Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Temporarily Waive Certain Port-Related Fees at Equity 7, Section 115 and Equity 7, Section 130, 67514-67516 [2022-24288]
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67514
Federal Register / Vol. 87, No. 215 / Tuesday, November 8, 2022 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–24284 Filed 11–7–22; 8:45 am]
BILLING CODE 8011–01–P
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
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96212; File No. SR–BX–
2022–021]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Temporarily Waive
Certain Port-Related Fees at Equity 7,
Section 115 and Equity 7, Section 130
November 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 October
24, 2022, Nasdaq BX, Inc. (‘‘BX’’ 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 temporarily
waive certain port-related fees at Equity
7, Section 115 and Equity 7, Section
130, 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.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
6 17
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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The purpose of the proposed rule
change is to amend Equity 7, Section
115 and Equity 7, Section 130 to
provide a temporary fee waiver for
newly added OUCH order entry ports
(production and Testing Facility
environments) with the updated version
of the OUCH Order entry protocol,3
referred to as ‘‘OUCH 5.0.’’ The
Exchange has proposed 4 to introduce
this new upgraded version of the OUCH
Order entry protocol that will enable the
Exchange to make functional
enhancements and improvements to
specific Order Types 5 and Order
Attributes.6
Temporary Fee Waiver Pursuant to
Equity 7, Section 115
First, the Exchange proposes to
amend Equity 7, Section 115 to provide
a 30-day waiver of the OUCH
production port fee for up to five 7
newly added OUCH ports with the
updated version of the OUCH Order
entry protocol, OUCH 5.0. The fee
waiver would be offered for a threemonth period, beginning on the date
when OUCH 5.0 first becomes available
on the Exchange, which such date the
Exchange shall announce in an Equity
Trader Alert. At the end of the threemonth period, users would no longer be
eligible for the waiver. A user may only
receive the 30-day waiver once per port
(up to a maximum of five ports) within
3 The OUCH Order entry protocol is a proprietary
protocol that allows subscribers to quickly enter
orders into the System and receive executions.
OUCH accepts limit Orders from members, and if
there are matching Orders, they will execute. Nonmatching Orders are added to the Limit Order Book,
a database of available limit Orders, where they are
matched in price-time priority. OUCH only
provides a method for members to send Orders and
receive status updates on those Orders. See https://
www.nasdaqtrader.com/Trader.aspx?id=OUCH.
4 See Securities Exchange Act Release No. 95695
(September 7, 2022), 87 FR 56122 (September 13,
2022).
5 An ‘‘Order Type’’ is a standardized set of
instructions associated with an Order that define
how it will behave with respect to pricing,
execution, and/or posting to the Exchange Book
when submitted to Nasdaq. See Equity 1, Section
1(a)(11).
6 An ‘‘Order Attribute’’ is a further set of variable
instructions that may be associated with an Order
to further define how it will behave with respect to
pricing, execution, and/or posting to the Exchange
Book when submitted to the Exchange. See id.
7 The fee waiver is limited to a maximum of five
OUCH production ports per Web Central
Registration Depository (‘‘CRD’’) membership.
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
the three-month window. The Exchange
proposes to offer this temporary waiver
to encourage new, prospective
customers to adopt and returning
customers to migrate to the updated
version of the OUCH Order entry
protocol.
Temporary Fee Waiver Pursuant to
Equity 7, Section 130
Second, the Exchange proposes to
amend Equity 7, Section 130 to provide
a 30-day waiver of the $300 Testing
Facility fee in Section 130(d)(1)(B) for
up to five 8 newly added OUCH Testing
Facility ports with the updated version
of the OUCH Order entry protocol,
OUCH 5.0. This fee waiver would also
be offered for a three-month period,
beginning on a date specified by the
Exchange in an Equity Trader Alert. At
the end of the three-month period, users
would no longer be eligible for the
waiver. A user may only receive the 30day waiver once per port (up to a
maximum of five ports) within the
three-month window. The Testing
Facility provides subscribers with a
virtual System test environment that
closely approximates the production
environment on which they may test
their automated systems that integrate
with the Exchange. For example, the
Testing Facility provides subscribers a
virtual System environment for testing
upcoming releases and product
enhancements, as well as testing firm
software prior to implementation. The
Exchange proposes to offer this
temporary waiver to encourage
customers to test the updated version of
the OUCH Order entry protocol free of
charge.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,9 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,10 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange’s proposed changes to
its fee schedule are reasonable in several
respects. As a threshold matter, the
Exchange is subject to significant
competitive forces in the market for
equity securities transaction services
that constrain its pricing determinations
8 The fee waiver is limited to a maximum of five
OUCH Testing Facility ports per CRD membership.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
E:\FR\FM\08NON1.SGM
08NON1
Federal Register / Vol. 87, No. 215 / Tuesday, November 8, 2022 / Notices
in that market. The Commission and the
courts have repeatedly expressed their
preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. In Regulation NMS,
while adopting a series of steps to
improve the current market model, 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.’’ 11
The Exchange believes that it is
reasonable to provide temporary fee
waivers for up to five newly added
OUCH order entry ports (production
and Testing Facility environments) with
the updated version of the OUCH Order
entry protocol, OUCH 5.0. The
Exchange believes it is important to
provide users an opportunity to test
OUCH 5.0 free of charge. The temporary
fee waivers would encourage users to
test and adopt the enhanced OUCH
Order entry protocol.
The Exchange believes that the
proposed temporary fee waivers are an
equitable allocation of reasonable dues,
fees and other charges and not unfairly
discriminatory because the Exchange
will apply the same temporary fee
waivers to all similarly situated
members. The waivers will reduce fees
for and benefit all users that add OUCH
5.0 order entry ports (production and
Testing Facility environments) within
the three-month window.
Intermarket Competition
IV. Solicitation of Comments
The Exchange believes that the
proposed temporary fee waivers will not
impose a burden on competition
because the Exchange’s execution
services are completely voluntary and
subject to extensive competition both
from the other live exchanges and from
off-exchange venues, which include
alternative trading systems that trade
national market system stock.
The proposed fee waivers are
reflective of this competition because, as
a threshold issue, the Exchange is a
relatively small market so its ability to
burden intermarket competition is
limited. In this regard, even the largest
U.S. equities exchange by volume only
has 17–18% market share, which in
most markets could hardly be
categorized as having enough market
power to burden competition. The
proposed fee waivers would facilitate
adoption of enhancements to the
Exchange’s System and Order entry
protocols, which is pro-competitive
because the enhancements bolster the
efficiency, functionality, and overall
attractiveness of the Exchange in an
absolute sense and relative to its peers.
Accordingly, the Exchange does not
believe that the proposed change will
impair the ability of members,
participants, or competing order
execution venues to maintain their
competitive standing in the financial
markets.
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:
B. Self-Regulatory Organization’s
Statement on Burden on Competition
No written comments were either
solicited or received.
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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Intramarket Competition
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67515
The Exchange does not believe that its
proposal will place any category of
Exchange participants at a competitive
disadvantage. The proposed change to
temporarily waive fees for newly added
OUCH 5.0 order entry ports (production
and Testing Facility environments) will
apply uniformly to all similarly situated
participants. The temporary fee waivers
are available to all users and would
enable users to test the OUCH
enhancements at no cost.
11 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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16:56 Nov 07, 2022
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,12 and Rule
19b–4(f)(2) 13 thereunder.
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: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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.
12 15
13 17
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00080
Fmt 4703
Sfmt 4703
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–
BX–2022–021 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–2022–021. 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–2022–021 and should
be submitted on or before November 29,
2022.
E:\FR\FM\08NON1.SGM
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67516
Federal Register / Vol. 87, No. 215 / Tuesday, November 8, 2022 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–24288 Filed 11–7–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96210; File No. SR–FICC–
2022–008]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of Proposed Rule Change To
Amend the Clearing Agency Liquidity
Risk Management Framework To
Include a New Section Describing the
Process by Which FICC Would
Designate Uncommitted Resources as
Qualifying Liquid Resources and Make
Other Changes
November 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 October
20, 2022, Fixed Income Clearing
Corporation (‘‘FICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
amendments to the Clearing Agency
Liquidity Risk Management Framework
(‘‘Framework’’) of FICC and its affiliates,
The Depository Trust Company (‘‘DTC’’)
and National Securities Clearing
Corporation (‘‘NSCC,’’ and together with
FICC and DTC, the ‘‘Clearing
Agencies’’).3 Specifically, the proposed
rule changes would (1) add a new
section describing the process by which
FICC would designate uncommitted
liquidity resources as qualifying liquid
resources (‘‘QLR’’); 4 (2) clarify that FICC
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Capitalized terms not defined herein are defined
in the DTC Rules, By-Laws and Organization
Certificate, the FICC Government Securities
Division Rulebook, the FICC Mortgage-Backed
Securities Division Clearing Rules, or the NSCC
Rules & Procedures (‘‘NSCC Rules’’), as applicable,
available at https://dtcc.com/legal/rules-andprocedures.
4 See 17 CFR 240.17Ad–22(a)(14).
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1 15
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Jkt 259001
may have access to liquidity resources
that are not designated as QLR; (3)
delete the stand-alone section on due
diligence and testing of liquidity
providers, and instead add due
diligence and testing descriptions where
each liquidity resource is described or
state where testing is not performed, as
applicable; (4) clarify the description of
FICC’s QLR; (5) clarify the description
of NSCC’s and DTC’s QLR, add language
to reflect NSCC’s and DTC’s current due
diligence and testing processes for their
committed line of credit, and make a
correction to the description of DTC’s
Collateral Monitor; and (6) make
technical changes, as described below.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The Clearing Agencies adopted the
Framework 5 to set forth the manner in
which they measure, monitor and
manage the liquidity risks that arise in
or are borne by each of the Clearing
Agencies, including (i) the manner in
which each Clearing Agency deploys
their respective liquidity tools to meet
its settlement obligations on an ongoing
and timely basis, and (ii) each
applicable Clearing Agency’s use of
intraday liquidity.6 In this way, the
Framework describes the liquidity risk
management of each of the Clearing
Agencies and how the Clearing
Agencies meet the applicable
requirements of Rule 17Ad–22(e)(7)
under the Act.7
The proposed changes to the
Framework would (1) add a new section
describing the process by which FICC
would designate uncommitted liquidity
resources as QLR; 8 (2) clarify that FICC
5 See Securities Exchange Act Release No. 82377
(December 21, 2017), 82 FR 61617 (December 28,
2017) (SR–DTC–2017–004; SR–NSCC–2017–005;
SR–FICC–2017–008).
6 See 17 CFR 240.17Ad–22(e)(7)(i), (ii), and (iv)
through (ix).
7 Id.
8 See 17 CFR 240.17Ad–22(a)(14).
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
may have access to liquidity resources
that are not designated as QLR; (3)
delete the stand-alone section on due
diligence and testing of liquidity
providers, and instead add due
diligence and testing descriptions where
each liquidity resource is described or
state where testing is not performed, as
applicable; (4) clarify the description of
FICC’s QLR; (5) clarify the description
of NSCC’s and DTC’s QLR, add language
to reflect NSCC’s and DTC’s current due
diligence and testing processes for their
committed line of credit, and make a
correction to the description of DTC’s
Collateral Monitor; and (6) make
technical changes. Each of these
proposed changes is described in greater
detail below.
i. Proposed Amendments To Add a New
Section Describing the Process by
Which FICC Would Designate
Uncommitted Liquidity Resources as
QLR
The Clearing Agencies would add a
new section to the Framework that
pertains specifically to FICC’s
designation of uncommitted liquidity
resources as QLR pursuant to the
requirements of Rule 17Ad–
22(a)(14)(ii)(B) under the Act.9 FICC
does not at this time have uncommitted
liquidity resources designated as QLR;
however, the proposed new section
would allow FICC to have such QLR to
the extent the requirements of Rule
17Ad–22(a)(14)(ii)(B) are followed.
In addition, and consistent with its
existing processes, FICC would consider
whether any uncommitted liquidity
resources, including those that are
designated as QLR, would require a
proposed rule change with the
Commission pursuant to Section
19(b)(1) of the Act,10 and the rules
thereunder, or an advance notice with
the Commission pursuant to Section
806(e)(1) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
entitled the Payment, Clearing, and
Settlement Supervision Act of 2010,11
and the rules thereunder.
The proposed new section would
explain that, in order to designate an
uncommitted liquidity resource as a
QLR, FICC would first identify the
properties of each financing
arrangement, including the underlying
collateral and the liquidity providers.
Based on the nature of the liquidity
resource, FICC would then determine
the nature of the rigorous analysis that
is appropriate for that resource and
9 17
CFR 240.17Ad–22(a)(14)(ii)(B).
U.S.C. 78s(b)(1).
11 12 U.S.C. 5465(e)(1).
10 15
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]]>Agencies
[Federal Register Volume 87, Number 215 (Tuesday, November 8, 2022)]
[Notices]
[Pages 67514-67516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24288]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96212; File No. SR-BX-2022-021]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Temporarily
Waive Certain Port-Related Fees at Equity 7, Section 115 and Equity 7,
Section 130
November 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 October 24, 2022, Nasdaq BX, Inc. (``BX'' 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 temporarily waive certain port-related
fees at Equity 7, Section 115 and Equity 7, Section 130, 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 amend Equity 7,
Section 115 and Equity 7, Section 130 to provide a temporary fee waiver
for newly added OUCH order entry ports (production and Testing Facility
environments) with the updated version of the OUCH Order entry
protocol,\3\ referred to as ``OUCH 5.0.'' The Exchange has proposed \4\
to introduce this new upgraded version of the OUCH Order entry protocol
that will enable the Exchange to make functional enhancements and
improvements to specific Order Types \5\ and Order Attributes.\6\
---------------------------------------------------------------------------
\3\ The OUCH Order entry protocol is a proprietary protocol that
allows subscribers to quickly enter orders into the System and
receive executions. OUCH accepts limit Orders from members, and if
there are matching Orders, they will execute. Non-matching Orders
are added to the Limit Order Book, a database of available limit
Orders, where they are matched in price-time priority. OUCH only
provides a method for members to send Orders and receive status
updates on those Orders. See https://www.nasdaqtrader.com/Trader.aspx?id=OUCH.
\4\ See Securities Exchange Act Release No. 95695 (September 7,
2022), 87 FR 56122 (September 13, 2022).
\5\ An ``Order Type'' is a standardized set of instructions
associated with an Order that define how it will behave with respect
to pricing, execution, and/or posting to the Exchange Book when
submitted to Nasdaq. See Equity 1, Section 1(a)(11).
\6\ An ``Order Attribute'' is a further set of variable
instructions that may be associated with an Order to further define
how it will behave with respect to pricing, execution, and/or
posting to the Exchange Book when submitted to the Exchange. See id.
---------------------------------------------------------------------------
Temporary Fee Waiver Pursuant to Equity 7, Section 115
First, the Exchange proposes to amend Equity 7, Section 115 to
provide a 30-day waiver of the OUCH production port fee for up to five
\7\ newly added OUCH ports with the updated version of the OUCH Order
entry protocol, OUCH 5.0. The fee waiver would be offered for a three-
month period, beginning on the date when OUCH 5.0 first becomes
available on the Exchange, which such date the Exchange shall announce
in an Equity Trader Alert. At the end of the three-month period, users
would no longer be eligible for the waiver. A user may only receive the
30-day waiver once per port (up to a maximum of five ports) within the
three-month window. The Exchange proposes to offer this temporary
waiver to encourage new, prospective customers to adopt and returning
customers to migrate to the updated version of the OUCH Order entry
protocol.
---------------------------------------------------------------------------
\7\ The fee waiver is limited to a maximum of five OUCH
production ports per Web Central Registration Depository (``CRD'')
membership.
---------------------------------------------------------------------------
Temporary Fee Waiver Pursuant to Equity 7, Section 130
Second, the Exchange proposes to amend Equity 7, Section 130 to
provide a 30-day waiver of the $300 Testing Facility fee in Section
130(d)(1)(B) for up to five \8\ newly added OUCH Testing Facility ports
with the updated version of the OUCH Order entry protocol, OUCH 5.0.
This fee waiver would also be offered for a three-month period,
beginning on a date specified by the Exchange in an Equity Trader
Alert. At the end of the three-month period, users would no longer be
eligible for the waiver. A user may only receive the 30-day waiver once
per port (up to a maximum of five ports) within the three-month window.
The Testing Facility provides subscribers with a virtual System test
environment that closely approximates the production environment on
which they may test their automated systems that integrate with the
Exchange. For example, the Testing Facility provides subscribers a
virtual System environment for testing upcoming releases and product
enhancements, as well as testing firm software prior to implementation.
The Exchange proposes to offer this temporary waiver to encourage
customers to test the updated version of the OUCH Order entry protocol
free of charge.
---------------------------------------------------------------------------
\8\ The fee waiver is limited to a maximum of five OUCH Testing
Facility ports per CRD membership.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its fee schedule are reasonable
in several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for equity securities
transaction services that constrain its pricing determinations
[[Page 67515]]
in that market. The Commission and the courts have repeatedly expressed
their preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
In Regulation NMS, while adopting a series of steps to improve the
current market model, 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.'' \11\
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\11\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes that it is reasonable to provide temporary
fee waivers for up to five newly added OUCH order entry ports
(production and Testing Facility environments) with the updated version
of the OUCH Order entry protocol, OUCH 5.0. The Exchange believes it is
important to provide users an opportunity to test OUCH 5.0 free of
charge. The temporary fee waivers would encourage users to test and
adopt the enhanced OUCH Order entry protocol.
The Exchange believes that the proposed temporary fee waivers are
an equitable allocation of reasonable dues, fees and other charges and
not unfairly discriminatory because the Exchange will apply the same
temporary fee waivers to all similarly situated members. The waivers
will reduce fees for and benefit all users that add OUCH 5.0 order
entry ports (production and Testing Facility environments) within the
three-month window.
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.
Intramarket Competition
The Exchange does not believe that its proposal will place any
category of Exchange participants at a competitive disadvantage. The
proposed change to temporarily waive fees for newly added OUCH 5.0
order entry ports (production and Testing Facility environments) will
apply uniformly to all similarly situated participants. The temporary
fee waivers are available to all users and would enable users to test
the OUCH enhancements at no cost.
Intermarket Competition
The Exchange believes that the proposed temporary fee waivers will
not impose a burden on competition because the Exchange's execution
services are completely voluntary and subject to extensive competition
both from the other live exchanges and from off-exchange venues, which
include alternative trading systems that trade national market system
stock.
The proposed fee waivers are reflective of this competition
because, as a threshold issue, the Exchange is a relatively small
market so its ability to burden intermarket competition is limited. In
this regard, even the largest U.S. equities exchange by volume only has
17-18% market share, which in most markets could hardly be categorized
as having enough market power to burden competition. The proposed fee
waivers would facilitate adoption of enhancements to the Exchange's
System and Order entry protocols, which is pro-competitive because the
enhancements bolster the efficiency, functionality, and overall
attractiveness of the Exchange in an absolute sense and relative to its
peers. Accordingly, the Exchange does not believe that the proposed
change will impair the ability of members, participants, or competing
order execution venues to maintain their competitive standing in the
financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
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)(ii) of the Act,\12\ and Rule 19b-4(f)(2) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
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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: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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-2022-021 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-2022-021. 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-2022-021 and should be submitted on
or before November 29, 2022.
[[Page 67516]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-24288 Filed 11-7-22; 8:45 am]
BILLING CODE 8011-01-P
