71898 Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices 

26 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

4See Exchange Rule 1.5(jj). 

5See, e.g., Interpretations and Policies .01 and 

.02(a) of Rule 11.13 of the BYX Exchange Rulebook, 

available at https://cdn.cboe.com/resources/ 

regulation/rule_book/BYX_Rulebook.pdf; 

Interpretations and Policies .01 and .02(a) of Rule 

11.13 of the BZX Exchange Rulebook, available at 

https://cdn.cboe.com/resources/regulation/rule_

book/BZX_Exchange_Rulebook.pdf; Interpretations 

and Policies .01 and .02(a) of Rule 11.10 the EDGA 

Exchange Rulebook, available at https://

cdn.cboe.com/resources/regulation/rule_book/ 

EDGA_Rulebook.pdf; and Interpretations and 

Policies .01 and .02(a) of Rule 11.10 the EDGX 

Exchange Rulebook, available at https://

cdn.cboe.com/resources/regulation/rule_book/ 

EDGX_Rulebook.pdf. 

6See Exchange Rule 21.1(d)(2). 

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–EMERALD–2023–26 and should be 

submitted on or before November 8, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22929 Filed 10–17–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98730; File No. SR–MEMX– 

2023–28] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Adopt Risk Settings Rules 

Applicable to Options Trading 

October 12, 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 29, 2023, MEMX LLC 

(‘‘MEMX’’ or the ‘‘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 is filing with the 

Commission a proposed rule to amend 

the Exchange’s risk settings rules 

applicable to Options trading. The 

Exchange has designated this proposal 

as ‘‘non-controversial’’ pursuant to 

section 19(b)(3)(A)(iii) of the Act and 

provided the Commission with the 

notice required by Rule 19b–4(f)(6)(iii) 

thereunder. The Exchange has 

commenced operations of MEMX 

Options on September 27, 2023. As 

such, the Exchange proposes to 

implement the changes to its options 

risk controls immediately. The text of 

the proposed rule change is provided in 

Exhibit 5. 

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 provide optional risk 

controls for Members 3 who participate 

in the Exchange’s options market (such 

market, ‘‘MEMX Options’’ and such 

Members, ‘‘Options Members’’), under 

proposed Interpretation and Policies .01 

and .02 of Exchange Rule 21.17, and to 

provide clarifying language in proposed 

Interpretation and Policy .03 of 

Exchange Rule 21.17. In order to help 

Options Users 4 to manage their risk, the 

Exchange proposes to add certain risk 

settings on MEMX Options which the 

Exchange already offers to Users in its 

market for equity securities (‘‘MEMX 

Equities’’). Under the proposed 

Interpretation and Policies .01 and .02 

of Exchange Rule 21.17, Users will have 

the same ability to manage their risk 

with respect to orders on the MEMX 

Options platform as Users currently 

have on the MEMX Equities platform (as 

set forth in Interpretation and Policies 

.01 and .02 of Exchange Rule 11.10). 

Lastly, the Exchange proposes to add 

Interpretation and Policy .03 of 

Exchange Rule 21.17 to clarify that the 

risk controls described in Exchange 

Rule 21.17 are meant to supplement, 

and not replace, a User’s internal risk 

monitoring and management systems. 

The Exchange proposes to add 

controls which will be exercisable and 

configurable by individual Users, and 

the thresholds of the controls may be 

adjusted within certain limits away 

from the assigned default values. The 

Exchange notes that other national 

securities exchanges have similar risk 

settings rules in their rulebooks.5 As 

previously noted, these risk settings will 

largely mirror the MEMX Equities 

settings rules in Interpretation and 

Policies .01 and .02 to Rule 11.10. The 

Exchange additionally proposes to add 

clarifying language in proposed 

Interpretation and Policy .03 of 

Exchange Rule 21.17. 

Specifically, in proposed 

Interpretation and Policy .01 of 

Exchange Rule 21.17, the Exchange 

proposes to offer risk settings that will 

result in orders being cancelled on 

entry, including: (i) controls related to 

the maximum dollar amount for a single 

order and the maximum number of 

contracts that may be included in a 

single order; (ii) controls related to order 

types or modifiers that can be utilized 

as well as when the market is crossed; 

(iii) controls to restrict the options 

classes for which a User may enter 

orders or to restrict activity to test 

symbols only; (iv) controls prohibiting 

the entry of duplicative orders; (v) 

controls restricting the overall rate of 

order entry; and (vi) credit controls 

measuring both gross and net exposure 

that warn when approached, and when 

breached, prevent submission of either 

all new orders or Market Orders 6 only. 

The Exchange further proposes, in 

proposed Interpretation and Policy .02 

of Exchange Rule 21.17, to offer (vii) 

risk functionality that permits a User to 


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7 17 CFR 240.15c3–5. 

8See, e.g., Rule 21.17 of the BZX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/BZX_Exchange_

Rulebook.pdf; and Rule 16.3 of the EDGX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/EDGX_

Rulebook.pdf. 

9See ‘‘Publication of Established Numeric 

Values’’ above for a description of how the 

Exchange will notify Members of default values 

applicable to risk settings. 

10See Exchange Rule 1.5(gg). 

11See, e.g., Rule 6.40P–O(a)(2)(A)(i) of the NYSE 

Arca Exchange Rulebook, available at https://

nysearca.wolterskluwer.cloud/rules/ 

b44a170e7ccd1000a69b90b11c2ac4f10127. 

12See Interpretations and Policies .01(a) and 

.01(b) of Rule 11.13 of the BYX Exchange Rulebook, 

available at: https://cdn.cboe.com/resources/ 

regulation/rule_book/BYX_Rulebook.pdf; 

Interpretations and Policies .01a and .01(b) of Rule 

11.13 of the BZX Exchange Rulebook, available at: 

https://cdn.cboe.com/resources/regulation/rule_

book/BZX_Exchange_Rulebook.pdf; Interpretations 

and Policies .01(a) and .01(b) of Rule 11.10 of the 

EDGA Exchange Rulebook, available at: https://

cdn.cboe.com/resources/regulation/rule_book/ 

EDGA_Rulebook.pdf; and Interpretations and 

Policies .01(a) and .01(b) of Rule 11.10 of the EDGX 

Exchange Rulebook, available at: https://

cdn.cboe.com/resources/regulation/rule_book/ 

EDGX_Rulebook.pdf. See also Interpretations and 

Policies 01(a) and .01(b) of Rule 11.10 of the MEMX 

Rulebook, available at: https://

info.memxtrading.com/regulation/memx-rules/. 

13See, e.g., Rule 6.40P–O(a)(2)(A)(iii) of the NYSE 

Arca Exchange Rulebook, available at https://

nysearca.wolterskluwer.cloud/rules/ 

b44a170e7ccd1000a69b90b11c2ac4f10127. 

14See Interpretations and Policy .01(c) of Rule 

11.13 of the BYX Exchange Rulebook, available at: 

https://cdn.cboe.com/resources/regulation/rule_

book/BYX_Rulebook.pdf; Interpretations and Policy 

.01(c) of Rule of Rule 11.13 of the BZX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/BZX_Exchange_

Rulebook.pdf; Interpretations and Policy .01(c) of 

Rule 11.10 the EDGA Exchange Rulebook, available 

at: https://cdn.cboe.com/resources/regulation/rule_

book/EDGA_Rulebook.pdf; Interpretations and 

Policy .01(c) of Rule 11.10 the EDGX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/EDGX_

Rulebook.pdf. See also Interpretations and Policy 

.01(c) of Rule 11.10 of the MEMX Rulebook, 

available at: https://info.memxtrading.com/ 

regulation/memx-rules/. 

cancel all unexecuted orders and quotes 

in the MEMX Options Book, block the 

entry of any new orders or quotes, or 

both cancel all unexecuted orders and 

quotes and block the entry of any new 

orders and quotes; and (viii) batch 

cancel functionality. Each of these 

functionalities will be further described 

in the paragraphs below. Additionally, 

in proposed Interpretation and Policy 

.03 to Exchange Rule 21.17, the 

Exchange would provide clarifying 

language that the risk controls described 

in Exchange Rule 21.17 do not replace 

the User’s own internal risk 

management systems, monitoring, and 

procedures and are not designed for 

compliance with Exchange Act Rule 

15c3–5.7

Publication of Established Numeric 

Values 

Current Rule 21.17 states that ‘‘all 

numeric values established by the 

Exchange pursuant to this Rule will be 

maintained by the Exchange in publicly 

available specifications and/or 

published in a Regulatory Circular.’’ As 

the proposed Interpretations and 

Policies described below would be 

contained in Rule 21.17, that language 

would also apply to such Interpretations 

and Policies. As a result, to the extent 

the Exchange establishes default values 

for certain risk settings, as described 

below, such default values would be 

readily ascertainable by Users and such 

Users will be able to determine whether 

they wish to maintain the default values 

established by the Exchange or to adopt 

different values in accordance with their 

overall risk mitigation strategy. 

The Exchange notes that other 

national securities exchanges establish 

numeric values pursuant to the risk 

settings for their options platforms in 

publicly available specifications and 

regulatory circulars.8

Controls Related to Maximum Dollar 

Amount and Maximum Number of 

Contracts 

Proposed paragraph (a) of proposed 

Interpretation and Policy .01 of 

Exchange Rule 21.17 would provide for 

order entry controls related to (i) the 

maximum dollar amount for a single 

order, and (ii) the maximum number of 

contracts that may be included in a 

single order. These controls on 

maximum notional value per order and 

the maximum number of contracts per 

order would each be User-configurable 

up to a maximum allowable limit. The 

Exchange would set default values on 

the maximum notional value per order 

and maximum number of contracts per 

order.9 The System 10 will reject or 

cancel an order that exceeds the Userconfigured limits or which exceeds the 

default value if the User has not entered 

any configuration for these controls. 

This proposed paragraph (a) would 

provide Options Members with the 

same risk control functionality on 

maximum notional value per order and 

maximum number of contracts per order 

as is currently provided to Members of 

MEMX Equities under Interpretation 

and Policy .01(a) and .01(b) of Exchange 

Rule 11.10. The Exchange notes that at 

least one other options exchange 

provides similar functionality on its 

trading platform.11 The Exchange also 

notes that other national securities 

exchanges, including the Exchange, 

include this functionality on their 

equities platforms.12 The purpose of 

proposed paragraph (a) of Interpretation 

and Policy .01 of Exchange Rule 21.17 

is to provide the same maximum 

notional value risk setting functionality 

and maximum share risk setting 

functionality for Users on MEMX 

Options, as is currently provided to 

Users on MEMX Equities. 

Controls Related to Order Types or 

Modifiers and Specific Market 

Conditions 

Proposed paragraph (b) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 would provide 

controls designed to prevent the entry of 

specific order types and modifiers, as 

well as the entry of orders when specific 

market conditions occur. The Exchange 

would provide a User-configurable on/ 

off switch to allow or disallow the entry 

of specific types of orders or the entry 

of any orders upon the existence of 

certain market conditions. The default 

value would be to allow the entry of 

orders. Specifically, the Exchange at this 

time would provide an on/off switch for 

(i) orders marked as Intermarket Sweep 

Orders (‘‘ISOs’’), (ii) orders entered 

when the National Best Bid and Offer 

(‘‘NBBO’’) is crossed, and (iii) Market 

Orders. With respect to controls on 

ISOs, the proposal would provide 

MEMX Options Users with the same 

ability to allow or disallow ISOs as is 

currently available to Users of MEMX 

Equities under Interpretation and Policy 

.01(c) of Exchange Rule 11.10. With 

respect to controls to allow or cancel 

incoming orders when the market is 

crossed, the proposal would provide 

MEMX Options Users with the same 

ability to allow or disallow incoming 

orders during a crossed market as is 

currently available to Members of 

MEMX Equities under Exchange Rule 

11.10(a)(2). To clarify, with respect to 

controls on ISO orders and orders 

during crossed markets, proposed 

paragraph (b) of Interpretation and 

Policy .01 of Exchange Rule 21.17 

would provide the same ISO and 

crossed market functionalities for Users 

on MEMX Options, as are currently 

provided to Users on MEMX Equities. 

The Exchange notes that at least one 

other options exchange provides similar 

functionality on its trading platform.13

The Exchange also notes that other 

national securities exchanges, including 

the Exchange, provide this functionality 

on their equities platforms.14

With respect to controls on Market 

Orders, the Exchange does not presently 

provide this functionality for MEMX 

Equities. The Exchange notes that other 

national securities exchanges provide 

functionality for Users to apply a risk 


ddrumheller on DSK120RN23PROD with NOTICES1
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15See Exchange Act Release Nos. 97988 (July 25, 

2023), 88 FR 49513 (July 31, 2023)(SR–CboeEDGA– 

2023–012); 97986 (July 25, 2023), 88 FR 49540 (July 

31, 2023) (SR–CboeBYX–2023–011); 97987 (July 25, 

2023), 88 FR 49516 (July 31, 2023) (SR–CboeEDGX– 

2023–046); see also Nasdaq Rulebook Section 5(b), 

available at: https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules/nasdaq-equity-6. 

16See, e.g., Rule 6.40P–O(a)(2)(A)(iv) of the NYSE 

Arca Exchange Rulebook, available at https://

nysearca.wolterskluwer.cloud/rules/ 

b44a170e7ccd1000a69b90b11c2ac4f10127. 

17See Interpretations and Policy .01(d) of Rule 

11.13 of the BYX Exchange Rulebook, available at: 

https://cdn.cboe.com/resources/regulation/rule_

book/BYX_Rulebook.pdf; Interpretations and Policy 

.01(d) of Rule of Rule 11.13 of the BZX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/BZX_Exchange_

Rulebook.pdf; Interpretations and Policy .01(d) of 

Rule 11.10 the EDGA Exchange Rulebook, available 

at: https://cdn.cboe.com/resources/regulation/rule_

book/EDGA_Rulebook.pdf; Interpretations and 

Policy .01(d) of Rule 11.10 the EDGX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/EDGX_

Rulebook.pdf. See also Interpretations and Policy 

.01(d) of Rule 11.10 of the MEMX Rulebook, 

available at: https://info.memxtrading.com/ 

regulation/memx-rules/. 

18A duplicative order is one with the same 

Executing Firm Identifier (‘‘EFID’’), side, price, size, 

and symbol. 

19See ‘‘Publication of Established Numeric 

Values’’ above for a description of how the 

Exchange will notify Members of default values 

applicable to risk settings. 

20See, e.g., Rule 6.40P–O(a)(2)(A)(v) of the NYSE 

Arca Exchange Rulebook, available at https://

nysearca.wolterskluwer.cloud/rules/ 

b44a170e7ccd1000a69b90b11c2ac4f10127. 

21See Interpretations and Policy .01(e) of Rule 

11.13 of the BYX Exchange Rulebook, available at: 

https://cdn.cboe.com/resources/regulation/rule_

book/BYX_Rulebook.pdf; Interpretations and Policy 

.01(e) of Rule of Rule 11.13 of the BZX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/BZX_Exchange_

Rulebook.pdf; Interpretations and Policy .01(f) of 

Rule 11.10 the EDGA Exchange Rulebook, available 

at: https://cdn.cboe.com/resources/regulation/rule_

book/EDGA_Rulebook.pdf; Interpretations and 

Policy .01(e) of Rule 11.10 the EDGX Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/EDGX_

Rulebook.pdf. See also Interpretations and Policy 

.01(e) of Rule 11.10 of the MEMX Rulebook, 

available at: https://info.memxtrading.com/ 

regulation/memx-rules/. 22See ‘‘Publication of Established Numeric 

Values’’ above for a description of how the 

Exchange will notify Members of default values 

applicable to risk settings. 23See, e.g., Interpretations and Policy .01(f) of 

Rule 11.13 of the BYX Exchange Rulebook, 

available at: https://cdn.cboe.com/resources/ 

regulation/rule_book/BYX_Rulebook.pdf; 

Interpretations and Policy .01(f) of Rule of Rule 

11.13 of the BZX Exchange Rulebook, available at: 

https://cdn.cboe.com/resources/regulation/rule_

book/BZX_Exchange_Rulebook.pdf; Interpretations 

and Policy .01(f) of Rule 11.10 the EDGA Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/EDGA_

Rulebook.pdf; and Interpretations and Policy .01(f) 

of Rule 11.10 the EDGX Exchange Rulebook, 

available at: https://cdn.cboe.com/resources/ 

regulation/rule_book/EDGX_Rulebook.pdf. See also 

Interpretations and Policy .01(f) of Rule 11.10 of the 

MEMX Rulebook, available at: https://

info.memxtrading.com/regulation/memx-rules/. 

setting that would reject market orders 

during continuous trading or auctions.15

The Exchange proposes to apply the 

same functionality to MEMX Options. 

Using this functionality, a User of 

MEMX Options would be allowed to 

reject Market Orders; the default setting 

would be to allow Market Orders. The 

Exchange proposes to make the risk 

setting User-configurable and will not 

require Users to utilize the Market Order 

risk setting. The purpose of this 

proposed risk setting is designed to 

prevent the entry of orders that may 

cause undue market impact, and reduce 

the potential for disruptive, marketwide events. 

Controls to Restrict Options Classes To 

Test Symbols 

Proposed paragraph (c) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 would provide 

controls to restrict the options classes 

for which a User may enter orders to test 

symbols only, which would apply upon 

order entry. The Exchange would 

provide a User-configurable on/off 

switch to restrict orders entered to test 

symbols only if configured by the User. 

The default value of such on/off switch 

will be to allow all options classes. The 

proposal would provide MEMX Options 

Users with the same ability to restrict 

options classes as is currently available 

to Users of MEMX Equities under 

Interpretation and Policy .01(d) of 

Exchange Rule 11.10. 

The Exchange notes that at least one 

other options exchange provides similar 

functionality on its trading platform.16

The Exchange also notes that other 

national securities exchanges, including 

the Exchange, already have controls to 

restrict the entry of orders in 

specifically identified securities on their 

equities platforms.17 The purpose of 

proposed paragraph (c) of Interpretation 

and Policy .01 of Exchange Rule 21.17 

is to provide Users on MEMX Options 

the same functionality to restrict the 

types of options classes which can be 

traded, as is currently provided to Users 

on MEMX Equities to restrict the types 

of securities which can be traded to test 

symbols only. 

Controls To Prohibit Duplicative Orders 

Proposed paragraph (d) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 would provide 

controls to prohibit duplicative orders, 

which would apply upon order entry.18

The Exchange would provide the User 

with the ability to set a duplicative 

order count and time window in 

seconds, subject to a maximum 

allowable limit of order count and time 

window. The Exchange would also 

provide default values for order count 

and time window in seconds, which 

would be the minimum values to be 

selected.19 The control would be 

triggered when the duplicative order 

count is exceeded within the time 

window specified. When such control is 

triggered, the System would reject 

incoming orders. Order cancellations 

would be processed normally during the 

time when the control is triggered. 

The Exchange notes that at least one 

other options exchange provides similar 

functionality to prevent duplicative 

orders on its trading platform.20 The 

Exchange notes that other national 

securities exchanges, including the 

Exchange, include controls on 

duplicative orders in their risk settings 

for their equities platforms.21 The 

proposal would provide Users of MEMX 

Options with the same ability to 

prohibit duplicative orders as is 

currently available to Users of MEMX 

Equities under Interpretation and Policy 

.01(e) of Exchange Rule 11.10. The 

purpose of proposed paragraph (d) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 is to provide the 

same functionality to prohibit 

duplicative orders for Users on MEMX 

Options, as is currently provided to 

Users on MEMX Equities. 

Controls To Restrict the Overall Rate of 

Orders 

Proposed paragraph (e) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 would provide 

controls to restrict the overall rate of 

orders, which would apply upon order 

entry. The control would include a 

default value for the time increment and 

a default value for the number of orders 

entered during that time increment.22

The Exchange would provide the User 

with the ability to configure an order 

count and time window, subject to 

minimum and maximum values 

identified by the Exchange. The control 

would be triggered when the order 

count is exceeded within the time 

window specified. When such control is 

triggered, the System would reject 

incoming orders. Order cancellations 

would be processed normally during the 

time when the control is triggered. The 

proposal would provide Users of MEMX 

Options with the same ability to restrict 

the rate of orders as is currently 

available to Users of MEMX Equities 

under Interpretation and Policy .01(f) of 

Exchange Rule 11.10. 

The Exchange also notes that other 

national securities exchanges, including 

the Exchange, already have risk settings 

for their Equities platform which allow 

Users to restrict the rate of orders.23 The 


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24See ‘‘Publication of Established Numeric 

Values’’ above for a description of how the 

Exchange will notify Members of default values 

applicable to risk settings. 

25See, e.g., Interpretations and Policy .01(h) of 

Rule 11.13 of the BYX Exchange Rulebook, 

available at: https://cdn.cboe.com/resources/ 

regulation/rule_book/BYX_Rulebook.pdf; 

Interpretations and Policy .01(h) of Rule of Rule 

11.13 of the BZX Exchange Rulebook, available at: 

https://cdn.cboe.com/resources/regulation/rule_

book/BZX_Exchange_Rulebook.pdf; Interpretations 

and Policy .01(h) of Rule 11.10 the EDGA Exchange 

Rulebook, available at: https://cdn.cboe.com/ 

resources/regulation/rule_book/EDGA_

Rulebook.pdf; and Interpretations and Policy .01(h) 

of Rule 11.10 the EDGX Exchange Rulebook, 

available at: https://cdn.cboe.com/resources/ 

regulation/rule_book/EDGX_Rulebook.pdf. See also 

Interpretations and Policy .01(h) of Rule 11.10 of 

the MEMX Rulebook, available at: https://

info.memxtrading.com/regulation/memx-rules/. 

26See Rule 6.40P–O(e)(3) and 6.40P–O(e)(4) of 

the NYSE Arca Exchange Rulebook, available at 

https://nysearca.wolterskluwer.cloud/rules/ 

b44a170e7ccd1000a69b90b11c2ac4f10127. 

27See, e.g., Nasdaq Options Market Rulebook 

Chapter 3, Section 19, available at: https://

listingcenter.nasdaq.com/RuleBook/Nasdaq/rules/ 

Nasdaq%20Options%203. 

28See supra note 7. 

29See Division of Trading and Markets, 

Responses to Frequently Asked Questions 

Concerning Risk Management Controls for Brokers 

or Dealers with Market Access, available at https:// 

Continued 

purpose of proposed paragraph (e) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 is to provide the 

same functionality to set the maximum 

overall rate of orders for Users on 

MEMX Options, as is currently provided 

to Users on MEMX Equities. 

Credit Controls for Gross and Net 

Exposure 

Proposed paragraph (f) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 would provide for 

credit controls on gross and net 

exposure, which would apply upon 

order entry. The default value for each 

such controls would be set to a 

maximum dollar amount.24 Users would 

be able to configure the limit for each 

control, subject to a minimum limit 

amount. Users would be able to select 

configurable controls on daily gross 

notional exposure, either for (i) all 

orders or (ii) only Market Orders. For 

any bid or offer, the System will cancel 

or reject it if such bid or offer causes the 

User’s daily gross notional exposure to 

exceed a User-configured limit. For any 

Market Order, the System will cancel or 

reject it if such Market Order causes the 

User’s daily gross notional exposure to 

exceed a User-configured limit. 

Similarly, Users would be able to select 

configurable controls on daily net 

notional exposure, either for (i) all 

orders or (ii) only Market Orders. For 

any bid or offer, the System will cancel 

or reject it if such bid or offer causes the 

User’s daily net notional exposure to 

exceed a User-configured limit. For any 

Market Order, the system will cancel or 

reject it if such Market Order causes the 

User’s daily gross notional exposure to 

exceed a User-configured limit. In 

addition to blocking orders for each of 

the controls set forth above, the System 

will block either all new orders or 

Market Orders only once an applicable 

setting has been breached. 

This proposal would provide Users of 

MEMX Options with the same ability to 

set configurable controls on daily net 

notional and daily gross notional 

exposure, for all orders or for Market 

Orders, as is currently available to Users 

of MEMX Equities under Interpretation 

and Policy .01(g) of Exchange Rule 

11.10. The Exchange notes that other 

national securities exchanges, including 

the Exchange, already provide 

functionality to set configurable controls 

on daily net notional exposure and daily 

gross notional exposure that apply on 

order entry.25

The Exchange believes that credit 

controls on daily net notional and daily 

gross notional exposure are of 

importance in the options markets. The 

purpose of proposed paragraph (f) of 

Interpretation and Policy .01 of 

Exchange Rule 21.17 is to provide the 

same functionality to set configurable 

controls on daily net notional exposure 

and daily gross notional exposure for 

Users on MEMX Options, as is currently 

provided to Users on MEMX Equities. 

Controls for Block and Cancel 

Functionality 

Proposed paragraph (a) of 

Interpretation and Policy .02 of 

Exchange Rule 21.17 would provide 

functionality to (i) cancel all unexecuted 

orders and quotes in the MEMX Options 

Book, (ii) block the entry of any new 

orders and quotes, or (iii) both cancel all 

unexecuted orders and quotes in the 

MEMX Options Book and block the 

entry of any new orders and quotes. 

Additionally, in addition to 

functionality (i), (ii), and (iii) described 

in this paragraph, the Exchange will 

provide functionality to (iv) 

automatically cancel a User’s orders to 

the extent the User loses its connection 

to the Exchange. This proposal would 

provide Users of MEMX Options with 

the same block and cancel functionality 

as is currently available to Users of 

MEMX Equities under Interpretation 

and Policy .02(a) of Exchange Rule 

11.10. The Exchange notes that at least 

one other options exchange provides 

similar functionality on its trading 

platform.26 The purpose of proposed 

paragraph (a) of Interpretation and 

Policy .02 of Exchange Rule 21.17 is to 

provide the same functionality to block 

new orders, cancel open orders, block 

new orders and cancel open orders, and 

cancel orders if a User loses connection 

to the Exchange for Users on MEMX 

Options, as is currently provided to 

Users on MEMX Equities. 

Controls for Mass Cancellation of 

Trading Interest Functionality 

Finally, the Exchange proposes 

paragraph (b) of Interpretation and 

Policy .02 of Exchange Rule 21.17, 

which would provide functionality to 

Users of MEMX Options for the mass 

cancellation of trading interest (i.e., 

‘‘batch cancel’’ functionality). Users 

would be able to cancel any orders in 

any series of options by requesting the 

Exchange to affect such cancellation as 

per the instructions of the User. A User 

initiating such a request may also 

request that the Exchange block new 

inbound orders in any series of options. 

The block will remain in effect until the 

User requests the Exchange remove the 

block. Proposed paragraph (b) of 

Interpretation and Policy .02 of 

Exchange Rule 21.17 would provide the 

same batch cancel functionality to Users 

of MEMX Options as is available to 

Users of MEMX Equities under 

Interpretation and Policy .02(b) of 

Exchange Rule 11.10. The Exchange 

notes that at least one other options 

exchange provides similar functionality 

on its trading platform.27 The purpose of 

this proposed paragraph (b) is to 

provide the same batch cancel 

functionality to Users of MEMX Options 

as is currently provided to Users of 

MEMX Equities. 

The purpose of these risk settings is 

to provide MEMX Options Users with 

functionality to assist in risk 

management, which will protect both 

the User as well as the Exchange from 

entering potentially erroneous orders 

that could have potential market impact. 

The Exchange proposes to make these 

risk settings available to all Users and 

will not require Users to use any of the 

risk settings provided. The Exchange 

will not provide any preferential 

treatment to Users based upon their use 

of any, all, or none of the risk settings. 

Clarifying Language On Risk Controls 

Pursuant to Rule 15c3–5 under the 

Act,28 a broker-dealer with market 

access must perform appropriate due 

diligence to assure that its controls are 

reasonably designed to be effective, and 

otherwise consistent with the rule.29


ddrumheller on DSK120RN23PROD with NOTICES1
71902 Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices 

www.sec.gov/divisions/marketreg/faq-15c-5- 

riskmanagement-controls-bd.htm. 

30See, e.g., Commentary .01 to Rule 6.40P–O of 

the NYSE Arca Exchange Rulebook, available at 

https://nysearca.wolterskluwer.cloud/rules/ 

b44a170e7ccd1000a69b90b11c2ac4f10127. 

31 15 U.S.C. 78f(b). 

32 15 U.S.C. 78f(b)(5). 33 15 U.S.C. 78f(b)(8). 

34See supra note 15. 

35 15 U.S.C. 78s(b)(3)(A)(iii). 

36 17 CFR 240.19b–4(f)(6). 

37 In addition, Rule 19b–4(f)(6) requires a selfregulatory 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. 

Use of the Exchange’s proposed risk 

settings for MEMX Options will not 

automatically constitute compliance 

with Exchange or federal rules and 

responsibility for compliance with all 

Exchange and SEC rules remains with 

the User. In order to clarify that the risk 

controls proposed for MEMX Options 

are not a substitute for a User’s 15c3– 

5 obligations, the Exchange proposes to 

provide clarifying language to this effect 

in proposed Interpretation and Policy 

.03 to Exchange Rule 21.17. The 

purpose of Interpretation and Policy .03 

to Exchange Rule 21.17 is to make clear 

that the User, and not the Exchange, 

will have the full responsibility for 

ensuring that their orders comply with 

applicable securities rules, laws, and 

regulations, and may not rely on the risk 

settings for any such purpose. The 

Exchange notes that other exchanges 

have included similar clarifying 

language in their options rules.30 The 

Exchange wishes to make clear that the 

use of the proposed risk settings can 

replace User-managed risk management 

solutions, and use of the proposed risk 

settings does not automatically 

constitute compliance with Exchange 

rules. Rather, the Exchange intends 

these controls to act as a complement to 

its Members’ overall suite of controls 

designed to comply with Rule 15c3–5 

and other applicable securities rules, 

laws and regulations. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of section 6(b) of the 

Act,31 in general, and furthers the 

objectives of sections and 6(b)(5) of the 

Act,32 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 the proposed 

risk settings promote just and equitable 

principles of trade because the risk 

settings will be equally available to all 

Users who trade on MEMX Options and 

such Users can employ such risk 

settings as part of their overall risk 

management strategy. Three of the 

proposed risk settings will apply to 

orders from all Users and cannot be 

turned off, namely the duplicative order 

check, the order rate check and the 

maximum contracts and maximum 

notional check. However, the Exchange 

will establish default values for these 

risk settings that are made publicly 

available through a Regulatory Circular 

and/or publicly available specifications, 

as discussed above. Further, Users will 

be able to configure these settings to 

different levels that align with their 

overall risk mitigation strategy. The 

remaining risk settings are optional and 

Users will be able to select whether they 

would like to use any, all, or none of 

these risk settings. No preferential 

treatment will be provided to Users who 

have elected to use any, all, or none of 

the optional risk settings that are 

available. Use of the risk settings does 

not unfairly discriminate among the 

Users of MEMX Options because each 

risk setting is available to all Users. 

The Exchange believes the proposed 

risk settings will remove impediments 

to and perfect the mechanism of a free 

and open market and national market 

system because it provides additional 

functionality for Users to manage risk. 

The proposed risk settings would 

provide Users with the means to manage 

and control their risk profile, helping to 

ensure the proper functioning of the 

market. The Exchange believes that 

these controls are designed to protect 

investors and the public interest 

because the proposed risk mitigation 

functionality will aid Users in 

minimizing their financial exposure and 

reducing the potential for marketdisrupting events. The risk management 

functionality of the risk settings could, 

in turn, enhance the integrity of trading 

on the securities markets and help to 

assure the stability of the financial 

system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes the proposal is 

consistent with section 6(b)(8) of the 

Act 33 in that it does not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act as explained 

below. The Exchange believes the 

proposal will not impose a burden on 

intermarket competition because Users 

of MEMX Options will be able to decide 

how they wish to utilize the risk settings 

offered in the context of their overall 

risk mitigation strategy. Users of MEMX 

Options are free to include the risk 

settings available as part of their 

determination of where to trade, or in 

many cases, not to use them at all. The 

Exchange does not believe that the 

proposed rule change imposes a burden 

on intramarket competition because the 

proposed risk settings will be available 

equally to all Users. As previously 

discussed, the proposed risk setting on 

MEMX Options which differs from the 

risk settings on MEMX Equities 

(namely, controls on Market Orders) has 

been implemented by other 

exchanges.34 Users would be able to 

choose the settings best suited to their 

risk profile, potentially enabling them to 

better manage their risk while trading 

on the Exchange. The Exchange believes 

that the proposed risk setting will 

enable Users to strengthen their risk 

management capabilities, which, in 

turn, may enhance the integrity of 

trading on the options markets and help 

to assure the stability of the financial 

system. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to section 

19(b)(3)(A)(iii) of the Act 35 and Rule 

19b–4(f)(6) thereunder 36 in that it 

effects a change that: (i) does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest.37

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii), 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. In support of its 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices 71903 

38For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. See 15 U.S.C. 

78c(f). 39 17 CFR 200.30–3(a)(12) and (a)(59). 

1 15 U.S.C. 80a–1 et seq. 

2 15 U.S.C. 80a–2(a)(41). See also 17 CFR 270.2a– 

4. 

3See 15 U.S.C. 80a–22(c) and 23(c). See also 17 

CFR 270.22c–1(a). 

waiver request, the Exchange states that 

the proposal will further the interests of 

investors and the public by making 

available a risk functionality by which 

Members (and each Member’s Users) 

can manage their risk on the Exchange’s 

options platform, MEMX Options. These 

risk settings will allow each User to 

configure a risk profile applicable to 

their risk tolerance and as necessary in 

the context of their overall risk 

management program, which the 

Exchange believes will assist in 

maintaining the Exchange as a fair and 

orderly market that better serves the 

interest of investors. Additionally, as 

discussed above, the proposed changes 

will not impose any significant or 

undue burden on competition because 

Options Members can decide how they 

wish to utilize the risk settings offered 

in the context of their overall risk 

mitigation strategy. 

Further, the Exchange launched 

MEMX Options on September 27, 2023. 

Waiver of the 30-day operative delay 

would allow the Exchange to implement 

the proposed change to offer the 

proposed risk settings immediately, 

which would benefit Members and 

investors by enabling the Exchange to 

provide additional functionality for 

Options Members to manage their risk. 

The Exchange states that these controls 

are designed to protect investors and the 

public interest because the proposed 

risk mitigation functionality will aid 

Members in minimizing their financial 

exposure and reducing the potential for 

market-disrupting events. For these 

reasons, and because the proposal does 

not raise any new or novel issues that 

have not been previously considered by 

the Commission, the Commission 

believes that waiver of the operative 

delay is consistent with the protection 

of investors and the public interest. 

Accordingly, the Commission hereby 

waives the 30-day operative delay and 

designates the proposal operative upon 

filing.38

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: (i) necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) 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– 

MEMX–2023–28 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–MEMX–2023–28. 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–MEMX–2023–28 and should be 

submitted on or before November 8, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22925 Filed 10–17–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–XXX, OMB Control No. 

3235–0779] 

Proposed Collection; Comment 

Request; Extension: Rule 2a–5 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collections of information 

summarized below. The Commission 

plans to submit the existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Section 2(a)(41) of the Investment 

Company Act of 1940 (‘‘Investment 

Company Act’’) 1 requires funds to value 

their portfolio investments using the 

market value of their portfolio securities 

when market quotations for those 

securities are ‘‘readily available,’’ and, 

when a market quotation for a portfolio 

security is not readily available, by 

using the fair value of that security, as 

determined in good faith by the fund’s 

board.2 The aggregate value of a fund’s 

investments is the primary determinant 

of the fund’s net asset value (‘‘NAV’’), 

which for many funds determines the 

price at which their shares are offered 

and redeemed (or repurchased).3

Rule 2a–5 provides requirements for 

determining in good faith the fair value 

of the investments of a registered 

investment company or companies that 

have elected to be treated as business 

development companies under the 

Investment Company Act (‘‘BDCs’’ and, 

collectively, ‘‘funds’’) for purposes of 

section 2(a)(41) of the Investment 

Company Act and rule 2a–4 


ddrumheller on DSK120RN23PROD with NOTICES1