[Federal Register Volume 89, Number 119 (Thursday, June 20, 2024)]
[Notices]
[Pages 51929-51931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13415]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100324; File No. SR-CboeBZX-2024-049]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Introduce a New Connectivity Offering Through Dedicated Cores

June 13, 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 June 6, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 as a ``non-controversial'' proposed rule change 
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.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
introduce a new connectivity offering.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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 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 introduce a new connectivity offering 
relating to the use of Dedicated Cores. By way of background, all 
Central Processing Units (``CPU Cores'') have historically been shared 
by logical order entry ports (i.e., multiple logical ports from 
multiple firms may connect to a single CPU Core). Starting June 10, 
2024, the Exchange will allow Users \5\ to assign a single Binary Order 
Entry (``BOE'') logical order entry port \6\ to a single dedicated CPU 
Core (``Dedicated Core'').\7\ Use of Dedicated Cores can provide 
reduced latency, enhanced throughput, and improved performance since a 
firm using a Dedicated Core is utilizing the full processing power of a 
CPU Core instead of sharing that power with other firms. This offering 
is completely voluntary and will be available to all Users.\8\ Users 
will also continue to have the option to utilize BOE logical order 
entry ports on shared CPU Cores as they do today, either in lieu of, or 
in addition to, their use of Dedicated Core(s). As such, Users will be 
able to operate across a mix of shared and dedicated CPU Cores which 
the Exchange believes provides additional risk and capacity management, 
especially during times of market volatility and high message traffic. 
Further, Dedicated Cores are not required nor necessary to participate 
on the Exchange and as such Users may opt not to use Dedicated Cores at 
all.
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    \5\ A User may be either a Member or Sponsored Participant. The 
term ``Member'' shall mean any registered broker or dealer that has 
been admitted to membership in the Exchange, limited liability 
company or other organization which is a registered broker or dealer 
pursuant to Section 15 of the Act, and which has been approved by 
the Exchange. A Sponsored Participant may be a Member or non-Member 
of the Exchange whose direct electronic access to the Exchange is 
authorized by a Sponsoring Member subject to certain conditions. See 
Exchange Rule 11.3.
    \6\ Users may currently connect to the Exchange using a logical 
port available through an application programming interface 
(``API''), such as the Binary Order Entry (``BOE'') protocol. A BOE 
logical order entry port is used for order entry.
    \7\ The Exchange notes that firms will not have physical access 
to their Dedicated Core and thus cannot make any modifications to 
the Dedicated Core or server. All Dedicated Cores (including servers 
used for this service) are owned and operated by the Exchange.
    \8\ The Exchange intends to submit a separate rule filing to 
adopt monthly fees related to the use of Dedicated Cores.
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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.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
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    In particular, the proposal would provide Users the option to 
assign a single BOE logical entry port to a single Dedicated Core. As 
described above, CPU Cores have historically been shared by logical 
order entry ports (i.e., multiple logical ports from multiple firms may 
connect to a single CPU Core). Use of Dedicated Cores can provide 
reduced latency, enhanced throughput, and improved performance since a 
firm using a Dedicated Core is utilizing the full processing power of a 
CPU Core instead of sharing that power with other firms. The Exchange 
also emphasizes that the use of Dedicated Cores is not necessary for 
trading and as noted above, is entirely optional. Indeed, Users can 
continue to access the Exchange through shared CPU Cores at no 
additional cost. Depending on a firm's specific business needs, the 
proposal enables Users to choose to use Dedicated Cores in lieu of, or 
in addition to, shared CPU Cores (or as noted, not use Dedicated Cores 
at all). The Exchange also notes that its affiliated exchanges, Cboe 
EDGA Exchange, Inc., Cboe BYX Exchange,

[[Page 51930]]

Inc., and Cboe EDGX Exchange, Inc. recently introduced Dedicated Cores 
and that another Exchange [sic] also provides a similar connectivity 
offering.\12\
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    \12\ See Securities Exchange Act Release No. 99818 (March 21, 
2024), 89 FR 21294 (March 27, 2024) (SR-CboeEDGA-2024-008), 
Securities Exchange Act Release No. 100062 (May 6, 2024), 89 FR 
40517 (May 10, 2024) (SR-CboeBYX-2024-013) and Securities Exchange 
Act Release No. 100182 (May 20, 2024), 89 FR 45932 (May 24, 2024) 
(SR-CboeEDGX-2024-026). See also The Nasdaq Stock Market, Equity 7 
Pricing Schedule, Section 115(g)(3), Dedicated Ouch Port 
Infrastructure.
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    Furthermore, this service is optional and is available to all 
Users. In this regard, some Users may determine it does not want or 
need Dedicated Cores and may continue their use of the shared CPU 
Cores, unchanged. The Exchange has no current plans to eliminate shared 
Cores nor require subscription to the dedicated offering.

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. Particularly, the Exchange 
believes the proposed rule change does not impose any burden on intra-
market competition that is not necessary or appropriate in furtherance 
of the purposes of the Act because Dedicated Cores will be available to 
all Users. While the Exchange believes that the proposed Dedicated 
Cores provide a valuable service, Users can choose to purchase, or not 
purchase, Dedicated Cores based on their own determination of the value 
and their business needs. Indeed, no User is required or under any 
regulatory obligation to use Dedicated Cores.
    Additionally, nothing in the proposal imposes any burden on the 
ability of other exchanges to compete. The Exchange operates in a 
highly competitive market in which exchanges offer various connectivity 
services as a means to facilitate the trading and other market 
activities of those market participants and at least one other exchange 
has an offering comparable to Dedicated Cores.\13\
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    \13\ See Securities Exchange Act Release No. 99818 (March 21, 
2024), 89 FR 21294 (March 27, 2024) (SR-CboeEDGA-2024-008), 
Securities Exchange Act Release No. 100062 (May 6, 2024), 89 FR 
40517 (May 10, 2024) (SR-CboeBYX-2024-013) and Securities Exchange 
Act Release No. 100182 (May 20, 2024), 89 FR 45932 (May 24, 2024) 
(SR-CboeEDGX-2024-026). See also The Nasdaq Stock Market, Equity 7 
Pricing Schedule, Section 115(g)(3), Dedicated Ouch Port 
Infrastructure.
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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

    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 for 30 
days prior to 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 it has 
become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \14\ 
and Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 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, 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 19b-4(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.
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
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    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 its affiliated exchanges, Cboe EDGA 
Exchange, Inc., Cboe BYX Exchange, Inc., and Cboe EDGX Exchange, Inc., 
recently introduced Dedicated Cores and another exchange has a 
connectivity offering comparable to Dedicated Cores.\18\ The Commission 
believes that the proposed rule change presents no novel legal or 
regulatory issues, and 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 30-day operative delay 
and designates the proposed rule change operative upon filing.\19\
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    \18\ See supra note 12.
    \19\ 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 under 
Section 19(b)(2)(B) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 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-CboeBZX-2024-049 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-CboeBZX-2024-049. 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

[[Page 51931]]

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-CboeBZX-2024-049 and should 
be submitted on or before July 11, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13415 Filed 6-18-24; 8:45 am]
BILLING CODE 8011-01-P