Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices 12047 

17 17 CFR 200.30–3(a)(85). 

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

2 17 CFR 240.19b–4. 

become operational upon approval by 

the Commission. 

D. Development and Implementation 

Phases 

The amendment proposed herein 

would be implemented to coincide with 

amendments filed by the equity 

exchanges and approved by the 

Commission. 

E. Analysis of Impact on Competition 

The amendment proposed herein does 

not impose any burden on competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act 

because the amendment simply 

incorporates into the UTP Plan the 

processes for Regulatory Halts that will 

be proposed by the equity exchanges. 

The Participants do not believe that the 

proposed amendment introduces terms 

that are unreasonably discriminatory for 

the purposes of Section 11A(c)(1)(D) of 

the Act. 

F. Written Understanding or Agreements 

Relating to Interpretation of, or 

Participation in, Plan 

Not applicable. 

G. Approval by Sponsors in Accordance 

With Plan 

Section IV(C)(1)(a) of the UTP Plan 

requires the Participants to 

unanimously approve the amendment 

proposed herein. They so approved it. 

H. Description of Operation of Facility 

Contemplated by the Proposed 

Amendment 

Not applicable. 

I. Terms and Conditions of Access 

Not applicable. 

J. Method of Determination and 

Imposition, and Amount of, Fees and 

Charges 

Not applicable. 

K. Method and Frequency of Processor 

Evaluation 

Not applicable. 

L. Dispute Resolution 

Not applicable. 

II. Regulation NMS Rule 601(a) (Solely 

in Its Application to the Amendment to 

the UTP Plan) 

A. Equity Securities for Which 

Transaction Reports Shall Be Required 

by the Plan 

Not applicable. 

B. Reporting Requirements 

Not applicable. 

C. Manner of Collecting, Processing, 

Sequencing, Making Available and 

Disseminating Last Sale Information 

Not applicable. 

D. Manner of Consolidation 

Not applicable. 

E. Standards and Methods Ensuring 

Promptness, Accuracy and 

Completeness of Transaction Reports 

Not applicable. 

F. Rules and Procedures Addressed to 

Fraudulent or Manipulative 

Dissemination 

Not applicable. 

G. Terms of Access to Transaction 

Reports 

Not applicable. 

H. Identification of Marketplace of 

Execution 

Not applicable. 

III. Solicitation of Comments 

The Commission seeks comments on 

the Amendment. Interested persons are 

invited to submit written data, views, 

and arguments concerning the 

foregoing, including whether the 

proposed Amendment is consistent with 

the Act and the rules and regulations 

thereunder applicable to national 

market system plans. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number S7– 

24–89 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 S7–24–89. 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 

website (http://www.sec.gov/rules/ 

sro.shtml). Copies of the submission, all 

written statements with respect to the 

proposed Amendment that are filed 

with the Commission, and all written 

communications relating to the 

proposed Amendment 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for website 

viewing and printing at the principal 

office of the Plan. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number S7–24–89 

and should be submitted on or before 

March 22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–04089 Filed 2–26–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91191; File No. SR– 

CboeEDGX–2021–010] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend 

Order Start Times During Its Early 

Trading Session 

February 23, 2021. 

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 February 

11, 2021, Cboe EDGX Exchange, Inc. 

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

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) proposes to 

amend order start times during its Early 

Trading Session. The text of the 

12048 Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices 

3 ‘‘Early Trading Session’’ means the time 

between 4:00 a.m. and 8:00 a.m. ET. See Rule 

1.5(ii). 

4 ‘‘Pre-Opening Session’’ means the time between 

8:00 a.m. and 9:30 a.m. ET. See Rule 1.5(s). 

5 ‘‘Regular Trading Hours’’ means the time 

between 9:30 a.m. and 4:00 p.m. ET. See Rule 

1.5(y). 

6 ‘‘Post-Closing Trading Session’’ means the time 

between 4:00 p.m. and 8:00 p.m. ET. See Rule 

1.5(r). 

7See Securities Exchange Act Release No. 90509 

(November 24, 2020), 85 FR 77310 (December 1, 

2020) (SR–CboeEDGX–2020–056). 

8The Exchange will announce the 

implementation of the extended Early Trading 

Session to Members in advance via Trade Desk 

Notice. 

9A User will be able to designate orders with a 

7:00 a.m. Start through the use of a port setting. See 

also infra note 14. 

10The Exchange notes that the extended hours are 

intended to provide market participants with 

additional opportunities to source and access 

liquidity for their orders on the Exchange. See 

supra note 7. 

11The Exchange’s affiliated equities exchange are 

Cboe BZX Exchange, Inc. (‘‘BZX’’), Cboe BYX 

Exchange, Inc. (‘‘BYX’’), and Cboe EDGA Exchange, 

Inc. (‘‘EDGA’’). 

12See e.g., BZX Rule 1.5(ee), BYX Rule 1.5(ee), 

EDGA Rule 1.5(ii), NYSE Rule 7.34(a)(1), NYSE 

American Rule 7.34E, and Nasdaq BX Rule 

4120(b)(4), each of which provide that their 

respective early trading sessions open at 7:00 a.m. 

ET. 

13See id. 

14The Exchange is aware are at least one liquidity 

provider that has expressed that it will not 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

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 amend 

Rule 11.1 to allow Users to designate 

their orders to become eligible for 

execution at 7:00 a.m. Eastern Time 

(‘‘ET’’) during the new Early Trading 

Session extended hours. 

The Exchange currently offers four 

distinct trading sessions where the 

Exchange accepts orders for potential 

execution: (1) The ‘‘Early Trading 

Session,’’ which begins at 4:00 a.m. ET 

and continues until 8:00 a.m. ET,3 (2) 

the ‘‘Pre-Opening Session,’’ which 

begins at 8:00 a.m. ET and continues 

until 9:30 a.m. ET,4 (3) ‘‘Regular Trading 

Hours,’’ which begin at 9:30 a.m. ET and 

continue until 4:00 p.m. ET,5 and (4) the 

‘‘Post-Closing Trading Session,’’ which 

begins at 4:00 p.m. ET and continues 

until 8:00 p.m. ET.6

The Exchange recently submitted an 

immediately effective rule filing which 

amended the Early Trading Session to 

extend its hours from a 7:00 a.m. ET 

start to a 4:00 a.m. ET start, and to allow 

Users to begin entering orders into the 

System prior to the Early Trading 

Session at 3:30 a.m. ET.7 The Exchange 

intends to launch the new Early Trading 

Session extended hours on March 8, 

2021.8 As amended, Rule 11.1 now 

provides that the Exchange will not 

accept the following orders prior to 4:00 

a.m. ET: Orders with a Post Only 

instruction, ISOs, Market Orders other 

than those with a TIF instruction of 

Regular Hours Only or a Stop Price, 

orders with a Minimum Execution 

Quantity instruction that also include a 

TIF instruction of Regular Hours Only, 

and all orders with a TIF instruction of 

IOC or FOK. Further, at the 

commencement of the Early Trading 

Session, orders entered between 3:30 

a.m. and 4:00 a.m. ET will be handled 

in time sequence, beginning with the 

order with the oldest time stamp, and 

will be placed on the EDGX Book, 

routed, cancelled, or executed in 

accordance with the terms of the order. 

In light of the planned extension of 

the Early Trading Session, the Exchange 

seeks to continue to provide Users with 

the option to submit orders that become 

eligible for execution during the Early 

Trading Session beginning at 7:00 a.m. 

ET. In particular, the proposed rule 

change amends Rule 11.1 to provide 

that at the commencement of the Early 

Trading Session, orders entered between 

3:30 a.m. and 4:00 a.m. ET, will become 

eligible for execution (‘‘4:00 a.m. Start’’), 

unless designated as eligible for 

execution during the Early Trading 

Session beginning at 7:00 a.m. ET (‘‘7:00 

a.m. Start’’). Orders with a 7:00 a.m. 

Start designation may be entered 

between 3:30 a.m. and 7:00 a.m. ET. At 

each Start time that orders may become 

eligible for execution in the Early 

Trading Session (4:00 a.m. or 7:00 a.m. 

ET), orders will be handled in time 

sequence, beginning with the order with 

the oldest time stamp, and will be 

placed on the EDGX Book, routed, 

cancelled, or executed in accordance 

with the terms of the order.9 The 

Exchange will not accept the following 

orders prior to 4:00 a.m. Eastern Time 

or prior to 7:00 a.m. Eastern Time for 

orders eligible for a 7:00 a.m. Start: 

Orders with a Post Only instruction, 

ISOs, Market Orders other than those 

with a TIF instruction of Regular Hours 

Only or a Stop Price, orders with a 

Minimum Execution Quantity 

instruction that also include a TIF 

instruction of Regular Hours Only, and 

all orders with a TIF instruction of IOC 

or FOK. 

The proposed rule change allows 

Users to continue to be able to choose 

to submit orders that become eligible for 

execution during the Early Trading 

Session beginning at 7:00 a.m. ET, as 

they may today in connection with the 

current Early Trading Session hours.10

As the Exchange’s Early Trading Session 

currently begins at 7:00 a.m. ET and 

other equities exchanges, including the 

Exchange’s affiliated equities 

exchanges,11 have early trading sessions 

that begin at 7:00 a.m. ET,12 the 

Exchange understands that many market 

participants have configured their 

systems for trading beginning at 7:00 

a.m. ET and find 7:00 a.m. ET to be a 

time at which there are additional 

opportunities across the industry to 

access and source liquidity. For 

example, the Exchange understands that 

retail brokerage firms generally have 

standard agreements in place with their 

retail customers which provide that 

retail customer orders may not become 

eligible for execution until a specific 

time, and is aware of at least one such 

firm on the Exchange that has standard 

agreements in place with their retail 

customers that limit this time to 7:00 

a.m. ET. The Exchange also understands 

that multiple liquidity providers wish to 

continue to participate in the Early 

Trading Session beginning at 7:00 a.m. 

given the particular liquidity and 

activity present across the U.S. equity 

markets at this specific time.13 Without 

a 7:00 a.m. Start designation available, 

certain retail investors may be limited in 

their ability to source liquidity that is 

available at this time during the 

Exchange’s Early Trading Session, and 

liquidity providers may similarly 

choose not to participate in this trading 

session, thereby reducing liquidity 

available to other market participants 

and investors.14

Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices 12049 

participate in the Early Trading Session without a 

7 a.m. Start feature. 

15The System may delay the release of 7:00 a.m. 

Start orders if the System is experiencing an 

unusually significant amount of orders with a 7:00 

a.m. Start designation that would potentially impact 

other System performance and processing functions 

during the Early Trading Session. The Exchange 

does not anticipate an occasion in which the 

System would have to implement a delayed release 

for orders with a 7:00 a.m. Start during the Early 

Trading Session. As the System does not have 

unlimited capacity, the proposed System flexibility 

to delay the release of orders with a 7:00 a.m. Start 

designation is a reasonable preventative measure to 

ensure that the System has the capacity to maintain 

fair and orderly markets in the event that there is 

an unusually significant amount of orders queued 

for 7:00 a.m. ET activation. 

16See Nasdaq Rule 4701(g). 17Orders using the SCAN or RTFY routing 

strategy available on Nasdaq. 18The Exchange notes that the designation for 

orders to become active at 7:00 a.m. ET on Nasdaq 

is similarly a port level setting. See Securities 

Exchange Act Release No. 83125 (April 27, 2018), 

83 FR 19586 (May 3, 2018) (SR–NASDAQ–2017– 

088). 

19 15 U.S.C. 78f(b). 20 15 U.S.C. 78f(b)(5). 21 Id. 22See supra note 12. 

As such, the proposed rule change is 

intended to alleviate potential difficulty 

for Users that generally begin 

participating in the markets beginning at 

7:00 a.m. ET, and to facilitate a fair and 

orderly market on the Exchange where 

retail investors and other market 

participants can benefit from trading 

opportunities present in the Exchange’s 

Early Trading Session. As such, the 

proposed 7:00 a.m. Start designation 

will provide Users with greater control 

over their orders and more flexibility to 

carry out their investment strategies and 

manage their needs based on market 

conditions. In turn, Users may continue 

to provide meaningful liquidity and 

benefit from trading opportunities 

present on the Exchange throughout the 

duration of the Early Trading Session. 

The Exchange notes that, as proposed, 

orders eligible for execution beginning 

at 7:00 a.m. ET will function in the same 

manner as they currently do today upon 

the 7:00 a.m. ET commencement of the 

Early Trading Session (and as they will 

upon the 4:00 a.m. ET commencement 

for the extended Early Trading Session 

hours). That is, Users will submit orders 

eligible for a 7:00 a.m. ET Start during 

the Early Trading Session in the same 

manner as they may currently submit 

orders eligible for execution during the 

Early Trading Session, and will 

continue to be able to submit all such 

orders at the beginning of the early 

order acceptance period. As orders with 

a 7:00 a.m. Start designation will not be 

activated until 7:00 a.m., Users will 

have through 7:00 a.m. to submit such 

orders. The Exchange will continue not 

to accept the same order types listed in 

Rule 11.1 prior to the commencement of 

an order’s eligible start time in the Early 

Trading Session. The proposed rule 

change makes it clear that orders with 

a Post Only instruction, ISOs, Market 

Orders other than those with a TIF 

instruction of Regular Hours Only or a 

Stop Price, orders with a Minimum 

Execution Quantity instruction that also 

include a TIF instruction of Regular 

Hours Only, and all orders with a TIF 

instruction of IOC or FOK will continue 

to be rejected prior to an order’s eligible 

start time in the Early Trading Session, 

as they are today. Additionally, the 

System will continue to handle all 

orders eligible for execution during the 

Early Trading Session, including those 

with a 7:00 a.m. Start designation, 

pursuant to Rule 11.1. In particular, the 

proposed rule language makes it clear 

that all orders eligible for execution 

during the Early Trading Session will 

continue to be handled in time 

sequence, beginning with the order with 

the oldest time stamp, and will be 

placed on the EDGX Book, routed, 

cancelled, or executed in accordance 

with the terms of the order, beginning 

at the Start time (either 4:00 a.m. or 7:00 

a.m. ET) at which they become eligible 

for execution in the Early Trading 

Session.15 At 7:00 a.m., orders with a 

7:00 a.m. Start designation will simply 

be handled as any incoming order is 

handled during the Early Trading 

Session, and merge, in time sequence, 

onto the already active EDGX Order 

Book for the Early Trading Session. A 

User must continue to select the 

appropriate TIF to allow the order to 

execute in the Early Trading and a port 

setting will merely permit a User to 

designate an order that is already 

marked for the Early Trading Session to 

become active later in the Early Trading 

Session. The Exchange notes that the 

proposal does not extend or otherwise 

modify any trading hours during which 

trading is currently permissible on the 

Exchange but simply permits a User to 

activate an order at a specific time 

during an ongoing trading session. 

Additionally, the Exchange notes that 

permitting Users to designate a 7:00 a.m. 

ET Start for which orders may become 

active during an early trading session 

that begins at 4:00 a.m. is consistent 

with the rules currently in place on 

Nasdaq Stock Market LLC (‘‘Nasdaq’’). 

Nasdaq’s early trading session currently 

begins at 4:00 a.m. and continues until 

the 9:30 a.m. commencement of 

Nasdaq’s regular trading hours.16

Nasdaq Rule 4703(a) allows participants 

to designate a time at which certain 

orders 17 may become active and 

includes 7:00 a.m. ET as an available 

time at which participants may activate 

such orders entered prior to 7:00 a.m. 

ET.18

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.19 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 20 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) 21 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the proposed rule 

change to allow Users to submit orders 

that become eligible for execution 

beginning at 7:00 a.m. ET, once the 

Exchange extends its Early Trading 

Session hours to begin at 4:00 a.m. ET, 

will remove impediments to and perfect 

the mechanism of a free and open 

market and national market system and 

will benefit investors by continuing to 

provide Users with the option to 

activate their orders for execution 

beginning at 7:00 a.m. ET and thus the 

opportunity to continue to source and 

access liquidity at a specific time in 

which there are additional trading 

opportunities in the markets. The 

Exchange does not believe that the 

proposed rule change will present any 

unique or novel issues nor affect the 

maintenance of a fair and orderly 

market, as many market participants 

have configured their systems for 

trading beginning at 7:00 a.m. ET in line 

with the commencement of the early 

trading sessions on other equities 

exchanges, including the Exchange’s 

affiliated equities exchanges.22 Rather, 

the proposed rule change is designed to 

benefit investors, as well as overall 

liquidity in the Early Trading Session, 

by providing Users with the option to 

continue to activate their orders for 

execution during the Early Trading 

12050 Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices 

23See also supra note 15. 

24A member’s best execution obligation may also 

include cancelling an order when market 

conditions deteriorate and could result in an 

inferior execution or informing customers where 

the execution of their order may be delayed 

intentionally as the member utilizes reasonable 

diligence to ascertain the best market for the 

security. See FINRA Rule 5130. See also FINRA 

Regulatory Notice 15–46, Best Execution. Guidance 

on Best Execution Obligations in Equity, Options, 

and Fixed Income Markets, (November 2015). 

25These characteristics are reflected in the 

disclosure requirements mandated by Exchange 

Rule 3.21 before a Member may accept an order 

from a customer for execution in the Pre-Opening, 

Post-Closing, and proposed Early Trading Sessions. 

26See Securities Exchange Act Release No. 43950 

(November 17, 2000), 65 FR 75414 (December 1, 

2000) (‘‘Disclosure of Order Execution and Routing 

Practices release’’). 

27See Securities Exchange Act Release No. 63241 

(November 3, 2010), 75 FR 69792 (November 15, 

2010) (File no. S7–03–10). 

28See e.g., Question 2.6 of the Division of Trading 

and Markets: Response to Frequently Asked 

Questions Concerning Regulations SHO, available 

at https://www.sec.gov/divisions/marketreg/ 

mrfaqregsho1204.htm. 

29 17 CFR 240.610–611. 

Session beginning at 7:00 a.m. ET when 

the Exchange extends its Early Trading 

Session hours. As described above, 

certain market participants, such as 

retail investors and liquidity providers, 

may be limited in their ability to source 

liquidity that is available in the 

Exchange’s Early Trading Session or 

choose not to participate in the Early 

Trading Session without the availability 

of a 7:00 a.m. Start designation, thereby 

reducing liquidity available to other 

market participants and investors. Thus, 

the proposed rule change will alleviate 

potential difficulties for Users that 

generally begin participating in in the 

markets at 7:00 a.m. ET (as these Users 

would not have to time the entry of their 

orders to occur as close to 7:00 a.m. ET 

as possible), and will facilitate a fair and 

orderly market on the Exchange by 

allowing retail investors and other 

market participants to benefit from 

trading opportunities present at this 

specific time during the Exchange’s 

Early Trading Session. Overall, the 

proposed rule change will serve to 

protect investors and the public interest 

by providing Users with greater control 

over their orders and more flexibility to 

carry out their investment strategies and 

manage their needs based on market 

conditions, thereby allowing them to 

continue to provide meaningful 

liquidity and benefit from trading 

opportunities present on the Exchange 

throughout the duration of the Early 

Trading Session. 

The proposed rule change will not 

affect the protection of investors as it 

would simply provide Users with the 

opportunity to choose whether orders 

entered for potential execution in the 

Early Trading Session will become 

active at the new 4:00 a.m. ET 

commencement of that trading session, 

or will instead continue to become 

active at 7:00 a.m. ET, as they do today. 

The System will continue to accept all 

orders eligible for execution during the 

Early Trading Session beginning at the 

early acceptance time, will continue to 

reject the same list of order types prior 

to the time an order is eligible to start 

trading in the Early Trading Session, 

and will continue to process all orders 

that are queued for participation in the 

Early Trading Session in time priority 

pursuant to Rule 11.1.23 That is, orders 

with a 7:00 a.m. Start designation will 

be handled as any incoming order is 

handled during the Early Trading 

Session, and merge, in time sequence, 

onto the already active EDGX Order 

Book for the Early Trading Session. As 

described above, a User must continue 

to select the appropriate TIF to allow 

the order to execute in the Early Trading 

Session and a port setting step will just 

permit an order already marked for 

execution in the Early Trading Session 

to become active later in the Early 

Trading Session. The proposed rule 

change does not extend or otherwise 

modify any trading hours during which 

trading is currently permissible on the 

Exchange but simply permits Users to 

choose to activate their orders at a 

specific time during an ongoing trading 

session. 

The Exchange also notes that, as with 

any order eligible for trading in the 

Early Trading Session, market 

participants must monitor market 

conditions to ensure compliance with 

best execution obligations 24 for their 

orders with a 7:00 a.m. Start designation 

and will be able to cancel or modify 

their orders with a 7:00 a.m. Start time 

designation at any time prior to their 

activation, thus allowing them to react 

to market conditions that may cause 

them to violate their best execution 

obligations. FINRA Rule 5310(a)(1) 

provides that a member must use 

reasonable diligence to ascertain the 

best market for a security and buy or sell 

in such market so that the resultant 

price to the customer is as favorable as 

possible under prevailing market 

conditions. FINRA Rule 5310(a)(1)(A) 

states that one of the factors that will be 

considered in determining whether a 

member has used ‘‘reasonable 

diligence’’ is ‘‘the character of the 

market for the security (e.g., price, 

volatility, relative liquidity, and 

pressure on available 

communication).’’ 25 The Exchange 

believes that Users are accustomed to 

this additional analysis and will 

continue to apply such in determining 

whether to designate an activation at 

7:00 a.m. ET. The regulatory guidance 

with respect to best execution 

anticipates the continued evolution of 

execution venues: 

[B]est execution is a facts and 

circumstances determination. A brokerdealer must consider several factors affecting 

the quality of execution, including, for 

example, the opportunity for price 

improvement, the likelihood of execution 

. . ., the speed of execution and the trading 

characteristics of the security, together with 

other non-price factors such as reliability and 

service.26

To the extent there may be best 

execution obligations at issue, they are 

no different than the best execution 

obligations faced by brokers in the 

current market structure, including the 

current use of orders that become 

eligible for execution at the start of the 

Early Trading Session, Pre-Opening 

Session or Regular Trading Hours, 

depending on the TIF selected by the 

User. A User may use continue to use 

TIF instructions to forgo a possible 

execution at the start of one trading 

session, or at a 7 a.m. Start time, as 

proposed, if they believe doing so is 

consistent with their best execution 

obligations as they anticipate that the 

market for the security may improve 

upon the start of another trading 

session, or at 7:00 a.m. ET, as proposed. 

Applicable best execution guidance 

contains no formulaic mandate as to 

whether or how brokers should direct 

orders. The optionality created by the 

proposed rule change simply represents 

one tool available to User to meet their 

best execution obligations. 

The Exchange also notes that Users 

are required to implement regulatory 

risk management controls and 

procedures that are reasonably designed 

to prevent the entry of orders that fail 

to comply with regulatory requirements 

that apply on a pre-order entry basis 

pursuant to the Market Access Rule 

under 15c3–5of the Act.27 These pretrade controls must, for example, be 

reasonably designed to assure 

compliance with Exchange trading rules 

and Commission rules under Regulation 

SHO 28 and Regulation NMS.29 In 

accordance with the Market Access 

Rule, a User’s procedures must be 

reasonably designed to ensure 

compliance with their applicable 

regulatory requirements, not just at the 

time the order is routed to the Exchange, 

but also at the time the order becomes 

eligible for execution. 

In addition to this, the proposed rule 

change will not affect the protection of 

investors as it is generally consistent 

Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices 12051 

30See supra note 16. 

31 15 U.S.C. 78s(b)(3)(A)(iii). 32 17 CFR 240.19b–4(f)(6). 33 15 U.S.C. 78s(b)(3)(A). 34 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s 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. 

35 17 CFR 240.19b–4(f)(6). 

36 17 CFR 240.19b–4(f)(6)(iii). 

37For 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). 

with Nasdaq Rule 4703(a), as previously 

approved by the Commission,30 which 

allows participants to designate 7:00 

a.m. ET as a time in which certain 

orders entered prior to 7:00 a.m. ET may 

become active during Nasdaq’s early 

trading session, which likewise 

commences at 4:00 a.m. ET. Unlike 

Nasdaq Rule 4703(a), which limits the 

types of orders that may be designated 

to begin at 7:00 a.m. ET, the proposal 

will provide Users with the control and 

flexibility to designate a 7 a.m. Start 

time for any of their same orders 

currently eligible to execute in the Early 

Trading Session, thereby providing the 

opportunity for all orders eligible for the 

Early Trading Session to access the 

additional liquidity and execution 

opportunities present in the markets at 

this particular time, as they may today. 

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 does not believe that the 

proposed rule change will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because all Users will be able to 

designate their orders to become eligible 

for execution during the Early Trading 

Session beginning at 7:00 a.m. ET. All 

Users’ orders submitted with a 7:00 a.m. 

Start designation will become eligible 

for execution at 7:00 a.m. ET in the 

same time sequence as they are today 

and will be subject to the same order 

type restrictions as are currently in 

place. The Exchange also does not 

believe that the proposed rule change 

will impose any burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act, and may promote 

competition, because the proposed 

activation time is substantially similar 

to that which is currently in place on 

Nasdaq, as previously approved by the 

Commission, and other equities 

exchanges currently begin their early 

trading sessions at 7:00 a.m. ET. 

Therefore, the proposal will also allow 

the Exchange to compete with those 

exchanges that allow for a 7:00 a.m. ET 

start time. 

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 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 31 and Rule 

19b–4(f)(6) thereunder.32 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 from the 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 has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 33 and Rule 19b–4(f)(6) 

thereunder.34

A proposed rule change filed under 

Rule 19b–4(f)(6) 35 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),36 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 

immediately. This will allow the 

Exchange to implement the proposal at 

the same time as the Exchange’s new 

extended Early Trading Session hours, 

which the Exchange plans to launch on 

March 8, 2021. In seeking this waiver, 

the Exchange asserts that this proposal 

neither introduces any new or novel 

issues nor extends or otherwise 

modifies trading hours during which 

trading is currently permissible on the 

Exchange. Rather, the Exchange states 

that this proposal will allow market 

participants and investors to continue to 

submit orders that become eligible for 

execution at 7:00 a.m. ET, as they 

already do today, once the Exchange 

extends its Early Trading Session hours 

to begin at 4:00 a.m. ET. Based on the 

foregoing, the Commission believes that 

allowing this proposed rule change to 

become operative upon filing is 

consistent with the protection of 

investors and the public interest. The 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal operative upon filing.37

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 

change 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeEDGX–2021–010 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–CboeEDGX–2021–010. 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 (http://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 

12052 Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices 

38 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78mm(a)(1). 

2 15 U.S.C. 78s(b). 

3See letter from Rebecca Tenuta, Counsel, Cboe 

C2 Exchange, Inc. to Vanessa Countryman, 

Secretary, Commission, dated February 9, 2021 

(‘‘Exemptive Request’’). 

4 15 U.S.C. 78mm(a)(1). 

5See Securities Exchange Act Release No. 87646 

(December 2, 2019), 84 FR 66938 (December 6, 

2019) (SR–C2–2019–025). 

6 Incorporates by reference Cboe Options Chapter 

3, Section B. 

7 Incorporates by reference Cboe Options Chapter 

4, Section A. 

8 Incorporates by reference Cboe Options Chapter 

4, Section B. 

9 Incorporates by reference Cboe Options Chapter 

8. 

10 Incorporates by reference Cboe Options 

Chapter 5, Section E. 

11 Incorporates by reference Cboe Options 

Chapter 6, Section B. 

12 Incorporates by reference Cboe Options 

Chapter 7, Section A. 

13 Incorporates by reference Cboe Options 

Chapter 7, Section B. 

14 Incorporates by reference Cboe Options 

Chapter 9. See also Securities Exchange Act Release 

No. 87646 (December 2, 2019), 84 FR 66938 

(December 6, 2019) (SR–C2–2019–025), which 

relocated former Rule 3.19 to Rule 9.20 in order to 

include Cboe Options Rule 9.20 in C2 Chapter 9’s 

incorporation of Cboe Options Chapter 9 by 

reference, as former Rule 3.19 is identical to Cboe 

Options Rule 9.20 and it is within the same 

category of exchange rules otherwise incorporated 

into C2 Chapter 9 by reference to Cboe Options 

Chapter 9 (i.e., rule related to doing business with 

the public). 

15 Incorporates by reference Cboe Options 

Chapter 10. 

16 Incorporates by reference Cboe Options 

Chapter 11. 

17 Incorporates by reference Cboe Options 

Chapter 12. 

18 Incorporates by reference Cboe Options 

Chapter 13. 

19 Incorporates by reference Cboe Options 

Chapter 14. 

20 Incorporates by reference Cboe Options 

Chapter 15. 

21See Securities Exchange Act Release Nos. 

61152 (December 10, 2009), 74 FR 66699 (December 

16, 2009); and 80339 (March 29, 2017), 82 FR 16442 

(April 4, 2017). 

22 17 CFR 240.0–12. 

23See Exemptive Request, supra note 3. 

24 Id. 

25 Id. 

26The Exchange states that it will provide such 

notice via a posting on the same website location 

where the Exchange posts its own rule filings 

pursuant to Rule 19b–4(l) within the timeframe 

required by such Rule. In addition, the Exchange 

states that the website posting will include a link 

to the location on Cboe’s website where the 

applicable proposed rule change is posted. Id. 

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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

offices of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeEDGX–2021–010, and 

should be submitted on or before March 

22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–04090 Filed 2–26–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91193] 

Order Granting Application by Cboe C2 

Exchange, Inc. for Exemption Pursuant 

to Section 36(a) of the Exchange Act 

From the Rule Filing Requirements of 

Section 19(b) of the Exchange Act With 

Respect to Certain Rules Incorporated 

by Reference 

February 23, 2021. 

Cboe C2 Exchange, Inc. (‘‘C2’’ or the 

‘‘Exchange’’) has filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) an application for 

an exemption under Section 36(a)(1) of 

the Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 from the rule filing 

requirements of Section 19(b) of the 

Exchange Act 2 with respect to certain 

rules of Cboe Exchange, Inc. (‘‘Cboe’’) 

that the Exchange seeks to incorporate 

by reference.3 Section 36(a)(1) of the 

Exchange Act,4 subject to certain 

limitations, authorizes the Commission 

to conditionally or unconditionally 

exempt any person, security, or 

transaction, or any class thereof, from 

any provision of the Exchange Act or 

rule thereunder, if necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors. 

The Exchange filed a proposed rule 

change 5 under Section 19(b) of the 

Exchange Act to update various C2 

Rules and Chapters to reflect changes to 

the Cboe Options rulebook. Namely, in 

the proposed rule change, the Exchange 

proposed to incorporate by reference 

rule changes made to each Cboe Options 

rule cross-referenced in the following 

C2 chapters or sections: Chapter 3, 

Section B (TPH Registration); 6 Chapter 

4, Section A (Equity and ETP Options); 7

Chapter 4, Section B (Index Options); 8

Chapter 5 (Business Conduct); 9 Chapter 

6, Section E (Intermarket Linkage); 10

Chapter 6, Section F (Exercises and 

Deliveries); 11 Chapter 7, Section A; 12

Chapter 7, Section B; 13 Chapter 9 

(Doing Business with the Public); 14

Chapter 10 (Margin Requirements); 15

Chapter 1 (Net Capital Requirements); 16

Chapter 12 (Summary Suspension); 17

Chapter 13 (Discipline); 18 Chapter 14 

(Arbitration); 19 and Chapter 15 

(Hearings and Review) 20 (the ‘‘Cboe 

Incorporated Rules’’). 

The Commission notes it previously 

granted C2 an exemption from the rule 

filing requirements of Section 19(b) of 

the Act for the rules of the Cboe set forth 

in the C2 rules referenced above.21

Since that time, the Cboe has 

renumbered and relocated the 

previously incorporated rules within its 

rulebook. As a result, C2 has submitted 

this exemptive request to reflect rule 

number changes in the Cboe Options 

rulebook. Specifically, the Exchange is 

now requesting, pursuant to Rule 0–12 

under the Exchange Act,22 that the 

Commission grant an exemption from 

the rule filing requirements of Section 

19(b) of the Exchange Act for changes to 

the Chapters 3–7 and 9–15 of the 

Exchange’s rules that are effected solely 

by virtue of a change to a Cboe 

Incorporated Rule. The Exchange 

requests that it be permitted to 

incorporate by reference changes made 

to the Cboe Incorporated Rules without 

the need for the Exchange to file 

separately the same proposed rule 

change pursuant to Section 19(b) of the 

Exchange Act.23

The Exchange represents that the 

Cboe Incorporated Rules are not trading 

rules.24 Moreover, the Exchange states 

that it proposes to incorporate by 

reference a category of rules (rather than 

individual rules within a category).25

The Exchange also represents that, as a 

condition of this exemption, the 

Exchange will provide written notice to 

its applicants and members whenever 

Cboe proposes a change to a Cboe 

Incorporated Rule.26

According to the Exchange, this 

exemption is necessary and appropriate 

to maintain consistency between C2 

rules and the Cboe Incorporated Rules, 

thus helping to ensure identical 

regulation of C2 Permit Holders that are 

also Cboe Trading Permit Holders with 

respect to the incorporated provisions as