[Federal Register Volume 89, Number 140 (Monday, July 22, 2024)]
[Notices]
[Pages 59174-59179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15999]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100542; File No. SR-BX-2024-023]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 2, 
Sections 6 and 10

July 16, 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 July 2, 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.
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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 2, Sections 6 and 10.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    BX proposes to amend Options 2, Section 6, Market Maker Orders, to 
add an exception to the rule. Additionally, the Exchange proposes to 
amend Options 2, Section 10, Directed Market Makers, to amend the 
current quoting obligations for Directed Market Makers.\3\
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    \3\ A Directed Market Maker is a Market Maker that may be 
entitled to an allocation in accordance with Options 3, Section 10 
provided the Directed Market Maker was quoting at the better of the 
internal BBO or the NBBO at the time of receipt of the Directed 
Order. See Options 2, Section 10.
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Options 2, Section 6
    Options 2, Section 6(a) currently states that Market Makers may 
enter all order types defined in Options 3, Section 7 in the options 
classes to which they are appointed and non-appointed. Today, Market 
Makers are unable to enter a Customer Cross Order pursuant to Options 
3, Section 7(a)(10). Customer Cross Orders are a Public Customer-to-
Public Customer Cross Order by definition \4\ and therefore cannot be 
entered by a Market Maker. The Exchange believes noting this exception, 
which is clear from Options 3, Section 12(a), will bring greater 
transparency to Options 2, Section 6.
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    \4\ See Options 3, Section 12(a).
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Options 2, Section 10
    In 2021, the Exchange filed to amend the expiration timeframe of 
Long-Term Options Series or ``LEAPs'' in Options 4A, Section 12(b) and 
amended the bid/ask differentials in Options 2, Sections 4 and 5 \5\ to 
reflect the change to Options 4A, Section 12(b) regarding LEAPs.\6\

[[Page 59175]]

Specifically, in 2021, the Exchange amended the expiration timeframe of 
LEAPs to lengthen the expiration term on index options from nine to 
sixty months to twelve to sixty months.\7\ The Exchange amended BX 
Options 2, Sections 4(j) and 5(d)(1), applicable to Market Makers and 
Lead Market Makers, respectively, to note the timeframes for index 
options that are considered LEAPs to carve out those quoting 
requirements as an exception. A similar timeframe is currently carved 
out for options on equities and exchange-traded funds (``ETFs''). 
Today, Market Markets and Lead Market Makers are currently not required 
to make two-sided markets in Quarterly Option Series, any Adjusted 
Option Series, and any option series with an expiration of nine months 
or greater in equities, and ETFs.\8\ Also, today, with respect to 
indexes, Market Makers and Lead Market Makers are not required to make 
two-sided markets in Quarterly Option Series, any Adjusted Option 
Series, and any option series with an expiration of twelve months or 
greater, although the rule text does not reflect the timeframe 
associated with LEAPs on index options. The Exchange notes that these 
same obligations would apply to a Market Maker or Lead Market Maker 
that received a Directed Order.
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    \5\ Options 2, Sections 4 and 5 describe quoting obligations for 
Market Makers and Lead Market Makers.
    \6\ See Securities Exchange Act Release No. 92664 (August 13, 
2021), 86 FR 46724 (August 19, 2021) (SR-BX-2021-034) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
the Expiration Timeframe of Long-Term Index Options Series).
    \7\ Id.
    \8\ See BX Options 2, Sections 4(j) and 5(d)(1).
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    At this time, the Exchange proposes to make a conforming amendment 
to Options 2, Section 10(a)(3)(A) and (B), similar to the current rule 
text applicable to Market Makers and Lead Market Makers in Options 2, 
Sections 4(j) and 5(d)(1), to reflect that Directed Market Makers are 
not required to make two-sided markets in any Quarterly Option Series, 
any Adjusted Option Series, and any option series with an expiration of 
twelve months or greater for index options. Options 2, Section 
10(a)(3)(A) and (B) currently provides that an Options Participant 
shall not be required to make two-sided markets in any Quarterly Option 
Series, any Adjusted Option Series, and any option series with an 
expiration of nine months or greater. The addition of this language 
concerning the current quoting requirement for Market Makers and Lead 
Market Makers who receive Directed Orders with respect to LEAPs in 
index options brings greater clarity to the Rule and conforms the 
requirements applicable to Market Makers and Lead Market Makers to 
those requirements noted in current Options 2, Sections 4(j)(1) and 
5(d)(1)(A).
    Additionally, the Exchange proposes to amend Options 2, Section 
10(a)(3)(A) related to the quoting obligations applicable to a Directed 
Market Maker. The current rule text states that Directed Market Makers, 
associated with the same Options Participant, are collectively required 
to provide two-sided quotations in 90% of the cumulative number of 
seconds, or such higher percentage as BX may announce in advance, for 
which that Options Participant's assigned options series are open for 
trading. With respect to a Directed Market Maker, BX currently requires 
that the Directed Market Maker provide two-sided quotations in 90% of 
the cumulative number of seconds, or such higher percentage as BX may 
announce in advance, among all options series in which the Directed 
Market Maker has executed a Directed Order on a daily basis. BX 
requires the Market Maker to fulfill this requirement in addition to 
its requirement to quote as a Market Maker or a Lead Market Maker.
    Below the Exchange presents examples of how the new rule text would 
operate.
Example 1
    [ssquf] Assume a Market Maker was assigned in options overlying 
AAPL, SPY, NFLX, ORCL and ADBE.
    [ssquf] Assume this Market Maker had previously executed a Directed 
Order and executes a Directed Order in NFLX and ADBE on February 27, 
2024.
    [ssquf] The Directed Market Maker obligation is a daily obligation 
once triggered and continues until the Directed Market Maker notifies 
the Exchange that it no longer desires to be a part of the Directed 
Order program.
    [ssquf] Moreover, on February 28, 2024 and each day thereafter the 
Directed Market Maker is required to provide two-sided quotations in 
90% of the cumulative number of seconds among all options series in 
which the Directed Market Maker has executed a Directed Order on a 
daily basis until a Directed Market Maker notifies the Exchange that it 
is no longer directed. Therefore, the Directed Market Maker would be 
required to quote at 90% of the cumulative number of seconds among all 
options series in which the Directed Market Maker has executed a 
Directed Order each day, regardless of whether the Directed Market 
Maker executed a Directed Order that day.
Obligations
    This Market Maker is required to provide two-sided quotations in 
60% of the cumulative number of seconds, or such higher percentage as 
BX may announce in advance, for which that Options Participant's 
assigned options series are open for trading among AAPL, SPY, and ORCL 
to fulfill its Market Maker obligation.
    Separately, this Market Maker would be obligated, separate and 
apart from its Market Maker obligations described in this example, to 
provide two-sided quotations in 90% of the cumulative number of 
seconds, or such higher percentage as BX may announce in advance, among 
NFLX and ADBE to fulfill its Directed Market Maker Obligation.
    This Market Maker would not be required to make two-sided markets 
in any Quarterly Option Series, any Adjusted Option Series, and any 
option series with an expiration of nine months or greater for options 
on equities and ETFs or with an expiration of twelve months or greater 
for index options in AAPL, SPY, NFLX, ORCL and ADBE when meeting its 
Market Maker or Directed Market Maker requirements.
Example 2
    [ssquf] Assume a Lead Market Maker was assigned in options 
overlying AAPL, SPY, NFLX, ORCL and ADBE.
    [ssquf] Assume this Lead Market Maker had previously executed a 
Directed Order and executes a Directed Order in NFLX and ADBE on 
February 27, 2024. The Directed Market Maker obligation is a daily 
obligation once triggered and continues until the Directed Market Maker 
notifies the Exchange that it no longer desires to be a part of the 
Directed Order program.
    [ssquf] The Directed Market Maker obligation is a daily obligation 
once triggered and continues until the Directed Market Maker notifies 
the Exchange that it no longer desires to be a part of the Directed 
Order program.
    [ssquf] Moreover, on February 28, 2024 and each day thereafter the 
Directed Market Maker is required to provide two-sided quotations in 
90% of the cumulative number of seconds among all options series in 
which the Directed Market Maker has executed a Directed Order on a 
daily basis until a Directed Market Maker notifies the Exchange that it 
is no longer directed. Therefore, the Directed Market Maker would be 
required to quote at 90% of the cumulative number of seconds among all 
options series in which the Directed Market Maker has executed a 
Directed Order each day, regardless of whether the Directed Market 
Maker executed a Directed Order that day.

[[Page 59176]]

Obligations
    This Lead Market Maker, associated with the same Options 
Participant, is collectively required to provide two-sided quotations 
in 90% of the cumulative number of seconds, or such higher percentage 
as BX may announce in advance, among AAPL, SPY, and ORCL to fulfill its 
Lead Market Maker obligation.\9\
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    \9\ See Options 2, Section 4(j)(1).
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    Separately, this Lead Market Maker would be obligated, separate and 
apart from its Lead Market Maker obligations described in this example, 
to provide two-sided quotations in 90% of the cumulative number of 
seconds, or such higher percentage as BX may announce in advance, among 
NFLX and ADBE to fulfill its Directed Market Maker obligation.
    This Market Maker would not be required to make two-sided markets 
in any Quarterly Option Series, any Adjusted Option Series, and any 
option series with an expiration of nine months or greater for options 
on equities and ETFs or with an expiration of twelve months or greater 
for index options in AAPL, SPY, NFLX, ORCL and ADBE when meeting its 
Lead Market Maker or Directed Market Maker requirements.
    The Exchange proposes to amend the rule text in Options 2, Section 
10(a)(3)(A) to require Directed Market Makers, collectively, to provide 
two-sided quotations in 90% of the cumulative number of seconds, or 
such higher percentage as BX may announce in advance, among all options 
series in which the Directed Market Maker has executed a Directed Order 
on a daily basis, except that a Directed Market Maker shall not be 
required to make two-sided markets in any Quarterly Option Series, any 
Adjusted Option Series, and any options series with an expiration of 
nine months or greater for options on equities and exchange-traded 
funds (``ETFs'') or with an expiration of twelve months or greater for 
index options. The Exchange notes that the proposed requirements are 
similar to requirements imposed by other options exchanges. NYSE Arca, 
Inc. (``NYSE Arca'') and NYSE American LLC (``NYSE American'') require 
that their lead market makers and market makers provide continuous two-
sided quotations throughout the trading day in issues for which it 
receives Directed Orders for 90% of the time the Exchange is open for 
trading in each issue.\10\
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    \10\ See NYSE Arca Rule 6.88-O and NYSE American Rule 964.1NY. 
NYSE Arca Rule 6.88-O(iv) states that these obligations will apply 
collectively to all series in all of the issues for which the 
Directed Order Market Maker receives Directed Orders, rather than on 
an issue-by-issue basis.
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    The Exchange also proposes to relocate certain rule text within 
Options 2, Section 10(a)(3)(A) to make clear the requirements 
applicable to a Directed Market Maker and make other amendments as 
well. The Exchange proposes to amend the timeframe in which a Directed 
Market Maker is obligated to commence complying with the quoting 
obligations of Options 2, Section 10(a)(3)(A).\11\ Today, a Directed 
Market Maker must commence complying with the quoting obligations 
specified in Options 2, Section 10(a)(3)(A) when a Directed Market 
Maker receives a Directed Order in any option in which they are 
assigned until such time as the Directed Market Maker notifies the 
Exchange that they are no longer directed. Pursuant to Options 2, 
Section 10(a)(1), ``[w]hen the Exchange's disseminated price is the 
NBBO at the time of receipt of the Directed Order, and the Directed 
Market Maker is quoting at the better of the internal BBO or the NBBO, 
the Directed Order shall be automatically executed and allocated in 
accordance with Options 3, Section 10 such that the Directed Market 
Maker shall receive a Directed Market Maker participation entitlement 
provided for therein.'' The Exchange proposes to amend Options 2, 
Section 10(a)(3)(A) to instead begin requiring a Directed Market Maker 
to comply with the Directed Market Maker quoting obligations in Options 
2, Section 10(a)(3)(A) when the Directed Market Maker executes its 
first Directed Order in any option in which they are assigned. A 
Directed Market Maker has the ongoing quoting obligation from the time 
a Directed Market Maker executes its first Directed Order in the 
options in which the Directed Market Maker is assigned until a Directed 
Market Maker notifies the Exchange that the Directed Market Maker is no 
longer directed. Because Directed Market Makers are unaware if an order 
is directed to them until such time as they execute the Directed Order 
and receive an allocation pursuant to Options 3, Section 10, the 
Exchange believes that starting the quoting obligation once a Directed 
Order is executed is a practical approach to ensuring that Directed 
Market Makers comply with their quoting obligations.
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    \11\ Currently, Options 2, Section 10(a)(3)(A) provides that an 
Options Participant shall be considered directed in all assigned 
options once the Options Participant receives a Directed Order in 
any option in which they are assigned and shall be considered a 
Directed Market Maker until such time as an Options Participant 
notifies the Exchange that they are no longer directed.
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    The proposed rule text would provide,

    Directed Market Makers, associated with the same Options 
Participant, are collectively required to provide two-sided 
quotations in 90% of the cumulative number of seconds, or such 
higher percentage as BX may announce in advance, among all options 
series in which the Directed Market Maker has executed a Directed 
Order on a daily basis, except that a Directed Market Maker shall 
not be required to make two-sided markets in any Quarterly Options 
Series, any Adjusted Options Series, and any options series with an 
expiration of nine months or greater for options on equities and 
ETFs or with an expiration of twelve months or greater for index 
options. A Directed Market Maker has the ongoing quoting obligation 
from the time a Directed Market Maker executes its first Directed 
Order in the options in which the Directed Market Maker is assigned 
until a Directed Market Maker notifies the Exchange that the 
Directed Market Maker is no longer directed.
    A Directed Market Maker shall not be required to make two-sided 
markets in any Quarterly Options Series, any Adjusted Options 
Series, and any options series with an expiration of nine months or 
greater for options on equities and ETFs or with an expiration of 
twelve months or greater for index options and would receive a 
participation entitlement in the Quarterly Options Series, the 
Adjusted Options Series, and an options series with an expiration of 
nine months or greater for options on equities and ETFs or with an 
expiration of twelve months or greater for index options for the 
Directed Order, only if it complies with the heightened 90% quoting 
requirement.

    As is the case today, a Directed Market Maker must be quoting at 
the better of the internal BBO or the NBBO at the time of receipt of 
the Directed Order to be entitled to the allocation in accordance with 
Options 3, Section 10.
    Finally, the Exchange proposes to amend Options 2, Section 10 to 
adopt a new Supplementary Material .01 to Options 2, Section 10. 
Specifically, the Exchange proposes to adopt definitions related to 
Directed Order. The Exchange proposes to define a ``Directed Order'' as 
any order to buy or sell which has been directed to a particular Market 
Maker by an Order Flow Provider. The Exchange proposes to define an 
``Order Flow Provider'' as any Participant that submits, as agent, 
orders to the Exchange. Finally, the Exchange proposes to adopt a new 
Supplementary Material .02 to Options 2, Section 10 which would provide 
that ``A Directed Market Maker may be the Lead Market Maker appointed 
to the options class or any Market Maker appointed to the options 
class.'' The Exchange believes that the definitions and clarity about 
who can be a Directed Market Maker will provide additional background 
to Options Participants regarding Directed

[[Page 59177]]

Orders. The definitions and description of who can be a Directed Market 
Maker are consistent with the Exchange's current practice and harmonize 
BX's definitions to those of Phlx Options 2, Section 10.
    The Exchange notes that its Directed Order functionality is 
currently not offered on BX. The Exchange proposes to add rule text at 
the beginning of Options 2, Section 10 that states, ``The Directed 
Order functionality is not operative on BX at this time. If the 
Exchange proposes to commence offering this functionality, it will file 
a rule change with the Commission specifying the implementation date.'' 
The Exchange would file a rule change with the Commission when it 
determines to commence offering the Directed Order functionality to 
Participants and will specify the implementation date in that rule 
change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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Options 2, Section 6
    The Exchange's proposal to amend Options 2, Section 6(a) to note 
that Market Makers may not enter a Customer Cross Order, which are a 
Public Customer-to-Public Customer Cross Order by definition,\14\ is 
consistent with the Act and the protection of investors and the general 
public. It is clear from Options 3, Section 12(a) that Market Makers 
cannot enter this order type. The Exchange believes noting this 
exception will bring greater transparency to Options 2, Section 6.
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    \14\ See Options 3, Section 12(a).
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Options 2, Section 10
    The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) and 
(B) to reflect the current quoting requirements for Directed Market 
Makers with respect to LEAPs in index options is consistent with the 
Act because, today, Market Makers and Lead Market Makers are not 
required to make two-sided markets in any Quarterly Option Series, any 
Adjusted Option Series, and any option series with an expiration of 
twelve months or greater for index options, pursuant to Options 2, 
Sections 4(j) and 5(d)(1). The addition of this language concerning the 
current quoting requirement for Market Makers and Lead Market Makers 
who receive Directed Orders with respect to LEAPs in index options 
brings greater clarity to the Rule and conforms the requirements 
applicable to Market Makers and Lead Market Makers to those 
requirements noted in current Options 2, Sections 4(j)(1) and 
5(d)(1)(A).
    The Exchange's proposal to amend the Directed Market Maker quoting 
obligations in Options 2, Section 10(a)(3)(A) is consistent with the 
Act. Other options exchanges today require Directed Market Makers, 
collectively, to provide two-sided quotations in 90% of the cumulative 
number of seconds among all options series in which the Directed Market 
Maker has received a Directed Order on a daily basis. The proposed 
Directed Market Maker quoting obligations would require Directed Market 
Makers, collectively, to provide two-sided quotations in 90% of the 
cumulative number of seconds or such higher percentage as BX may 
announce in advance, among all options series in which the Directed 
Market Maker has executed a Directed Order on a daily basis in addition 
to their quoting requirements as Market Makers and Lead Market Makers.
    The Exchange believes that these quoting requirements create a 
direct nexus between the allocation that would be received by a 
Directed Market Maker pursuant to Options 3, Section 10 and the 
liquidity that the Directed Market Maker would be required to provide 
to the market in that particular options series. The Exchange notes 
that any Directed Market Maker quoting at the NBBO would need to 
provide two-sided quotations in 90% of the cumulative number of seconds 
among all options series in which the Directed Market Maker has 
executed a Directed Order for the entire day in which the Directed 
Market Maker received the Directed Order and each day thereafter, on a 
daily basis, until a Directed Market Maker notifies the Exchange that 
it is no longer directed. The Exchange believes that this quoting 
obligation is designed to promote just and equitable principles of 
trade by ensuring that Directed Market Makers quote competitively in as 
many series as possible to attract Directed Orders so that they may 
receive an enhanced allocation as a Directed Market Maker.
    The proposed rule text would harmonize the Directed Market Maker's 
quoting obligations with other options exchanges, such as NYSE Arca and 
NYSE American which require that their lead market makers and market 
makers provide continuous two-sided quotations throughout the trading 
day in issues for which it receives Directed Orders for 90% of the time 
the Exchange is open for trading in each issue.\15\
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    \15\ See supra note 10.
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    The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) to 
require a Directed Market Maker to commence complying with the Options 
2, Section 10(a)(3)(A) quoting obligations when the Directed Market 
Maker executes its first Directed Order in any option in which they are 
assigned is a practical approach to ensuring that Directed Market 
Makers comply with their quoting obligations. Directed Market Makers 
are unaware if an order is directed to them until such time as they 
execute the Directed Order and receive an allocation pursuant to 
Options 3, Section 10. Further, the Exchange notes that a Directed 
Market Maker must be quoting at the better of the internal BBO or the 
NBBO at the time of receipt of the Directed Order to be entitled to the 
allocation in accordance with Options 3, Section 10.
    The Exchange's proposal to amend Options 2, Section 10 to adopt a 
new Supplementary Material .01 to Options 2, Section 10 is consistent 
with the Act as the proposed definitions and clarity about who can be a 
Directed Market Maker will provide additional background to Options 
Participants regarding Directed Orders. The definitions and description 
of who can be a Directed Market Maker are consistent with the 
Exchange's current practice and harmonize BX's definitions to those of 
Phlx Options 2, Section 10.
    The Exchange's proposal to note that its Directed Order 
functionality is currently not offered on BX and to commit to file a 
rule change with the Commission when it determines to commence offering 
the Directed Order functionality to Participants with the 
implementation date, will bring greater transparency to the 
availability of this 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.
Options 2, Section 6
    The Exchange's proposal to amend Options 2, Section 6(a) to note 
that Market Makers may not enter a

[[Page 59178]]

Customer Cross Order, which are a Public Customer-to-Public Customer 
Cross Order by definition,\16\ does not impose an undue burden on 
competition. No Market Maker may enter a Customer Cross Order; only 
Public Customers may enter a Customer Cross Order by definition. The 
proposal does not impose a burden on inter-market competition as other 
options markets may similarly copy BX's order types and impose similar 
restrictions.
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    \16\ See Options 3, Section 12(a).
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Options 2, Section 10
    The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) and 
(B) to reflect the current quoting requirements for Directed Market 
Makers with respect to LEAPs in index options does not impose an undue 
burden on competition because all Market Makers, Lead Market Makers and 
Directed Market Makers are subject to the same quoting requirements 
with respect to LEAPs in index options in that they are not required to 
make two-sided markets in any Quarterly Option Series, any Adjusted 
Option Series, and any option series with an expiration of twelve 
months or greater for index options. The proposed rule text would 
conform the requirements applicable to Market Makers and Lead Market 
Makers to those requirements noted in current Options 2, Sections 
4(j)(1) and 5(d)(1)(A). The proposal does not impose a burden on inter-
market competition as other options markets may impose similar quoting 
obligations.
    The Exchange's proposal to amend the Directed Market Maker quoting 
obligations in Options 2, Section 10(a)(3)(A) does not impose an undue 
burden on competition as every Directed Market Maker would be required, 
collectively, to provide two-sided quotations in 90% of the cumulative 
number of seconds or such higher percentage as BX may announce in 
advance, among all options series in which the Directed Market Maker 
has executed a Directed Order for the entire day in which the Directed 
Market Maker received the Directed Order, on a daily basis, until a 
Directed Market Maker notifies the Exchange that it is no longer 
directed. The proposal does not impose a burden on inter-market 
competition as other options markets today impose similar quoting 
obligations.
    The Exchange's proposal to amend Options 2, Section 10(a)(3)(A) to 
require a Directed Market Maker to commence complying with the Options 
2, Section 10(a)(3)(A) quoting obligations when the Directed Market 
Maker executes its first Directed Order in any option in which they are 
assigned does not impose an undue burden on competition because all 
Directed Market Makers will be required to commence complying with 
Options 2, Section 10(a)(3)(A) when the Directed Market Maker executes 
its first Directed Order in any option in which they are assigned. The 
proposal does not impose a burden on inter-market competition as other 
options markets today impose similar quoting obligations and may amend 
their rules to mirror those of BX.
    The Exchange's proposal to amend Options 2, Section 10 to adopt a 
new Supplementary Material .01 to Options 2, Section 10 does not impose 
an undue burden on competition as the proposed definitions and clarity 
about who can be a Directed Market Maker will be uniformly applied to 
all Options Participants. The definitions and description of who can be 
a Directed Market Maker are consistent with the Exchange's current 
practice and harmonize BX's definitions to those of Phlx Options 2, 
Section 10. The proposal does not impose a burden on inter-market 
competition as other options markets today offer similar functionality 
and apply it similar BX.
    The Exchange's proposal to note that its Directed Order 
functionality is currently not offered on BX and commit to filing a 
rule change with the Commission when it determines to commence offering 
the Directed Order functionality to Participants and will specify the 
implementation date in that rule change does not impose an undue burden 
competition as no Participant would be able to utilize this 
functionality at this time. The proposal does not impose a burden on 
inter-market competition as other options markets today offer similar 
functionality.

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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \17\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 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-2024-023 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-2024-023. 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

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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-2024-023 
and should be submitted on or before August 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15999 Filed 7-19-24; 8:45 am]
BILLING CODE 8011-01-P