Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Notices 62129 

22 15 U.S.C. 78s(b)(3)(A). 

23 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

24 17 CFR 240.19b–4(f)(6). 

25 17 CFR 240.19b–4(f)(6)(iii). 

26For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3References herein to Phlx Rules in the 3000 

Series shall mean Rules in Phlx Equity 4. 

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) of the Act 22 and Rule 19b– 

4(f)(6) 23 thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 24 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),25 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposed 

rule change may become operative upon 

filing. The Exchange requested the 

waiver, stating its desire to harmonize 

its rules to those of NYSE American to 

ensure fair competition among the 

options exchanges. Further, the 

proposed change would allow options 

on IPO’d securities to come to market 

sooner (i.e., at least two business days 

post-IPO not inclusive of the day of the 

IPO) without sacrificing investor 

protection. For these reasons, and 

because the proposed rule change does 

not raise any novel legal or regulatory 

issues, the Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Therefore, the Commission hereby 

waives the 30-day operative delay and 

designates the proposal operative upon 

filing.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 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CBOE–2023–043 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–CBOE–2023–043. 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–CBOE–2023–043 and should be 

submitted on or before September 29, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–19355 Filed 9–7–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No, 34–98280; File No. SR–PHLX– 

2023–40] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing of 

Proposed Rule Change To Amend 

Equity 4, Rules 3301A and 3301B To 

Establish New ‘‘Contra Midpoint Only’’ 

and ‘‘Contra Midpoint Only With PostOnly’’ Order Types and To Make Other 

Corresponding Changes to the 

Rulebook 

September 1, 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 

28, 2023, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘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 

Equity 4, Rules 3301A and 3301B3 to 

establish new ‘‘Contra Midpoint Only’’ 

and ‘‘Contra Midpoint Only with PostOnly’’ Order Types, and to make other 

corresponding changes to the Rulebook. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/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 


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62130 Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Notices 

4 In certain instances below, the Exchange uses 

the term ‘‘removal’’ rather than the term 

‘‘cancellation’’ to describe how the System would 

behave when handling a CMO. When the Exchange 

removes a CMO from its Order Book, it would not 

send a cancellation message when doing so, thus 

limiting the potential for information leakage. 

5See Rule 3301A(b)(6). 

6See Securities Exchange Act Release No. 34– 

82825 (Mar. 7, 2018), 83 FR 10937 (Mar. 13, 2018) 

(order approving SR–NASDAQ–2017–074). 

7 In 2020, the Commission issued an order 

approving the Nasdaq’s proposal to shorten the 

Holding Period for M–ELO and M–ELO+CB Orders 

from one-half second to 10 milliseconds. See 

Securities Exchange Act Release No. 34–88743 

(April 24, 2020), 85 FR 24068 (April 30, 2020) 

(order approving SR–NASDAQ–2020–011). 

8See Securities Exchange Act Release No. 34– 

86938 (September 11, 2019), 84 FR 48978 

(September 17, 2019) (order approving SR– 

NASDAQ–2019–048). 

9For example, if the incoming Order is filled 

fully by resting interest with price/time priority 

ahead of the resting CMO Order, then the System 

will not remove the CMO Order from the Order 

Book. 

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 

Equity 4, Rule 3301A(b) to establish 

‘‘Contra Midpoint Only’’ or ‘‘CMO’’ and 

‘‘Contra Midpoint Only with Post-Only’’ 

or ‘‘CMO+PO’’ as new Order Types on 

the Exchange. 

A CMO is a Non-Displayed Order 

Type priced at the midpoint between 

the National Best Bid and the National 

Best Offer (the ‘‘NBBO’’ and the 

midpoint of the NBBO, the ‘‘Midpoint’’). 

The Exchange will remove a CMO 

resting on the Order Book upon entry of 

certain types of incoming Orders that 

are likely to result in unfavorable 

executions, including because the 

incoming Orders are likely to indicate 

price movements that would be more 

favorable to the resting CMO user than 

the prevailing price. Thus, the CMO 

provides protection to the resting CMO 

user against executions at the prevailing 

Midpoint price that the user may deem 

unfavorable. As explained below, once 

the System removes a CMO under these 

circumstances, the Exchange would 

submit a new CMO at the then-current 

Midpoint price automatically on behalf 

of the user.4

A CMO+PO is like a CMO, except that 

it provides for ‘‘post-only’’ 

functionality, meaning that like a 

Midpoint Peg Post-Only Order,5 a 

CMO+PO will execute upon entry only 

in circumstances where economically 

beneficial to the party entering the 

Order. 

The CMO and CMO+PO are Order 

Types that the Exchange has developed 

to provide market participants with 

options that allow them to make their 

own determinations with regards to 

various trade-offs that exist when 

executing their strategies in the markets. 

One such trade off might be the amount 

of liquidity they can obtain in the near 

term versus the potential for market 

movement relative to the Midpoint 

price. Some participants may value 

avoiding immediate executions in order 

to wait for a better price while others 

would rather obtain the liquidity 

instead of waiting. 

In this regard, CMO resembles an 

order type that the Exchange’s sister 

market, the Nasdaq Stock Market LLC 

(‘‘Nasdaq’’), introduced in 2018—the 

Midpoint Extended Life Order (‘‘M– 

ELO’’).6 Like CMO, M–ELO is also a 

non-displayed Order Type that executes 

only at the Midpoint. It is eligible to 

execute only against other M–ELOs, and 

it protects users from interacting with 

time-sensitive orders by requiring them 

to wait a period of time (a ‘‘Holding 

Period’’) before their M–ELO is eligible 

to execute (originally one-half second, 

and subsequently reduced to 10 

milliseconds).7 In 2019, Nasdaq 

enhanced the M–ELO concept by adding 

the Midpoint Extended Life Order Plus 

Continuous Book (‘‘M–ELO+CB’’).8 A 

M–ELO+CB behaves exactly like a M– 

ELO, except that it may also interact 

with Midpoint Orders on Nasdaq’s 

Continuous Book (and thus have access 

to larger sources of liquidity) to the 

extent that such Midpoint Orders, in 

turn, opt to rest on the Continuous Book 

for at least 10 milliseconds before 

becoming eligible to execute against a 

M–ELO+CB. CMO and CMO+PO are 

variations on the M–ELO/M–ELO+CB 

theme. M–ELOs only trade against other 

Orders from like-minded participants 

that are willing to wait the required time 

period before trading. CMOs and 

CMO+POs, by contrast, can trade in a 

wider array of situations, but like M– 

ELO, they will not trade in instances 

where the incoming order is likely to 

impact the prevailing price of the 

security. This will provide users of 

CMOs and CMO+POs with 

opportunities for more liquidity 

interaction than M–ELO but without a 

delay mechanism. On the other hand, 

CMOs and CMO+POs will provide more 

protection to users than regular 

Midpoint Orders, but with less 

opportunity to interact with liquidity. 

Instead of imposing a waiting period, 

the Exchange will remove a resting 

CMO when it faces incoming orders that 

have the potential to shift the Midpoint, 

while also providing an opportunity to 

a participant to receive price 

improvement when the System 

resubmits its CMO or CMO+PO to take 

advantage of a shift in the Midpoint. 

The specific proposed characteristics 

of the CMO are as follows: 

A CMO is a non-displayed Order 

Type with the Midpoint Pegging 

Attribute that will be priced and ranked 

in time order at the Midpoint. A user 

may cancel a CMO at any time. 

The System will remove a CMO Order 

automatically if a CMO is resting at the 

Midpoint on the PSX Book, an incoming 

Order is priced through the price of the 

CMO, the CMO would otherwise trade 

against the incoming Order,9 and one or 

more of the following conditions apply, 

which the Exchange anticipates are 

indicative of a pending price shift in 

favor of the CMO user: 

• The incoming Order is Displayed 

and its size is greater than that of the 

resting CMO; or 

• The incoming Order is not 

Displayed, it is priced at or better than 

the far side of the NBBO, and its size is 

greater than that of the resting CMO. 

Again, in the first of these scenarios, 

the Exchange observes that the 

incoming Order has the potential to 

cause the NBBO to shift, such that 

removal of the CMO will be preferable 

to allowing the CMO to execute at a 

Midpoint price that may be stale. The 

System will then automatically resubmit a new CMO on behalf of the user 

after removing the original CMO. In the 

second scenario, the incoming Order 

may not cause a shift in the NBBO, due 

to its hidden nature, but because it is 

priced aggressively at the far side of the 

NBBO, it still offers a CMO user an 

opportunity for an execution that is 

more favorable than the prevailing 

midpoint price. CMO functionality 

enables a participant to avail itself of 

this opportunity. 

The following examples illustrate this 

concept. In the first example, assume 

that the National Best Bid is $10.00 and 

the National Best Offer is $11.00. 

Participant A enters Order 1, which is 

a CMO to buy 100 shares of X that is 

priced at $10.50—the midpoint of the 

NBBO. While Order 1 is resting on the 

Exchange Book, Participant B enters 

Order 2, which is a Displayed Order to 

sell 200 shares of X at $10.40. In this 

instance, Order 2 is larger than Order 1. 

If Order 1 was not a CMO and it had 


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10There also may be scenarios where use of CMO 

might not ultimately benefit market participants, 

such as where the amount of price improvement 

associated with use of CMO is outweighed by the 

fee a participant would incur when its CMO is 

deemed to remove liquidity from the Exchange 

Book. 

11A CMO will also receive a new timestamp 

whenever it is resubmitted after removal. 12A user may enter a CMO using RASH or OUCH. 

13The Exchange also proposes to amend the 

Exchange’s Rule governing Midpoint Pegging, at 

Rule 3301B(d), to add language stating that ‘‘Orders 

with Midpoint Pegging will be cancelled by the 

System when a trading halt is declared, and any 

Orders with Midpoint Pegging entered during a 

trading halt will be rejected.’’ Such language exists 

in a corresponding rule of the rulebook of the 

Exchange’s sister exchange, the Nasdaq Stock 

Market, LLC, see Nasdaq Rule 4703(d), but was 

mistakenly omitted from Rule 3301B(d). 

14A CMO+PO entered prior to the beginning of 

Market Hours will be rejected. A CMO+PO will be 

cancelled by the System when a trading halt is 

declared, and any CMO+PO entered during a 

trading halt will be rejected. 

executed against Order 2 at $10.50, then 

Participant A would have missed out on 

the favorable impact of Order 2 shifting 

the midpoint of the NBBO lower to 

$10.20. To avoid this outcome, however, 

the System would remove Order 1 from 

the Exchange Book and resubmit it as 

Order 3, priced at $10.20. Participant C 

then enters Order 4 to sell 100 shares of 

X at 10.20. Order 3 would then execute 

against Order 4 at $10.20, thus 

providing Participant A with price 

improvement. 

In a second example, assume again 

that the National Best Bid is $10.00 and 

the National Best Offer is $11.00. 

Participant A again enters Order 1, 

which is a CMO to buy 100 shares of X 

that is priced at $10.50. While Order 1 

is resting on the Exchange Book, 

Participant B enters Order 2, which this 

time is a Non-Displayed Order to sell 

200 shares at $10.00. CMO functionality 

would activate for Order 1 both because 

Order 2 is larger than Order 1 and 

because Order 2 is priced at the far side 

of the NBBO. The System would 

resubmit Order 1 as Order 3, priced at 

$10.00. Order 3 would then execute at 

$10.00, again providing price 

improvement to Participant A.10

Additionally, because a CMO 

inherently possesses the Midpoint 

Pegging Attribute, it will behave in 

accordance with Rule 3301B(d), which 

governs Orders with Midpoint Pegging. 

Thus, consistent with Rule 3301B(d), 

the following behavior applies to CMOs: 

• A CMO user may only enter a CMO 

Order during Market Hours. 

• A CMO will have its price set upon 

initial entry and will thereafter have its 

price reset in accordance with changes 

to the relevant Inside Quotation. A CMO 

will receive a new timestamp whenever 

its price is updated 11 and therefore will 

be evaluated with respect to possible 

execution in the same manner as a 

newly entered Order. If the price to 

which a CMO is pegged becomes 

unavailable, pegging would lead to a 

price at which the CMO cannot be 

posted, or if the Inside Bid and Inside 

Offer become crossed, then the CMO 

will be removed from the PSX Book and 

will be re-entered once there is a 

permissible price, provided however, 

that the System will cancel the CMO if 

no permissible pegging price becomes 

available within one second after the 

CMO was removed and no longer 

available on the PSX Book (the 

Exchange may, in the exercise of its 

discretion modify the length of this one 

second time period by posting advance 

notice of the applicable time period on 

its website).12

• If at the time of entry, there is no 

price to which a CMO, that has not been 

assigned a Time in Force of Immediateor-Cancel, can be pegged or pegging 

would lead to a price at which the Order 

cannot be posted, or if the Inside Bid 

and Inside Offer are Crossed, then the 

CMO will not be immediately available 

on the PSX Book and will be entered 

once there is a permissible price; 

provided however, that the System will 

cancel the CMO if no permissible 

pegging price becomes available within 

one second after Order entry (the 

Exchange may, in the exercise of its 

discretion, modify the length of this one 

second time period by posting advance 

notice of the applicable time period on 

its website). 

• A CMO will have its price set upon 

initial entry to the Midpoint, unless the 

CMO has a limit price, and that limit 

price is lower than the Midpoint for a 

CMO to buy (higher than the Midpoint 

for CMO to sell), in which case the 

Order will be ranked on the PSX Book 

at its limit price. If the Inside Bid and 

Inside Offer are locked, a CMO will be 

priced at the locking price. However, 

even if the Inside Bid and Inside Offer 

are locked, an Order with CMO that 

locked an Order on the PSX Book would 

execute. 

• If a CMO has been assigned a 

Discretion Order Attribute, the CMO 

may execute at any price within the 

discretionary price range, even if 

beyond the limit price specified with 

respect to the Midpoint Pegging Order 

Attribute. If CMO is priced at its limit 

price, the price of the CMO may 

nevertheless be changed to a less 

aggressive price based on changes to the 

Inside Quotation. 

Unlike other Orders with the 

Midpoint Pegging Attribute, CMOs 

cannot be assigned a Routing Attribute, 

such that provisions of the Midpoint 

Pegging Rule that govern Midpoint 

Pegged Orders with Routing do not 

apply to CMOs. 

As noted above, a CMO will not be 

accepted outside of Market Hours. A 

CMO remaining unexecuted at the end 

of Market Hours will be cancelled by the 

System. 

The System will cancel CMOs when 

a trading halt is declared, and the 

System will reject any CMOs entered 

during a trading halt.13

A CMO user may opt to apply the 

Minimum Quantity, Trade Now, or 

Discretion Order Attributes and a TimeIn-Force to a CMO. Again, the NonDisplay and Midpoint Pegging 

Attributes always apply to CMOs. 

A CMO+PO will possess all the 

characteristics and attributes of a CMO, 

as described above, as well as those of 

a Managed Midpoint Peg Post-Only 

Order, as set forth in Rule 3301A(b)(6), 

with certain exceptions set forth below. 

Like a Midpoint Peg Post-Only Order, 

a CMO+PO is a Non-Displayed Order 

that is priced at the Midpoint and 

executes upon entry only in 

circumstances where economically 

beneficial to the party entering the 

Order. 

Like a Midpoint Peg Post-Only Order, 

the price of the CMO+PO will be 

updated repeatedly to equal the 

midpoint between the NBBO; provided, 

however, that the CMO+PO will not be 

priced higher (lower) than its limit 

price. In the event that the Midpoint 

between the NBBO becomes higher than 

(lower than) the limit price of a 

CMO+PO to buy (sell), the price of the 

CMO+PO will stop updating and the 

CMO+PO will post (with a Non-Display 

Attribute) at its limit price, but will 

resume updating if the Midpoint 

becomes lower than (higher than) the 

limit price of the CMO+PO to buy (sell). 

Similarly, if a CMO+PO is on the PSX 

Book and subsequently the NBBO is 

crossed, or if there is no NBBO, the 

Order will be removed from the PSX 

Book and will be re-entered at the new 

Midpoint once there is a valid NBBO 

that is not crossed. The CMO+PO 

receives a new timestamp each time its 

price is changed. 

All CMO+POs will be cancelled if 

they remain on the PSX Book at the end 

of Market Hours.14 Also like a Midpoint 

Peg Post-Only Order, a CMO+PO may 

not possess the Discretion or Routing 

Order Attributes, and a CMO+PO must 

be priced at more than $1 per share. 

Finally, unlike a Midpoint Peg PostOnly Order, RASH may be used to enter 


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15Punitive fees or other participant requirements 

tied to CMO and CMO+PO usage will be 

implemented by rule filing under Section 19(b) of 

the Act, 15 U.S.C. 78s(b), should the Exchange 

determine that they are necessary to maintain a fair 

and orderly market. 

16The Exchange plans to propose a fee structure 

for the CMO and CMO+PO in a subsequent 

Commission rule filing. 

17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(5). 

19Cf. Securities Exchange Act Release No. 34– 

82825 (March 7, 2018), 83 FR 10937 (March 13, 

2018) (SR–NASDAQ–2017–074) (approving the 

Midpoint Extended Life Order (‘‘M–ELO’’) because 

it could ‘‘create additional and more efficient 

trading opportunities on the Exchange for investors 

with longer investment time horizons, including 

institutional investors, and could provide these 

investors with an ability to limit the information 

leakage and the market impact that could result 

from their orders.’’). 

20Cf. Order Approving a Proposed Rule Change 

to Add a New Discretionary Limit Order Type 

Called D-Limit, Securities Exchange Act Release 

No. 34–89686 (August 26, 2020), 85 FR 54438 

(September 1, 2020) (SR–IEX–2019–15) (‘‘D-Limit 

orders will encourage long term investors to 

participate in the displayed exchange market by 

protecting them against one particular strategy 

employed by short term traders. It is not unfairly 

discriminatory for an exchange to address that 

advantage in a narrowly tailored manner that 

promotes investor protection and the public 

interest. Accordingly, the Commission concludes 

that IEX’s proposal is not designed to permit unfair 

discrimination between customers, issuers, brokers, 

or dealers.’’). 

a CMO+PO with a Time in Force of IOC 

(as well as OUCH, which can be used 

for such purposes with respect to a 

MPPO), and in such cases the Order will 

be canceled after determining whether it 

can be executed. 

CMO and CMO+PO executions will 

be reported to Securities Information 

Processors and provided in the 

Exchange’s proprietary data feed 

without any new or special indication. 

As part of the surveillance the 

Exchange currently performs, CMOs and 

CMO+POs will be subject to real-time 

surveillance to determine if they are 

being abused by market participants. 

The Exchange is committed to 

determining whether there is 

opportunity or prevalence of behavior 

that is inconsistent with normal risk 

management behavior. Manipulative 

abuse is subject to potential disciplinary 

action under the Exchange’s Rules, and 

other behavior that is not necessarily 

manipulative but nonetheless frustrates 

the purposes of the CMO or CMO+PO 

may be subject to penalties or other 

participant requirements to discourage 

such behavior, should it occur.15

The Exchange plans to implement 

CMO and CMO+PO within thirty days 

after Commission approval of the 

proposal. The Exchange will make the 

CMO and CMO+PO available to all 

members and to all securities upon 

implementation. The Exchange will 

announce the implementation date by 

Equity Trader Alert.16

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,17 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,18

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. In 

particular, the proposal is consistent 

with the Act because it would create 

additional options with respect to how 

participants can manage trading at the 

Midpoint. These additional options 

allow participants to tune their 

interactions more finely in the market, 

which can lead to more efficient trading 

opportunities on the Exchange for 

investors with similar investment 

objectives.19 Much like the analogous 

M–ELO Order Type, which Nasdaq 

introduced a few years ago, CMO and 

CMO+PO would provide market 

participants with a means to avoid 

certain execution scenarios which they 

may deem unfavorable. Unlike M–ELO, 

however, which imposes a waiting 

period upon participants to bring likeminded participants together, the CMO 

and CMO+PO would have no such 

waiting period. That is, the Exchange 

designed CMO and CMO+PO for 

participants that want Midpoint or 

better executions but have a greater 

urgency to execute their orders and are 

not concerned about interacting with 

other participants acting with similar or 

more urgency. At the same time, the 

CMO and CMO+PO will avoid 

interacting with orders that have the 

potential to shift the Midpoint, even 

without a holding period, by providing 

for the System to remove a CMO or 

CMO+PO from the Order Book when 

faced with incoming Orders that cross 

the Midpoint or otherwise have the 

potential to shift the Midpoint. The 

System will then automatically enter a 

new CMO to take advantage of a better 

ensuing Midpoint. 

The CMO and CMO+PO will be 

available for voluntary use by all 

Exchange members. Although the 

proposal would enable market 

participants that use CMOs to avoid 

potentially adverse executions, while 

causing participants to miss executions 

to the extent that their incoming Orders 

trigger removal of CMOs, this treatment 

is fair. That is, the proposal would 

facilitate the provision of marketenhancing midpoint liquidity by 

providing a mechanism by which 

participants could post such liquidity 

safely and without fear of adverse 

executions. Exchange functionality 

which permits like-minded participants 

the ability to achieve their objectives in 

an efficient manner will improve overall 

execution quality on the market. 

Moreover, the protections that these 

Order Types provide are tailored to 

mitigate the risk of adverse executions, 

even though the entry of either an 

incoming Displayed Order larger than a 

CMO or an incoming spread-crossing 

Non-Displayed Order larger than a CMO 

would not necessarily result in an 

adverse execution in every conceivable 

circumstance.20 As the chart below 

demonstrates, mark-outs are 

significantly worse after executions 

against incoming contra-orders in the 

two scenarios covered by the proposed 

Rule than they are after executions in 

other scenarios. This data suggests that 

the CMO and CMO+PO would, indeed, 

help participants avoid poor quality 

executions that would likely occur 

otherwise. 


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Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Notices 62133 

The Exchange also notes that the 

scenarios in which CMO and CMO+PO 

would apply constitute only a quarter of 

all midpoint executions adding liquidity 

on the Exchange. 

Like all other Order Types, the 

Exchange will conduct real-time 

surveillance to monitor the use of CMOs 

and CMO+POs to ensure that such usage 

is appropriately tied to the intent of the 

Order Type. Transactions in CMOs and 

CMO+POs will be reported to the 

Securities Information Processor and 

will be provided in the Exchange’s 

proprietary data feed in the same 

manner as all other transactions 

occurring on the Exchange, without any 

new or special indication that it is a 

CMO or CMO+PO execution. The 

Exchange believes that doing so is 

important to ensuring that investors are 

protected from any market impact that 

may occur if CMO executions were 

reported with a special indication. 

The Exchange does not believe that 

the proposed CMO or CMO+PO will 

negatively affect the quality of the 

market. To the contrary, the Exchange 

believes that the addition of CMO and 

CMO+PO will draw new market 

participants to the Exchange’s 

transparent and well-regulated market. 

The CMO and CMO+PO will allow 

investors an opportunity to find likeminded counterparties at the Midpoint 

on the Exchange, while also limiting 

executions users may deem unfavorable 

and providing opportunities for price 

improvement. Insofar as the CMO and 

CMO+PO would provide new options 

for participants to achieve efficient, 

high-quality midpoint executions, the 

CMO and CMO+PO stands to increase 

participation on the Exchange and to 

improve the quality of executions on the 

Exchange. 

Lastly, it is consistent with the Act to 

amend the Exchange’s Rule governing 

Midpoint Pegging, at Rule 3301B(d), to 

add language stating that ‘‘Orders with 

Midpoint Pegging will be cancelled by 

the System when a trading halt is 

declared, and any Orders with Midpoint 

Pegging entered during a trading halt 

will be rejected.’’ Such language exists 

in a corresponding rule of the rulebook 

of the Exchange’s sister exchange, the 

Nasdaq Stock Market, LLC, at Nasdaq 

Rule 4703(d), but was mistakenly 

omitted from Rule 3301B(d). In 

additional to correcting an inadvertent 

omission of this language from the 

Exchange’s Rulebook, the proposed text 

codifies existing Exchange practice and 

corresponds to participant expectations 

for the behavior of Orders with 

Midpoint Pegging during trading halts. 

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 believes that the 

introduction of the CMO and CMO+PO 

will draw new market participants to 

the Exchange while also providing a 

new option for existing participants that 

wish to achieve high-quality Midpoint 

(or better) executions, but do not wish 

for their Orders to be subject to a 


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62134 Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Notices 

21 17 CFR 200.30–3(a)(12). 

Holding Period (as in M–ELO or M– 

ELO+CB orders on Nasdaq) or care 

about their counterparties being subject 

to the same. To the extent the proposed 

change is successful in attracting 

additional market participants or 

increasing existing participation on the 

Exchange, the Exchange believes that 

the proposed change will promote 

competition among trading venues by 

making the Exchange a more attractive 

trading venue for investors and 

participants. 

Additionally, adoption of the CMO 

and CMO+PO will not burden 

competition among market participants. 

The CMO and CMO+PO will be 

available to all Exchange members and 

it will be available on an optional basis. 

Thus, any member that seeks to avail 

itself of the benefits of a CMO or 

CMO+PO can choose accordingly. 

Although the proposal provides 

potential benefits for investors that 

select the CMO and CMO+PO, the 

Exchange believes that all market 

participants will benefit to the extent 

that this proposal contributes to a 

healthy and attractive market that is 

attentive to the needs of all types of 

investors. 

The proposal also will not adversely 

impact market participants that choose 

not to use these Order Types because no 

changes need to be made to participants’ 

systems to account for it. As discussed 

above, CMO and CMO+PO executions 

will be reported the same as other 

executions, without any new or special 

indicator. 

In any event, the Exchange notes that 

it operates in a highly competitive 

market in which market participants can 

readily choose between competing 

venues if they deem participation in the 

Exchange’s market is no longer 

desirable. In such an environment, the 

Exchange must carefully consider the 

impact that any change it proposes may 

have on its participants, understanding 

that it will likely lose participants to the 

extent a change is viewed as 

unfavorable by them. Because 

competitors are free to modify the 

incentives and structure of their 

markets, the Exchange believes that the 

degree to which modifying the market 

structure of an individual market may 

impose any burden on competition is 

limited. Last, to the extent the proposed 

change is successful in attracting 

additional market participants or 

additional activity by existing 

participants, the Exchange also believes 

that the proposed change will promote 

competition among trading venues by 

making the Exchange a more attractive 

trading venue for participants and 

investors. 

The Exchange perceives no 

competitive impact associated with 

amending the Exchange’s Rule 

governing Midpoint Pegging, at Rule 

3301B(d), to add language stating that 

‘‘Orders with Midpoint Pegging will be 

cancelled by the System when a trading 

halt is declared, and any Orders with 

Midpoint Pegging entered during a 

trading halt will be rejected.’’ This 

proposal merely adds language that had 

been mistakenly omitted from the 

Exchange’s Rulebook, but which exists 

in the corresponding rules of the Nasdaq 

Stock Market, LLC, and codifies existing 

Exchange practice as to Orders with 

Midpoint Pegging during a trading halt. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) by order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be 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– 

PHLX–2023–40 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–PHLX–2023–40. 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–PHLX–2023–40 and should be 

submitted on or before September 29, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–19358 Filed 9–7–23; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

SBA Council on Underserved 

Communities Meeting 

AGENCY: Small Business Administration 

(SBA). 

ACTION: Notice of Federal advisory 

committee meeting. 

SUMMARY: The SBA is issuing this notice 

to announce the location, date, time, 

and agenda for the fourth meeting of the 

SBA Council on Underserved 

Communities. The meeting will be in 

person for Council members and 

streamed live to the public. 

DATES: The meeting will be held on 

Wednesday, September 13th, 2023, from 

9:30 a.m. to 12:30 p.m. Eastern Time. 

ADDRESSES: The Council on 

Underserved Communities will meet at 


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