[Federal Register Volume 88, Number 102 (Friday, May 26, 2023)]
[Notices]
[Pages 34201-34203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11239]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97541; File No. SR-BX-2023-012]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Offer Field-
Programmable Gate Array Technology as an Optional Delivery Mechanism 
for BX TotalView

May 22, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 12, 2023, 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 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 offer field-programmable gate array 
(``FPGA'') technology as an optional delivery mechanism for BX 
TotalView.

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
    BX proposes to offer field-programmable gate array (``FPGA'') 
technology as an optional delivery mechanism for BX TotalView.\3\
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    \3\ A proposal to make FPGA technology also available at the PSX 
Exchange is being submitted together with this proposal. The 
Exchange initially filed this Proposal on May 4, 2023 (SR-BX-2023-
011). On May 12, 2023, the Exchange withdrew SR-BX-2023-011 and 
replaced it with the instant filing. This filing corrects an error 
in the initial submission, but includes no substantive changes.
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    FPGA technology has been used for over a decade by the Nasdaq Stock 
Market to facilitate customer ingestion of large quantities of 
information at periods of peak activity. FPGA hardware is designed to 
facilitate the processing of large data packets without introducing 
variable queuing, thereby improving the predictability of data transfer 
on telecommunications ports, a process known as ``determinism.'' 
Outside of peak activity, FPGA helps customers establish more 
predictable consistency in message throughput over the course of the 
trading day.

[[Page 34202]]

    The Exchange proposes to use FPGA technology to process BX 
TotalView data. BX TotalView is a real-time market data product that 
provides full order depth using a series of order messages to track the 
life of customer orders in the BX market, as well as trade data for BX 
executions and administrative messages such as Trading Action messages, 
Symbol Directory, and Event Control messages.\4\ BX TotalView allows 
users to view all displayed quotes and orders, access total displayed 
anonymous interest, and see total size of all displayed quotes and 
orders.
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    \4\ See Nasdaq BX, Inc. Rules, Equity 7, Section 123 (BX 
TotalView); see also Securities Exchange Act Release No. 59307 
(January 28, 2009), 74 FR 6069 (February 4, 2009) (establishing fees 
for BX TotalView).
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    FPGA technology has been offered by the Nasdaq Stock Exchange for 
over a decade, and the Nasdaq Options Market for nearly as long,\5\ and 
has been cited by the SEC as an example of a technology useful in the 
distribution of market data products.\6\ It is a well-established 
technology that is familiar to market participants.
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    \5\ See Securities Exchange Act Release No. 67297 (June 28, 
2012), 77 FR 39752 (July 5, 2012) (SR-Nasdaq-2012-063) (introducing 
FPGA technology); see also Nasdaq Data News 2012-13, available at 
http://www.nasdaqtrader.com/TraderNews.aspx?id=dn2012-13 
(introducing TotalView FPGA service as of August 1, 2012); 
Securities Exchange Act Release No. 74745 (April 16, 2015), 80 FR 
22588 (April 22, 2015) (SR-Nasdaq-2015-035) (establishing FPGA for 
the Nasdaq Options Market); see also The Nasdaq Stock Market LLC 
Rules, Equity 7, Section 126(c) (Hardware-Based Delivery of Nasdaq 
Depth data).
    \6\ See Securities Exchange Act Release No. 90610, 86 FR 18596, 
18647 (April 9, 2021) (File No. S7-03-20) (listing field 
programmable gate array services as an example of a technological 
innovation that could be employed by competing consolidators as part 
of the Market Data Infrastructure rule).
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    The purchase of FPGA technology is entirely optional because FPGA 
functionality can be replicated through a variety of software 
solutions. Our experience with Nasdaq TotalView is that some customers 
use FPGA technology to address determinism, others avail themselves of 
software solutions, some use both, and others alternate between both. 
Some market participants that have purchased FPGA technology in the 
past have discontinued its use. There are no systematic differences 
among market participants that choose to use or not to use FPGA 
technology beyond the compatibility of FPGA technology with the 
customer's specific technical systems, which can change over time as 
systems are modified, replaced or updated.
    The proposal to offer FPGA technology to customers of BX TotalView 
is in response to customer demand. To date, lower levels of peak 
activity at the BX Exchange relative to the Nasdaq Exchange have been 
associated with low levels of customer interest in this product. 
Recently, however, BX has heard from customers interested in using FPGA 
technology for BX TotalView. To address this customer demand, and to 
drive liquidity to the BX Exchange by making it a more attractive 
trading venue, BX has decided to offer this product to meet evolving 
customer needs.
    The Exchange will submit a proposed fee schedule for this product 
in a separate filing. The Exchange intends to make this product 
available on June 1, 2023.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and in general to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    As noted above, the current proposal to offer FPGA technology with 
BX TotalView is in response to changes in customer demand. This 
proposal reflects the need for the Exchange to stay competitive in the 
market for exchange services. It also promotes competition and 
innovation by providing market participants additional choices in the 
transmission of depth of book data.
    Offering this well-recognized technology to customers will 
facilitate their usage of the data. If the technology is not ultimately 
beneficial, the customer can discontinue it at any time, and for any 
reason, as they have done in the past. Customers that choose not to 
purchase FPGA technology will not be affected because these customers 
have alternative methods to facilitate determinism available to them.
    Approval of this proposal is in the public interest and otherwise 
furthers the objectives of Section 6(b)(5) of the Act because it 
promotes competition, facilitates the ingestion of market data by 
certain market participants, and has no impact on customers that do not 
elect to avail themselves of the service.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    Nothing in the Proposal burdens inter-market competition (the 
competition among self-regulatory organizations) because approval of 
the Proposal does not impose any burden on the ability of other 
exchanges to compete. All exchanges are free introduce products that 
facilitate the ingestion of data at peak periods.
    Nothing in the Proposal burdens intra-market competition (the 
competition among consumers of exchange data) because FPGA technology 
will be available to any market participant on a non-discriminatory 
basis.

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

    FINRA has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 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) thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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 on June 1 so that any potential customer that 
wishes to obtain

[[Page 34203]]

the FPGA service would be able to do so on June 1, 2023. The Exchange 
argues that an operative date of June 1, 2023 is consistent with the 
protection of investors and the public interest because market data 
services are typically initiated at the beginning of a calendar month, 
and the June 1 operative date would allow any interested customer to 
utilize the service for the entire month, while still allowing any 
interested party almost a month to review the proposal.\13\ The 
Exchange also argues that the benefits of the full month of operation 
outweigh any costs associated with a slightly shorter operative delay, 
given that FPGA is a well-established technology that is familiar to 
market participants. 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 hereby waives the 
operative delay and designates the proposed rule change as operative 
upon filing.\14\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ The Exchange initially filed the substance of this proposed 
rule change on May 4, 2023 as SR-BX-2023-011. This initial proposal 
was withdrawn and replaced on May 12, 2023.
    \14\ 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 shall 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BX-2023-012 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2023-012. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-BX-2023-012, and should be submitted on 
or before June 16, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11239 Filed 5-25-23; 8:45 am]
BILLING CODE 8011-01-P