Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices 58373 

29 15 U.S.C. 78s(b)(3)(A)(iii). 

30 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. 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3As described below, the Exchange will 

specifically define this passive risk counter 

functionality as ‘‘Rapid Fire’’ within this Rule. 

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 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 29 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.30

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 rule-comments@

sec.gov. Please include file number SR– 

ISE–2023–18 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–ISE–2023–18. 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–ISE–2023–18 and should be 

submitted on or before September 15, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–18304 Filed 8–24–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98179; File No. SR–BX– 

2023–019] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Options 3, 

Section 15 (Risk Protections) To Adopt 

an Active Quote Protection 

August 21, 2023. 

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 

11, 2023, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Options 3, Section 15 (Risk Protections) 

to adopt an active quote protection. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/bx/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 purpose of the proposed rule 

change is to adopt an active risk counter 

functionality called active quote 

protection (‘‘Active Quote Protection’’) 

in Options 3, Section 15. The Exchange 

intends to begin implementation prior 

to December 20, 2024, and will provide 

prior notice of the implementation date 

to Members in an Options Trader Alert. 

The Exchange proposes to offer an 

optional active risk counter 

functionality called Active Quote 

Protection, which will be available to 

Market Makers as an alternative to 

existing passive risk counter 

functionality described in Options 3, 

Section 15(c)(2)(A) (i.e., ‘‘Quotation 

Adjustments’’).3 The proposed Active 


ddrumheller on DSK120RN23PROD with NOTICES1
58374 Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices 

4See MEMX LLC (‘‘MEMX’’) Rule 21.16(b) 

(Active Risk Counter). See also Securities Exchange 

Act Release No. 95445 (August 8, 2022), 87 FR 

49894 (August 12, 2022) (SR–MEMX–2022–10). 

Similar to the proposed Active Quote Protection, 

the active risk counter on MEMX is voluntary and 

offers a way for users to proactively manage their 

risk. The MEMX risk protection, however, allows 

the user to actively manage all the risk limits 

specified in MEMX’s rule (e.g., executed contracts, 

notional value, etc.) whereas the Exchange’s 

proposal would allow Market Makers to actively 

manage executed contracts only, as discussed later 

in this filing. In addition, the Exchange’s proposal 

will only apply to quotes whereas MEMX’s 

functionality applies to both orders and quotes. 

5The Thresholds are described in detail in 

Options 3, Section 15(c)(2)(A)(i)–(iv). If a Market 

Maker does not provide a parameter for each 

Threshold, the Exchange will apply default 

parameters announced to Members. 

6 If the Market Maker opting to use Active Quote 

Protection does not provide a Contract Limit at the 

outset, the Exchange will apply a default parameter 

for the Active Quote Protection Contract Limit 

(which would be announced to Participants). The 

Exchange will initially set the default Contract 

Limit at 100 contracts. 

7Specialized Quote Feed or ‘‘SQF’’ is an interface 

that only Market Makers may use to submit quotes 

to the Exchange. See Options 3, Section 7(e)(1)(B). 

8See Options 3, Section 15(c)(2)(C) (renumbered 

as Section 15(c)(2)(D) under this proposal, as noted 

below). 

9The time of receipt for an order or quote is the 

time such message is processed by the Exchange’s 

order book. 

10See current Options 3, Section 15(c)(2)(C)(ii). 

The Exchange will renumber this as Section 

15(c)(2)(D)(ii) and clarify this provision in the 

manner described later in this filing. 

11See supra note 9. 

12For both the current Quotation Adjustments 

and proposed Active Quote Protection, the System 

will execute marketable interest up to the size of the 

Market Maker’s quote, but cannot guarantee interest 

will be fully executed, as is the case with any 

execution in the Exchange’s order book. There is 

always the possibility that the Market Maker’s quote 

size (and/or Market Maker’s quote plus other 

interest on the order book) may not be sufficient 

volume to fill the incoming interest. 

13As discussed later in this filing, in order to reenter the System after their quotes are purged 

pursuant to the Active Quote Protection, Market 

Makers will need to submit the same request to 

fully decrement their Limit Counter to zero. 

14The term ‘‘badge’’ means an account number, 

which may contain letters and/or numbers, 

assigned to BX Market Makers. A BX Market Maker 

account may be associated with multiple badges. 

See Options 1, Section 1(a)(6). 

15As a result, the Exchange will also renumber 

existing paragraphs (C)–(F) as proposed paragraphs 

(D)–(G). 

Quote Protection functionality will be 

similar to existing active risk counter 

functionality on another options 

exchange, which currently allows 

exchange users to actively decrement 

the risk counter by a specified amount 

at any time, rather than waiting until a 

risk limit is reached or the user 

otherwise sends a specific instruction to 

the exchange to completely reset the 

counting program.4

Today, the Exchange requires Market 

Makers to configure risk exposure 

thresholds based on either percentage of 

executed quotes (‘‘Percentage 

Threshold’’) or total number of executed 

contracts (‘‘Volume Threshold’’). The 

Exchange also offers two optional risk 

exposure thresholds based on the 

absolute value of the difference between 

long and short positions (‘‘Delta 

Threshold’’), and absolute value of the 

difference between contracts bought and 

contracts sold (‘‘Vega Threshold’’) 

(collectively, ‘‘Thresholds’’).5 As set 

forth in Options 3, Section 15(c)(2)(A), 

the System tracks each Threshold with 

a corresponding risk counter over a 

Market Maker-specified rolling time 

period not to exceed 30 seconds. 

Furthermore, Section 15(c)(2)(A) 

describes that when a risk counter 

exceeds the corresponding Threshold 

during the specified time period, the 

System would automatically remove the 

Market Maker’s quotes in all series of 

the applicable options class (each, a 

‘‘Purge Event’’). As a result of a Purge 

Event, the corresponding risk counter 

and Threshold would reset upon such 

removal. The Exchange also notes that 

pursuant to Section 15(c)(2)(D) today, 

the Thresholds and risk counters can be 

completely reset if the Market Maker 

specifically requests the System to 

remove quotes in all options series in an 

underlying issue. This risk protection is 

passive in that the risk counters wait to 

reset until the expiry of a specified time 

period, a Purge Event, or when the 

Market Maker otherwise sends a specific 

instruction to the Exchange to remove 

quotes to completely reset the counters. 

The Exchange now proposes to 

introduce a new risk protection called 

Active Quote Protection that would 

enable Market Makers to actively 

manage their executed contract limit 

(‘‘Contract Limit’’) by sending an 

electronic instruction to the Exchange to 

decrement their executed contract limit 

counter (‘‘Limit Counter’’) by a specified 

amount at any time, rather than waiting 

until the expiry of a defined time 

period, when the risk limit is exceeded 

(like a Purge Event), or when the Market 

Maker otherwise sends a specific 

instruction to purge quotes to 

completely reset the risk counter.6

The Contract Limit, as set by the 

Market Maker, would apply for the 

duration of the trading day. Once the 

Market Maker’s Limit Counter exceeds 

the Contract Limit set by the Market 

Maker, the System would automatically 

remove quotes in all series of the 

applicable options class submitted 

through the Exchange’s Specialized 

Quote Feed protocol,7 identical to how 

the quote removal mechanism works for 

a Purge Event today.8 Today, Purge 

Events are triggered under the existing 

Quotation Adjustments on the first 

execution that exceeds the applicable 

Threshold. Once an execution occurs, 

the System checks all Thresholds to see 

if they have been exceeded. If exceeded, 

the Market Maker’s quote would be 

purged pursuant to Options 3, Section 

15(c)(2)(D). In order to remain 

consistent with the firm quote 

obligations of a broker-dealer pursuant 

to Rule 602 of Regulation NMS, any 

marketable orders or quotes that are 

executable against a Market Maker’s 

quotes that are received 9 prior to the 

time the applicable Threshold is 

triggered will be automatically executed 

up to the size of the Market Maker’s 

quote, regardless of whether the 

execution would cause the Market 

Maker to exceed their pre-set Percentage 

Threshold, Volume Threshold, Delta 

Threshold, or Vega Threshold.10

Under Active Quote Protection, the 

System would similarly handle the 

Market Maker’s quote in that the quote 

could be filled one execution over the 

Contract Limit before the Market 

Maker’s remaining quotes are cancelled 

by the System in order to be consistent 

with the firm quote obligations under 

Rule 602 of Regulation NMS. 

Specifically, the Exchange notes that 

any marketable orders or quotes that are 

executable against a Market Maker’s 

quotes that are received 11 prior to the 

time the Contract Limit is triggered will 

be automatically executed up to the size 

of the Market Maker’s quote, regardless 

of whether the execution would cause 

the Market Maker to exceed the Contract 

Limit.12

Additionally, under Active Quote 

Protection, Market Makers will be able 

to submit a request (i) to decrement 

their Limit Counter by a specified 

number of contracts, or (ii) to fully 

decrement their Limit Counter to zero.13

Market Makers that elect to use the 

proposed Active Quote Protection on a 

badge 14 will not be able to use the 

existing Threshold risk protections 

described above on the same badge (i.e., 

the active and passive risk counter 

functionality would be mutually 

exclusive per badge) given that it would 

be unnecessarily complex to implement 

from a technology standpoint. Market 

Makers may be associated with multiple 

badges today, so if they want to use both 

risk protections for their activity on the 

Exchange, they will be able to set either 

the active or passive risk counter 

functionality on each one. 

To effectuate the foregoing changes, 

the Exchange proposes to set forth the 

new risk protection in paragraph (B) of 

Options 3, Section 15(c)(2), as 

follows: 15


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Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices 58375 

16Multi-Trigger Threshold is defined in current 

paragraph (B) (proposed paragraph (D)) of Section 

15(c)(2) as the number of allowable triggers by 

which the Exchange will automatically remove 

quotes in all options series in all underlying issues 

submitted through designated BX protocols as 

specified by the Exchange. This threshold is part of 

the Exchange’s Multi-Trigger risk protection. 17See supra note 9. 

18This would be more than one BX Market 

Maker, but does not require the aggregation of all 

of the Participant’s Market Makers. A Group would 

be comprised of BX Market Makers affiliated with 

one Participant (i.e., one BX options member firm). 

The Participant would be required to define a 

Group by providing a list of such affiliated BX 

Market Makers to the Exchange. 

In lieu of Rapid Fire, a Market Maker may 

provide an executed contract limit (‘‘Contract 

Limit’’) that, if exceeded, the System will 

automatically remove the Market Maker’s 

quotes in all series of an options class 

submitted through SQF. The System will 

apply the Contract Limit for the duration of 

the trading day. For each class of options, the 

System will maintain an active limit counter 

that will track the current number of 

contracts executed through the Market 

Maker’s quotes (‘‘Limit Counter’’). If the 

Limit Counter exceeds the Contract Limit 

established by the Market Maker, the System 

will automatically remove the Market 

Maker’s quotes as described in paragraph (D) 

below. Market Makers may submit a request 

(i) to decrement their Limit Counter by a 

specified number of contracts, or (ii) to fully 

decrement their Limit Counter to zero, 

including to re-enter the System as described 

in paragraph (F) below. 

The Exchange also proposes to amend 

current paragraph (F) (renumbered to 

paragraph (G) under this proposal) of 

Options 3, Section 15(c)(2) to specify 

that the active and passive risk counter 

functionality will be mutually exclusive 

per badge). As amended, proposed 

paragraph (G) will provide: 

The Exchange will require BX Market 

Makers to utilize the Percentage Threshold, 

the Volume Threshold, or the Contract Limit. 

For Market Makers that elect to utilize the 

Contract Limit, the Percentage Threshold, 

Volume Threshold, Delta Threshold, and 

Vega Threshold will not be available for use 

on the Market Maker’s badge. The Delta, Vega 

and Multi-Trigger Thresholds are optional. 

As described above, once the Limit 

Counter exceeds the Contract Limit set 

by the Market Maker under the 

proposed Active Quote Protection, the 

System would automatically remove 

quotes in the same manner as currently 

specified for a Purge Event in proposed 

paragraph (D) of Options 3, Section 

15(c)(2). Accordingly, the Exchange 

proposes to add Active Quote 

Protection’s Contract Limit throughout 

this Rule. Specifically, proposed 

paragraph (D) will provide that the 

System will automatically remove 

quotes in all series of an options class 

in an underlying security when the 

Percentage Threshold, Volume 

Threshold, Delta Threshold, Vega 

Threshold, or the Contract Limit has 

been exceeded. The System will 

automatically remove quotes in all 

series of an option class in all 

underlying securities when the MultiTrigger Threshold 16 has been exceeded. 

The System will send a Purge 

Notification Message to the BX Market 

Maker for all affected options when the 

above thresholds have been exceeded. 

Proposed subparagraph (D)(i) will 

provide that the Percentage Threshold, 

Volume Threshold, Delta Threshold, 

Vega Threshold, Contract Limit, and 

Multi-Trigger Threshold are considered 

independently of each other. 

Further, as discussed above, any 

marketable orders or quotes that are 

executable against a Market Maker’s 

quotes that are received 17 prior to the 

time the applicable Threshold or 

Contract Limit is triggered will be 

automatically executed up to the size of 

the Market Maker’s quote, even if such 

execution would cause the Market 

Maker to exceed any of their pre-set risk 

limits with respect to any of the 

foregoing risk parameters. The Exchange 

notes that the current related Rule in 

sub-paragraph (C)(ii) only mentions that 

quotes will execute up to the Market 

Maker’s size, and is silent on marketable 

orders. In addition, the current Rule 

does not specify the time of receipt of 

such marketable interest that is 

executable against the size of the Market 

Maker’s quote. As such, the Exchange 

proposes to add this specificity in 

proposed sub-paragraph (D)(ii) to better 

describe how the System operates today 

for Quotation Adjustments and how the 

System will operate for proposed Active 

Quote Protection. In particular, subparagraph (D)(ii) will provide: 

The System will execute any marketable 

orders or quotes that are executable against 

a Market Maker’s quote and received prior to 

the time the Percentage Threshold, Volume 

Threshold, Delta Threshold, Vega Threshold, 

or Contract Limit is triggered up to the size 

of the Market Maker’s quote, even if such 

execution results in executions in excess of 

the Market Maker’s applicable Threshold or 

Contract Limit with respect to any parameter. 

In addition, when the System removes 

quotes as a result of exceeding the 

Contract Limit under Active Quote 

Protection, the Exchange proposes to 

require the Market Maker to submit a 

request to re-enter the System. This 

request will be the same type of message 

as the request described in proposed 

paragraph (B) where the Market Maker 

must request to fully decrement their 

Limit Counter back to zero in order to 

re-enter the System. This requirement 

will be added in proposed paragraph (F) 

of Options 3, Section 15(c)(2), and will 

be similar to how the existing quote 

purge mechanism works for the 

Thresholds today, except the Market 

Maker needs to send a separate message 

(i.e., a re-entry indicator) to re-enter the 

System when their quotes are purged as 

a result of exceeding any of the existing 

Thresholds. 

The Exchange also proposes that the 

new Active Quote Protection would 

leverage the existing multi-trigger 

(‘‘Multi-Trigger’’) functionality currently 

set forth in Options 3, Section 

15(c)(2)(B) (renumbered as Section 

15(c)(2)(C) under this proposal). Today, 

Multi-Trigger is a risk protection offered 

alongside the current Quotation 

Adjustments. A BX Market Maker or BX 

Market Maker Group, which is defined 

as multiple affiliated BX Market 

Makers,18 may provide the specified 

time period and number of allowable 

Purge Events by which the Exchange 

will automatically remove quotes in all 

options series in all underlying issues 

submitted through designated BX 

protocols as specified by the Exchange 

(‘‘Multi-Trigger Threshold’’). MultiTrigger is triggered when during a time 

period established by the Market Maker 

not to exceed 30 seconds, the total 

number of Quotation Adjustment Purge 

Events exceeds the Multi-Trigger 

Threshold provided to the Exchange by 

the BX Market Maker or BX Market 

Maker Group. When Multi-Trigger is 

triggered, the System automatically 

purges all of the Market Maker’s or 

Group’s quotes in all options series in 

an underlying issue. As set forth in 

current Options 3, Section 15(c)(2)(E) 

(renumbered to Section 15(c)(2)(F) 

under this proposal), when the System 

removes quotes as a result of the MultiTrigger Threshold, the Market Maker 

must manually request re-entry to the 

System by contacting the Exchange. 

Exchange staff must then set a re-entry 

indicator in this case to enable re-entry, 

which will cause the System to send a 

Reentry Notification Message to the BX 

Market Maker or Group for all options 

series in all underlying issues. The 

Market Maker’s Clearing Firm will be 

notified regarding the trigger and reentry into the System after quotes are 

removed as a result of the Multi-Trigger 

Threshold, provided the Market Maker’s 

Clearing Firm has requested to receive 

such notification. 

Today, Multi-Trigger is meant to 

provide Market Makers or a Group with 

protection from the risk of multiple 

executions across multiple series of an 

option or across multiple options. This 

risk protection recognizes that risk to 


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58376 Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices 

19 15 U.S.C. 78f(b). 

20 15 U.S.C. 78f(b)(5). 

Market Makers is not limited to a single 

series in an option or even to all series 

in an option; Market Makers that quote 

in multiple series of multiple options 

have significant exposure, requiring 

them to offset or hedge their overall 

positions. Market Makers are required to 

continuously quote in assigned options, 

and quoting across many series in an 

option or multiple options creates the 

possibility of executions that can create 

large, unintended principal positions 

that could expose Market Makers to 

unnecessary risk. Multi-Trigger is 

therefore intended to assist Market 

Makers or Groups in managing their 

market risk by tracking the number of 

Purge Events relative to the MultiTrigger Threshold set by the Market 

Maker or Group. The Exchange believes 

that tracking the number of Active 

Quote Protection Purge Events for a 

Market Maker or Group against its 

Multi-Trigger Threshold would be 

similarly useful for managing market 

risk. 

To that end, the Exchange proposes to 

update Multi-Trigger to add purge 

events under Active Quote Protection to 

the Multi-Trigger counter such that 

Active Quote Protection purge events 

and Purge Events under the current 

Quotation Adjustments will be 

aggregated together as counting toward 

the specified Multi-Trigger Threshold. 

Accordingly, the Exchange proposes to 

add references to the Active Quote 

Protection rule (i.e., proposed paragraph 

(B) of Options 3, Section 15(c)(2)) 

throughout the Multi-Trigger rule in 

proposed paragraph (C), specifically: 

A BX Market Maker or BX Market Maker 

Group (multiple affiliated BX Market Makers 

is a ‘‘Group’’ as defined by a BX Participant 

and provided by such Participant to the 

Exchange) may provide a specified time 

period and number of allowable triggers by 

which the Exchange will automatically 

remove quotes in all options series in all 

underlying issues submitted through 

designated BX protocols as specified by the 

Exchange (‘‘Multi-Trigger Threshold’’). 

During a specified time period established by 

the BX Market Maker not to exceed 30 

seconds (‘‘Multi-Trigger Specified Time 

Period’’), the number of times the System 

automatically removes the BX Market 

Maker’s or Group’s quotes in all options 

series will be based on the number of triggers 

of the Percentage Threshold described in 

paragraph (A)(i) above, the Volume 

Threshold described in paragraph (A)(ii) 

above, the Delta Threshold described in 

paragraph (A)(iii) above, the Vega Threshold 

described in paragraph (A)(iv) above, and the 

Contract Limit described in paragraph (B) 

above. Once the System determines that the 

number of triggers exceeds a number 

established by either the BX Market Maker or 

Group, during a Multi-Trigger Specified Time 

Period, the System will automatically remove 

all quotes in all options series in all 

underlying issues for that BX Market Maker 

or Group. A trigger is defined as the event 

which causes the System to automatically 

remove quotes in all options series in an 

underlying issue. A Multi-Trigger Specified 

Time Period will commence after every 

trigger of the Percentage Threshold, Volume 

Threshold, Delta Threshold, Vega Threshold, 

or Contract Limit, and will continue until the 

System removes quotes as described in 

paragraph (D) below or the Multi-Trigger 

Specified Time Period expires. The System 

counts triggers within the Multi-Trigger 

Specified Time Period across all triggers for 

the BX Market Maker or Group. A MultiTrigger Specified Time Period operates on a 

rolling basis in that there may be multiple 

Multi-Trigger Specified Time Periods 

occurring simultaneously and such MultiTrigger Specified Time Periods may overlap. 

The following example illustrates the 

proposed behavior of the Active Quote 

Protection risk protection: 

Market Maker AAPL 

Contract Limit: 100 

• Market Maker trades a transaction 

for 10 contracts in AAPL; Limit Counter 

goes from 0 to 10. 

• Market Maker sends a request to 

decrement its Limit Counter in AAPL 

for 10 contracts; Limit Counter goes 

from 10 to 0. 

• Market Maker trades a transaction 

for 20 contracts in AAPL; Limit Counter 

goes from 0 to 20. 

• Market Maker trades a transaction 

for 50 contracts in AAPL; Limit Counter 

goes from 20 to 70. 

• Market Maker sends a request to 

decrement its Limit Counter in AAPL 

for 20 contracts; Limit Counter goes 

from 70 to 50. 

• Market Maker trades a transaction 

for 60 contracts in AAPL; Limit Counter 

goes from 50 to 110 and all Market 

Maker quotes in AAPL are automatically 

purged after the execution because the 

Limit Counter exceeded the Market 

Maker’s Contract Limit of 100 executed 

contracts. 

• At this point, the Market Maker 

must send a request to fully decrement 

its Limit Counter in AAPL back to zero 

in order to begin quoting again. 

The following example illustrates 

how Multi-Trigger will work with the 

proposed Active Quote Protection 

functionality: 

• Assume Market Maker in AAPL and 

SPY has Quotation Adjustments set for 

AAPL and Active QP set for SPY. 

• Market Maker sets its Multi-Trigger 

Threshold so that it is triggered at 25 

purge events within a 20 second time 

period. 

• On a given trading day, if an Active 

Quote Protection Purge Event is 

triggered 15 times in SPY and a 

Quotation Adjustment Purge Event is 

triggered 10 times in AAPL, all within 

20 seconds, then the Exchange will 

automatically remove all of the Market 

Maker’s quotes AAPL and SPY. 

Technical Amendments 

The Exchange proposes a few 

technical, non-substantive amendments 

in Options 3, Section 15(c)(2). With the 

addition of the new Active Quote 

Protection rule in proposed paragraph 

(B), the Exchange proposes to renumber 

existing paragraphs (B)–(F) as proposed 

paragraphs (C)–(G) and make related 

changes to update existing cross-cites 

within Section 15(c)(2). The Exchange 

also proposes in paragraph (A) to correct 

the current cross-cites to paragraphs (B) 

and (C) to paragraphs (D) and (E) 

because the Exchange originally 

intended to refer to how the System 

removes quotes either pursuant to a 

Purge Event (which is governed by 

proposed paragraph (D)) or pursuant to 

a Market Maker specifically requesting 

the System to remove quotes in all 

series of an underlying issue (which is 

governed by proposed paragraph (E)). 

The Exchange proposes to reword the 

rule text within proposed Options 3, 

Section 15(c)(2)(D) to replace the term 

‘‘options’’ with the words ‘‘series of an 

options class’’ to conform the wording 

in this paragraph to other rule text with 

Options 3, Section 15. Additionally, the 

Exchange proposes to add the words ‘‘or 

Group’’ to Options 3, Section 15(c)(2)(F) 

because a Group may also request reentry pursuant to proposed Options 3, 

Section 15(c)(2)(C) and would receive a 

Reentry Notification Message. 

Lastly, the Exchange proposes to title 

paragraph (A) as ‘‘Rapid Fire’’ and 

paragraph (C) as ‘‘Multi-Trigger’’ to 

more clearly identify which rules apply 

to which risk protections. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with section 6(b) 

of the Act,19 in general, and furthers the 

objectives of section 6(b)(5) of the Act,20

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. 

The Exchange believes that the 

proposed Active Quote Protection risk 

protection is consistent with the Act 

because it will enhance the risk 

protection tools available to Market 

Makers and Groups by introducing a 


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Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices 58377 

21See supra note 9. 

22See proposed subparagraph (D)(ii) of Options 3, 

Section 15(c)(2). 

23See supra note 4. 24See supra note 4. 

new method of establishing and 

monitoring for risk parameters that will 

be offered as an alternative to existing 

Rapid Fire risk parameters, thereby 

supporting a Market Maker’s ability to 

manage their risk on the Exchange, and 

also providing them with flexibility to 

use additional tools to manage risk. As 

noted above, while the passive (Rapid 

Fire) and active (Active QP) risk counter 

functionality will be mutually exclusive 

on each badge, Market Makers will still 

be able to use both to cover their activity 

on the Exchange by getting multiple 

badges and setting each risk counter by 

badge. The Exchange believes that 

offering more risk management tools to 

Market Makers would mitigate their 

exposure to excessive risk. The 

Exchange further believes that having 

the new Active Quote Protection 

functionality leverage the existing 

Multi-Trigger functionality will 

similarly support a Market Maker’s 

ability to manage their risk on the 

Exchange by including Active Quote 

Protection purge events to the MultiTrigger counter. As noted above, the risk 

to Market Makers is not limited to a 

single series in an option or even 

multiple series in an option as Market 

Makers that quote in multiple series of 

multiple options have significant 

exposure, requiring them to offset or 

hedge their overall positions. Market 

Makers are required to continuously 

quote in assigned options, and quoting 

across many series in an option or 

multiple options creates the possibility 

of executions that can create large, 

unintended principal positions that 

could expose Market Makers to 

unnecessary risk. Today, Multi-Trigger 

is designed to assist Market Makers or 

a Group in managing their market risk 

by tracking the number of Purge Events 

relative to the market-wide parameter 

set by the Market Maker or the Group. 

The Exchange therefore believes that 

tracking the number of Active Quote 

Protection purge events for a Market 

Maker against its Multi-Trigger 

Threshold would be similarly useful for 

managing market risk so that they can 

provide deep and liquid markets to the 

benefit of all investors. Ultimately, the 

Exchange believes that providing 

Market Makers with additional tools in 

the manner described above to manage 

their risk parameters serves to perfect 

the mechanism of a free and open 

market and a national market system, 

and, in general to protect investors and 

the public interest because Market 

Makers will be better able to manage 

risks with these tools. 

With regard to the impact of this 

proposal on system capacity, the 

Exchange notes that it has analyzed its 

capacity and represents that it and the 

Options Price Reporting Authority have 

the necessary systems capacity to 

handle any potential additional traffic 

associated with the proposed rule 

change. The Exchange believes that its 

members will not have a capacity issue 

as a result of this proposal. 

The Exchange further represents that 

its proposal will continue to operate 

consistently with the firm quote 

obligations of a broker-dealer pursuant 

to Rule 602 of Regulation NMS. 

Specifically, any marketable interest 

that is executable against a Market 

Maker’s quotes that are received 21 by 

the Exchange prior to the time this 

functionality is triggered will be 

automatically executed at the price up 

to the Market Maker’s size, regardless of 

whether such execution results in 

executions in excess of the Market 

Maker’s pre-set Contract Limit.22 As 

discussed above, this is also in line with 

how current Rapid Fire operates today. 

The Exchange believes that the 

proposed changes in proposed subparagraph (D)(ii) to specify that this 

Rule will apply to marketable orders 

and quotes (currently silent on 

marketable orders), and to specify the 

time of receipt of such marketable 

interest that is executable against the 

size of the Market Maker’s quote, will 

promote clarity in how the System 

currently operates for Rapid Fire and 

will operate for Active Quote Protection. 

As noted above, the proposed Active 

Quote Protection functionality is similar 

to existing active risk counter 

functionality on another options 

exchange, which currently allows users 

to actively decrement the risk counter 

by a specified amount at any time, 

rather than waiting until a risk limit is 

reached or the user otherwise sends a 

specific instruction to the exchange to 

completely reset the counting 

program.23

Technical Amendments 

The Exchange believes that the 

technical amendments in Options 3, 

Section 15(c)(2) described above are 

consistent with the Act because they 

will promote clarity in the rules and 

make the Rulebook easier to navigate for 

market participants by updating rule 

numbering and existing cross-cites as 

described above. Furthermore, the 

Exchange also believes that adding the 

defined terms for Rapid Fire and MultiTrigger in the rule text will promote 

clarity so that Members can more easily 

locate the relevant functionalities in the 

Rulebook. Rewording the rule text 

within proposed Options 3, Section 

15(c)(2)(D) to replace the term ‘‘options’’ 

with the words ‘‘series of an options 

class’’ will conform the wording in this 

paragraph to other rule text with 

Options 3, Section 15. Finally, adding 

the words ‘‘or Group’’ to Options 3, 

Section 15(c)(2)(F) will make the 

sentence more accurate because a Group 

may also request re-entry pursuant to 

proposed Options 3, Section 15(c)(2)(C) 

and would receive a Reentry 

Notification Message. 

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. 

The Exchange does not believe that 

the proposed Active Quote Protection 

functionality will impose any undue 

burden on intra-market competition as it 

is aimed at mitigating exposure to 

excessive risk when trading on the 

Exchange. While the Exchange will offer 

the proposed functionality to Market 

Makers only, the proposed risk 

protection is intended to provide Market 

Makers with an additional tool to 

manage their risk parameters in a 

manner they deem appropriate. As such, 

the Exchange believes that the proposed 

functionality may facilitate Market 

Makers’ provision of liquidity on the 

Exchange, thereby benefitting all market 

participants through additional 

execution opportunities at potentially 

improved prices. 

The Exchange also believes that its 

Active Quote Protection proposal does 

not impose an undue burden on intermarket competition as the proposed risk 

protection is similar to an existing risk 

protection on MEMX 24 as described 

above, and any options market could 

adopt similar rules. 

Lastly, the Exchange does not believe 

that the proposed technical 

amendments in Options 3, Section 

15(c)(2) will impose an undue burden 

on competition as these are nonsubstantive changes to promote clarity 

in the rules and make the Rulebook 

easier to navigate for market 

participants. 


ddrumheller on DSK120RN23PROD with NOTICES1
58378 Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices 

25 15 U.S.C. 78s(b)(3)(A)(iii). 

26 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. 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ means an individual or 

organization approved to exercise the trading rights 

associated with a Trading Permit. Members are 

deemed ‘‘members’’ under the Exchange Act. See 

Exchange Rule 100. 

4The MIAX Express Interface (‘‘MEI’’) is a 

connection to MIAX systems that enables Market 

Makers to submit simple and complex electronic 

quotes to MIAX. See Fee Schedule, note 26. 

5The term ‘‘Market Makers’’ refers to Lead Market 

Makers (‘‘LMMs’’), Primary Lead Market Makers 

(‘‘PLMMs’’), and Registered Market Makers 

(‘‘RMMs’’) collectively. See Exchange Rule 100. For 

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 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 25 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.26

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 rule-comments@

sec.gov. Please include file number SR– 

BX–2023–019 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–2023–019. 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–2023–019 and should be 

submitted on or before September 15, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–18301 Filed 8–24–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98173; File No. SR–MIAX– 

2023–30] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Fee Schedule 

To Modify Certain Connectivity and 

Port Fees 

August 21, 2023. 

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 8, 

2023, Miami International Securities 

Exchange, LLC (‘‘MIAX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Options Exchange Fee 

Schedule (‘‘Fee Schedule’’) to amend 

certain connectivity and port fees. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxoptions.com/rulefilings, at MIAX’s principal office, 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 the 

Fee Schedule as follows: (1) increase the 

fees for a 10 gigabit (‘‘Gb’’) ultra-low 

latency (‘‘ULL’’) fiber connection for 

Members 3 and non-Members; and (2) 

amend the fees for Limited Service 

MIAX Express Interface (‘‘MEI’’) Ports 4

available to Market Makers.5 The 


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