[Federal Register Volume 88, Number 176 (Wednesday, September 13, 2023)]
[Notices]
[Pages 62833-62835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19730]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98318; File No. SR-BX-2023-021]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 3,
Section 13 Concerning PRISM
September 7, 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 August 30, 2023, Nasdaq BX, Inc. (``BX'' 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\ 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 Options 3, Section 13, Price
Improvement Auction (``PRISM'').
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/bx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Options 3, Section 13, Price
Improvement Auction (``PRISM''). Specifically, the Exchange proposes to
amend Options 3, Section 13(i)(A) through (C) to harmonize the language
within the PRISM entry checks with language within Nasdaq GEMX, LLC's
(``GEMX'') PIM, Nasdaq ISE, LLC's (``ISE'') PIM, Nasdaq MRX, LLC's
(``MRX'') PIM, and Nasdaq Phlx LLC's (``Phlx'') PIXL, without changing
the substantive operations of these price improvement auctions. The
Exchange believes that by utilizing similar language, Participants will
be able to compare BX's PRISM entry checks with similar mechanisms on
Nasdaq affiliated markets.
BX proposes to add ``a price that is'' to the end of Options 3,
Section 13(i)(A) and add new subparagraphs (1) and (2) to distinguish
opposite and same side checks. The opposite side check is currently
spelled out in the current rule text, however the same side check does
not specify the NBBO check. Today, if the PRISM Order is for less than
50 option contracts, and if the difference between the NBBO or the
internal BBO is $0.01, the Initiating Participant must stop the entire
PRISM Order at a price that is, on the same side of the market as the
PRISM Order, equal to or better than the NBBO \3\ and better than any
Limit Order or quote on the Limit Order book. The Exchange believes
that the addition of the NBBO check will add clarity to the rule text
concerning same side price checks because the NBBO check is always
relevant in the same side check to avoid a trade-through. The Exchange
also proposes to capitalize ``Limit Order,'' and remove other
extraneous words as the sentence has been rearranged. The Exchange
notes that this rule text represents current System functionality.
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\3\ For example, if the market is 0.98 bid and 0.99 offer, a
Public Customer PRISM Order to buy for less than 50 contracts must
be stopped at 0.98 cents in this scenario to be accepted into a
PRISM Auction, provided there is no resting order or quote on the BX
order book at 0.98 in which case the PRISM Order would be rejected.
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The Exchange proposes to amend Options 3, Section 13(i)(B) to
distinguish opposite and same side checks and add a semicolon to the
end of Options 3, Section 13(i)(B). The opposite side check is
currently spelled out in the current rule text, however the same side
check does not specify the NBBO check. Today, if the PRISM Order is for
the account of a Public Customer and such order is for 50 option
contracts or more, or if the difference between the NBBO or the
internal BBO is greater than $0.01, the Initiating Participant must
stop the entire PRISM Order at a price that is, on the same side of the
market as the PRISM Order, at least $0.01 better than any Limit Order
or quote on the Limit Order book and equal to or better than the NBBO.
The Exchange believes that the addition of the NBBO check will add
clarity to the rule text because the NBBO check is always relevant in
the same side check to avoid a trade-through. The Exchange also
proposes to capitalize ``Limit Order,'' and remove other extraneous
words as the sentence has been rearranged. The Exchange notes that this
rule text represents current System functionality.
The Exchange proposes to amend Options 3, Section 13(i)(C) to
distinguish opposite and same side checks and add a semicolon to the
end of Options 3, Section 13(i)(C). The opposite side check is not
currently delineated in the rule text. The Exchange proposes to provide
that if the PRISM Order is for the account of a broker dealer or any
other person or entity that is not a Public Customer and such order is
for 50 option contracts or more, or if the difference between the NBBO
or the internal BBO is greater than $0.01, the Initiating Participant
must stop the entire PRISM Order at a price that is equal to or better
than the internal BBO and NBBO on the opposite side of the market from
the PRISM Order. The Exchange notes that this rule text represents
current System functionality. The Exchange also proposes to reword the
current rule text related to the same side check to provide that if the
PRISM Order is for the account of a broker dealer or any other person
or entity that is not a Public Customer and such order is for 50 option
contracts or more, or if the difference between the NBBO or the
internal BBO is greater than $0.01, the Initiating Participant must
stop the entire PRISM Order at a price that is, on the same side of the
market as the PRISM Order, at least $0.01 better than any Limit Order
or quote on the Limit Order book, and equal to or better than the NBBO.
The Exchange notes that this rule text represents current System
functionality. The current rule text indicates that the PRISM Order
must be stopped at a price that is the better of the BX BBO improved by
at least $0.01 or the PRISM Order's limit price on the same side of the
market as the PRISM Order, provided in either case that such price is
at or better than the NBBO. Because the language is the ``better of''
the Exchange notes that the proposed language, which conforms to
similar language utilized on other Nasdaq affiliated markets, describes
the same price checks and adds the NBBO check which is currently
missing.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\4\ in general, and furthers the objectives of section
6(b)(5) of the Act,\5\ in particular, in that it is designed to promote
just and equitable principles of trade and to protect investors and the
public interest.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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The Exchange's proposal to amend Options 3, Section 13(i)(A)
through (C) to harmonize the language within the PRISM entry checks
with language within GEMX's PIM, ISE's PIM, MRX's PIM, and Phlx's PIXL,
without changing the substantive operations of these price improvement
auctions, is consistent with the Act and the protection of investors
and the general public because by utilizing similar language
Participants will be able to compare BX's PRISM entry checks with
similar mechanisms on Nasdaq affiliated markets.
BX's proposal to amend Options 3, Section 13(i)(A) to distinguish
opposite and same side checks, and add the NBBO check to the same side
price check is consistent with the Act and the protection of investors
and the general public because the NBBO check is always relevant in the
same side check to avoid a trade-through. The Exchange believes that
the addition of the NBBO check will add clarity to the rule text
because the NBBO check is always relevant in the same side check to
avoid a trade-through. The remainder of the changes are non-
substantive.
BX's proposal to amend Options 3, Section 13(i)(B) to distinguish
opposite and same side checks, and add the NBBO check to the same side
price check is consistent with the Act and the protection of investors
and the general public because the NBBO check is always relevant in the
same side check to avoid a trade-through. The Exchange believes that
the addition of the NBBO check will add clarity to the rule text
because the NBBO check is always relevant in the same side check to
avoid a trade-through. The remainder of the changes are non-
substantive.
BX's proposal to amend Options 3, Section 13(i)(C) to distinguish
opposite and same side checks, and add the opposite side check to the
rule text is consistent with the Act and the protection of investors
and the general public. The opposite side check must be equal to or
better than the NBBO and any non-displayed order on the Exchange's
order book to avoid a trade-through. Also, the NBBO check is always
relevant in the same side check to avoid a trade-through. Rewording the
current rule text related to the same side check to provide that if the
PRISM Order is for the account of a broker dealer or any other person
or entity that is not a Public Customer and such order is for 50 option
contracts or more, or if the difference between the NBBO or the
internal BBO is greater than $0.01, the Initiating Participant must
stop the entire PRISM Order at a price that is on the same side of the
market as the PRISM Order, at least $0.01 better than any Limit Order
or quote on the Limit Order book, and equal to or better than the NBBO
is consistent with the Act and the protection of investors and the
general public. The proposed rule text describes the same price checks
as the current rule while conforming the rule text to similar language
utilized on other Nasdaq affiliated markets. Additionally, the proposed
rule text adds the NBBO check which is always relevant in the same side
check to avoid a trade-through. The Exchange believes that the addition
of the NBBO check will add clarity to the rule text because the NBBO
check is always relevant in the same side check to avoid a trade-
through. The Exchange notes that this rule text represents current
System functionality.
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.
BX's proposal to amend Options 3, Section 13(i)(A) through (C) to
harmonize the language within the PRISM entry checks with language
within GEMX's PIM, ISE's PIM, MRX's PIM, and Phlx's PIXL, without
changing the substantive operations of these price improvement
auctions, does not impose an undue burden on competition because market
participants will be able to compare BX's PRISM entry checks with
similar mechanisms on Nasdaq affiliated markets.
Amending Options 3, Section 13(i)(A) through (C) to specify the
entry checks that are utilized by BX's System today to initiate a PRISM
does not impose an undue burden on competition because these checks
will apply uniformly to any order entered into PRISM. Further, the
proposed amendments will add transparency to the current System
functionality, which is not being substantively amended.
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
Because the foregoing 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 for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6)
thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 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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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 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-BX-2023-021 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-2023-021. This file
number should be included on the
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subject line if email is used. To help the Commission process and
review your comments more efficiently, please use only one method. The
Commission will post all comments on the Commission's internet website
(https://www.sec.gov/rules/sro.shtml). Copies of the submission, all
subsequent amendments, all written statements with respect to the
proposed rule change that are filed with the Commission, and all
written communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-BX-2023-021 and should be submitted on or before October 4, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19730 Filed 9-12-23; 8:45 am]
BILLING CODE 8011-01-P