62610 Federal Register / Vol. 88, No. 175 / Tuesday, September 12, 2023 / Notices 

32 Id. 

33 15 U.S.C. 78f(b)(5). 

34See Notice, supra note 3. 

35See id. at 38110. 

36See id.; id. at 38112. 

37Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Act Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 38 17 CFR 200.30–3(a)(57). 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,32 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

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

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 33

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice,34 in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following questions 

and asks commenters to submit data 

where appropriate to support their 

views: 

• According to the Exchange, the 

investment objective of the Trust will be 

for the Shares to reflect the performance 

of the price of EUAs, and that the Trust 

intends to achieve its objective by 

investing all of its assets in EUAs on a 

non-discretionary basis and will not 

hold or trade in commodity futures 

contracts.35 The Exchange further 

represents, however, that the Trust is 

not a proxy for investing in physical 

carbon credits, and that the 

Administrator will use the settlement 

price for the Daily EUA Futures 

established by ICE Endex to calculate 

the NAV.36 What are commenters’ views 

on the Trust’s holdings in spot EUAs, on 

the one hand, and its method of 

calculating NAV based on the 

settlement price of Daily EUA Futures, 

on the other? What are commenters’ 

views on the correlation in pricing 

between the EUA and Daily EUA 

Futures markets? 

• The Exchange asserts that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares will 

be listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in NYSE Arca Rule 

8.201–E. What are commenters’ views 

on whether the proposed Trust and 

Shares would be susceptible to 

manipulation? What are commenters’ 

views generally on whether the 

Exchange’s proposal is designed to 

prevent fraudulent and manipulative 

acts and practices? 

III. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.37

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change should be 

approved or disapproved by October 3, 

2023. Any person who wishes to file a 

rebuttal to any other person’s 

submission must file that rebuttal by 

October 17, 2023. 

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– 

NYSEARCA–2023–37 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–NYSEARCA–2023–37. 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–NYSEARCA–2023–37 and should be 

submitted on or before October 3, 2023. 

Rebuttal comments should be submitted 

by October 17, 2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–19591 Filed 9–11–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98303; File No. 4–546] 

Joint Industry Plan; Notice of Filing 

and Immediate Effectiveness of 

Amendment to the Options Order 

Protection and Locked/Crossed Market 

Plan To Add MEMX, LLC, as a 

Participant 

September 6, 2023. 

Pursuant to Section 11A(a)(3) of the 

Securities Exchange Act of 1934 


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Federal Register / Vol. 88, No. 175 / Tuesday, September 12, 2023 / Notices 62611 

1 15 U.S.C. 78k–1(a)(3). 

2 17 CFR 242.608. 

3On July 30, 2009, the Commission approved the 

Plan, which was proposed by Chicago Board 

Options Exchange, Incorporated (‘‘CBOE’’), 

International Securities Exchange, LLC (‘‘ISE’’), The 

NASDAQ Stock Market LLC (‘‘Nasdaq’’), NASDAQ 

OMX BX, Inc. (‘‘BX’’), NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’), NYSE Amex, LLC (‘‘NYSE Amex’’), and 

NYSE Arca, Inc. (‘‘NYSE Arca’’). See Securities 

Exchange Act Release No. 60405 (July 30, 2009), 74 

FR 39362 (August 6, 2009). See also Securities 

Exchange Act Release No. 61546 (February 19, 

2010), 75 FR 8762 (February 25, 2010) (adding 

BATS Exchange, Inc. (‘‘BATS’’) as a Participant); 

63119 (October 15, 2010), 75 FR 65536 (October 25, 

2010) (adding C2 Options Exchange, Incorporated 

(‘‘C2’’) as a Participant); 66969 (May 12, 2015), 77 

FR 29396 (May 17, 2012) (adding BOX Options 

Exchange LLC (‘‘BOX Options’’) as a Participant); 

70763 (October 28, 2013), 78 FR 65740 (November 

1, 2013) (adding Topaz Exchange, LLC (‘‘Topaz’’) as 

a Participant); 70762 (October 28, 2013), 78 FR 

65733 (November 1, 2013) (adding MIAX 

International Securities Exchange, LLC (‘‘MIAX’’) as 

a Participant); 76823 (January 5, 2016), 81 FR 1260 

(January 11, 2016) (adding EDGX Exchange, Inc. 

(‘‘EDGX’’) as a Participant); 77324 (March 8, 2016), 

81 FR 13425 (March 14, 2016) (adding ISE 

MERCURY, LLC (‘‘ISE Mercury’’) as a Participant); 

79896 (January 30, 2017), 82 FR 9264 (February 3, 

2017)(adding MIAX Pearl ‘‘Pearl’’) as a Participant); 

85229 (March 1, 2019), 84 FR 8347 (March 7, 2019) 

(adding MIAX Emerald, LLC (‘‘Emerald’’) as a 

Participant). 

4The term ‘‘Participant’’ is defined as an Eligible 

Exchange whose participation in the Plan has 

become effective pursuant to Section 3(c) of the 

Plan. 

5Section 2(6) of the Plan defines an ‘‘Eligible 

Exchange’’ as a national securities exchange 

registered with the Commission pursuant to Section 

6(a) of the Act, 15 U.S.C. 78f(a), that: (a) is a 

‘‘Participant Exchange’’ in the Options Clearing 

Corporation (‘‘OCC’’) (as defined in OCC By-laws, 

Section VII); (b) is a party to the Options Price 

Reporting Authority (‘‘OPRA’’) Plan (as defined in 

the OPRA Plan, Section 1); and (c) if the national 

securities exchange chooses not to become part to 

this Plan, is a participant in another plan approved 

by the Commission providing for comparable 

Trade-Through and Locked and Crossed Market 

protection. MEMX has represented that it has met 

the requirements for being considered an Eligible 

Exchange. See letter from Anders Franzon, General 

Counsel, MEMX, to Vanessa Countryman, 

Secretary, Commission, dated August 29, 2023. 

6MEMX has represented that it has executed a 

copy of the current Plan, amended to include 

MEMX as a Participant and has sent each current 

Participant a copy of the executed Plan. See letter 

from Anders Franzon, General Counsel, MEMX, to 

Vanessa Countryman, Secretary, Commission, dated 

August 29, 2023. 

7 17 CFR 242.608(b)(3)(iii). 

8 17 CFR 242.608(a)(1). 

(‘‘Act’’) 1 and Rule 608 thereunder,2

notice is hereby given that on August 

29, 2023, MEMX, LLC (‘‘MEMX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) an amendment to the 

Options Order Protection and Locked/ 

Crossed Market Plan (‘‘Plan’’).3 The 

amendment adds MEMX as a 

Participant 4 to the Plan. The 

Commission is publishing this notice to 

solicit comments on the amendment 

from interested persons. 

I. Description and Purpose of the 

Amendment 

The Plan requires the options 

exchanges to establish a framework for 

providing order protection and 

addressing locked and crossed markets 

in eligible options classes. The 

amendment to the Plan adds MEMX as 

a Participant. The other Plan 

Participants are BATS, BOX, BX, C2, 

CBOE, EDGX, Emerald, ISE, ISE Gemini, 

ISE Mercury, MIAX, Nasdaq, Pearl, 

Phlx, NYSE MKT, and NYSE Arca. 

MEMX has submitted an executed copy 

of the Plan to the Commission in 

accordance with the procedures set 

forth in the Plan regarding new 

Participants. Section 3(c) of the Plan 

provides for the entry of new 

Participants to the Plan. Specifically, 

Section 3(c) of the Plan provides that an 

Eligible Exchange 5 may become a 

Participant in the Plan by: (i) executing 

a copy of the Plan, as then in effect; (ii) 

providing each current Participant with 

a copy of such executed Plan; and (iii) 

effecting an amendment to the Plan, as 

specified in Section 4(b) of the Plan.6

Section 4(b) of the Plan sets forth the 

process by which an Eligible Exchange 

may effect an amendment to the Plan. 

Specifically, an Eligible Exchange must: 

(a) execute a copy of the Plan with the 

only change being the addition of the 

new Participant’s name in Section 3(a) 

of the Plan; and (b) submit the executed 

Plan to the Commission. The Plan then 

provides that such an amendment will 

be effective when the amendment is 

approved by the Commission or 

otherwise becomes effective pursuant to 

Section 11A of the Act and Rule 608 

thereunder. 

II. Effectiveness of the Proposed 

Linkage Plan Amendment 

The foregoing Plan amendment has 

become effective pursuant to Rule 

608(b)(3)(iii) 7 because it has been 

designated as involving solely technical 

or ministerial matters. At any time 

within sixty days of the filing of this 

amendment, the Commission may 

summarily abrogate the amendment and 

require that it be refiled pursuant to 

paragraph (a)(1) of Rule 608,8 if it 

appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or the maintenance of fair and 

orderly markets, to remove impediments 

to, and perfect the mechanisms of, a 

national market system or otherwise in 

furtherance of the purposes of the Act. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the amendment is 

consistent with the Act and the rules 

thereunder. 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 4– 

546 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 4–546. 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 

4–546 and should be submitted on or 

before October 3, 2023. 


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62612 Federal Register / Vol. 88, No. 175 / Tuesday, September 12, 2023 / Notices 

9 17 CFR 200.30–3(a)(85). 

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

2 17 CFR 240.19b–4. 3See Rule 5.51. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–19592 Filed 9–11–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98304; File No. SR–CBOE– 

2023–044] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing of a 

Proposed Rule Change To Adopt a 

Quote Protection Timer 

September 6, 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 

30, 2023, Cboe Exchange, Inc. 

(‘‘Exchange’’) 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 Exchange, Inc. (the ‘‘Exchange’’ 

or ‘‘Cboe Options’’) proposes to amend 

Rule 5.32. The text of the proposed rule 

change is provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), 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 5.32 to adopt a passive quote 

protection mechanism. 

The options market is driven by 

Market-Maker quotes, and thus MarketMaker quotes are critical to provide 

liquidity to the market and contribute to 

price discovery for investors. If MarketMakers do not have sufficient time to 

refresh their resting quotes (the primary 

source of liquidity for customers in the 

market) in response to market updates 

before executing against incoming 

interest that has incorporated those 

market updates, this increased risk of 

execution at stale prices may cause 

Market-Makers to widen their quotes to 

the detriment of investors or otherwise 

withhold liquidity. This reduced 

liquidity may reduce execution 

opportunities or cause executions to 

occur at worse prices for customers. 

Further, Market-Makers must comply 

with various obligations, including to 

provide continuous electronic quotes 

and to update quotes in response to 

market conditions.3 It takes time for 

Market-Makers to update quotes in 

series in their appointed classes, which 

may not take effect until after faster 

market participants have updated 

orders. The Exchange believes it is 

appropriate to provide Market-Maker 

quotes with a reasonable amount of 

protection to allow them to execute at 

prices reflective of market updates given 

not only the Exchange-imposed 

requirements to provide and updates 

such quotes but also the resources 

Market-Makers expend to comply with 

those requirements. 

Market-Maker quotes are based 

generally on pricing models that rely on 

various factors, including the price of 

the underlying security and that 

security’s volatility. As these variables 

change, a Market-Maker’s pricing model 

automatically will enter updates to a 

number of its bids and offers. 

Additionally, a Market-Maker’s system 

may also automatically enter orders in 

response to changes in those variables 

as part of their market-making activity, 

such as hedging. As a result, there can 

be a multitude of instances in which the 

bids and offers of multiple MarketMakers attempting to update their 

quotes and submit orders in response to 

market changes inadvertently interact 

with each other, which can lead to 

significant risk and exposure. This may 

occur, for example, when one MarketMaker’s price update system is faster 

than systems used by other MarketMakers. In this respect, a MarketMaker’s system that updates options 

prices microseconds, or even 

nanoseconds, faster than another 

Market-Maker’s system may lock or 

cross its bids (offers) against the other 

Market-Maker’s offers (bids) every time 

its bid (offer) adjusts to the offer (bid) of 

the second Market-Maker even if the 

second Market-Maker’s system was also 

in the process of updating that offer 

(bid). 

For example, suppose three MarketMakers for class XYZ have the following 

displayed markets: 

Market-Maker A: (10) 10.00–10.20 (10) 

Market-Maker B: (5) 10.05–10.20 (5) 

Market-Maker C: (5) 9.95–10.15 (5) 

Each of the Market-Maker’s systems 

identify an increase in the price of stock 

XYZ, which causes those systems to 

send updated quotes. However, MarketMaker A, as a result of its own 

technological investment, has the fastest 

system, which received the updated 

price of stock XYZ three microseconds 

before the systems of the other two 

Market-Makers, and thus sent its 

updated quotes to the Exchange three 

microseconds before the systems of the 

other two Market-Makers. Market-Maker 

a sent a revised two-sided market of (10) 

10.20–10.40 (10) based on the updated 

price of XYZ. Because the quotes for 

Market-Maker A’s updated market 

reached the Exchange before the 

updated markets of Market-Makers B 

and C, Market-Maker A’s bid will 

execute against Market-Maker C’s offer 

of 10.15 and Market-Maker B’s offer of 

10.20, which offers were based on a 

lower stock price. Market-Maker B’s and 

C’s updated markets of (5) 10.25–10.40 

(5) and (5) 10.15–10.35 (5) reached the 

Exchange after this execution, despite 

those Market-Makers no longer being 

interested in selling at the price of 10.15 

or 10.20. Market-Maker A likely 

submitted its updated market to display 

liquidity available for customer prices at 

an updated price, rather than remove 

liquidity from other liquidity providers 

at outdated prices. This could happen 

contemporaneously in a large number of 

series within the class, such that instead 

of locking one quote, Market-Maker A 

may lock 20 of Market-Maker B’s and 

Market-Maker C’s quotes. This may 

expose each Market-Maker to significant 

risk due to these unintended executions 

and prevent orders intended to provide 

liquidity in the Book from doing so. 


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