Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend Rule 11.28(a) To Extend the MOC Cut-Off Time, 72527-72537 [2022-25669]
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days of such date (i) as the
Commission may designate if it finds
such longer period to be appropriate
and publishes its reasons for so finding
or (ii) as to which the Exchange
consents, the Commission shall: (a) by
order approve or disapprove such
proposed rule change, or (b) institute
proceedings to determine whether the
proposed rule change should be
disapproved.
IV. Solicitation of Comments
Electronic Comments
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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
offices 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–IEX–2022–10, and should
be submitted on or before December 16,
2022.
institute proceedings to determine
whether to disapprove the proposed
rule change.5 On November 11, 2022,
the Exchange submitted Amendment
No. 1 to the proposed rule change as
described in Items I and II below, which
Items have been prepared by the
Exchange. Amendment No. 1 amended
and superseded the proposed rule
change as originally filed.6 The
Commission is publishing this notice
and order to solicit comments on the
proposed rule change, as modified by
Amendment No. 1, from interested
persons and to institute proceedings
pursuant to section 19(b)(2)(B) of the
Act 7 to determine whether to approve
or disapprove the proposed rule change,
as modified by Amendment No. 1.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.52
Sherry R. Haywood,
Assistant Secretary.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
[FR Doc. 2022–25663 Filed 11–23–22; 8:45 am]
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:
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96359; File No. SR–
CboeBZX–2022–038]
• 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–
IEX–2022–10 on the subject line.
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing of
Amendment No. 1 and Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change To Amend Rule 11.28(a)
To Extend the MOC Cut-Off Time
Paper Comments
November 18, 2022.
• 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–IEX–2022–10. 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
On August 5, 2022, Cboe BZX
Exchange, Inc. (‘‘BZX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend BZX Rule 11.28(a) to
extend the cut-off time for accepting
Market-on-Close orders entered for
participation in the Cboe Market Close.
The proposed rule change was
published for comment in the Federal
Register on August 24, 2022.3 On
October 4, 2022, pursuant to section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
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52 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 95529
(August 17, 2022), 87 FR 52092.
4 15 U.S.C. 78s(b)(2).
1 15
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Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
amend Rule 11.28(a) to extend the Cboe
Market Close MOC Cut-Off Time from
3:35 p.m. Eastern Time to 3:49 p.m.
Eastern Time. The text of the proposed
rule change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
5 See Securities Exchange Act Release No. 95967,
87 FR 61425 (October 11, 2022). The Commission
designated November 22, 2022, as the date by
which the Commission shall approve or disapprove,
or institute proceedings to determine whether to
disapprove, the proposed rule change.
6 Amendment No. 1 is available on the
Commission’s website at: https://www.sec.gov/
comments/sr-cboebzx-2022-038/
srcboebzx2022038.htm.
7 15 U.S.C. 78s(b)(2)(B).
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
Exchange Rule 11.28 (Cboe Market
Close, a Closing Match Process for NonBZX-Listed Securities) provides
Members an optional closing match
process for non-BZX-Listed securities,
known as Cboe Market Close (‘‘CMC’’).
Currently, per Rule 11.28(a) (Order
Entry) Members 8 may enter, cancel, or
replace Market-on-Close (‘‘MOC’’)
orders designated for participation in
CMC beginning at 6:00 a.m. Eastern
Time 9 up to 3:35 p.m. (‘‘MOC Cut-Off
Time’’). The Exchange now proposes to
move the MOC Cut-Off Time from 3:35
p.m. to 3:49 p.m. The Exchange is not
proposing to make any other changes to
the CMC process.
By way of background, on May 5,
2017, the Exchange filed a proposed
rule change to adopt CMC, a match
process for MOC orders in non-BZX
listed securities and on December 1,
2017, filed Amendment No. 1 10 to that
proposal (the ‘‘Original Proposal’’).11 On
January 17, 2018, the Commission,
acting through authority delegated to
the Division of Trading and Markets,12
approved the Original Proposal
(‘‘Approval Order’’).13 On January 31,
2018, NYSE Group, Inc. (‘‘NYSE’’) and
the Nasdaq Stock Market LLC
(‘‘Nasdaq’’) filed petitions for review of
the Approval Order (‘‘Petitions for
8 The term ‘‘Member’’ shall mean any registered
broker or dealer that has been admitted to
membership in the Exchange. A Member will have
the status of a ‘‘member’’ of the Exchange as that
term is defined in section 3(a)(3) of the Act.
Membership may be granted to a sole proprietor,
partnership, corporation, limited liability company
or other organization which is a registered broker
or dealer pursuant to section 15 of the Act, and
which has been approved by the Exchange. See
Rule 1.5(n), definition of ‘‘Member’’.
9 All times noted throughout are in Eastern Time.
10 The only change in Amendment No. 1 was to
rename the proposed closing match process as Cboe
Market Close. Per the Commission, because
Amendment No. 1 was a technical amendment and
did not materially alter the substance of the
proposed rule change or raise unique or novel
regulatory issues, Amendment No. 1 was not
subject to notice and comment.
11 See Securities Exchange Act Release No. 34–
80683 (May 16, 2017), 82 FR 23320 (May 22, 2017)
(SR–Bats–BZX–2017–34) (Notice of Filing of a
Proposed Rule Change to Introduce Bats Market
Close, a Closing Match Process for Non-BZX Listed
Securities Under New Exchange Rule 11.28).
12 17 CFR 200.30–3(a)(12).
13 See Securities Exchange Act Release No. 34–
82522 (January 17, 2018), 83 FR 3205 (January 23,
2018) (SR–BatsBZX–2017–34) (Notice of Filing of
Amendment No. 1 and Order Granting Approval of
a Proposed Rule Change, as Modified by
Amendment No. 1, To Introduce Cboe Market
Close, a Closing Match Process for Non-BZX Listed
Securities Under New Exchange Rule 11.28).
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Review’’). Pursuant to Commission Rule
of Practice 431(e),14 the Approval Order
was stayed by the filing with the
Commission of a notice of intention to
petition for review.15 On March 1, 2018,
pursuant to Commission Rule of
Practice 431, the Commission issued a
scheduling order granting the Petitions
of Review of the Approval Order, and
provided until March 22, 2018, for any
party or other person to file a written
statement in support of, or in opposition
to, the Approval Order.16 On April 12,
2018, NYSE and Nasdaq submitted
written statements opposing the
Approval Order and BZX submitted a
statement in support of the Approval
Order.17 On October 4, 2018, BZX filed
Amendment No. 2 18 to the Original
Proposal.
The Commission conducted a de novo
review of the CMC proposal and
associated public record, including
Amendment No. 2, the Petitions for
Review, and all comments and
statements submitted by certain
exchanges, issuers, and other market
participants,19 to determine whether the
proposal was consistent with the
requirements of the Act and the rules
and regulations issued thereunder that
are applicable to a national securities
exchange.20 The Commission noted that
14 17
CFR 201.431(e).
Letter to Christopher Solgan, Assistant
General Counsel, Cboe Global Markets, Inc. (Jan. 24,
2018) (providing notice of receipt of notices of
intention to petition for review of delegated action
and stay of order), available at: https://www.sec.gov/
rules/sro/batsbzx/2018/sr-batsbzx-2017-34-letterfrom-secretary-to-cboe.pdf.
16 See Securities Exchange Act Release No. 82794,
83 FR 9561 (Mar. 6, 2018). On March 16, 2018, the
Office of the Secretary, acting by delegated
authority, issued an order on behalf of the
Commission granting a motion for an extension of
time to file statements on or before April 12, 2018.
See Securities Exchange Act Release No. 82896, 83
FR 12633 (Mar. 22, 2018).
17 See Statement of NYSE Group, Inc., in
Opposition to the Division’s Order Approving a
Rule to Introduce Cboe Market Close (‘‘NYSE
Statement’’); Statement of the Nasdaq Stock Market
LLC in Opposition to Order Granting Approval of
a Proposed Rule Change, as Modified by
Amendment No. 1, to Introduce Cboe Market Close
(‘‘Nasdaq Statement’’); and Statement of Cboe BZX
Exchange, Inc., in support of Commission Staff’s
Approval Order (‘‘BZX Statement’’), available at:
https://www.sec.gov/comments/sr-batsbzx-2017-34/
batsbzx201734.htm.
18 See Securities Exchange Act Release No. 34–
84670 (November 28, 2018), 83 FR 62646
(December 4, 2018) (SR–BatsBZX–2017–34)
(‘‘Notice of Filing of Amendment No. 2 to Proposed
Rule Change to Introduce Cboe Market Close, a
Closing Match Process for Non-BZX Listed
Securities Under New Exchange Rule 11.28’’).
19 See ‘‘Statements on File No. SR–BatsBZX–
2017–34’’, available at: https://www.sec.gov/
comments/sr-batsbzx-2017-34/batsbzx201734.htm.
20 See Securities Exchange Act Release No. 34–
88008 (January 21, 2020), 85 FR 4726 (January 27,
2020) (SR–BatsBZX–2017–34) (‘‘Order Setting
Aside Action by Delegated Authority and
15 See
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under Rule 700(b)(3) of the
Commission’s Rule of Practice, the
‘‘burden to demonstrate that a proposed
rule change is consistent with the
Exchange Act and the rules and
regulations issued thereunder . . . is on
the self-regulatory organization that
proposed the rule change.’’ 21
Importantly, after reviewing the entire
record, the Commission concluded that
BZX met its burden to show that the
proposed rule change was consistent
with the Act, and pursuant to its
January 21, 2020, order, set aside the
Approval Order and approved BZX’s
CMC proposal, as amended (‘‘Final
Approval Order’’).22 Notably, the
Commission stated that the record
‘‘demonstrate[d] that Cboe Market Close
should introduce and promote
competitive forces among national
securities exchanges for the execution of
MOC orders’’ 23 and that ‘‘the record
demonstrate[d] that Cboe Market Close
should not disrupt the closing auction
price discovery process nor should it
materially increase the risk of
manipulation of official closing
prices’’.24 For the reasons discussed
more fully below, the Exchange believes
that when applying the Commission’s
analysis in the Final Approval Order to
the current proposal, such review would
similarly conclude that this proposal is
consistent with the Act and should be
approved.
Since the Original Proposal various
exchanges have extended the MOC cutoff times for their closing auctions,
moving them closer to 4:00 p.m.25
Additionally, closing price match
services offered by off-exchange venues
have grown in popularity,26 including
alternative trading systems (‘‘ATS’’) that
offer a MOC cut-off time as close as 30seconds before the primary exchanges’
Approving a Proposed Rule Change, as Modified by
Amendments No. 1 and 2, To Introduce Cboe
Market Close, a Closing Match Process for Non-BZX
Listed Securities Under New Exchange Rule
11.28’’).
21 Id.
22 Id.
23 Id.
24 Id.
25 See Securities Exchange Act Release No. 34–
84454 (October 19, 2018), 83 FR 53923 (October 25,
2018) (SR–Nasdaq–2018–068) (Order approving a
rule change by Nasdaq) (The Commission approved
a rule change by Nasdaq to move the cut-off times
for the entry of MOC and LOC orders from 3:50 p.m.
to 3:55 p.m.); see also Securities Exchange Act
Release No. 34–85021 (January 31, 2019) (SR–
NYSE–2018–58) (Order approving a rule change by
NYSE) (The Commission approved a rule change by
the NYSE to amend Rule 123C to extend the cutoff times for order entry and cancellation for
participation in the closing auction, from 3:45 p.m.
to 3:50 p.m.).
26 See infra, ‘‘Price Discovery’’ and
‘‘Fragmentation’’, which describes the growth of offexchange closing volume.
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
in the marketplace and trading directly
against such interest, or guaranteeing a
customer order at a price better than the
national best bid or offer by committing
capital to an order and filling it in a
principal capacity, as well as continuing
to trade orders algorithmically into the
close, thus reducing the size of their
outstanding orders that they may decide
to commit to CMC or the primary
auctions.
cut-off times, as well as MOC cut-off
times aligned with those of NYSE,
NYSE Arca, and Nasdaq.27 As the
market structure for closing auctions
and closing price match offerings has
continued to evolve, and in response to
customer feedback and to better
compete with off-exchange venues, the
Exchange is proposing this rule change
to align CMC’s MOC Cut-Off Time more
closely with the other exchanges and
off-exchange venues.
The Exchange notes that Members
have requested a MOC Cut-Off Time
that is closer to the end of Regular
Trading Hours 28 so that they may retain
control of their trading for a longer
period and be better able to manage
their trading at the close.29 Generally
speaking, notional trading and trading
volatility are typically at their highest
towards the end of Regular Trading
Hours. Accordingly, market participants
often prefer to trade as close to 4:00 p.m.
as possible, because doing so can
provide them with more time to seek
better priced liquidity for their orders in
a variety of ways, including but not
limited to, finding contra-side liquidity
Additionally, Members have
indicated that extending the MOC CutOff Time to 3:49 p.m. will help to make
CMC a more comparable alternative to
NYSE and Nasdaq, which have MOC
cut-off times of 3:50 p.m.30 and 3:55
p.m.,31 respectively. For reasons
discussed directly above, cut-off times
closer to 4:00 p.m. are beneficial to
market participants, and by extending
CMC’s MOC Cut-Off Time to 3:49 p.m.,
CMC will be better positioned to serve
as a viable option for market
participants to consider when deciding
which venues to route their MOC
orders, thus enhancing intermarket
competition.
27 For example, JP Morgan Securities’ ATS, JPB–
X, offers Close Price Match. This functionality
utilizes a conditional order process to match orders
and crosses them at the security’s official closing
prices, as determined by the closing auction at the
primary exchange for a security. The Close Price
Match time for an NMS stock is currently 30seconds before the MOC cut-off time for that stock’s
primary exchange. Additionally, Instinet, LLC’s
ATS, CBX provides for three MOC Crossing
Sessions, which consist of: a cross for securities
where the primary listing exchange is the Nasdaq
(‘‘Nasdaq Cross’’), a cross for securities where the
primary listing exchange is the NYSE Arca (‘‘Arca
Cross’’), and a cross for securities where the
primary listing exchange is the NYSE (‘‘NYSE
Cross’’) (collectively, ‘‘MOC Crosses’’). Each MOC
Cross occurs two minutes prior to the relevant
exchange’s cut-off time; i.e. the Nasdaq Cross
currently occurs at or near 3:53 p.m., the NYSE
Cross at or near 3:48 p.m., and the Arca Cross at
or near 3:57 p.m. See Form ATS–N, JPB–X,
available at: https://www.sec.gov/Archives/edgar//
data/782124/000001961722000459/xslATS-N_X01/
primary_doc.xml; see also Form ATS–N, Instinet,
LLC’s ATS, CBX, available at: https://www.sec.gov/
Archives/edgar/data/310607//0000310607/
22000009/xslATS-N_X01/primary_doc.xml.
28 The term ‘‘Regular Trading Hours’’ means the
time between 9:30 a.m. and 4:00 p.m. Eastern Time.
See Rule 1.2 (w), definition of, ‘‘Regular Trading
Hours.’’
29 The Exchange notes that part of its rationale for
extending CMC’s MOC Cut-Off Time is
substantively identical to that of other exchanges
moving their MOC cut-off times to later in the
trading day, namely, NYSE and Nasdaq. See
Securities Exchange Act Release No. 34–84454
(October 19, 2018), 83 FR 18580 (October 25, 2018)
(SR–Nasdaq–2018–068) (‘‘Specifically, the
Exchange believes that extending the cutoff times
for submitting on close orders will allow market
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72529
In support of the above, the chart
below shows the total traded volume
across all market centers, from 3:30 p.m.
to 4:00 p.m. in 30-seconds intervals, and
includes labels for the different MOC
cut-off times for CMC, NYSE, and
Nasdaq. As illustrated, at NYSE’s 3:50
p.m. MOC cut-off time, Nasdaq’s 3:55
p.m. MOC cut-off time, and 4:00 p.m.
market close, there is a noticeable
increase in traded volume in the overall
marketplace, with volume relatively flat
in the overall marketplace prior to those
times. Comparatively, there is no
observed spike in traded volume in the
overall marketplace at the current CMC
MOC Cut-Off Time of 3:35 p.m. The
Exchange believes that this data
substantiates the view that a MOC cutoff time closer to 4:00 p.m. is valued by
market participants, and that by
extending the CMC MOC Cut-Off Time
to 3:49 p.m. CMC will be better
positioned as a viable alternative to the
primary exchanges’ closing auctions,
‘‘foster[ing] price competition and
thereby decreas[ing] costs for market
participants.’’ 32
participants to retain control over their orders for
a longer period of time, and thereby assist those
market participants in managing their trading at the
close.’’); see also Securities Exchange Act Release
No. 34–84804 (December 12, 2018), 83 FR 64910
(December 18, 2018) (SR–NYSE–2018–58) (‘‘The
Exchange believes that extending the cut-off times
for entry and cancellation of MOC and LOC Orders,
cancellation of CO orders, as well as when the
Exchange would begin disseminating Order
Imbalance Information for the close
would. . .allow market participants to retain
control over their orders for a longer period of time,
and thereby assist those market participants in
managing their trading at the close.’’).
30 See NYSE Rule 73.5(a)(8), Closing Auction
Imbalance Freeze Time.
31 See Nasdaq Rule 4702(b)(11)(A), Market On
Close Order.
32 Supra note 20.
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3:30PM to 4:00PM Average Daily Volume: 2022 YTD
140mm
120mm
1100mm
3:50Jlf!l:
> 80mm
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I
<
.
NYSE
60mm
40mm
20mm
0mm
#####~##,######~##,######~~###
~~~~~~~~~~~~~~~~~~~~~~#~~~~#~~
Time of Day (30 Second 8uclcets)
The Exchange also notes that today’s
market participants, including users of
CMC, are technologically equipped 33 to
handle a 3:49 p.m. MOC Cut-Off Time.
As a general matter, today’s market
participants, including CMC users, rely
on electronic smart order routers, order
management systems, and trading
algorithms, which make routing and
trading decisions on an automated basis,
in times typically measured in
microseconds. In this regard, the
Exchange believes that if a CMC user
receives a message that their MOC order
was not matched in CMC,34 such CMC
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33 The
Exchange notes that today’s equities
markets involve the widespread use of automated
trading algorithms and routing solutions, as well as
market connectivity options with speeds often
measured in microseconds. See generally ‘‘Staff
Report on Algorithmic Trading in U.S. Capital
Markets’’ (August 5, 2020), available at https://
www.sec.gov/tm/reports-and-publications/specialstudies/algo_trading_report_2020 (‘‘Algorithmic
Trading Report’’) (‘‘Over the past decade, the
‘manual handling of institutional orders is
increasingly rare and has been replaced by
sophisticated institutional order execution
algorithms and smart order routing systems.’’)
(‘‘The secondary market for U.S.-listed equity
securities that has developed within this structure
is now primarily automated. The process of trading
has changed dramatically primarily as a result of
developments in technologies for generating,
routing, and executing orders, as well as by the
requirement imposed by law and regulation.’’)
(‘‘Modern equity markets are connected in part by
the data flowing between market centers. An
enormous volume of data is available to market
participants. In recent years, there has been an
exponential growth in the amount of market data
available, the speed with which it is disseminated,
and the computer power used to analyze and react
to price movements.’’).
34 The CMC Closing Match Process—i.e., the
matching of all buy and sell MOC orders entered
into the System by time priority at the MOC CutOff Time, the electronic notification to Members of
any unmatched MOC orders, and the dissemination
by the Exchange of the total size of all buy and sell
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user will have more than enough time
to reroute their MOC order to the
primary exchange. Importantly, the
Exchange discussed the proposed
change with both current CMC users
and potential new CMC users 35 to gauge
whether a MOC Cut-Off Time oneminute prior to the NYSE cut-off time,
and six-minutes prior to the Nasdaq cutoff time, would present operational or
technological challenges, and confirmed
that both current CMC users as well as
potential new CMC users can in fact
technologically manage the proposed
change.
orders matched via CMC via the Cboe Auction
Feed—generally occurs within microseconds. As
such, a MOC Cut-Off Time one-minute prior to the
primary exchanges’ cut-off times is a sufficient
period of time for Members to reroute their
unmatched MOC orders to the primary exchanges,
should they choose to do so.
35 The Exchange discussed the proposed
amendment with both current CMC users, as well
as potential new users. By way of background, a
large majority of CMC Users are mid-size, regional
broker dealers that utilize third-party front-end
providers or broker-dealers that provide them with
electronic and automated trading solutions such as
algorithms and smart order routers, which they use
to access CMC. Specifically, the Exchange
discussed the proposed amendment with CMC’s
Users’ two (2) third-party providers whose end
users are responsible for 100% of CMC’s volume,
and these providers indicated that the automated
routing and trading solutions they offer to CMC’s
users can appropriately manage the proposed MOC
Cut-Off Time. Additionally, the Exchange discussed
the proposed amendment with potential new users
of CMC (approximately sixty (60) market
participants, including proprietary trading firms,
regional broker-dealers, and bulge bracket brokerdealers). These market participants indicated that
amending the MOC Cut-Off Time would likely
encourage them to use CMC as part of their trading
strategies (whether directly or through a third-party
provider) because the proposed MOC Cut-Off Time
enables market participants to hold onto and trade
their orders closer to 4:00 p.m. and makes CMC a
more viable alternative to the primary exchanges’
closing auctions.
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2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.36 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 37 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the section 6(b)(5) 38 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
that moving the MOC Cut-Off Time to
3:49 p.m. would remove impediments to
and perfect the mechanism of a free and
open market and a national market
system because it would allow Members
to retain control over their orders for a
longer period, thereby assisting market
participants in managing their trading at
the close. As discussed more fully
above, market participants may prefer to
trade as close to 4:00 p.m. as possible,
36 15
37 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
38 Id.
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
because doing so can provide them with
more time to seek better priced liquidity
for their orders in a variety of ways, as
well as give them more time to
determine the size of their outstanding
orders that they may decide to commit
to CMC the primary auctions, or
services offered by off-exchange venues
such as ATSs.
Additionally, the Exchange believes
that a MOC Cut-Off Time fifteenminutes (15) prior to NYSE’s cut-off
time, and twenty-five-minutes (25) prior
to Nasdaq’s cut-off time, is no longer
necessary. Rather, the Exchange notes
that today’s market participants are
technologically equipped 39 to handle a
3:49 p.m. MOC Cut-Off Time.
Specifically, CMC’s current users
utilizes third-party providers or brokerdealers 40 that provide them with
electronic trading technology enabling
them to quickly react to market
conditions and messages, such as the
Cboe Auction Feed. Moreover, as noted
above, many market participants,
including non-users of CMC, utilize
electronic smart order routers, order
management systems, and trading
algorithms, which make routing and
trading decisions on an automated basis,
in times often measured in
microseconds. Therefore, the Exchange
believes that both current users of CMC,
as well as those that may utilize CMC
following approval of this amendment,
will be technologically equipped to
efficiently respond to CMC’s publication
of matched shares and should they so
choose, reroute any unmatched MOC
39 Supra
note 33.
a general matter, third-party technology
providers and broker-dealers with electronic trading
offerings provide automated trading and routing
products and services to market participants that
may not possess their own proprietary technology,
or simply choose to leverage third party solutions
they deem superior to their own internal
technology. By way of example, portfolio managers
responsible for reweighting their managed funds
may not possess internal automated routing and
algorithmic trading capabilities, and instead utilize
third-party solutions enabling them to trade on an
automated basis. As such, the proposed MOC CutOff Time of 3:49 p.m. is not likely to negatively
impact market participants who may not possess
the internal capabilities to reroute unmatched CMC
MOC orders to the primary exchanges’ closing
auctions. The Exchange further notes that the
utilization of third parties and broker-dealers for
technological trading solutions was even noted by
the Commission in its Algorithmic Trading Report.
Supra note 33 (‘‘Institutions that do not create their
own algorithms generally use algorithms provided
to them by institutional brokers.’’) (‘‘Brokers are
tasked by their customers with finding liquidity in
a complex, fragmented market, achieving best
execution, and minimizing information leakage and
other implicit costs. To try to meet these goals,
brokers use, and offer to their customers, a wide
range of execution algorithms.’’)
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orders to the respective primary closing
auction.41
The Exchange acknowledges that
there are market participants that may
not currently possess internal highspeed routing and trading technology.
However, such market participants may,
and likely already do, utilize routing
and trading services offered by thirdparty providers or broker-dealers 42 to
handle and execute their orders
electronically. Accordingly, the
Exchange believes that the proposed
MOC Cut-Off Time is not likely to result
in disparate treatment amongst CMC
users and other market participants.
The Exchange also believes that the
extension of cut-off times by the
primary exchanges since CMC’s
proposal, as well as the growth of offexchange venues 43 with cut-off times in
41 By way of background, CMC calculates the
matched shares at the MOC Cut-Off Time (currently
3:35 p.m.) Importantly, the matching process
happens quickly, and while the duration may vary,
the total matching process typically takes a fraction
of second (e.g., ∼948 microseconds), with the
maximum being around 1-second. With these
timeframes in mind, a user should in most
instances knows the paired CMC quantity no later
than 3:49:01 p.m., leaving the user at least fiftynine-seconds (59) to reroute any unpaired CMC
MOC orders to the primary exchanges’ closing
auctions. As noted by the Exchange throughout this
filing, the speed of today’s trading technology is
typically measured in microseconds, making fiftynine-seconds (59) a significant amount of time for
a user to make an automated trading decision. For
reference, a microsecond is 1-millionth of a second.
42 Supra note 40.
43 Supra note 27.
44 As noted above, NYSE’s cut-off time is 3:50
p.m., and Nasdaq’s cut-off time is 3:55 p.m. NYSE
Arca’s cut-off time for MOC orders is 3:59 p.m. See
‘‘Trading Information—Closing Auctions’’, available
at: https://www.nyse.com/markets/nyse-arca/
trading-info.
45 Supra note 20.
46 The Exchange spoke with four (4) designated
market makers for the primary exchanges and
confirmed that while they do not currently monitor
the Cboe Auction Feed, they are technically
equipped to do so.
47 Supra note 41.
48 As a general matter, third-party technology
providers and broker-dealers with electronic trading
offerings provide automated trading and routing
products and services to market participants that
may not possess their own proprietary technology,
or simply choose to leverage third party solutions
they deem superior to their own internal
technology. By way of example, portfolio managers
responsible for reweighting their managed funds
may not possess internal automated routing and
algorithmic trading capabilities, and instead utilize
third-party solutions enabling them to trade on an
automated basis. As such, the proposed MOC CutOff Time of 3:49 p.m. is not likely to negatively
impact market participants who may not possess
the internal capabilities to reroute unmatched CMC
MOC orders to the primary exchanges’ closing
auctions. The Exchange further notes that the
utilization of third parties and broker-dealers for
technological trading solutions was even noted by
the Commission in its Algorithmic Trading Report.
Supra note 33 (‘‘Institutions that do not create their
own algorithms generally use algorithms provided
to them by institutional brokers.’’) (‘‘Brokers are
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72531
such close proximity to the end of
Regular Trading Hours is indicative of
Members’ desires for such offerings.
Logically, such a change in market
structure would not have occurred if
market participants did not already
possess the operational and
technological wherewithal to effectively
manage the multitude of cut-off times
offered by the exchanges and offexchange venues.
Moreover, the Exchange believes that
the proposed rule change will remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because
extending the MOC Cut-Off Time to 3:49
p.m. would more closely align the CMC
MOC Cut-Off Time to the cut-off times
in place for the primary exchanges.44
For the reasons discussed more fully
above, the primary exchanges’ cut-off
times are beneficial to market
participants because of their proximity
to 4:00 p.m. By moving the MOC CutOff Time closer to the primary
exchanges’ cut-off times, CMC can
become a comparable alternative to the
primary exchanges’ closing auctions for
Members to route their unpriced MOC
orders, and ‘‘should foster price
competition and thereby decrease costs
for market participants.’’ 45 Importantly,
even with a MOC Cut-Off Time closer to
the primary exchanges’ cut-off times,
CMC removes any perceived impact on
the primary listing markets’ close by
publishing the number of matched order
shares, by security, in advance of the
primary markets’ cut-off time. The total
matched shares would still be
disseminated by the Exchange free of
charge via the Cboe Auction Feed, albeit
at the new proposed MOC Cut-Off Time
of 3:49 p.m. Because of the speeds and
widespread use of market technology
the market makers on the primary
exchanges could, should they choose to
do so, incorporate the Cboe Auction
Feed information into their closing
processes.46 Additionally, as discussed
above, because of the market technology
utilized by market participants in
today’s markets, those who choose to
participate in CMC will still have ample
time 47 to reroute any MOC orders not
matched via CMC to reach the primary
market to be included in their closing
auction process. Specifically, CMC’s
current users rely on third-party
providers or broker-dealers 48 to handle
and execute their orders electronically.
Furthermore, potential new users of
tasked by their customers with finding liquidity in
a complex, fragmented market, achieving best
execution, and minimizing information leakage and
other implicit costs. To try to meet these goals,
brokers use, and offer to their customers, a wide
range of execution algorithms.’’)
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CMC either likely already possess the
necessary routing and trading
technology or may simply choose to
utilize third-party solutions.49
Accordingly, the Exchange believes that
the proposed MOC Cut-Off Time is not
likely to result in disparate treatment
amongst CMC users.
The proposed rule change would also
more closely align CMC’s MOC Cut-Off
Time with that of off-exchange venues
that offer cut-off times aligned with
those currently offered by the primary
exchanges, and as little as 30-seconds
prior to market close.50 As such, the
Exchange believes that the proposed
rule change is supported by both ample
precedent as well as current market
structure, and should not present any
new or novel issues that market
participants must consider when
managing their trading and determining
which exchange or off-exchange venue
to route their MOC orders.
Price Discovery 51
The Exchange believes that the
proposed rule change is consistent with
the section 6(b)(5) requirements.52 As
previously noted by the Exchange,53
CMC accepts and matches only
unpriced MOC orders. By matching only
unpriced MOC orders, and not Limit49 Supra
note 40.
note 27.
51 As part of this proposed rule change the
Exchange is addressing several questions
considered by the Commission in connection with
the Exchange’s Original Proposal, including price
discovery and fragmentation, market complexity
and operational risk, and manipulation.
Importantly, in considering these questions, the
Commission found that based on CMC’s design and
the record before the Commission, that the proposal
was consistent with Section 6(b)(5) of the Act.
Supra note 20.
52 The Exchange notes that the Commission, in its
Final Approval Order, carefully analyzed and
considered CMC and its potential effects, if any, on
the primary listing exchanges’ closing auctions,
including their price discovery functions.
Importantly, the Commission found that, based on
CMC’s design, CMC should not disrupt the price
discovery process in the closing auctions of the
primary listing exchanges. Supra note 20.
53 See Letter from Joanne Moffic-Silver, Executive
Vice President, General Counsel, and Corporate
Secretary, Bats Global Markets, Inc. (August 2,
2017), available at: https://www.sec.gov//batsbzx2017-34/batsbzx201734-2162452-157801.pdf; see
also Letter from Joanne Moffic-Silver (October 11,
2017), available at: https://www.sec.gov/comments/
sr-batsbzx-2017-34/batsbzx201734-2634580161229.pdf.
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50 Supra
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On-Close (‘‘LOC’’) orders and executing
those matched MOC orders that
naturally pair off with each other and
effectively cancel each other out, CMC
is designed to avoid impacting price
discovery. While the proposed rule
change would have CMC accept MOC
orders up to 3:49 p.m., such extension
will not change this underlying
functionality. As previously noted by
the Exchange,54 matched MOC orders
are merely recipients of price formation
and do not directly contribute to the
price formation process. Indeed, in its
Final Approval Order for CMC, even the
Commission noted that unpriced,
paired-off MOC orders do not directly
contribute to setting the official closing
price of securities on the primary listing
exchanges but, rather, are inherently the
recipients of price formation
information.55
Moreover, the Exchange believes that
even if extending the MOC Cut-Off Time
to 3:49 p.m. reduces the number of MOC
orders routed to a security’s primary
listing market, CMC is designed to
remove any perceived adverse impact
on the primary listing markets’ close
because the total matched shares would
still be disseminated by the Exchange
free of charge via the Cboe Auction Feed
prior to the primary exchanges’ cut-off
times. Additionally, because of the
technological capabilities of today’s
market participants discussed more
fully above, the market makers on the
primary exchanges could, should they
choose to do so, incorporate the Cboe
Auction Feed information into their
closing processes. Furthermore, current
users of CMC are technologically
equipped to manage the proposed CMC
MOC-Cut Off Time. Potential new CMC
users are capable of rerouting any
unmatched CMC MOC orders to the
primary exchanges. As discussed above,
CMC’s current users rely on third-party
solutions that provide them with the
technological capability to appropriately
manage the proposed MOC Cut-Off
Time above. Similarly, given the
widespread use of routing and trading
technology in today’s markets, it is
likely that potential new CMC users
already possess the technological
capabilities to manage the proposed
54 Id.
55 Supra
PO 00000
note 20.
Frm 00091
Fmt 4703
Sfmt 4703
MOC Cut-Off time. Even where
potential new users of CMC may not
possess internally high-speed routing
and trading technology, such users can
utilize, to the extent they do not so
already, third-party providers and
broker-dealers to handle and route their
orders electronically.
Fragmentation 56
Another matter addressed by the
Commission in their review of the
Original Proposal was fragmentation,
and whether CMC would fragment the
markets beyond what currently occurs
through off-exchange close price
matching venues offered by brokerdealers.57 While comparisons to offexchange MOC activity may not be a
perfect measure of the potential
resulting effect of CMC market
fragmentation,58 the proposed
amendment is designed to enable CMC
to better compete with off-exchange
venues and for closing volume that is
already executed away from the primary
listing venues.
As illustrated in the first two charts
below, a growing proportion of trading
volume at the close occurs on offexchange venues, where the TRF close
volume, as a percent of Exchange close
volume, has risen steadily since January
2019.59 In the third chart the Exchange
also studied the top ten most actively
traded securities during the same time
period and found that a significant
portion of the total closing volume is
executed off-exchange, following the
dissemination of the official closing
price.
56 Supra
note 51.
note 20.
58 Id (‘‘. . .[C]omparisons to off-exchange activity
are not a perfect measure of the potential resulting
effect of the [CMC] proposal because the structures
of the many off-exchange mechanisms differ from
the structure of Cboe Market Close.’’).
59 The Exchange conducted an analysis of offexchange/Trade Reporting Facility (‘‘TRF’’) closing
volume that occurs after market close, 4:00 p.m.
Eastern Time, where the price is equal to the
closing price and for which such trades are reported
with a Prior Reference Price (‘‘PRP’’) trade reporting
modifier. The TRF is a trade reporting facility
where FINRA members may report trades in
Nasdaq-listed and other exchange-listed securities,
that were executed otherwise than on an exchange.
The first two charts represent TRF executed volume
at the close with the ‘‘PRP’’ flag that equals the
closing auction price, divided by total on exchange
auction volume.
57 Supra
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
TRF Close Volume% of Exchange Close Volume by Listing Exchange
50%
GI
listing Exchange
Ill BZX
1111 NYSE
Ill NYSE American
1111 NYSE Arca
%1 Nasdaq
45%
E
.: 40%
0
~35%
C
·~ 30%
125%
111 20%
ii
....~
15%
;
10%
5%
Source: Internal Exchange Data.
TRF Close% of Exchange Close
11%
10%
GI
Ill
0
9%
8%
0
GI
01
C
1!u
7%
6%
)(
....w
5%
0
-g. 4%
LL
I=
3%
2%
1%
2019 Ql
2019 Q2
2019 Q3
2019 Q4
2020 Ql
2020 Q2
2020 Q3
2020 Q4
2021 Ql
2021 Q2
2021 Q3
2021 Q4
2022 Q1
2022 Q2
Source: Internal Exchange Data.
1 ...............
2 ...............
3 ...............
4 ...............
5 ...............
6 ...............
7 ...............
8 ...............
9 ...............
10 .............
Symbol
Primary exchange
AAPL ...............................................................................
T ......................................................................................
BAC .................................................................................
INTC ................................................................................
MSFT ...............................................................................
F ......................................................................................
PFE .................................................................................
CSCO ..............................................................................
CMCSA ...........................................................................
WFC ................................................................................
Nasdaq ............................................................................
NYSE ...............................................................................
NYSE ...............................................................................
Nasdaq ............................................................................
Nasdaq ............................................................................
NYSE ...............................................................................
NYSE ...............................................................................
Nasdaq ............................................................................
Nasdaq ............................................................................
NYSE ...............................................................................
TRF close %
inc. PRP 60
9
6
10
5
7
9
5
5
7
9
60 As
participants have expressed the value of
being able to trade closer to 4:00 p.m.
In this regard, with the proposed MOC
Cut-Off Time CMC will be able to meet
the needs of market participants, and
better compete with off-exchange
venues, ‘‘foster[ing] price competition
and thereby decreas[ing] costs for
defined above, ‘‘PRP’’.
VerDate Sep<11>2014
18:43 Nov 23, 2022
market participants.61 Members may
prefer to execute their MOC orders via
CMC rather than off-exchange venues
for reasons such as the increased
transparency and reliability that exists
when investors execute their orders on
public, well-regulated exchanges.
61 Supra
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25NON1
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Given the significant volume of offexchange MOC activity, the Exchange
believes there is ample opportunity for
CMC to attract existing MOC volume
that is already being executed away
from CMC and the primary listing
venues. As discussed above, market
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72534
Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
Moreover, by attracting such order flow,
CMC can help to increase the amount of
volume at the close executed on systems
subject to the resiliency requirements of
Regulation SCI.62
Indeed, an analysis by the Exchange
shows that the closing auction volume
on both NYSE and Nasdaq has increased
despite the launch of CMC on March 6,
2020. Therefore, while the proposed
amendment may lead to additional
orders being routed to CMC rather than
the primary exchanges’ closing auctions,
it cannot be said with certainty that
such a change will significantly
fragment the marketplace. In any event,
the proposed extension of the MOC CutOff Time to 3:49 p.m. is not likely to
materially increase market
fragmentation and have a negative
impact on the market because the data
shows that even with the
implementation of CMC, there is still a
significant amount of volume executed
on the primary exchanges’ suggesting
that market participants continue to
utilize the primary closing auctions.
Average Daily Closing Auction Volume by Primary
Since CMC Launch
800M
IIIIBZX
■ AMEX
;11ARCA
■ NYSE
II NASDAQ
PreCMC
PostCMC
Source: Internal Exchange Data.
The Exchange believes that the
proposed rule change is simple and
straightforward, and as such will not
significantly increase market complexity
or operational risk. The Exchange seeks
only to extend the MOC Cut-Off Time to
3:49 p.m., leaving all other aspects of
the CMC process intact. Members will
not have to consider new operational
requirements of monitoring and
consuming a new data feed or consider
the utilization of a new order type or
implementation of new Exchange code.
Rather, Members may continue to
monitor the same data feed as they do
today, the Cboe Auction Feed, and
simply look for the publication of the
CMC information at the new proposed
MOC Cut-Off Time.
Additionally, as discussed more fully
above, the Exchange discussed this
proposal with current CMC users prior
to submitting this proposal and learned
that CMC’s current users are
technologically equipped 64 to manage a
MOC Cut-Off Time closer to the primary
exchanges’ cut-off times, and that they
can respond to CMC’s publication of
matched shares and quickly reroute any
unmatched MOC orders to the
respective primary closing auction.
Moreover, CMC is a voluntary offering,
and Members may freely decide
whether to participate.
Furthermore, as noted throughout,
both off-exchange venues and other
exchanges already offer MOC cut-off
times that are closer in time to the end
of Regular Trading Hours. Specifically,
as mentioned above, in 2018 Nasdaq
received approval to move the cut-off
times for the entry of MOC and LimitOn-Close (‘‘LOC’’) orders from 3:50 to
3:55 p.m.65 Similarly, in 2018 the NYSE
received approval from the SEC to
extend their cut-off times for order entry
and cancellation for participation their
closing auction, from 3:45 p.m. to 3:50
p.m.66 NYSE also offers discretionaryorders, which unlike MOC/LOC orders
that are subject to NYSE’s 3:50 p.m. cutoff, may be entered for participation in
the closing auction until 3:59:50.67
Additionally, market participants may
enter MOC orders for participation in
NYSE Arca’s closing auction up to 3:59
p.m.68 Finally, various off-exchange
venues offer closing match processes
with cut-off times aligned with those of
62 See Letter from Joanne Moffic-Silver, Executive
Vice President, General Counsel, and Corporate
Secretary, Bats Global Markets, Inc., a Cboe
Company (Oct. 11, 2017) (‘‘Furthermore, [CMC]
would operate on the Exchange’s reliable SCI
systems . . . significant MOC liquidity is
conducted today by off-exchange venues. These
venues are not SCI systems and, therefore, not
subject to Regulation SCI’s enhanced resiliency
requirements. [CMC] could attract MOC orders from
these off-exchange venues to the Exchange and its
reliable SCI system, furthering the Commission’s
presumed desire for liquidity at the close to be
conducted on SCI systems.’’)
63 Supra note 51.
64 Supra note 41.
65 Supra note 25.
66 Id.
67 See NYSE Rule 7.31(c)(2)(C); see also ‘‘The
Floor Broker’s Modern Trading Tool’’, available at:
https://www.nyse.com/article/trading/d-order
(‘‘While D Orders are available for use throughout
the trading day, most executions occur in the
closing auction, where they’re known as Closing D
Orders. At 3:55 p.m., Closing D Order interest
eligible to participate in the closing auction is
added to the order imbalance feed at their
discretionary price range. Closing D Orders can also
be submitted, modified or cancelled up to 3:59:50
p.m. These distinct features of Closing D Orders are
designed to facilitate the Floor Broker’s traditional
agency role on behalf of larger institutional interest,
allowing Floor Brokers to work in conjunction with
their customer to find larger liquidity
opportunities.’’).
68 See ‘‘Closing Auction Timeline’’, available at:
https://www.nyse.com/markets/nyse-arca/tradinginfo.
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
the primary exchanges, and even as
close to 30-seconds before market close,
4:00 p.m.69
Accordingly, the Exchange believes
that market participants are well
accustomed to managing the various
cut-off times in today’s marketplace,
and in incorporating these timelines
into their trading decisions. The number
of exchanges and off-exchange venues
with extended cut-off times indicates
that market participants find value in
their ability to retain control of their
trading heading into the end of Regular
Trading Hours, and the primary
exchanges and off-exchange venues
have responded to such demand.
Certainly, market participants would
not desire cut-off times closer to the end
of Regular Trading Hours if they could
not technologically and operationally
manage their trading accordingly.
Therefore, the extension of CMC’s MOC
Cut-Off Time should not present market
participants with any novel operational
or technological complexities.
Manipulation 70
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As a general matter, the Exchange
notes that the value to market
participants in extending the MOC CutOff Time to 3:49 p.m. is not the
proximity of CMC’s matched shares
message to the cut-off times of the
primary exchanges. Rather, the value of
the proposed amendment is the ability
of users to trade their orders for a longer
period of time before deciding whether
to commit their MOC orders to CMC.
Nevertheless, the Exchange does not
expect that the proposed extension of
the MOC Cut-Off Time to 3:49 p.m. will
result in an increase of manipulative
activity due to information asymmetries,
or raise any unique manipulation
concerns relative to how CMC exists
today with a current MOC Cut-Time of
3:35 p.m.
The Exchange notes that any
information CMC participants may be
able to glean from their paired-off MOC
orders, or from their unmatched MOC
orders, is still limited in nature. For
instance, any information that CMC
participants may learn from receiving
unmatched MOC order messages is still
limited in nature because the CMC
participant would still only know the
unexecuted size of its own order.71
69 Supra
note 27.
note 51.
71 The Exchange notes that in its Final Approval
Order, even the Commission noted that, ‘‘In
particular, a market participant would only be able
to determine the direction of the imbalance and
would have difficulty determining the magnitude of
any imbalance, as it would only know the
unexecuted size of its own order. In addition, the
information would only be with regard to the pool
70 Supra
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Moreover, even if a Member chose to
participate in CMC only to gather
information about the direction of an
imbalance and use such information to
manipulate the closing price, the
Member’s orders were still eligible for
execution subjecting the Member to
economic risk.
While this proposal would result in
the total shares for buy and sell orders
in CMC being disseminated closer in
time to the primary exchanges’ cut-off
times, this change does not suddenly
make such information more valuable or
useful in terms of enhancing
opportunities for gaming and
manipulating the official closing price.
The proposed MOC Cut-Off Time is oneminute prior to NYSE’s cut-off time of
3:50 p.m., and six-minutes prior to
Nasdaq’s cut-off time of 3:55 p.m. As
noted above, today’s markets are marked
by technological solutions which
typically operate in durations of
microseconds. In this context, the
separation between the CMC MOC CutOff Time and that of NYSE’s and
Nasdaq’s is a substantial duration of
time, during which much can change in
the marketplace, thus limiting the value
of information, if any, that can be
gleaned from CMC’s dissemination of
matched shares at 3:49 p.m.
Furthermore, as with the current MOC
Cut-Off Time, the proposed extension
does not present any information
asymmetries that do not already exist in
today’s markets, as the very nature of
trading creates short term asymmetries
of information to those who are parties
to a trade.72 Indeed, as noted by the
Commission, any party to a trade gains
valuable insight regarding the depth of
the market when an order is executed or
partially executed.73 Additionally,
NYSE imbalance information is already
disseminated to NYSE floor brokers,
who are permitted to share with their
customers specific data from the
imbalance feed.74 Even in this case,
though, the Commission stated that the
value of such information is limited
because the imbalance information does
not represent overall supply and
of liquidity on BZX and would provide no insight
into imbalances on the primary listing exchange,
competing auctions, ATSs, or other off-exchange
matching services which, as described above, can
represent a significant portion of trading volume at
the close.’’ Supra note 20.
72 The Exchange also notes that in its approval
order, even the Commission noted that, ‘‘Further,
the Commission believes information asymmetries
as those described by commenters exist today and
are inherent in trading, including with respect to
closing auctions. For example, any party to a trade
gains valuable insight regarding the depth of the
market when an order is executed or partially
executed.’’ Id.
73 Id.
74 Id.
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Sfmt 4703
72535
demand for a security, is subject to
change, and is only one relevant piece
of information.75 Similarly, because any
information gleaned by a CMC
participant is limited only to the
unexecuted size of their order, and
relative to the depth of only the BZX
pool of liquidity, the Exchange believes
that the proposed extension of the MOC
Cut-Off Time does not create an
increased risk of manipulative trading
activity.
Moreover, there are currently controls
and processes in place to monitor for
manipulative trading activity, such as
the supervisory responsibilities and
capabilities of exchanges and the
expansive cross market surveillance
conducted by FINRA. Following
approval of this proposal, the Exchange,
FINRA and others will continue to
surveil for potential manipulative
activity and when appropriate, bring
enforcement actions against market
participants engaged in manipulative
trading activity.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, the
proposed rule change seeks merely to
extend the MOC Cut-Off Time from 3:35
p.m. to 3:49 p.m., enabling all Members
to manage their trading for a longer
period. The Exchange is not proposing
to make any other changes to the CMC
process. Moreover, CMC is a voluntary
closing match process, and Members are
not required to participate in the CMC.
Additionally, the proposed rule change
applies equally to all Members.
Importantly, based on feedback from
CMC users, the proposed MOC Cut-Off
Time will not prevent CMC’s current
user’s from participating in CMC, as
CMC’s current users are technologically
equipped to manage a 3:49 p.m. MOC
Cut-Off Time, and should they choose to
do so, reroute MOC orders not matched
in CMC to the primary exchanges’
closing auctions.
Furthermore, the Exchange does not
believe that the proposed rule change
will impose any burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. As noted above, the
proposed rule change more closely
aligns the CMC MOC Cut-Off Time to
the cut-off times of other exchanges,
while still providing CMC participants
with an opportunity to reroute any of
their unpaired MOC orders to the
75 Id.
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
primary exchanges. In this regard, the
proposed rule change may make CMC a
more viable alternative to the primary
auctions and ‘‘should foster price
competition and thereby decrease costs
for market participants.’’ 76
Additionally, the proposed MOC CutOff Time may also enable the Exchange
to more effectively compete with offexchange venues that have cut-off times
much closer in time to the market close
and comprise a growing percentage of
closing volume.
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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. Proceedings To Determine Whether
To Approve or Disapprove SR–
CboeBZX–2022–038, as Modified by
Amendment No. 1, and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 77 to determine
whether the proposed rule change, as
modified by Amendment No. 1, should
be approved or disapproved. Institution
of proceedings is appropriate at this
time in view of the legal and policy
issues raised by the proposal. Institution
of proceedings does not indicate that the
Commission has reached any
conclusions with respect to any of the
issues involved. Rather, as described
below, the Commission seeks and
encourages interested persons to
provide comments on the proposed rule
change, as modified by Amendment No.
1, to further inform the Commission’s
analysis of whether to approve or
disapprove the proposal.
Pursuant to Section 19(b)(2)(B) of the
Act,78 the Commission is providing
notice of the grounds for possible
disapproval under consideration. The
Commission is instituting proceedings
to allow for additional analysis, and
input from commenters with respect to,
the consistency of the proposal with
Sections 6(b)(5) 79 and 6(b)(8) 80 of the
Act. Section 6(b)(5) of the Act requires
that the rules of a national securities
exchange be designed, among other
things, to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
note 20.
U.S.C. 78s(b)(2)(B).
and a national market system and, in
general, to protect investors and the
public interest, and not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
Section 6(b)(8) of the Act requires that
the rules of a national securities
exchange not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in
Amendment No. 1,81 in addition to any
other comments they may wish to
submit about the proposed rule change,
as modified by Amendment No. 1. In
particular, the Commission seeks
comment on the following aspects of the
proposal and asks commenters to
submit data where appropriate to
support their views:
1. The Exchange states that CMC users
are technologically equipped to handle
a 3:49 p.m. MOC Cut-Off Time and that,
if a CMC user receives a message that
their MOC order was not matched in
CMC, such CMC user will have more
than enough time to reroute their MOC
order to the primary exchange.82 While
the Exchange acknowledges that there
are market participants that may not
currently possess internal high-speed
routing and trading technology, the
Exchange states that such market
participants may, and likely already do,
utilize routing and trading services
offered by third-party providers or
broker-dealers to handle and execute
their orders electronically.83
Accordingly, the Exchange believes that
the proposed MOC Cut-Off Time is not
likely to result in disparate treatment
amongst CMC users and other market
participants.84 What are commenters’
views on whether the proposed MOC
Cut-Off Time (3:49 p.m.), which would
be one minute from NYSE’s MOC cutoff time of 3:50 p.m. and six minutes
from Nasdaq’s MOC cut-off time of 3:55
p.m., would provide enough time for
CMC users to reroute unmatched MOC
orders to the primary exchanges should
they choose to do so?
2. The Exchange states that total
matched share information would still
be disseminated by the Exchange free of
charge via the Cboe Auction Feed, albeit
at the new proposed MOC Cut-Off Time
of 3:49 p.m.85 The Exchange states that,
because of the speeds and widespread
76 Supra
81 See
77 15
82 See
supra note 6.
supra Item II.A.1.
83 See supra Item II.A.2.
84 See id.
85 See id.
78 Id.
79 15
80 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(8).
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18:43 Nov 23, 2022
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Fmt 4703
use of market technology, market
makers on the primary exchanges could,
should they choose to do so, incorporate
the Cboe Auction Feed information into
their closing processes.86 What are
commenters’ views on whether the
dissemination of total matched share
information at an MOC Cut-Off Time of
3:49 p.m. would provide enough time
for market participants, including
market makers, to access and
incorporate such information into their
closing trading strategies and processes
should they choose to do so?
3. The Exchange states that, with an
MOC Cut-Off Time at 3:49 p.m., CMC
will be better positioned to serve as a
viable option for market participants to
consider when deciding which venues
to route their MOC orders, thus
enhancing intermarket competition.87 In
particular, the Exchange states that, by
extending the MOC Cut-Off Time to 3:49
p.m., CMC will be better positioned as
a viable alternative to the primary
exchanges’ closing auctions, ‘‘foster[ing]
price competition and thereby
decreas[ing] costs for market
participants.’’ 88 The Exchange also
states that the proposed MOC Cut-Off
Time may enable the Exchange to more
effectively compete with off-exchange
venues that have cut-off times much
closer in time to the market close and
comprise a growing percentage of
closing volume.89 What are
commenters’ views on the extent to
which an extension of the MOC Cut-Off
Time to 3:49 p.m. would promote
competition among MOC order
execution venues and foster price
competition for MOC order execution
fees?
IV. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their data, views, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Sections
6(b)(5) and 6(b)(8), or any other
provision of the Act, or the rules and
regulations thereunder. Although there
do not appear to be any issues relevant
to approval or disapproval that would
be facilitated by an oral presentation of
data, views, and arguments, the
Commission will consider, pursuant to
86 See
id.
supra Item II.A.1.
88 See id. (quoting the Final Approval Order).
89 See supra Item II.B.
87 See
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Federal Register / Vol. 87, No. 226 / Friday, November 25, 2022 / Notices
Rule 19b–4 under the Act,90 any request
for an opportunity to make an oral
presentation.91
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposed rule change, as modified by
Amendment No. 1, should be approved
or disapproved by December 16, 2022.
Any person who wishes to file a rebuttal
to any other person’s submission must
file that rebuttal by December 30, 2022.
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–
CboeBZX–2022–038 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–CboeBZX–2022–038. 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
90 17
CFR 240.19b–4.
19(b)(2) of the Act, as amended by the
Securities Acts Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Acts Amendments of
1975, Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
khammond on DSKJM1Z7X2PROD with NOTICES
91 Section
VerDate Sep<11>2014
18:43 Nov 23, 2022
Jkt 259001
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–CboeBZX–2022–038 and
should be submitted on or before
December 16, 2022. Rebuttal comments
should be submitted by December 30,
2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.92
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–25669 Filed 11–23–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96357; File No. SR–
CboeBZX–2022–055]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend its
Fee Schedule
November 18, 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 November
10, 2022, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
amend its Fee Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
92 17 CFR 200.30–3(a)(12); 17 CFR 200.30–
3(a)(57).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Sfmt 4703
72537
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fee Schedule to modify the required
criteria of the Tape B Volume and
Quoting Tier 1 and to clarify that fee
code X 3 is applicable to certain routed
orders that add or remove liquidity.4
The Exchange first notes that its
listing business also operates in a
highly-competitive market in which
market participants, which includes
issuers of securities, Lead Market
Makers (‘‘LMMs’’), and other liquidity
providers, can readily transfer their
listings, opt not to participate, or direct
order flow to competing venues if they
deem fee levels, liquidity provision
incentive programs, or any other factor
at a particular venue to be insufficient
or excessive. Footnote 13 of the Fee
Schedule provides for the Tape B
Volume and Quoting Tiers, which are
designed to incentivize market
participants to enroll in LMP
Securities,5 which the Exchange
believes will enhance market quality in
all securities listed on the Exchange and
encourage issuers to list new products
and transfer existing products to the
Exchange.
The Exchange currently offers two
Tape B Volume and Quoting Tiers
under Footnote 13, which provide an
additional rebate of $0.0001 (Tier 1) and
3 Fee
code X is appended to routed orders.
Exchange initially filed the proposed fee
changes on November 1, 2022 (SR–CboeBZX–2022–
054). On November 10, 2022, the Exchange
withdrew that filing and submitted this filing.
5 ‘‘LMP Securities’’ means a list of securities
included in the Liquidity Management Program, the
universe of which is determined by the Exchange
and published in a circular distributed to Members
and on the Exchange’s website. Such LMP
Securities include all Cboe-listed Exchange-Traded
Products (‘‘ETPs’’) and certain non-Cboe-listed
ETPs for which the Exchange wants to incentivize
Members to provide enhanced market quality.
4 The
E:\FR\FM\25NON1.SGM
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]]>Agencies
[Federal Register Volume 87, Number 226 (Friday, November 25, 2022)]
[Notices]
[Pages 72527-72537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25669]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96359; File No. SR-CboeBZX-2022-038]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of Amendment No. 1 and Order Instituting Proceedings To
Determine Whether To Approve or Disapprove a Proposed Rule Change To
Amend Rule 11.28(a) To Extend the MOC Cut-Off Time
November 18, 2022.
On August 5, 2022, Cboe BZX Exchange, Inc. (``BZX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend BZX Rule 11.28(a) to extend the cut-off
time for accepting Market-on-Close orders entered for participation in
the Cboe Market Close. The proposed rule change was published for
comment in the Federal Register on August 24, 2022.\3\ On October 4,
2022, pursuant to section 19(b)(2) of the Act,\4\ the Commission
designated a longer period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\5\ On
November 11, 2022, the Exchange submitted Amendment No. 1 to the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. Amendment No. 1 amended and
superseded the proposed rule change as originally filed.\6\ The
Commission is publishing this notice and order to solicit comments on
the proposed rule change, as modified by Amendment No. 1, from
interested persons and to institute proceedings pursuant to section
19(b)(2)(B) of the Act \7\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 95529 (August 17,
2022), 87 FR 52092.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 95967, 87 FR 61425
(October 11, 2022). The Commission designated November 22, 2022, as
the date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ Amendment No. 1 is available on the Commission's website at:
https://www.sec.gov/comments/sr-cboebzx-2022-038/srcboebzx2022038.htm.
\7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend Rule 11.28(a) to extend the Cboe Market Close MOC Cut-Off Time
from 3:35 p.m. Eastern Time to 3:49 p.m. Eastern Time. The text of the
proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 72528]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Exchange Rule 11.28 (Cboe Market Close, a Closing Match Process for
Non-BZX-Listed Securities) provides Members an optional closing match
process for non-BZX-Listed securities, known as Cboe Market Close
(``CMC''). Currently, per Rule 11.28(a) (Order Entry) Members \8\ may
enter, cancel, or replace Market-on-Close (``MOC'') orders designated
for participation in CMC beginning at 6:00 a.m. Eastern Time \9\ up to
3:35 p.m. (``MOC Cut-Off Time''). The Exchange now proposes to move the
MOC Cut-Off Time from 3:35 p.m. to 3:49 p.m. The Exchange is not
proposing to make any other changes to the CMC process.
---------------------------------------------------------------------------
\8\ The term ``Member'' shall mean any registered broker or
dealer that has been admitted to membership in the Exchange. A
Member will have the status of a ``member'' of the Exchange as that
term is defined in section 3(a)(3) of the Act. Membership may be
granted to a sole proprietor, partnership, corporation, limited
liability company or other organization which is a registered broker
or dealer pursuant to section 15 of the Act, and which has been
approved by the Exchange. See Rule 1.5(n), definition of ``Member''.
\9\ All times noted throughout are in Eastern Time.
---------------------------------------------------------------------------
By way of background, on May 5, 2017, the Exchange filed a proposed
rule change to adopt CMC, a match process for MOC orders in non-BZX
listed securities and on December 1, 2017, filed Amendment No. 1 \10\
to that proposal (the ``Original Proposal'').\11\ On January 17, 2018,
the Commission, acting through authority delegated to the Division of
Trading and Markets,\12\ approved the Original Proposal (``Approval
Order'').\13\ On January 31, 2018, NYSE Group, Inc. (``NYSE'') and the
Nasdaq Stock Market LLC (``Nasdaq'') filed petitions for review of the
Approval Order (``Petitions for Review''). Pursuant to Commission Rule
of Practice 431(e),\14\ the Approval Order was stayed by the filing
with the Commission of a notice of intention to petition for
review.\15\ On March 1, 2018, pursuant to Commission Rule of Practice
431, the Commission issued a scheduling order granting the Petitions of
Review of the Approval Order, and provided until March 22, 2018, for
any party or other person to file a written statement in support of, or
in opposition to, the Approval Order.\16\ On April 12, 2018, NYSE and
Nasdaq submitted written statements opposing the Approval Order and BZX
submitted a statement in support of the Approval Order.\17\ On October
4, 2018, BZX filed Amendment No. 2 \18\ to the Original Proposal.
---------------------------------------------------------------------------
\10\ The only change in Amendment No. 1 was to rename the
proposed closing match process as Cboe Market Close. Per the
Commission, because Amendment No. 1 was a technical amendment and
did not materially alter the substance of the proposed rule change
or raise unique or novel regulatory issues, Amendment No. 1 was not
subject to notice and comment.
\11\ See Securities Exchange Act Release No. 34-80683 (May 16,
2017), 82 FR 23320 (May 22, 2017) (SR-Bats-BZX-2017-34) (Notice of
Filing of a Proposed Rule Change to Introduce Bats Market Close, a
Closing Match Process for Non-BZX Listed Securities Under New
Exchange Rule 11.28).
\12\ 17 CFR 200.30-3(a)(12).
\13\ See Securities Exchange Act Release No. 34-82522 (January
17, 2018), 83 FR 3205 (January 23, 2018) (SR-BatsBZX-2017-34)
(Notice of Filing of Amendment No. 1 and Order Granting Approval of
a Proposed Rule Change, as Modified by Amendment No. 1, To Introduce
Cboe Market Close, a Closing Match Process for Non-BZX Listed
Securities Under New Exchange Rule 11.28).
\14\ 17 CFR 201.431(e).
\15\ See Letter to Christopher Solgan, Assistant General
Counsel, Cboe Global Markets, Inc. (Jan. 24, 2018) (providing notice
of receipt of notices of intention to petition for review of
delegated action and stay of order), available at: https://www.sec.gov/rules/sro/batsbzx/2018/sr-batsbzx-2017-34-letter-from-secretary-to-cboe.pdf.
\16\ See Securities Exchange Act Release No. 82794, 83 FR 9561
(Mar. 6, 2018). On March 16, 2018, the Office of the Secretary,
acting by delegated authority, issued an order on behalf of the
Commission granting a motion for an extension of time to file
statements on or before April 12, 2018. See Securities Exchange Act
Release No. 82896, 83 FR 12633 (Mar. 22, 2018).
\17\ See Statement of NYSE Group, Inc., in Opposition to the
Division's Order Approving a Rule to Introduce Cboe Market Close
(``NYSE Statement''); Statement of the Nasdaq Stock Market LLC in
Opposition to Order Granting Approval of a Proposed Rule Change, as
Modified by Amendment No. 1, to Introduce Cboe Market Close
(``Nasdaq Statement''); and Statement of Cboe BZX Exchange, Inc., in
support of Commission Staff's Approval Order (``BZX Statement''),
available at: https://www.sec.gov/comments/sr-batsbzx-2017-34/batsbzx201734.htm.
\18\ See Securities Exchange Act Release No. 34-84670 (November
28, 2018), 83 FR 62646 (December 4, 2018) (SR-BatsBZX-2017-34)
(``Notice of Filing of Amendment No. 2 to Proposed Rule Change to
Introduce Cboe Market Close, a Closing Match Process for Non-BZX
Listed Securities Under New Exchange Rule 11.28'').
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The Commission conducted a de novo review of the CMC proposal and
associated public record, including Amendment No. 2, the Petitions for
Review, and all comments and statements submitted by certain exchanges,
issuers, and other market participants,\19\ to determine whether the
proposal was consistent with the requirements of the Act and the rules
and regulations issued thereunder that are applicable to a national
securities exchange.\20\ The Commission noted that under Rule 700(b)(3)
of the Commission's Rule of Practice, the ``burden to demonstrate that
a proposed rule change is consistent with the Exchange Act and the
rules and regulations issued thereunder . . . is on the self-regulatory
organization that proposed the rule change.'' \21\
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\19\ See ``Statements on File No. SR-BatsBZX-2017-34'',
available at: https://www.sec.gov/comments/sr-batsbzx-2017-34/batsbzx201734.htm.
\20\ See Securities Exchange Act Release No. 34-88008 (January
21, 2020), 85 FR 4726 (January 27, 2020) (SR-BatsBZX-2017-34)
(``Order Setting Aside Action by Delegated Authority and Approving a
Proposed Rule Change, as Modified by Amendments No. 1 and 2, To
Introduce Cboe Market Close, a Closing Match Process for Non-BZX
Listed Securities Under New Exchange Rule 11.28'').
\21\ Id.
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Importantly, after reviewing the entire record, the Commission
concluded that BZX met its burden to show that the proposed rule change
was consistent with the Act, and pursuant to its January 21, 2020,
order, set aside the Approval Order and approved BZX's CMC proposal, as
amended (``Final Approval Order'').\22\ Notably, the Commission stated
that the record ``demonstrate[d] that Cboe Market Close should
introduce and promote competitive forces among national securities
exchanges for the execution of MOC orders'' \23\ and that ``the record
demonstrate[d] that Cboe Market Close should not disrupt the closing
auction price discovery process nor should it materially increase the
risk of manipulation of official closing prices''.\24\ For the reasons
discussed more fully below, the Exchange believes that when applying
the Commission's analysis in the Final Approval Order to the current
proposal, such review would similarly conclude that this proposal is
consistent with the Act and should be approved.
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\22\ Id.
\23\ Id.
\24\ Id.
\25\ See Securities Exchange Act Release No. 34-84454 (October
19, 2018), 83 FR 53923 (October 25, 2018) (SR-Nasdaq-2018-068)
(Order approving a rule change by Nasdaq) (The Commission approved a
rule change by Nasdaq to move the cut-off times for the entry of MOC
and LOC orders from 3:50 p.m. to 3:55 p.m.); see also Securities
Exchange Act Release No. 34-85021 (January 31, 2019) (SR-NYSE-2018-
58) (Order approving a rule change by NYSE) (The Commission approved
a rule change by the NYSE to amend Rule 123C to extend the cut-off
times for order entry and cancellation for participation in the
closing auction, from 3:45 p.m. to 3:50 p.m.).
\26\ See infra, ``Price Discovery'' and ``Fragmentation'', which
describes the growth of off-exchange closing volume.
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Since the Original Proposal various exchanges have extended the MOC
cut-off times for their closing auctions, moving them closer to 4:00
p.m.\25\ Additionally, closing price match services offered by off-
exchange venues have grown in popularity,\26\ including alternative
trading systems (``ATS'') that offer a MOC cut-off time as close as 30-
seconds before the primary exchanges'
[[Page 72529]]
cut-off times, as well as MOC cut-off times aligned with those of NYSE,
NYSE Arca, and Nasdaq.\27\ As the market structure for closing auctions
and closing price match offerings has continued to evolve, and in
response to customer feedback and to better compete with off-exchange
venues, the Exchange is proposing this rule change to align CMC's MOC
Cut-Off Time more closely with the other exchanges and off-exchange
venues.
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\27\ For example, JP Morgan Securities' ATS, JPB-X, offers Close
Price Match. This functionality utilizes a conditional order process
to match orders and crosses them at the security's official closing
prices, as determined by the closing auction at the primary exchange
for a security. The Close Price Match time for an NMS stock is
currently 30-seconds before the MOC cut-off time for that stock's
primary exchange. Additionally, Instinet, LLC's ATS, CBX provides
for three MOC Crossing Sessions, which consist of: a cross for
securities where the primary listing exchange is the Nasdaq
(``Nasdaq Cross''), a cross for securities where the primary listing
exchange is the NYSE Arca (``Arca Cross''), and a cross for
securities where the primary listing exchange is the NYSE (``NYSE
Cross'') (collectively, ``MOC Crosses''). Each MOC Cross occurs two
minutes prior to the relevant exchange's cut-off time; i.e. the
Nasdaq Cross currently occurs at or near 3:53 p.m., the NYSE Cross
at or near 3:48 p.m., and the Arca Cross at or near 3:57 p.m. See
Form ATS-N, JPB-X, available at: https://www.sec.gov/Archives/edgar//data/782124/000001961722000459/xslATS-N_X01/primary_doc.xml; see
also Form ATS-N, Instinet, LLC's ATS, CBX, available at: https://www.sec.gov/Archives/edgar/data/310607//0000310607/22000009/xslATS-N_X01/primary_doc.xml.
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The Exchange notes that Members have requested a MOC Cut-Off Time
that is closer to the end of Regular Trading Hours \28\ so that they
may retain control of their trading for a longer period and be better
able to manage their trading at the close.\29\ Generally speaking,
notional trading and trading volatility are typically at their highest
towards the end of Regular Trading Hours. Accordingly, market
participants often prefer to trade as close to 4:00 p.m. as possible,
because doing so can provide them with more time to seek better priced
liquidity for their orders in a variety of ways, including but not
limited to, finding contra-side liquidity in the marketplace and
trading directly against such interest, or guaranteeing a customer
order at a price better than the national best bid or offer by
committing capital to an order and filling it in a principal capacity,
as well as continuing to trade orders algorithmically into the close,
thus reducing the size of their outstanding orders that they may decide
to commit to CMC or the primary auctions.
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\28\ The term ``Regular Trading Hours'' means the time between
9:30 a.m. and 4:00 p.m. Eastern Time. See Rule 1.2 (w), definition
of, ``Regular Trading Hours.''
\29\ The Exchange notes that part of its rationale for extending
CMC's MOC Cut-Off Time is substantively identical to that of other
exchanges moving their MOC cut-off times to later in the trading
day, namely, NYSE and Nasdaq. See Securities Exchange Act Release
No. 34-84454 (October 19, 2018), 83 FR 18580 (October 25, 2018) (SR-
Nasdaq-2018-068) (``Specifically, the Exchange believes that
extending the cutoff times for submitting on close orders will allow
market participants to retain control over their orders for a longer
period of time, and thereby assist those market participants in
managing their trading at the close.''); see also Securities
Exchange Act Release No. 34-84804 (December 12, 2018), 83 FR 64910
(December 18, 2018) (SR-NYSE-2018-58) (``The Exchange believes that
extending the cut-off times for entry and cancellation of MOC and
LOC Orders, cancellation of CO orders, as well as when the Exchange
would begin disseminating Order Imbalance Information for the close
would. . .allow market participants to retain control over their
orders for a longer period of time, and thereby assist those market
participants in managing their trading at the close.'').
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Additionally, Members have indicated that extending the MOC Cut-Off
Time to 3:49 p.m. will help to make CMC a more comparable alternative
to NYSE and Nasdaq, which have MOC cut-off times of 3:50 p.m.\30\ and
3:55 p.m.,\31\ respectively. For reasons discussed directly above, cut-
off times closer to 4:00 p.m. are beneficial to market participants,
and by extending CMC's MOC Cut-Off Time to 3:49 p.m., CMC will be
better positioned to serve as a viable option for market participants
to consider when deciding which venues to route their MOC orders, thus
enhancing intermarket competition.
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\30\ See NYSE Rule 73.5(a)(8), Closing Auction Imbalance Freeze
Time.
\31\ See Nasdaq Rule 4702(b)(11)(A), Market On Close Order.
---------------------------------------------------------------------------
In support of the above, the chart below shows the total traded
volume across all market centers, from 3:30 p.m. to 4:00 p.m. in 30-
seconds intervals, and includes labels for the different MOC cut-off
times for CMC, NYSE, and Nasdaq. As illustrated, at NYSE's 3:50 p.m.
MOC cut-off time, Nasdaq's 3:55 p.m. MOC cut-off time, and 4:00 p.m.
market close, there is a noticeable increase in traded volume in the
overall marketplace, with volume relatively flat in the overall
marketplace prior to those times. Comparatively, there is no observed
spike in traded volume in the overall marketplace at the current CMC
MOC Cut-Off Time of 3:35 p.m. The Exchange believes that this data
substantiates the view that a MOC cut-off time closer to 4:00 p.m. is
valued by market participants, and that by extending the CMC MOC Cut-
Off Time to 3:49 p.m. CMC will be better positioned as a viable
alternative to the primary exchanges' closing auctions, ``foster[ing]
price competition and thereby decreas[ing] costs for market
participants.'' \32\
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\32\ Supra note 20.
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[[Page 72530]]
[GRAPHIC] [TIFF OMITTED] TN25NO22.046
Source: Internal Exchange Data
The Exchange also notes that today's market participants, including
users of CMC, are technologically equipped \33\ to handle a 3:49 p.m.
MOC Cut-Off Time. As a general matter, today's market participants,
including CMC users, rely on electronic smart order routers, order
management systems, and trading algorithms, which make routing and
trading decisions on an automated basis, in times typically measured in
microseconds. In this regard, the Exchange believes that if a CMC user
receives a message that their MOC order was not matched in CMC,\34\
such CMC user will have more than enough time to reroute their MOC
order to the primary exchange. Importantly, the Exchange discussed the
proposed change with both current CMC users and potential new CMC users
\35\ to gauge whether a MOC Cut-Off Time one-minute prior to the NYSE
cut-off time, and six-minutes prior to the Nasdaq cut-off time, would
present operational or technological challenges, and confirmed that
both current CMC users as well as potential new CMC users can in fact
technologically manage the proposed change.
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\33\ The Exchange notes that today's equities markets involve
the widespread use of automated trading algorithms and routing
solutions, as well as market connectivity options with speeds often
measured in microseconds. See generally ``Staff Report on
Algorithmic Trading in U.S. Capital Markets'' (August 5, 2020),
available at https://www.sec.gov/tm/reports-and-publications/special-studies/algo_trading_report_2020 (``Algorithmic Trading
Report'') (``Over the past decade, the `manual handling of
institutional orders is increasingly rare and has been replaced by
sophisticated institutional order execution algorithms and smart
order routing systems.'') (``The secondary market for U.S.-listed
equity securities that has developed within this structure is now
primarily automated. The process of trading has changed dramatically
primarily as a result of developments in technologies for
generating, routing, and executing orders, as well as by the
requirement imposed by law and regulation.'') (``Modern equity
markets are connected in part by the data flowing between market
centers. An enormous volume of data is available to market
participants. In recent years, there has been an exponential growth
in the amount of market data available, the speed with which it is
disseminated, and the computer power used to analyze and react to
price movements.'').
\34\ The CMC Closing Match Process--i.e., the matching of all
buy and sell MOC orders entered into the System by time priority at
the MOC Cut-Off Time, the electronic notification to Members of any
unmatched MOC orders, and the dissemination by the Exchange of the
total size of all buy and sell orders matched via CMC via the Cboe
Auction Feed--generally occurs within microseconds. As such, a MOC
Cut-Off Time one-minute prior to the primary exchanges' cut-off
times is a sufficient period of time for Members to reroute their
unmatched MOC orders to the primary exchanges, should they choose to
do so.
\35\ The Exchange discussed the proposed amendment with both
current CMC users, as well as potential new users. By way of
background, a large majority of CMC Users are mid-size, regional
broker dealers that utilize third-party front-end providers or
broker-dealers that provide them with electronic and automated
trading solutions such as algorithms and smart order routers, which
they use to access CMC. Specifically, the Exchange discussed the
proposed amendment with CMC's Users' two (2) third-party providers
whose end users are responsible for 100% of CMC's volume, and these
providers indicated that the automated routing and trading solutions
they offer to CMC's users can appropriately manage the proposed MOC
Cut-Off Time. Additionally, the Exchange discussed the proposed
amendment with potential new users of CMC (approximately sixty (60)
market participants, including proprietary trading firms, regional
broker-dealers, and bulge bracket broker-dealers). These market
participants indicated that amending the MOC Cut-Off Time would
likely encourage them to use CMC as part of their trading strategies
(whether directly or through a third-party provider) because the
proposed MOC Cut-Off Time enables market participants to hold onto
and trade their orders closer to 4:00 p.m. and makes CMC a more
viable alternative to the primary exchanges' closing auctions.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\36\ Specifically, the Exchange believes the proposed rule change
is consistent with the section 6(b)(5) \37\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the section 6(b)(5) \38\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\36\ 15 U.S.C. 78f(b).
\37\ 15 U.S.C. 78f(b)(5).
\38\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that moving the MOC Cut-Off
Time to 3:49 p.m. would remove impediments to and perfect the mechanism
of a free and open market and a national market system because it would
allow Members to retain control over their orders for a longer period,
thereby assisting market participants in managing their trading at the
close. As discussed more fully above, market participants may prefer to
trade as close to 4:00 p.m. as possible,
[[Page 72531]]
because doing so can provide them with more time to seek better priced
liquidity for their orders in a variety of ways, as well as give them
more time to determine the size of their outstanding orders that they
may decide to commit to CMC the primary auctions, or services offered
by off-exchange venues such as ATSs.
Additionally, the Exchange believes that a MOC Cut-Off Time
fifteen-minutes (15) prior to NYSE's cut-off time, and twenty-five-
minutes (25) prior to Nasdaq's cut-off time, is no longer necessary.
Rather, the Exchange notes that today's market participants are
technologically equipped \39\ to handle a 3:49 p.m. MOC Cut-Off Time.
Specifically, CMC's current users utilizes third-party providers or
broker-dealers \40\ that provide them with electronic trading
technology enabling them to quickly react to market conditions and
messages, such as the Cboe Auction Feed. Moreover, as noted above, many
market participants, including non-users of CMC, utilize electronic
smart order routers, order management systems, and trading algorithms,
which make routing and trading decisions on an automated basis, in
times often measured in microseconds. Therefore, the Exchange believes
that both current users of CMC, as well as those that may utilize CMC
following approval of this amendment, will be technologically equipped
to efficiently respond to CMC's publication of matched shares and
should they so choose, reroute any unmatched MOC orders to the
respective primary closing auction.\41\
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\39\ Supra note 33.
\40\ As a general matter, third-party technology providers and
broker-dealers with electronic trading offerings provide automated
trading and routing products and services to market participants
that may not possess their own proprietary technology, or simply
choose to leverage third party solutions they deem superior to their
own internal technology. By way of example, portfolio managers
responsible for reweighting their managed funds may not possess
internal automated routing and algorithmic trading capabilities, and
instead utilize third-party solutions enabling them to trade on an
automated basis. As such, the proposed MOC Cut-Off Time of 3:49 p.m.
is not likely to negatively impact market participants who may not
possess the internal capabilities to reroute unmatched CMC MOC
orders to the primary exchanges' closing auctions. The Exchange
further notes that the utilization of third parties and broker-
dealers for technological trading solutions was even noted by the
Commission in its Algorithmic Trading Report. Supra note 33
(``Institutions that do not create their own algorithms generally
use algorithms provided to them by institutional brokers.'')
(``Brokers are tasked by their customers with finding liquidity in a
complex, fragmented market, achieving best execution, and minimizing
information leakage and other implicit costs. To try to meet these
goals, brokers use, and offer to their customers, a wide range of
execution algorithms.'')
\41\ By way of background, CMC calculates the matched shares at
the MOC Cut-Off Time (currently 3:35 p.m.) Importantly, the matching
process happens quickly, and while the duration may vary, the total
matching process typically takes a fraction of second (e.g., ~948
microseconds), with the maximum being around 1-second. With these
timeframes in mind, a user should in most instances knows the paired
CMC quantity no later than 3:49:01 p.m., leaving the user at least
fifty-nine-seconds (59) to reroute any unpaired CMC MOC orders to
the primary exchanges' closing auctions. As noted by the Exchange
throughout this filing, the speed of today's trading technology is
typically measured in microseconds, making fifty-nine-seconds (59) a
significant amount of time for a user to make an automated trading
decision. For reference, a microsecond is 1-millionth of a second.
---------------------------------------------------------------------------
The Exchange acknowledges that there are market participants that
may not currently possess internal high-speed routing and trading
technology. However, such market participants may, and likely already
do, utilize routing and trading services offered by third-party
providers or broker-dealers \42\ to handle and execute their orders
electronically. Accordingly, the Exchange believes that the proposed
MOC Cut-Off Time is not likely to result in disparate treatment amongst
CMC users and other market participants.
---------------------------------------------------------------------------
\42\ Supra note 40.
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The Exchange also believes that the extension of cut-off times by
the primary exchanges since CMC's proposal, as well as the growth of
off-exchange venues \43\ with cut-off times in such close proximity to
the end of Regular Trading Hours is indicative of Members' desires for
such offerings. Logically, such a change in market structure would not
have occurred if market participants did not already possess the
operational and technological wherewithal to effectively manage the
multitude of cut-off times offered by the exchanges and off-exchange
venues.
---------------------------------------------------------------------------
\43\ Supra note 27.
\44\ As noted above, NYSE's cut-off time is 3:50 p.m., and
Nasdaq's cut-off time is 3:55 p.m. NYSE Arca's cut-off time for MOC
orders is 3:59 p.m. See ``Trading Information--Closing Auctions'',
available at: https://www.nyse.com/markets/nyse-arca/trading-info.
\45\ Supra note 20.
\46\ The Exchange spoke with four (4) designated market makers
for the primary exchanges and confirmed that while they do not
currently monitor the Cboe Auction Feed, they are technically
equipped to do so.
\47\ Supra note 41.
\48\ As a general matter, third-party technology providers and
broker-dealers with electronic trading offerings provide automated
trading and routing products and services to market participants
that may not possess their own proprietary technology, or simply
choose to leverage third party solutions they deem superior to their
own internal technology. By way of example, portfolio managers
responsible for reweighting their managed funds may not possess
internal automated routing and algorithmic trading capabilities, and
instead utilize third-party solutions enabling them to trade on an
automated basis. As such, the proposed MOC Cut-Off Time of 3:49 p.m.
is not likely to negatively impact market participants who may not
possess the internal capabilities to reroute unmatched CMC MOC
orders to the primary exchanges' closing auctions. The Exchange
further notes that the utilization of third parties and broker-
dealers for technological trading solutions was even noted by the
Commission in its Algorithmic Trading Report. Supra note 33
(``Institutions that do not create their own algorithms generally
use algorithms provided to them by institutional brokers.'')
(``Brokers are tasked by their customers with finding liquidity in a
complex, fragmented market, achieving best execution, and minimizing
information leakage and other implicit costs. To try to meet these
goals, brokers use, and offer to their customers, a wide range of
execution algorithms.'')
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Moreover, the Exchange believes that the proposed rule change will
remove impediments to and perfect the mechanism of a free and open
market and a national market system because extending the MOC Cut-Off
Time to 3:49 p.m. would more closely align the CMC MOC Cut-Off Time to
the cut-off times in place for the primary exchanges.\44\ For the
reasons discussed more fully above, the primary exchanges' cut-off
times are beneficial to market participants because of their proximity
to 4:00 p.m. By moving the MOC Cut-Off Time closer to the primary
exchanges' cut-off times, CMC can become a comparable alternative to
the primary exchanges' closing auctions for Members to route their
unpriced MOC orders, and ``should foster price competition and thereby
decrease costs for market participants.'' \45\ Importantly, even with a
MOC Cut-Off Time closer to the primary exchanges' cut-off times, CMC
removes any perceived impact on the primary listing markets' close by
publishing the number of matched order shares, by security, in advance
of the primary markets' cut-off time. The total matched shares would
still be disseminated by the Exchange free of charge via the Cboe
Auction Feed, albeit at the new proposed MOC Cut-Off Time of 3:49 p.m.
Because of the speeds and widespread use of market technology the
market makers on the primary exchanges could, should they choose to do
so, incorporate the Cboe Auction Feed information into their closing
processes.\46\ Additionally, as discussed above, because of the market
technology utilized by market participants in today's markets, those
who choose to participate in CMC will still have ample time \47\ to
reroute any MOC orders not matched via CMC to reach the primary market
to be included in their closing auction process. Specifically, CMC's
current users rely on third-party providers or broker-dealers \48\ to
handle and execute their orders electronically. Furthermore, potential
new users of
[[Page 72532]]
CMC either likely already possess the necessary routing and trading
technology or may simply choose to utilize third-party solutions.\49\
Accordingly, the Exchange believes that the proposed MOC Cut-Off Time
is not likely to result in disparate treatment amongst CMC users.
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\49\ Supra note 40.
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The proposed rule change would also more closely align CMC's MOC
Cut-Off Time with that of off-exchange venues that offer cut-off times
aligned with those currently offered by the primary exchanges, and as
little as 30-seconds prior to market close.\50\ As such, the Exchange
believes that the proposed rule change is supported by both ample
precedent as well as current market structure, and should not present
any new or novel issues that market participants must consider when
managing their trading and determining which exchange or off-exchange
venue to route their MOC orders.
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\50\ Supra note 27.
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Price Discovery \51\
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\51\ As part of this proposed rule change the Exchange is
addressing several questions considered by the Commission in
connection with the Exchange's Original Proposal, including price
discovery and fragmentation, market complexity and operational risk,
and manipulation. Importantly, in considering these questions, the
Commission found that based on CMC's design and the record before
the Commission, that the proposal was consistent with Section
6(b)(5) of the Act. Supra note 20.
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The Exchange believes that the proposed rule change is consistent
with the section 6(b)(5) requirements.\52\ As previously noted by the
Exchange,\53\ CMC accepts and matches only unpriced MOC orders. By
matching only unpriced MOC orders, and not Limit-On-Close (``LOC'')
orders and executing those matched MOC orders that naturally pair off
with each other and effectively cancel each other out, CMC is designed
to avoid impacting price discovery. While the proposed rule change
would have CMC accept MOC orders up to 3:49 p.m., such extension will
not change this underlying functionality. As previously noted by the
Exchange,\54\ matched MOC orders are merely recipients of price
formation and do not directly contribute to the price formation
process. Indeed, in its Final Approval Order for CMC, even the
Commission noted that unpriced, paired-off MOC orders do not directly
contribute to setting the official closing price of securities on the
primary listing exchanges but, rather, are inherently the recipients of
price formation information.\55\
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\52\ The Exchange notes that the Commission, in its Final
Approval Order, carefully analyzed and considered CMC and its
potential effects, if any, on the primary listing exchanges' closing
auctions, including their price discovery functions. Importantly,
the Commission found that, based on CMC's design, CMC should not
disrupt the price discovery process in the closing auctions of the
primary listing exchanges. Supra note 20.
\53\ See Letter from Joanne Moffic-Silver, Executive Vice
President, General Counsel, and Corporate Secretary, Bats Global
Markets, Inc. (August 2, 2017), available at: https://www.sec.gov//batsbzx-2017-34/batsbzx201734-2162452-157801.pdf; see also Letter
from Joanne Moffic-Silver (October 11, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-34/batsbzx201734-2634580-161229.pdf.
\54\ Id.
\55\ Supra note 20.
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Moreover, the Exchange believes that even if extending the MOC Cut-
Off Time to 3:49 p.m. reduces the number of MOC orders routed to a
security's primary listing market, CMC is designed to remove any
perceived adverse impact on the primary listing markets' close because
the total matched shares would still be disseminated by the Exchange
free of charge via the Cboe Auction Feed prior to the primary
exchanges' cut-off times. Additionally, because of the technological
capabilities of today's market participants discussed more fully above,
the market makers on the primary exchanges could, should they choose to
do so, incorporate the Cboe Auction Feed information into their closing
processes. Furthermore, current users of CMC are technologically
equipped to manage the proposed CMC MOC-Cut Off Time. Potential new CMC
users are capable of rerouting any unmatched CMC MOC orders to the
primary exchanges. As discussed above, CMC's current users rely on
third-party solutions that provide them with the technological
capability to appropriately manage the proposed MOC Cut-Off Time above.
Similarly, given the widespread use of routing and trading technology
in today's markets, it is likely that potential new CMC users already
possess the technological capabilities to manage the proposed MOC Cut-
Off time. Even where potential new users of CMC may not possess
internally high-speed routing and trading technology, such users can
utilize, to the extent they do not so already, third-party providers
and broker-dealers to handle and route their orders electronically.
Fragmentation \56\
---------------------------------------------------------------------------
\56\ Supra note 51.
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Another matter addressed by the Commission in their review of the
Original Proposal was fragmentation, and whether CMC would fragment the
markets beyond what currently occurs through off-exchange close price
matching venues offered by broker-dealers.\57\ While comparisons to
off-exchange MOC activity may not be a perfect measure of the potential
resulting effect of CMC market fragmentation,\58\ the proposed
amendment is designed to enable CMC to better compete with off-exchange
venues and for closing volume that is already executed away from the
primary listing venues.
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\57\ Supra note 20.
\58\ Id (``. . .[C]omparisons to off-exchange activity are not a
perfect measure of the potential resulting effect of the [CMC]
proposal because the structures of the many off-exchange mechanisms
differ from the structure of Cboe Market Close.'').
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As illustrated in the first two charts below, a growing proportion
of trading volume at the close occurs on off-exchange venues, where the
TRF close volume, as a percent of Exchange close volume, has risen
steadily since January 2019.\59\ In the third chart the Exchange also
studied the top ten most actively traded securities during the same
time period and found that a significant portion of the total closing
volume is executed off-exchange, following the dissemination of the
official closing price.
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\59\ The Exchange conducted an analysis of off-exchange/Trade
Reporting Facility (``TRF'') closing volume that occurs after market
close, 4:00 p.m. Eastern Time, where the price is equal to the
closing price and for which such trades are reported with a Prior
Reference Price (``PRP'') trade reporting modifier. The TRF is a
trade reporting facility where FINRA members may report trades in
Nasdaq-listed and other exchange-listed securities, that were
executed otherwise than on an exchange. The first two charts
represent TRF executed volume at the close with the ``PRP'' flag
that equals the closing auction price, divided by total on exchange
auction volume.
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[[Page 72533]]
[GRAPHIC] [TIFF OMITTED] TN25NO22.047
Source: Internal Exchange Data.
[GRAPHIC] [TIFF OMITTED] TN25NO22.048
Source: Internal Exchange Data.
------------------------------------------------------------------------
TRF close %
Symbol Primary exchange inc. PRP \60\
------------------------------------------------------------------------
1............... AAPL.............. Nasdaq............ 9
2............... T................. NYSE.............. 6
3............... BAC............... NYSE.............. 10
4............... INTC.............. Nasdaq............ 5
5............... MSFT.............. Nasdaq............ 7
6............... F................. NYSE.............. 9
7............... PFE............... NYSE.............. 5
8............... CSCO.............. Nasdaq............ 5
9............... CMCSA............. Nasdaq............ 7
10.............. WFC............... NYSE.............. 9
------------------------------------------------------------------------
Source: Internal Exchange Data.
Given the significant volume of off-exchange MOC activity, the
Exchange believes there is ample opportunity for CMC to attract
existing MOC volume that is already being executed away from CMC and
the primary listing venues. As discussed above, market participants
have expressed the value of being able to trade closer to 4:00 p.m. In
this regard, with the proposed MOC Cut-Off Time CMC will be able to
meet the needs of market participants, and better compete with off-
exchange venues, ``foster[ing] price competition and thereby
decreas[ing] costs for market participants.\61\ Members may prefer to
execute their MOC orders via CMC rather than off-exchange venues for
reasons such as the increased transparency and reliability that exists
when investors execute their orders on public, well-regulated
exchanges.
[[Page 72534]]
Moreover, by attracting such order flow, CMC can help to increase the
amount of volume at the close executed on systems subject to the
resiliency requirements of Regulation SCI.\62\
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\60\ As defined above, ``PRP''.
\61\ Supra note 20.
\62\ See Letter from Joanne Moffic-Silver, Executive Vice
President, General Counsel, and Corporate Secretary, Bats Global
Markets, Inc., a Cboe Company (Oct. 11, 2017) (``Furthermore, [CMC]
would operate on the Exchange's reliable SCI systems . . .
significant MOC liquidity is conducted today by off-exchange venues.
These venues are not SCI systems and, therefore, not subject to
Regulation SCI's enhanced resiliency requirements. [CMC] could
attract MOC orders from these off-exchange venues to the Exchange
and its reliable SCI system, furthering the Commission's presumed
desire for liquidity at the close to be conducted on SCI systems.'')
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Indeed, an analysis by the Exchange shows that the closing auction
volume on both NYSE and Nasdaq has increased despite the launch of CMC
on March 6, 2020. Therefore, while the proposed amendment may lead to
additional orders being routed to CMC rather than the primary
exchanges' closing auctions, it cannot be said with certainty that such
a change will significantly fragment the marketplace. In any event, the
proposed extension of the MOC Cut-Off Time to 3:49 p.m. is not likely
to materially increase market fragmentation and have a negative impact
on the market because the data shows that even with the implementation
of CMC, there is still a significant amount of volume executed on the
primary exchanges' suggesting that market participants continue to
utilize the primary closing auctions.
[GRAPHIC] [TIFF OMITTED] TN25NO22.049
Source: Internal Exchange Data.
Market Complexity and Operational Risk \63\
---------------------------------------------------------------------------
\63\ Supra note 51.
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The Exchange believes that the proposed rule change is simple and
straightforward, and as such will not significantly increase market
complexity or operational risk. The Exchange seeks only to extend the
MOC Cut-Off Time to 3:49 p.m., leaving all other aspects of the CMC
process intact. Members will not have to consider new operational
requirements of monitoring and consuming a new data feed or consider
the utilization of a new order type or implementation of new Exchange
code. Rather, Members may continue to monitor the same data feed as
they do today, the Cboe Auction Feed, and simply look for the
publication of the CMC information at the new proposed MOC Cut-Off
Time.
Additionally, as discussed more fully above, the Exchange discussed
this proposal with current CMC users prior to submitting this proposal
and learned that CMC's current users are technologically equipped \64\
to manage a MOC Cut-Off Time closer to the primary exchanges' cut-off
times, and that they can respond to CMC's publication of matched shares
and quickly reroute any unmatched MOC orders to the respective primary
closing auction. Moreover, CMC is a voluntary offering, and Members may
freely decide whether to participate.
---------------------------------------------------------------------------
\64\ Supra note 41.
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Furthermore, as noted throughout, both off-exchange venues and
other exchanges already offer MOC cut-off times that are closer in time
to the end of Regular Trading Hours. Specifically, as mentioned above,
in 2018 Nasdaq received approval to move the cut-off times for the
entry of MOC and Limit-On-Close (``LOC'') orders from 3:50 to 3:55
p.m.\65\ Similarly, in 2018 the NYSE received approval from the SEC to
extend their cut-off times for order entry and cancellation for
participation their closing auction, from 3:45 p.m. to 3:50 p.m.\66\
NYSE also offers discretionary-orders, which unlike MOC/LOC orders that
are subject to NYSE's 3:50 p.m. cut-off, may be entered for
participation in the closing auction until 3:59:50.\67\ Additionally,
market participants may enter MOC orders for participation in NYSE
Arca's closing auction up to 3:59 p.m.\68\ Finally, various off-
exchange venues offer closing match processes with cut-off times
aligned with those of
[[Page 72535]]
the primary exchanges, and even as close to 30-seconds before market
close, 4:00 p.m.\69\
---------------------------------------------------------------------------
\65\ Supra note 25.
\66\ Id.
\67\ See NYSE Rule 7.31(c)(2)(C); see also ``The Floor Broker's
Modern Trading Tool'', available at: https://www.nyse.com/article/trading/d-order (``While D Orders are available for use throughout
the trading day, most executions occur in the closing auction, where
they're known as Closing D Orders. At 3:55 p.m., Closing D Order
interest eligible to participate in the closing auction is added to
the order imbalance feed at their discretionary price range. Closing
D Orders can also be submitted, modified or cancelled up to 3:59:50
p.m. These distinct features of Closing D Orders are designed to
facilitate the Floor Broker's traditional agency role on behalf of
larger institutional interest, allowing Floor Brokers to work in
conjunction with their customer to find larger liquidity
opportunities.'').
\68\ See ``Closing Auction Timeline'', available at: https://www.nyse.com/markets/nyse-arca/trading-info.
\69\ Supra note 27.
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Accordingly, the Exchange believes that market participants are
well accustomed to managing the various cut-off times in today's
marketplace, and in incorporating these timelines into their trading
decisions. The number of exchanges and off-exchange venues with
extended cut-off times indicates that market participants find value in
their ability to retain control of their trading heading into the end
of Regular Trading Hours, and the primary exchanges and off-exchange
venues have responded to such demand. Certainly, market participants
would not desire cut-off times closer to the end of Regular Trading
Hours if they could not technologically and operationally manage their
trading accordingly. Therefore, the extension of CMC's MOC Cut-Off Time
should not present market participants with any novel operational or
technological complexities.
Manipulation \70\
---------------------------------------------------------------------------
\70\ Supra note 51.
---------------------------------------------------------------------------
As a general matter, the Exchange notes that the value to market
participants in extending the MOC Cut-Off Time to 3:49 p.m. is not the
proximity of CMC's matched shares message to the cut-off times of the
primary exchanges. Rather, the value of the proposed amendment is the
ability of users to trade their orders for a longer period of time
before deciding whether to commit their MOC orders to CMC.
Nevertheless, the Exchange does not expect that the proposed extension
of the MOC Cut-Off Time to 3:49 p.m. will result in an increase of
manipulative activity due to information asymmetries, or raise any
unique manipulation concerns relative to how CMC exists today with a
current MOC Cut-Time of 3:35 p.m.
The Exchange notes that any information CMC participants may be
able to glean from their paired-off MOC orders, or from their unmatched
MOC orders, is still limited in nature. For instance, any information
that CMC participants may learn from receiving unmatched MOC order
messages is still limited in nature because the CMC participant would
still only know the unexecuted size of its own order.\71\ Moreover,
even if a Member chose to participate in CMC only to gather information
about the direction of an imbalance and use such information to
manipulate the closing price, the Member's orders were still eligible
for execution subjecting the Member to economic risk.
---------------------------------------------------------------------------
\71\ The Exchange notes that in its Final Approval Order, even
the Commission noted that, ``In particular, a market participant
would only be able to determine the direction of the imbalance and
would have difficulty determining the magnitude of any imbalance, as
it would only know the unexecuted size of its own order. In
addition, the information would only be with regard to the pool of
liquidity on BZX and would provide no insight into imbalances on the
primary listing exchange, competing auctions, ATSs, or other off-
exchange matching services which, as described above, can represent
a significant portion of trading volume at the close.'' Supra note
20.
---------------------------------------------------------------------------
While this proposal would result in the total shares for buy and
sell orders in CMC being disseminated closer in time to the primary
exchanges' cut-off times, this change does not suddenly make such
information more valuable or useful in terms of enhancing opportunities
for gaming and manipulating the official closing price. The proposed
MOC Cut-Off Time is one-minute prior to NYSE's cut-off time of 3:50
p.m., and six-minutes prior to Nasdaq's cut-off time of 3:55 p.m. As
noted above, today's markets are marked by technological solutions
which typically operate in durations of microseconds. In this context,
the separation between the CMC MOC Cut-Off Time and that of NYSE's and
Nasdaq's is a substantial duration of time, during which much can
change in the marketplace, thus limiting the value of information, if
any, that can be gleaned from CMC's dissemination of matched shares at
3:49 p.m.
Furthermore, as with the current MOC Cut-Off Time, the proposed
extension does not present any information asymmetries that do not
already exist in today's markets, as the very nature of trading creates
short term asymmetries of information to those who are parties to a
trade.\72\ Indeed, as noted by the Commission, any party to a trade
gains valuable insight regarding the depth of the market when an order
is executed or partially executed.\73\ Additionally, NYSE imbalance
information is already disseminated to NYSE floor brokers, who are
permitted to share with their customers specific data from the
imbalance feed.\74\ Even in this case, though, the Commission stated
that the value of such information is limited because the imbalance
information does not represent overall supply and demand for a
security, is subject to change, and is only one relevant piece of
information.\75\ Similarly, because any information gleaned by a CMC
participant is limited only to the unexecuted size of their order, and
relative to the depth of only the BZX pool of liquidity, the Exchange
believes that the proposed extension of the MOC Cut-Off Time does not
create an increased risk of manipulative trading activity.
---------------------------------------------------------------------------
\72\ The Exchange also notes that in its approval order, even
the Commission noted that, ``Further, the Commission believes
information asymmetries as those described by commenters exist today
and are inherent in trading, including with respect to closing
auctions. For example, any party to a trade gains valuable insight
regarding the depth of the market when an order is executed or
partially executed.'' Id.
\73\ Id.
\74\ Id.
\75\ Id.
---------------------------------------------------------------------------
Moreover, there are currently controls and processes in place to
monitor for manipulative trading activity, such as the supervisory
responsibilities and capabilities of exchanges and the expansive cross
market surveillance conducted by FINRA. Following approval of this
proposal, the Exchange, FINRA and others will continue to surveil for
potential manipulative activity and when appropriate, bring enforcement
actions against market participants engaged in manipulative trading
activity.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the proposed rule
change seeks merely to extend the MOC Cut-Off Time from 3:35 p.m. to
3:49 p.m., enabling all Members to manage their trading for a longer
period. The Exchange is not proposing to make any other changes to the
CMC process. Moreover, CMC is a voluntary closing match process, and
Members are not required to participate in the CMC. Additionally, the
proposed rule change applies equally to all Members. Importantly, based
on feedback from CMC users, the proposed MOC Cut-Off Time will not
prevent CMC's current user's from participating in CMC, as CMC's
current users are technologically equipped to manage a 3:49 p.m. MOC
Cut-Off Time, and should they choose to do so, reroute MOC orders not
matched in CMC to the primary exchanges' closing auctions.
Furthermore, the Exchange does not believe that the proposed rule
change will impose any burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. As
noted above, the proposed rule change more closely aligns the CMC MOC
Cut-Off Time to the cut-off times of other exchanges, while still
providing CMC participants with an opportunity to reroute any of their
unpaired MOC orders to the
[[Page 72536]]
primary exchanges. In this regard, the proposed rule change may make
CMC a more viable alternative to the primary auctions and ``should
foster price competition and thereby decrease costs for market
participants.'' \76\ Additionally, the proposed MOC Cut-Off Time may
also enable the Exchange to more effectively compete with off-exchange
venues that have cut-off times much closer in time to the market close
and comprise a growing percentage of closing volume.
---------------------------------------------------------------------------
\76\ Supra note 20.
---------------------------------------------------------------------------
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. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2022-038, as Modified by Amendment No. 1, and Grounds for
Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \77\ to determine whether the proposed rule
change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of proceedings is appropriate at this time in
view of the legal and policy issues raised by the proposal. Institution
of proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described below, the Commission seeks and encourages interested persons
to provide comments on the proposed rule change, as modified by
Amendment No. 1, to further inform the Commission's analysis of whether
to approve or disapprove the proposal.
---------------------------------------------------------------------------
\77\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\78\ the Commission is
providing notice of the grounds for possible disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis, and input from commenters with respect to, the
consistency of the proposal with Sections 6(b)(5) \79\ and 6(b)(8) \80\
of the Act. Section 6(b)(5) of the Act requires that the rules of a
national securities exchange be designed, among other things, 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, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. Section 6(b)(8) of the Act
requires that the rules of a national securities exchange not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\78\ Id.
\79\ 15 U.S.C. 78f(b)(5).
\80\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in Amendment No. 1,\81\ in addition to any other comments they may wish
to submit about the proposed rule change, as modified by Amendment No.
1. In particular, the Commission seeks comment on the following aspects
of the proposal and asks commenters to submit data where appropriate to
support their views:
---------------------------------------------------------------------------
\81\ See supra note 6.
---------------------------------------------------------------------------
1. The Exchange states that CMC users are technologically equipped
to handle a 3:49 p.m. MOC Cut-Off Time and that, if a CMC user receives
a message that their MOC order was not matched in CMC, such CMC user
will have more than enough time to reroute their MOC order to the
primary exchange.\82\ While the Exchange acknowledges that there are
market participants that may not currently possess internal high-speed
routing and trading technology, the Exchange states that such market
participants may, and likely already do, utilize routing and trading
services offered by third-party providers or broker-dealers to handle
and execute their orders electronically.\83\ Accordingly, the Exchange
believes that the proposed MOC Cut-Off Time is not likely to result in
disparate treatment amongst CMC users and other market
participants.\84\ What are commenters' views on whether the proposed
MOC Cut-Off Time (3:49 p.m.), which would be one minute from NYSE's MOC
cut-off time of 3:50 p.m. and six minutes from Nasdaq's MOC cut-off
time of 3:55 p.m., would provide enough time for CMC users to reroute
unmatched MOC orders to the primary exchanges should they choose to do
so?
---------------------------------------------------------------------------
\82\ See supra Item II.A.1.
\83\ See supra Item II.A.2.
\84\ See id.
---------------------------------------------------------------------------
2. The Exchange states that total matched share information would
still be disseminated by the Exchange free of charge via the Cboe
Auction Feed, albeit at the new proposed MOC Cut-Off Time of 3:49
p.m.\85\ The Exchange states that, because of the speeds and widespread
use of market technology, market makers on the primary exchanges could,
should they choose to do so, incorporate the Cboe Auction Feed
information into their closing processes.\86\ What are commenters'
views on whether the dissemination of total matched share information
at an MOC Cut-Off Time of 3:49 p.m. would provide enough time for
market participants, including market makers, to access and incorporate
such information into their closing trading strategies and processes
should they choose to do so?
---------------------------------------------------------------------------
\85\ See id.
\86\ See id.
---------------------------------------------------------------------------
3. The Exchange states that, with an MOC Cut-Off Time at 3:49 p.m.,
CMC will be better positioned to serve as a viable option for market
participants to consider when deciding which venues to route their MOC
orders, thus enhancing intermarket competition.\87\ In particular, the
Exchange states that, by extending the MOC Cut-Off Time to 3:49 p.m.,
CMC will be better positioned as a viable alternative to the primary
exchanges' closing auctions, ``foster[ing] price competition and
thereby decreas[ing] costs for market participants.'' \88\ The Exchange
also states that the proposed MOC Cut-Off Time may enable the Exchange
to more effectively compete with off-exchange venues that have cut-off
times much closer in time to the market close and comprise a growing
percentage of closing volume.\89\ What are commenters' views on the
extent to which an extension of the MOC Cut-Off Time to 3:49 p.m. would
promote competition among MOC order execution venues and foster price
competition for MOC order execution fees?
---------------------------------------------------------------------------
\87\ See supra Item II.A.1.
\88\ See id. (quoting the Final Approval Order).
\89\ See supra Item II.B.
---------------------------------------------------------------------------
IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their data, views, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Sections 6(b)(5) and 6(b)(8), or any other provision of
the Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of data, views, and arguments,
the Commission will consider, pursuant to
[[Page 72537]]
Rule 19b-4 under the Act,\90\ any request for an opportunity to make an
oral presentation.\91\
---------------------------------------------------------------------------
\90\ 17 CFR 240.19b-4.
\91\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Report of the
Senate Committee on Banking, Housing and Urban Affairs to Accompany
S. 249, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------
Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change, as modified by
Amendment No. 1, should be approved or disapproved by December 16,
2022. Any person who wishes to file a rebuttal to any other person's
submission must file that rebuttal by December 30, 2022.
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-CboeBZX-2022-038 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-CboeBZX-2022-038. 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-CboeBZX-2022-038 and should be submitted
on or before December 16, 2022. Rebuttal comments should be submitted
by December 30, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\92\
---------------------------------------------------------------------------
\92\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25669 Filed 11-23-22; 8:45 am]
BILLING CODE 8011-01-P
