Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Rule 6.76AP-O, 14414-14416 [2023-04687]
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Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
in taking such steps to replenish
financial resources.
D. Consistency With Rule 17Ad–
22(e)(15) Under the Exchange Act
Rule 17Ad–22(e)(15) 16 states that a
clearing agency shall ‘‘identify, monitor,
and manage, the covered clearing
agency’s general business risk and hold
sufficient liquid net assets funded by
equity to cover potential general
business losses . . .’’ by ‘‘[m]aintaining
a viable plan, approved by the board of
directors and updated at least annually,
for raising additional equity should its
equity fall close to or below the amount
required under paragraph (e)(15)(ii) of
this section.’’ 17
The Commission believes the
proposed rule is consistent with Rule
17Ad–22(e)(15). The proposed rule has
been approved by the ICEEU Board of
Directors, would be reviewed and
updated annually, and would outline
the tools available to restore additional
capital if needed. Specifically, the
proposed rule serves as a part of a
broader recovery plan and is intended to
document tools, arrangements and
procedures for replenishing capital
when needed, including as a result of
losses from general business risk. The
capital restoration levels detailed in the
proposed rule are based on ICEEU’s
legal capital requirements and its own
target capital level. These are designed
to exceed the amount required under
Rule 17Ad–22(e)(15)(ii).18
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act, and in
particular, with the requirements of
Section 17A(b)(3)(F) of the Act 19 and
Rules 17Ad–22(e)(2)(v), (e)(3)(ii), and
(e)(15) thereunder.20
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 21 that the
proposed rule change (SR–ICEEU–2022–
027), be, and hereby is, approved.22
16 17
CFR 240.17Ad–22(e)(15).
CFR 240.17 Ad–22(e)(15)(iii).
18 17 CFR 240.17 Ad–22(e)(15)(ii).
19 15 U.S.C. 78q–1(b)(3)(F).
20 17 CFR 240.17Ad–22(e)(2)(v), (e)(3)(ii), and
(e)(15).
21 15 U.S.C. 78s(b)(2).
22 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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[FR Doc. 2023–04682 Filed 3–7–23; 8:45 am]
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97026; File No. SR–
NYSEARCA–2023–19]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Amend Rule 6.76AP–
O
March 2, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on February
23, 2023, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 6.76AP–O (Order Execution and
Routing) regarding the treatment of
routable orders. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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 those 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,
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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1. Purpose
The Exchange proposes to amend
Rule 6.76AP–O (Order Execution and
Routing) regarding the treatment of
routable orders.
Background
Rule 6.76AP–O describes the
Exchange’s process for order execution
and routing. First, subject to certain
pricing parameters and allocation
guarantees, the Exchange will match
eligible interest (i.e., an Aggressing
Order or Aggressing Quote) 4 against
contra-side interest according to the
price-time priority ranking of the resting
interest, per Rule 6.76P–O (Order
Ranking and Display).5 Per Rule
6.76AP–O(b), after being matched to the
extent possible with local interest (on
the Consolidated Book) per paragraph
(a) of this Rule, routable orders (or
portions thereof) may be routed to Away
Market(s) if marketable.6 The Exchange
proposes to amend Rule 6.76AP–O(b) to
add new text regarding the handling of
such orders as set forth below.
Proposed Rule Change
The Exchange’s current order
handling and routing system was
recently implemented in connection
with the Exchange’s migration to the
Pillar trading platform in July 2022.7
The Exchange has been operating on
Pillar for approximately six months and
has identified a performance
optimization that will reduce
unnecessary processing by Pillar.
Specifically, the Exchange proposes
that once an order needs to be routed to
an Away Market, Pillar will then
determine the venue(s) to which the
order should be routed. Currently, this
evaluation of price(s) and volume(s) on
Away Markets is constantly available in
4 See Rule 6.76P–O(a)(5) defining ‘‘Aggressing
Order’’ or ‘‘Aggressing Quote’’ as referring to ‘‘a buy
(sell) order or quote that is or becomes marketable
against sell (buy) interest on the Consolidated
Book.’’
5 See Rule 6.76AP–O(a)(1)(A)–(D) (setting forth
the criteria for executing incoming interest against
the quote of an LMM, up to 40% of the incoming
interest, up to the size of the LMM’s quote (the
‘‘LMM Guarantee’’)).
6 See Rule 6.76AP–O(b)(2) (providing that orders
with an instruction not to route are processed per
Rule 6.62P–O (Orders and Modifiers)).
7 The Exchange announced the migration of the
fifth and final tranche of symbols to the Pillar
trading platform, via Trader Update, available here:
https://www.nyse.com/trader-update/history#
110000440092.
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Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices
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Pillar regardless of whether an order
needs to be routed. The Exchange
believes that limiting this evaluation
solely to when Pillar determines that an
order is eligible for routing would
optimize Pillar performance because it
would eliminate inefficient processing
within Pillar. The Exchange believes
that the proposed optimization change
to process routing information more
efficiently would result in faster order
processing to the benefit of all market
participants.
To effect this change, the Exchange
proposes to specify how it will handle
marketable routable orders during the
discrete period that such orders are
being evaluated for routing.8 If such an
order is deemed marketable against
Away Market interest,9 Pillar will make
a determination as to the destination,
price and size for each routed portion of
the order pursuant to Rule 6.94–O(a)
(Order Protection).10 To clarify this
proposed order handling, the Exchange
proposes to add rule text to Rule
6.76AP–O(b), which would provide that
‘‘[w]hile determining the venue(s) to
which the order(s) will be routed, such
order(s) may 11 be held non-displayed at
the contra-side ABBO 12 and ranked in
its respective priority category, per Rule
6.76P–O(e), behind any displayed
interest at that price.13 The Exchange
notes that such marketable orders
remain executable against incoming
interest and interest in the Consolidated
Book.
Market participants have the option of
designating their orders as non-routable
(and executable solely against interest
on the Exchange) or routable (and
executable against interest available on
the Exchange or an Away Market). For
participants that choose the latter,
8 The Exchange’s routing determination typically
takes a few microseconds.
9 See Rule 1.1. (defining ‘‘Away Market’’ as
referring to any Trading Center (1) with which the
Exchange maintains an electronic linkage, and (2)
that provides instantaneous responses to orders
routed from the Exchange).
10 See Rule 6.94–O(a) (providing that, subject to
exceptions, ‘‘[m]embers shall not effect TradeThroughs’’.)
11 To avoid creating a locked or crossed market,
the Exchange will hold a routable order in a nondisplayed state while making the routing
determination. However, when a previously
displayed order is to be routed, such order will
remain displayed while Pillar makes its routing
determination.
12 See Rule 1.1. (defining ‘‘ABBO’’ (or ‘‘Away
Market BBO’’) as referring to the best bid(s) or
offer(s) disseminated by Away Markets and
calculated by the Exchange based on market
information the Exchange receives from OPRA).
13 See Rule 6.76P–O(e) (providing that at each
price, trading interest is assigned to one of three
priority categories: Priority 1—Market Orders;
Priority 2—Display Orders; and Priority 3—NonDisplay Orders’’).
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proposed Rule 6.76AP–O(b) will clarify
the status of such orders in the
Consolidated Book during evaluation.
The Exchange anticipates
implementing the applicable technology
changes in the second quarter of 2023
and will announce by Trader Update the
implementation date of this proposed
rule change.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),14 in general, and furthers the
objectives of Section 6(b)(5),15 in
particular, because it is 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 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.
The Exchange believes that the
proposed rule change would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because it
is designed to optimize performance on
the Pillar trading platform, and would
specify the Exchange’s handling of
marketable routable orders during the
discrete period that such orders are
being evaluated for routing. The
Exchange believes that the proposed
optimization change to process routing
information more efficiently would
result in faster order processing to the
benefit of all market participants. In
addition, the Exchange believes the
proposed change would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system by adding
clarity and transparency to Exchange
rules that a routable order may 16 be
held non-displayed at the ABBO during
the period that it is being evaluated for
routing.
Further, the Exchange notes that
market participants have the option of
designating their orders as non-routable
(and executable solely against interest
on the Exchange) or routable (and
executable against interest available on
the Exchange or an Away Market). The
proposed change would remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system because it
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
16 See supra note 11.
15 15
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14415
will clarify the status of such orders in
the Consolidated Book during
evaluation.
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. The
proposed change is not intended to
address competition, but rather is being
made in connection with technology
changes designed to optimize
performance on the Pillar trading
platform. The proposed change would
apply to all similarly-situated market
participants that trade on the Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 17 and Rule
19b–4(f)(6) thereunder.18 Because the
proposed rule change does not: (i)
significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.19
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
17 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
19 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change at least five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
18 17
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Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices
under Section 19(b)(2)(B) 20 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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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–
NYSEARCA–2023–19 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–NYSEARCA–2023–19. 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–NYSEARCA–2023–19 and
20 15
U.S.C. 78s(b)(2)(B).
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should be submitted on or before March
29,2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–04687 Filed 3–7–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97019; File No. SR–CBOE–
2022–058]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Order Approving a
Proposed Rule Change To Amend Rule
10.3 Regarding Margin Requirements
March 2, 2023.
I. Introduction
On November 14, 2022, Cboe
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘Cboe’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Exchange Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend Cboe Rule 10.3
regarding margin requirements related
to cash-settled index options written
against exchange-traded funds
(‘‘ETF(s)’’) that track the same index
underlying the option. The proposed
rule change was published for comment
in the Federal Register on December 2,
2022.3 On January 10, 2023, the
Exchange consented to an extension of
the time period in which the
Commission must approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change to
March 2, 2023. The Commission
received no comment letters on the
proposal. This order approves the
proposed rule change.
II. Description of the Proposed Rule
Change
The Exchange proposed to amend
Cboe Rule 10.3, which sets forth margin
requirements, and certain exceptions to
those requirements, applicable to
security positions of Trading Permit
Holders’ (‘‘TPHs’’) customers.
Specifically, the Exchange stated that
Cboe Rule 10.3(c)(5) generally requires
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Exchange Act Release No. 96395 (Nov. 28,
2022), 87 FR 74199 (Dec. 2, 2022) (‘‘Notice’’).
1 15
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TPHs to obtain from a customer, and
maintain, a margin deposit for short
cash-settled index options in an amount
equal to 100% of the current market
value of the option plus 15% (if
overlying a broad-based index) or 20%
(if overlying a narrow-based index) of
the amount equal to the index value
multiplied by the index multiplier
minus the amount, if any, by which the
option is out-of-the-money.4 The
minimum margin required for such an
option is 100% of the option current
market value plus 10% of the index
value multiplied by the index multiplier
for a call or 10% of the exercise price
multiplied by the index multiplier for a
put.5
By contrast, Rule 10.3(c)(5)(C)(iii)
provides that no margin is required for
a call (put) option contract or warrant
carried in a short position where there
is carried in the same account a long
(short) position in equivalent units of
the underlying security,6 and no margin
is required for a call (put) index option
contract or warrant carried in a short
position where there is carried in the
same account a long (short) position in
an (1) underlying stock basket,7 (2)
index mutual fund, (3) index portfolio
receipt (‘‘IPR’’),8 or (4) index portfolio
4 See Notice at 74201. According to the Exchange,
the out-of-the-money amount for a call is any excess
of the aggregate exercise price of the option or
warrant over the product of the current (spot or
cash) index value and the applicable multiplier.
The out-of-the-money amount for a put is any
excess of the product of the current (spot or cash)
index value and the applicable multiplier over the
aggregate exercise price of the option or warrant.
See id. at 74201, n.8.
5 See id. at 74201.
6 The Exchange states that in computing margin
on a position in the underlying security, (a) in the
case of a call, the current market value to be used
must not be greater than the exercise price and (b)
in the case of a put, margin will be the amount
required by Cboe Rule 10.3(b)(2), plus the amount,
if any, by which the exercise price of the put
exceeds the current market value of the underlying.
See id. at 74201, n.3.
7 The Exchange defines ‘‘underlying stock basket’’
to mean a group of securities that includes each of
the component securities of the applicable index
and which meets the following conditions: (a) the
quantity of each stock in the basket is proportional
to its representation in the index, (b) the total
market value of the basket is equal to the
underlying index value of the index options or
warrants to be covered, (c) the securities in the
basket cannot be used to cover more than the
number of index options or warrants represented by
that value and (d) the securities in the basket shall
be unavailable to support any other option or
warrant transaction in the account. See Cboe Rule
10.3(a)(7). See also Notice at 74201, n.4.
8 The Exchange defines IPRs as securities that (a)
represent an interest in a unit investment trust
(‘‘UIT’’) which holds the securities that comprise an
index on which a series of IPRs is based; (b) are
issued by the UIT in a specified aggregate minimum
number in return for a ‘‘Portfolio Deposit’’
consisting of specified numbers of shares of stock
plus a cash amount; (c) when aggregated in the
same specified minimum number, may be
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]]>Agencies
[Federal Register Volume 88, Number 45 (Wednesday, March 8, 2023)]
[Notices]
[Pages 14414-14416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04687]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97026; File No. SR-NYSEARCA-2023-19]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Amend Rule
6.76AP-O
March 2, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on February 23, 2023, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 6.76AP-O (Order Execution and
Routing) regarding the treatment of routable orders. The proposed rule
change is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 6.76AP-O (Order Execution and
Routing) regarding the treatment of routable orders.
Background
Rule 6.76AP-O describes the Exchange's process for order execution
and routing. First, subject to certain pricing parameters and
allocation guarantees, the Exchange will match eligible interest (i.e.,
an Aggressing Order or Aggressing Quote) \4\ against contra-side
interest according to the price-time priority ranking of the resting
interest, per Rule 6.76P-O (Order Ranking and Display).\5\ Per Rule
6.76AP-O(b), after being matched to the extent possible with local
interest (on the Consolidated Book) per paragraph (a) of this Rule,
routable orders (or portions thereof) may be routed to Away Market(s)
if marketable.\6\ The Exchange proposes to amend Rule 6.76AP-O(b) to
add new text regarding the handling of such orders as set forth below.
---------------------------------------------------------------------------
\4\ See Rule 6.76P-O(a)(5) defining ``Aggressing Order'' or
``Aggressing Quote'' as referring to ``a buy (sell) order or quote
that is or becomes marketable against sell (buy) interest on the
Consolidated Book.''
\5\ See Rule 6.76AP-O(a)(1)(A)-(D) (setting forth the criteria
for executing incoming interest against the quote of an LMM, up to
40% of the incoming interest, up to the size of the LMM's quote (the
``LMM Guarantee'')).
\6\ See Rule 6.76AP-O(b)(2) (providing that orders with an
instruction not to route are processed per Rule 6.62P-O (Orders and
Modifiers)).
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange's current order handling and routing system was
recently implemented in connection with the Exchange's migration to the
Pillar trading platform in July 2022.\7\ The Exchange has been
operating on Pillar for approximately six months and has identified a
performance optimization that will reduce unnecessary processing by
Pillar.
---------------------------------------------------------------------------
\7\ The Exchange announced the migration of the fifth and final
tranche of symbols to the Pillar trading platform, via Trader
Update, available here: https://www.nyse.com/trader-update/history#110000440092.
---------------------------------------------------------------------------
Specifically, the Exchange proposes that once an order needs to be
routed to an Away Market, Pillar will then determine the venue(s) to
which the order should be routed. Currently, this evaluation of
price(s) and volume(s) on Away Markets is constantly available in
[[Page 14415]]
Pillar regardless of whether an order needs to be routed. The Exchange
believes that limiting this evaluation solely to when Pillar determines
that an order is eligible for routing would optimize Pillar performance
because it would eliminate inefficient processing within Pillar. The
Exchange believes that the proposed optimization change to process
routing information more efficiently would result in faster order
processing to the benefit of all market participants.
To effect this change, the Exchange proposes to specify how it will
handle marketable routable orders during the discrete period that such
orders are being evaluated for routing.\8\ If such an order is deemed
marketable against Away Market interest,\9\ Pillar will make a
determination as to the destination, price and size for each routed
portion of the order pursuant to Rule 6.94-O(a) (Order Protection).\10\
To clarify this proposed order handling, the Exchange proposes to add
rule text to Rule 6.76AP-O(b), which would provide that ``[w]hile
determining the venue(s) to which the order(s) will be routed, such
order(s) may \11\ be held non-displayed at the contra-side ABBO \12\
and ranked in its respective priority category, per Rule 6.76P-O(e),
behind any displayed interest at that price.\13\ The Exchange notes
that such marketable orders remain executable against incoming interest
and interest in the Consolidated Book.
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\8\ The Exchange's routing determination typically takes a few
microseconds.
\9\ See Rule 1.1. (defining ``Away Market'' as referring to any
Trading Center (1) with which the Exchange maintains an electronic
linkage, and (2) that provides instantaneous responses to orders
routed from the Exchange).
\10\ See Rule 6.94-O(a) (providing that, subject to exceptions,
``[m]embers shall not effect Trade-Throughs''.)
\11\ To avoid creating a locked or crossed market, the Exchange
will hold a routable order in a non-displayed state while making the
routing determination. However, when a previously displayed order is
to be routed, such order will remain displayed while Pillar makes
its routing determination.
\12\ See Rule 1.1. (defining ``ABBO'' (or ``Away Market BBO'')
as referring to the best bid(s) or offer(s) disseminated by Away
Markets and calculated by the Exchange based on market information
the Exchange receives from OPRA).
\13\ See Rule 6.76P-O(e) (providing that at each price, trading
interest is assigned to one of three priority categories: Priority
1--Market Orders; Priority 2--Display Orders; and Priority 3--Non-
Display Orders'').
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Market participants have the option of designating their orders as
non-routable (and executable solely against interest on the Exchange)
or routable (and executable against interest available on the Exchange
or an Away Market). For participants that choose the latter, proposed
Rule 6.76AP-O(b) will clarify the status of such orders in the
Consolidated Book during evaluation.
The Exchange anticipates implementing the applicable technology
changes in the second quarter of 2023 and will announce by Trader
Update the implementation date of this proposed rule change.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\14\ in general, and
furthers the objectives of Section 6(b)(5),\15\ in particular, because
it is 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 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.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it is designed to optimize performance
on the Pillar trading platform, and would specify the Exchange's
handling of marketable routable orders during the discrete period that
such orders are being evaluated for routing. The Exchange believes that
the proposed optimization change to process routing information more
efficiently would result in faster order processing to the benefit of
all market participants. In addition, the Exchange believes the
proposed change would remove impediments to and perfect the mechanism
of a free and open market and a national market system by adding
clarity and transparency to Exchange rules that a routable order may
\16\ be held non-displayed at the ABBO during the period that it is
being evaluated for routing.
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\16\ See supra note 11.
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Further, the Exchange notes that market participants have the
option of designating their orders as non-routable (and executable
solely against interest on the Exchange) or routable (and executable
against interest available on the Exchange or an Away Market). The
proposed change would remove impediments to, and perfect the mechanism
of, a free and open market and a national market system because it will
clarify the status of such orders in the Consolidated Book during
evaluation.
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. The proposed change is not
intended to address competition, but rather is being made in connection
with technology changes designed to optimize performance on the Pillar
trading platform. The proposed change would apply to all similarly-
situated market participants that trade on the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\19\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings
[[Page 14416]]
under Section 19(b)(2)(B) \20\ of the Act to determine whether the
proposed rule change should be approved or disapproved.
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\20\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2023-19 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-NYSEARCA-2023-19. 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-NYSEARCA-2023-19 and should be submitted
on or before March 29, 2023.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04687 Filed 3-7-23; 8:45 am]
BILLING CODE 8011-01-P
