Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 4, Rule 4757, 63558-63560 [2022-22661]
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63558
Federal Register / Vol. 87, No. 201 / Wednesday, October 19, 2022 / Notices
single options exchange has more than
18% of the market share. Therefore, no
exchange possesses significant pricing
power in the execution of order flow.
Indeed, participants can readily choose
to send their orders to other exchanges
if they deem fee levels at those other
venues to be more favorable. As noted
above, the Exchange believes that the
proposed fee changes are comparable to
that of other exchanges offering similar
functionality. Moreover, the
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Specifically, in
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
’fierce.’ . . . As the SEC explained, ’[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . . ’’. Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
jspears on DSK121TN23PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 13 and paragraph (f) of Rule
19b–4 14 thereunder. At any time within
60 days of the filing of the proposed rule
13 15
U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f).
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17:58 Oct 18, 2022
Jkt 259001
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2022–043 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–2022–043. 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
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
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–2022–043 and
should be submitted on or before
November 9, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–22662 Filed 10–18–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96069; File No. SR–
NASDAQ–2022–056]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Equity 4, Rule 4757
October 13, 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 October
6, 2022, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Equity 4, Rule 4757, as described further
below. The text of the proposed rule
change is available on the Exchange’s
website at https://
listingcenter.nasdaq.com/rulebook/
nasdaq/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
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\19OCN1.SGM
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Federal Register / Vol. 87, No. 201 / Wednesday, October 19, 2022 / Notices
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
jspears on DSK121TN23PROD with NOTICES
1. Purpose
The purpose of the proposed rule
change is to enhance the antiinternalization functionality available
on the Exchange by giving market
participants the flexibility to choose to
have this protection apply to market
participants under Common
Ownership.3 Anti-internalization, also
known as self-match prevention, is an
optional feature available on the
Exchange that (1) prevents two orders
with the same Market Participant
Identifier (MPID) from executing against
each other, or (2) prevents two orders
entered through a specific order entry
port from executing against each other
(in the case of market participants using
the OUCH order entry protocol). The
proposed rule change would permit
market participants to direct that
quotes/orders entered into the System
not execute against quotes/orders
entered across MPIDs that are under
Common Ownership. The Exchange
believes that this enhancement will
provide helpful flexibility for market
participants that wish to prevent trading
against all quotes and orders entered by
market participants under Common
Ownership, instead of just quotes and
orders that are entered under the same
MPID or under a particular order entry
port.
Currently, under Equity 4, Rule 4757,
the Exchange provides optional antiinternalization functionality whereby
quotes and orders entered by market
participants using the same MPID are
not executed against quotes and orders
by market participants using the same
MPID. In addition, under Equity 4, Rule
4757, market participants using the
OUCH order entry protocol may assign
to orders entered through a specific
order entry port a unique group
identification modifier that will prevent
quotes/orders with such modifier from
3 The
proposed rule change would define
‘‘Common Ownership’’ under Equity 4, Rule 4757
to mean participants under 75% common
ownership or control.
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63559
executing against each other.4 Selfmatch prevention functionality assists
participants in reducing trading costs
from unwanted executions potentially
resulting from the interaction of
executable buy and sell trading interest
from the same firm.
The Exchange currently provides
three versions of self-match prevention
functionality to allow participants to
choose how orders are handled in the
event of a self-match situation: (1)
decrement, (2) cancel oldest, and (3)
cancel newest. Under the first version
(‘‘decrement’’), if the self-match orders
have the same share size, both orders
will cancel back to the customer. If the
orders are not equivalent in size, the
smaller order will cancel back to the
originating customer and the larger
order will decrement by the size of the
smaller order. The remaining shares of
the larger order will remain on the book.
Under the second version (‘‘cancel
oldest’’), the full size of the order
residing on the book will cancel back to
the customer if the incoming order
would execute against it. The incoming
order will remain intact with no
changes. Under the third version
(‘‘cancel newest’’), the full size of the
order coming into the book will cancel
back to the customer. The resting order
will remain intact with no changes.
Currently, firms may opt-in to any
version of the self-match prevention
functionality on a per MPID basis or per
port basis.
Today, the anti-internalization
protection prevents market participants
from trading against their own quotes
and orders at the MPID or port level.
The proposed enhancement to this
functionality would allow participants
to choose to have this protection
applied at the MPID or port level as
implemented today, or across MPIDs
under Common Ownership. If
participants choose to have this
protection applied across MPIDs under
Common Ownership, the antiinternalization functionality would
prohibit quotes and orders from
different MPIDs associated with the
same Organization ID (‘‘OrgId’’) 5 from
trading against one another. Under the
proposed rule change, the antiinternalization functionality would
continue to be an optional feature. If a
firm chooses to take advantage of selfmatch prevention, the firm would need
to opt-in to the self-match prevention
functionality, as is the case today. If
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,7 in general, and furthers the
objectives of Section 6(b)(5) of the Act,8
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.
The Exchange believes that the
proposed rule change is consistent with
the protection of investors and the
public interest as it is designed to
provide market participants with
additional flexibility with respect to
how to implement self-trade protections
provided by anti-internalization
functionality. Currently, market
participants are provided optional
functionality that (1) prevents quotes
and orders from one MPID from trading
with quotes and orders from the same
MPID, or (2) prevents quotes and orders
entered through a specific order entry
port from trading with quotes and
orders entered though the same order
entry port (in the case of market
participants using the OUCH order entry
protocol). This functionality allows
participants to better manage their order
flow and prevent undesirable
4 The group identification modifier allows firms
to apply self-match prevention on a more granular
level (i.e., per a specific order entry port).
5 The OrgId is a field that indicates Common
Ownership across multiple MPIDs.
6 If the self-match prevention strategy differs
between two orders, the strategy of the order
removing liquidity applies.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
participants opt-in to the self-match
prevention functionality, under the
proposed rule change, participants
would have the option to choose
whether to apply the protection at the
OrgId, MPID, or port level. In addition,
participants may opt-in to any version
of the self-match prevention strategy
that exists today (i.e., decrement, cancel
oldest, or cancel newest).6
The Exchange believes that the
proposed anti-internalization
enhancement would provide
participants with more tailored selftrade functionality that allows them to
manage their trading as appropriate
based on the participant’s business
needs. While the Exchange believes that
some firms will want to restrict selfmatch prevention to trading against
interest from the same MPID or same
port—i.e., as implemented today—the
Exchange believes that other firms will
find it helpful to be able to configure
self-match prevention to apply at the
OrgId level so that they are protected
regardless of which MPID the order or
quote originated from.
2. Statutory Basis
E:\FR\FM\19OCN1.SGM
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63560
Federal Register / Vol. 87, No. 201 / Wednesday, October 19, 2022 / Notices
executions where the participant, using
the same MPID or same port, would be
on both sides of the trade. While this
functionality is helpful, the Exchange
proposes to expand the protections to
provide participants with the option not
to trade with quotes and orders entered
by different MPIDs under Common
Ownership. The Exchange would
continue to provide the option to opt
out of the self-match prevention. In
addition, the Exchange would continue
to provide the option to use the current
functionality to prevent self-trades on a
per MPID or per port basis. The
proposed rule change would offer a new
option for participants opting-in to the
self-match prevention to prevent
undesirable executions across different
MPIDs under the same Common
Ownership. The Exchange believes that
flexibility to apply anti-internalization
functionality at the OrgId level would
be useful to participants. The Exchange
believes that the proposed rule change
is designed to promote just and
equitable principles of trade and will
remove impediments to and perfect the
mechanisms of a free and open market
as it will further enhance self-trade
protections provided to market
participants. This functionality does not
relieve or otherwise modify the duty of
best execution owed to orders received
from public customers.
jspears on DSK121TN23PROD with NOTICES
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. The
proposed rule change is designed to
enhance self-match prevention
functionality provided to the Exchange’s
participants and will benefit
participants that wish to protect their
quotes and orders against trading with
other quotes and orders within the same
OrgId, rather than the more limited
MPID or port standard applied today.
The new functionality is also
completely voluntary, and members that
wish to use the current functionality (or
opt out altogether) can also continue to
do so. The Exchange does not believe
that providing more flexibility to
participants will have any significant
impact on competition. In fact, the
Exchange believes that the proposed
rule change is evidence of the
competitive environment where
exchanges must continually improve
their offerings to maintain competitive
standing.
VerDate Sep<11>2014
17:58 Oct 18, 2022
Jkt 259001
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
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2022–056 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–NASDAQ–2022–056. This
9 15
U.S.C. 78s(b)(3)(A)(iii).
10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
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–NASDAQ–2022–056 and
should be submitted on or before
November 9, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–22661 Filed 10–18–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96065; File No. SR–CBOE–
2022–052]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Update Its Fees
Schedule
October 13, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
3, 2022, Cboe Exchange, Inc. (the
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\19OCN1.SGM
19OCN1
]]>Agencies
[Federal Register Volume 87, Number 201 (Wednesday, October 19, 2022)]
[Notices]
[Pages 63558-63560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22661]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96069; File No. SR-NASDAQ-2022-056]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Equity 4, Rule 4757
October 13, 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 October 6, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Equity 4, Rule 4757, as described
further below. The text of the proposed rule change is available on the
Exchange's website at https://listingcenter.nasdaq.com/rulebook/nasdaq/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
[[Page 63559]]
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 the proposed rule change is to enhance the anti-
internalization functionality available on the Exchange by giving
market participants the flexibility to choose to have this protection
apply to market participants under Common Ownership.\3\ Anti-
internalization, also known as self-match prevention, is an optional
feature available on the Exchange that (1) prevents two orders with the
same Market Participant Identifier (MPID) from executing against each
other, or (2) prevents two orders entered through a specific order
entry port from executing against each other (in the case of market
participants using the OUCH order entry protocol). The proposed rule
change would permit market participants to direct that quotes/orders
entered into the System not execute against quotes/orders entered
across MPIDs that are under Common Ownership. The Exchange believes
that this enhancement will provide helpful flexibility for market
participants that wish to prevent trading against all quotes and orders
entered by market participants under Common Ownership, instead of just
quotes and orders that are entered under the same MPID or under a
particular order entry port.
---------------------------------------------------------------------------
\3\ The proposed rule change would define ``Common Ownership''
under Equity 4, Rule 4757 to mean participants under 75% common
ownership or control.
---------------------------------------------------------------------------
Currently, under Equity 4, Rule 4757, the Exchange provides
optional anti-internalization functionality whereby quotes and orders
entered by market participants using the same MPID are not executed
against quotes and orders by market participants using the same MPID.
In addition, under Equity 4, Rule 4757, market participants using the
OUCH order entry protocol may assign to orders entered through a
specific order entry port a unique group identification modifier that
will prevent quotes/orders with such modifier from executing against
each other.\4\ Self-match prevention functionality assists participants
in reducing trading costs from unwanted executions potentially
resulting from the interaction of executable buy and sell trading
interest from the same firm.
---------------------------------------------------------------------------
\4\ The group identification modifier allows firms to apply
self-match prevention on a more granular level (i.e., per a specific
order entry port).
---------------------------------------------------------------------------
The Exchange currently provides three versions of self-match
prevention functionality to allow participants to choose how orders are
handled in the event of a self-match situation: (1) decrement, (2)
cancel oldest, and (3) cancel newest. Under the first version
(``decrement''), if the self-match orders have the same share size,
both orders will cancel back to the customer. If the orders are not
equivalent in size, the smaller order will cancel back to the
originating customer and the larger order will decrement by the size of
the smaller order. The remaining shares of the larger order will remain
on the book. Under the second version (``cancel oldest''), the full
size of the order residing on the book will cancel back to the customer
if the incoming order would execute against it. The incoming order will
remain intact with no changes. Under the third version (``cancel
newest''), the full size of the order coming into the book will cancel
back to the customer. The resting order will remain intact with no
changes. Currently, firms may opt-in to any version of the self-match
prevention functionality on a per MPID basis or per port basis.
Today, the anti-internalization protection prevents market
participants from trading against their own quotes and orders at the
MPID or port level. The proposed enhancement to this functionality
would allow participants to choose to have this protection applied at
the MPID or port level as implemented today, or across MPIDs under
Common Ownership. If participants choose to have this protection
applied across MPIDs under Common Ownership, the anti-internalization
functionality would prohibit quotes and orders from different MPIDs
associated with the same Organization ID (``OrgId'') \5\ from trading
against one another. Under the proposed rule change, the anti-
internalization functionality would continue to be an optional feature.
If a firm chooses to take advantage of self-match prevention, the firm
would need to opt-in to the self-match prevention functionality, as is
the case today. If participants opt-in to the self-match prevention
functionality, under the proposed rule change, participants would have
the option to choose whether to apply the protection at the OrgId,
MPID, or port level. In addition, participants may opt-in to any
version of the self-match prevention strategy that exists today (i.e.,
decrement, cancel oldest, or cancel newest).\6\
---------------------------------------------------------------------------
\5\ The OrgId is a field that indicates Common Ownership across
multiple MPIDs.
\6\ If the self-match prevention strategy differs between two
orders, the strategy of the order removing liquidity applies.
---------------------------------------------------------------------------
The Exchange believes that the proposed anti-internalization
enhancement would provide participants with more tailored self-trade
functionality that allows them to manage their trading as appropriate
based on the participant's business needs. While the Exchange believes
that some firms will want to restrict self-match prevention to trading
against interest from the same MPID or same port--i.e., as implemented
today--the Exchange believes that other firms will find it helpful to
be able to configure self-match prevention to apply at the OrgId level
so that they are protected regardless of which MPID the order or quote
originated from.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is consistent
with the protection of investors and the public interest as it is
designed to provide market participants with additional flexibility
with respect to how to implement self-trade protections provided by
anti-internalization functionality. Currently, market participants are
provided optional functionality that (1) prevents quotes and orders
from one MPID from trading with quotes and orders from the same MPID,
or (2) prevents quotes and orders entered through a specific order
entry port from trading with quotes and orders entered though the same
order entry port (in the case of market participants using the OUCH
order entry protocol). This functionality allows participants to better
manage their order flow and prevent undesirable
[[Page 63560]]
executions where the participant, using the same MPID or same port,
would be on both sides of the trade. While this functionality is
helpful, the Exchange proposes to expand the protections to provide
participants with the option not to trade with quotes and orders
entered by different MPIDs under Common Ownership. The Exchange would
continue to provide the option to opt out of the self-match prevention.
In addition, the Exchange would continue to provide the option to use
the current functionality to prevent self-trades on a per MPID or per
port basis. The proposed rule change would offer a new option for
participants opting-in to the self-match prevention to prevent
undesirable executions across different MPIDs under the same Common
Ownership. The Exchange believes that flexibility to apply anti-
internalization functionality at the OrgId level would be useful to
participants. The Exchange believes that the proposed rule change is
designed to promote just and equitable principles of trade and will
remove impediments to and perfect the mechanisms of a free and open
market as it will further enhance self-trade protections provided to
market participants. This functionality does not relieve or otherwise
modify the duty of best execution owed to orders received from public
customers.
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. The proposed rule change is
designed to enhance self-match prevention functionality provided to the
Exchange's participants and will benefit participants that wish to
protect their quotes and orders against trading with other quotes and
orders within the same OrgId, rather than the more limited MPID or port
standard applied today. The new functionality is also completely
voluntary, and members that wish to use the current functionality (or
opt out altogether) can also continue to do so. The Exchange does not
believe that providing more flexibility to participants will have any
significant impact on competition. In fact, the Exchange believes that
the proposed rule change is evidence of the competitive environment
where exchanges must continually improve their offerings to maintain
competitive standing.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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-NASDAQ-2022-056 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-NASDAQ-2022-056. 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-NASDAQ-2022-056 and should be submitted
on or before November 9, 2022.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-22661 Filed 10-18-22; 8:45 am]
BILLING CODE 8011-01-P
