Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rules To Provide Users With a Risk Setting They May Elect To Apply to Their Orders That Will Allow Them To Reject Market Orders During Continuous Trading and/or Auctions, 49513-49515 [2023-16113]
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Federal Register / Vol. 88, No. 145 / Monday, July 31, 2023 / Notices
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 her designee, has
certified that, in her 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: July 27, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023–16288 Filed 7–27–23; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97988; File No. SR–
CboeEDGA–2023–012]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend
Exchange Rules To Provide Users With
a Risk Setting They May Elect To Apply
to Their Orders That Will Allow Them
To Reject Market Orders During
Continuous Trading and/or Auctions
ddrumheller on DSK120RN23PROD with NOTICES1
July 25, 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 July 14,
2023, Cboe EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (‘‘EDGA’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposal to
amend Interpretation and Policy .01 to
Rule 11.10 in connection with a risk
setting that Users 3 may elect to apply to
their orders that will allow them to
reject market orders during continuous
trading and/or auctions.4 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/edga/),
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposal is to
amend Interpretation and Policy .01 to
Rule 11.10 to allow the Exchange to
offer its Users the ability to apply a risk
setting to their orders that will allow
them to reject market orders during
continuous trading or auctions (‘‘Market
Order Check’’). Pursuant to
Interpretation and Policy .01 to Rule
11.10, the Exchange currently offers
3 A User is any Member or Sponsored Participant
who is authorized to obtain access to the System
pursuant to Rule 11.3. See Rule 1.5(ee).
4 The Exchange plans to implement the proposed
rule change on a date that will be circulated in a
notice from the Cboe Trade Desk to all Members.
PO 00000
Frm 00080
Fmt 4703
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49513
certain optional risk settings applicable
to a User’s activities on the Exchange.
Specifically, pursuant to Interpretation
and Policy .01(c), the Exchange
currently provides Users with the
controls to restrict order types or
modifiers that can be utilized (including
pre-market, post-market, short sales,
ISOs, and Directed ISOs). When
utilized, this optional risk tool acts as a
risk filter by evaluating a User’s orders
to determine whether the orders comply
with certain criteria established by the
User.
Based on feedback from its Members,
the Exchange now seeks to expand this
risk setting to allow a User to restrict
additional order types from being
entered—market orders during
continuous trading and/or market orders
during auctions (‘‘Market Order
Check’’).5 The Market Order Check will
reside at a User’s port level, a Userspecific logical session used to access
the Exchange. A User may utilize the
Market Order Check to control the
acceptance of, or rejection of, its
inbound market orders. Similarly, a
Sponsoring Member 6 may utilize the
check to control the acceptance of, or
rejection of, its Sponsored Participants 7
inbound market orders. Specifically,
when utilized the Market Order Check
will allow a User to (1) permit market
orders; (2) reject market orders during
continuous trading and allow market
orders during auctions, or (3) reject
market orders during continuous trading
and also during auctions. In the case of
Sponsored Participants, the Sponsoring
Member will be responsible for their
5 The Exchange notes that the proposed Market
Order Check will treat a Market Order with a Stop
Price as a regular market order. See Rule 11.8(a),
where the term Market Order is defined as ‘‘An
order to buy and sell a stated amount of a security
that is to be executed at the NBBO or better when
the order reaches the Exchange’’; see also Rule
11.8(a)(1), where the term ‘‘Stop Price’’ is defined
as ‘‘An order may include a Stop Price which will
convert the order into a Market Order when the
Stop Price is triggered. An order to buy converts to
a Market Order when the consolidated last sale in
the security occurs at, or above, the specified Stop
Price. An order to sell converts into a Market Order
when the consolidated last sale in the security
occurs at, or below, the specified Stop Price.
6 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 resulting 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 Rule
1.5(aa), definition of, ‘‘Sponsoring Member’’.
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 Rule 1.5(z), definition of, ‘‘Sponsored
Participant’’.
E:\FR\FM\31JYN1.SGM
31JYN1
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Federal Register / Vol. 88, No. 145 / Monday, July 31, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
Sponsored Participant’s Market Order
Check settings. The Market Order Check
will apply only to equities orders and
will not apply to market on open or
market on close orders. The proposed
Market Order Check is similar in nature
to the Order Type/Attribution check
offered by Nasdaq Stock Exchange, LLC
(‘‘Nasdaq’’), which prevents the entry of
certain order types or modifiers that can
be utilized, including but not limited to,
non-auction market orders.8 While the
proposed Market Order Check differs
slightly from that offered by Nasdaq in
that it includes functionality that
prohibits the entry of both auction and
non-auction market orders, the intended
purpose of the control—a risk
management tool designed to prevent
the entry of orders that may cause
undue market impact—remains the
same.
Importantly, as is the case with the
existing risk settings, the User, and not
the Exchange, will have the full
responsibility for ensuring that their
orders comply with applicable
securities rules, laws, and regulations.
Furthermore, the Exchange does not
believe that the use of the Market Order
Check can replace User-managed risk
management solutions, and use of the
Market Order Check does not
automatically constitute compliance
with Exchange rules.
The Exchange proposes to make the
risk setting available to its Users upon
request and will not require Users to
utilize the Market Order Check. The
Exchange will not provide preferential
treatment to Users utilizing the Market
Order Check. However, the Exchange
believes the Market Order Check will
offer Exchange Users another option in
efficient risk management of its access
to the Exchange. For instance, the
Market Order Check may assist some
Users in mitigating the risk of receiving
executions at unfavorable prices due to
market fluctuations and/or available
liquidity in the subject security.
Similarly, the Market Order Risk Check
may serve as a supplemental tool for
Sponsoring Members to ensure that
market orders entered by their
Sponsored Participants do not
8 See Nasdaq Equity 6, Section 5. Risk Settings
(b), ‘‘Order Type/Attribution Check—This control
relates to the order types or modifiers that can be
utilized (including pre-market, post-market, short
sales, non-auction market orders and Intermarket
Sweep Orders)’’, available at: https://
listingcenter.nasdaq.com/rulebook/Nasdaq/rules/
Nasdaq%20Equity%206/
market%20impact%20check/EQUALS/#position;
see also Securities Exchange Act Release No. 34–
95495 (August 12, 2022), 87 FR 50902 (August 18,
2022) (SR–NASDAQ–2022–047) (Notice of Filing
and Immediate Effectiveness of Proposed Rule
Change to Amend Nasdaq Equity 6, Section 5).
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18:11 Jul 28, 2023
Jkt 259001
unexpectedly cause undue impact to the
market for a security, which may occur
when the market fluctuates, and an
order executes at prices significantly
different from the price of the security
at the time of order entry.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of Section 6(b) of the Act,9
in general, and Section 6(b)(5) of the
Act,10 in particular, in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, to remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
Specifically, the proposed Market
Order Check is designed to protect
investors and the public interest
because it will provide Users with a tool
to help prevent the entry of market
orders that may cause unintentional
market impact, and reduce the potential
for disruptive, market-wide events. The
proposed Market Order Check may also
assist Users in managing their financial
exposure by preventing executions at
unfavorable prices, thereby fostering the
integrity of trading on the securities
markets and helping to assure the
stability of the financial system. Finally,
the Exchange believes that the proposed
rule change does not unfairly
discriminate among the Exchange’s
Users because like each of the other
Exchange’s risk settings, use of the
Market Order Check is optional and
available to all Users, and its use is not
a perquisite for participation on the
Exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change imposes any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, the
proposed Market Order Check will
foster competition because it would
allow the Exchange to offer a risk check
that is similar to functionality being
offered by Nasdaq,11 which offers an
order type/attribution check that
prevents the entry of certain order types
or modifiers that can be utilized,
including but not limited to, non-
PO 00000
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
11 Supra note 10.
10 15
Frm 00081
Fmt 4703
Sfmt 4703
auction market orders. Additionally, by
providing Users with additional means
to monitor and control their risk, the
proposed Market Order Check may
enhance proper functioning of the
markets and contribute to additional
competition among trading venues and
broker-dealer dealers. Finally, the
proposed Market Order Check will
enable Users to strengthen their risk
management capabilities, which, in
turn, may enhance the integrity of
trading on the securities markets and
help to assure the stability of the
financial system.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposal. No written comments
were solicited or received 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 (A) significantly affect
the protection of investors or the public
interest; (b) impose any significant
burden on competition; and (C) 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) of the Act 12 and Rule 19b–
4(f)(6) 13 thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),15 the
Commission may designate a shorter
time if 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 waiver
of the 30-day operative delay will allow
the Exchange to immediately offer its
Users an additional means to mitigate
unintended market impact, thus
fostering the protection of investors and
12 15
U.S.C. 78s(b)(3)(A).
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, along with a brief
description and text of 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.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
13 17
E:\FR\FM\31JYN1.SGM
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Federal Register / Vol. 88, No. 145 / Monday, July 31, 2023 / Notices
the public interest. 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.16
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:
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
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–CboeEDGA–2023–012 and should
be submitted on or before August 21,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–16113 Filed 7–28–23; 8:45 am]
BILLING CODE 8011–01–P
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–
CboeEDGA–2023–012 on the subject
line.
ddrumheller on DSK120RN23PROD with NOTICES1
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–CboeEDGA–2023–012. 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
16 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).
VerDate Sep<11>2014
18:11 Jul 28, 2023
Jkt 259001
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–21, OMB Control No.
3235–0025]
Submission for OMB Review;
Comment Request; Extension: Rule
30e–1
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, under the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.) (‘‘Paperwork
Reduction Act’’), the Securities and
Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension of the
previously approved collection of
information discussed below.
Rule 30e–1 (17 CFR 270.30e–1) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) (‘‘Investment
Company Act’’) generally requires a
registered investment company (‘‘fund’’)
to transmit to its shareholders, at least
semi-annually, reports containing the
information that is required to be
PO 00000
17 17
CFR 200.30–3(a)(12), (a)(59).
Frm 00082
Fmt 4703
Sfmt 4703
49515
included in such reports by the fund’s
registration statement form under the
Investment Company Act. The purpose
of the collection of information required
by rule 30e–1 is to provide fund
shareholders with current information
about the operation of their funds in
accordance with Section 30 of the
Investment Company Act.
Approximately 2,490 funds, with a
total of approximately 10,750 portfolios,
respond to rule 30e–1 annually. Based
on conversations with fund
representatives, we estimate that it takes
approximately 84 hours to comply with
the collection of information associated
with rule 30e–1 per portfolio. This time
is spent, for example, preparing,
reviewing, and certifying the reports.
Accordingly, we calculate the total
estimated annual internal burden of
responding to rule 30e–1 to be
approximately 903,000 hours (84 hours
× 10,750 portfolios). In addition to the
burden hours, based on conversations
with fund representatives, we estimate
that the total cost burden of compliance
with the information collection
requirements of rule 30e–1 is
approximately $31,061 per portfolio.
This includes, for example, the costs for
funds to prepare, print, and mail the
reports. Accordingly, we calculate the
total external cost burden associated
with rule 30e–1 to be approximately
$333,905,750.
Estimates of the average burden hours
are made solely for the purposes of the
Paperwork Reduction Act and are not
derived from a comprehensive or even
representative survey or study of the
costs of Commission rules and forms.
The collection of information under rule
30e–1 is mandatory. The information
provided under rule 30e–1 will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information 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
within 30 days of publication of this
notice by August 30, 2023 to (i)
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov 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.
E:\FR\FM\31JYN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 145 (Monday, July 31, 2023)]
[Notices]
[Pages 49513-49515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16113]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97988; File No. SR-CboeEDGA-2023-012]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Exchange Rules To Provide Users With a Risk Setting They May
Elect To Apply to Their Orders That Will Allow Them To Reject Market
Orders During Continuous Trading and/or Auctions
July 25, 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 July 14, 2023, Cboe EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGA Exchange, Inc. (``EDGA'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposal to amend Interpretation and Policy .01 to Rule 11.10 in
connection with a risk setting that Users \3\ may elect to apply to
their orders that will allow them to reject market orders during
continuous trading and/or auctions.\4\ The text of the proposed rule
change is provided in Exhibit 5.
---------------------------------------------------------------------------
\3\ A User is any Member or Sponsored Participant who is
authorized to obtain access to the System pursuant to Rule 11.3. See
Rule 1.5(ee).
\4\ The Exchange plans to implement the proposed rule change on
a date that will be circulated in a notice from the Cboe Trade Desk
to all Members.
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/edga/), 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposal is to amend Interpretation and Policy
.01 to Rule 11.10 to allow the Exchange to offer its Users the ability
to apply a risk setting to their orders that will allow them to reject
market orders during continuous trading or auctions (``Market Order
Check''). Pursuant to Interpretation and Policy .01 to Rule 11.10, the
Exchange currently offers certain optional risk settings applicable to
a User's activities on the Exchange. Specifically, pursuant to
Interpretation and Policy .01(c), the Exchange currently provides Users
with the controls to restrict order types or modifiers that can be
utilized (including pre-market, post-market, short sales, ISOs, and
Directed ISOs). When utilized, this optional risk tool acts as a risk
filter by evaluating a User's orders to determine whether the orders
comply with certain criteria established by the User.
Based on feedback from its Members, the Exchange now seeks to
expand this risk setting to allow a User to restrict additional order
types from being entered--market orders during continuous trading and/
or market orders during auctions (``Market Order Check'').\5\ The
Market Order Check will reside at a User's port level, a User-specific
logical session used to access the Exchange. A User may utilize the
Market Order Check to control the acceptance of, or rejection of, its
inbound market orders. Similarly, a Sponsoring Member \6\ may utilize
the check to control the acceptance of, or rejection of, its Sponsored
Participants \7\ inbound market orders. Specifically, when utilized the
Market Order Check will allow a User to (1) permit market orders; (2)
reject market orders during continuous trading and allow market orders
during auctions, or (3) reject market orders during continuous trading
and also during auctions. In the case of Sponsored Participants, the
Sponsoring Member will be responsible for their
[[Page 49514]]
Sponsored Participant's Market Order Check settings. The Market Order
Check will apply only to equities orders and will not apply to market
on open or market on close orders. The proposed Market Order Check is
similar in nature to the Order Type/Attribution check offered by Nasdaq
Stock Exchange, LLC (``Nasdaq''), which prevents the entry of certain
order types or modifiers that can be utilized, including but not
limited to, non-auction market orders.\8\ While the proposed Market
Order Check differs slightly from that offered by Nasdaq in that it
includes functionality that prohibits the entry of both auction and
non-auction market orders, the intended purpose of the control--a risk
management tool designed to prevent the entry of orders that may cause
undue market impact--remains the same.
---------------------------------------------------------------------------
\5\ The Exchange notes that the proposed Market Order Check will
treat a Market Order with a Stop Price as a regular market order.
See Rule 11.8(a), where the term Market Order is defined as ``An
order to buy and sell a stated amount of a security that is to be
executed at the NBBO or better when the order reaches the
Exchange''; see also Rule 11.8(a)(1), where the term ``Stop Price''
is defined as ``An order may include a Stop Price which will convert
the order into a Market Order when the Stop Price is triggered. An
order to buy converts to a Market Order when the consolidated last
sale in the security occurs at, or above, the specified Stop Price.
An order to sell converts into a Market Order when the consolidated
last sale in the security occurs at, or below, the specified Stop
Price.
\6\ 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 resulting 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 Rule
1.5(aa), definition of, ``Sponsoring Member''.
\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 Rule 1.5(z), definition of, ``Sponsored
Participant''.
\8\ See Nasdaq Equity 6, Section 5. Risk Settings (b), ``Order
Type/Attribution Check--This control relates to the order types or
modifiers that can be utilized (including pre-market, post-market,
short sales, non-auction market orders and Intermarket Sweep
Orders)'', available at: https://listingcenter.nasdaq.com/rulebook/Nasdaq/rules/Nasdaq%20Equity%206/market%20impact%20check/EQUALS/#position; see also Securities Exchange Act Release No. 34-95495
(August 12, 2022), 87 FR 50902 (August 18, 2022) (SR-NASDAQ-2022-
047) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change to Amend Nasdaq Equity 6, Section 5).
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Importantly, as is the case with the existing risk settings, the
User, and not the Exchange, will have the full responsibility for
ensuring that their orders comply with applicable securities rules,
laws, and regulations. Furthermore, the Exchange does not believe that
the use of the Market Order Check can replace User-managed risk
management solutions, and use of the Market Order Check does not
automatically constitute compliance with Exchange rules.
The Exchange proposes to make the risk setting available to its
Users upon request and will not require Users to utilize the Market
Order Check. The Exchange will not provide preferential treatment to
Users utilizing the Market Order Check. However, the Exchange believes
the Market Order Check will offer Exchange Users another option in
efficient risk management of its access to the Exchange. For instance,
the Market Order Check may assist some Users in mitigating the risk of
receiving executions at unfavorable prices due to market fluctuations
and/or available liquidity in the subject security. Similarly, the
Market Order Risk Check may serve as a supplemental tool for Sponsoring
Members to ensure that market orders entered by their Sponsored
Participants do not unexpectedly cause undue impact to the market for a
security, which may occur when the market fluctuates, and an order
executes at prices significantly different from the price of the
security at the time of order entry.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\9\ in general, and Section
6(b)(5) of the Act,\10\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to, and perfect the mechanism of, a
free and open market and a national market system and, in general, to
protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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Specifically, the proposed Market Order Check is designed to
protect investors and the public interest because it will provide Users
with a tool to help prevent the entry of market orders that may cause
unintentional market impact, and reduce the potential for disruptive,
market-wide events. The proposed Market Order Check may also assist
Users in managing their financial exposure by preventing executions at
unfavorable prices, thereby fostering the integrity of trading on the
securities markets and helping to assure the stability of the financial
system. Finally, the Exchange believes that the proposed rule change
does not unfairly discriminate among the Exchange's Users because like
each of the other Exchange's risk settings, use of the Market Order
Check is optional and available to all Users, and its use is not a
perquisite for participation on the Exchange.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change imposes
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Rather, the proposed Market
Order Check will foster competition because it would allow the Exchange
to offer a risk check that is similar to functionality being offered by
Nasdaq,\11\ which offers an order type/attribution check that prevents
the entry of certain order types or modifiers that can be utilized,
including but not limited to, non-auction market orders. Additionally,
by providing Users with additional means to monitor and control their
risk, the proposed Market Order Check may enhance proper functioning of
the markets and contribute to additional competition among trading
venues and broker-dealer dealers. Finally, the proposed Market Order
Check will enable Users to strengthen their risk management
capabilities, which, in turn, may enhance the integrity of trading on
the securities markets and help to assure the stability of the
financial system.
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\11\ Supra note 10.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposal. No written comments were solicited or
received 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 (A)
significantly affect the protection of investors or the public
interest; (b) impose any significant burden on competition; and (C)
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) of the Act \12\ and Rule 19b-
4(f)(6) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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, along
with a brief description and text of 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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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter time if 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
waiver of the 30-day operative delay will allow the Exchange to
immediately offer its Users an additional means to mitigate unintended
market impact, thus fostering the protection of investors and
[[Page 49515]]
the public interest. 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.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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).
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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 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-CboeEDGA-2023-012 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-CboeEDGA-2023-012. 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 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-CboeEDGA-2023-012 and should
be submitted on or before August 21, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12), (a)(59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-16113 Filed 7-28-23; 8:45 am]
BILLING CODE 8011-01-P
