Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Codify Certain Practices and Requirements Related to the Exchange's Port Message Rate Thresholds, 7519-7521 [2022-02667]
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Federal Register / Vol. 87, No. 27 / Wednesday, February 9, 2022 / Notices
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is February 6, 2022.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
19(b)(2) of the Act, 5 the Commission
designates March 23, 2022, as the date
by which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–CboeBZX–2021–083).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–02668 Filed 2–8–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
of a Proposed Rule Change To Codify
Certain Practices and Requirements
Related to the Exchange’s Port
Message Rate Thresholds
lotter on DSK11XQN23PROD with NOTICES1
February 3, 2022.
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 January
21, 2022, Cboe EDGX Exchange, Inc.
(‘‘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.
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
6 17
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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
[Release No. 34–94144; File No. SR–
CboeEDGX–2022–004]
5 15
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 codify
certain practices and requirements
related to the Exchange’s port message
rate thresholds, and to promote
transparency and maintain clarity in the
rules. 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.
1. Purpose
The purpose of this rule filing is to
codify certain of the Exchange’s current
practices and requirements related to its
port message rate thresholds, which it
believes will promote transparency and
maintain clarity in its rules.
Specifically, the Exchange is proposing
to add new Rule 11.23, titled Port
Message Rate Threshold, in order to
memorialize the Exchange’s ability to
establish per port message rate limits
applicable to its Members. The
Exchange has historically provided
Members with information regarding the
port order rate threshold, as defined
below, in its publicly available technical
specifications, 3 but to promote
transparency, the Exchange is proposing
3 Port Order Rate Threshold is defined as the
maximum allowed message rate on a port. See Cboe
FIX Specifications, available at: https://cdn.cboe./
resources/membership/Cboe_US_Equities_FIX_
Specification.pdf. See also Cboe BOE
Specifications, available at: https://cdn..com/
resources/membership/Cboe_US_Equities_BOE_
Specification.pdf.
PO 00000
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7519
to codify the Exchange’s discretion to
impose such limits in its rulebook. The
System 4 does not have unlimited port
capacity to consistently support an
unlimited number of messages
throughout the trading day. For this
reason, the Exchange limits each
Member to a maximum number of
messages over a set amount of time, per
port (hereinafter the ‘‘Port Order Rate
Thresholds’’). While Members may elect
to establish a lower Port Order Rate
Threshold, each Member is subject to
the same maximum Port Order Rate
Threshold. Like other exchanges, 5
EDGX currently imposes a maximum
Port Order Rate Threshold, at its
discretion, and notifies its Members of
such maximum number through the
Exchange’s publicly available technical
specifications.6 Consistent with this
current functionality, proposed Rule
11.23 would memorialize that all
Members shall be subject to a Port Order
Rate Threshold, as determined by the
Exchange in its discretion.
The Exchange notes that proposed
Rule 11.23 is based on substantially
similar rules that historically 7 existed
in the Cboe Options Exchange (‘‘C1’’)
4 The term ‘‘System’’ shall mean the electronic
communications and trading facility designated by
the Board through which securities orders of Users
are consolidated for ranking, execution and, when
applicable, routing away. See Rule 1.5(cc).
5 E.g., Section 5.7 of the New York Stock
Exchange’s technical specifications states, ‘‘In order
to protect the Trading Engine from an overload of
incoming messages, the CGC Gateway employs a
session-level throttle mechanism. This is a
configurable value currently set to 1000 messages
per second on a rolling 1 second basis. In the event
this throttle mechanism is activated, the gateway
will slow the sending of incoming messages down
to the Trading Engine during the throttle period
(i.e., messages will be queued) so as to not exceed
the defined message threshold. See https://
www.nyse.com///markets//NYSE_CCG_FIX_
Specification.pdf.
6 E.g., page 73, ‘‘Port Order Rate Threshold’’, of
the Cboe U.S. Equities FIX Technical
Specifications, which denotes the current
maximum allowed message rate on the port. When
the first non-administrative message is received, a
one second window begins. During the second no
more than 4,999 additional non-administrative
messages will be allowed within that window. If the
rate is exceeded all new orders in the time window
are rejected, modifies are treated as cancels, and
cancels are processed. If maximum rate limit of
10,000 is requested, no more than 9,999 additional
non-administrative messages will be allowed within
that one second window.
7 In 2016, Cboe Global Markets, Inc. the parent
company of C1 and C2, acquired Cboe EDGA
Exchange Inc., Cboe EDGX Exchange, Inc., Cboe
BZX Exchange, Inc., and Cboe BYX Exchange, Inc.
(collectively, the ‘‘Cboe Affiliated Exchanges’’).
Subsequent to the acquisitions, the Cboe Affiliated
Exchanges sought to align their rulebooks, retaining
only intended differences between the Cboe
Affiliated Exchanges. As part of this process C1
Rule 6.23B and C2 Rule 6.35 were removed from
the C1 and C2 rulebooks. See SR–CBOE–2019–033
(https://cdn.cboe.com/resources/regulations/rule_
filings/approved/2019/SR-CBOE-2019-033.pdf.)
E:\FR\FM\09FEN1.SGM
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Federal Register / Vol. 87, No. 27 / Wednesday, February 9, 2022 / Notices
lotter on DSK11XQN23PROD with NOTICES1
and the Cboe C2 Options Exchange
(‘‘C2’’) rulebooks, as well as MIAX Rule
502 (‘‘Message Packets’’) which
currently exists in the MIAX Options
and MIAX Emerald (collectively,
‘‘MIAX’’) rulebooks.8 Like new Rule
11.23, C1 Rule 6.23B 9 (Bandwidth
Packets), C2 Rule 6.35 10 (Message
Packets), and MIAX Rule 502 provide(d)
that Trading Permit Holders are entitled
to a maximum number of orders and
quotes per second as determined by C1/
C2 or MIAX.
The Exchange further notes that C1
Rule 6.23B, C2 Rule 6.35, and MIAX
Rule 502 provide(d) for certain other
messaging restrictions and actions not
included in proposed Rule 11.23;
namely, the restriction that only a
Market-Maker 11 may enter quotes, and
language noting the ability of Trading
Permit Holders to purchase additional
bandwidth packets at the prices set forth
in the exchanges’ fee schedule.
However, these changes are not
necessary for the purposes of proposed
Rule 11.23 because all Exchange
Members, not just Market Makers, may
submit messages to the Exchange.
Additionally, it is already clear from the
Exchange’s fee filings 12 that additional
ports are available for purchase.
Additionally, C1 Rule 6.23B and C2
Rule 6.35, provided those exchanges
with the discretion to temporarily
increase, upon request, a Member’s
limits, as well as the discretion to
designate time periods when Members
8 See MIAX Options and MIAX Emerald Rule 502
(‘‘Message Packets’’).
9 Rule 6.23B and 6.35 provided: Each Trading
Permit shall entitle the holder to a maximum
number of orders and quotes per second(s) as
determined by the Exchange. Only Market-Makers
may submit quotes. Trading Permit Holders seeking
to exceed that number of messages per second(s)
may purchase additional bandwidth packets at
prices set forth in the Exchange’s Fees Schedule.
The Exchange shall, upon request and where good
cause is shown, temporarily increase a Trading
Permit Holder’s order entry bandwidth allowance at
no additional cost. All determinations to
temporarily expand bandwidth allowance shall be
made in a non-discriminatory manner and on a fair
and equal basis. No bandwidth limits shall be in
effect during pre-opening prior to 8:25 a.m. CT,
which shall apply to all Trading Permit Holders.
The Exchange may also determine time periods for
which there shall temporarily be no bandwidth
limits in effect for all Trading Permit Holders. Any
such determination shall be made in the interest of
maintaining a fair and orderly market. The
Exchange shall notify all Trading Permit Holders of
any such determination.’’
10 Id.
11 The C1 and C2 Rulebooks defined ‘‘MarketMaker’’ as a Trading Permit Holder registered with
the Exchange for the purpose of making markets in
options contracts traded on the Exchange and that
is vested with the rights and responsibilities
specified in Chapter 5 of the Rules.
12 See EDGX Exchange fees, effective December 1,
2021, available at: https://www.cboe.com/us/
equities/membership/fee_schedule/edgx/.
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shall not be subject to a message limit.
This language is not included in this
rule filing because the Exchange is not
currently proposing to allow Members
to request temporary message rate
increases or to designate time periods
when Members shall not be subject to a
message limit.
2. Statutory Basis
The Exchange believes the proposed
rule changes are consistent with the
requirements of Section 6(b) of the
Act,13 in general, and Section 6(b)(5) of
the Act,14 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
Specifically, the Exchange believes
that proposed Rule 11.23 does not
unfairly discriminate amongst market
participants. Under proposed Rule
11.23, Members may elect a lower Port
Order Rate Threshold, but all Members
are limited to the same maximum Port
Order Rate Threshold.
Moreover, by providing the Exchange
with the explicit discretion to impose
Port Order Rate Thresholds, proposed
Rule 11.23 helps to foster a free and
open national market system, as well as
the Commission’s goal of ensuring that
critical market infrastructure has ‘‘levels
of capacity, integrity, availability, and
security adequate to maintain their
operational capability and promote the
maintenance of fair and order
market’’.15
As noted above the Exchange’s
Systems do not have unlimited port
capacity to consistently support an
unlimited number of messages
throughout the trading day. As such, it
is critical that the Exchange maintain
discretion to impose Port Order Rate
Thresholds to ensure that Members are
not able to submit orders in quantities
that degrade the capacity and
performance of Members’ ports, as well
as the Exchange systems through which
securities orders of Members are
consolidated for ranking, execution and,
where applicable, routing away.16
13 15
U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
15 See Securities and Exchange Act Release No.
73639 (November 19, 2014) 79 FR 72251 (December
5, 2014) (File No. S7–01–13) (Regulation SCI
Adopting Release).
16 See Section 6(b) of the Securities and Exchange
Act of 1934 (the ‘‘Act’’), 15 U.S.C. 78f (National
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
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 seeks merely to
provide Members with additional clarity
and transparency regarding Exchange
port message rate limits.
Importantly, the Exchange notes that
similar to other exchanges, proposed
rule 11.23 does not include an explicit
number of messages or range of
messages, that may be imposed by the
Exchange, in its discretion. Accordingly,
proposed Rule 11.23 places the
Exchange on par with its peer exchanges
by preserving the Exchange’s ability to
adjust the port order rate threshold as
needed, to ensure the Exchange’s
operational resiliency.
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
Securities Exchanges), which requires that
exchanges have the capacity to carry out the
purposes of an exchange under the Act.
E:\FR\FM\09FEN1.SGM
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Federal Register / Vol. 87, No. 27 / Wednesday, February 9, 2022 / Notices
• Send an email to rule-comments@
sec.gov. Please include File Number SRCboeEDGX–2022–004 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–2022–004. 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–2022–004 and
should be submitted on or before March
2, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
lotter on DSK11XQN23PROD with NOTICES1
[FR Doc. 2022–02667 Filed 2–8–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94140; File No. SR–LTSE–
2021–08]
Self-Regulatory Organizations; LongTerm Stock Exchange, Inc.; Notice of
Designation of a Longer Period for
Commission Action on a Proposed
Rule Change To Modify and Expand
the Package of Products and Services
Provided to Companies and Clarify
Existing Practice Under Rule 14.602
7521
19(b)(2) of the Act,5 the Commission
designates March 21, 2022, as the date
by which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–LTSE–2021–08).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–02665 Filed 2–8–22; 8:45 am]
BILLING CODE 8011–01–P
February 3, 2022.
On December 2, 2021, Long-Term
Stock Exchange, Inc. (‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule to
modify and expand the package of
products and services provided to
Companies and clarify existing practice
under Exchange Rule 14.602 with
respect to providing Company-specific
web pages on the Exchange’s website in
connection with listing on the
Exchange. The proposed rule change
was published for comment in the
Federal Register on December 21,
2021.3 The Commission has not
received any comment letters on the
proposed rule change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is February 4,
2022.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94145; File No. SR–
NASDAQ–2021–099]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Designation of a Longer Period for
Commission Action on Proposed Rule
Change To Amend Nasdaq Rule 5815
Regarding the Use of a Panel Monitor
Following a Compliance Determination
by a Nasdaq Listings Qualification
Hearings Panel
February 3, 2022.
On December 10, 2021, The Nasdaq
Stock Market LLC (‘‘Nasdaq’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend Rule 5815 regarding the use of a
Hearings Panel Monitor following a
compliance determination by a Nasdaq
Listings Qualification Hearings Panel.
The proposed rule change was
published for comment in the Federal
Register on December 21, 2021.3 The
Commission has received no comments
on the proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
5 Id.
1 15
17 17
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 93787
(December 15, 2021), 86 FR 72296 (December 21,
2021).
4 15 U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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17:29 Feb 08, 2022
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PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 93789
(December 15, 2021), 86 FR 72293.
4 15 U.S.C. 78s(b)(2).
1 15
E:\FR\FM\09FEN1.SGM
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Agencies
[Federal Register Volume 87, Number 27 (Wednesday, February 9, 2022)]
[Notices]
[Pages 7519-7521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02667]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94144; File No. SR-CboeEDGX-2022-004]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing of a Proposed Rule Change To Codify Certain Practices and
Requirements Related to the Exchange's Port Message Rate Thresholds
February 3, 2022.
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 January 21, 2022, Cboe EDGX Exchange, Inc. (``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
Cboe EDGX Exchange, Inc. (``EDGX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposal to codify certain practices and requirements related to the
Exchange's port message rate thresholds, and to promote transparency
and maintain clarity in the rules. 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 purpose of this rule filing is to codify certain of the
Exchange's current practices and requirements related to its port
message rate thresholds, which it believes will promote transparency
and maintain clarity in its rules. Specifically, the Exchange is
proposing to add new Rule 11.23, titled Port Message Rate Threshold, in
order to memorialize the Exchange's ability to establish per port
message rate limits applicable to its Members. The Exchange has
historically provided Members with information regarding the port order
rate threshold, as defined below, in its publicly available technical
specifications,\3\ but to promote transparency, the Exchange is
proposing to codify the Exchange's discretion to impose such limits in
its rulebook. The System \4\ does not have unlimited port capacity to
consistently support an unlimited number of messages throughout the
trading day. For this reason, the Exchange limits each Member to a
maximum number of messages over a set amount of time, per port
(hereinafter the ``Port Order Rate Thresholds''). While Members may
elect to establish a lower Port Order Rate Threshold, each Member is
subject to the same maximum Port Order Rate Threshold. Like other
exchanges,\5\ EDGX currently imposes a maximum Port Order Rate
Threshold, at its discretion, and notifies its Members of such maximum
number through the Exchange's publicly available technical
specifications.\6\ Consistent with this current functionality, proposed
Rule 11.23 would memorialize that all Members shall be subject to a
Port Order Rate Threshold, as determined by the Exchange in its
discretion.
---------------------------------------------------------------------------
\3\ Port Order Rate Threshold is defined as the maximum allowed
message rate on a port. See Cboe FIX Specifications, available at:
https://cdn.cboe./resources/membership/
Cboe_US_Equities_FIX_Specification.pdf. See also Cboe BOE
Specifications, available at: https://cdn..com/resources/membership/
Cboe_US_Equities_BOE_Specification.pdf.
\4\ The term ``System'' shall mean the electronic communications
and trading facility designated by the Board through which
securities orders of Users are consolidated for ranking, execution
and, when applicable, routing away. See Rule 1.5(cc).
\5\ E.g., Section 5.7 of the New York Stock Exchange's technical
specifications states, ``In order to protect the Trading Engine from
an overload of incoming messages, the CGC Gateway employs a session-
level throttle mechanism. This is a configurable value currently set
to 1000 messages per second on a rolling 1 second basis. In the
event this throttle mechanism is activated, the gateway will slow
the sending of incoming messages down to the Trading Engine during
the throttle period (i.e., messages will be queued) so as to not
exceed the defined message threshold. See https://www.nyse.com///markets//NYSE_CCG_FIX_Specification.pdf.
\6\ E.g., page 73, ``Port Order Rate Threshold'', of the Cboe
U.S. Equities FIX Technical Specifications, which denotes the
current maximum allowed message rate on the port. When the first
non-administrative message is received, a one second window begins.
During the second no more than 4,999 additional non-administrative
messages will be allowed within that window. If the rate is exceeded
all new orders in the time window are rejected, modifies are treated
as cancels, and cancels are processed. If maximum rate limit of
10,000 is requested, no more than 9,999 additional non-
administrative messages will be allowed within that one second
window.
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The Exchange notes that proposed Rule 11.23 is based on
substantially similar rules that historically \7\ existed in the Cboe
Options Exchange (``C1'')
[[Page 7520]]
and the Cboe C2 Options Exchange (``C2'') rulebooks, as well as MIAX
Rule 502 (``Message Packets'') which currently exists in the MIAX
Options and MIAX Emerald (collectively, ``MIAX'') rulebooks.\8\ Like
new Rule 11.23, C1 Rule 6.23B \9\ (Bandwidth Packets), C2 Rule 6.35
\10\ (Message Packets), and MIAX Rule 502 provide(d) that Trading
Permit Holders are entitled to a maximum number of orders and quotes
per second as determined by C1/C2 or MIAX.
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\7\ In 2016, Cboe Global Markets, Inc. the parent company of C1
and C2, acquired Cboe EDGA Exchange Inc., Cboe EDGX Exchange, Inc.,
Cboe BZX Exchange, Inc., and Cboe BYX Exchange, Inc. (collectively,
the ``Cboe Affiliated Exchanges''). Subsequent to the acquisitions,
the Cboe Affiliated Exchanges sought to align their rulebooks,
retaining only intended differences between the Cboe Affiliated
Exchanges. As part of this process C1 Rule 6.23B and C2 Rule 6.35
were removed from the C1 and C2 rulebooks. See SR-CBOE-2019-033
(https://cdn.cboe.com/resources/regulations/rule_filings/approved/
2019/SR-CBOE-2019-033.pdf.)
\8\ See MIAX Options and MIAX Emerald Rule 502 (``Message
Packets'').
\9\ Rule 6.23B and 6.35 provided: Each Trading Permit shall
entitle the holder to a maximum number of orders and quotes per
second(s) as determined by the Exchange. Only Market-Makers may
submit quotes. Trading Permit Holders seeking to exceed that number
of messages per second(s) may purchase additional bandwidth packets
at prices set forth in the Exchange's Fees Schedule. The Exchange
shall, upon request and where good cause is shown, temporarily
increase a Trading Permit Holder's order entry bandwidth allowance
at no additional cost. All determinations to temporarily expand
bandwidth allowance shall be made in a non-discriminatory manner and
on a fair and equal basis. No bandwidth limits shall be in effect
during pre-opening prior to 8:25 a.m. CT, which shall apply to all
Trading Permit Holders. The Exchange may also determine time periods
for which there shall temporarily be no bandwidth limits in effect
for all Trading Permit Holders. Any such determination shall be made
in the interest of maintaining a fair and orderly market. The
Exchange shall notify all Trading Permit Holders of any such
determination.''
\10\ Id.
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The Exchange further notes that C1 Rule 6.23B, C2 Rule 6.35, and
MIAX Rule 502 provide(d) for certain other messaging restrictions and
actions not included in proposed Rule 11.23; namely, the restriction
that only a Market-Maker \11\ may enter quotes, and language noting the
ability of Trading Permit Holders to purchase additional bandwidth
packets at the prices set forth in the exchanges' fee schedule.
However, these changes are not necessary for the purposes of proposed
Rule 11.23 because all Exchange Members, not just Market Makers, may
submit messages to the Exchange. Additionally, it is already clear from
the Exchange's fee filings \12\ that additional ports are available for
purchase. Additionally, C1 Rule 6.23B and C2 Rule 6.35, provided those
exchanges with the discretion to temporarily increase, upon request, a
Member's limits, as well as the discretion to designate time periods
when Members shall not be subject to a message limit. This language is
not included in this rule filing because the Exchange is not currently
proposing to allow Members to request temporary message rate increases
or to designate time periods when Members shall not be subject to a
message limit.
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\11\ The C1 and C2 Rulebooks defined ``Market-Maker'' as a
Trading Permit Holder registered with the Exchange for the purpose
of making markets in options contracts traded on the Exchange and
that is vested with the rights and responsibilities specified in
Chapter 5 of the Rules.
\12\ See EDGX Exchange fees, effective December 1, 2021,
available at: https://www.cboe.com/us/equities/membership/fee_schedule/edgx/.
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2. Statutory Basis
The Exchange believes the proposed rule changes are consistent with
the requirements of Section 6(b) of the Act,\13\ in general, and
Section 6(b)(5) of the Act,\14\ 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.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that proposed Rule 11.23 does
not unfairly discriminate amongst market participants. Under proposed
Rule 11.23, Members may elect a lower Port Order Rate Threshold, but
all Members are limited to the same maximum Port Order Rate Threshold.
Moreover, by providing the Exchange with the explicit discretion to
impose Port Order Rate Thresholds, proposed Rule 11.23 helps to foster
a free and open national market system, as well as the Commission's
goal of ensuring that critical market infrastructure has ``levels of
capacity, integrity, availability, and security adequate to maintain
their operational capability and promote the maintenance of fair and
order market''.\15\
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\15\ See Securities and Exchange Act Release No. 73639 (November
19, 2014) 79 FR 72251 (December 5, 2014) (File No. S7-01-13)
(Regulation SCI Adopting Release).
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As noted above the Exchange's Systems do not have unlimited port
capacity to consistently support an unlimited number of messages
throughout the trading day. As such, it is critical that the Exchange
maintain discretion to impose Port Order Rate Thresholds to ensure that
Members are not able to submit orders in quantities that degrade the
capacity and performance of Members' ports, as well as the Exchange
systems through which securities orders of Members are consolidated for
ranking, execution and, where applicable, routing away.\16\
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\16\ See Section 6(b) of the Securities and Exchange Act of 1934
(the ``Act''), 15 U.S.C. 78f (National Securities Exchanges), which
requires that exchanges have the capacity to carry out the purposes
of an exchange under the Act.
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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 seeks merely to provide Members with additional clarity and
transparency regarding Exchange port message rate limits.
Importantly, the Exchange notes that similar to other exchanges,
proposed rule 11.23 does not include an explicit number of messages or
range of messages, that may be imposed by the Exchange, in its
discretion. Accordingly, proposed Rule 11.23 places the Exchange on par
with its peer exchanges by preserving the Exchange's ability to adjust
the port order rate threshold as needed, to ensure the Exchange's
operational resiliency.
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
[[Page 7521]]
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2022-004 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-2022-004. 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-2022-004 and should be
submitted on or before March 2, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-02667 Filed 2-8-22; 8:45 am]
BILLING CODE 8011-01-P