Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing of Proposed Rule Change To Adopt Rules Related to ISO Functionality, 55055-55058 [2022-19412]
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Federal Register / Vol. 87, No. 173 / Thursday, September 8, 2022 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95664; File No. SR–MRX–
2022–11]
Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing of Proposed
Rule Change To Adopt Rules Related
to ISO Functionality
September 2, 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 August
18, 2022, Nasdaq MRX, LLC (‘‘MRX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
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 adopt rules
related to Intermarket Sweep Order
(‘‘ISO’’) functionality.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/mrx/rules, at the principal
office of the Exchange, 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.
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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 ISO
functionality in Options 3, Section 11
that permits Members to submit ISOs in
the Exchange’s Facilitation Mechanism
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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(‘‘Facilitation ISO’’), and Solicited Order
Mechanism (‘‘Solicitation ISO’’).3
As set forth in Options 3, Section
11(b), the Facilitation Mechanism is a
process wherein the Electronic Access
Member seeks to facilitate a block-size
order it represents as agent, and/or a
transaction wherein the Electronic
Access Member solicited interest to
execute against a block-size order it
represents as agent. Electronic Access
Members must be willing to execute the
entire size of orders entered into the
Facilitation Mechanism. As set forth in
Options 3, Section 11(d), the Solicited
Order Mechanism is a process by which
an Electronic Access Member can
attempt to execute orders of 500 or more
contracts it represents as agent against
contra orders it solicited. Each order
entered into the Solicited Order
Mechanism shall be designated as all-ornone.
An ISO is defined in Options 3,
Section 7(b)(5) as a limit order that
meets the requirements of Options 5,
Section 1(h) and trades at allowable
prices on the Exchange without regard
to the ABBO. Simultaneously with the
routing of the ISO to the Exchange, one
or more additional ISOs, as necessary,
are routed to execute against the full
displayed size of any Protected Bid, in
the case of a limit order to sell, or any
Protected Offer, in the case of a limit
order to buy, for the options series with
a price that is superior to the limit price
of the ISO.4 A Member may submit an
ISO to the Exchange only if it has
simultaneously routed one or more
additional ISOs to execute against the
full displayed size of any Protected Bid,
in the case of a limit order to sell, or
Protected Offer, in the case of a limit
order to buy, for an options series with
a price that is superior to the limit price
of the ISO.
As discussed further below, none of
the proposed rule changes will amend
current functionality. Rather, these
changes are designed to bring greater
transparency around certain order types
currently available on the Exchange.
The Exchange notes that the Facilitation
ISO and Solicitation ISO 5 are
3 This functionality is currently offered on the
Exchange, so the proposed rule change codifies
existing functionality in the Exchange’s rules.
4 ‘‘Protected Bid’’ or ‘‘Protected Offer’’ means a
Bid or Offer in an options series, respectively, that:
(a) is disseminated pursuant to the Options Order
Protection and Locked/Crossed Market Plan; and (b)
is the Best Bid or Best Offer, respectively, displayed
by an Eligible Exchange. See Options 5, Section
1(o).
5 The Exchange notes that it has an ISO trade
through surveillance in place that will identify and
capture when a Member marks a Facilitation or
Solicitation ISO and the order possibly trades
through a Protected Bid or Protected Offer price at
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functionally similar to the Exchange’s
Price Improvement Mechanism 6 ISO
(‘‘PIM ISO’’) as set forth in
Supplementary Material .08 to Options
3, Section 13, as further discussed
below.7
Facilitation ISO
Today, the Exchange allows the
submission of ISOs into its Facilitation
Mechanism as Facilitation ISOs. To
promote transparency, the Exchange
proposes to memorialize Facilitation
ISOs as an order type in Supplementary
Material .06 to Options 3, Section 11.
Specifically, the Exchange proposes:
A Facilitation ISO order (‘‘Facilitation
ISO’’) is the transmission of two orders for
crossing pursuant to paragraph (b) above
without regard for better priced Protected
Bids or Protected Offers (as defined in
Options 5, Section 1) because the Member
transmitting the Facilitation ISO to the
Exchange has, simultaneously with the
routing of the Facilitation ISO, routed one or
more ISOs, as necessary, to execute against
the full displayed size of any Protected Bid
or Protected Offer that is superior to the
starting Facilitation auction price. Any
execution(s) resulting from such sweeps shall
accrue to the Agency order.
Today, the Exchange will accept a
Facilitation ISO provided the order
adheres to the current order entry
requirements for the Facilitation
Mechanism as set forth in Options 3,
Section 11(b)(1),8 but without regard to
an away exchange. The Exchange will monitor the
NBBO prior to and after the order trades on the
Exchange to detect potential trade through
violations.
6 The Price Improvement Mechanism (‘‘PIM’’) is
a process that allows an Electronic Access Member
to provide price improvement opportunities for a
transaction wherein the Electronic Access Member
seeks to facilitate an order it represents as agent,
and/or a transaction wherein the Electronic Access
Member solicited interest to execute against an
order it represents as agent. See Options 3, Section
13(a).
7 The Exchange also notes that its affiliates,
Nasdaq BX (‘‘BX’’) and Nasdaq Phlx (‘‘Phlx’’),
currently allow ISOs to be entered into BX’s Price
Improvement Mechanism (‘‘PRISM’’) and Phlx’s
Price Improvement XL (‘‘PIXL’’), respectively. See
BX Options 3, Section 13(ii)(K) (describing PRISM
ISOs) and Phlx Options 3, Section 13(b)(11)
(describing PIXL ISOs). Other options exchanges
similarly allow ISOs to be entered into their auction
mechanisms. See e.g., Cboe Rules 5.37(b)(4)(A)
(allowing ISOs to be entered into Cboe’s Automated
Improvement Mechanism (‘‘AIM ISOs’’) and
5.39(b)(4) (allowing ISOs to be entered into Cboe’s
Solicitation Auction Mechanism (‘‘SAM ISOs’’)).
8 Specifically, Options 3, Section 11(b)(1)
provides that orders must be entered into the
Facilitation Mechanism at a price that is (A) equal
to or better than the NBBO on the same side of the
market as the agency order unless there is a Priority
Customer order on the same side Exchange best bid
or offer, in which case the order must be entered
at an improved price; and (B) equal to or better than
the ABBO on the opposite side. Orders that do not
meet these requirements are not eligible for the
Facilitation Mechanism and will be rejected.
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the ABBO (similar to a regular ISO in
Options 3, Section 7(b)(5)). Therefore,
Facilitation ISOs must be entered at a
price that is equal to or better than the
Exchange best bid or offer on the same
side of the market as the agency order
unless there is a Priority Customer order
on the same side Exchange best bid or
offer, in which case the Facilitation ISO
must be entered at an improved price.
The Exchange does not check the
Exchange best bid or offer on the
opposite side of the Facilitation ISO
because the underlying Facilitation
Mechanism similarly does not check the
opposite side Exchange best bid or offer.
As discussed above, the Facilitation
Mechanism only requires that the
opposite side of the Facilitation order be
equal to or better than the ABBO.9 The
Facilitation Mechanism does not check
the opposite side Exchange best bid or
offer because any interest that is
available on the opposite side of the
market would allocate against the
Facilitation agency order and provide
price improvement. As an example:
Assume the following market:
Exchange BBO: 1 × 2 (also NBBO)
CBOE: 0.75. × 2.25 (next best exchange
quote)
Facilitation order is entered to buy 50
contracts @2.05
No Responses are received.
The Facilitation order executes with
resting 50 lot quote @2. In this instance,
the Facilitation order is able to begin
crossed with the contra side Exchange
BBO because in execution, the resting
50 lot quote @2 is able to provide price
improvement to the facilitation order.
Given that the Facilitation ISO is
accepted so long as it adheres to the
order entry requirements of the
underlying Facilitation Mechanism, but
without regard to the ABBO, the
Exchange believes that it is appropriate
and logical to align the order entry
checks of the Facilitation ISO in the
manner discussed above.
The Exchange processes the
Facilitation ISO in the same manner that
it processes any other Facilitation
orders, except that it will initiate a
Facilitation auction without protecting
prices away. Instead, the Member
entering the Facilitation ISO will bear
the responsibility to clear all better
priced interest away simultaneously
with submitting the Facilitation ISO to
the Exchange. The Exchange believes
that offering this order type is beneficial
for Members as it provides them with an
efficient method to initiate a Facilitation
auction while preventing tradethroughs.
9 Id.
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The Exchange notes that the
Facilitation ISO is similar to the PIM
ISO that is currently described in
Supplementary Material .08 to Options
3, Section 13.10 Similar to the
Facilitation ISO, the PIM ISO must meet
the order entry requirements for PIM in
Options 3, Section 13(b) but does not
consider the ABBO.11 Further, the
Exchange processes a PIM ISO order the
same way as any other PIM order except
the Exchange will initiate a PIM auction
without protecting away prices. As with
Facilitation ISOs, the Member entering
the PIM ISO bears responsibility to clear
all better priced interest away
simultaneously with submitting the PIM
ISO to the Exchange.
The following example illustrates
how Facilitation ISO operates:
Assume:
ABBO: 1 × 1.20
MRX BBO: 0.90 × 1.30
Member enters Facilitation ISO with
Agency side to buy 50 @1.25
Facilitation ISO auction period
concludes with no responses
arriving
Facilitation ISO executes with contra
side 50 @1.25
Solicitation ISO
Today, the Exchange allows the
submission of ISOs into its Solicited
Order Mechanism as Solicitation ISOs.
To promote transparency, the Exchange
proposes to memorialize Solicitation
10 Supplementary Material .08 to Options 3,
Section 13 defines PIM ISO as the transmission of
two orders for crossing pursuant to this Rule
without regard for better priced Protected Bids or
Protected Offers (as defined in Options 5, Section
1) because the Member transmitting the PIM ISO to
the Exchange has, simultaneously with the routing
of the PIM ISO, routed one or more ISOs, as
necessary, to execute against the full displayed size
of any Protected Bid or Protected Offer that is
superior to the starting PIM auction price and has
swept all interest in the Exchange’s book priced
better than the proposed auction starting price. Any
execution(s) resulting from such sweeps shall
accrue to the PIM order.
11 Unlike the Facilitation Mechanism, PIM
requires an opposite side NBBO check, which
would include the Exchange best bid or offer. As
discussed above, the Facilitation order entry checks
only require that the opposite side of the
Facilitation order be equal to or better than the
ABBO (i.e., there is no opposite side local book
check). For PIM, the order must be entered at one
minimum price improvement increment better than
the NBBO on the opposite side of the market if the
Agency Order is for less than 50 option contracts
and if the difference between the NBBO is $0.01.
If the Agency Order is for 50 option contracts or
more, or if the difference between the NBBO is
greater than $0.01, the PIM order must be entered
at a price that is equal to or better than the NBBO
on the opposite side. See Options 3, Section
13(b)(1) and (2). As such, PIM ISOs additionally
require the entering Member to sweep all interest
in the Exchange’s book priced better than the
proposed auction starting price (unlike Facilitation
ISO which does not have a similar sweep
requirement).
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Fmt 4703
Sfmt 4703
ISOs as an order type in Supplementary
Material .07 to Options 3, Section 11.
Specifically, the Exchange proposes:
A Solicitation ISO order (‘‘Solicitation
ISO’’) is the transmission of two orders for
crossing pursuant to paragraph (d) above
without regard for better priced Protected
Bids or Protected Offers (as defined in
Options 5, Section 1) because the Member
transmitting the Solicitation ISO to the
Exchange has, simultaneously with the
routing of the Solicitation ISO, routed one or
more ISOs, as necessary, to execute against
the full displayed size of any Protected Bid
or Protected Offer that is superior to the
starting Solicitation auction price and has
swept all interest in the Exchange’s book
priced better than the proposed auction
starting price. Any execution(s) resulting
from such sweeps shall accrue to the Agency
order.
Today, the Exchange will accept a
Solicitation ISO provided the order
adheres to the current order entry
requirements for the Solicited Order
Mechanism as set forth in Options 3,
Section 11(d)(1),12 but without regard to
the ABBO (similar to a regular ISO in
Options 3, Section 7(b)(5)). Therefore,
Solicitation ISOs must be entered at a
price that is equal to or better than the
Exchange best bid or offer on both sides
of the market; provided that, if there is
a Priority Customer order on the
Exchange best bid or offer, the
Solicitation ISO must be entered at an
improved price.
The Exchange processes the
Solicitation ISO in the same manner
that it processes other orders entered in
the Solicited Order Mechanism, except
that it will initiate a Solicited Order
auction without protecting away prices.
Instead, the Member entering the
Solicitation ISO will bear the
responsibility to clear all better priced
interest away simultaneously with
submitting the Solicitation ISO to the
Exchange. Similar to the Facilitation
ISO discussed above, the Exchange
believes that offering this order type is
beneficial for Members as it provides
them with an efficient method to initiate
an auction in the Solicited Order
Mechanism while preventing tradethroughs. Furthermore, Solicitation
ISOs are similar to PIM ISOs in the
manner described above for Facilitation
ISOs.13 In addition, another options
12 Specifically, Options 3, Section 11(d)(1)
provides that orders must be entered into the
Solicited Order Mechanism at a price that is equal
to or better than the NBBO on both sides of the
market; provided that, if there is a Priority
Customer order on the Exchange best bid or offer,
the order must be entered at an improved price.
Orders that do not meet these requirements are not
eligible for the Solicited Order Mechanism and will
be rejected.
13 The Exchange notes that similar to the PIM
ISO, but unlike Facilitation ISO, the Solicitation
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exchange currently offers a substantially
similar order type as the Exchange’s
Solicitation ISO.14
The following example illustrates
how the Solicitation ISO operates:
Assume:
ABBO: 1 × 1.20
MRX BBO: 0.90 × 1.30
Member enters Solicitation ISO with
Agency side to buy 500 @1.25
Solicitation ISO auction period
concludes with no responses
arriving
Solicitation ISO executes with contra
side 500 @1.25
Intermarket Sweep Orders
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In light of the changes proposed above
to adopt the Facilitation ISO and
Solicitation ISO into its Rulebook, the
Exchange proposes to make related
amendments to the ISO rule in Options
3, Section 7(b)(5) to add that ‘‘ISOs may
be entered on the single leg order book
or into the Facilitation Mechanism,
Solicited Order Mechanism, or Price
Improvement Mechanism, pursuant to
Supplementary Material .06 and .07 to
Options 3, Section 11, and
Supplementary Material .08 to Options
3, Section 13.’’
The proposed rule text will be similar
to BX’s current ISO rule in BX Options
3, Section 7(a)(6), except the Exchange’s
ISO rule will refer to Exchange
functionality that BX does not have
today. Specifically, BX does not
currently offer Facilitation ISOs or
Solicitation ISOs. PIM ISOs are
currently codified in Supplementary
Material .08 to Options 3, Section 13, so
the proposed rule text herein is a nonsubstantive amendment to add a crossreference to the PIM ISO rule. The
proposed language does not amend the
current ISO functionality but rather is
intended to add more granularity and
ISO requires entering Members to sweep all interest
in the Exchange’s book priced better than the
proposed auction starting price. The order entry
checks for the Solicited Order Mechanism, similar
to PIM, requires an opposite side NBBO check,
which would include the Exchange best bid or
offer. See supra notes 11–12.
14 In addition, Cboe currently offers a SAM ISO
order type, which is defined as the submission of
two orders for crossing in a SAM Auction without
regard for better-priced Protected Quotes (as
defined in Cboe Rule 5.65) because the Initiating
TPH routed an ISO(s) simultaneously with the
routing of the SAM ISO to execute against the full
displayed size of any Protected Quote that is better
than the stop price and has swept all interest in the
Book with a price better than the stop price. Any
execution(s) resulting from these sweeps accrue to
the SAM Agency Order. See Cboe Rule 5.39(b)(4).
See also Securities Exchange Act Release No. 87192
(October 1, 2019), 84 FR 53525 (October 7, 2019)
(SR–CBOE–2019–063) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
related to the SAM Auction, including to adopt the
SAM ISO).
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more closely align the ISO rule with
BX’s ISO rule.
currently described in Supplementary
Material .08 to Options 3, Section 13.19
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,15 in general, and furthers the
objectives of Section 6(b)(5) of the Act,16
in particular, in that it is designed to
promote just and equitable principles of
trade, 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.
Intermarket Sweep Orders
The Exchange believes that the
proposed changes to the definition of
ISOs in Options 3, Section 7(b)(5) are
consistent with the Act. As discussed
above, the proposed changes are
intended to add more granularity and
more closely align the level of detail in
the ISO rule with BX’s ISO rule in BX
Options 3, Section 7(a)(6) by specifying
how ISOs may be submitted. As such,
the Exchange believes that its proposal
will promote transparency in the
Exchange’s rules and consistency across
the rules of the Nasdaq affiliated options
exchanges. While the proposed changes
to the Exchange’s ISO rule generally
track BX’s ISO rule, the proposed
language will refer to certain Exchange
functionality that BX does not have
today (i.e., Facilitation ISOs or
Solicitation ISOs).
Facilitation and Solicitation ISOs
The Exchange believes that the
proposal to adopt Facilitation ISOs and
Solicitation ISOs in Supplementary
Material .06 and .07 to Options 3,
Section 11 is consistent with the Act.
The proposal will codify current
functionality, thereby promoting
transparency in the Exchange’s rules
and reducing any potential confusion.
As it relates to Solicitation ISOs, the
Exchange believes that the proposed
rule change promotes fair competition.
Specifically, the proposal allows the
Exchange to offer Members an order
type that is already offered by another
options exchange.17
In addition, offering the Facilitation
ISO and Solicitation ISO benefits market
participants and investors because this
functionality provides an additional and
efficient method to initiate a Facilitation
or Solicited Order auction while
preventing trade-throughs. As discussed
above, the Exchange processes the
Facilitation and Solicitation ISO in the
same manner as it processes any other
order entered into the Facilitation and
Solicited Order Mechanism, except the
Exchange will initiate a Facilitation
auction or Solicited Order auction
without protecting away prices (similar
to a regular ISO in Options 3, Section
7(b)(5)). Instead, the entering Member,
simultaneous with the routing of the
Facilitation ISO or Solicitation ISO to
the Exchange, remains responsible for
routing one or more ISOs, as necessary,
to execute against the full displayed size
of any Protected Bid or Protected Offer
that is superior to the starting
Facilitation or Solicitation auction
price, and for Solicitation ISO, has
swept all interest in the Exchange’s
book priced better than the proposed
auction starting price.18 As discussed
above, these order types operate in a
similar manner to the PIM ISO that is
15 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
17 See supra note 14.
18 See supra note 13.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. Offering
Facilitation and Solicitation ISOs does
not impose an undue burden on
competition because it enables the
Exchange to provide market participants
with an additional and efficient method
to initiate a Facilitation or Solicited
Order auction while preventing tradethroughs, as discussed above. In
addition, all Members may submit a
Facilitation ISO or Solicitation ISO. As
it relates to the Solicitation ISO, the
Exchange believes that the proposed
rule change will promote fair
competition among options exchanges
as it will allow the Exchange to compete
with other markets that already allow
ISOs in their solicitation auction
mechanisms.20
The Exchange further believes that the
proposed changes to its ISO rule do not
impose an undue burden on
competition. As discussed above, the
proposed changes are intended to add
more granularity and more closely align
the level of detail in the ISO rule with
BX’s ISO rule in BX Options 3, Section
7(a)(6) by specifying how ISOs may be
submitted, except the Exchange’s ISO
rule will refer to Exchange functionality
that BX does not have today (i.e.,
Facilitation and Solicitation ISOs). With
the proposed changes, the Exchange
believes that its proposal will promote
16 15
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19 See
20 See
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supra notes 11 and 13.
supra note 14.
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Federal Register / Vol. 87, No. 173 / Thursday, September 8, 2022 / Notices
transparency in the Exchange’s rules
and consistency across the rules of the
Nasdaq affiliated options exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
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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 of such date (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 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.
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–MRX–2022–11 and should
be submitted on or before September 29,
2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Deputy Secretary.
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:
[FR Doc. 2022–19412 Filed 9–7–22; 8:45 am]
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–
MRX–2022–11 on the subject line.
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change To Revise the Excess
Capital Premium Charge
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–MRX–2022–11. 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
September 1, 2022.
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95656; File No. SR–NSCC–
2022–005]
I. Introduction
On May 20, 2022, National Securities
Clearing Corporation (‘‘NSCC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–NSCC–2022–005 (the
‘‘Proposed Rule Change’’) pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The Proposed Rule
Change was published for comment in
the Federal Register on June 8, 2022,3
and the Commission has received
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 95026
(June 2, 2022), 87 FR 34913 (June 8, 2022) (File No.
SR–NSCC–2022–005). The Notice referred to an
incorrect filing date of May 30, 2022; however, the
proposal was filed on May 20, 2022, as indicated
here.
comments regarding the changes
proposed in the Proposed Rule Change.4
On July 11, 2022, pursuant to Section
19(b)(2) of the Act,5 the Commission
designated a longer period within which
to approve, disapprove, or institute
proceedings to determine whether to
approve or disapprove the Proposed
Rule Change.6 This order institutes
proceedings, pursuant to Section
19(b)(2)(B) of the Act,7 to determine
whether to approve or disapprove the
Proposed Rule Change.
II. Summary of the Proposed Rule
Change
A key tool that NSCC uses to manage
its respective credit exposures to its
members is the daily collection of
margin from each member, which is
referred to as each member’s Required
Fund Deposit. The aggregated amount of
all members’ margin constitutes the
Clearing Fund, which NSCC would
access should a defaulted member’s
own margin be insufficient to satisfy
losses to NSCC caused by the
liquidation of that member’s portfolio.
The Excess Capital Premium (ECP)
charge is a component of the Clearing
Fund that is designed to mitigate the
heightened default risk a member could
pose to NSCC if it operates with lower
capital levels relative to its margin
requirements. Each Business Day, NSCC
determines if a member may be subject
to the ECP charge by first determining
its Calculated Amount. The Calculated
Amount is a portion of a member’s
Required Fund Deposit designed to
represent its margin requirements to
NSCC.
As described in the Notice, NSCC
proposes to modify Procedure XV
(Clearing Fund Formula and Other
Matters) of NSCC’s Rules & Procedures
(‘‘Rules’’) to revise the ECP charge by
enhancing the methodology for
calculating the charge to (1) compare a
member’s applicable capital amounts
with the amount it contributes to the
Clearing Fund that represents its
volatility charge, (2) for members that
are broker-dealers, use net capital
amounts rather than excess net capital
amounts in the calculation of the ECP
charge; and for all other members, use
equity capital in the calculation of the
ECP charge, and (3) establish a cap of
2.0 for the Excess Capital Ratio that is
used in calculating a member’s ECP
1 15
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
4 Comments are available at https://www.sec.gov/
comments/sr-nscc-2022-005/srnscc2022005.htm.
5 15 U.S.C. 78s(b)(2).
6 Securities Exchange Act Release No. 95245 (July
11, 2022), 87 FR 42523 (July 15, 2022) (SR–NSCC–
2022–005).
7 15 U.S.C. 78s(b)(2)(B).
E:\FR\FM\08SEN1.SGM
08SEN1
Agencies
[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55055-55058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19412]
[[Page 55055]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95664; File No. SR-MRX-2022-11]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
of Proposed Rule Change To Adopt Rules Related to ISO Functionality
September 2, 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 August 18, 2022, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II 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 adopt rules related to Intermarket Sweep
Order (``ISO'') functionality.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the
principal office of the Exchange, 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 ISO functionality in Options 3,
Section 11 that permits Members to submit ISOs in the Exchange's
Facilitation Mechanism (``Facilitation ISO''), and Solicited Order
Mechanism (``Solicitation ISO'').\3\
---------------------------------------------------------------------------
\3\ This functionality is currently offered on the Exchange, so
the proposed rule change codifies existing functionality in the
Exchange's rules.
---------------------------------------------------------------------------
As set forth in Options 3, Section 11(b), the Facilitation
Mechanism is a process wherein the Electronic Access Member seeks to
facilitate a block-size order it represents as agent, and/or a
transaction wherein the Electronic Access Member solicited interest to
execute against a block-size order it represents as agent. Electronic
Access Members must be willing to execute the entire size of orders
entered into the Facilitation Mechanism. As set forth in Options 3,
Section 11(d), the Solicited Order Mechanism is a process by which an
Electronic Access Member can attempt to execute orders of 500 or more
contracts it represents as agent against contra orders it solicited.
Each order entered into the Solicited Order Mechanism shall be
designated as all-or-none.
An ISO is defined in Options 3, Section 7(b)(5) as a limit order
that meets the requirements of Options 5, Section 1(h) and trades at
allowable prices on the Exchange without regard to the ABBO.
Simultaneously with the routing of the ISO to the Exchange, one or more
additional ISOs, as necessary, are routed to execute against the full
displayed size of any Protected Bid, in the case of a limit order to
sell, or any Protected Offer, in the case of a limit order to buy, for
the options series with a price that is superior to the limit price of
the ISO.\4\ A Member may submit an ISO to the Exchange only if it has
simultaneously routed one or more additional ISOs to execute against
the full displayed size of any Protected Bid, in the case of a limit
order to sell, or Protected Offer, in the case of a limit order to buy,
for an options series with a price that is superior to the limit price
of the ISO.
---------------------------------------------------------------------------
\4\ ``Protected Bid'' or ``Protected Offer'' means a Bid or
Offer in an options series, respectively, that: (a) is disseminated
pursuant to the Options Order Protection and Locked/Crossed Market
Plan; and (b) is the Best Bid or Best Offer, respectively, displayed
by an Eligible Exchange. See Options 5, Section 1(o).
---------------------------------------------------------------------------
As discussed further below, none of the proposed rule changes will
amend current functionality. Rather, these changes are designed to
bring greater transparency around certain order types currently
available on the Exchange. The Exchange notes that the Facilitation ISO
and Solicitation ISO \5\ are functionally similar to the Exchange's
Price Improvement Mechanism \6\ ISO (``PIM ISO'') as set forth in
Supplementary Material .08 to Options 3, Section 13, as further
discussed below.\7\
---------------------------------------------------------------------------
\5\ The Exchange notes that it has an ISO trade through
surveillance in place that will identify and capture when a Member
marks a Facilitation or Solicitation ISO and the order possibly
trades through a Protected Bid or Protected Offer price at an away
exchange. The Exchange will monitor the NBBO prior to and after the
order trades on the Exchange to detect potential trade through
violations.
\6\ The Price Improvement Mechanism (``PIM'') is a process that
allows an Electronic Access Member to provide price improvement
opportunities for a transaction wherein the Electronic Access Member
seeks to facilitate an order it represents as agent, and/or a
transaction wherein the Electronic Access Member solicited interest
to execute against an order it represents as agent. See Options 3,
Section 13(a).
\7\ The Exchange also notes that its affiliates, Nasdaq BX
(``BX'') and Nasdaq Phlx (``Phlx''), currently allow ISOs to be
entered into BX's Price Improvement Mechanism (``PRISM'') and Phlx's
Price Improvement XL (``PIXL''), respectively. See BX Options 3,
Section 13(ii)(K) (describing PRISM ISOs) and Phlx Options 3,
Section 13(b)(11) (describing PIXL ISOs). Other options exchanges
similarly allow ISOs to be entered into their auction mechanisms.
See e.g., Cboe Rules 5.37(b)(4)(A) (allowing ISOs to be entered into
Cboe's Automated Improvement Mechanism (``AIM ISOs'') and 5.39(b)(4)
(allowing ISOs to be entered into Cboe's Solicitation Auction
Mechanism (``SAM ISOs'')).
---------------------------------------------------------------------------
Facilitation ISO
Today, the Exchange allows the submission of ISOs into its
Facilitation Mechanism as Facilitation ISOs. To promote transparency,
the Exchange proposes to memorialize Facilitation ISOs as an order type
in Supplementary Material .06 to Options 3, Section 11. Specifically,
the Exchange proposes:
A Facilitation ISO order (``Facilitation ISO'') is the
transmission of two orders for crossing pursuant to paragraph (b)
above without regard for better priced Protected Bids or Protected
Offers (as defined in Options 5, Section 1) because the Member
transmitting the Facilitation ISO to the Exchange has,
simultaneously with the routing of the Facilitation ISO, routed one
or more ISOs, as necessary, to execute against the full displayed
size of any Protected Bid or Protected Offer that is superior to the
starting Facilitation auction price. Any execution(s) resulting from
such sweeps shall accrue to the Agency order.
Today, the Exchange will accept a Facilitation ISO provided the
order adheres to the current order entry requirements for the
Facilitation Mechanism as set forth in Options 3, Section 11(b)(1),\8\
but without regard to
[[Page 55056]]
the ABBO (similar to a regular ISO in Options 3, Section 7(b)(5)).
Therefore, Facilitation ISOs must be entered at a price that is equal
to or better than the Exchange best bid or offer on the same side of
the market as the agency order unless there is a Priority Customer
order on the same side Exchange best bid or offer, in which case the
Facilitation ISO must be entered at an improved price. The Exchange
does not check the Exchange best bid or offer on the opposite side of
the Facilitation ISO because the underlying Facilitation Mechanism
similarly does not check the opposite side Exchange best bid or offer.
As discussed above, the Facilitation Mechanism only requires that the
opposite side of the Facilitation order be equal to or better than the
ABBO.\9\ The Facilitation Mechanism does not check the opposite side
Exchange best bid or offer because any interest that is available on
the opposite side of the market would allocate against the Facilitation
agency order and provide price improvement. As an example:
---------------------------------------------------------------------------
\8\ Specifically, Options 3, Section 11(b)(1) provides that
orders must be entered into the Facilitation Mechanism at a price
that is (A) equal to or better than the NBBO on the same side of the
market as the agency order unless there is a Priority Customer order
on the same side Exchange best bid or offer, in which case the order
must be entered at an improved price; and (B) equal to or better
than the ABBO on the opposite side. Orders that do not meet these
requirements are not eligible for the Facilitation Mechanism and
will be rejected.
\9\ Id.
---------------------------------------------------------------------------
Assume the following market:
Exchange BBO: 1 x 2 (also NBBO)
CBOE: 0.75. x 2.25 (next best exchange quote)
Facilitation order is entered to buy 50 contracts @2.05
No Responses are received.
The Facilitation order executes with resting 50 lot quote @2. In
this instance, the Facilitation order is able to begin crossed with the
contra side Exchange BBO because in execution, the resting 50 lot quote
@2 is able to provide price improvement to the facilitation order.
Given that the Facilitation ISO is accepted so long as it adheres
to the order entry requirements of the underlying Facilitation
Mechanism, but without regard to the ABBO, the Exchange believes that
it is appropriate and logical to align the order entry checks of the
Facilitation ISO in the manner discussed above.
The Exchange processes the Facilitation ISO in the same manner that
it processes any other Facilitation orders, except that it will
initiate a Facilitation auction without protecting prices away.
Instead, the Member entering the Facilitation ISO will bear the
responsibility to clear all better priced interest away simultaneously
with submitting the Facilitation ISO to the Exchange. The Exchange
believes that offering this order type is beneficial for Members as it
provides them with an efficient method to initiate a Facilitation
auction while preventing trade-throughs.
The Exchange notes that the Facilitation ISO is similar to the PIM
ISO that is currently described in Supplementary Material .08 to
Options 3, Section 13.\10\ Similar to the Facilitation ISO, the PIM ISO
must meet the order entry requirements for PIM in Options 3, Section
13(b) but does not consider the ABBO.\11\ Further, the Exchange
processes a PIM ISO order the same way as any other PIM order except
the Exchange will initiate a PIM auction without protecting away
prices. As with Facilitation ISOs, the Member entering the PIM ISO
bears responsibility to clear all better priced interest away
simultaneously with submitting the PIM ISO to the Exchange.
---------------------------------------------------------------------------
\10\ Supplementary Material .08 to Options 3, Section 13 defines
PIM ISO as the transmission of two orders for crossing pursuant to
this Rule without regard for better priced Protected Bids or
Protected Offers (as defined in Options 5, Section 1) because the
Member transmitting the PIM ISO to the Exchange has, simultaneously
with the routing of the PIM ISO, routed one or more ISOs, as
necessary, to execute against the full displayed size of any
Protected Bid or Protected Offer that is superior to the starting
PIM auction price and has swept all interest in the Exchange's book
priced better than the proposed auction starting price. Any
execution(s) resulting from such sweeps shall accrue to the PIM
order.
\11\ Unlike the Facilitation Mechanism, PIM requires an opposite
side NBBO check, which would include the Exchange best bid or offer.
As discussed above, the Facilitation order entry checks only require
that the opposite side of the Facilitation order be equal to or
better than the ABBO (i.e., there is no opposite side local book
check). For PIM, the order must be entered at one minimum price
improvement increment better than the NBBO on the opposite side of
the market if the Agency Order is for less than 50 option contracts
and if the difference between the NBBO is $0.01. If the Agency Order
is for 50 option contracts or more, or if the difference between the
NBBO is greater than $0.01, the PIM order must be entered at a price
that is equal to or better than the NBBO on the opposite side. See
Options 3, Section 13(b)(1) and (2). As such, PIM ISOs additionally
require the entering Member to sweep all interest in the Exchange's
book priced better than the proposed auction starting price (unlike
Facilitation ISO which does not have a similar sweep requirement).
---------------------------------------------------------------------------
The following example illustrates how Facilitation ISO operates:
Assume:
ABBO: 1 x 1.20
MRX BBO: 0.90 x 1.30
Member enters Facilitation ISO with Agency side to buy 50 @1.25
Facilitation ISO auction period concludes with no responses arriving
Facilitation ISO executes with contra side 50 @1.25
Solicitation ISO
Today, the Exchange allows the submission of ISOs into its
Solicited Order Mechanism as Solicitation ISOs. To promote
transparency, the Exchange proposes to memorialize Solicitation ISOs as
an order type in Supplementary Material .07 to Options 3, Section 11.
Specifically, the Exchange proposes:
A Solicitation ISO order (``Solicitation ISO'') is the
transmission of two orders for crossing pursuant to paragraph (d)
above without regard for better priced Protected Bids or Protected
Offers (as defined in Options 5, Section 1) because the Member
transmitting the Solicitation ISO to the Exchange has,
simultaneously with the routing of the Solicitation ISO, routed one
or more ISOs, as necessary, to execute against the full displayed
size of any Protected Bid or Protected Offer that is superior to the
starting Solicitation auction price and has swept all interest in
the Exchange's book priced better than the proposed auction starting
price. Any execution(s) resulting from such sweeps shall accrue to
the Agency order.
Today, the Exchange will accept a Solicitation ISO provided the
order adheres to the current order entry requirements for the Solicited
Order Mechanism as set forth in Options 3, Section 11(d)(1),\12\ but
without regard to the ABBO (similar to a regular ISO in Options 3,
Section 7(b)(5)). Therefore, Solicitation ISOs must be entered at a
price that is equal to or better than the Exchange best bid or offer on
both sides of the market; provided that, if there is a Priority
Customer order on the Exchange best bid or offer, the Solicitation ISO
must be entered at an improved price.
---------------------------------------------------------------------------
\12\ Specifically, Options 3, Section 11(d)(1) provides that
orders must be entered into the Solicited Order Mechanism at a price
that is equal to or better than the NBBO on both sides of the
market; provided that, if there is a Priority Customer order on the
Exchange best bid or offer, the order must be entered at an improved
price. Orders that do not meet these requirements are not eligible
for the Solicited Order Mechanism and will be rejected.
---------------------------------------------------------------------------
The Exchange processes the Solicitation ISO in the same manner that
it processes other orders entered in the Solicited Order Mechanism,
except that it will initiate a Solicited Order auction without
protecting away prices. Instead, the Member entering the Solicitation
ISO will bear the responsibility to clear all better priced interest
away simultaneously with submitting the Solicitation ISO to the
Exchange. Similar to the Facilitation ISO discussed above, the Exchange
believes that offering this order type is beneficial for Members as it
provides them with an efficient method to initiate an auction in the
Solicited Order Mechanism while preventing trade-throughs. Furthermore,
Solicitation ISOs are similar to PIM ISOs in the manner described above
for Facilitation ISOs.\13\ In addition, another options
[[Page 55057]]
exchange currently offers a substantially similar order type as the
Exchange's Solicitation ISO.\14\
---------------------------------------------------------------------------
\13\ The Exchange notes that similar to the PIM ISO, but unlike
Facilitation ISO, the Solicitation ISO requires entering Members to
sweep all interest in the Exchange's book priced better than the
proposed auction starting price. The order entry checks for the
Solicited Order Mechanism, similar to PIM, requires an opposite side
NBBO check, which would include the Exchange best bid or offer. See
supra notes 11-12.
\14\ In addition, Cboe currently offers a SAM ISO order type,
which is defined as the submission of two orders for crossing in a
SAM Auction without regard for better-priced Protected Quotes (as
defined in Cboe Rule 5.65) because the Initiating TPH routed an
ISO(s) simultaneously with the routing of the SAM ISO to execute
against the full displayed size of any Protected Quote that is
better than the stop price and has swept all interest in the Book
with a price better than the stop price. Any execution(s) resulting
from these sweeps accrue to the SAM Agency Order. See Cboe Rule
5.39(b)(4). See also Securities Exchange Act Release No. 87192
(October 1, 2019), 84 FR 53525 (October 7, 2019) (SR-CBOE-2019-063)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change related to the SAM Auction, including to adopt the SAM ISO).
---------------------------------------------------------------------------
The following example illustrates how the Solicitation ISO
operates:
Assume:
ABBO: 1 x 1.20
MRX BBO: 0.90 x 1.30
Member enters Solicitation ISO with Agency side to buy 500 @1.25
Solicitation ISO auction period concludes with no responses arriving
Solicitation ISO executes with contra side 500 @1.25
Intermarket Sweep Orders
In light of the changes proposed above to adopt the Facilitation
ISO and Solicitation ISO into its Rulebook, the Exchange proposes to
make related amendments to the ISO rule in Options 3, Section 7(b)(5)
to add that ``ISOs may be entered on the single leg order book or into
the Facilitation Mechanism, Solicited Order Mechanism, or Price
Improvement Mechanism, pursuant to Supplementary Material .06 and .07
to Options 3, Section 11, and Supplementary Material .08 to Options 3,
Section 13.''
The proposed rule text will be similar to BX's current ISO rule in
BX Options 3, Section 7(a)(6), except the Exchange's ISO rule will
refer to Exchange functionality that BX does not have today.
Specifically, BX does not currently offer Facilitation ISOs or
Solicitation ISOs. PIM ISOs are currently codified in Supplementary
Material .08 to Options 3, Section 13, so the proposed rule text herein
is a non-substantive amendment to add a cross-reference to the PIM ISO
rule. The proposed language does not amend the current ISO
functionality but rather is intended to add more granularity and more
closely align the ISO rule with BX's ISO rule.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\15\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\16\ in particular, in that it is designed to
promote just and equitable principles of trade, 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.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Facilitation and Solicitation ISOs
The Exchange believes that the proposal to adopt Facilitation ISOs
and Solicitation ISOs in Supplementary Material .06 and .07 to Options
3, Section 11 is consistent with the Act. The proposal will codify
current functionality, thereby promoting transparency in the Exchange's
rules and reducing any potential confusion. As it relates to
Solicitation ISOs, the Exchange believes that the proposed rule change
promotes fair competition. Specifically, the proposal allows the
Exchange to offer Members an order type that is already offered by
another options exchange.\17\
---------------------------------------------------------------------------
\17\ See supra note 14.
---------------------------------------------------------------------------
In addition, offering the Facilitation ISO and Solicitation ISO
benefits market participants and investors because this functionality
provides an additional and efficient method to initiate a Facilitation
or Solicited Order auction while preventing trade-throughs. As
discussed above, the Exchange processes the Facilitation and
Solicitation ISO in the same manner as it processes any other order
entered into the Facilitation and Solicited Order Mechanism, except the
Exchange will initiate a Facilitation auction or Solicited Order
auction without protecting away prices (similar to a regular ISO in
Options 3, Section 7(b)(5)). Instead, the entering Member, simultaneous
with the routing of the Facilitation ISO or Solicitation ISO to the
Exchange, remains responsible for routing one or more ISOs, as
necessary, to execute against the full displayed size of any Protected
Bid or Protected Offer that is superior to the starting Facilitation or
Solicitation auction price, and for Solicitation ISO, has swept all
interest in the Exchange's book priced better than the proposed auction
starting price.\18\ As discussed above, these order types operate in a
similar manner to the PIM ISO that is currently described in
Supplementary Material .08 to Options 3, Section 13.\19\
---------------------------------------------------------------------------
\18\ See supra note 13.
\19\ See supra notes 11 and 13.
---------------------------------------------------------------------------
Intermarket Sweep Orders
The Exchange believes that the proposed changes to the definition
of ISOs in Options 3, Section 7(b)(5) are consistent with the Act. As
discussed above, the proposed changes are intended to add more
granularity and more closely align the level of detail in the ISO rule
with BX's ISO rule in BX Options 3, Section 7(a)(6) by specifying how
ISOs may be submitted. As such, the Exchange believes that its proposal
will promote transparency in the Exchange's rules and consistency
across the rules of the Nasdaq affiliated options exchanges. While the
proposed changes to the Exchange's ISO rule generally track BX's ISO
rule, the proposed language will refer to certain Exchange
functionality that BX does not have today (i.e., Facilitation ISOs or
Solicitation ISOs).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Offering Facilitation and
Solicitation ISOs does not impose an undue burden on competition
because it enables the Exchange to provide market participants with an
additional and efficient method to initiate a Facilitation or Solicited
Order auction while preventing trade-throughs, as discussed above. In
addition, all Members may submit a Facilitation ISO or Solicitation
ISO. As it relates to the Solicitation ISO, the Exchange believes that
the proposed rule change will promote fair competition among options
exchanges as it will allow the Exchange to compete with other markets
that already allow ISOs in their solicitation auction mechanisms.\20\
---------------------------------------------------------------------------
\20\ See supra note 14.
---------------------------------------------------------------------------
The Exchange further believes that the proposed changes to its ISO
rule do not impose an undue burden on competition. As discussed above,
the proposed changes are intended to add more granularity and more
closely align the level of detail in the ISO rule with BX's ISO rule in
BX Options 3, Section 7(a)(6) by specifying how ISOs may be submitted,
except the Exchange's ISO rule will refer to Exchange functionality
that BX does not have today (i.e., Facilitation and Solicitation ISOs).
With the proposed changes, the Exchange believes that its proposal will
promote
[[Page 55058]]
transparency in the Exchange's rules and consistency across the rules
of the Nasdaq affiliated options exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or 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 up to 90 days of such
date (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 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-MRX-2022-11 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-MRX-2022-11. 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-MRX-2022-11 and should be submitted on
or before September 29, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19412 Filed 9-7-22; 8:45 am]
BILLING CODE 8011-01-P