64478 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 34– 

98225 (August 16, 2023), 88 FR 60255 (August 31, 

2023) (SR–NASDAQ–2023–030). The Exchange’s 

proposal differs from that of Nasdaq in that it 

excludes changes to Order Types and Attributes 

that are inapplicable to the Exchange due to its 

absence of opening and closing crosses. 

4Pursuant to Rule 4702(b)(7)(A), a ‘‘Market Maker 

Peg Order’’ is an Order Type designed to allow a 

Market Maker to maintain a continuous two-sided 

quotation at a displayed price that is compliant 

with the quotation requirements for Market Makers 

set forth in Equity 2, Section 5(a)(2). The displayed 

price of the Market Maker Peg Order is set with 

reference to a ‘‘Reference Price’’ in order to keep the 

displayed price of the Market Maker Peg Order 

within a bounded price range. The Reference Price 

for a Market Maker Peg Order to buy (sell) is the 

then-current National Best Bid (National Best 

Offer), or if no such National Best Bid or National 

Best Offer, the most recent reported last-sale eligible 

trade from the responsible single plan processor for 

that day, or if none, the previous closing price of 

the security as adjusted to reflect any corporate 

actions (e.g., dividends or stock splits) in the 

security. 

5 ‘‘Reserve Size’’ is, in part, an Order Attribute 

that ‘‘permits a Participant to stipulate that an 

Order Type that is displayed may have its displayed 

size replenished from additional non-displayed 

size.’’ Rule 4703(h). The Rule also states that 

Reserve ‘‘is not available for Orders that are not 

displayed; provided, however, that if a Participant 

enters Reserve Size for a Non-Displayed Order with 

a Time-in-Force of IOC, the full size of the Order, 

including Reserve Size, will be processed as a NonDisplayed Order.’’ Id. In addition to the change 

proposed above, the Exchange proposes to 

eliminate from the immediately preceding language 

‘‘with a Time-in-Force of IOC’’ because the 

Exchange does not assess a reason to include this 

qualifier. The statement that a Non-Displayed Order 

with Reserve will be entirely non-displayed is true 

even as to Non-Displayed Orders with other TIFs. 

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–2023–022 and should be 

submitted on or before October 10, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20167 Filed 9–18–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98378; File No. SR–BX– 

2023–023] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Equity 4, 

Rules 4702 and 4703 

September 13, 2023. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on 

September 5, 2023, Nasdaq BX, Inc. 

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

Securities and Exchange Commission 

(the ‘‘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 

The Exchange proposes to amend 

Equity 4, Rules 4702 and 4703. 

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 Exchange proposes amendments 

to its Rules to address inconsistencies 

between the Rule Text and observed 

System behavior as well as behavior 

unaccounted for in the existing Rule 

text, as follows. This proposal is similar 

to a rule change filed by the Exchange’s 

sister exchange, the Nasdaq Stock 

Market, LLC on August 16, 2023.3

First Rule Change 

The first proposed rule change 

addresses an edge case of inconsistency 

between the Rule text and System 

behavior, this time regarding Market 

Maker Peg Orders.4 Rule 4702(b)(7)(A) 

states that, if after entry of a Market 

Maker Peg Order that has a displayed 

price based on the NBBO, and the 

NBBO subsequently shifts such that the 

displayed price of the Market Maker Peg 

Order to buy (sell) is equal to or greater 

(less) than the National Best Bid (or 

National Best Offer), the Market Maker 

Peg Order will not be subsequently 

repriced until a new reference price is 

established that is more aggressive than 

the displayed price of the Market Maker 

Peg Order. System testing revealed that 

the System does not reprice Market 

Maker Peg Orders in this scenario, but 

only if such Orders are in round lot 

sizes, whereas it does reprice such 

Orders when they are in odd lot sizes. 

After evaluation, the Exchange 

determined to maintain this System 

behavior and amend the Rule to 

conform to it. The Exchange proposes to 

do so because the existing language 

proscribing repricing only makes sense 

within the context of round lot Market 

Maker Peg Orders, which this scenario 

would set a new NBBO and when they 

do so, cannot reprice with respect to the 

reference price they just set. By contrast, 

odd lot Market Maker Peg Orders are 

ineligible to set the NBBO, and do not 

have this same problem. Accordingly, 

the Exchange proposes to amend Rule 

4702(b)(7)(A) to clarify that the 

prohibition against repricing only 

applies to Market Maker Peg Orders in 

round lot sizes. 

Second Rule Change 

The second proposal would amend 

Equity 4, Rule 4703(h), to correct its 

description of behavior of the NonDisplayed portion of Orders with the 

Reserve Attribute.5 Rule 4703(h) 

provides as follows, in pertinent part: 

In all cases, if the remaining size of the 

Non-Displayed Order is less than the fixed or 

random amount stipulated by the Participant, 

the full remaining size of the Non-Displayed 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64479 

6 15 U.S.C. 78s(b)(3)(A)(iii). 

7 17 CFR 240.19b–4(f)(6). 

8 15 U.S.C. 78s(b)(3)(A). 

9 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. 10 15 U.S.C. 78s(b)(2)(B). 

Order will be displayed and the NonDisplayed Order will be removed. 

As stated, this Rule requires that the 

entire Non-Displayed portion of a 

Reserve Order will become Displayed 

the moment the size of the NonDisplayed portion drops below an 

amount that a participant designates or 

has directed the System to randomly 

designate (the ‘‘Max Floor’’). In 

conducting a test of System behavior, 

however, the Exchange observed that 

the System does not, in fact, operate in 

this manner. Instead, the System 

maintains the Non-Displayed portion of 

a Reserve Order as such when the size 

of that Non-Displayed Portion drops 

below the Max Floor. Rather than 

correct the current System behavior to 

match the Rule, the Exchange 

determined that users of Reserve Orders 

prefer the current System behavior 

because it is true to the underlying 

intent of Reserve functionality, which is 

to help limit the price impacts of trading 

large quantities of shares by displaying 

only small portions of such shares at a 

given time, while hiding the rest in 

reserve. Thus, the Exchange proposes to 

address the inconsistency between the 

Rule text and the behavior of the System 

by deleting the aforementioned language 

from Rule 4703(h). Going forward, the 

System will not convert to a Displayed 

Order the Non-Displayed remainder of a 

Reserve Order that falls below the Max 

Floor, and the System will not remove 

it. 

2. Statutory Basis 

The Exchange believes that its 

proposals are consistent with section 

6(b) of the Act, in general, and further 

the objectives of section 6(b)(5) of the 

Act, in particular, in that they are 

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. 

It is consistent with the Act to amend 

the Exchange’s Rules to address 

inconsistencies between the Rule text 

and observed System behavior, 

including by adapting the Rule text to 

codify observed System behavior, where 

the observed behavior is more 

consistent with the underlying purpose 

of an Order Attribute than is the Rule 

text (maintaining the Non-Displayed 

status of a reserve portion of a Reserve 

Order that drops below the Max Floor) 

and where System behavior reflects a 

nuance not contemplated by the existing 

Rules (clarifying that the prohibition 

against repricing Market Maker Peg 

Orders that have prices equal to or 

better than the NBBO only applies to 

round lot Market Maker Peg Orders, and 

not to odd lots). 

Finally, it is consistent with the Act 

to amend Rule 4703(h) to delete 

qualifying language which erroneously 

suggests that Non-Displayed Orders 

with Reserve are only non-displayed 

when such Orders have a TIF of IOC. 

Investors and the public have an interest 

in the Exchange maintaining a Rulebook 

that is accurate. 

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 

proposals merely address 

inconsistencies between Rule text and 

System behavior. The Exchange neither 

intends nor perceives that these rule 

changes will have any impact on 

competition. 

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 

The Exchange has filed the proposed 

rule change pursuant to section 

19(b)(3)(A)(iii) of the Act 6 and Rule 

19b–4(f)(6) thereunder.7 Because the 

proposed rule change does not: (i) 

significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

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

of the Act 8 and Rule 19b–4(f)(6)(iii) 

thereunder.9

At any time within 60 days of the 

filing of such 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 

under section 19(b)(2)(B) 10 of the Act 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– 

BX–2023–023 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–2023–023. 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 


ddrumheller on DSK120RN23PROD with NOTICES1
64480 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Cboe Global Markets U.S. Options Market 

Monthly Volume Summary (August 28, 2023), 

available at https://markets.cboe.com/us/options/ 

market_statistics/. 

4 15 U.S.C. 78f(b). 

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

6 Id. 

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–2023–023 and should be 

submitted on or before October 10, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20170 Filed 9–18–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98376; File No. CboeBZX– 

2023–065] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

September 13, 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 

September 1, 2023, Cboe BZX Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) 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 selfregulatory organization. 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 BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) proposes to 

amend its Fee Schedule. 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://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Fee Schedule, effective September 1, 

2023. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 options venues to which market 

participants may direct their order flow. 

Based on publicly available information, 

no single options exchange has more 

than 17% of the market share and 

currently the Exchange represents only 

approximately 5% of the market share.3

Thus, in such a low-concentrated and 

highly competitive market, no single 

options exchange, including the 

Exchange, possesses significant pricing 

power in the execution of option order 

flow. The Exchange believes that the 

ever-shifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 

reduce use of certain categories of 

products, in response to fee changes. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees, and market participants can readily 

trade on competing venues if they deem 

pricing levels at those other venues to 

be more favorable. 

The Exchange’s Fee Schedule sets 

forth standard rebates and rates applied 

per contract. For example, the Exchange 

provides a rebate of $0.25 per contract 

for Customer orders that add liquidity in 

Penny Securities, yielding fee code PY. 

The Fee Codes and Associated Fees 

section of the Fees Schedule also 

provides for certain fee codes associated 

with certain order types and market 

participants that provide for various 

other fees or rebates. 

Currently, Customer orders in Penny 

Securities, excluding SPY, that remove 

liquidity are assessed a standard 

transaction fee of $0.48 per contract and 

yield fee code ‘‘PC’’. Customer SPY 

orders that remove liquidity are 

assessed a standard transaction fee of 

$0.45 per contract and yield fee code 

‘‘PR’’. 

Currently, IWM Customer orders that 

remove liquidity yield fee code PC and 

are assessed $0.48 per contract. The 

Exchange proposes to reduce the fee 

assessed for IWM orders that remove 

liquidity to $0.45 per contract. The 

Exchange therefore proposes to amend 

current fee code PR to include Customer 

IWM orders that remove liquidity. The 

standard transaction fee assessed for 

orders that yield fee code PR remains 

the same under the proposed rule 

change (i.e., $0.45 per contract). 

The Exchange also proposes to amend 

the definition of fee code PC to clarify 

that such fee code (and corresponding 

transaction fee) applies to all customer 

orders in Penny securities that remove 

liquidity, except Customer orders in 

SPY and IWM. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

section 6(b) of the Act.4 Specifically, the 

Exchange believes the proposed rule 

change is consistent with the section 

6(b)(5) 5 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the section 6(b)(5) 6 requirement that the 

rules of an exchange not be designed to 

permit unfair discrimination between 


ddrumheller on DSK120RN23PROD with NOTICES1