange's Rules. It is in the public interest for rules to be accurate
and concise so as to eliminate the potential for confusion.

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

The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. In
this instance, the proposed rule change to offer the optional Service
is in response to Member interest and requests for tools that would
enable them to better measure traversal times between their network and
that of the Exchange at a more granular level. The Exchange does not
believe the proposed Service will have an inappropriate burden on
intra-market competition between Members that choose to subscribe to
the Service and those Members that do not. As discussed above, other
latency measurement tools are available to U.S. registered broker-
dealers, alternative trading systems, and currently offered by at least
two foreign securities exchanges.\22\ Like the proposed Service, these
tools also provide market participants the ability to further enhance
their systems to send and receive such communications to the Exchange
in a timelier manner and to verify that their systems are performing
correctly. Additionally, some Members may be able to enhance their own
traversal time calculations without subscribing to the proposed Service
by using existing time synchronization methods described above or
utilize some other services that may assist them in time
synchronization of their systems. Members may view these alternatives
as more in line with their business needs or chose [sic] an alternative
that is more compatible with their existing technology.
---------------------------------------------------------------------------

\22\ See supra notes 7 and 8.
---------------------------------------------------------------------------

The Exchange does not believe the proposed Service will have an
inappropriate burden on inter-market competition as similar services
are currently available to brokers-dealers by at least two other U.S.
exchange groups.\23\ The proposed Service would therefore serve to
enhance competition by allowing the Exchange to offer a time
synchronization service that is similar to those currently available on
other U.S. securities exchanges. The proposed rule change should
enhance competition by promoting further initiatives and innovation
among market centers and market participants as it concerns time
measurements and synchronization among trading platforms.
---------------------------------------------------------------------------

\23\ See supra note 7.
---------------------------------------------------------------------------

Lastly, if the proposed Service is unattractive to Members, Members
will opt not to subscribe to it. Accordingly, the Exchange does not
believe that the proposed change will impair the ability of Members or
competing order execution venues to maintain their competitive standing
in the financial markets.

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

Written comments were neither solicited nor received.

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 (i) as the Commission may
designate up to 90 days of such date 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 shall: (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-EMERALD-2021-38 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-EMERALD-2021-38. 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

[[Page 69306]]

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-
EMERALD-2021-38, and should be submitted on or before December 28,
2021.
---------------------------------------------------------------------------

\24\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26451 Filed 12-6-21; 8:45 am]
BILLING CODE 8011-01-P

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