Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BX Options 7, Section 2, 6157-6159 [2024-01861]
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6157
Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99430; File No. SR–BX–
2024–003]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend BX Options 7,
Section 2
January 25, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on January
12, 2024, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The 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
Pricing Schedule at Options 7, Section
2. While the changes proposed herein
are effective upon filing, the Exchange
has designated the amendments become
operative on February 1, 2024.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/bx/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
The Exchange proposes to amend
BX’s Pricing Schedule at Options 7,
Section 2, BX Options Market-Fees and
Rebates. Specifically, the Exchange
proposes to amend Options 7, Section
2(5) related to the BX Price
Improvement Auction (‘‘PRISM’’).
Currently, the Exchange assesses the
below fees and pays the below rebates
for orders executed in its PRISM
Auction.
FEES AND REBATES (PER CONTACT)
Type of market
participants
Submitted PRISM auction order
in penny classes
PRISM order
Customer ...........................
Lead Market Maker ...........
BX Options Market Maker
Non-Customer ...................
Initiating order
$0.00
0.00
0.00
0.00
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 A PRISM Order is one-side of a PRISM Auction
Order that represents an agency order on behalf a
Public Customer, broker-dealer or other entity
which is paired with an Initiating Order. See BX
Options 7, Section 2(5).
5 The term ‘‘Customer’’ or (‘‘C’’) applies to any
transaction that is identified by a Participant for
clearing in the Customer range at The Options
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2 15
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PRISM order
$0.00
0.00
0.00
0.00
Today, the Exchange assesses no
PRISM Order 4 fees in Penny and NonPenny Classes to any Participant. Today,
the Exchange pays a $0.12 per contract
rebate to Customers 5 for PRISM Orders
in Non-Penny Classes. Today, the
Exchange assesses no Initiating Order 6
fees in Penny and Non-Penny Classes to
any Participant for PRISM Auction
Orders.7 Today, the Exchange assesses a
$0.40 per contract PRISM Response 8 to
Customers and a $0.50 per contract
PRISM Response to Non-Customers 9 in
Penny Classes. Today, the Exchange
assesses a $0.79 per contract PRISM
Response to Customers and a $1.25 per
contract PRISM Response to NonCustomers in Non-Penny Classes.
Today, if a PRISM Order trades with a
1 15
Submitted PRISM auction order
in non-penny classes rebate
PRISM response to PRISM
auction fee
Initiating order
Penny classes
$0.00
0.00
0.00
0.00
$0.40
0.50
0.50
0.50
$0.12
0.00
0.00
0.00
PRISM Response, the Exchange pays a
rebate of $0.35 to Customers for Penny
Classes and a rebate of $0.70 to
Customers for Non-Penny Classes. NonCustomers are not paid a rebate if a
PRISM Order trades with a PRISM
Response.
Proposal
The Exchange proposes to amend its
PRISM pricing to increase its Initiating
Order fees in Penny and Non-Penny
Classes for Non-Customers 10 from $0.00
to $0.05 per contract. Customers will
continue to be assessed no Initiating
Order Fee in Penny and Non-Penny
Classes. The Exchange also proposes to
decrease its pricing for Non-Penny
PRISM Responses for Non-Customers
Clearing Corporation (‘‘OCC’’) which is not for the
account of broker or dealer or for the account of a
‘‘Professional’’ (as that term is defined in Options
1, Section 1(a)(48)). See BX Options 7, Section 1(a).
6 An Initiating Order is one-side of a PRISM
Auction Order that represents principal or other
interest which is paired with a PRISM Order. See
BX Options 7, Section 2(5).
7 A PRISM Auction Order is a two-sided, paired
order comprised of a PRISM Order and an Initiating
Order. See BX Options 7, Section 2(5).
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
Non-penny
classes
$0.79
1.25
1.25
1.25
PRISM order traded with
PRISM response rebate
Penny classes
$0.35
0.00
0.00
0.00
Non-penny
classes
$0.70
0.00
0.00
0.00
from $1.25 to $1.10 per contract. The
Exchange is not amending its NonPenny PRISM Responses for Customers.
While the Exchange is increasing its
Initiating Order fee from $0.00 to $0.05
per contract in Penny and Non-Penny
Classes for Non-Customers, the
Exchange believes the proposed pricing
remains competitive and will continue
to encourage BX Participants to
participate in PRISM Orders on BX.
Customers will continue to be assessed
no Initiating Order fee in a PIXL
Auction in Penny and Non-Penny
Classes. The Exchange believes that the
decreased Non-Penny Non-Customer
PRISM Response fees will encourage
Participants to participate in PRISM
Orders on BX. Customers will continue
8 A PRISM Response is interest that executed
against the PRISM Order pursuant to Options 3,
Section 13. See BX Options 7, Section 2(5).
9 The term ‘‘Non-Customer’’ shall include a
Professional, Broker-Dealer and Non-BX Options
Market Maker. See BX Options 7, Section 1(a).
10 The term ‘‘Non-Customer’’ shall include a
Professional, Broker-Dealer and Non-BX Options
Market Maker. See BX Options 7, Section 1(a).
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Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices
to be assessed a lower Non-Penny
PRISM Response fee as compared to
other Participants.
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2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,11 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,12 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The proposed changes to its Pricing
Schedule are reasonable in several
respects. As a threshold matter, the
Exchange is subject to significant
competitive forces in the market for
options transaction services that
constrain its pricing determinations in
that market. The fact that this market is
competitive has long been recognized by
the courts. In NetCoalition v. Securities
and Exchange Commission 13
(‘‘NetCoalition’’), the D.C. Circuit stated,
‘‘[n]o one disputes that competition for
order flow is 1fierce.’ . . . As the SEC
explained, 1[i]n the U.S. national market
system, buyers and sellers of securities,
and the broker-dealers that act as their
order-routing agents, have a wide range
of choices of where to route orders for
execution’; [and] ‘no exchange can
afford to take its market share
percentages for granted’ because ‘no
exchange possesses a monopoly,
regulatory or otherwise, in the execution
of order flow from broker
dealers’. . . .’’ 14
Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for options
transaction services. The Exchange is
only one of seventeen options
exchanges to which market participants
may direct their order flow. Within this
environment, market participants can
freely and often do shift their order flow
among the Exchange and competing
venues in response to changes in their
respective pricing schedules. Within the
foregoing context, the proposal
represents a reasonable attempt by the
Exchange to attract additional order
flow to the Exchange and increase its
market share relative to its competitors.
11 15
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(4) and (5).
13 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
14 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
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The Exchange’s proposal to amend its
PRISM pricing to increase its Initiating
Order fees in Penny and Non-Penny
Classes for Non-Customers from $0.00 to
$0.05 per contract is reasonable. While
the Exchange is increasing its Initiating
Order fee from $0.00 to $0.05 in Penny
and Non-Penny Classes for NonCustomers, the Exchange believes the
proposed pricing remains competitive
and will continue to encourage BX
Participants to participate in PRISM
Orders on BX. The Exchange’s proposal
to decrease its pricing for Non-Penny
PRISM Responses for Non-Customers
from $1.25 to $1.10 per contract is
reasonable. The Exchange believes that
the decreased Non-Penny PRISM
Response fees will encourage
Participants to attract order flow to BX
since the Exchange is no longer
assessing any fees to participate in
PRISM Orders on BX. The proposed
pricing is comparable to the spread
between the agency order and responses
in a price improvement auction on
another options exchange.15
The Exchange’s proposal to amend its
PRISM pricing to increase its Initiating
Order fees in Penny and Non-Penny
Classes for Non-Customers from $0.00 to
$0.05 per contract is equitable and not
unfairly discriminatory. The Exchange
will uniformly not assess a Penny or
Non-Penny Initiating Order fee to any
Non-Customer. While Customers will
continue to not be assessed an Initiating
Order fee in Penny and Non-Penny
Classes, the Exchange notes that
Customer activity enhances liquidity on
the Exchange for the benefit of all
market participants and benefits all
market participants by providing more
trading opportunities, which attracts
market makers. The Initiating Order fee
is comparable to other options
exchanges. The Exchange’s proposal to
decrease its pricing for Non-Penny
PRISM Responses for Non-Customers
from $1.25 to $1.10 per contract is
equitable and not unfairly
discriminatory. The Exchange will
uniformly assess the $1.10 per contract
Non-Penny PRISM Responses to NonCustomers. Customers will continue to
be assessed a lower Non-Penny PRISM
Response fee of $0.79 per contract.
Assessing Customers a lower NonPenny PRISM Response fee of $0.79 per
15 BOX Exchange LLC (‘‘BOX’’) assesses
customers no agency order fee and assesses NonCustomers a $0.05 per contract agency order fee in
Penny and Non-Penny classes in BOX’s Price
Improvement Period or ‘‘PIP’’. BOX assesses a
Penny Response Fee of $0.49 per contract for
Customers and $0.50 per contract for NonCustomers in PIP. BOX assesses a Non-Penny
Response Fee of $0.96 per contract for Customers
and $1.15 per contract for Non-Customers in PIP.
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
contract as compared to $1.10 per
contract for Non-Customers is equitable
and not unfairly discriminatory as
Customer activity enhances liquidity on
the Exchange for the benefit of all
market participants and benefits all
market participants by providing more
trading opportunities, which attracts
market makers.
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.
Intermarket Competition
The proposal does not impose an
undue burden on inter-market
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
to initiate a price improvement auction.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges. Because competitors are free
to modify their own fees in response,
and because market participants may
readily adjust their order routing
practices, the Exchange believes that the
degree to which fee changes in this
market may impose any burden on
competition is extremely limited.
Intramarket Competition
The Exchange’s proposal to amend its
PRISM pricing to increase its Initiating
Order fees in Penny and Non-Penny
Classes for Non-Customers from $0.00 to
$0.05 per contract does not impose an
undue burden on competition. The
Exchange will uniformly not assess a
Penny or Non-Penny Initiating Order
Fee to any Non-Customer. While
Customers will continue to not be
assessed an Initiating Order fee in
Penny and Non-Penny Classes, the
Exchange notes that Customer activity
enhances liquidity on the Exchange for
the benefit of all market participants
and benefits all market participants by
providing more trading opportunities,
which attracts market makers. The
Exchange’s proposal to decrease its
pricing for Non-Penny PRISM
Responses for Non-Customers from
$1.25 to $1.10 per contract does not
impose an undue burden on
E:\FR\FM\31JAN1.SGM
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Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices
competition. The Exchange will
uniformly assess the $1.10 per contract
Non-Penny PRISM Responses to NonCustomers. Customers will continue to
be assessed a lower Non-Penny PRISM
Response fee of $0.79 per contract.
Assessing Customers a lower NonPenny PRISM Response fee of $0.79 per
contract as compared to $1.10 per
contract for Non-Customers does not
impose an undue burden on
competition as Customer activity
enhances liquidity on the Exchange for
the benefit of all market participants
and benefits all market participants by
providing more trading opportunities,
which attracts market makers.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 16 of the Act and
subparagraph (f)(2) of Rule 19b–4 17
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
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
under Section 19(b)(2)(B) 18 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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IV. Solicitation of Comments
• Send an email to rule-comments@
sec.gov. Please include file number SR–
BX–2024–003 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–BX–2024–003. 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–BX–2024–003 and should be
submitted on or before February 21,
2024.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
Electronic Comments
BILLING CODE 8011–01–P
[FR Doc. 2024–01861 Filed 1–30–24; 8:45 am]
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
16 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
18 15 U.S.C. 78s(b)(2)(B).
17 17
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17:00 Jan 30, 2024
19 17
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PO 00000
CFR 200.30–3(a)(12).
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6159
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
35116; 812–15534]
AMG Pantheon Credit Solutions Fund
and Pantheon Ventures (US) LP
January 26, 2024.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) of the
Act, under sections 6(c) and 23(c) of the
Act for an exemption from rule 23c–3
under the Act, and for an order pursuant
to section 17(d) of the Act and rule 17d–
1 under the Act.
Summary of Application: Applicants
request an order to permit certain
registered closed-end investment
companies to issue multiple classes of
shares and to impose asset-based
distribution and/or service fees and
early withdrawal charges.
Applicants: AMG Pantheon Credit
Solutions Fund and Pantheon Ventures
(US) LP.
Filing Dates: The application was
filed on December 14, 2023, and
amended on January 9, 2024.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on February 20, 2024, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit, or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Joshua B. Deringer, Esq., Faegre Drinker
Biddle & Reath LLP, joshua.deringer@
faegredrinker.com; with a copy to Kara
Zanger, Pantheon Ventures (US) LP,
kara.zanger@pantheon.com.
E:\FR\FM\31JAN1.SGM
31JAN1
]]>Agencies
[Federal Register Volume 89, Number 21 (Wednesday, January 31, 2024)]
[Notices]
[Pages 6157-6159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01861]
[[Page 6157]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99430; File No. SR-BX-2024-003]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend BX Options
7, Section 2
January 25, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on January 12, 2024, Nasdaq BX, Inc. (``BX'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Pricing Schedule at Options 7,
Section 2. While the changes proposed herein are effective upon filing,
the Exchange has designated the amendments become operative on February
1, 2024.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/bx/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
The Exchange proposes to amend BX's Pricing Schedule at Options 7,
Section 2, BX Options Market-Fees and Rebates. Specifically, the
Exchange proposes to amend Options 7, Section 2(5) related to the BX
Price Improvement Auction (``PRISM'').
Currently, the Exchange assesses the below fees and pays the below
rebates for orders executed in its PRISM Auction.
Fees and Rebates (per contact)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Submitted PRISM auction order Submitted PRISM auction order PRISM response to PRISM PRISM order traded with PRISM
in penny classes in non-penny classes rebate auction fee response rebate
Type of market participants -------------------------------------------------------------------------------------------------------------------------------
Initiating Initiating Non-penny Non-penny
PRISM order order PRISM order order Penny classes classes Penny classes classes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Customer........................................................ $0.00 $0.00 $0.12 $0.00 $0.40 $0.79 $0.35 $0.70
Lead Market Maker............................................... 0.00 0.00 0.00 0.00 0.50 1.25 0.00 0.00
BX Options Market Maker......................................... 0.00 0.00 0.00 0.00 0.50 1.25 0.00 0.00
Non-Customer.................................................... 0.00 0.00 0.00 0.00 0.50 1.25 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Today, the Exchange assesses no PRISM Order \4\ fees in Penny and
Non-Penny Classes to any Participant. Today, the Exchange pays a $0.12
per contract rebate to Customers \5\ for PRISM Orders in Non-Penny
Classes. Today, the Exchange assesses no Initiating Order \6\ fees in
Penny and Non-Penny Classes to any Participant for PRISM Auction
Orders.\7\ Today, the Exchange assesses a $0.40 per contract PRISM
Response \8\ to Customers and a $0.50 per contract PRISM Response to
Non-Customers \9\ in Penny Classes. Today, the Exchange assesses a
$0.79 per contract PRISM Response to Customers and a $1.25 per contract
PRISM Response to Non-Customers in Non-Penny Classes. Today, if a PRISM
Order trades with a PRISM Response, the Exchange pays a rebate of $0.35
to Customers for Penny Classes and a rebate of $0.70 to Customers for
Non-Penny Classes. Non-Customers are not paid a rebate if a PRISM Order
trades with a PRISM Response.
---------------------------------------------------------------------------
\4\ A PRISM Order is one-side of a PRISM Auction Order that
represents an agency order on behalf a Public Customer, broker-
dealer or other entity which is paired with an Initiating Order. See
BX Options 7, Section 2(5).
\5\ The term ``Customer'' or (``C'') applies to any transaction
that is identified by a Participant for clearing in the Customer
range at The Options Clearing Corporation (``OCC'') which is not for
the account of broker or dealer or for the account of a
``Professional'' (as that term is defined in Options 1, Section
1(a)(48)). See BX Options 7, Section 1(a).
\6\ An Initiating Order is one-side of a PRISM Auction Order
that represents principal or other interest which is paired with a
PRISM Order. See BX Options 7, Section 2(5).
\7\ A PRISM Auction Order is a two-sided, paired order comprised
of a PRISM Order and an Initiating Order. See BX Options 7, Section
2(5).
\8\ A PRISM Response is interest that executed against the PRISM
Order pursuant to Options 3, Section 13. See BX Options 7, Section
2(5).
\9\ The term ``Non-Customer'' shall include a Professional,
Broker-Dealer and Non-BX Options Market Maker. See BX Options 7,
Section 1(a).
---------------------------------------------------------------------------
Proposal
The Exchange proposes to amend its PRISM pricing to increase its
Initiating Order fees in Penny and Non-Penny Classes for Non-Customers
\10\ from $0.00 to $0.05 per contract. Customers will continue to be
assessed no Initiating Order Fee in Penny and Non-Penny Classes. The
Exchange also proposes to decrease its pricing for Non-Penny PRISM
Responses for Non-Customers from $1.25 to $1.10 per contract. The
Exchange is not amending its Non-Penny PRISM Responses for Customers.
---------------------------------------------------------------------------
\10\ The term ``Non-Customer'' shall include a Professional,
Broker-Dealer and Non-BX Options Market Maker. See BX Options 7,
Section 1(a).
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While the Exchange is increasing its Initiating Order fee from
$0.00 to $0.05 per contract in Penny and Non-Penny Classes for Non-
Customers, the Exchange believes the proposed pricing remains
competitive and will continue to encourage BX Participants to
participate in PRISM Orders on BX. Customers will continue to be
assessed no Initiating Order fee in a PIXL Auction in Penny and Non-
Penny Classes. The Exchange believes that the decreased Non-Penny Non-
Customer PRISM Response fees will encourage Participants to participate
in PRISM Orders on BX. Customers will continue
[[Page 6158]]
to be assessed a lower Non-Penny PRISM Response fee as compared to
other Participants.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees, and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4) and (5).
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The proposed changes to its Pricing Schedule are reasonable in
several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for options transaction
services that constrain its pricing determinations in that market. The
fact that this market is competitive has long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission \13\
(``NetCoalition''), the D.C. Circuit stated, ``[n]o one disputes that
competition for order flow is [revaps]fierce.' . . . As the SEC
explained, [revaps][i]n the U.S. national market system, buyers and
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders
for execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \14\
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\13\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\14\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options transaction services. The Exchange is only one of seventeen
options exchanges to which market participants may direct their order
flow. Within this environment, market participants can freely and often
do shift their order flow among the Exchange and competing venues in
response to changes in their respective pricing schedules. Within the
foregoing context, the proposal represents a reasonable attempt by the
Exchange to attract additional order flow to the Exchange and increase
its market share relative to its competitors.
The Exchange's proposal to amend its PRISM pricing to increase its
Initiating Order fees in Penny and Non-Penny Classes for Non-Customers
from $0.00 to $0.05 per contract is reasonable. While the Exchange is
increasing its Initiating Order fee from $0.00 to $0.05 in Penny and
Non-Penny Classes for Non-Customers, the Exchange believes the proposed
pricing remains competitive and will continue to encourage BX
Participants to participate in PRISM Orders on BX. The Exchange's
proposal to decrease its pricing for Non-Penny PRISM Responses for Non-
Customers from $1.25 to $1.10 per contract is reasonable. The Exchange
believes that the decreased Non-Penny PRISM Response fees will
encourage Participants to attract order flow to BX since the Exchange
is no longer assessing any fees to participate in PRISM Orders on BX.
The proposed pricing is comparable to the spread between the agency
order and responses in a price improvement auction on another options
exchange.\15\
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\15\ BOX Exchange LLC (``BOX'') assesses customers no agency
order fee and assesses Non-Customers a $0.05 per contract agency
order fee in Penny and Non-Penny classes in BOX's Price Improvement
Period or ``PIP''. BOX assesses a Penny Response Fee of $0.49 per
contract for Customers and $0.50 per contract for Non-Customers in
PIP. BOX assesses a Non-Penny Response Fee of $0.96 per contract for
Customers and $1.15 per contract for Non-Customers in PIP.
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The Exchange's proposal to amend its PRISM pricing to increase its
Initiating Order fees in Penny and Non-Penny Classes for Non-Customers
from $0.00 to $0.05 per contract is equitable and not unfairly
discriminatory. The Exchange will uniformly not assess a Penny or Non-
Penny Initiating Order fee to any Non-Customer. While Customers will
continue to not be assessed an Initiating Order fee in Penny and Non-
Penny Classes, the Exchange notes that Customer activity enhances
liquidity on the Exchange for the benefit of all market participants
and benefits all market participants by providing more trading
opportunities, which attracts market makers. The Initiating Order fee
is comparable to other options exchanges. The Exchange's proposal to
decrease its pricing for Non-Penny PRISM Responses for Non-Customers
from $1.25 to $1.10 per contract is equitable and not unfairly
discriminatory. The Exchange will uniformly assess the $1.10 per
contract Non-Penny PRISM Responses to Non-Customers. Customers will
continue to be assessed a lower Non-Penny PRISM Response fee of $0.79
per contract. Assessing Customers a lower Non-Penny PRISM Response fee
of $0.79 per contract as compared to $1.10 per contract for Non-
Customers is equitable and not unfairly discriminatory as Customer
activity enhances liquidity on the Exchange for the benefit of all
market participants and benefits all market participants by providing
more trading opportunities, which attracts market makers.
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.
Intermarket Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice to initiate a price improvement auction. The Exchange
notes that it operates in a highly competitive market in which market
participants can readily favor competing venues if they deem fee levels
at a particular venue to be excessive, or rebate opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its fees to remain competitive
with other exchanges. Because competitors are free to modify their own
fees in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which fee changes in this market may impose any burden on competition
is extremely limited.
Intramarket Competition
The Exchange's proposal to amend its PRISM pricing to increase its
Initiating Order fees in Penny and Non-Penny Classes for Non-Customers
from $0.00 to $0.05 per contract does not impose an undue burden on
competition. The Exchange will uniformly not assess a Penny or Non-
Penny Initiating Order Fee to any Non-Customer. While Customers will
continue to not be assessed an Initiating Order fee in Penny and Non-
Penny Classes, the Exchange notes that Customer activity enhances
liquidity on the Exchange for the benefit of all market participants
and benefits all market participants by providing more trading
opportunities, which attracts market makers. The Exchange's proposal to
decrease its pricing for Non-Penny PRISM Responses for Non-Customers
from $1.25 to $1.10 per contract does not impose an undue burden on
[[Page 6159]]
competition. The Exchange will uniformly assess the $1.10 per contract
Non-Penny PRISM Responses to Non-Customers. Customers will continue to
be assessed a lower Non-Penny PRISM Response fee of $0.79 per contract.
Assessing Customers a lower Non-Penny PRISM Response fee of $0.79 per
contract as compared to $1.10 per contract for Non-Customers does not
impose an undue burden on competition as Customer activity enhances
liquidity on the Exchange for the benefit of all market participants
and benefits all market participants by providing more trading
opportunities, which attracts market makers.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \16\ of the Act and subparagraph (f)(2) of Rule
19b-4 \17\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(2).
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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 under
Section 19(b)(2)(B) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\18\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-BX-2024-003 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-BX-2024-003. 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-BX-2024-003 and should be
submitted on or before February 21, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01861 Filed 1-30-24; 8:45 am]
BILLING CODE 8011-01-P
