Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca Rule 1.1, 15239-15242 [2024-04299]
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Federal Register / Vol. 89, No. 42 / Friday, March 1, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
Fridays.22 Further, today, Tuesday and
Thursday Short Term Option Daily
Expirations do not expire on a business
day in which monthly options series or
Quarterly Options Series expire.23
Today, all Short Term Option Daily
Expirations expire at the close of
business on each of the next two
Mondays, Tuesdays, Wednesdays, and
Thursdays, respectively, that are
business days and are not business days
in which monthly options series or
Quarterly Options Series expire. There
are no material differences in the
treatment of Tuesday and Thursday SPY
and QQQ Short Term Daily Expirations
as compared to the proposed Tuesday
and Thursday IWM Short Term Daily
Expirations.
Finally, the Exchange represents that
it has an adequate surveillance program
in place to detect manipulative trading
in the proposed Tuesday and Thursday
IWM Short Term Daily Expirations, in
the same way that it monitors trading in
the current Short Term Option Series
and trading in Tuesday and Thursday
SPY and QQQ Expirations. The
Exchange also represents that it has the
necessary systems capacity to support
the new options series. Finally, the
Exchange does not believe that any
market disruptions will be encountered
with the introduction of Tuesday and
Thursday IWM Short Term Daily
Expirations.
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.
Similar to SPY and QQQ Tuesday and
Thursday Expirations, the introduction
of IWM Tuesday and Thursday Short
Term Daily Expirations does not impose
an undue burden on competition. The
Exchange believes that it will, among
other things, expand hedging tools
available to market participants and
continue the reduction of the premium
cost of buying protection. The Exchange
believes that IWM Tuesday and
Thursday Short Term Daily Expirations
will allow market participants to
purchase IWM options based on their
timing as needed and allow them to
tailor their investment and hedging
needs more effectively. The Exchange
notes that Cboe began listing Tuesday
and Thursday expirations in RUTW and
MRUT on January 8, 2024.
22 See ISE Supplementary Material .03(b) at
Options 4, Section 5.
23 See ISE Supplementary Material .03 at Options
4, Section 5
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The Exchange does not believe the
proposal will impose any burden on
inter-market competition, as nothing
prevents other options exchanges from
proposing similar rules to list and trade
Short-Term Option Series with Tuesday
and Thursday Short Term Daily
Expirations. The Exchange notes that
having Tuesday and Thursday IWM
expirations is not a novel proposal, as
SPY and QQQ Tuesday and Thursday
Expirations are currently listed on ISE.24
Further, the Exchange does not
believe the proposal will impose any
burden on intra-market competition, as
all market participants will be treated in
the same manner under this proposal.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) by order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be 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:
15239
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–ISE–2024–06 and should be
submitted on or before March 22, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–04298 Filed 2–29–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–99606; File No. SR–
NYSEARCA–2024–16]
• 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–
ISE–2024–06 on the subject line.
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend NYSE Arca
Rule 1.1
Paper Comments
February 26, 2024.
• 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–ISE–2024–06. This file
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on February
14, 2024, NYSE Arca, Inc. (‘‘NYSE
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
24 See ISE Supplementary Material .03 at Options
4, Section 5.
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Federal Register / Vol. 89, No. 42 / Friday, March 1, 2024 / Notices
Arca’’ 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 self-regulatory organization. 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
Rule 1.1 (Definitions) to adopt a
category of Market Makers called Floor
Market Makers and to make other
conforming changes. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, 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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The purpose of this filing is to amend
Exchange Rule 1.1 (Definitions) to adopt
a category of Market Makers called Floor
Market Makers and to make other
conforming changes. The Exchange
notes that the proposed category of
Floor Market Makers is substantively
identical to the category of Floor Market
Makers on at least one other options
exchange, including on the Exchange’s
affiliated SRO, NYSE American LLC
(‘‘NYSE American’’).4
The Exchange proposes to adopt a
category of Market Maker called a Floor
Market Maker, which would be
substantively identical to the category of
Floor Market Maker on NYSE American.
4 See NYSE American Rules 900.2NY
(Definitions) (defining a ‘‘Floor Market Maker’’ as
‘‘a registered Market Maker who makes transactions
as a dealer-specialist while on the Floor of the
Exchange’’).
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In this regard, the Exchange proposes to
add a definition of Floor Market Maker
that would provide that a Floor Market
Maker is ‘‘a registered Market Maker
who makes transactions as a dealerspecialist while on the Floor of the
Exchange.’’ Consistent with this
proposal, the Exchange also proposes to
amend Rules 6.32–O (Market Maker
Defined) to make clear that Floor Market
Makers are included in the definition of
Market Maker, unless otherwise
specified or unless context requires
otherwise.5 As such, Floor Market
Makers are required to satisfy the
myriad of obligations imposed on
Market Makers including registration
requirements per Rule 6.33–O
(Registration of Market Makers),
minimum trading requirements for
option issues in appointment per Rule
6.35–O (Appointment of Market
Makers), minimum continuous quoting
requirements per Rules 6.37–O
(Obligations of Market Maker) and
6.37AP–O (Market Maker Quotations),
among others.6 In particular, at least
75% of the trading activity of each
Market Maker, including Floor Market
Makers, must be in option issues in its
appointed issues (the ‘‘minimum 75%
trading requirement’’).7 However,
relevant to the proposed category of
Floor Market Maker, trades executed on
the Trading Floor are counted toward
the minimum 75% trading requirement,
regardless of whether the trades are in
option issues in the Market Maker’s
appointment.8
5 Compare proposed Rule 6.32–O (providing, in
relevant part, that ‘‘[a] Market Maker on the
Exchange will be a Market Maker, Floor Market
Maker, or a Lead Market Maker’’ and that ‘‘[u]nless
specified, or unless the context requires otherwise,
the term Market Maker refers to Market Makers,
Floor Market Makers, and Lead Market Makers’’)
(emphasis added) with NYSE American Rule 920NY
(providing, in relevant part, that ‘‘[a] Market Maker
on the Exchange will be either a Remote Market
Maker, a Floor Market Maker, a Specialist or an eSpecialist’’ and that ‘‘[u]nless specified, or unless
the context requires otherwise, the term Market
Maker refers to Remote Market Makers, Floor
Market Makers, Specialists and e-Specialists’’).
6 Floor Market Makers likewise must comply with
the other requirements specific to Market Makers,
including Rules 6.34–O (Trading by OTP Holders
and OTP Firms on the Floor), 6.34A–O (Market
Maker Authorized Traders—OX), 6.35–O
(Appointment of Market Makers), 6.36–O (Letters of
Guarantee), 6.37B–O (Market Maker Orders), and
6.39–O (Securities Accounts and Orders of Market
Makers).
7 See Rule 6.35–O(i) (Appointment of Market
Makers), Trading Requirements).
8 See Commentary .01 to Rule 6.35–O (providing
that trades effected on the Trading Floor to
accommodate cross trades executed pursuant to
Rule 6.47–O (i.e., taking the other side of a
‘‘crossing’’ order) will ‘‘count toward the Market
Maker’s 75% requirement, regardless of whether the
trades are in issues within or without the Market
Maker’s appointment’’).
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The primary role of Market Makers is
to provide liquidity. The Exchange does
not limit the number of participants
who may act as Market Makers and
would likewise not limit the number of
Market Makers acting as Floor Market
Makers. The proposed category of Floor
Market Makers would have a specific
focus on providing liquidity for orders
submitted for execution on the Floor of
the Exchange through open outcry. The
Exchange believes that the nature of
open outcry transactions lends itself
better to larger-sized transactions than
the liquidity that is typically available
electronically and the proposed
installation of Floor Market Makers
would encourage greater participation
in, and increased liquidity for, such
large trades. The Exchange therefore
believes that all market participants
stand to benefit from any increased
opportunities for order execution
resulting from the infusion of liquidity
on the Trading Floor.
The Exchange has submitted a
separate fee filing that will make Market
Makers acting as Floor Market Makers
eligible for beneficial fee treatment,
provided the Floor Market Maker
satisfies certain criteria, as is the case on
NYSE American.9
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Securities Exchange Act of 1934,10 in
general, and furthers the objectives of
Section 6(b)(5),11 in particular, because
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange believes the proposal to
adopt a new category of Market Makers
called Floor Market Maker and to
subject Floor Market Makers to the same
requirements as non-Floor Market
9 See SR–NYSEArca–2024–12 (providing for
discounted rates on monthly OTP fees to Floor
Market Makers that satisfy certain criteria). The
Exchange notes that the description of Floor Market
Makers set forth SR–NYSEArca–2024–12 is
identical to the description proposed herein and the
proposed minimum 75% Manual trading
requirement aligns with Commentary .01 to Rule
6.35–O, as described herein. See NYSE American
Fee Schedule, Section III.A. (Monthly ATP Fees)
and Section III.A., n. 1 (describing discounted rates
available to Floor Market Makers that meet specific
criteria, which rates/criteria are identical to those
proposed herein).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 89, No. 42 / Friday, March 1, 2024 / Notices
Makers will remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, protect
investors and the public interest, by
creating a subset of Market Makers that
will have a presence on the Trading
Floor with a focus on providing
liquidity for the execution of open
outcry orders The Exchange notes that
Floor Market Makers would have an
incentive to execute orders in all
options issues in open outcry because
all such trades would count towards the
75% minimum trading requirement (per
Commentary .01 to Rule 6.35–O). As
noted herein, the Exchange would not
limit the number of Market Makers
acting as Floor Market Makers. The
Exchange believes that the nature of
open outcry transactions lends itself
better to larger-sized transactions than
the liquidity that is generally available
electronically and the proposed
installation of Floor Market Makers
would encourage greater participation
in such large trades. Therefore, the
proposal will benefit all market
participants trading on the Exchange,
especially those seeking liquidity for
large-sized and complex orders.
Moreover, the Exchange believes that
the proposal would benefit investors,
the national market system, and the
Exchange by increasing competition for
order flow and executions, which would
improve price discovery.
The Exchange notes that, as proposed,
Floor Market Makers would be subject
to the same requirements and
obligations as non-Floor Market Makers.
That said, Floor Market Makers, by
virtue of their presence on the Trading
Floor, would be better positioned to
execute trading interest in open outcry,
which would increase liquidity on the
Trading Floor to the benefit of all
market participants. Because the
proposed category of Floor Market
Makers are subject to the same
obligations as non-Floor Market Makers,
the Exchange notes that it would not
need to undertake any additional
procedures or create additional
surveillances to regulate its Floor
Market Makers together with non-Floor
Market Makers.
As noted herein, the proposal to have
Floor Market Makers is not new or novel
as Floor Market Makers exist pursuant
to the rules of Exchange’s affiliated
options SRO, NYSE American.12 As
12 See NYSE American Rule 900.2NY
(Definitions) (defining a ‘‘Floor Market Maker’’ as
‘‘a registered Market Maker who makes transactions
as a dealer-specialist while on the Floor of the
Exchange’’). See also BOX Options LLC (‘‘BOX’’)
Rule 8510 (defining a ‘‘Floor Market Maker’’ as ‘‘an
Options Participant of the Exchange located on the
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such, this proposal does not raise any
issues not previously considered by the
Exchange.
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. Instead, the
Exchange believes that the proposed
change would continue to encourage
competition because it would apply to
all similarly-situated Market Makers.
The Exchange believes the proposed
change would not unduly burden
market participants trading on the
Exchange but would instead allow (and
encourage) market making firms that do
not already have a presence on the
Trading Floor to install a Floor Market
Maker. The Exchange believes that all
market participants stand to benefit
from this proposal because Floor Market
Makers focused on open outcry
transactions would encourage increased
liquidity and quote competition on the
Exchange. The Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing venues. In such
an environment, the Exchange must
continually review, and consider
adjusting, its rules to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
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 with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 13 and Rule
19b–4(f)(6) thereunder.14 Because the
proposed rule change does not: (i)
significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
Trading Floor who has received permission from
the Exchange to trade in options for his own
account’’).
13 15 U.S.C. 78s(b)(3)(A)(iii).
14 17 CFR 240.19b–4(f)(6).
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15241
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.15
A proposed rule change filed under
Rule 19b–4(f)(6) 16 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),17 the Commission
may 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 would
be consistent with the protection of
investors and the public interest
because it would enable the Exchange to
allow a subset of Market Makers to have
a presence on the Trading Floor with a
specific focus on providing liquidity for
the execution of open outcry orders
without delay. The Exchange further
states that it believes the presence of
Floor Market Makers may result in
increased liquidity for open outcry
interest, which would benefit investors
and the public interest and should
therefore be implemented without
delay. Finally, the Exchange notes that
its affiliate Exchange (NYSE American)
has a substantially identical rule and
therefore the proposed rule change does
not raise any new novel regulatory
issues. For the foregoing reasons, the
Commission does not believe that the
proposal raises any new or novel
regulatory issues, and may provide
market participants with an additional
opportunities to interact with liquidity
on the Trading Floor. Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.18
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
15 Id. In addition, Rule 19b–4(f)(6)(iii) requires a
self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule
change, along with a brief description and text of
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 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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Federal Register / Vol. 89, No. 42 / Friday, March 1, 2024 / Notices
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) 19 of the Act 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:
ddrumheller on DSK120RN23PROD with NOTICES1
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–
NYSEARCA–2024–16 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–NYSEARCA–2024–16. 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–NYSEARCA–2024–16 and should be
submitted on or before March 22, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–04299 Filed 2–29–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99598; File No. SR–BX–
2024–006]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Adopt an OTTO
Protocol
February 26, 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 February
15, 2024, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a
new protocol, ‘‘Ouch to Trade Options’’
or ‘‘OTTO’’ and establish pricing for this
new protocol.
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
20 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
19 15
U.S.C. 78s(b)(2)(B).
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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
BX proposes to offer a new order
entry protocol called OTTO. Today, BX
Participants may enter orders into the
Exchange through the ‘‘Financial
Information eXchange’’ or ‘‘FIX.’’ 3 The
proposed new OTTO protocol is
identical to the OTTO protocol offered
today on 3 Nasdaq affiliated exchanges,
Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq
GEMX, LLC (‘‘GEMX’’) and Nasdaq
MRX, LLC (‘‘MRX’’).
The OTTO protocol is a proprietary
protocol of Nasdaq, Inc. The Exchange
continues to innovate and modernize
technology so that it may continue to
compete among options markets. The
ability to continue to innovate with
technology and offer new products to
market participants allows BX to remain
competitive in the options space which
currently has seventeen options markets
and potential new entrants.
OTTO Protocol
As proposed, OTTO would allow
Participants and their Sponsored
Customers 4 to connect, send, and
receive messages related to orders,
auction orders, and auction responses to
the Exchange. OTTO features would
include the following: (1) options
symbol directory messages (e.g.,
underlying and complex instruments);
(2) System 5 event messages (e.g., start of
3 FIX is an interface that allows Participants and
their Sponsored Customers to connect, send, and
receive messages related to orders and auction
orders and responses to and from the Exchange.
Features include the following: (1) execution
messages; (2) order messages; and (3) risk protection
triggers and cancel notifications. In addition, a BX
Participant may elect to utilize FIX to send a
message and PRISM Order, as defined within
Options 3, Section 13, to all BX Participants that
opt in to receive Requests for PRISM requesting that
it submit the sender’s PRISM Order with
responder’s Initiating Order, as defined within
Options 3, Section 13, into the Price Improvement
Auction (‘‘PRISM’’) mechanism, pursuant to
Options 3, Section 13 (‘‘Request for PRISM’’). See
Options 3, Section 7(e)(1)(A).
4 General 2, Section 22 describes Sponsored
Access arrangements.
5 The term ‘‘System’’ or ‘‘Trading System’’ means
the automated system for order execution and trade
reporting owned and operated by BX as the BX
Options market. The BX Options market comprises:
(A) an order execution service that enables
E:\FR\FM\01MRN1.SGM
01MRN1
]]>Agencies
[Federal Register Volume 89, Number 42 (Friday, March 1, 2024)]
[Notices]
[Pages 15239-15242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04299]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99606; File No. SR-NYSEARCA-2024-16]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca
Rule 1.1
February 26, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on February 14, 2024, NYSE Arca, Inc. (``NYSE
[[Page 15240]]
Arca'' 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 self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 1.1 (Definitions) to adopt a
category of Market Makers called Floor Market Makers and to make other
conforming changes. The proposed rule change is available on the
Exchange's website at www.nyse.com, 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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Exchange Rule 1.1
(Definitions) to adopt a category of Market Makers called Floor Market
Makers and to make other conforming changes. The Exchange notes that
the proposed category of Floor Market Makers is substantively identical
to the category of Floor Market Makers on at least one other options
exchange, including on the Exchange's affiliated SRO, NYSE American LLC
(``NYSE American'').\4\
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\4\ See NYSE American Rules 900.2NY (Definitions) (defining a
``Floor Market Maker'' as ``a registered Market Maker who makes
transactions as a dealer-specialist while on the Floor of the
Exchange'').
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The Exchange proposes to adopt a category of Market Maker called a
Floor Market Maker, which would be substantively identical to the
category of Floor Market Maker on NYSE American. In this regard, the
Exchange proposes to add a definition of Floor Market Maker that would
provide that a Floor Market Maker is ``a registered Market Maker who
makes transactions as a dealer-specialist while on the Floor of the
Exchange.'' Consistent with this proposal, the Exchange also proposes
to amend Rules 6.32-O (Market Maker Defined) to make clear that Floor
Market Makers are included in the definition of Market Maker, unless
otherwise specified or unless context requires otherwise.\5\ As such,
Floor Market Makers are required to satisfy the myriad of obligations
imposed on Market Makers including registration requirements per Rule
6.33-O (Registration of Market Makers), minimum trading requirements
for option issues in appointment per Rule 6.35-O (Appointment of Market
Makers), minimum continuous quoting requirements per Rules 6.37-O
(Obligations of Market Maker) and 6.37AP-O (Market Maker Quotations),
among others.\6\ In particular, at least 75% of the trading activity of
each Market Maker, including Floor Market Makers, must be in option
issues in its appointed issues (the ``minimum 75% trading
requirement'').\7\ However, relevant to the proposed category of Floor
Market Maker, trades executed on the Trading Floor are counted toward
the minimum 75% trading requirement, regardless of whether the trades
are in option issues in the Market Maker's appointment.\8\
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\5\ Compare proposed Rule 6.32-O (providing, in relevant part,
that ``[a] Market Maker on the Exchange will be a Market Maker,
Floor Market Maker, or a Lead Market Maker'' and that ``[u]nless
specified, or unless the context requires otherwise, the term Market
Maker refers to Market Makers, Floor Market Makers, and Lead Market
Makers'') (emphasis added) with NYSE American Rule 920NY (providing,
in relevant part, that ``[a] Market Maker on the Exchange will be
either a Remote Market Maker, a Floor Market Maker, a Specialist or
an e-Specialist'' and that ``[u]nless specified, or unless the
context requires otherwise, the term Market Maker refers to Remote
Market Makers, Floor Market Makers, Specialists and e-
Specialists'').
\6\ Floor Market Makers likewise must comply with the other
requirements specific to Market Makers, including Rules 6.34-O
(Trading by OTP Holders and OTP Firms on the Floor), 6.34A-O (Market
Maker Authorized Traders--OX), 6.35-O (Appointment of Market
Makers), 6.36-O (Letters of Guarantee), 6.37B-O (Market Maker
Orders), and 6.39-O (Securities Accounts and Orders of Market
Makers).
\7\ See Rule 6.35-O(i) (Appointment of Market Makers), Trading
Requirements).
\8\ See Commentary .01 to Rule 6.35-O (providing that trades
effected on the Trading Floor to accommodate cross trades executed
pursuant to Rule 6.47-O (i.e., taking the other side of a
``crossing'' order) will ``count toward the Market Maker's 75%
requirement, regardless of whether the trades are in issues within
or without the Market Maker's appointment'').
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The primary role of Market Makers is to provide liquidity. The
Exchange does not limit the number of participants who may act as
Market Makers and would likewise not limit the number of Market Makers
acting as Floor Market Makers. The proposed category of Floor Market
Makers would have a specific focus on providing liquidity for orders
submitted for execution on the Floor of the Exchange through open
outcry. The Exchange believes that the nature of open outcry
transactions lends itself better to larger-sized transactions than the
liquidity that is typically available electronically and the proposed
installation of Floor Market Makers would encourage greater
participation in, and increased liquidity for, such large trades. The
Exchange therefore believes that all market participants stand to
benefit from any increased opportunities for order execution resulting
from the infusion of liquidity on the Trading Floor.
The Exchange has submitted a separate fee filing that will make
Market Makers acting as Floor Market Makers eligible for beneficial fee
treatment, provided the Floor Market Maker satisfies certain criteria,
as is the case on NYSE American.\9\
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\9\ See SR-NYSEArca-2024-12 (providing for discounted rates on
monthly OTP fees to Floor Market Makers that satisfy certain
criteria). The Exchange notes that the description of Floor Market
Makers set forth SR-NYSEArca-2024-12 is identical to the description
proposed herein and the proposed minimum 75% Manual trading
requirement aligns with Commentary .01 to Rule 6.35-O, as described
herein. See NYSE American Fee Schedule, Section III.A. (Monthly ATP
Fees) and Section III.A., n. 1 (describing discounted rates
available to Floor Market Makers that meet specific criteria, which
rates/criteria are identical to those proposed herein).
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934,\10\ in general, and furthers the
objectives of Section 6(b)(5),\11\ in particular, because it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, to remove impediments to, and perfect the mechanism of, a
free and open market and a national market system and, in general, to
protect investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposal to adopt a new category of
Market Makers called Floor Market Maker and to subject Floor Market
Makers to the same requirements as non-Floor Market
[[Page 15241]]
Makers will remove impediments to and perfect the mechanism of a free
and open market and a national market system, and, in general, protect
investors and the public interest, by creating a subset of Market
Makers that will have a presence on the Trading Floor with a focus on
providing liquidity for the execution of open outcry orders The
Exchange notes that Floor Market Makers would have an incentive to
execute orders in all options issues in open outcry because all such
trades would count towards the 75% minimum trading requirement (per
Commentary .01 to Rule 6.35-O). As noted herein, the Exchange would not
limit the number of Market Makers acting as Floor Market Makers. The
Exchange believes that the nature of open outcry transactions lends
itself better to larger-sized transactions than the liquidity that is
generally available electronically and the proposed installation of
Floor Market Makers would encourage greater participation in such large
trades. Therefore, the proposal will benefit all market participants
trading on the Exchange, especially those seeking liquidity for large-
sized and complex orders. Moreover, the Exchange believes that the
proposal would benefit investors, the national market system, and the
Exchange by increasing competition for order flow and executions, which
would improve price discovery.
The Exchange notes that, as proposed, Floor Market Makers would be
subject to the same requirements and obligations as non-Floor Market
Makers. That said, Floor Market Makers, by virtue of their presence on
the Trading Floor, would be better positioned to execute trading
interest in open outcry, which would increase liquidity on the Trading
Floor to the benefit of all market participants. Because the proposed
category of Floor Market Makers are subject to the same obligations as
non-Floor Market Makers, the Exchange notes that it would not need to
undertake any additional procedures or create additional surveillances
to regulate its Floor Market Makers together with non-Floor Market
Makers.
As noted herein, the proposal to have Floor Market Makers is not
new or novel as Floor Market Makers exist pursuant to the rules of
Exchange's affiliated options SRO, NYSE American.\12\ As such, this
proposal does not raise any issues not previously considered by the
Exchange.
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\12\ See NYSE American Rule 900.2NY (Definitions) (defining a
``Floor Market Maker'' as ``a registered Market Maker who makes
transactions as a dealer-specialist while on the Floor of the
Exchange''). See also BOX Options LLC (``BOX'') Rule 8510 (defining
a ``Floor Market Maker'' as ``an Options Participant of the Exchange
located on the Trading Floor who has received permission from the
Exchange to trade in options for his own account'').
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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. Instead, the Exchange
believes that the proposed change would continue to encourage
competition because it would apply to all similarly-situated Market
Makers. The Exchange believes the proposed change would not unduly
burden market participants trading on the Exchange but would instead
allow (and encourage) market making firms that do not already have a
presence on the Trading Floor to install a Floor Market Maker. The
Exchange believes that all market participants stand to benefit from
this proposal because Floor Market Makers focused on open outcry
transactions would encourage increased liquidity and quote competition
on the Exchange. The Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues. In such an environment, the Exchange must continually
review, and consider adjusting, its rules to remain competitive with
other exchanges. For the reasons described above, the Exchange believes
that the proposed rule change reflects this competitive environment.
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 with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\15\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ Id. In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ the Commission
may 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 would be consistent with the protection of
investors and the public interest because it would enable the Exchange
to allow a subset of Market Makers to have a presence on the Trading
Floor with a specific focus on providing liquidity for the execution of
open outcry orders without delay. The Exchange further states that it
believes the presence of Floor Market Makers may result in increased
liquidity for open outcry interest, which would benefit investors and
the public interest and should therefore be implemented without delay.
Finally, the Exchange notes that its affiliate Exchange (NYSE American)
has a substantially identical rule and therefore the proposed rule
change does not raise any new novel regulatory issues. For the
foregoing reasons, the Commission does not believe that the proposal
raises any new or novel regulatory issues, and may provide market
participants with an additional opportunities to interact with
liquidity on the Trading Floor. Accordingly, the Commission hereby
waives the 30-day operative delay and designates the proposed rule
change operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ 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 such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such
[[Page 15242]]
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) \19\ of the Act to
determine whether the proposed rule change should be approved or
disapproved.
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\19\ 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-NYSEARCA-2024-16 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-NYSEARCA-2024-16. 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-NYSEARCA-2024-16 and should
be submitted on or before March 22, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-04299 Filed 2-29-24; 8:45 am]
BILLING CODE 8011-01-P
