Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10363 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See BX Options 3, Section 7(e)(1). ‘‘FIX’’ is an 

interface that allows BX Participants and their 

Sponsored Customers to connect, send, and receive 

messages related to orders and auction orders and 

responses to and from the Exchange. Features 

include the following: (1) Execution messages; (2) 

order messages; and (3) risk protection triggers and 

cancel notifications. 

4BX Options 1, Section 1(a)(40) defines 

‘‘Participant’’ to mean a firm, or organization that 

is registered with the Exchange pursuant to Options 

2A of BX Rules for purposes of participating in 

options trading on the BX options market as a ‘‘BX 

Options Order Entry Firm,’’ as defined in BX 

Options 1, Section 1(a)(11), or ‘‘BX Options Market 

Maker,’’ as defined in BX Options 1, Section 

1(a)(10). 

5See Securities Exchange Act Release No. 90383 

(November 9, 2020), 85 FR 73095 (‘‘Notice’’). 

6See Securities Exchange Act Release Nos. 90815, 

86 FR 353 (January 5, 2021), in which the 

Commission designated February 14, 2021 as the 

date by which it should approve, disapprove, or 

institute proceedings to determine whether to 

disapprove these proposed rule changes 7A ‘‘Public Customer’’ means a person that is not 

a broker or dealer in securities and is not a 

Professional as defined within BX Options 1, 

Section 1(a)(48). See BX Options 1, Section 1(a)(49). 

A ‘‘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). All Professional orders shall 

be appropriately marked by Participants. See BX 

Options 1, Section 1(a)(48). 

8PRISM Orders submitted during the final two 

seconds of the trading session in the affected series 

are not eligible to initiate an Auction and will be 

immediately cancelled. See BX Options 3, Section 

13(i)(F). 

9See Notice, supra note 5, at 73095 n.7. 

10Proposed BX Options 3, Section 

7(d)(1)(A)(1)(c). 

11Proposed BX Options 3, Section 

7(d)(1)(A)(1)(a). 

12The Exchange will initially set the time period 

to 100 milliseconds to respond to the Request for 

PRISM or otherwise not respond before the Request 

for PRISM would become unavailable. The 

Exchange will post the time period on its System 

settings page. See Notice, supra note 5, at 73096 

n.8. 

13Proposed BX Options 3, Section 

7(d)(1)(A)(1)(b). 

14 Id. 

15 Id. 

16 Id. BX Options 3, Section 13(ii)(A)(1) provides 

three options to submit a PRISM Order and initiate 

the PRISM Auction. Specifically, the Initiating 

Participant must mark the PRISM Order for Auction 

processing, and specify either: (a) A single price at 

which it seeks to execute the PRISM Order (a ‘‘stop 

price’’); (b) that it is willing to automatically match 

as principal or as agent on behalf of an Initiating 

Order the price and size of all PAN responses, and 

trading interest (‘‘auto-match’’) in which case the 

PRISM Order will be stopped at the NBBO on the 

Initiating Order side; or (c) that it is willing to 

either: (i) Stop the entire order at a single stop price 

and auto-match PAN responses and trading interest 

at a price or prices that improve the stop price to 

a specified price (a ‘‘No Worse Than’’ or ‘‘NWT’’ 

price); (ii) stop the entire order at a single stop price 

and auto-match all PAN responses and trading 

interest at or better than the stop price; or (iii) stop 

the entire order at the NBBO on the Initiating Order 

side, and auto-match PAN responses and trading 

interest at a price or prices that improve the stop 

price up to the NWT price. 

17Proposed BX Options 3, Section 

7(d)(1)(A)(1)(b). 

18 Id. 

19Proposed BX Options 3, Section 

7(d)(1)(A)(1)(d). 

sufficient time to consider the proposed 

rule change. Accordingly, the 

Commission, pursuant to Section 

19(b)(2) of the Act,5 designates April 4, 

2021, as the date by which the 

Commission shall either approve or 

disapprove or institute proceedings to 

determine whether to disapprove the 

proposed rule change (File Number SR– 

NYSE–2020–85). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03343 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91124; File No. SR–BX– 

2020–033] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Order Granting Approval of a 

Proposed Rule Change To Utilize the 

FIX Protocol To Submit Orders to BX’s 

Price Improvement Auction 

Mechanism 

February 12, 2021. 

I. Introduction 

On October 27, 2020, Nasdaq BX, Inc. 

(‘‘BX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

utilize the ‘‘Financial Information 

eXchange’’ (‘‘FIX’’) 3 protocol for BX 

Participants 4 seeking to submit orders 

into the Price Improvement Auction 

(‘‘PRISM’’) mechanism. The proposed 

rule change was published for comment 

in the Federal Register on November 16, 

2020.5 On December 29, 2020, the 

Commission extended the time period 

within which to approve, disapprove, or 

institute proceedings to determine 

whether to approve or disapprove the 

proposed rule changes.6 The 

Commission received no comments on 

the proposed rule change. The 

Commission is approving the proposed 

rule change. 

II. Description of the Proposed Rule 

Change 

Pursuant to BX Options 3, Section 13, 

a BX Participant may electronically 

submit for execution an order it 

represents as agent on behalf of a Public 

Customer,7 broker dealer, or any other 

entity (‘‘PRISM Order’’) against 

principal interest or against any other 

order 8 it represents as agent (an 

‘‘Initiating Order’’), provided it submits 

the PRISM Order for electronic 

execution into the Auction. According 

to the Exchange, BX Participants 

currently solicit contra-side Initiating 

Orders to pair with their PRISM Orders 

using methods such as telephone, 

electronically using an external order 

management system, or utilizing instant 

message.9 BX proposes to provide BX 

Participants (‘‘sender’’) the option to use 

the FIX protocol to send a message, 

which includes a PRISM Order, to one 

or more BX Participants (‘‘recipient’’) 

requesting that they provide a contraside Initiating Order in response, which 

would result in the start of a PRISM 

auction (‘‘Request for PRISM’’). BX 

Participants must opt-in in order to 

receive Requests for PRISM. A Request 

for PRISM would be sent 

simultaneously to all BX Participants 

who opted in to receive Requests for 

PRISM,10 and a BX Participant who 

opts-in would receive all Requests for 

PRISM from all senders.11

The Exchange proposes to establish a 

certain time period up to one second 12

within which a recipient, if it chooses 

to respond to the Request for PRISM, 

may utilize FIX to submit the sender’s 

PRISM Order, along with its Initiating 

Order, into the System for execution 

into PRISM pursuant to Options 3, 

Section 13 (‘‘response’’).13 The System 

would enter the PRISM Order and the 

Initiation Order of the first recipient to 

respond into the PRISM through FIX to 

start a PRISM auction and would send 

a reject message to subsequent 

responders.14 Any Initiating Order must 

match the PRISM Order and is not 

permitted to improve the price, or else 

it would be rejected.15 However, the 

Initiating Order may be configured to 

improve the PRISM Order stop price 

pursuant to Options 3, Section 

13(ii)(A)(1)(c); 16 the configuration 

would apply only if the System initiated 

a PRISM auction.17 If there are no 

responses to the Request for PRISM, the 

PRISM Order would be placed on the 

Order Book as a Limit Order or 

cancelled, consistent with the sending 

BX Participant’s instruction.18

Once a recipient of a Request for 

PRISM has responded to the Request for 

PRISM by adding the Initiating Order, 

the PRISM may not be cancelled.19 The 

sender may not cancel a Request for 

PRISM once that Request for PRISM has 


tkelley on DSKBCP9HB2PROD with NOTICES
10364 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

20Proposed BX Options 3, Section 

7(d)(1)(A)(1)(e). 

21Proposed BX Options 3, Section 

7(d)(1)(A)(1)(f). 

22 Id. 

23Proposed BX Options 3, Section 

7(d)(1)(A)(1)(g). 

24See Notice, supra note 5, at 73097. 

25 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

26 15 U.S.C. 78f(b)(5). 

27 15 U.S.C. 78f(b)(8). 

28See Notice, supra note 5, at 73095–96 

(describing the current methods Participants use to 

find a paired order). 

29Proposed BX Options 3, Section 

7(d)(1)(A)(1)(c). 

30Notice, supra note 5, at 73097. 

31Proposed BX Options 3, Section 

7(d)(1)(A)(1)(f). 

32Notice, supra note 5, at 73097. 

33Notice, supra note 5, at 73098. 

34Proposed BX Options 3, Section 

7(d)(1)(A)(1)(f). 

35Notice, supra note 5, at 73098. 

36See id. 

37 17 CFR 200.30–3(a)(12). 

been sent.20 The identity of the sender 

and recipients will not be known to any 

party,21 and the Exchange will not 

disclose a list of BX Participants that 

have opted-in to receive Requests for 

PRISM.22

It would be deemed conduct 

inconsistent with just and equitable 

principles of trade and a violation of 

Options 9, Section 1, and other 

Exchange Rules, to utilize non-public 

information in connection with a 

Request for PRISM to a BX Participant’s 

economic advantage.23 The Exchange 

intends to begin implementation of the 

proposed rule change by June 30, 2021. 

The Exchange will issue an Options 

Trader Alert to BX Participants with the 

date of implementation.24

III. Discussion and Commission 

Findings 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.25 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,26 which requires that 

the rules of an exchange be designed, 

among other things, 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 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, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers or dealers. 

The Commission also finds that the 

proposed rule change is consistent with 

Section 6(b)(8) of the Act,27 which 

requires that the rules of a national 

securities exchange not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

The proposed rule change appears 

reasonably designed to offer Participants 

an efficient process to solicit an 

Initiating Order among other BX 

Participants for entry into the PRISM 

auction.28 The Commission believes 

that by permitting BX Participants to 

use FIX to send a Request for PRISM 

(with a PRISM Order) simultaneously to 

all BX Participants that have opted-in, 

the proposed Request for PRISM process 

would provide BX Participants with 

another means of soliciting interest for 

a PRISM auction from a potentially 

broader group of market participants, 

potentially providing price 

improvement to the PRISM Order. The 

Commission further notes that the 

proposal would not amend the manner 

in which PRISM auction operates. Any 

paired order entered into PRISM must 

comply with the eligibility requirements 

of BX Options 3, Section 13(i) to 

commence the auction and the auction 

process will operate as it does today. 

The Commission also believes that the 

proposal appears to be designed to 

provide an objective process for the 

selection of the contra-side to the 

PRISM Order. Any BX Participant may 

choose to opt-in, and those who opt-in 

would receive any Request for PRISM 

sent from BX Participants.29 Further, 

any BX Participant that chooses to optin may subsequently opt-out.30 In 

addition, the Exchange has proposed 

that the identity of the sender and 

recipients would not be known to any 

party and that it would not disclose a 

list of the BX Participants that opted-in 

to receive a Request for PRISM.31 Thus, 

the decision of which Participant is 

chosen to provide the Initiating Order 

will be based solely on which recipient 

responded first to the Request for 

PRISM. 

The Commission also believes that the 

proposed rule change appears designed 

to prevent the misuse of information 

related to the proposed Request for 

PRISM and create an audit trail for 

surveilling Requests for PRISM. The 

Exchange represents that it will employ 

surveillances to prevent misuse of nonpublic information related to a Request 

for PRISM similar to how it employs 

surveillances today to ensure that 

information available in auctions is not 

misused.32 The Exchange also 

represents that the communications that 

would occur, through FIX, would be 

available to and maintained by the 

Exchange, and that it would be able to 

monitor entries into both the order book 

and the PRISM auction.33 Further, the 

Exchange proposes in Options 3, 

Section 13 that it would be deemed 

conduct inconsistent with just and 

equitable principles of trade and a 

violation of Options 9, Section 1, and 

other Exchange Rules for BX 

Participants receiving Requests for 

PRISM to utilize the information to a BX 

Participant’s economic advantage.34 In 

addition, a Request for PRISM would be 

subject to the restrictions set forth in BX 

Options 3, Section 22 (Limitations on 

Order Entry), and any paired order 

resulting from a Request for PRISM 

would be subject to the PRISM auction 

requirements in BX Options 3, Section 

13.35

For the reasons set forth above, the 

Commission believes that the proposed 

rule changes are consistent with the 

requirements of the Act. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,36 that the 

proposed rule change (SR–BX–2020– 

033) hereby is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03341 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91122; File No. SR–CBOE– 

2020–052] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Amend Rules 

5.37, 5.38, and 5.73 Related to Auction 

Notification Messages and Index 

Combo Orders in SPX in the 

Automated Improvement Mechanism, 

Complex Automated Improvement 

Mechanism, and FLEX Automated 

Improvement Mechanism 

February 12, 2021. 

I. Introduction 

On June 3, 2020, Cboe Exchange, Inc. 

(‘‘Exchange’’ or ‘‘Cboe’’) filed with the 

Securities and Exchange Commission 


tkelley on DSKBCP9HB2PROD with NOTICES