Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NOM Options 3 Rules, 45248-45253 [2023-14910]

Download as PDF 45248 Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 / Notices Estimated Total Annual Burden Hours: 742. IV. Request for Comments Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of NASA, including whether the information collected has practical utility; (2) the accuracy of NASA’s estimate of the burden (including hours and cost) of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including automated collection techniques or the use of other forms of information technology. Comments submitted in response to this notice will be summarized and included in the request for OMB approval of this information collection. They will also become a matter of public record. William Edwards-Bodmer, NASA PRA Clearance Officer. [FR Doc. 2023–14898 Filed 7–13–23; 8:45 am] BILLING CODE 7510–13–P NATIONAL FOUNDATION OF THE ARTS AND THE HUMANITIES Institute of Museum and Library Services 47th Meeting of the National Museum and Library Services Board; Correction Institute of Museum and Library Services (IMLS), National Foundation of the Arts and the Humanities (NFAH). ACTION: Notice; correction. AGENCY: IMLS published a document in the Federal Register of June 26, 2023, concerning notice of the 47th National Museum and Library Services Board meeting on July 18th, 2023. Since then, the agency has updated its agenda. FOR FURTHER INFORMATION CONTACT: Katherine Maas, Chief of Staff and Alternate Designated Federal Officer, (202) 653–4798; kmaas@imls.gov. SUPPLEMENTARY INFORMATION: SUMMARY: lotter on DSK11XQN23PROD with NOTICES1 Correction In the Federal Register of June 26, 2023, in FR Doc. 2023–13421, on page 41421, at the bottom of the third column, please adjust the agenda to read: I. Call to Order II. Approval of Minutes of the 46th Meeting III. Director’s Welcome and Update VerDate Sep<11>2014 17:54 Jul 13, 2023 Jkt 259001 IV. Program Overview—Library Grants to State Program V. IMLS 250—Preparing for the Upcoming 250th Anniversary of the United States VI. Advancing Information Literacy VII. National Medals for Museum and Library Services Program VIII. Adjourn Meeting Week of August 7, 2023—Tentative There are no meetings scheduled for the week of August 7, 2023. Dated: July 11, 2023. Brianna Ingram, Paralegal Specialist. Week of August 21, 2023—Tentative There are no meetings scheduled for the week of August 21, 2023. [FR Doc. 2023–14978 Filed 7–13–23; 8:45 am] CONTACT PERSON FOR MORE INFORMATION: BILLING CODE 7036–01–P For more information or to verify the status of meetings, contact Wesley Held at 301–287–3591 or via email at Wesley.Held@nrc.gov. The NRC is holding the meetings under the authority of the Government in the Sunshine Act, 5 U.S.C. 552b. NUCLEAR REGULATORY COMMISSION [NRC–2023–0001] Sunshine Act Meetings Weeks of July 17, 24, 31, August 7, 14, 21, 2023. The schedule for Commission meetings is subject to change on short notice. The NRC Commission Meeting Schedule can be found on the internet at: https:// www.nrc.gov/public-involve/publicmeetings/schedule.html. PLACE: The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings or need this meeting notice or the transcript or other information from the public meetings in another format (e.g., braille, large print), please notify Anne Silk, NRC Disability Program Specialist, at 301–287–0745, by videophone at 240–428–3217, or by email at Anne.Silk@nrc.gov. Determinations on requests for reasonable accommodation will be made on a case-by-case basis. STATUS: Public. Members of the public may request to receive the information in these notices electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555, at 301–415–1969, or by email at Wendy.Moore@nrc.gov. MATTERS TO BE CONSIDERED: TIME AND DATE: Week of July 17, 2023 There are no meetings scheduled for the week of July 17, 2023. Week of July 24, 2023—Tentative There are no meetings scheduled for the week of July 24, 2023. Week of July 31, 2023—Tentative There are no meetings scheduled for the week of July 31, 2023. PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 Week of August 14, 2023—Tentative There are no meetings scheduled for the week of August 14, 2023. Dated: July 12, 2023. For the Nuclear Regulatory Commission. Wesley W. Held, Policy Coordinator, Office of the Secretary. [FR Doc. 2023–15092 Filed 7–12–23; 4:15 pm] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97870; File No. SR– NASDAQ–2023–018] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NOM Options 3 Rules July 10, 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 June 27, 2023, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend The Nasdaq Options Market LLC (‘‘NOM’’) Rules at Options 3, Options Trading Rules, at: Section 4 Entry and Display of Quotes; Section 5, Entry and Display of Orders; Section 7, Types of Orders and Order and Quote Protocols; and Section 15, Risk Protections. The Exchange also 1 15 2 17 E:\FR\FM\14JYN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 14JYN1 Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 / Notices proposes to amend Options 5, Section 4, Order Routing. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/nasdaq/rules, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change lotter on DSK11XQN23PROD with NOTICES1 1. Purpose NOM proposes to amend Options 3, Options Trading Rules, at: Section 4 Entry and Display of Quotes; Section 5, Entry and Display of Orders; Section 7, Types of Orders and Order and Quote Protocols; and Section 15, Risk Protections. The Exchange also proposes to amend Options 5, Section 4, Order Routing. Each change will be discussed below. The amendments proposed herein seek to codify the current System functionality. The proposed amendments will not result in System changes. Option 3, Sections 4 and 5 The Exchange proposes to codify existing functionality that allows Market Makers to submit their quotes to the Exchange in block quantities as a single bulk message. In other words, a Market Maker may submit a single message to the Exchange, which may contain bids and offers in multiple series. The Exchange’s current rules do not specify bulk messaging for orders. The Exchange has historically provided Market Makers with information regarding bulk messaging in its publicly available technical specifications.3 To promote greater transparency, the Exchange is seeking to codify this 3 See https://www.nasdaq.com/docs/2023/01/12/ 0054-Q23_SQF_8.2b%20akg_NAM.pdf (specifying for bulk quoting of up to 200 quotes per quote block message). The specifications note in other places the manner in which a Participant can send such quote block messages. VerDate Sep<11>2014 17:54 Jul 13, 2023 Jkt 259001 functionality in its Rulebook. Specifically, the Exchange proposes to amend NOM Options 3, Section 4(b)(3) to memorialize that quotes may be submitted as a bulk message. The Exchange also proposes to add a definition of ‘‘bulk message’’ in new subparagraph (i) of Options 3, Section 4(b)(3), which will provide that a bulk message means a single electronic message submitted by a Market Maker to the Exchange which may contain a specified number of quotations as designated by the Exchange.4 The bulk message, submitted via SQF,5 may enter, modify, or cancel quotes. Bulk messages are handled by the System in the same manner as it handles a single quote message. MRX recently added bulk messages to MRX Options 3, Section 4(b)(3).6 The proposed amendment to the Rulebook to add NOM Options 3, Section 4(b)(3) will not result in a System change. The Exchange also proposes to amend NOM Options 3, Section 4(b)(6) to provide the following, A quote will not be executed at a price that trades through another market or displayed at a price that would lock or cross another market. If, at the time of entry, a quote would cause a locked or crossed market violation or would cause a trade-through, violation, it will be re-priced to the current national best offer (for bids) or the current national best bid (for offers) as non-displayed, and displayed at one minimum price variance above (for offers) or below (for bids) the national best price. Where a quote is re-priced to avoid a locked or crossed market, the best bid or offer will be non-displayed and the repriced order will be displayed at a price that is one minimum trading increment 4 Id. As noted above, quote bulk messages can presently contain up to 200 quotes per message. This is the maximum amount that is permitted in a bulk message. The Exchange would announce any change to these specifications in an Options Technical Update distributed to all Participants. 5 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an interface that allows Market Makers to connect, send, and receive messages related to quotes and Immediate-or-Cancel Orders into and from the Exchange. Features include the following: (1) options symbol directory messages (e.g., underlying instruments); (2) system event messages (e.g., start of trading hours messages and start of opening); (3) trading action messages (e.g., halts and resumes); (4) execution messages; (5) quote messages; (6) Immediate-or-Cancel Order messages; (7) risk protection triggers and purge notifications; and (8) opening imbalance messages. The SQF Purge Interface only receives and notifies of purge requests from the Market Maker. Market Makers may only enter interest into SQF in their assigned options series. See Options 3, Section 7(e)(1)(B). 6 See Securities Exchange Act, Release No. 95982 (October 4, 2022), 87 FR 61391 (October 11, 2022) (SR–MRX–2022–18) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Rules in Connection With a Technology Migration to Enhanced Nasdaq Functionality) (‘‘SR–MRX–2022–18’’). PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 45249 inferior to the ABBO. A similar change is proposed for Options 3, Section 5(d). MRX recently amended Options 3, Section 4(b)(6) and Options 3, Section 5(d) to include this language.7 At this time, the Exchange proposes to amend NOM’s rule text to reflect that the actual price remains non-displayed in this scenario. The proposed amendment to the Rulebook to add NOM Options 3, Section 4(b)(6) will not result in a System change. Similarly, the Exchange proposes to add a new NOM Options 3, Section 4(b)(7) to clarify that, today, NOM’s System will automatically execute eligible quotes using the Exchange’s displayed best bid and offer (‘‘BBO’’) or the Exchange’s non-displayed order book (‘‘internal BBO’’) 8 if the best bid and/or offer on the Exchange has been repriced pursuant to Options 3, Section 5(d) and Options 3, Section 4(b)(6). This rule text seeks to codify the current System function and make clear that the internal BBO is comprised of both orders and quotes.9 MRX recently amended Options 3, Section 4(b)(7) to include the same language.10 At this time, the Exchange proposes to align NOM’s rule text in Options 3, Section 4(b)(7) to MRX’s rule text in Options 3, Section 4(b)(7). The proposed amendment to the Rulebook to add NOM Options 3, Section 4(b)(7) will not result in a System change. Finally, the Exchange proposes to amend NOM Options 3, Section 5(c) to include a citation to Options 3, Section 4(b)(6) as the internal BBO is comprised of both orders and quotes, similar to MRX.11 The amendments proposed to Options 3, Sections 4 and 5 do not change the current System functionality. Options 3, Section 7 The Exchange proposes to amend the ‘‘Post-Only Order type at Options 3, Section 7(a)(9) to rename the order type ‘‘Add Liquidity Order’’. The Exchange believes the name better describes this order type. This is also the name of a similar order type on MRX.12 The Exchange also proposes to capitalize the 7 See Securities Exchange Act, Release No. 95807 (September 16, 2022), 87 FR 57933 (September 22, 2022) (SR–MRX–2022–16) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Certain Rules in Connection With a Technology Migration to Enhanced Nasdaq Functionality) (‘‘SR–MRX–2022–16’’). 8 The internal BBO refers to the Exchange’s nondisplayed book. 9 The Exchange also proposes to re-number current Options 3, Section 4(b)(7) as (8). 10 See SR–MRX–2022–16. 11 Id. 12 See MRX Options 7, Section 7(n). E:\FR\FM\14JYN1.SGM 14JYN1 45250 Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 / Notices term ‘‘Opening Process’’ which refers to NOM Options 3, Section 8. The Exchange proposes to amend the description of Specialized Quote Feed or ‘‘SQF’’ within NOM Options 3, Section 7(e)(1)(B) to add rule text which states, ‘‘Immediate-or-Cancel Orders entered into SQF are not subject to the Order Price Protection, Market Order Spread Protection, or Size Limitation Protection in Options 3, Section 15(a)(1), (a)(2), and (b)(2) respectively.’’ This rule text is currently noted within Options 3, Section 7(b)(2) above. The Exchange is adding the same language into the description of SQF to provide a more complete description. The addition of this information would align the level of information of NOM’s rule text to NOM’s rule text at Supplementary Material .03(c) to Options 3, Section 7. The Exchange is proposing a similar amendment to Options 3, Section 7(e)(1)(D) regarding Quote Using Orders or ‘‘QUO’’ 13 to state that, ‘‘Orders entered into QUO are not subject to the Order Price Protection or Size Limitation in Options 3, Section 15(a)(1) and (b)(2), respectively.’’ All orders entered into QUO are not subject to the Order Price Protection or Size Limitation protections, not Immediateor-Cancel Orders. Also, the Market Order Spread Protection is not applicable to QUO because QUO cannot be utilized to send Market Orders to the Exchange, only FIX may be utilized to send Market Orders. The proposed amendment to NOM Options 3, Section 7(e)(1)(B) and (D) will not result in System changes. Options 3, Section 15 MRX recently amended its Order Price Protection (‘‘OPP’’) 14 rule.15 MRX’s OPP rule utilized different rule text to explain the OPP functionality than is currently on NOM. At this time, the Exchange proposes to amend NOM Options 3, Section 15(a)(1) to align NOM’s rule text to MRX’s rule text within Options 3, Section 15(a)(1)(A). Specifically, the Exchange proposes to remove the references to ‘‘day limit, lotter on DSK11XQN23PROD with NOTICES1 13 ‘‘Quote Using Orders’’ or ‘‘QUO’’ is an interface that allows Market Makers to connect, send, and receive messages related to single-sided orders to and from the Exchange. Order Features include the following: (1) options symbol directory messages (e.g., underlying); (2) system event messages (e.g., start of trading hours messages and start of opening); (3) trading action messages (e.g., halts and resumes); (4) execution messages; (5) order messages; and (6) risk protection triggers and cancel notifications. Orders submitted by Market Makers over this interface are treated as quotes. Market Makers may only enter interest into QUO in their assigned options series. 14 OPP prevents the execution of Limit Orders at prices outside pre-set parameters. 15 See SR–MRX–2022–18. VerDate Sep<11>2014 17:54 Jul 13, 2023 Jkt 259001 good til cancelled, and immediate or cancel orders’’ and, instead, simply refer to ‘‘Limit’’ Orders as that order type accurately captures the scope of the orders subject to OPP. Further, the Exchange proposes to remove ‘‘market orders’’ from the next sentence since OPP only applies to limit orders. The Exchange also proposes to capitalize ‘‘Opening’’ and add Process in Options 2, Section 15(a)(1)(A) to refer to the Opening Process within Options 3, Section 8. The proposed amendment to Options 3, Section 15(a)(1) will not result in a System change. Additionally, the Exchange proposes to amend its Acceptable Trade Range (‘‘ATR’’) Rule within NOM Options 3, Section 15(b)(1).16 MRX recently amended its ATR rule.17 MRX’s ATR rule utilized different rule text to explain the ATR functionality. At this time, the Exchange proposes to amend Options 3, Section 15(b)(1)(A) to add the word ‘‘quote’’ in that same sentence, where it was omitted and also add the words ‘‘after the Posting Period’’ to explain when a new ATR would be calculated to provide more context to the rule.18 Additionally, similar to MRX Options 3, Section 15(a)(2)(A)(v) the Exchange proposes to add the following rule text within NOM Options 3, Section 15(b)(1)(C), There will be three categories of options for Acceptable Trade Range: (1) Penny Interval Program Options trading in one cent increments for options trading at less than $3.00 and increments of five cents for options trading at $3.00 or more, (2) Penny Interval Program Options trading in one-cent increments for all prices, and (3) Non-Penny Interval Program Options. This is how NOM operates today. This rule text makes clear the application of NOM Options 3, Section 3 to the ATR rule by explicitly stating the Exchange’s ability to set different ATR values by options category. These ATR values are set forth in NOM’s System Settings document which is posted online.19 The Exchange believes this rule text will add greater clarity to the ATR rule. The proposed amendment to Options 3, Section 15(b)(1) will not result in a System change. The Exchange proposes to capitalize the words ‘‘opening process’’ at the end 16 ATR is designed to guard against the System from experiencing dramatic price swings by preventing the immediate execution of quotes and orders beyond the thresholds set by the protection. 17 See SR–MRX–2022–16. 18 The Exchange also proposes technical amendments to capitalize ‘‘the’’ and add opening parentheses in two places. 19 https://www.nasdaq.com/docs/ BXOptionsSystemSettings. PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 of Options 3, Section 15(c)(1) which refers to the Anti-Internalization functionality. The term refers to the process within Options 3, Section 8. The Exchange proposes to and the words ‘‘or quote’’ to Options 3, Section 15(c)(3) which refers to the Post-Only Quoting Protection. The paragraph refers to order or quote throughout and was mistakenly omitted in one sentence. Options 5, Section 4 Options 5, Section 4 describes the manner in which NOM routes orders. The Exchange proposes to amend NOM Options 5, Section 4(a) to eliminate the following rule text, The term ‘‘System routing table’’ refers to the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them. The Exchange reserves the right to maintain a different System routing table for different routing options and to modify the System routing table at any time without notice. When ISE filed to amend its routing rules, it did not include this sentence.20 At this time, the Exchange proposes to remove this unnecessary term that is not utilized elsewhere within Options 5, Section 4. Removing this rule text will harmonize NOM’s Options 5, Section 4 rule with ISE’s Options 5, Section 4(e). The proposed amendment to Options 5, Section 4(a) will not result in a System change. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,21 in general, and furthers the objectives of Section 6(b)(5) of the Act,22 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. Option 3, Sections 4 and 5 The Exchange believes that its proposal to memorialize its bulk message functionality within Options 3, Section 4(b)(3) is consistent with the Act as it will codify existing functionality, thereby promoting transparency in the Exchange’s rules 20 See Securities Exchange Act Release No. 94894 (May 18, 2022), 87 FR 30294 (May 12, 2022) (SR– ISE–2022–11) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Routing Functionality in Connection With a Technology Migration). 21 15 U.S.C. 78f(b). 22 15 U.S.C. 78f(b)(5). E:\FR\FM\14JYN1.SGM 14JYN1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 / Notices and reducing any potential confusion.23 This functionality provides Market Makers with an additional tool to meet their various quoting obligations in a manner they deem appropriate, consistent with the purpose of the bulk message functionality to facilitate Market Makers’ provision of liquidity. By providing Market Makers with additional control over the quotes they use to provide liquidity to the Exchange, this tool may benefit all investors through additional execution opportunities at potentially improved prices. Today, MRX offers this same functionality within Options 3, Section 4(b)(3). Further, the Exchange does not believe that the offering the bulk message functionality to only Market Makers would permit unfair discrimination. Market Makers play a unique and critical role in the options market by providing liquidity and active markets, and are subject to various quoting obligations which other market participants are not, including obligations to maintain active markets, update quotes in response to changed market conditions, to compete with other Market Makers in its appointed classes, and to provide intra-day quotes in its appointed classes.24 Bulk message functionality provides Market Makers with a means to help them satisfy these obligations. The proposed amendment to the Rulebook to add NOM Options 3, Section 4(b)(3) will not result in a System change. The Exchange’s proposal to amend Options 3, Section 4(b)(6) to make clear that the actual price remains nondisplayed during re-pricing is consistent with the Act and removes impediments to and perfects the mechanism of a free and open market and a national market system because it displays a re-priced order that does not lock or cross an away market. The rule text clearly explains that the best bid or offer will be non-displayed and the re-priced order will be displayed. A similar change is proposed for NOM Options 3, Section 5(d). MRX recently amended Options 3, Section 4(b)(6) and Options 3, Section 5(d) to include the same language.25 The proposed change aligns NOM’s rule text to MRX’s rule text. The proposed amendment to the Rulebook to add NOM Options 3, Section 4(b)(6) will not result in a System change. The Exchange’s proposal to add a new Options 3, Section 4(b)(7) to clarify that, today, NOM’s System will automatically 23 As discussed above, this existing functionality is currently described in the Exchange’s publicly available technical specifications. See supra note 3. 24 See Options 2, Sections 4 and 5. 25 See SR–MRX–2022–16. VerDate Sep<11>2014 17:54 Jul 13, 2023 Jkt 259001 execute eligible quotes using the Exchange’s displayed best bid and offer (‘‘BBO’’) or the Exchange’s nondisplayed order book (‘‘internal BBO’’) if the best bid and/or offer on the Exchange has been repriced pursuant to Options 3, Section 5(d) and Options 3, Section 4(b)(6) is consistent with the Act and protects investors and the public interest. This rule text seeks to codify the current System function and make clear that the internal BBO is comprised or both orders and quotes, both of which are considered for price checks. MRX recently amended Options 3, Section 4(b)(7) to include this language.26 The proposed change aligns NOM’s rule text to MRX’s rule text. The proposed amendment to the Rulebook to add NOM Options 3, Section 4(b)(7) will not result in a System change. Options 3, Section 7 The Exchange’s proposal to amend the name of the ‘‘Post-Only Order type at Options 3, Section 7(a)(9) to rename the order type ‘‘Add Liquidity Order’’ is a non-substantive technical amendment that will align the name to that used on MRX.27 The Exchange’s proposal to amend the description of SQF within Options 3, Section 7(e)(1)(B) and the description of QUO within Options 3, Section 7(e)(1)(D) is consistent with the Act as this rule text is currently noted within Options 3, Section 7(b)(2) above. The addition of this language into the description of SQF and QUO provides a more complete description of this protocol. The addition of this information also aligns the level of information with that offered on MRX for SQF within Supplementary Material .03(c) to Options 3, Section 7 and differentiates the information from QUO. All orders entered into QUO are not subject to the Order Price Protection or Size Limitation protections, not Immediate-or-Cancel Orders. Also, the Market Order Spread Protection is not applicable to QUO because QUO cannot be utilized to send Market Orders to the Exchange, only FIX may be utilized to send Market Orders. The proposed amendment to NOM Options 3, Section 7(e)(1)(B) will not result in a System change. Options 3, Section 15 The Exchange’s proposal to amend NOM Options 3, Section 15(a)(1) to align NOM’s OPP rule text to MRX’s OPP rule text within Options 3, Section PO 00000 26 Id. 27 See MRX Options 7, Section 7(n). Frm 00124 Fmt 4703 Sfmt 4703 45251 15(a)(1)(A) is consistent with the Act 28 because removing the references to ‘‘day limit, good til cancelled, and immediate or cancel orders’’ and, instead, referring to ‘‘Limit’’ Orders accurately captures the scope of the orders subject to OPP. This change would also make unnecessary the reference to market orders. The proposed amendment to Options 3, Section 15(a)(1) will not result in a System change. The Exchange’s proposal to amend the ATR Rule within Options 3, Section 15(b)(1) is consistent with the Act. MRX recently amended its ATR rule.29 MRX’s ATR rule utilized different rule text to explain the ATR functionality. Amending NOM Section 15(b)(1) to add the words ‘‘after the Posting Period’’ to explain when a new ATR would be calculated provides more context to the rule will provide greater context to the sentence. Additionally, adding the word ‘‘quote’’ in the one sentence where it is omitted will add clarity the sentence. The proposed amendment to Options 3, Section 15(b)(1) will not result in a System change. Also, adding rule text within NOM Options 3, Section 15(b)(1)(C) to make clear the Exchange’s ability to set different ATR values by options category is consistent with the Act because the ATR risk protection limits the range of prices at which an order and quote trades and would take into account the minimum increment. The ability for the Exchange to set the ATR based on the increment allows the Exchange to set appropriate limits. The Exchange believes this rule text will add greater clarity to the ATR rule. The proposed amendment to Options 3, Section 15(b)(1) will not result in a System change. Options 5, Section 4 Eliminating an unnecessary term in Options 5, Section 4(a) that is not utilized elsewhere within Options 5, Section 4 which is unnecessary is consistent with the Act as it will remove confusion. The proposed amendment to Options 5, Section 4(a) will not result in a System change. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. 28 MRX recently amended its Order Price Protection (‘‘OPP’’) rule. See SR–MRX–2022–18. 29 See SR–MRX–2022–16. E:\FR\FM\14JYN1.SGM 14JYN1 45252 Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 / Notices Option 3, Sections 4 and 5 The Exchange believes that its proposal to memorialize its bulk message functionality within Options 3, Section 4(b)(3) does not impose an undue burden on intra-market competition. While the Exchange currently offers this functionality to Market Makers only, bulk messaging is intended to provide Market Makers with an additional tool to meet their various quoting obligations in a manner they deem appropriate. As such, the Exchange believes that this functionality may facilitate Market Makers’ provision of liquidity, thereby benefiting all market participants through additional execution opportunities at potentially improved prices. Furthermore, while the Exchange will offer the proposed Post-Only Quote Configuration to Market Makers only, the proposed risk protection will enhance the ability of Market Makers to add liquidity and avoid removing liquidity from the Exchange’s order book in the manner described above. Greater liquidity benefits all market participants by providing more trading opportunities and attracting greater participation by Market Makers. The Exchange believes that its proposal to memorialize its bulk message functionality within Options 3, Section 4(b)(3) does not impose an undue burden on inter-market competition as other options exchanges may adopt this functionality. The Exchange’s proposal to amend NOM’s rules at Options 3, Section 4(b)(6) and Options 3, Section 4(b)(7) do not impose an undue burden on competition because all options markets must not trade-through other orders on their markets as well as away markets. The proposed change aligns NOM’s rule text to MRX’s rule text. lotter on DSK11XQN23PROD with NOTICES1 Options 3, Section 7 The Exchange’s proposal to amend the name of the ‘‘Post-Only Order type at Options 3, Section 7(a)(9) to rename the order type ‘‘Add Liquidity Order’’ is a non-substantive technical amendment that does not impose an undue burden on competition. Amending the description of SQF within Options 3, Section 7(e)(1)(B) and the description of QUO within Options 3, Section 7(e)(1)(D) does not impose an undue burden on competition The addition of this language into the description of SQF and QUO provides a more complete description of this protocol. Options 3, Section 15 The Exchange’s proposal to amend NOM Options 3, Section 15(a)(1) to VerDate Sep<11>2014 17:54 Jul 13, 2023 Jkt 259001 align NOM’s OPP rule text to MRX’s OPP rule text within Options 3, Section 15(a)(1)(A) does not impose an undue burden on competition because removing the references to ‘‘day limit, good til cancelled, and immediate or cancel orders’’ and, instead, referring to ‘‘Limit’’ Orders accurately captures the scope of the orders subject to OPP. This change would also make unnecessary the reference to market orders. The Exchange’s proposal to amend the ATR Rule within Options 3, Section 15(b)(1) does not impose an undue burden on competition. Amending NOM Section 15(b)(1) to add the words ‘‘after the Posting Period’’ to explain when a new ATR would be calculated provides more context to the rule will provide greater context to the sentence. Additionally, adding the word ‘‘quote’’ in the one sentence where it is omitted will add clarity the sentence. Adding rule text within NOM Options 3, Section 15(b)(1)(C) to make clear the Exchange’s ability to set different ATR values by options category does not impose an undue burden on competition because the ability for the Exchange to set the ATR based on the increment allows the Exchange to set appropriate limits. The Exchange believes this rule text will add greater clarity to the ATR rule. Options 5, Section 4 Eliminating an unnecessary reference within amend Options 5, Section 4(a) does not impose an undue burden on competition because the term is not utilized elsewhere within Options 5, Section 4. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 30 and subparagraph (f)(6) of Rule 19b–4 thereunder.31 30 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give 31 17 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– NASDAQ–2023–018 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–NASDAQ–2023–018. 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 a.m. and 3 p.m. Copies of the filing also 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. E:\FR\FM\14JYN1.SGM 14JYN1 Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 / Notices will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–NASDAQ–2023–018 and should be submitted on or before August 4, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–14910 Filed 7–13–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–818, OMB Control No. 3235–0774] Submission for OMB Review; Comment Request; Extension: Amendments to the National Market System Plan Governing the Consolidated Audit Trail Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in connection with amendments 1 adopted pursuant to the statutory authority provided by the Securities Exchange Act of 1934,2 including Sections 11A(a)(3)(B),3 17(a),4 19(b),5 and 23(a) 6 thereof, and pursuant to Rule 608(a)(2) and (b)(2),7 to a National Market System (NMS) Plan filed with the Commission under Rule 613 (17 CFR 242.613), under lotter on DSK11XQN23PROD with NOTICES1 32 17 CFR 200.30–3(a)(12). 1 See Securities Exchange Act Release No. 88890 (May 15, 2020), 85 FR 31322 (May 22, 2020) (File No. S7–13–19) (‘‘Adopting Release’’). 2 See 15 U.S.C. 78a et seq. 3 See 15 U.S.C. 78k–1(a)(3)(B). 4 See 15 U.S.C. 78q(a). 5 See 15 U.S.C. 78s(b). 6 See 15 U.S.C. 78w(a). 7 See 17 CFR 242.608(a)(2), (b)(2). VerDate Sep<11>2014 17:54 Jul 13, 2023 Jkt 259001 the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). The amendments, as adopted, required two new collections of information: a. Implementation Plan. The amendments require the Participants, within 30 calendar days following the effective date of the amendments, to prepare, file with the Commission, and make publicly available on a website a complete CAT implementation plan (‘‘Implementation Plan’’) that includes a detailed timeline for achieving various implementation milestones. b. Quarterly Progress Reports. The amendments require the Participants, within 30 calendar days after the end of each calendar quarter, to prepare, file with the Commission, and make publicly available on a website a complete report (the ‘‘Quarterly Progress Report’’) that provides a detailed and up-to-date description of the progress made by the Participants toward each of the milestones identified in the Implementation Plan. The one-time information collection associated with the Implementation Plan was completed by the Participants, so there will be no further burdens associated with the Implementation Plan. The Quarterly Progress Report information collection continues. There are currently 25 Participants, who must complete four Quarterly Progress Reports per year. The Commission staff estimates that, on the average, most Quarterly Progress Reports require approximately 72 hours per Participant, and cost approximately $8,000 per Participant. The Commission staff estimates Participants spend a total of approximately 7,200 hours per year (25 × 4 × 72) and $800,000 per year (25 × 4 × $8,000) complying with the rule. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent by August 14, 2023 to (i) www.reginfo.gov/ public/do/PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@ sec.gov. PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 45253 Dated: July 11, 2023. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–15000 Filed 7–13–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97871; File No. SR–Phlx– 2023–27] Self-Regulatory Organizations; Nasdaq Phlx LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Phlx Options 3 and 4A Rules July 10, 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 June 27, 2023, Nasdaq Phlx LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Rules at Options 3, Options Trading Rules, at: Section 4 Entry and Display of Quotes; Section 5, Entry and Display of Orders; Section 7, Types of Orders and Order and Quote Protocols; Section 8, Options Opening Process; Section 10, Electronic Execution Priority and Processing in the System; Section 14, Complex Orders; and Section 15, Risk Protections. The Exchange also proposes to amend Phlx Options 4A, Sections 6, Position Limits, and Section 12, Terms of Index Options Contracts. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/phlx/rules, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for 1 15 2 17 E:\FR\FM\14JYN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 14JYN1

Agencies

[Federal Register Volume 88, Number 134 (Friday, July 14, 2023)]
[Notices]
[Pages 45248-45253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14910]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97870; File No. SR-NASDAQ-2023-018]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NOM Options 3 Rules

July 10, 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 June 27, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend The Nasdaq Options Market LLC 
(``NOM'') Rules at Options 3, Options Trading Rules, at: Section 4 
Entry and Display of Quotes; Section 5, Entry and Display of Orders; 
Section 7, Types of Orders and Order and Quote Protocols; and Section 
15, Risk Protections. The Exchange also

[[Page 45249]]

proposes to amend Options 5, Section 4, Order Routing.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NOM proposes to amend Options 3, Options Trading Rules, at: Section 
4 Entry and Display of Quotes; Section 5, Entry and Display of Orders; 
Section 7, Types of Orders and Order and Quote Protocols; and Section 
15, Risk Protections. The Exchange also proposes to amend Options 5, 
Section 4, Order Routing. Each change will be discussed below. The 
amendments proposed herein seek to codify the current System 
functionality. The proposed amendments will not result in System 
changes.
Option 3, Sections 4 and 5
    The Exchange proposes to codify existing functionality that allows 
Market Makers to submit their quotes to the Exchange in block 
quantities as a single bulk message. In other words, a Market Maker may 
submit a single message to the Exchange, which may contain bids and 
offers in multiple series. The Exchange's current rules do not specify 
bulk messaging for orders. The Exchange has historically provided 
Market Makers with information regarding bulk messaging in its publicly 
available technical specifications.\3\ To promote greater transparency, 
the Exchange is seeking to codify this functionality in its Rulebook. 
Specifically, the Exchange proposes to amend NOM Options 3, Section 
4(b)(3) to memorialize that quotes may be submitted as a bulk message. 
The Exchange also proposes to add a definition of ``bulk message'' in 
new subparagraph (i) of Options 3, Section 4(b)(3), which will provide 
that a bulk message means a single electronic message submitted by a 
Market Maker to the Exchange which may contain a specified number of 
quotations as designated by the Exchange.\4\ The bulk message, 
submitted via SQF,\5\ may enter, modify, or cancel quotes. Bulk 
messages are handled by the System in the same manner as it handles a 
single quote message. MRX recently added bulk messages to MRX Options 
3, Section 4(b)(3).\6\ The proposed amendment to the Rulebook to add 
NOM Options 3, Section 4(b)(3) will not result in a System change.
---------------------------------------------------------------------------

    \3\ See https://www.nasdaq.com/docs/2023/01/12/0054-Q23_SQF_8.2b%20akg_NAM.pdf (specifying for bulk quoting of up to 200 
quotes per quote block message). The specifications note in other 
places the manner in which a Participant can send such quote block 
messages.
    \4\ Id. As noted above, quote bulk messages can presently 
contain up to 200 quotes per message. This is the maximum amount 
that is permitted in a bulk message. The Exchange would announce any 
change to these specifications in an Options Technical Update 
distributed to all Participants.
    \5\ ``Specialized Quote Feed'' or ``SQF'' is an interface that 
allows Market Makers to connect, send, and receive messages related 
to quotes and Immediate-or-Cancel Orders into and from the Exchange. 
Features include the following: (1) options symbol directory 
messages (e.g., underlying instruments); (2) system event messages 
(e.g., start of trading hours messages and start of opening); (3) 
trading action messages (e.g., halts and resumes); (4) execution 
messages; (5) quote messages; (6) Immediate-or-Cancel Order 
messages; (7) risk protection triggers and purge notifications; and 
(8) opening imbalance messages. The SQF Purge Interface only 
receives and notifies of purge requests from the Market Maker. 
Market Makers may only enter interest into SQF in their assigned 
options series. See Options 3, Section 7(e)(1)(B).
    \6\ See Securities Exchange Act, Release No. 95982 (October 4, 
2022), 87 FR 61391 (October 11, 2022) (SR-MRX-2022-18) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Its Rules in Connection With a Technology Migration to Enhanced 
Nasdaq Functionality) (``SR-MRX-2022-18'').
---------------------------------------------------------------------------

    The Exchange also proposes to amend NOM Options 3, Section 4(b)(6) 
to provide the following,

    A quote will not be executed at a price that trades through 
another market or displayed at a price that would lock or cross 
another market. If, at the time of entry, a quote would cause a 
locked or crossed market violation or would cause a trade-through, 
violation, it will be re-priced to the current national best offer 
(for bids) or the current national best bid (for offers) as non-
displayed, and displayed at one minimum price variance above (for 
offers) or below (for bids) the national best price.

    Where a quote is re-priced to avoid a locked or crossed market, the 
best bid or offer will be non-displayed and the re-priced order will be 
displayed at a price that is one minimum trading increment inferior to 
the ABBO. A similar change is proposed for Options 3, Section 5(d). MRX 
recently amended Options 3, Section 4(b)(6) and Options 3, Section 5(d) 
to include this language.\7\ At this time, the Exchange proposes to 
amend NOM's rule text to reflect that the actual price remains non-
displayed in this scenario. The proposed amendment to the Rulebook to 
add NOM Options 3, Section 4(b)(6) will not result in a System change.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act, Release No. 95807 (September 
16, 2022), 87 FR 57933 (September 22, 2022) (SR-MRX-2022-16) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Certain Rules in Connection With a Technology Migration to 
Enhanced Nasdaq Functionality) (``SR-MRX-2022-16'').
---------------------------------------------------------------------------

    Similarly, the Exchange proposes to add a new NOM Options 3, 
Section 4(b)(7) to clarify that, today, NOM's System will automatically 
execute eligible quotes using the Exchange's displayed best bid and 
offer (``BBO'') or the Exchange's non-displayed order book (``internal 
BBO'') \8\ if the best bid and/or offer on the Exchange has been 
repriced pursuant to Options 3, Section 5(d) and Options 3, Section 
4(b)(6). This rule text seeks to codify the current System function and 
make clear that the internal BBO is comprised of both orders and 
quotes.\9\ MRX recently amended Options 3, Section 4(b)(7) to include 
the same language.\10\ At this time, the Exchange proposes to align 
NOM's rule text in Options 3, Section 4(b)(7) to MRX's rule text in 
Options 3, Section 4(b)(7). The proposed amendment to the Rulebook to 
add NOM Options 3, Section 4(b)(7) will not result in a System change.
---------------------------------------------------------------------------

    \8\ The internal BBO refers to the Exchange's non-displayed 
book.
    \9\ The Exchange also proposes to re-number current Options 3, 
Section 4(b)(7) as (8).
    \10\ See SR-MRX-2022-16.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to amend NOM Options 3, Section 5(c) 
to include a citation to Options 3, Section 4(b)(6) as the internal BBO 
is comprised of both orders and quotes, similar to MRX.\11\
---------------------------------------------------------------------------

    \11\ Id.
---------------------------------------------------------------------------

    The amendments proposed to Options 3, Sections 4 and 5 do not 
change the current System functionality.
Options 3, Section 7
    The Exchange proposes to amend the ``Post-Only Order type at 
Options 3, Section 7(a)(9) to rename the order type ``Add Liquidity 
Order''. The Exchange believes the name better describes this order 
type. This is also the name of a similar order type on MRX.\12\ The 
Exchange also proposes to capitalize the

[[Page 45250]]

term ``Opening Process'' which refers to NOM Options 3, Section 8.
---------------------------------------------------------------------------

    \12\ See MRX Options 7, Section 7(n).
---------------------------------------------------------------------------

    The Exchange proposes to amend the description of Specialized Quote 
Feed or ``SQF'' within NOM Options 3, Section 7(e)(1)(B) to add rule 
text which states, ``Immediate-or-Cancel Orders entered into SQF are 
not subject to the Order Price Protection, Market Order Spread 
Protection, or Size Limitation Protection in Options 3, Section 
15(a)(1), (a)(2), and (b)(2) respectively.'' This rule text is 
currently noted within Options 3, Section 7(b)(2) above. The Exchange 
is adding the same language into the description of SQF to provide a 
more complete description. The addition of this information would align 
the level of information of NOM's rule text to NOM's rule text at 
Supplementary Material .03(c) to Options 3, Section 7. The Exchange is 
proposing a similar amendment to Options 3, Section 7(e)(1)(D) 
regarding Quote Using Orders or ``QUO'' \13\ to state that, ``Orders 
entered into QUO are not subject to the Order Price Protection or Size 
Limitation in Options 3, Section 15(a)(1) and (b)(2), respectively.'' 
All orders entered into QUO are not subject to the Order Price 
Protection or Size Limitation protections, not Immediate-or-Cancel 
Orders. Also, the Market Order Spread Protection is not applicable to 
QUO because QUO cannot be utilized to send Market Orders to the 
Exchange, only FIX may be utilized to send Market Orders. The proposed 
amendment to NOM Options 3, Section 7(e)(1)(B) and (D) will not result 
in System changes.
---------------------------------------------------------------------------

    \13\ ``Quote Using Orders'' or ``QUO'' is an interface that 
allows Market Makers to connect, send, and receive messages related 
to single-sided orders to and from the Exchange. Order Features 
include the following: (1) options symbol directory messages (e.g., 
underlying); (2) system event messages (e.g., start of trading hours 
messages and start of opening); (3) trading action messages (e.g., 
halts and resumes); (4) execution messages; (5) order messages; and 
(6) risk protection triggers and cancel notifications. Orders 
submitted by Market Makers over this interface are treated as 
quotes. Market Makers may only enter interest into QUO in their 
assigned options series.
---------------------------------------------------------------------------

Options 3, Section 15
    MRX recently amended its Order Price Protection (``OPP'') \14\ 
rule.\15\ MRX's OPP rule utilized different rule text to explain the 
OPP functionality than is currently on NOM. At this time, the Exchange 
proposes to amend NOM Options 3, Section 15(a)(1) to align NOM's rule 
text to MRX's rule text within Options 3, Section 15(a)(1)(A). 
Specifically, the Exchange proposes to remove the references to ``day 
limit, good til cancelled, and immediate or cancel orders'' and, 
instead, simply refer to ``Limit'' Orders as that order type accurately 
captures the scope of the orders subject to OPP. Further, the Exchange 
proposes to remove ``market orders'' from the next sentence since OPP 
only applies to limit orders. The Exchange also proposes to capitalize 
``Opening'' and add Process in Options 2, Section 15(a)(1)(A) to refer 
to the Opening Process within Options 3, Section 8. The proposed 
amendment to Options 3, Section 15(a)(1) will not result in a System 
change.
---------------------------------------------------------------------------

    \14\ OPP prevents the execution of Limit Orders at prices 
outside pre-set parameters.
    \15\ See SR-MRX-2022-18.
---------------------------------------------------------------------------

    Additionally, the Exchange proposes to amend its Acceptable Trade 
Range (``ATR'') Rule within NOM Options 3, Section 15(b)(1).\16\ MRX 
recently amended its ATR rule.\17\ MRX's ATR rule utilized different 
rule text to explain the ATR functionality. At this time, the Exchange 
proposes to amend Options 3, Section 15(b)(1)(A) to add the word 
``quote'' in that same sentence, where it was omitted and also add the 
words ``after the Posting Period'' to explain when a new ATR would be 
calculated to provide more context to the rule.\18\
---------------------------------------------------------------------------

    \16\ ATR is designed to guard against the System from 
experiencing dramatic price swings by preventing the immediate 
execution of quotes and orders beyond the thresholds set by the 
protection.
    \17\ See SR-MRX-2022-16.
    \18\ The Exchange also proposes technical amendments to 
capitalize ``the'' and add opening parentheses in two places.
---------------------------------------------------------------------------

    Additionally, similar to MRX Options 3, Section 15(a)(2)(A)(v) the 
Exchange proposes to add the following rule text within NOM Options 3, 
Section 15(b)(1)(C),

    There will be three categories of options for Acceptable Trade 
Range: (1) Penny Interval Program Options trading in one cent 
increments for options trading at less than $3.00 and increments of 
five cents for options trading at $3.00 or more, (2) Penny Interval 
Program Options trading in one-cent increments for all prices, and 
(3) Non-Penny Interval Program Options.

    This is how NOM operates today. This rule text makes clear the 
application of NOM Options 3, Section 3 to the ATR rule by explicitly 
stating the Exchange's ability to set different ATR values by options 
category. These ATR values are set forth in NOM's System Settings 
document which is posted online.\19\ The Exchange believes this rule 
text will add greater clarity to the ATR rule. The proposed amendment 
to Options 3, Section 15(b)(1) will not result in a System change.
---------------------------------------------------------------------------

    \19\ https://www.nasdaq.com/docs/BXOptionsSystemSettings.
---------------------------------------------------------------------------

    The Exchange proposes to capitalize the words ``opening process'' 
at the end of Options 3, Section 15(c)(1) which refers to the Anti-
Internalization functionality. The term refers to the process within 
Options 3, Section 8.
    The Exchange proposes to and the words ``or quote'' to Options 3, 
Section 15(c)(3) which refers to the Post-Only Quoting Protection. The 
paragraph refers to order or quote throughout and was mistakenly 
omitted in one sentence.
Options 5, Section 4
    Options 5, Section 4 describes the manner in which NOM routes 
orders. The Exchange proposes to amend NOM Options 5, Section 4(a) to 
eliminate the following rule text,

    The term ``System routing table'' refers to the proprietary 
process for determining the specific trading venues to which the 
System routes orders and the order in which it routes them. The 
Exchange reserves the right to maintain a different System routing 
table for different routing options and to modify the System routing 
table at any time without notice.

    When ISE filed to amend its routing rules, it did not include this 
sentence.\20\ At this time, the Exchange proposes to remove this 
unnecessary term that is not utilized elsewhere within Options 5, 
Section 4. Removing this rule text will harmonize NOM's Options 5, 
Section 4 rule with ISE's Options 5, Section 4(e). The proposed 
amendment to Options 5, Section 4(a) will not result in a System 
change.
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release No. 94894 (May 18, 
2022), 87 FR 30294 (May 12, 2022) (SR-ISE-2022-11) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Routing 
Functionality in Connection With a Technology Migration).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\21\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\22\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Option 3, Sections 4 and 5
    The Exchange believes that its proposal to memorialize its bulk 
message functionality within Options 3, Section 4(b)(3) is consistent 
with the Act as it will codify existing functionality, thereby 
promoting transparency in the Exchange's rules

[[Page 45251]]

and reducing any potential confusion.\23\ This functionality provides 
Market Makers with an additional tool to meet their various quoting 
obligations in a manner they deem appropriate, consistent with the 
purpose of the bulk message functionality to facilitate Market Makers' 
provision of liquidity. By providing Market Makers with additional 
control over the quotes they use to provide liquidity to the Exchange, 
this tool may benefit all investors through additional execution 
opportunities at potentially improved prices. Today, MRX offers this 
same functionality within Options 3, Section 4(b)(3). Further, the 
Exchange does not believe that the offering the bulk message 
functionality to only Market Makers would permit unfair discrimination. 
Market Makers play a unique and critical role in the options market by 
providing liquidity and active markets, and are subject to various 
quoting obligations which other market participants are not, including 
obligations to maintain active markets, update quotes in response to 
changed market conditions, to compete with other Market Makers in its 
appointed classes, and to provide intra-day quotes in its appointed 
classes.\24\ Bulk message functionality provides Market Makers with a 
means to help them satisfy these obligations. The proposed amendment to 
the Rulebook to add NOM Options 3, Section 4(b)(3) will not result in a 
System change.
---------------------------------------------------------------------------

    \23\ As discussed above, this existing functionality is 
currently described in the Exchange's publicly available technical 
specifications. See supra note 3.
    \24\ See Options 2, Sections 4 and 5.
---------------------------------------------------------------------------

    The Exchange's proposal to amend Options 3, Section 4(b)(6) to make 
clear that the actual price remains non-displayed during re-pricing is 
consistent with the Act and removes impediments to and perfects the 
mechanism of a free and open market and a national market system 
because it displays a re-priced order that does not lock or cross an 
away market. The rule text clearly explains that the best bid or offer 
will be non-displayed and the re-priced order will be displayed. A 
similar change is proposed for NOM Options 3, Section 5(d). MRX 
recently amended Options 3, Section 4(b)(6) and Options 3, Section 5(d) 
to include the same language.\25\ The proposed change aligns NOM's rule 
text to MRX's rule text. The proposed amendment to the Rulebook to add 
NOM Options 3, Section 4(b)(6) will not result in a System change.
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    \25\ See SR-MRX-2022-16.
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    The Exchange's proposal to add a new Options 3, Section 4(b)(7) to 
clarify that, today, NOM's System will automatically execute eligible 
quotes using the Exchange's displayed best bid and offer (``BBO'') or 
the Exchange's non-displayed order book (``internal BBO'') if the best 
bid and/or offer on the Exchange has been repriced pursuant to Options 
3, Section 5(d) and Options 3, Section 4(b)(6) is consistent with the 
Act and protects investors and the public interest. This rule text 
seeks to codify the current System function and make clear that the 
internal BBO is comprised or both orders and quotes, both of which are 
considered for price checks. MRX recently amended Options 3, Section 
4(b)(7) to include this language.\26\ The proposed change aligns NOM's 
rule text to MRX's rule text. The proposed amendment to the Rulebook to 
add NOM Options 3, Section 4(b)(7) will not result in a System change.
---------------------------------------------------------------------------

    \26\ Id.
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Options 3, Section 7
    The Exchange's proposal to amend the name of the ``Post-Only Order 
type at Options 3, Section 7(a)(9) to rename the order type ``Add 
Liquidity Order'' is a non-substantive technical amendment that will 
align the name to that used on MRX.\27\
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    \27\ See MRX Options 7, Section 7(n).
---------------------------------------------------------------------------

    The Exchange's proposal to amend the description of SQF within 
Options 3, Section 7(e)(1)(B) and the description of QUO within Options 
3, Section 7(e)(1)(D) is consistent with the Act as this rule text is 
currently noted within Options 3, Section 7(b)(2) above. The addition 
of this language into the description of SQF and QUO provides a more 
complete description of this protocol. The addition of this information 
also aligns the level of information with that offered on MRX for SQF 
within Supplementary Material .03(c) to Options 3, Section 7 and 
differentiates the information from QUO. All orders entered into QUO 
are not subject to the Order Price Protection or Size Limitation 
protections, not Immediate-or-Cancel Orders. Also, the Market Order 
Spread Protection is not applicable to QUO because QUO cannot be 
utilized to send Market Orders to the Exchange, only FIX may be 
utilized to send Market Orders. The proposed amendment to NOM Options 
3, Section 7(e)(1)(B) will not result in a System change.
Options 3, Section 15
    The Exchange's proposal to amend NOM Options 3, Section 15(a)(1) to 
align NOM's OPP rule text to MRX's OPP rule text within Options 3, 
Section 15(a)(1)(A) is consistent with the Act \28\ because removing 
the references to ``day limit, good til cancelled, and immediate or 
cancel orders'' and, instead, referring to ``Limit'' Orders accurately 
captures the scope of the orders subject to OPP. This change would also 
make unnecessary the reference to market orders. The proposed amendment 
to Options 3, Section 15(a)(1) will not result in a System change.
---------------------------------------------------------------------------

    \28\ MRX recently amended its Order Price Protection (``OPP'') 
rule. See SR-MRX-2022-18.
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    The Exchange's proposal to amend the ATR Rule within Options 3, 
Section 15(b)(1) is consistent with the Act. MRX recently amended its 
ATR rule.\29\ MRX's ATR rule utilized different rule text to explain 
the ATR functionality. Amending NOM Section 15(b)(1) to add the words 
``after the Posting Period'' to explain when a new ATR would be 
calculated provides more context to the rule will provide greater 
context to the sentence. Additionally, adding the word ``quote'' in the 
one sentence where it is omitted will add clarity the sentence. The 
proposed amendment to Options 3, Section 15(b)(1) will not result in a 
System change. Also, adding rule text within NOM Options 3, Section 
15(b)(1)(C) to make clear the Exchange's ability to set different ATR 
values by options category is consistent with the Act because the ATR 
risk protection limits the range of prices at which an order and quote 
trades and would take into account the minimum increment. The ability 
for the Exchange to set the ATR based on the increment allows the 
Exchange to set appropriate limits. The Exchange believes this rule 
text will add greater clarity to the ATR rule. The proposed amendment 
to Options 3, Section 15(b)(1) will not result in a System change.
---------------------------------------------------------------------------

    \29\ See SR-MRX-2022-16.
---------------------------------------------------------------------------

Options 5, Section 4
    Eliminating an unnecessary term in Options 5, Section 4(a) that is 
not utilized elsewhere within Options 5, Section 4 which is unnecessary 
is consistent with the Act as it will remove confusion. The proposed 
amendment to Options 5, Section 4(a) will not result in a System 
change.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

[[Page 45252]]

Option 3, Sections 4 and 5
    The Exchange believes that its proposal to memorialize its bulk 
message functionality within Options 3, Section 4(b)(3) does not impose 
an undue burden on intra-market competition. While the Exchange 
currently offers this functionality to Market Makers only, bulk 
messaging is intended to provide Market Makers with an additional tool 
to meet their various quoting obligations in a manner they deem 
appropriate. As such, the Exchange believes that this functionality may 
facilitate Market Makers' provision of liquidity, thereby benefiting 
all market participants through additional execution opportunities at 
potentially improved prices. Furthermore, while the Exchange will offer 
the proposed Post-Only Quote Configuration to Market Makers only, the 
proposed risk protection will enhance the ability of Market Makers to 
add liquidity and avoid removing liquidity from the Exchange's order 
book in the manner described above. Greater liquidity benefits all 
market participants by providing more trading opportunities and 
attracting greater participation by Market Makers. The Exchange 
believes that its proposal to memorialize its bulk message 
functionality within Options 3, Section 4(b)(3) does not impose an 
undue burden on inter-market competition as other options exchanges may 
adopt this functionality.
    The Exchange's proposal to amend NOM's rules at Options 3, Section 
4(b)(6) and Options 3, Section 4(b)(7) do not impose an undue burden on 
competition because all options markets must not trade-through other 
orders on their markets as well as away markets. The proposed change 
aligns NOM's rule text to MRX's rule text.
Options 3, Section 7
    The Exchange's proposal to amend the name of the ``Post-Only Order 
type at Options 3, Section 7(a)(9) to rename the order type ``Add 
Liquidity Order'' is a non-substantive technical amendment that does 
not impose an undue burden on competition.
    Amending the description of SQF within Options 3, Section 
7(e)(1)(B) and the description of QUO within Options 3, Section 
7(e)(1)(D) does not impose an undue burden on competition The addition 
of this language into the description of SQF and QUO provides a more 
complete description of this protocol.
Options 3, Section 15
    The Exchange's proposal to amend NOM Options 3, Section 15(a)(1) to 
align NOM's OPP rule text to MRX's OPP rule text within Options 3, 
Section 15(a)(1)(A) does not impose an undue burden on competition 
because removing the references to ``day limit, good til cancelled, and 
immediate or cancel orders'' and, instead, referring to ``Limit'' 
Orders accurately captures the scope of the orders subject to OPP. This 
change would also make unnecessary the reference to market orders.
    The Exchange's proposal to amend the ATR Rule within Options 3, 
Section 15(b)(1) does not impose an undue burden on competition. 
Amending NOM Section 15(b)(1) to add the words ``after the Posting 
Period'' to explain when a new ATR would be calculated provides more 
context to the rule will provide greater context to the sentence. 
Additionally, adding the word ``quote'' in the one sentence where it is 
omitted will add clarity the sentence. Adding rule text within NOM 
Options 3, Section 15(b)(1)(C) to make clear the Exchange's ability to 
set different ATR values by options category does not impose an undue 
burden on competition because the ability for the Exchange to set the 
ATR based on the increment allows the Exchange to set appropriate 
limits. The Exchange believes this rule text will add greater clarity 
to the ATR rule.
Options 5, Section 4
    Eliminating an unnecessary reference within amend Options 5, 
Section 4(a) does not impose an undue burden on competition because the 
term is not utilized elsewhere within Options 5, Section 4.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \30\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\31\
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    \30\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NASDAQ-2023-018 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-NASDAQ-2023-018. 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 
a.m. and 3 p.m. Copies of the filing also

[[Page 45253]]

will be available for inspection and copying at the principal office of 
the Exchange. Do not include personal identifiable information in 
submissions; you should submit only information that you wish to make 
available publicly. We may redact in part or withhold entirely from 
publication submitted material that is obscene or subject to copyright 
protection. All submissions should refer to file number SR-NASDAQ-2023-
018 and should be submitted on or before August 4, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-14910 Filed 7-13-23; 8:45 am]
BILLING CODE 8011-01-P
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