Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Sponsored Participant Rules 11.3(a) and 11.3(b)(2), 16700-16704 [2023-05536]
Download as PDF
<![CDATA[
16700
Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly.
All submissions should refer to File
Number SR–Phlx–2023–08 and should
be submitted on or before April 10,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
In the event that the time, date, or
location of this meeting changes, an
announcement of the change, along with
the new time, date, and/or place of the
meeting will be posted on the
Commission’s website at https://
www.sec.gov.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and
(a)(10), permit consideration of the
scheduled matters at the closed meeting.
The subject matter of the closed
meeting will consist of the following
topics:
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims; and
Other matters relating to examinations
and enforcement proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting agenda items that
may consist of adjudicatory,
examination, litigation, or regulatory
matters.
Contact Person for More Information:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Authority: 5 U.S.C. 552b.
Dated: March 16, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023–05750 Filed 3–16–23; 11:15 am]
BILLING CODE 8011–01–P
[FR Doc. 2023–05542 Filed 3–17–23; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
lotter on DSK11XQN23PROD with NOTICES1
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97139; File No. SR–
CboeEDGX–2023–014]
Sunshine Act Meetings
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Sponsored Participant Rules 11.3(a)
and 11.3(b)(2)
Time and Date: 2:00 p.m. on
Thursday, March 23, 2023.
Place: The meeting will be held via
remote means and/or at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
Status: This meeting will be closed to
the public.
Matters To Be Considered:
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters also may be present.
March 14, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
28, 2023, Cboe EDGX Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
1 15
16 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:19 Mar 17, 2023
2 17
Jkt 259001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00122
Fmt 4703
Sfmt 4703
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 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 EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) proposes to
amend Exchange Rules 11.3(a)–(b), to:
(1) define the term ‘‘Sponsored Access’’;
(2) provide that the Sponsored
Participant rules of the Exchange apply
only to the trading of equities; and (3)
to codify that the agreement required by
and between the Sponsoring Member
and Sponsored Participant must include
a provision that any Sponsored Access
relationship must follow the
requirements of SEC Rule 15c3–5, the
Market Access Rule (‘‘MAR’’).5 The text
of the proposed rule change is provided
below and in Exhibit 5.6
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
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.
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 17 CFR 240.15c3–5—Risk management controls
for brokers or dealers with market access.
6 The Exchange proposes to implement the
proposed changes to Rule 11.3(a)–(b)(1)–(3) on a
date that will be announced via Cboe Trade Desk,
notifying both existing and prospective Sponsoring
Members and Sponsored Participants, of the new
rule language and required contractual provisions.
4 17
E:\FR\FM\20MRN1.SGM
20MRN1
Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to amend
Exchange Rule 11.3(a)–(b) to: (1) define
the term ‘‘Sponsored Access’’; (2)
provide that the Sponsored Participant
rules of the Exchange apply only to the
trading of equities; and (3) to codify that
the agreement required by and between
the Sponsoring Member and Sponsored
Participant must include a provision
that any Sponsored Access relationship
must follow the requirements of the
MAR.
lotter on DSK11XQN23PROD with NOTICES1
Sponsored Access Definition
Per current Exchange rules a
‘‘Sponsored Participant’’ 7 may be a
Member 8 or non-Member of the
Exchange whose direct electronic access
to the Exchange is authorized by a
Sponsoring Member 9 pursuant to the
requirements set forth in Exchange Rule
11.3(b)(1)–(3), ‘‘Sponsored
Participants’’. The Exchange proposes to
amend Rule 11.3(a) to include the
following definition, ‘‘Sponsored Access
shall mean an arrangement whereby a
Member permits its Sponsored
Participants to enter orders into the
Exchange’s System that bypass the
Member’s trading system and are routed
directly to the Exchange, including
through a service bureau or other thirdparty technology provider.’’ The
Exchange notes that the proposed
definition of Sponsored Access is
identical to that adopted 10 by the
7 The term ‘‘Sponsored Participant’’ shall mean a
person which has entered into a sponsorship
arrangement with a Sponsoring Member pursuant to
Rule 11.3. See Exchange Rule 1.5(z), definition of
‘‘Sponsored Participant’’.
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
Exchange Rule 1.5(n), definition of ‘‘Member’’.
9 The term ‘‘Sponsoring Member’’ shall mean a
broker-dealer that has been issued a membership by
the Exchange who has been designated by a
Sponsored Participant to execute, clear and settle
transactions from the System. The Sponsoring
Member shall be either (i) a clearing firm with
membership in a clearing agency registered with the
Commission that maintains facilities through which
transactions may be cleared or (ii) a correspondent
firm with a clearing arrangement with any such
clearing firm. See Exchange Rule 1.5(aa), definition
of ‘‘Sponsoring Member’’.
10 See Securities and Exchange Act Release No.
34–76449) (November 27, 2015) 80 FR 73011
(November 23, 2015) (SR–NASDAQ–2015–140)
(Notice of Filing and Immediate Effectiveness of the
VerDate Sep<11>2014
17:19 Mar 17, 2023
Jkt 259001
Nasdaq Stock Market, LLC (‘‘Nasdaq’’),
General 2 in Section 22, Sponsored
Participants, of their General Equity and
Options Rules.11 The Exchange believes
defining Sponsored Access will provide
Sponsoring Members with greater
clarity in understanding which types of
market access relationships are subject
to Exchange Rule 11.3(a)–(b),12 and
what obligations Sponsoring Members
and Sponsored Participants must satisfy
when establishing a Sponsored Access
relationship.
Sponsored Access—Equities Market
Only
Additionally, the Exchange seeks to
amend Rule 11.3(a) to provide that the
application of the Exchange’s Sponsored
Participant rule applies only to
Sponsored Members of the Exchange’s
equities market and does not apply to
Options Members 13 of the Exchange’s
Proposed Rule Change Relating to Sponsored
Access) (‘Sponsored Access shall mean an
arrangement whereby a member permits its
customers to enter orders into the Exchange’s
System that bypass the member’s trading system
and are routed directly to the Exchange, including
routing through a service bureau or other third
party technology provider.’’)
11 See General Equity and Options Rule, General
2: General Provisions, Section 22(a), available at:
https://listingcenter.nasdaq.com/rulebook/Nasdaq/
rules.
12 Consistent with the proposed definition, such
relationships generally include where a brokerdealer allows its customer—such as a hedge fund,
mutual fund, bank or insurance company, an
Exchange registered market maker, an individual, or
another broker-dealer—to use the broker-dealer’s
market participant identifier (‘‘MPID’’) or other
mechanism or mnemonic to enter orders into the
Exchange’s System that bypass the Sponsoring
Member’s order handling system and are
electronically routed directly to the Exchange by
the Sponsored Participant, including through a
service bureau or other third-party technology
provider. For the avoidance of doubt, in a scenario
where a Sponsored Participant is also an Exchange
Member (e.g., where a Sponsored Member provides
market access to an Exchange Member Market
Maker), (i) the Sponsored Participant will be subject
to all Exchange rules and regulations applicable to
Members acting in their own capacity, whether the
Sponsored Participant accesses the Exchange via
their own Membership or via a Sponsored Access
arrangement; and (ii) the Sponsoring Member will
be responsible for the Sponsored Participant
activity just as it would for any other non-Member
Sponsored Participant under Rule 11.3(b),
including compliance with the MAR requirements
and for compliance with the applicable Memberrelated activity electronically routed to the
Exchange via the Sponsored Access arrangement
(e.g., the Sponsoring Member would be required to
hold appointments and would be subject to
applicable requirements as an Exchange Market
Maker in the products for which the Sponsored
Participant Market Maker is registered and routes
orders/quotes via the Sponsored Access
arrangement).
13 The term ‘‘Options Members’’ means a firm, or
organization that is registered with the Exchange
pursuant to Chapter XVII of these Rules for
purposes of participating in options trading on
EDGX Options as an ‘‘Options Order Entry Firm’’
or ‘‘Options Market-Maker’’. See Rule 16.1,
definition of ‘‘Options Member’’.
PO 00000
Frm 00123
Fmt 4703
Sfmt 4703
16701
options market. The Exchange does not
currently have any Options Members
registered to act as Sponsoring Members
for any Sponsored Participants who
would electronically trade options and,
to date, has not received such a request
for an options-based Sponsoring
Member-Sponsored Participant
relationship. Accordingly, the Exchange
believes it appropriate to provide that
the Sponsored Access program will
apply only to Sponsoring Members
providing Sponsored Participants direct
electronic access to the Exchange’s
equities market (not the Exchange’s
options market) and does not believe
that making such change will result in
unfair discrimination between equity
Members and Options Members.
Market Access Rule
The Exchange seeks to codify that the
agreement currently required under
Exchange Rule 11.3(b)(2), by and
between the Sponsoring Member and
Sponsored Participant, must include a
provision that any Sponsored Access
relationship must follow the
requirements of the MAR. While
Sponsoring Members have existing
obligations under the MAR because they
are providing market access to their
Sponsored Participants, the Exchange
believes the proposed amendment will
help to reinforce such obligations.
Sponsored Participants will now be
required to contractually agree with
their Sponsoring Members to follow the
requirements of the MAR.
The Exchange believes that the
proposed addition of 11.3(b)(2)(J) will
reinforce to Sponsoring Members that
Sponsored Access relationships must
comply with the SEC’s MAR, as well as
Exchange rules regarding the provision
of market access. As noted above, such
relationships generally include where a
broker-dealer allows its customer to use
the broker-dealer’s market participant
identifier (‘‘MPID’’) or other mechanism
or mnemonic to enter orders into the
Exchange’s System that bypass the
Sponsoring Member’s order handling
system and are electronically routed
directly to the Exchange by the
Sponsored Participant, including
through a service bureau or other thirdparty technology provider.
The Exchange notes further that the
proposed addition of 11.3(b)(2)(J) is
non-substantive in nature for
Sponsoring Members because as brokerdealers providing market access,
Sponsoring Members are already
required to comply with the MAR, as
well as with existing Exchange Rules
regarding market access. Indeed, per the
Exchange’s current Sponsored
Participant rules the Sponsoring
E:\FR\FM\20MRN1.SGM
20MRN1
16702
Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
Member is already responsible for all its
Sponsored Participant’s activity on the
Exchange 14 and is required to comply
with the Exchange’s Certificate of
Incorporation, By-Laws, Rules, and
procedures.15 This includes compliance
with Rule 2.2, which requires, among
other things, compliance with the Act
and the regulations thereunder,
including the MAR.
The proposed addition of Rule
11.3(b)(2)(J) is potentially substantive in
nature to Sponsored Participants in that
the proposed amendment adds a
requirement to the agreement by and
between the Sponsoring Member and
Sponsored Participant, requiring the
Sponsored Participant to contractually
agree to follow the requirements of the
MAR. Importantly, as part of their
obligation to comply with Exchange
Rules and procedures, existing
Sponsoring Members will be expected
to amend any existing contractual
arrangements with their Sponsored
Participants to include the new
contractual provision proposed by the
Exchange.
lotter on DSK11XQN23PROD with NOTICES1
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.16 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 17 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) 18 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
Defining Sponsored Access
As noted above, the Exchange
believes that defining Sponsored Access
will provide Sponsoring Members with
14 See
Rule 11.3(b)(2)(B)(1)–(2).
Rule 11.3(b)(2)(C).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
18 Id.
15 See
VerDate Sep<11>2014
17:19 Mar 17, 2023
greater clarity as to which types of
market access relationships 19 are
subject to Exchange Rule 11.3(a)–(b)(1)–
(3), and what obligations Sponsoring
Members and Sponsored Participants
must satisfy when establishing a
Sponsored Access relationship. As such,
the proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices and serves to promote
just and equitable principles of trade.
The proposed change will also help to
reduce confusion by codifying a
definition for such activity on the
Exchange that is consistent with other
industry practices currently in place
elsewhere. The Exchange further notes
that the proposed Sponsored Access
definition is reasonable and does not
affect investor protection because the
proposed change does not present any
novel or unique issues, as the proposed
Sponsored Access definition has
previously been adopted by Nasdaq.20
Sponsored Access—Equities Market
Only
Furthermore, the Exchange believes
that limiting Exchange Rule 11.3(a)–
(b)(1)–(3) to Sponsoring Members
providing direct electronic access to
Sponsored Participants of the
Exchange’s equities market will
contribute to the protection of investors
and the public interest by simplifying
the Exchange’s rules and making them
easier for Members and Options
Members to understand, thus bolstering
their collective understanding of the
Exchange’s rules. Moreover, as noted
above, the Exchange currently has no
Options Members registered as
Sponsoring Members and has yet to
receive a request from Options Members
to establish a Sponsored Access
relationship. Accordingly, the Exchange
does not believe that this proposed rule
change will significantly alter Options
Members’ relationship with the
Exchange or impose upon them any new
obligations, and no longer wishes to
have its Sponsored Access program
apply to its options market.
Market Access Rule
As noted above, the proposed
addition of 11.3(b)(2)(J) will reinforce to
Sponsoring Members that Sponsored
Access relationships must comply with
the SEC’s MAR, as well as Exchange
Rules regarding the provision of market
access. Also, by adding proposed
paragraph 11.3(b)(2)(J), Sponsored
Participants are now required to
contractually agree that their Sponsored
19 Supra
20 Supra
Jkt 259001
PO 00000
note 12.
note 10.
Frm 00124
Fmt 4703
Sfmt 4703
Access to the Exchange must follow the
requirements of the MAR.
In this regard, the proposed
amendment will help to ensure that by
and between the Sponsoring Member
and Sponsored Participant that all
orders entered onto the Exchange
pursuant to a Sponsored Access
relationship will follow the
requirements of the MAR. As discussed,
the Exchange believes the proposed
addition of 11.3(b)(2)(J) is nonsubstantive in nature for Sponsoring
Members because as broker-dealers
providing market access, Sponsoring
Members are already required to comply
with the MAR, as well as with existing
Exchange Rules regarding market
access. The proposed addition of Rule
11.3(b)(2)(J) is potentially substantive in
nature to Sponsored Participants in that
the proposed amendment adds a new
requirement to the relationship by and
between the Sponsoring Member and
Sponsored Participant, requiring the
Sponsored Participant to contractually
agree to follow the requirements of the
MAR.
Accordingly, the proposed rule
change will help to promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and national market system, and, in
general to protect investors and the
public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
For the reasons noted below, 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.
Defining Sponsored Access
The proposed Sponsored Access
definition does not impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed definition merely seeks to
make clear to Sponsoring Members that
Sponsored Access is a relationship
subject to Exchange Rule 11.3(a)–(b)(1)–
(3). Moreover, Sponsored Access is a
voluntary arrangement that a
Sponsoring Member voluntarily elects
to enter with its Sponsoring Participant.
A Member is not required to become a
Sponsoring Member, and in fact, may
decline to enter such a relationship with
its customers.
Sponsored Access—Equities Market
Only
Moreover, providing that Exchange
Rule 11.3(a)–(b)(1)–(3) will only apply
E:\FR\FM\20MRN1.SGM
20MRN1
Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
to Sponsoring Members providing direct
electronic access to Sponsored
Participants to the Exchange’s equities
market does not unduly burden Options
Members because as noted above, the
Exchange is historically yet to receive
any Sponsored Access registrations from
Options Members, and there are
currently no Options Members
registered as Sponsoring Members.
Market Access Rule
Additionally, the Exchange does not
believe that the proposed rule change
will impose any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. Notably, other
exchanges have in place similar rules
and documentation requirements
applicable to sponsored participants
and their sponsoring members.21
Moreover, the proposed Sponsored
Access definition is identical to that
adopted by Nasdaq 22 and currently
codified in their rulebook.23
The proposed rule change to
explicitly cite the MAR in Rule
11.3(b)(2)(J) does not impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. As noted
above, this change is non-substantive as
Sponsoring Members are currently
responsible for complying with the
MAR with respect to their provision of
Sponsored Access to Sponsored
Participants. While the proposed
addition of Rule 11.3(b)(2)(J) is
potentially substantive in nature to
Sponsored Participants because it
requires a Sponsored Participant to
contractually agree with its Sponsoring
Member to follow the requirements of
the MAR, the Exchange notes the
proposed contractual requirement also
exists in the Nasdaq rulebook 24 and as
such, should not raise any new or novel
issues for consideration by Sponsored
Participants.
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.
25 15
lotter on DSK11XQN23PROD with NOTICES1
Because the foregoing proposed rule
change does not: (i) significantly affect
note 11.
note 10.
23 Supra note 11.
24 Id.
22 Supra
VerDate Sep<11>2014
17:19 Mar 17, 2023
Jkt 259001
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
27 17 CFR 240.19b–4(f)(6).
28 17 CFR 240.19b–4(f)(6)(iii).
29 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
26 17
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
21 Supra
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 25 and Rule 19b–4(f)(6) 26
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 27 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),28 the
Commission may designate a shorter
time of such action is consistent with
the protection of investor and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become operative upon
filing. The Exchange states that the
proposed rule change could
immediately benefit market participants
by clarifying for Sponsoring Members
which relationships are subject to the
Exchange’s Sponsored Access rules and
promoting just and equitable principles
of trade. The Exchange also states that
the proposed rule change could
immediately bolster Sponsoring
Members and Options Members
collective understanding of the
Exchange’s Sponsored Participant rules,
thereby contributing to the protection of
investors and public interest. The
Exchange also states the proposed
addition of 11.3(b)(2)(J) will reinforce to
Sponsoring Members their obligation to
comply with MAR. Because the
proposed rule change does not raise any
novel regulatory issues, the Commission
believes that waiving the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Therefore, the Commission
hereby waives the operative delay and
designates the proposal operative upon
filing.29
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
16703
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2023–014 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeEDGX–2023–014. 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 such
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
E:\FR\FM\20MRN1.SGM
20MRN1
16704
Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2023–014 and
should be submitted on or before April
10, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–05536 Filed 3–17–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34853; 812–15440]
The RBB Fund, Inc., et al.
March 14, 2023.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
lotter on DSK11XQN23PROD with NOTICES1
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 2(a)(32), 5(a)(1), 22(d) and 22(e)
of the Act and rule 22c–1 under the Act
and under sections 6(c) and 17(b) of the
Act for an exemption from sections
17(a)(1) and 17(a)(2) of the Act.
SUMMARY OF APPLICATION: Applicants
request an order (‘‘Order’’) that permits:
(a) the Funds (as described in the
Reference Order (as defined below)) to
issue shares (‘‘Shares’’) redeemable in
large aggregations only (‘‘creation
units’’); (b) secondary market
transactions in Shares to occur at
negotiated market prices rather than at
net asset value; (c) certain Funds to pay
redemption proceeds, under certain
circumstances, more than seven days
after the tender of Shares for
redemption; and (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of creation units. The
relief in the Order would incorporate by
reference terms and conditions of the
same relief of a previous order granting
the same relief sought by applicants, as
that order may be amended from time to
time (‘‘Reference Order’’).1
APPLICANTS: The RBB Fund, Inc., The
RBB Fund Trust, Quasar Distributors
LLC, and F/m Investments LLC, DBA
North Slope Capital LLC.
30 17
CFR 200.30–3(a)(12), (a)(59).
Tractor ETF Trust and Blue Tractor Group,
LLC, Investment Company Act Rel. Nos. 33682
(November 14, 2019) (notice) and 33710 (December
10, 2019) (order).
1 Blue
VerDate Sep<11>2014
17:19 Mar 17, 2023
Jkt 259001
The application was filed
on February 28, 2023.
FILING DATES:
SECURITIES AND EXCHANGE
COMMISSION
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 10, 2023, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit, or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
The Commission:
Secretarys-Office@sec.gov. Applicants:
Steven Plump, splump@rbbfund.com,
Michael W. Mundt, mmundt@
stradley.com.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Trace W. Rakestraw, Senior Special
Counsel, at (202) 551–6825 (Division of
Investment Management, Chief
Counsel’s Office).
For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ application, dated February
28, 2023, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
SUPPLEMENTARY INFORMATION:
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[Release No. 34–97138; File No. SR–
CboeBZX–2023–016]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
March 14, 2023.
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 February
28, 2023, Cboe BZX Exchange, Inc.
(‘‘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 Options’’)
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.
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.
[FR Doc. 2023–05527 Filed 3–17–23; 8:45 am]
BILLING CODE 8011–01–P
PO 00000
1 15
2 17
Frm 00126
Fmt 4703
Sfmt 4703
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\20MRN1.SGM
20MRN1
]]>Agencies
[Federal Register Volume 88, Number 53 (Monday, March 20, 2023)]
[Notices]
[Pages 16700-16704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05536]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97139; File No. SR-CboeEDGX-2023-014]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Sponsored Participant Rules 11.3(a) and 11.3(b)(2)
March 14, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 28, 2023, Cboe EDGX Exchange, Inc. (the ``Exchange''
or ``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend Exchange Rules 11.3(a)-(b), to: (1) define the term ``Sponsored
Access''; (2) provide that the Sponsored Participant rules of the
Exchange apply only to the trading of equities; and (3) to codify that
the agreement required by and between the Sponsoring Member and
Sponsored Participant must include a provision that any Sponsored
Access relationship must follow the requirements of SEC Rule 15c3-5,
the Market Access Rule (``MAR'').\5\ The text of the proposed rule
change is provided below and in Exhibit 5.\6\
---------------------------------------------------------------------------
\5\ 17 CFR 240.15c3-5--Risk management controls for brokers or
dealers with market access.
\6\ The Exchange proposes to implement the proposed changes to
Rule 11.3(a)-(b)(1)-(3) on a date that will be announced via Cboe
Trade Desk, notifying both existing and prospective Sponsoring
Members and Sponsored Participants, of the new rule language and
required contractual provisions.
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), 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 16701]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Exchange Rule 11.3(a)-(b)
to: (1) define the term ``Sponsored Access''; (2) provide that the
Sponsored Participant rules of the Exchange apply only to the trading
of equities; and (3) to codify that the agreement required by and
between the Sponsoring Member and Sponsored Participant must include a
provision that any Sponsored Access relationship must follow the
requirements of the MAR.
Sponsored Access Definition
Per current Exchange rules a ``Sponsored Participant'' \7\ may be a
Member \8\ or non-Member of the Exchange whose direct electronic access
to the Exchange is authorized by a Sponsoring Member \9\ pursuant to
the requirements set forth in Exchange Rule 11.3(b)(1)-(3), ``Sponsored
Participants''. The Exchange proposes to amend Rule 11.3(a) to include
the following definition, ``Sponsored Access shall mean an arrangement
whereby a Member permits its Sponsored Participants to enter orders
into the Exchange's System that bypass the Member's trading system and
are routed directly to the Exchange, including through a service bureau
or other third-party technology provider.'' The Exchange notes that the
proposed definition of Sponsored Access is identical to that adopted
\10\ by the Nasdaq Stock Market, LLC (``Nasdaq''), General 2 in Section
22, Sponsored Participants, of their General Equity and Options
Rules.\11\ The Exchange believes defining Sponsored Access will provide
Sponsoring Members with greater clarity in understanding which types of
market access relationships are subject to Exchange Rule 11.3(a)-
(b),\12\ and what obligations Sponsoring Members and Sponsored
Participants must satisfy when establishing a Sponsored Access
relationship.
---------------------------------------------------------------------------
\7\ The term ``Sponsored Participant'' shall mean a person which
has entered into a sponsorship arrangement with a Sponsoring Member
pursuant to Rule 11.3. See Exchange Rule 1.5(z), definition of
``Sponsored Participant''.
\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 Exchange Rule 1.5(n), definition of
``Member''.
\9\ The term ``Sponsoring Member'' shall mean a broker-dealer
that has been issued a membership by the Exchange who has been
designated by a Sponsored Participant to execute, clear and settle
transactions from the System. The Sponsoring Member shall be either
(i) a clearing firm with membership in a clearing agency registered
with the Commission that maintains facilities through which
transactions may be cleared or (ii) a correspondent firm with a
clearing arrangement with any such clearing firm. See Exchange Rule
1.5(aa), definition of ``Sponsoring Member''.
\10\ See Securities and Exchange Act Release No. 34-76449)
(November 27, 2015) 80 FR 73011 (November 23, 2015) (SR-NASDAQ-2015-
140) (Notice of Filing and Immediate Effectiveness of the Proposed
Rule Change Relating to Sponsored Access) (`Sponsored Access shall
mean an arrangement whereby a member permits its customers to enter
orders into the Exchange's System that bypass the member's trading
system and are routed directly to the Exchange, including routing
through a service bureau or other third party technology
provider.'')
\11\ See General Equity and Options Rule, General 2: General
Provisions, Section 22(a), available at: https://listingcenter.nasdaq.com/rulebook/Nasdaq/rules.
\12\ Consistent with the proposed definition, such relationships
generally include where a broker-dealer allows its customer--such as
a hedge fund, mutual fund, bank or insurance company, an Exchange
registered market maker, an individual, or another broker-dealer--to
use the broker-dealer's market participant identifier (``MPID'') or
other mechanism or mnemonic to enter orders into the Exchange's
System that bypass the Sponsoring Member's order handling system and
are electronically routed directly to the Exchange by the Sponsored
Participant, including through a service bureau or other third-party
technology provider. For the avoidance of doubt, in a scenario where
a Sponsored Participant is also an Exchange Member (e.g., where a
Sponsored Member provides market access to an Exchange Member Market
Maker), (i) the Sponsored Participant will be subject to all
Exchange rules and regulations applicable to Members acting in their
own capacity, whether the Sponsored Participant accesses the
Exchange via their own Membership or via a Sponsored Access
arrangement; and (ii) the Sponsoring Member will be responsible for
the Sponsored Participant activity just as it would for any other
non-Member Sponsored Participant under Rule 11.3(b), including
compliance with the MAR requirements and for compliance with the
applicable Member-related activity electronically routed to the
Exchange via the Sponsored Access arrangement (e.g., the Sponsoring
Member would be required to hold appointments and would be subject
to applicable requirements as an Exchange Market Maker in the
products for which the Sponsored Participant Market Maker is
registered and routes orders/quotes via the Sponsored Access
arrangement).
---------------------------------------------------------------------------
Sponsored Access--Equities Market Only
Additionally, the Exchange seeks to amend Rule 11.3(a) to provide
that the application of the Exchange's Sponsored Participant rule
applies only to Sponsored Members of the Exchange's equities market and
does not apply to Options Members \13\ of the Exchange's options
market. The Exchange does not currently have any Options Members
registered to act as Sponsoring Members for any Sponsored Participants
who would electronically trade options and, to date, has not received
such a request for an options-based Sponsoring Member-Sponsored
Participant relationship. Accordingly, the Exchange believes it
appropriate to provide that the Sponsored Access program will apply
only to Sponsoring Members providing Sponsored Participants direct
electronic access to the Exchange's equities market (not the Exchange's
options market) and does not believe that making such change will
result in unfair discrimination between equity Members and Options
Members.
---------------------------------------------------------------------------
\13\ The term ``Options Members'' means a firm, or organization
that is registered with the Exchange pursuant to Chapter XVII of
these Rules for purposes of participating in options trading on EDGX
Options as an ``Options Order Entry Firm'' or ``Options Market-
Maker''. See Rule 16.1, definition of ``Options Member''.
---------------------------------------------------------------------------
Market Access Rule
The Exchange seeks to codify that the agreement currently required
under Exchange Rule 11.3(b)(2), by and between the Sponsoring Member
and Sponsored Participant, must include a provision that any Sponsored
Access relationship must follow the requirements of the MAR. While
Sponsoring Members have existing obligations under the MAR because they
are providing market access to their Sponsored Participants, the
Exchange believes the proposed amendment will help to reinforce such
obligations. Sponsored Participants will now be required to
contractually agree with their Sponsoring Members to follow the
requirements of the MAR.
The Exchange believes that the proposed addition of 11.3(b)(2)(J)
will reinforce to Sponsoring Members that Sponsored Access
relationships must comply with the SEC's MAR, as well as Exchange rules
regarding the provision of market access. As noted above, such
relationships generally include where a broker-dealer allows its
customer to use the broker-dealer's market participant identifier
(``MPID'') or other mechanism or mnemonic to enter orders into the
Exchange's System that bypass the Sponsoring Member's order handling
system and are electronically routed directly to the Exchange by the
Sponsored Participant, including through a service bureau or other
third-party technology provider.
The Exchange notes further that the proposed addition of
11.3(b)(2)(J) is non-substantive in nature for Sponsoring Members
because as broker-dealers providing market access, Sponsoring Members
are already required to comply with the MAR, as well as with existing
Exchange Rules regarding market access. Indeed, per the Exchange's
current Sponsored Participant rules the Sponsoring
[[Page 16702]]
Member is already responsible for all its Sponsored Participant's
activity on the Exchange \14\ and is required to comply with the
Exchange's Certificate of Incorporation, By-Laws, Rules, and
procedures.\15\ This includes compliance with Rule 2.2, which requires,
among other things, compliance with the Act and the regulations
thereunder, including the MAR.
---------------------------------------------------------------------------
\14\ See Rule 11.3(b)(2)(B)(1)-(2).
\15\ See Rule 11.3(b)(2)(C).
---------------------------------------------------------------------------
The proposed addition of Rule 11.3(b)(2)(J) is potentially
substantive in nature to Sponsored Participants in that the proposed
amendment adds a requirement to the agreement by and between the
Sponsoring Member and Sponsored Participant, requiring the Sponsored
Participant to contractually agree to follow the requirements of the
MAR. Importantly, as part of their obligation to comply with Exchange
Rules and procedures, existing Sponsoring Members will be expected to
amend any existing contractual arrangements with their Sponsored
Participants to include the new contractual provision proposed by the
Exchange.
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.\16\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \17\ 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) \18\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ Id.
---------------------------------------------------------------------------
Defining Sponsored Access
As noted above, the Exchange believes that defining Sponsored
Access will provide Sponsoring Members with greater clarity as to which
types of market access relationships \19\ are subject to Exchange Rule
11.3(a)-(b)(1)-(3), and what obligations Sponsoring Members and
Sponsored Participants must satisfy when establishing a Sponsored
Access relationship. As such, the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices and serves to
promote just and equitable principles of trade.
---------------------------------------------------------------------------
\19\ Supra note 12.
---------------------------------------------------------------------------
The proposed change will also help to reduce confusion by codifying
a definition for such activity on the Exchange that is consistent with
other industry practices currently in place elsewhere. The Exchange
further notes that the proposed Sponsored Access definition is
reasonable and does not affect investor protection because the proposed
change does not present any novel or unique issues, as the proposed
Sponsored Access definition has previously been adopted by Nasdaq.\20\
---------------------------------------------------------------------------
\20\ Supra note 10.
---------------------------------------------------------------------------
Sponsored Access--Equities Market Only
Furthermore, the Exchange believes that limiting Exchange Rule
11.3(a)-(b)(1)-(3) to Sponsoring Members providing direct electronic
access to Sponsored Participants of the Exchange's equities market will
contribute to the protection of investors and the public interest by
simplifying the Exchange's rules and making them easier for Members and
Options Members to understand, thus bolstering their collective
understanding of the Exchange's rules. Moreover, as noted above, the
Exchange currently has no Options Members registered as Sponsoring
Members and has yet to receive a request from Options Members to
establish a Sponsored Access relationship. Accordingly, the Exchange
does not believe that this proposed rule change will significantly
alter Options Members' relationship with the Exchange or impose upon
them any new obligations, and no longer wishes to have its Sponsored
Access program apply to its options market.
Market Access Rule
As noted above, the proposed addition of 11.3(b)(2)(J) will
reinforce to Sponsoring Members that Sponsored Access relationships
must comply with the SEC's MAR, as well as Exchange Rules regarding the
provision of market access. Also, by adding proposed paragraph
11.3(b)(2)(J), Sponsored Participants are now required to contractually
agree that their Sponsored Access to the Exchange must follow the
requirements of the MAR.
In this regard, the proposed amendment will help to ensure that by
and between the Sponsoring Member and Sponsored Participant that all
orders entered onto the Exchange pursuant to a Sponsored Access
relationship will follow the requirements of the MAR. As discussed, the
Exchange believes the proposed addition of 11.3(b)(2)(J) is non-
substantive in nature for Sponsoring Members because as broker-dealers
providing market access, Sponsoring Members are already required to
comply with the MAR, as well as with existing Exchange Rules regarding
market access. The proposed addition of Rule 11.3(b)(2)(J) is
potentially substantive in nature to Sponsored Participants in that the
proposed amendment adds a new requirement to the relationship by and
between the Sponsoring Member and Sponsored Participant, requiring the
Sponsored Participant to contractually agree to follow the requirements
of the MAR.
Accordingly, the proposed rule change will help to promote just and
equitable principles of trade, remove impediments to and perfect the
mechanism of a free and open market and national market system, and, in
general to protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
For the reasons noted below, 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.
Defining Sponsored Access
The proposed Sponsored Access definition does not impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed definition merely
seeks to make clear to Sponsoring Members that Sponsored Access is a
relationship subject to Exchange Rule 11.3(a)-(b)(1)-(3). Moreover,
Sponsored Access is a voluntary arrangement that a Sponsoring Member
voluntarily elects to enter with its Sponsoring Participant. A Member
is not required to become a Sponsoring Member, and in fact, may decline
to enter such a relationship with its customers.
Sponsored Access--Equities Market Only
Moreover, providing that Exchange Rule 11.3(a)-(b)(1)-(3) will only
apply
[[Page 16703]]
to Sponsoring Members providing direct electronic access to Sponsored
Participants to the Exchange's equities market does not unduly burden
Options Members because as noted above, the Exchange is historically
yet to receive any Sponsored Access registrations from Options Members,
and there are currently no Options Members registered as Sponsoring
Members.
Market Access Rule
Additionally, the Exchange does not believe that the proposed rule
change will impose any burden on intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
Notably, other exchanges have in place similar rules and documentation
requirements applicable to sponsored participants and their sponsoring
members.\21\ Moreover, the proposed Sponsored Access definition is
identical to that adopted by Nasdaq \22\ and currently codified in
their rulebook.\23\
---------------------------------------------------------------------------
\21\ Supra note 11.
\22\ Supra note 10.
\23\ Supra note 11.
---------------------------------------------------------------------------
The proposed rule change to explicitly cite the MAR in Rule
11.3(b)(2)(J) does not impose any burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. As noted above, this change is non-substantive as Sponsoring
Members are currently responsible for complying with the MAR with
respect to their provision of Sponsored Access to Sponsored
Participants. While the proposed addition of Rule 11.3(b)(2)(J) is
potentially substantive in nature to Sponsored Participants because it
requires a Sponsored Participant to contractually agree with its
Sponsoring Member to follow the requirements of the MAR, the Exchange
notes the proposed contractual requirement also exists in the Nasdaq
rulebook \24\ and as such, should not raise any new or novel issues for
consideration by Sponsored Participants.
---------------------------------------------------------------------------
\24\ Id.
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\25\ and Rule 19b-4(f)(6) \26\ thereunder.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(3)(A)(iii).
\26\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \27\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\28\ the Commission
may designate a shorter time of such action is consistent with the
protection of investor and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. The Exchange states that
the proposed rule change could immediately benefit market participants
by clarifying for Sponsoring Members which relationships are subject to
the Exchange's Sponsored Access rules and promoting just and equitable
principles of trade. The Exchange also states that the proposed rule
change could immediately bolster Sponsoring Members and Options Members
collective understanding of the Exchange's Sponsored Participant rules,
thereby contributing to the protection of investors and public
interest. The Exchange also states the proposed addition of
11.3(b)(2)(J) will reinforce to Sponsoring Members their obligation to
comply with MAR. Because the proposed rule change does not raise any
novel regulatory issues, the Commission believes that waiving the 30-
day operative delay is consistent with the protection of investors and
the public interest. Therefore, the Commission hereby waives the
operative delay and designates the proposal operative upon filing.\29\
---------------------------------------------------------------------------
\27\ 17 CFR 240.19b-4(f)(6).
\28\ 17 CFR 240.19b-4(f)(6)(iii).
\29\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2023-014 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeEDGX-2023-014. 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 such 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
[[Page 16704]]
to make available publicly. All submissions should refer to File Number
SR-CboeEDGX-2023-014 and should be submitted on or before April 10,
2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
---------------------------------------------------------------------------
\30\ 17 CFR 200.30-3(a)(12), (a)(59).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05536 Filed 3-17-23; 8:45 am]
BILLING CODE 8011-01-P
