Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Certain Rules Related to Stock-Option Orders, 11882-11886 [2024-03099]
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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Notices
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Date of required notice: February
15, 2024.
DATES:
FOR FURTHER INFORMATION CONTACT:
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on February 7,
2024, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & USPS Ground
Advantage® Contract 186 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–187, CP2024–193.
SUPPLEMENTARY INFORMATION:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2024–03094 Filed 2–14–24; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Product Change—Priority Mail and
USPS Ground Advantage® Negotiated
Service Agreement
ACTION:
BILLING CODE 7710–12–P
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: February
15, 2024.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on February 6,
2024, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail, USPS Ground Advantage®
& Parcel Select Contract 5 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–184, CP2024–190.
Sean Robinson,
Attorney, Corporate and Postal Business Law.
BILLING CODE 7710–12–P
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Date of required notice: February
15, 2024.
DATES:
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on February 6,
2024, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & USPS Ground
Advantage® Contract 185 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–185, CP2024–191.
SUPPLEMENTARY INFORMATION:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2024–03086 Filed 2–14–24; 8:45 am]
BILLING CODE 7710–12–P
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18:36 Feb 14, 2024
Jkt 262001
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2024–03088 Filed 2–14–24; 8:45 am]
Postal ServiceTM.
ACTION: Notice.
AGENCY:
[FR Doc. 2024–03087 Filed 2–14–24; 8:45 am]
Postal ServiceTM.
SUMMARY:
khammond on DSKJM1Z7X2PROD with NOTICES
Product Change—Priority Mail, USPS
Ground Advantage® & Parcel Select
Negotiated Service Agreement
SUMMARY:
Sean Robinson, 202–268–8405.
AGENCY:
are available at www.prc.gov, Docket
Nos. MC2024–188, CP2024–194.
POSTAL SERVICE
POSTAL SERVICE
Product Change—Priority Mail and
USPS Ground Advantage® Negotiated
Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: February
15, 2024.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on February 8,
2024, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & USPS Ground
Advantage® Contract 187 to
Competitive Product List. Documents
SUMMARY:
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99510; File No. SR–
CboeEDGX–2024–012]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend
Certain Rules Related to Stock-Option
Orders
February 9, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
6, 2024, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal pursuant to Section
19(b)(3)(A)(iii) of the Act 3 and Rule
19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX Options’’)
proposes to amend certain Rules related
to stock-option orders. 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/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Notices
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
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1. Purpose
The Exchange proposes to update
certain of its Rules regarding the
definition and execution of stock-option
orders. Rule 21.20(b) defines a ‘‘stockoption order’’ as the purchase or sale of
a stated number of units of an
underlying stock or a security
convertible into the underlying stock
(‘‘convertible security’’) coupled with
the purchase or sale of an option
contract(s) on the opposite side of the
market representing either (a) the same
number of units of the underlying stock
or convertible security or (b) the number
of units of the underlying stock
necessary to create a delta neutral
position, but in no case in a ratio greater
than eight-to-one (8.00), where the ratio
represents the total number of units of
the underlying stock or convertible
security in the option leg(s) to the total
number of units of the underlying stock
or convertible security in the stock leg.5
Rule 21.20(f)(2)(B) currently describes
certain restrictions on executions of
stock-option orders. Current Rule
21.20(f)(2)(B) provides that stock-option
orders that execute electronically are
subject to the following:
• For a stock-option order with one
option leg, the option leg may not trade
at a price worse than the individual
component price on the Simple Book or
at the same price as a Priority Customer
Order on the Simple Book.
• For a stock-option order with more
than one option leg, the option legs
must trade at prices pursuant to Rule
21.20(f)(2)(A) above.6
5 Only those stock-option orders in the classes
designated by the Exchange with no more than the
applicable number of legs are eligible for
processing. Stock-option orders execute in the same
manner as other complex orders, except as
otherwise specified in Rule 21.20.
6 Rule 21.20(f)(2)(A) states the System does not
execute a complex order pursuant to Rule 21.20 at
a net price: (i) that would cause any component of
the complex strategy to be executed at a price of
zero; (ii) that would cause any component of the
complex strategy to be executed at a price worse
than the individual component prices on the
Simple Book; (iii) worse than the price that would
be available if the complex order Legged into the
Simple Book; or (iv) worse than the synthetic best
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• A stock-option order may only
execute if the stock leg is executable at
the price(s) necessary to achieve the
desired net price.7
• The System executes the buy (sell)
stock leg of a stock-option order
pursuant to Rule 21.20 up to a buffer
amount above (below) the NBO (NBB)
for the stock leg.8
The Exchange previously amended its
rules to permit complex orders of all
ratios to be executed on the Exchange,
subject to certain execution
restrictions.9 Rule 21.20(a) currently
defines ‘‘complex order’’ as any order
involving the concurrent purchase and/
or sale of two or more different series in
the same class (the ‘‘legs’’ or
‘‘components’’ of the complex order),
for the same account, in any ratio and
for the purposes of executing a
particular investment strategy. Only
those complex orders with no more than
the applicable number of legs
(determined by the Exchange) are
eligible for processing.
The Exchange first proposes to adopt
definitions of ‘‘conforming’’ and
‘‘nonconforming’’ complex orders in
Rule 21.20(a). The Exchange notes these
proposed definitions are consistent with
definitions used by other options
exchanges.10 Specifically, the Exchange
proposes to define a ‘‘conforming
complex order’’ as (a) a complex order
bid or offer (‘‘SBBO’’) or equal to the SBBO when
there is a Priority Customer order on any leg
comprising the SBBO and: (a) if a complex order
has a ratio equal to or greater than oneto-three [sic]
(.333) and less than or equal to three-to-one (3.00),
at least one component of the complex order must
execute at a price that improves the BBO for that
component; or (b) if the complex order has a ratio
less than one-to-three (.333) or greater than threeto-one (3.00), the component(s) of the complex
order for the leg(s) with a Priority Customer order
at the BBO must execute at a price that improves
the price of that Priority Customer order(s) on the
Simple Book, except AON complex orders may only
execute at prices better than the SBBO.
7 To facilitate the execution of the stock leg and
options leg(s) of an executable stock-option order at
valid increments pursuant to Rule 21.20(f)(1)(B), the
legs may trade outside of their expected notional
trade value by a specified amount (which the
Exchange determines), unless the order has a
capacity of ‘‘C’’.
8 See Rule 21.20(f)(2)(B) (the provisions off which
the Exchange proposes to number as subparagraphs
(i) through (iv)). The rule further provides that the
execution price of the buy (sell) stock leg of a QCC
with Stock Order may be any price (including
outside the NBBO for the stock leg), except the
price must be permitted by Regulation SHO and the
Limit Up-Limit Down Plan. See proposed Rule
21.20(f)(2)(B)(iv).
9 See Securities Exchange Release No. 95321 (July
19, 2022), 87 FR 44174 (July 25, 2022) (SR–
CboeEDGX–2021–033).
10 See Cboe Exchange, Inc. (‘‘Cboe Options’’) Rule
1.1 (definitions of ‘‘conforming complex order’’ and
‘‘nonconforming complex order’’); and Miami
International Securities Exchange, LLC (‘‘MIAX’’)
Rule 518(a)(8) and (16) (defining ‘‘conforming ratio’’
and ‘‘nonconforming ratio’’).
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with a ratio on the options legs greater
than or equal to one-to-three (.333) or
less than or equal to three-to-one (3.00)
and (b) a stock-option order with a ratio
less than or equal to eight-to-one (8.00),
where the ratio represents the total
number of units of the underlying stock
or convertible security in the option
leg(s) to the total number of units of the
underlying stock or convertible security
in the stock leg. The Exchange proposes
to define a ‘‘nonconforming complex
order’’ as (a) a complex order with a
ratio on the options legs less than oneto-three (.333) or greater than three-toone (3.00) and (b) a stock-option order
with a ratio greater than eight-to-one
(8.00), where the ratio represents the
total number of units of the underlying
stock or convertible security in the
option leg(s) to the total number of units
of the underlying stock or convertible
security in the stock leg.11 The proposed
definitions of conforming and
nonconforming complex orders each
provide that, for the purpose of applying
these ratios to complex orders
comprised of legs for both mini-options
and standard options, ten mini-option
contracts represent one standard option
contract. These proposed ratio
applications are consistent with the
current definitions of complex order
and stock-option order.
The proposed rule change amends
Rule 21.20(f)(2)(A) to incorporate the
proposed definitions of conforming and
nonconforming complex orders but
makes no other substantive changes to
this rule. These proposed changes are
consistent with industry terminology
regarding complex orders with these
ratios.
Based on the definition in Rule 21.20
of complex orders, which includes
stock-option orders, the Exchange’s
previous rule change was intended to
apply to stock-option orders (i.e., to
permit stock-option orders of any ratio
to be processed).12 The reasons set forth
in that rule change for expanding
processing of nonconforming complex
orders applies to all complex orders,
including stock-option orders. However,
the Exchange inadvertently did not
11 The proposed definitions of conforming and
nonconforming complex order provide that, for the
purpose of applying these ratios to complex orders
comprised of legs for both mini-options and
standard options, ten mini-option contracts
represent one standard option contract.
12 See supra note 9; and Exchange Notice, Cboe
EDGX and C2 Options Introduce New Net, Leg Price
Increments and Enhanced Handling for Complex
Orders with Non-Conforming Ratios, dated July 1,
2022 (available at https://cdn.cboe.com/resources/
release_notes/2022/Cboe-EDGX-and-C2-OptionsIntroduce-New-Net-Leg-Price-Increments-andEnhanced-Handling-for-Complex-Orders-with-NonConforming-Ratios.pdf).
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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Notices
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update certain provisions specific to
stock-option orders. Therefore, in
addition to adding the proposed
definitions of conforming and
nonconforming complex orders, the
proposed rule change updates the
definition of stock-option order in Rule
21.20 to allow the Exchange to permit
stock-option orders of any ratio to be
processed (rather than stock-option
orders in ratios no greater than eight-toone (8.00)).13 This is consistent with the
language currently included in the
definition of ‘‘complex order’’ in Rule
21.20(a), the intent of which is to permit
nonconforming complex orders
(including stock-option orders) to be
submitted for processing on the
Exchange pursuant to Rule 21.20.14
The proposed rule change also adds
proposed Rule 21.20(f)(2)(B)(v) to state
the System does not execute a stockoption order pursuant to Rule 21.20 at
a net price worse than the SBBO or
equal to the SBBO when there is a
Priority Customer order on any leg
comprising the SBBO and: (a) if a
conforming stock-option order, at least
one option component of the stockoption order must execute at a price that
improves the BBO for that component
by at least one minimum increment; or
(b) if a nonconforming stock-option
order, the option component(s) of the
stock-option order for the leg(s) with a
Priority Customer order at the BBO must
execute at a price that improves the
price of that Priority Customer order(s)
on the Simple Book by at least one
minimum increment, except AON 15
stock-option orders may only execute at
prices better than the SBBO. This is
consistent with the permissible
execution prices of conforming and
nonconforming complex orders with
only option components.16 Therefore,
execution of all conforming and
nonconforming complex orders,
including stock-option orders, continues
to protect Priority Customer interest on
the Exchange.
The proposed rule change has no
impact on the requirements for stockoption orders or how they may be
13 The proposed rule change also amends the
paragraph lettering in the definition of stock-option
order to conform to the paragraph numbering and
lettering scheme used throughout the Rules.
14 The Exchange notes other options exchanges
rules permit the electronic processing of
nonconforming stock-option orders. See Cboe Rule
5.33(b)(5) (definition of ‘‘stock-option order’’); and
MIAX Rule 518(a)(5) (definition of ‘‘complex
order’’).
15 See Rule 21.1(d)(4) for definition of ‘‘all-ornone’’ or ‘‘AON’’ orders.
16 See Rule 21.20(f)(2)(A)(iv). This execution
priority is also the same as other options exchanges.
See Cboe Options Rule 5.33(f)(2)(B); and MIAX Rule
518, Interpretation and Policy .01(c).
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executed. For example, all stock-option
orders (both conforming and
nonconforming) must satisfy the criteria
set forth in the definitions of stockoption orders in Rule 21.20(b), as set
forth above. Additionally, all stockoption orders must comply with the
Qualified Contingent Trade (‘‘QCT’’)
exemption.17 The Exchange represents
that its surveillances incorporate stockoption orders with all ratios, including
nonconforming ratios.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.18 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 19 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 20 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed rule change to adopt
definitions of conforming and
nonconforming complex orders
(including stock-option orders) in Rule
21.20(a), and to incorporate these
proposed definitions into Rule
21.20(f)(2)(A)(iv) will protect investors,
as it incorporates into the Exchange’s
Rules terminology generally used in the
industry to refer to complex orders with
ratios equal to and greater than one-tothree (0.333) and less three-to-one (3.00)
(conforming) and less than one-to-three
(0.333) and greater than three-to-one
3.00 (nonconforming), and stock-option
orders with ratios less than or equal to
eight-to-one (8.00) (conforming) and
greater than eight-to-one (8.00)
(nonconforming). Therefore, the
Exchange believes this proposed rule
17 See
Rule 21.20, Interpretation and Policy .04.
U.S.C. 78f(b).
19 15 U.S.C. 78f(b)(5).
20 Id.
18 15
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change adds transparency and reduces
potential confusion within the
Exchange’s Rules. These definitions
ultimately make no substantive changes
to the rules and relate merely to
terminology. The Exchange notes these
definitions are substantially similar to
definitions used in other options
exchanges’ rulebooks.21
Additionally, the Exchange believes
the proposed rule change to provide for
the processing of stock-option orders
with any ratio will 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, as it
will eliminate confusion regarding what
types of stock-option orders are
permissible for processing. As noted
above, when the Exchange amended its
Rules to permit the processing of
nonconforming complex orders, the
intent of that amendment was to permit
the processing of all nonconforming
complex orders, including
nonconforming stock-option orders. The
reasons set forth in the Exchange’s prior
rule filing regarding expansion of
processing of nonconforming complex
orders applies to all complex orders,
including stock-option orders; the
Exchange inadvertently omitted updates
to certain provision regarding stockoption orders to incorporate that
change.22 The proposed rule change
merely updates the definition of stockoption order to incorporate the same
change that was made to the definition
of complex order with respect to
processing to provide consistency and
transparency in the Exchange’s Rules.
As noted above, the proposed rule
changes regarding execution of
conforming and nonconforming stockoption orders are consistent with the
Exchange’s previously adopted rules
regarding execution of other conforming
and nonconforming complex orders, as
well as the rules of other options
exchanges.23
The proposed rule change also adds a
provision in Rule 21.20(f)(2)(B)
regarding the specific permissible
execution prices for conforming and
nonconforming stock-option orders,
consistent with the execution pricing for
other conforming and nonconforming
complex orders, which further adds
transparency regarding the execution of
these orders on the Exchange. The
Exchange believes the proposed rule
21 See Cboe Rule 1.1 (definitions of ‘‘conforming
complex order’’ and ‘‘nonconforming complex
order’’); and MIAX Rule 518(a)(8) and (16) (defining
‘‘conforming ratio’’ and ‘‘nonconforming ratio’’).
22 See supra note 9.
23 See Cboe Options Rule 5.33(f)(2)(B); and MIAX
Rule 518, Interpretation and Policy .01(c).
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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Notices
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change will add clarity, transparency,
and consistency to its Rules, thus
eliminating potential confusion about
the permissible execution prices of
conforming and nonconforming
complex orders, which will ultimately
remove impediments to and perfect the
mechanisms of a free and open market
and national market system, and in
general protect investors. The proposed
rule change will further remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, as it is
consistent with the rules of other
options exchanges.24
The proposed rule change will permit
the electronic trading of nonconforming
stock-option orders but has no impact
on the requirements for stock-option
orders or how they may be executed.
Execution of all conforming and
nonconforming complex orders,
including stock-option orders, will
continue to protect Priority Customer
interest on the Exchange. All stockoption orders (both conforming and
nonconforming) must satisfy the criteria
set forth in the definition of stockoption orders in Rule 21.20(b), which is
described above. Additionally, all stockoption orders must comply with the
QCT exemption.25 The Exchange
represents that its surveillances
incorporate stock-option orders with all
ratios, including nonconforming ratios.
The Exchange believes the proposed
changes to update paragraph lettering
and numbering of certain subparagraphs
will benefit investors, as it conforms
these provisions to the lettering and
numbering scheme used throughout the
Rulebook, which promotes consistency
throughout the Rulebook and may
ultimately reduce potential investor
confusion.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act,
as the proposed rule change applies
equally to all Members. Therefore, any
Member may submit conforming and
24 See Cboe Rules 1.1 (definitions of ‘‘conforming
complex order’’ and ‘‘nonconforming complex
order’’) and Rule 5.33(f)(2)(B); and MIAX Rule
518(a)(8) and (16) (defining ‘‘conforming ratio’’ and
‘‘nonconforming ratio’’) and Interpretation and
Policy .01(c).
25 See Rule 21.20, Interpretation and Policy .04.
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nonconforming stock-option orders,
which will all be handled by the
Exchange in a uniform manner. Further,
the Exchange’s proposal will continue
to protect Priority Customer interest on
the Exchange.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act,
as it has no impact on the requirements
for stock-option orders or how they may
be executed. As discussed above, the
proposed rule change merely updates
certain rule provisions it inadvertently
did not update in connection with a
previous rule change. Additionally, the
proposed rule change is consistent with
the offering of other options
exchanges.26 The Exchange believes
availability of conforming and
nonconforming complex orders,
including stock-option orders, may
promote competition, as it provides
investors with multiple venues at which
to execute these orders, giving investors
greater flexibility and choice of where to
send their orders.
The Exchange believes the proposed
rule change to make nonsubstantive
updates to lettering and numbering of
subparagraphs will have no burden on
intramarket or intermarket competition,
as these changes are not competitive
and merely conform these
subparagraphs to the lettering and
numbering scheme used throughout the
Rulebook.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A) of the
Act 27 and Rule 19b–4(f)(6) 28
thereunder, the Exchange has
designated this proposal as one that
effects a change that: (i) does not
significantly affect the protection of
investors or the public interest; (ii) does
not impose any significant burden on
competition; and (iii) by its terms, does
not 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
26 See Cboe Options Rule 5.33(f)(2)(B); and MIAX
Rule 518, Interpretation and Policy .01(c).
27 15 U.S.C. 78s(b)(3)(A).
28 17 CFR 240.19b–4(f)(6).
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Sfmt 4703
11885
pursuant to Section 19(b)(3)(A) of the
Act 29 and Rule 19b–4(f)(6)
thereunder.30
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 31 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange states that waiver
of the operative delay will immediately
eliminate potential confusion regarding
the permissibility of conforming and
nonconforming stock-option orders on
the Exchange and will provide investors
with an additional venue for executing
nonconforming stock-option orders. The
Exchange further states that the
proposal is not novel because other
options exchanges have substantially
similar definitions of conforming and
nonconforming complex orders, other
options exchanges permit electronic
processing of nonconforming stockoption orders, and the proposed
execution pricing requirements for
nonconforming stock-option orders are
consistent with the execution pricing
requirements of other options
exchanges.32 The Exchange also states
that the proposed execution pricing
requirements will protect Priority
Customer interest on the Exchange.
As discussed above, the proposed
definitions of conforming and
nonconforming stock-option order are
substantively identical to definitions
adopted by other options exchanges.33
In addition, the proposed execution
pricing requirements for stock-option
orders are consistent with the rules of
other options exchanges.34 The proposal
does not raise new or novel regulatory
issues and will provide investors with
29 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 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.
31 17 CFR 240.19b–4(f)(6)(iii).
32 See Cboe Options Rules 1.1 (definitions of
‘‘conforming complex order’’ and ‘‘nonconforming
complex order’’) and 5.33(f)(2)(B); and MIAX Rule
518(a)(8) and (16) (defining ‘‘conforming ratio’’ and
‘‘non-conforming ratio’’) and MIAX Rule 518,
Interpretation and Policy .01(c).
33 See Cboe Rule 1.1 and MIAX Rules 518(a)(8)
and (16).
34 See Cboe Rule 5.33(f)(2)(B)(v) and MIAX Rules
518(c)(1)(iv) and (v) and MIAX Rule 518,
Interpretation and Policy .01(c).
30 17
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11886
Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Notices
an additional venue for executing
nonconforming stock-option orders
electronically. For these reasons, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.35
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.
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–CboeEDGX–2024–012 and should be
submitted on or before March 7, 2024.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
Sherry R. Haywood,
Assistant Secretary.
khammond on DSKJM1Z7X2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2024–012 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–CboeEDGX–2024–012. 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
35 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
VerDate Sep<11>2014
18:36 Feb 14, 2024
Jkt 262001
[FR Doc. 2024–03099 Filed 2–14–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99512; File No. SR–
NASDAQ–2024–004]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Listing Rules 5815 and 5820 To Modify
the Deadline To Submit the Required
Fee for a Hearing Request and To
Remove Obsolete Language
February 9, 2024.
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 January
30, 2024, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) 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.
36 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Listing Rules 5815 and 5820 to modify
the deadline to submit the required fee
for a hearing request and to remove
obsolete language.
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
The purpose of the proposed rule
change is to align the deadline to
request a hearing contained in Rule
5815(a)(1) with the deadline to submit
the hearing fee in Rule 5815(a)(3) so that
both requirements are seven calendar
days. Under the current rule, a company
must request a hearing within seven
calendar days of a Staff Delisting
Determination, Public Reprimand
Letter, or written denial of an initial
listing application, but is allowed 15
calendar days to submit the required
hearing fee. The extended period to
submit the hearing fee was adopted
originally to allow time for companies
to mail checks for the payment.
However, technology has become more
efficient, and companies now can easily
and inexpensively submit the required
payment by wire or other electronic
means, so there is no longer a need to
wait for checks to be mailed and
received. As such, Nasdaq proposes to
modify the rule to require payment of
the required $20,000 hearing fee within
seven calendar days of the Staff
Delisting Determination, Public
Reprimand Letter, or written denial of
an initial listing application to reflect
the ease and speed with which
E:\FR\FM\15FEN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 32 (Thursday, February 15, 2024)]
[Notices]
[Pages 11882-11886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03099]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99510; File No. SR-CboeEDGX-2024-012]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Certain Rules Related to Stock-Option Orders
February 9, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 6, 2024, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act \3\
and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'')
proposes to amend certain Rules related to stock-option orders. 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/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for
[[Page 11883]]
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 update certain of its Rules regarding the
definition and execution of stock-option orders. Rule 21.20(b) defines
a ``stock-option order'' as the purchase or sale of a stated number of
units of an underlying stock or a security convertible into the
underlying stock (``convertible security'') coupled with the purchase
or sale of an option contract(s) on the opposite side of the market
representing either (a) the same number of units of the underlying
stock or convertible security or (b) the number of units of the
underlying stock necessary to create a delta neutral position, but in
no case in a ratio greater than eight-to-one (8.00), where the ratio
represents the total number of units of the underlying stock or
convertible security in the option leg(s) to the total number of units
of the underlying stock or convertible security in the stock leg.\5\
---------------------------------------------------------------------------
\5\ Only those stock-option orders in the classes designated by
the Exchange with no more than the applicable number of legs are
eligible for processing. Stock-option orders execute in the same
manner as other complex orders, except as otherwise specified in
Rule 21.20.
---------------------------------------------------------------------------
Rule 21.20(f)(2)(B) currently describes certain restrictions on
executions of stock-option orders. Current Rule 21.20(f)(2)(B) provides
that stock-option orders that execute electronically are subject to the
following:
For a stock-option order with one option leg, the option
leg may not trade at a price worse than the individual component price
on the Simple Book or at the same price as a Priority Customer Order on
the Simple Book.
For a stock-option order with more than one option leg,
the option legs must trade at prices pursuant to Rule 21.20(f)(2)(A)
above.\6\
---------------------------------------------------------------------------
\6\ Rule 21.20(f)(2)(A) states the System does not execute a
complex order pursuant to Rule 21.20 at a net price: (i) that would
cause any component of the complex strategy to be executed at a
price of zero; (ii) that would cause any component of the complex
strategy to be executed at a price worse than the individual
component prices on the Simple Book; (iii) worse than the price that
would be available if the complex order Legged into the Simple Book;
or (iv) worse than the synthetic best bid or offer (``SBBO'') or
equal to the SBBO when there is a Priority Customer order on any leg
comprising the SBBO and: (a) if a complex order has a ratio equal to
or greater than oneto-three [sic] (.333) and less than or equal to
three-to-one (3.00), at least one component of the complex order
must execute at a price that improves the BBO for that component; or
(b) if the complex order has a ratio less than one-to-three (.333)
or greater than three-to-one (3.00), the component(s) of the complex
order for the leg(s) with a Priority Customer order at the BBO must
execute at a price that improves the price of that Priority Customer
order(s) on the Simple Book, except AON complex orders may only
execute at prices better than the SBBO.
---------------------------------------------------------------------------
A stock-option order may only execute if the stock leg is
executable at the price(s) necessary to achieve the desired net
price.\7\
---------------------------------------------------------------------------
\7\ To facilitate the execution of the stock leg and options
leg(s) of an executable stock-option order at valid increments
pursuant to Rule 21.20(f)(1)(B), the legs may trade outside of their
expected notional trade value by a specified amount (which the
Exchange determines), unless the order has a capacity of ``C''.
---------------------------------------------------------------------------
The System executes the buy (sell) stock leg of a stock-
option order pursuant to Rule 21.20 up to a buffer amount above (below)
the NBO (NBB) for the stock leg.\8\
---------------------------------------------------------------------------
\8\ See Rule 21.20(f)(2)(B) (the provisions off which the
Exchange proposes to number as subparagraphs (i) through (iv)). The
rule further provides that the execution price of the buy (sell)
stock leg of a QCC with Stock Order may be any price (including
outside the NBBO for the stock leg), except the price must be
permitted by Regulation SHO and the Limit Up-Limit Down Plan. See
proposed Rule 21.20(f)(2)(B)(iv).
---------------------------------------------------------------------------
The Exchange previously amended its rules to permit complex orders
of all ratios to be executed on the Exchange, subject to certain
execution restrictions.\9\ Rule 21.20(a) currently defines ``complex
order'' as any order involving the concurrent purchase and/or sale of
two or more different series in the same class (the ``legs'' or
``components'' of the complex order), for the same account, in any
ratio and for the purposes of executing a particular investment
strategy. Only those complex orders with no more than the applicable
number of legs (determined by the Exchange) are eligible for
processing.
---------------------------------------------------------------------------
\9\ See Securities Exchange Release No. 95321 (July 19, 2022),
87 FR 44174 (July 25, 2022) (SR-CboeEDGX-2021-033).
---------------------------------------------------------------------------
The Exchange first proposes to adopt definitions of ``conforming''
and ``nonconforming'' complex orders in Rule 21.20(a). The Exchange
notes these proposed definitions are consistent with definitions used
by other options exchanges.\10\ Specifically, the Exchange proposes to
define a ``conforming complex order'' as (a) a complex order with a
ratio on the options legs greater than or equal to one-to-three (.333)
or less than or equal to three-to-one (3.00) and (b) a stock-option
order with a ratio less than or equal to eight-to-one (8.00), where the
ratio represents the total number of units of the underlying stock or
convertible security in the option leg(s) to the total number of units
of the underlying stock or convertible security in the stock leg. The
Exchange proposes to define a ``nonconforming complex order'' as (a) a
complex order with a ratio on the options legs less than one-to-three
(.333) or greater than three-to-one (3.00) and (b) a stock-option order
with a ratio greater than eight-to-one (8.00), where the ratio
represents the total number of units of the underlying stock or
convertible security in the option leg(s) to the total number of units
of the underlying stock or convertible security in the stock leg.\11\
The proposed definitions of conforming and nonconforming complex orders
each provide that, for the purpose of applying these ratios to complex
orders comprised of legs for both mini-options and standard options,
ten mini-option contracts represent one standard option contract. These
proposed ratio applications are consistent with the current definitions
of complex order and stock-option order.
---------------------------------------------------------------------------
\10\ See Cboe Exchange, Inc. (``Cboe Options'') Rule 1.1
(definitions of ``conforming complex order'' and ``nonconforming
complex order''); and Miami International Securities Exchange, LLC
(``MIAX'') Rule 518(a)(8) and (16) (defining ``conforming ratio''
and ``nonconforming ratio'').
\11\ The proposed definitions of conforming and nonconforming
complex order provide that, for the purpose of applying these ratios
to complex orders comprised of legs for both mini-options and
standard options, ten mini-option contracts represent one standard
option contract.
---------------------------------------------------------------------------
The proposed rule change amends Rule 21.20(f)(2)(A) to incorporate
the proposed definitions of conforming and nonconforming complex orders
but makes no other substantive changes to this rule. These proposed
changes are consistent with industry terminology regarding complex
orders with these ratios.
Based on the definition in Rule 21.20 of complex orders, which
includes stock-option orders, the Exchange's previous rule change was
intended to apply to stock-option orders (i.e., to permit stock-option
orders of any ratio to be processed).\12\ The reasons set forth in that
rule change for expanding processing of nonconforming complex orders
applies to all complex orders, including stock-option orders. However,
the Exchange inadvertently did not
[[Page 11884]]
update certain provisions specific to stock-option orders. Therefore,
in addition to adding the proposed definitions of conforming and
nonconforming complex orders, the proposed rule change updates the
definition of stock-option order in Rule 21.20 to allow the Exchange to
permit stock-option orders of any ratio to be processed (rather than
stock-option orders in ratios no greater than eight-to-one (8.00)).\13\
This is consistent with the language currently included in the
definition of ``complex order'' in Rule 21.20(a), the intent of which
is to permit nonconforming complex orders (including stock-option
orders) to be submitted for processing on the Exchange pursuant to Rule
21.20.\14\
---------------------------------------------------------------------------
\12\ See supra note 9; and Exchange Notice, Cboe EDGX and C2
Options Introduce New Net, Leg Price Increments and Enhanced
Handling for Complex Orders with Non-Conforming Ratios, dated July
1, 2022 (available at https://cdn.cboe.com/resources/release_notes/2022/Cboe-EDGX-and-C2-Options-Introduce-New-Net-Leg-Price-Increments-and-Enhanced-Handling-for-Complex-Orders-with-Non-Conforming-Ratios.pdf).
\13\ The proposed rule change also amends the paragraph
lettering in the definition of stock-option order to conform to the
paragraph numbering and lettering scheme used throughout the Rules.
\14\ The Exchange notes other options exchanges rules permit the
electronic processing of nonconforming stock-option orders. See Cboe
Rule 5.33(b)(5) (definition of ``stock-option order''); and MIAX
Rule 518(a)(5) (definition of ``complex order'').
---------------------------------------------------------------------------
The proposed rule change also adds proposed Rule 21.20(f)(2)(B)(v)
to state the System does not execute a stock-option order pursuant to
Rule 21.20 at a net price worse than the SBBO or equal to the SBBO when
there is a Priority Customer order on any leg comprising the SBBO and:
(a) if a conforming stock-option order, at least one option component
of the stock-option order must execute at a price that improves the BBO
for that component by at least one minimum increment; or (b) if a
nonconforming stock-option order, the option component(s) of the stock-
option order for the leg(s) with a Priority Customer order at the BBO
must execute at a price that improves the price of that Priority
Customer order(s) on the Simple Book by at least one minimum increment,
except AON \15\ stock-option orders may only execute at prices better
than the SBBO. This is consistent with the permissible execution prices
of conforming and nonconforming complex orders with only option
components.\16\ Therefore, execution of all conforming and
nonconforming complex orders, including stock-option orders, continues
to protect Priority Customer interest on the Exchange.
---------------------------------------------------------------------------
\15\ See Rule 21.1(d)(4) for definition of ``all-or-none'' or
``AON'' orders.
\16\ See Rule 21.20(f)(2)(A)(iv). This execution priority is
also the same as other options exchanges. See Cboe Options Rule
5.33(f)(2)(B); and MIAX Rule 518, Interpretation and Policy .01(c).
---------------------------------------------------------------------------
The proposed rule change has no impact on the requirements for
stock-option orders or how they may be executed. For example, all
stock-option orders (both conforming and nonconforming) must satisfy
the criteria set forth in the definitions of stock-option orders in
Rule 21.20(b), as set forth above. Additionally, all stock-option
orders must comply with the Qualified Contingent Trade (``QCT'')
exemption.\17\ The Exchange represents that its surveillances
incorporate stock-option orders with all ratios, including
nonconforming ratios.
---------------------------------------------------------------------------
\17\ See Rule 21.20, Interpretation and Policy .04.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\18\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \19\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \20\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
\20\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes the proposed rule change to
adopt definitions of conforming and nonconforming complex orders
(including stock-option orders) in Rule 21.20(a), and to incorporate
these proposed definitions into Rule 21.20(f)(2)(A)(iv) will protect
investors, as it incorporates into the Exchange's Rules terminology
generally used in the industry to refer to complex orders with ratios
equal to and greater than one-to-three (0.333) and less three-to-one
(3.00) (conforming) and less than one-to-three (0.333) and greater than
three-to-one 3.00 (nonconforming), and stock-option orders with ratios
less than or equal to eight-to-one (8.00) (conforming) and greater than
eight-to-one (8.00) (nonconforming). Therefore, the Exchange believes
this proposed rule change adds transparency and reduces potential
confusion within the Exchange's Rules. These definitions ultimately
make no substantive changes to the rules and relate merely to
terminology. The Exchange notes these definitions are substantially
similar to definitions used in other options exchanges' rulebooks.\21\
---------------------------------------------------------------------------
\21\ See Cboe Rule 1.1 (definitions of ``conforming complex
order'' and ``nonconforming complex order''); and MIAX Rule
518(a)(8) and (16) (defining ``conforming ratio'' and
``nonconforming ratio'').
---------------------------------------------------------------------------
Additionally, the Exchange believes the proposed rule change to
provide for the processing of stock-option orders with any ratio will
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, as it will eliminate confusion
regarding what types of stock-option orders are permissible for
processing. As noted above, when the Exchange amended its Rules to
permit the processing of nonconforming complex orders, the intent of
that amendment was to permit the processing of all nonconforming
complex orders, including nonconforming stock-option orders. The
reasons set forth in the Exchange's prior rule filing regarding
expansion of processing of nonconforming complex orders applies to all
complex orders, including stock-option orders; the Exchange
inadvertently omitted updates to certain provision regarding stock-
option orders to incorporate that change.\22\ The proposed rule change
merely updates the definition of stock-option order to incorporate the
same change that was made to the definition of complex order with
respect to processing to provide consistency and transparency in the
Exchange's Rules. As noted above, the proposed rule changes regarding
execution of conforming and nonconforming stock-option orders are
consistent with the Exchange's previously adopted rules regarding
execution of other conforming and nonconforming complex orders, as well
as the rules of other options exchanges.\23\
---------------------------------------------------------------------------
\22\ See supra note 9.
\23\ See Cboe Options Rule 5.33(f)(2)(B); and MIAX Rule 518,
Interpretation and Policy .01(c).
---------------------------------------------------------------------------
The proposed rule change also adds a provision in Rule
21.20(f)(2)(B) regarding the specific permissible execution prices for
conforming and nonconforming stock-option orders, consistent with the
execution pricing for other conforming and nonconforming complex
orders, which further adds transparency regarding the execution of
these orders on the Exchange. The Exchange believes the proposed rule
[[Page 11885]]
change will add clarity, transparency, and consistency to its Rules,
thus eliminating potential confusion about the permissible execution
prices of conforming and nonconforming complex orders, which will
ultimately remove impediments to and perfect the mechanisms of a free
and open market and national market system, and in general protect
investors. The proposed rule change will further remove impediments to
and perfect the mechanism of a free and open market and a national
market system, as it is consistent with the rules of other options
exchanges.\24\
---------------------------------------------------------------------------
\24\ See Cboe Rules 1.1 (definitions of ``conforming complex
order'' and ``nonconforming complex order'') and Rule 5.33(f)(2)(B);
and MIAX Rule 518(a)(8) and (16) (defining ``conforming ratio'' and
``nonconforming ratio'') and Interpretation and Policy .01(c).
---------------------------------------------------------------------------
The proposed rule change will permit the electronic trading of
nonconforming stock-option orders but has no impact on the requirements
for stock-option orders or how they may be executed. Execution of all
conforming and nonconforming complex orders, including stock-option
orders, will continue to protect Priority Customer interest on the
Exchange. All stock-option orders (both conforming and nonconforming)
must satisfy the criteria set forth in the definition of stock-option
orders in Rule 21.20(b), which is described above. Additionally, all
stock-option orders must comply with the QCT exemption.\25\ The
Exchange represents that its surveillances incorporate stock-option
orders with all ratios, including nonconforming ratios.
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\25\ See Rule 21.20, Interpretation and Policy .04.
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The Exchange believes the proposed changes to update paragraph
lettering and numbering of certain subparagraphs will benefit
investors, as it conforms these provisions to the lettering and
numbering scheme used throughout the Rulebook, which promotes
consistency throughout the Rulebook and may ultimately reduce potential
investor confusion.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as the proposed
rule change applies equally to all Members. Therefore, any Member may
submit conforming and nonconforming stock-option orders, which will all
be handled by the Exchange in a uniform manner. Further, the Exchange's
proposal will continue to protect Priority Customer interest on the
Exchange.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as it has no
impact on the requirements for stock-option orders or how they may be
executed. As discussed above, the proposed rule change merely updates
certain rule provisions it inadvertently did not update in connection
with a previous rule change. Additionally, the proposed rule change is
consistent with the offering of other options exchanges.\26\ The
Exchange believes availability of conforming and nonconforming complex
orders, including stock-option orders, may promote competition, as it
provides investors with multiple venues at which to execute these
orders, giving investors greater flexibility and choice of where to
send their orders.
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\26\ See Cboe Options Rule 5.33(f)(2)(B); and MIAX Rule 518,
Interpretation and Policy .01(c).
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The Exchange believes the proposed rule change to make
nonsubstantive updates to lettering and numbering of subparagraphs will
have no burden on intramarket or intermarket competition, as these
changes are not competitive and merely conform these subparagraphs to
the lettering and numbering scheme used throughout the Rulebook.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A) of the Act \27\ and Rule 19b-
4(f)(6) \28\ thereunder, the Exchange has designated this proposal as
one that effects a change that: (i) does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
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 \29\ and Rule 19b-
4(f)(6) thereunder.\30\
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\27\ 15 U.S.C. 78s(b)(3)(A).
\28\ 17 CFR 240.19b-4(f)(6).
\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \31\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange states that
waiver of the operative delay will immediately eliminate potential
confusion regarding the permissibility of conforming and nonconforming
stock-option orders on the Exchange and will provide investors with an
additional venue for executing nonconforming stock-option orders. The
Exchange further states that the proposal is not novel because other
options exchanges have substantially similar definitions of conforming
and nonconforming complex orders, other options exchanges permit
electronic processing of nonconforming stock-option orders, and the
proposed execution pricing requirements for nonconforming stock-option
orders are consistent with the execution pricing requirements of other
options exchanges.\32\ The Exchange also states that the proposed
execution pricing requirements will protect Priority Customer interest
on the Exchange.
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\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ See Cboe Options Rules 1.1 (definitions of ``conforming
complex order'' and ``nonconforming complex order'') and
5.33(f)(2)(B); and MIAX Rule 518(a)(8) and (16) (defining
``conforming ratio'' and ``non-conforming ratio'') and MIAX Rule
518, Interpretation and Policy .01(c).
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As discussed above, the proposed definitions of conforming and
nonconforming stock-option order are substantively identical to
definitions adopted by other options exchanges.\33\ In addition, the
proposed execution pricing requirements for stock-option orders are
consistent with the rules of other options exchanges.\34\ The proposal
does not raise new or novel regulatory issues and will provide
investors with
[[Page 11886]]
an additional venue for executing nonconforming stock-option orders
electronically. For these reasons, the Commission believes that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission waives
the 30-day operative delay and designates the proposed rule change
operative upon filing.\35\
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\33\ See Cboe Rule 1.1 and MIAX Rules 518(a)(8) and (16).
\34\ See Cboe Rule 5.33(f)(2)(B)(v) and MIAX Rules 518(c)(1)(iv)
and (v) and MIAX Rule 518, Interpretation and Policy .01(c).
\35\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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-CboeEDGX-2024-012 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-CboeEDGX-2024-012. 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-CboeEDGX-2024-012 and should
be submitted on or before March 7, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-03099 Filed 2-14-24; 8:45 am]
BILLING CODE 8011-01-P
