[Federal Register Volume 89, Number 166 (Tuesday, August 27, 2024)]
[Notices]
[Pages 68676-68680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19149]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100792; File No. SR-BX-2024-028]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Introduce BX 
Options Trade Outline

August 21, 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 August 9, 2024, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with 
the Securities and Exchange Commission

[[Page 68677]]

(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated the proposed rule change as constituting a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A)(iii) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon receipt of this filing by the Commission. 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

    The Exchange proposes to introduce BX Options Trade Outline.
    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
    The Exchange proposes to introduce BX Options Trade Outline.\5\ 
Patterned after PHLX Options Trade Outline ``PHOTO,'' \6\ BX Trade 
Options Outline will replicate in substance \7\ PHOTO and the other 
trade outline products currently offered by Nasdaq ISE, LLC 
(``ISE''),\8\ Nasdaq GEMX, LLC (``GEMX''),\9\ and the options market 
operated by the Nasdaq Stock Market LLC (``Nasdaq Options Market'' or 
``NOM'').\10\ It is also similar to trade outline products offered by 
exchanges not affiliated with Nasdaq.\11\
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    \5\ A proposal to introduce MRX Options Trade Outline on the MRX 
Exchange is being submitted concurrently with this filing.
    \6\ See PHLX Rules, Options 7, Section 10; Securities Exchange 
Act Release No. 62887 (September 10, 2010), 75 FR 57092 (September 
17, 2010) (SR-Phlx-2010-121) (introducing PHOTO on September 1, 
2010).
    \7\ The underlying information for BX Options Trade Outline will 
be the same as the other trade outline products offered by the 
Nasdaq exchanges. Presentation will differ, however, in that data 
will not be subdivided into categories. For example, the trade 
outline products offered by PHLX, ISE, GEMX and NOM subdivide the 
aggregate volume traded for each reported series into categories 
according to the quantity of contracts (less than 100, 100-199, and 
greater than 200). BX Options Trade Outline will not separate this 
information into quantitative categories, but rather will provide 
the same aggregate volume information as PHOTO and the other Nasdaq 
exchanges without separating the information into categories 
according to the quantity of contracts.
    \8\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B) 
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
    \9\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq GEMX 
Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX Open/
Close Intraday Trade Profile).
    \10\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options 
Trade Outline (``NOTO'')).
    \11\ See, e.g., Securities Exchange Act Release No. 94913 (May 
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing 
End-of-Day and Intraday Open-Close Data as a summary of trading 
activity on the exchange at the option level by origin, side of the 
market, price and transaction type); Securities Exchange Act Release 
No. 93803 (December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-
NYSEAMER-2021-46) (describing the NYSE Options Open-Close Volume 
Summary as a volume summary of trading activity on the exchange at 
the option level by origin, side of the market, contract volume and 
transaction type); Securities Exchange Act Release No. 93132 
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type); Securities Exchange Act Release No. 97174 (March 21, 2023), 
88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing the BOX 
exchange Open-Close Data report as providing volume by origin, 
buying/selling, and opening/closing criteria); Securities Exchange 
Act Release No. 91964 (May 21, 2021), 86 FR 28667 (May 27, 2021) 
(SR-PEARL-2021-24) (introducing the Open-Close Report).
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    Information will be provided on an End of Day, Intra-Day, and 
historical basis.
    BX Options Trade Outline, like all of these other trade outline 
products, provides data to help market participants understand market 
sentiment on the Exchange and to support the creation of trading models 
useful in both options and equities markets. Market participants have 
expressed an interest in purchasing a trade outline product from the 
Exchange similar to those products already sold on the PHLX and other 
Nasdaq affiliates. BX Options Trade Outline is being introduced to meet 
that demand, and to offer investors an additional perspective on 
investor sentiment.
BX Options Trade Outline
    BX Options Trade Outline will provide aggregate quantity and volume 
information for trades on the Exchange for all series \12\ during a 
trading session. Information is provided in the following categories: 
(i) total exchange volume for Intra-Day information and total exchange 
and industry volume for End of Day information for each reported 
series; (ii) open interest for the series; (iii) aggregate quantity of 
trades and aggregate trade volume effected to open a position,\13\ 
characterized by origin type (Customers,\14\ Broker-Dealers,\15\ BX 
Options Market Makers,\16\ Firms,\17\ and Professionals \18\); and (iv) 
aggregate quantity of trades and aggregate trade volume effected to 
close a position,\19\ characterized by origin type (Customers, Broker-
Dealers, BX Options Market Makers, Firms, and Professionals).\20\
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    \12\ Every options series trades as a distinct symbol; the terms 
``series'' and ``symbol'' are therefore synonyms.
    \13\ This would include the aggregate number of ``opening 
purchase transactions,'' defined as a BX Options Transaction that 
creates or increases a long position in an options contract, see 
Options 1, Section 1(a)(35), and the aggregate number of ``opening 
writing transactions,'' defined as a BX Options Transaction that 
creates or increases a short position in an options contract. See 
Options 1, Section 1(a)(36).
    \14\ The term ``Customer'' applies to any transaction that is 
identified by a Participant for clearing in the Customer range at 
The Options Clearing Corporation (``OCC'') which is not for the 
account of broker or dealer or for the account of a ``Professional'' 
(as that term is defined in Options 1, Section 1(a)(48)). See 
Options 7, Section 1(a).
    \15\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category. See Options 7, Section 1(a).
    \16\ The term ``BX Options Market Maker'' is a Participant that 
has registered as a Market Maker on BX Options pursuant to Options 
2, Section 1, and must also remain in good standing pursuant to 
Options 2, Section 9. In order to receive Market Maker pricing in 
all securities, the Participant must be registered as a BX Options 
Market Maker in at least one security. See Options 7, Section 1(a).
    \17\ The term ``Firm'' applies to any transaction that is 
identified by a Participant for clearing in the Firm range at OCC. 
See Options 7, Section 1(a).
    \18\ The term ``Professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s) pursuant to Options 
1, Section 1(a)(48). All Professional orders shall be appropriately 
marked by Participants. See Options 7, Section 1(a).
    \19\ This would include the aggregate number of ``closing 
purchase transactions'' in the affected series, defined as a BX 
Options Transaction that reduces or eliminates a short position in 
an options contract, see Options 1, Section 1(a)(19), and the 
aggregate number of ``closing writing transactions,'' defined as a 
BX Options Transaction that reduces or eliminates a long position in 
an options contract. See Options 1, Section 1(a)(20).
    \20\ These are the same types of information available on PHOTO, 
and the other trade outline products offered by Nasdaq exchanges.

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[[Page 68678]]

    BX Trade Outline End of Day will also provide opening buy, closing 
buy, opening sell and closing sell information, which shall include 
option first trade price, option high trade price, option low trade 
price, and option last trade price.
    End of Day information will be available the next business day. 
Intra-Day information is updated at 10-minute intervals over the course 
of the trading day. Historical information will be available upon 
request.
    This information will be available to all market participants, 
including both members and non-members, for all series and symbols in 
End of Day, Intra-Day, and historical files (upon request).
    BX Options Trade Outline will provide proprietary Exchange trading 
data and will not include any intraday trading data from any other 
exchange.\21\ The information provided, both in End of Day and Intraday 
formats, is not a real-time data feed. BX Options Trade Outline is a 
completely voluntary product in that the Exchange is not required by 
any rule or regulation to make this data available and potential 
subscribers may purchase it only if they voluntarily choose to do so.
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    \21\ The End of Day report includes a field that presents Total 
Industry Volume for the Series.
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    The End of Day file will be updated during an overnight process 
with additional fields \22\ and will be available the following 
morning, providing aggregate data for the entire trading session.
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    \22\ The additional fields are: First Trade Price, High Trade 
Price, Low Trade Price, Last Trade Price, Underlying Close, 
Moneyness, Total Exchange volume, Total Industry Volume for the 
Series, and Open Interest.
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    Intra-Day information will be released in scheduled ``snapshots'' 
available every 10 minutes for all options series over the course of 
the trading day. The snapshot will be updated to reflect whatever 
activity occurred, or to indicate that no activity occurred.\23\ This 
is the same schedule currently offered on PHLX, ISE, GEMX, and Nasdaq 
Options Market.\24\
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    \23\ Subscribers will receive the first snapshot at 9:42 a.m. 
ET, representing data captured from 9:30 a.m. to 9:40 a.m., and the 
second calculation at 9:52 a.m., representing data from both the 
most recent snapshot and previous snapshots, and continuing over the 
course of the trading day. The final Intra-Day snapshot will be 
distributed at 4:15 p.m.
    \24\ See Supra, notes 4 through 7.
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    Historical data will be available in both End of Day and Intra-Day 
formats for all option series traded for every calendar month after 
December 2014, based on specific request.\25\
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    \25\ Market participants generally use historical files for 
model testing and research, and the period of time required by a 
particular market participant will depend on its unique testing and 
research needs as well as whether it is using End of Day or Intra-
Day information. Some customers, for example, may request years of 
data, while others only months, or even a single month. The same 
principle applies to End of Day vs. Intra-Day information.
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    Fees for BX Options Trade Outline will be proposed in a separate 
filing.
    The proposed date of implementation, subject to the regulatory 
process, will be September 2, 2024.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\26\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\27\ 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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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that BX Options Trade Outline would further 
broaden the availability of U.S. option market data to investors. The 
proposal promotes transparency through the dissemination of aggregate 
quantity and volume information for trades on the Exchange for all 
series during a trading session, and would benefit investors by 
promoting better informed trading throughout the trading day and at the 
end of the day. The proposed product is well-understood in the market, 
and provides the same information as ISE, GEMX, NOM, and substantially 
the same information as many exchanges not affiliated with Nasdaq.
    The Exchange believes that BX Options Trade Outline would further 
broaden the availability of U.S. option market data to investors 
consistent with the principles of the Act. The proposed rule change 
would promote better informed trading by, for example, disseminating 
information that may indicate investor sentiment. Data recipients may 
also be able to enhance their ability to analyze option trade and 
volume data on an intraday basis, and create and test trading models 
and analytical strategies. BX Options Trade Outline will provide a 
valuable tool that subscribers can use to gain comprehensive insight 
into the trading activity in particular series.\28\
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    \28\ While such information is valuable, it is not necessary for 
trading.
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    Trade outline products have been available on multiple exchanges 
for many years and are well known in the market and used by many market 
participants. PHLX Options Trade Outline, which is a model for BX 
Options Trade Outline, has been available for well over a decade.\29\ 
Similar products available on other Nasdaq exchanges include ISE Trade 
Profile,\30\ GEMX Trade Profile,\31\ and Nasdaq Options Trade 
Outline.\32\ Trade outline products are also offered by competitor 
exchanges such a Cboe,\33\ NYSE American,\34\ NYSE Arca,\35\ BOX,\36\ 
and MIAX PEARL.\37\ The trade outline products offered by the Nasdaq-
affiliated exchanges provide exactly the same information as the 
proposed BX Options Trade outline, and those offered by other exchanges 
provide substantially the same information, including both Intra-Day 
and End of Day data.
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    \29\ See Securities Exchange Act Release No. 62887 (September 
10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121) 
(introducing PHOTO on September 1, 2010).
    \30\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B) 
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
    \31\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq 
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX 
Open/Close Intraday Trade Profile).
    \32\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options 
Trade Outline (``NOTO'')).
    \33\ See, e.g., Securities Exchange Act Release No. 94913 (May 
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing 
End-of-Day and Intraday Open-Close Data as a summary of trading 
activity on the exchange at the option level by origin, side of the 
market, price and transaction type).
    \34\ See, e.g., Securities Exchange Act Release No. 93803 
(December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type).
    \35\ See, e.g., Securities Exchange Act Release No. 93132 
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type).
    \36\ See, e.g., Securities Exchange Act Release No. 97174 (March 
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing 
the BOX exchange Open-Close Data report as providing volume by 
origin, buying/selling, and opening/closing criteria).
    \37\ See, e.g., Securities Exchange Act Release No. 91964 (May 
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24) 
(introducing the Open-Close Report).
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    BX Options Trade Outline will foster investor protection by 
expanding the amount of information available to investors. Adding 
information from another exchange to the current mix of trade outline 
products will help investors become better informed about market 
sentiment and therefore better able to protect their interests.
    Approval of this proposal will expand customer choice. Trade 
outline products can serve as substitutes or complements, depending on 
the information needs of

[[Page 68679]]

the market participant. In general, the value of a trade outline 
product depends on trading volume on a particular exchange; the higher 
the volume of transactions on an exchange, the more valuable the 
information on market sentiment. Customers can choose to purchase 
multiple trade outline products, or to substitute the product of one 
exchange for another, based on their particular trading strategy and 
information needs. Adding a new exchange to the product mix will expand 
the number of options available to market participants, and will foster 
competition among the exchanges offering these products. As noted 
above, this proposal is a direct response to customer demand.

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 this proposal 
does not impose any burden on the ability of other exchanges to 
compete. As explained above, many exchanges not affiliated with Nasdaq 
currently offer competing products and the introduction of BX Options 
Trade Outline will assist the Exchange in competing with those other 
exchanges.
    Nothing in the proposal burdens intra-market competition (the 
competition among consumers of exchange data) because BX Options Trade 
Outline will be available to any market participant, including both 
members and non-members.

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 if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \38\ and Rule 19b-
4(f)(6) \39\ thereunder.
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    \38\ 15 U.S.C. 78s(b)(3)(A).
    \39\ 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) \40\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\41\ 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 proposed 
rule change may become operative upon filing. The Exchange states that 
waiver of the operative delay does not present market participants with 
any new or novel issues, as the proposed product is well-understood in 
the market, and provides the same information as trade outline products 
offered by PHLX, ISE, GEMX, and NOM,\42\ and substantially the same 
information as many exchanges not affiliated with Nasdaq.\43\ The 
Exchange also states that the proposed trade outline product will 
promote better informed trading throughout the trading day and at the 
end of the day by disseminating information that may indicate investor 
sentiment, and which may allow data recipients to create and test 
trading models and analytic strategies. For these reasons, the 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposal operative upon filing.\44\
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    \40\ 17 CFR 240.19b-4(f)(6).
    \41\ 17 CFR 240.19b-4(f)(6)(iii).
    \42\ See supra note 7.
    \43\ See supra note 11.
    \44\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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 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-2024-028 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-2024-028. 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-BX-2024-028 and should be 
submitted on or before September 17, 2024.


[[Page 68680]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\45\
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    \45\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-19149 Filed 8-26-24; 8:45 am]
BILLING CODE 8011-01-P