Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 4, Rule 4757 To Enhance the Anti-Internalization Functionality Available on the Exchange, 65633-65635 [2022-23579]
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Federal Register / Vol. 87, No. 209 / Monday, October 31, 2022 / Notices
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
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.
khammond on DSKJM1Z7X2PROD with NOTICES
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:
9 15
U.S.C. 78s(b)(3)(A)(iii).
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.
10 17
VerDate Sep<11>2014
17:15 Oct 28, 2022
Jkt 259001
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–
Phlx–2022–43 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–Phlx–2022–43. 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–Phlx–2022–43 and should
be submitted on or before November 21,
2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–23583 Filed 10–28–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96156; File No. SR–BX–
2022–020]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Equity 4, Rule
4757 To Enhance the AntiInternalization Functionality Available
on the Exchange
October 25, 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
21, 2022, Nasdaq BX, Inc. (‘‘BX’’ 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/bx/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 purpose of the proposed rule
change is to enhance the anti1 15
11 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00066
Fmt 4703
Sfmt 4703
65633
2 17
E:\FR\FM\31OCN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
31OCN1
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65634
Federal Register / Vol. 87, No. 209 / Monday, October 31, 2022 / Notices
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.
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 each other. 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.
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
3 The proposed rule change would define
‘‘Common Ownership’’ under Equity 4, Rule 4757
to mean participants under 75% common
ownership or control.
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).
VerDate Sep<11>2014
17:15 Oct 28, 2022
Jkt 259001
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
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
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.
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
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.
Implementation Date
The Exchange intends to introduce
this new functionality no later than the
First Quarter of 2023. In any event, the
Exchange will issue an Equities Trader
Alert to provide notification of the
change and relevant date prior to
introducing the new functionality.
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.
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
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
7 15
8 15
E:\FR\FM\31OCN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
31OCN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 209 / Monday, October 31, 2022 / Notices
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.
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.
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.
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:
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
VerDate Sep<11>2014
17:15 Oct 28, 2022
Jkt 259001
IV. Solicitation of Comments
65635
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–BX–2022–020 and should
be submitted on or before November 21,
2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Deputy Secretary.
Electronic Comments
[FR Doc. 2022–23579 Filed 10–28–22; 8:45 am]
• 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–
BX–2022–020 on the subject line.
BILLING CODE P
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–BX–2022–020. 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
9 15
U.S.C. 78s(b)(3)(A)(iii).
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.
10 17
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–027, OMB Control No.
3235–0035]
Submission for OMB Review;
Comment Request; Extension: Rule
17a–13
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 17a–13 (17 CFR 240.17a–13) under
the Securities Exchange Act of 1934 (15
U.S. C. 78a et seq.) (‘‘Exchange Act’’).
Rule 17a–13(b) (17 CFR 240.17a–
13(b)) generally requires that at least
once each calendar quarter, all
registered brokers-dealers physically
examine and count all securities held,
and that they account for all other
11 17
E:\FR\FM\31OCN1.SGM
CFR 200.30–3(a)(12).
31OCN1
]]>Agencies
[Federal Register Volume 87, Number 209 (Monday, October 31, 2022)]
[Notices]
[Pages 65633-65635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23579]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96156; File No. SR-BX-2022-020]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Equity 4,
Rule 4757 To Enhance the Anti-Internalization Functionality Available
on the Exchange
October 25, 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 21, 2022, Nasdaq BX, Inc. (``BX'' 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/bx/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 purpose of the proposed rule change is to enhance the anti-
[[Page 65634]]
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 each other. 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.
Implementation Date
The Exchange intends to introduce this new functionality no later
than the First Quarter of 2023. In any event, the Exchange will issue
an Equities Trader Alert to provide notification of the change and
relevant date prior to introducing the new functionality.
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 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
[[Page 65635]]
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-BX-2022-020 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-BX-2022-020. 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-BX-2022-020 and should be submitted on
or before November 21, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-23579 Filed 10-28-22; 8:45 am]
BILLING CODE P
