5596 Federal Register / Vol. 89, No. 19 / Monday, January 29, 2024 / Notices 

64 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The ‘‘SIP’’ refers to the centralized securities 

information processors. 

4See ‘‘How Subdollar Securities are Trading 

Now’’ (March 16, 2023). Available at https://

www.cboe.com/insights/posts/how-subdollarsecurities-are-trading-now/. 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CBOE–2024–006 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CBOE–2024–006. 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, as modified by Amendment No. 

1, that are filed with the Commission, 

and all written communications relating 

to the proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CBOE–2024–006 and should be 

submitted on or before February 20, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.64

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01620 Filed 1–26–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: Notice is hereby given, 

pursuant to the provisions of the 

Government in the Sunshine Act, Public 

Law 94–409, that the Securities and 

Exchange Commission will hold an 

Open Meeting on Wednesday, January 

31, 2024, at 10:00 a.m. (ET). 

PLACE: The meeting will be held in 

Auditorium LL–002 at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549 and 

will be simultaneously webcast on the 

Commission’s website at www.sec.gov. 

STATUS: This meeting will begin at 10:00 

a.m. (ET) and will be open to the public. 

Seating will be on a first-come, firstserved basis. Visitors will be subject to 

security checks. The meeting will be 

webcast on the Commission’s website at 

www.sec.gov. 

MATTERS TO BE CONSIDERED: 

1. The Commission will consider 

whether to adopt new rules to further 

define the phrase ‘‘as a part of a regular 

business’’ as used in the statutory 

definitions of the terms ‘‘dealer’’ and 

‘‘government securities dealer’’ under 

the Securities Exchange Act of 1934, in 

connection with certain liquidity 

providers. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 

what, if any, matters have been added, 

deleted or postponed, please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Authority: 5 U.S.C. 552b. 

Dated: January 24, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01758 Filed 1–25–24; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99414; File No. SR– 

CboeBZX–2024–006] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To Amend 

Rule 11.9(c)(6) and Rule 11.13(a)(4)(D) 

To Permit the Use of BZX Post Only 

Orders at Prices Below $1.00 

January 23, 2024. 

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 January 8, 

2024, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) proposes to 

amend Rule 11.9(c)(6) and Rule 

11.13(a)(4)(D) to permit the use of BZX 

Post Only Orders at prices below $1.00. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Trading in sub-dollar securities both 

on- and off-exchange has grown 

significantly since early 2019. An 

analysis of SIP 3 data by the Exchange 

found that sub-dollar average daily 

volume has increased 313% as 

compared to volumes in the first quarter 

of 2019.4 During this period, onexchange average daily volume in subdollar securities grew from 442 million 


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5 Id. 

6Trade Reporting Facilities are facilities through 

which FINRA members report off-exchange 

transactions in NMS stocks, as defined in SEC Rule 

600(b)(47) of Regulation NMS. See Securities 

Exchange Act Release No. 96494 (December 14, 

2022), 87 FR 80266 (December 29, 2022) (‘‘Tick Size 

Proposal’’) at 80315. 

7Supra note 5. 

8 Id. 

9See Rule 1.5(e). The BZX Book means the 

System’s electronic file of orders. 

10See Rule 1.5(cc). The term ‘‘User’’ shall mean 

any Member or Sponsored Participant who is 

authorized to obtain access to the System pursuant 

to Rule 11.3. 

11BZX Post Only Orders in securities priced at or 

above $1.00 remove contra-side liquidity only if the 

value of such execution when removing liquidity 

equals or exceeds the value of such execution if the 

order instead posted to the BZX Book and 

subsequently provided liquidity. The Exchange 

does not propose to change the functionality of BZX 

Post Only Orders in securities priced at or above 

$1.00. 

12The Exchange’s economic best interest 

calculation determines whether the value of price 

improvement associated with a BZX Post Only 

Order equals or exceeds the sum of fees charged for 

such execution and the value of any rebate that 

would be provided if the order posted to the BZX 

Book and subsequently provided liquidity. The 

determination of whether a BZX Post Only Order 

will be allowed to post to the BZX Book or be 

eligible to remove liquidity is based on the current 

fee schedule, the execution price, and the amount 

of price improvement received. 

13See Rule 11.9(c)(11). A ‘‘Non-Displayed Order’’ 

is a market or limit order that is not displayed on 

the Exchange. 

14See Securities Exchange Act Release No. 64475 

(May 12, 2011), 76 FR 28830 (May 18, 2011), SR– 

BATS–2011–015 (‘‘Resting Order Execution 

Filing’’). The Resting Order Execution Filing 

introduced an order handling change for certain 

Non-Displayed Orders and orders subject to 

display-price sliding that are not executable at 

prices equal to displayed orders on the opposite 

side of the market (the ‘‘locking price’’). The Resting 

Order Execution Filing permits Resting Orders 

priced at or above $1.00 to be executed at one-half 

minimum price variation less aggressive than the 

locking price (for bids) and one-half minimum price 

variation more aggressive than the locking price (for 

offers), under certain circumstances. 

15See Rule 11.13(a)(4)(D). 

16See Resting Order Execution Filing footnote 8. 

17See Rule 1.5(aa). The term ‘‘System’’ shall 

mean the electronic communications and trading 

facility designated by the Board through which 

securities orders of Users are consolidated for 

ranked, executions and, when applicable, routing 

away. 

shares per day to 1.8 billion shares per 

day.5 A separate analysis of SIP and 

FINRA Trade Reporting Facility 

(‘‘TRF’’) 6 data indicated that exchanges 

represented approximately 39.8% 

market share in sub-dollar securities, 

with a total of 1,638 securities trading 

below $1.00.7 As an exchange group, 

Cboe had approximately 13.3% of 

market share in sub-dollar securities in 

the first quarter of 2023.8

As a result of the growth in sub-dollar 

trading, the Exchange proposes to 

amend Rule 11.9(c)(6) in order to permit 

a BZX Post Only Order to post to the 

BZX Book 9 at prices below $1.00. As 

defined in Rule 11.9(c)(6), a BZX Post 

Only Order is ‘‘[a]n order that is to be 

ranked and executed on the Exchange 

pursuant to Rule 11.12 and Rule 

11.13(a)(4) or cancelled, as appropriate, 

without routing away to another trading 

center except that the order will not 

remove liquidity from the BZX 

Book. . .’’. Accordingly, a BZX Post 

Only Order does not remove liquidity, 

but rather posts to the BZX Book to the 

extent permissible. Additionally, the 

Exchange proposes to amend Rule 

11.13(a)(4)(D) to describe the manner in 

which bids or offers priced below $1.00 

per share are executed against orders 

resting on the BZX Book. The Exchange 

believes the proposed changes will 

provide Users 10 with an additional 

order type to utilize when submitting 

order flow to the Exchange in securities 

priced below $1.00, thereby 

contributing to a deeper and more liquid 

market, which benefits all market 

participants and provides greater 

execution opportunities on the 

Exchange. 

Currently, BZX Post Only Orders 

priced below $1.00 are automatically 

treated as orders that remove liquidity.11

In order to permit a BZX Post Only 

Order to post to the BZX Book at prices 

below $1.00, the Exchange proposes to 

amend Rule 11.9(c)(6) to remove 

language that states that a BZX Post 

Only Order ‘‘will remove contra-side 

liquidity from the BZX Book if the order 

is an order to buy or sell a security 

priced below $1.00. . .’’. While the 

Exchange’s economic best interest 

calculation 12 will remain the same as is 

currently in-place for securities priced 

at or above $1.00, the impact of this 

proposal will modify the outcome of 

BZX Post Only Orders in securities 

priced below $1.00 for Users who 

choose to utilize this particular order 

type. Under this proposal, BZX Post 

Only Orders priced below $1.00 will 

only remove liquidity if the value of the 

overall execution (taking into account 

all applicable fees and rebates) make it 

economically beneficial for the order to 

remove liquidity. The Exchange has 

received User feedback requesting the 

ability to utilize BZX Post Only Orders 

in securities priced below $1.00 in order 

to allow Users to operate a single 

trading strategy for securities at all 

prices even though the execution cost 

economics for securities priced below 

$1.00 may only provide a slight 

economic benefit for Users who choose 

to utilize BZX Post Only Orders in 

securities priced below $1.00. 

In addition to the proposed 

amendment to Rule 11.9(c)(6), the 

Exchange proposes an amendment to its 

order handling procedures in order to 

permit Non-Displayed Orders 13 and 

orders subject to display-price sliding 

(collectively, ‘‘Resting Orders’’) which 

are not executable at their most 

aggressive price due to the presence of 

a contra-side BZX Post Only Order to be 

executed at one minimum price 

variation less aggressive than the order’s 

most aggressive price.14 Currently, 

similar order handling behavior applies 

only to securities priced at or above 

$1.00.15 When proposed in 2011, the 

Resting Order Execution Filing stated 

that the order handling functionality 

was not necessary for securities priced 

below $1.00 as the Exchange did not 

have the ability to quote in sub-pennies 

and the system limitations that market 

participants may encounter if 

attempting to execute in increments 

finer than $0.0001.16 Given the rise in 

sub-dollar trading discussed above, the 

Exchange now proposes to expand the 

order handling functionality introduced 

by the Resting Order Execution Filing to 

securities priced below $1.00. 

Rule 11.13(a)(4)(D) states that for 

securities priced above $1.00, incoming 

orders that are market orders or limit 

orders priced more aggressively than a 

displayed order on the same side of the 

market, the Exchange will execute the 

incoming order at, in the case of an 

incoming sell order, one-half minimum 

price variation less than the price of the 

displayed order, and, in the case of an 

incoming buy order, at one-half 

minimum price variation more than the 

price of the displayed order. The 

Exchange proposes that for securities 

priced below $1.00, incoming orders 

that are market orders or limit orders 

priced more aggressively than a 

displayed order on the same side of the 

market, the Exchange will execute the 

incoming order at, in the case of an 

incoming sell order, one minimum price 

variation less than the price of the 

displayed order, and, in the case of an 

incoming buy order, at one minimum 

price variation more than the price of 

the displayed order. The different 

treatment of securities priced below 

$1.00 from securities priced at or above 

$1.00 arises from limitations within the 

System,17 which cannot process 

executions out to five decimal places. 

In order to demonstrate the proposed 

order handling behavior for securities 

priced below $1.00, the Exchange has 

included the following examples: 

Example 1 

• Assume the NBB is $0.50 and the 

NBO is $0.53. There is no resting 

interest on the BZX Book. 


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18See Rule 11.9(g)(1)(A). An order eligible for 

display by the Exchange that, at the time of entry, 

would create a violation of Rule 610(d) of 

Regulation NMS by locking or crossing a Protected 

Quotation of an external market will be ranked at 

the locking price in the BZX Book and displayed 

by the System at one minimum price variation 

below the current NBO (for bids) or to one 

minimum price variation above the current NBB 

(for offers) (‘‘display-price sliding’’). 

19The Exchange notes that the reference to 

‘‘temporarily’’ is meant to convey that for so long 

as the NBB is locked, Order 1 will be displayed at 

a price of $0.5001 pursuant to Rule 11.9(g)(1)(A)(i). 

In the event that the NBB moves so that Order 1 

is no longer locking the NBB, Order 1 will be 

displayed at the most aggressive permissible price. 

See also Rule 11.9(g)(1)(A)(ii). 

20 Id. 

21See Rule 11.9(g)(1)(E). 

22See Rule 11.9(b)(1). An ‘‘IOC’’ order is a limit 

order that is to be executed in whole or in part as 

soon as such order is received. The portion not 

executed immediately on the Exchange or another 

trading center is treated as cancelled and is not 

posted to the BZX Book. 

23Orders subject to NMS price sliding (‘‘displayprice sliding’’) that are temporarily slid to one 

minimum price variation above (below) the NBO 

(NBB) will consist of a non-displayed ranked price 

that is equal to the locking price while 

simultaneously showing a displayed price that is 

one minimum price variation above (below) the 

NBO (NBB). Given that orders subject to displayprice sliding contain a non-displayed ranked price 

in addition to the order’s displayed price, the 

particular priority issue identified in the Resting 

Order Execution Filing with regard to NonDisplayed Orders is also present when an order 

subject to display-price sliding is resting on the 

BZX Book opposite a displayed order. 

24Supra note 18. 

25See 17 CFR 242.612 (‘‘Minimum pricing 

increment’’). Given that the minimum pricing 

increment for securities priced below $1.00 is 

$0.0001, the Exchange believes that allowing orders 

to execute at one minimum price variation above 

(for offers) or below (for bids) the locking price is 

appropriate, as requiring executions to occur at onehalf minimum price variation above (for offers) or 

below (for bids) the locking price, which is the 

current behavior for securities priced at or above 

$1.00, would result in trades executing out to five 

decimal places, which is not supported by the 

System. 

26For example, if all facts from Example 1 remain 

the same except that Order 3 is an IOC buy order 

entered with a limit price of $0.5005, then Order 

3 will execute against Order 1 at a price of $0.5001 

and receive $0.0004 of price improvement. 

27See Resting Order Execution Filing at 28831 

28 Id. 

Bid Offer 

National best: $0.50 × $0.53 

• Next, assume the Exchange received 

an incoming displayed offer (Order 1) to 

sell 100 shares at $0.50. Order 1 is 

eligible for display-price sliding 

pursuant to Rule 11.9(g).18 Pursuant to 

Rule 11.9(g), Order 1 is temporarily slid 

to a displayed price of $0.5001 as it 

locked the NBB upon entry.19 Even 

though Order 1 is now temporarily 

displayed at a price of $0.5001, Order 

1’s ranked price remains $0.50, as $0.50 

is the locking price.20

• Next, assume the Exchange received 

an incoming BZX Post Only Order bid 

(Order 2) to buy 100 shares at $0.50. The 

Exchange’s economic best interest 

calculation determined that it was more 

beneficial for Order 2 to post to the BZX 

Book and display at a price of $0.50. 

BZX Post Only Orders are permitted to 

post and be displayed opposite the 

ranked price of orders subject to 

display-price sliding.21 The result is 

depicted as follows: 

Bid Offer 

National best: $0.50 × $0.5001 

BZX best: $0.50 × $0.5001 

• The Exchange then receives an 

IOC22 order to buy (Order 3) 100 shares 

at $0.5001. Order 3 executes against 

Order 1 in its entirety at a price of 

$0.5001. 

Consistent with the Exchange’s rule 

regarding priority of orders, Rule 11.12, 

a Non-Displayed order cannot be 

executed by the Exchange pursuant to 

Rule 11.13 when such order would be 

executed at the locking price. 

Specifically, if an incoming, marketable 

order was allowed to execute against the 

resting, non-displayed portion of Order 

1 at the locking price, such order would 

receive a priority advantage over Order 

2, a resting, displayed order at the 

locking price. The Resting Order 

Execution Filing granted the Exchange 

the ability to execute Non-Displayed 

Orders and orders subject to NMS Price 

Sliding 23 priced at or above $1.00 at 

one-half minimum price variation more 

(less) than the locking price in the event 

that a bid (offer) submitted to the 

Exchange opposite such Resting Order 

is a market order or limit order priced 

more aggressive than the locking price. 

In the example above, Order 1, ranked 

at $0.50 upon entry, was slid to a 

displayed price of $0.5001 pursuant to 

Rule 11.9(g)(1)(A) as it locked the NBB. 

Upon the arrival of Order 2, which is a 

BZX Post Only Order that is permitted 

to post to the BZX Book and display 

opposite of Order 1,24 the Exchange’s 

current priority rule prohibits Order 1 

from executing at a price of $0.50 in the 

event a subsequent contra-side 

incoming order is entered at a more 

aggressive price than the locking price. 

In the example above, Order 3 was 

entered at a more aggressive price 

($0.5001) than the locking price ($0.50). 

Without the proposed changes to Rule 

11.13(a)(4), Order 3 would be cancelled 

upon entry as it cannot execute at a 

price of $0.50 due to Order 2’s higher 

priority status. 

As discussed above, the Exchange is 

proposing that a Resting Order priced 

below $1.00 be permitted to execute at 

one minimum price variation above the 

locking price (in the event of a Resting 

Order offer) or one minimum price 

variation below the locking price (in the 

event of a Resting Order bid) in the 

event that an order submitted to the 

Exchange on the side opposite such 

Resting Order is a market or limit order 

priced more aggressively than the 

locking price.25 This behavior is 

substantially similar to the order 

handling functionality described in the 

Resting Order Execution Filing, with 

one difference being that securities 

priced below $1.00 will execute at one 

full minimum price variation above 

(below) the locking price for offers 

(bids) rather than one-half minimum 

price variation above (below) the 

locking price for offers (bids) in 

securities priced at or above $1.00. 

While the example above shows a 

scenario in which only the Resting 

Order will receive $0.0001 of price 

improvement, rather than each side of 

the transaction as is the case in the 

scenarios described in the Resting Order 

Execution Filing, the Exchange notes 

that if Order 3 in the example above was 

entered at any price more aggressive 

than $0.5001, Order 3 would continue 

to execute against Order 1 at a price of 

$0.5001 and Order 3 would receive 

price improvement equal to the 

difference between its limit price and 

$0.5001.26

The Resting Order Execution Filing 

specifically introduced order handling 

behavior that would permit Resting 

Orders to be executed at one-half 

minimum price variation above (below) 

the locking price when an incoming, 

marketable offer (bid) would otherwise 

be prevented from executing due to the 

presence of a BZX Post Only Order in 

order to optimize available liquidity for 

incoming orders and to provide price 

improvement for market participants.27

This change to order handling behavior 

was required because, if incoming 

orders were allowed to execute against 

Resting Orders at the locking price, such 

incoming order would receive a priority 

advantage over the resting, displayed 

order at the locking price, contrary to 

the Exchange’s priority rule, Rule 

11.12.28 The Exchange recognizes that 

the order handling behavior for 

securities priced at or above $1.00 

described in the Resting Order 

Execution Filing results in price 

improvement for both sides of an 

affected transaction and the Exchange’s 

proposed order handling change will 

result in $0.0001 of price improvement 

only for the Resting Order, however this 

situation is limited to instances where 


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29 15 U.S.C. 78f(b). 

30 15 U.S.C. 78f(b)(5). 31 Id. 

the incoming order is entered at a price 

equal to the displayed price of the 

Resting Order. While only the Resting 

Order will receive $0.0001 of price 

improvement when an incoming order 

is entered at a price equal to the Resting 

Order’s displayed price, the Exchange 

believes the incoming order is receiving 

the benefit of immediate execution 

rather than cancelling back or posting to 

the BZX Book (depending on User 

instruction), which will result in higher 

overall market quality and likelihood of 

execution on BZX for Users. In 

situations where the incoming order is 

entered at a more aggressive price than 

the displayed price of the Resting Order, 

however, each side of the transaction 

will be receiving at least $0.0001 of 

price improvement. 

Without the proposed order handling 

change for securities priced below 

$1.00, a Resting Order may be priced at 

the very inside of the market at a price 

below $1.00 but temporarily unable to 

execute at its full limit price due to the 

Exchange’s priority rule and current 

order handling procedures. The 

Exchange notes that by permitting a 

User’s Resting Order to rest at a locking 

price opposite a displayed order and 

receive an execution against an 

incoming order that is priced equal to or 

more aggressively than the displayed 

price, the Exchange is incentivizing 

Users to post aggressively priced 

liquidity on both sides of the market, 

rather than discouraging such liquidity 

by leaving orders unexecuted. In 

addition, if the BZX Book changes so 

that such orders are no longer resting or 

ranked opposite a displayed order, then 

such orders will again be executable at 

their full limit price, and in the case of 

price slid orders, will be displayed at 

that limit price. 

The Exchange is proposing a solution 

to address specific conditions that are 

present on the BZX Book when a BZX 

Post Only Order is displayed opposite 

the ranked price of orders subject to 

display-price sliding. The Exchange 

believes that such specific 

circumstances, without modification of 

Rule 11.13(a)(4), would be present upon 

the expansion of BZX Post Only Order 

functionality to securities priced below 

$1.00 and would result in Users 

receiving fewer executions than the 

Exchange could otherwise facilitate. The 

Exchange believes the proposed change 

to Rule 11.13(a)(4)(D) is substantially 

similar to the order handling 

modification proposed and ultimately 

approved by the Resting Order 

Execution Filing and does not introduce 

any novel order handling behavior that 

has not previously been proposed. 

While the Exchange is proposing to use 

a full minimum price variation rather 

than the one-half minimum price 

variation currently used for securities 

priced at or above $1.00 as detailed in 

the Resting Order Execution Filing, the 

minimum price variation proposed for 

securities priced below $1.00 is 

commensurate with the standard 

minimum pricing increment for 

securities priced below $1.00. 

The Exchange believes the absence of 

price improvement for the incoming 

order is diminished by the incoming 

order’s ability to receive an execution 

on the Exchange against the Resting 

Order, rather than receive a cancellation 

or be posted to the BZX Book 

(depending on User instruction). 

Further, the Exchange believes that 

Users who receive increased execution 

rates on BZX will be more likely to 

submit additional order flow to the 

Exchange. Additional increased order 

flow benefits all market participants by 

contributing to a deeper, more liquid 

market and provides even more 

execution opportunities for active 

market participants. Additionally, this 

difference is necessary due to System 

limitations that do not support 

executions out to five decimal places 

($0.00001) in securities priced below 

$1.00, which would occur should the 

Exchange utilize the same minimum 

price variation described in the Resting 

Order Execution Filing. The proposal to 

amend Rule 11.13(a)(4)(D) is limited to 

certain circumstances that occur as a 

result of the presence of a BZX Post 

Only Order resting opposite a NonDisplayed Order or order subject to 

display-price sliding and is designed to 

optimize available liquidity for 

incoming orders. 

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.29 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 30 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) 31 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

As discussed above, the Exchange is 

proposing to expand its BZX Post Only 

Order functionality to securities priced 

below $1.00. In conjunction with 

expanding the ability to utilize BZX 

Post Only Orders at prices below $1.00, 

the Exchange also proposes that a 

Resting Order priced below $1.00 be 

permitted to execute at one minimum 

price variation above the locking price 

(in the event of a Resting Order offer) or 

one minimum price variation below the 

locking price (in the event of a Resting 

Order bid) in the event that an order 

submitted to the Exchange on the side 

opposite such Resting Order is a market 

or limit order priced more aggressively 

than the locking price. This change in 

order handling behavior is necessary in 

order to address specific conditions that 

are present on the BZX Book when a 

BZX Post Only Order is displayed 

opposite the ranked price of orders 

subject to display-price sliding. As 

discussed below, the Exchange believes 

its proposal is consistent with Section 

6(b)(5) of the Act. 

In particular, the proposal to amend 

Rule 11.9(c)(6) to permit orders priced 

below $1.00 to utilize BZX Post Only 

Order functionality promotes just and 

equitable principles of trade and 

removes impediments to, and perfects 

the mechanism of a free and open 

market and a national market system 

because it will allow Users to enter 

orders with a BZX Post Only instruction 

at any price, rather than being limited 

to securities priced above $1.00. The 

growth in trading of sub-dollar 

securities has expanded significantly 

since 2019 and as such, the Exchange 

believes that orders at all prices, not 

only securities priced above $1.00, 

should be permitted to utilize BZX Post 

Only Order functionality, which will 

permit orders to post on the Exchange 

without removing liquidity or routing to 

away to another trading center. BZX 

Post Only Orders allow Users to post 

aggressively priced liquidity, as such 

Users have certainty as to the fee or 

rebate they will receive from the 

Exchange if their order is executed. 

Without such ability, the Exchange 

believes that certain Users would 

simply post less aggressively priced 

liquidity, and prices available for 


ddrumheller on DSK120RN23PROD with NOTICES1
5600 Federal Register / Vol. 89, No. 19 / Monday, January 29, 2024 / Notices 

32Supra note 25. 

33See Nasdaq Equity 4, Rule 4702(b)(4) (‘‘PostOnly Order’’). See also NYSE Rule 7.31(e)(2) (‘‘ALO 

Order’’). 

34See ‘‘Off-Exchange Trends: Beyond Sub-dollar 

Trading’’ (May 17, 2023). Available at https://

www.cboe.com/insights/posts/off-exchange-trendsbeyond-sub-dollar-trading/. 

market participants, including retail 

investors, would deteriorate. 

Accordingly, the Exchange believes that 

BZX Post Only Orders enhance the 

liquidity available to all market 

participants by allowing market makers 

and other liquidity providers to add 

liquidity to the Exchange at or near the 

inside of the market. Indeed, such 

market participants have asked the 

Exchange to implement such 

functionality in order to permit them to 

utilize a single trading strategy across 

securities at all prices. Allowing BZX 

Post Only Orders to be utilized at prices 

below $1.00 will deepen the Exchange’s 

pool of available liquidity in sub-dollar 

securities, which is a growing area of 

trading, particularly for retail investors. 

A deeper and more liquid market 

supports the quality of price discovery, 

promotes market transparency, and 

improves market quality for all 

investors. The Exchange does not 

believe that the proposed amendment to 

Rule 11.9(c)(6) is unfairly 

discriminatory as it will permit the BZX 

Post Only Order type to be used by all 

Users at any price and the order type 

will no longer be limited to securities 

priced at or above $1.00. 

Similarly, the proposal to amend Rule 

11.13(a)(4)(D) to allow, under limited 

circumstances, a Resting Order priced 

below $1.00 that would otherwise be 

non-executable due to the presence of a 

BZX Post Only Order to execute at one 

minimum price variation above (below) 

the locking price upon the receipt of an 

incoming, marketable offer (bid) that 

would otherwise be prohibited from 

executing due to the presence of a BZX 

Post Only Order promotes just and 

equitable principles of trade and 

removes impediments to, and perfects 

the mechanism of a free and open 

market and a national market system 

because it extends functionality 

currently available to orders priced at or 

above $1.00 to orders priced below 

$1.00, with a slight difference in the 

minimum price variation to account for 

the System’s inability to display orders 

out to five decimal places ($0.00001). 

The proposed amendment to Rule 

11.13(a)(4)(D) is substantially similar to 

the order handling behavior change that 

was proposed (and later approved) by 

the Resting Order Execution Filing and 

will only serve to improve execution 

quality for participants sending orders 

to the Exchange. 

The Exchange does not believe that 

the treatment of sub-dollar securities is 

unfairly discriminatory as the Exchange 

will be using the standard minimum 

pricing increment for sub-dollar 

securities in order to determine the 

price at which the Resting Order is 

eligible to execute.32 While the 

Exchange recognizes that under its 

proposal for securities priced below 

$1.00 results in a limited situation in 

which only the Resting Order will 

receive $0.0001 of price improvement 

(i.e., when an incoming order is entered 

at the same price as the displayed price 

of the Resting Order), the Exchange 

believes the incoming, contra-side order 

is receiving the benefit of immediate 

execution rather than cancelling or 

posting to the BZX Book (depending on 

User instruction), which will result in 

higher overall market quality and 

likelihood of execution on BZX for 

Users. In situations where the incoming 

order is entered at a more aggressive 

price than the displayed price of the 

Resting Order, however, each side of the 

transaction will be receiving at least 

$0.0001 of price improvement, which is 

substantially similar to how the order 

handling functionality works for 

securities priced at or above $1.00. The 

Exchange believes the proposed change 

to execute marketable orders that are 

currently not executed under specific 

scenarios will help provide price 

improvement to Resting Orders that, in 

these limited circumstances, otherwise 

would not receive an execution even 

though their order is priced at the inside 

of the market and would also provide 

increased execution opportunities to 

aggressively priced incoming orders 

rather than requiring these orders to be 

cancelled or post to the BZX Book. 

Thus, the Exchange believes that its 

proposed order handling process in the 

limited scenario where a Resting Order 

is ineligible to execute due to the 

presence of a contra-side BZX Post Only 

Order will benefit market participants 

and their customers by allowing them 

greater flexibility in their efforts to fill 

orders and minimize trading costs. 

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 intramarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

The proposed change to Rule 11.9(c)(6) 

will apply equally to all Users in that all 

Users will be eligible to utilize the BZX 

Post Only Order for securities priced 

below $1.00. Similarly, the proposed 

change to Rule 11.13(a)(4)(D) applies 

equally to all Users in that all Resting 

Orders will benefit from the proposed 

order handling behavior change that 

will execute Resting Orders at one 

minimum price variation above (below) 

the locking price upon the receipt of a 

marketable offer (bid) should a Resting 

Order be ineligible to execute due to the 

presence of a contra-side BZX Post Only 

Order. The proposed changes are 

designed to expand an existing 

Exchange order type and existing order 

handling behavior to securities priced 

below $1.00 due to the growth in subdollar trading that has been seen since 

2019. Further, the Exchange does not 

believe that Users submitting incoming, 

contra-side orders are burdened by 

virtue of not receiving price 

improvement in limited situations as 

they instead receive the benefit of an 

immediate execution as opposed to 

being cancelled back to the User or 

posting on the BZX Book which results 

in increased overall market quality and 

a higher likelihood of execution on 

BZX. 

The Exchange similarly does not 

believe that the proposed rule change 

will impose any burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. In fact, the 

Exchange notes that other exchanges 

already offer the ability to submit an 

order that is not eligible for routing to 

away markets and posts to the relevant 

exchange book at prices below $1.00.33

The Exchange believes its proposal to 

expand the use of the BZX Post Only 

Order to securities priced below $1.00 

will promote competition between the 

Exchange and other exchanges for 

volume in sub-dollar securities. 

Furthermore, the Exchange believes its 

proposal will promote competition 

between the Exchange and off-exchange 

trading venues, where a significant 

amount of sub-dollar trading occurs 

today.34 The Exchange similarly 

believes that its proposal to amend its 

order handling behavior in limited 

circumstances where a Resting Order 

cannot execute due to the presence of a 

contra-side BZX Post Only Order does 

not impose a burden on intermarket 

competition as the change is not 

designed to address any competitive 

issue, but rather to address order 

handling behavior in a substantially 

similar manner to how the Exchange 

treats Resting Orders priced at or above 

$1.00 in the limited scenario where a 

Resting Order is ineligible to execute 

against an incoming, marketable order 

due to the presence of a contra-side BZX 

Post Only Order. 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 19 / Monday, January 29, 2024 / Notices 5601 

35 17 CFR 200.30–3(a)(12). 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the Exchange consents, the Commission 

will: 

A. by order approve or disapprove 

such proposed rule change, or 

B. institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2024–006 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–CboeBZX–2024–006. 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–CboeBZX–2024–006 and should be 

submitted on or before February 20, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01618 Filed 1–26–24; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Highway Administration 

Federal Share Flexibility Pilot Program 

AGENCY: Federal Highway 

Administration (FHWA), Department of 

Transportation (DOT). 

ACTION: Notice. 

SUMMARY: The FHWA is announcing a 

pilot program to enable, on an 

experimental basis, a State department 

of transportation (State DOT) to 

determine the Federal share on a 

project, multi-project, or program basis 

for projects under certain specified 

programs. The Federal Share Flexibility 

Pilot (Pilot) Program will be carried out 

until September 30, 2026. 

DATES: Applications must be received 

by March 29, 2024. 

ADDRESSES: All application materials 

should be emailed to FSPPP@

Sharepointmail.dot.gov or mailed 

attention to Rhonda Shaffer, Federal 

Highway Administration, Room E62– 

332, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Dan Parker, Senior Program Analyst, 

Office of Financial Management, (801) 

955–3518, Danial.Parker@dot.gov. 

SUPPLEMENTARY INFORMATION: 

Electronic Access 

An electronic copy of this notice may 

be downloaded from the Office of the 

Federal Register’s home page at: 

www.federalregister.gov/ and the 

Government Publishing Office’s web 

page at: www.gpo.gov/fdsys/. 

Background 

The Federal-aid highway program is a 

federally funded, State-administered 

program, under which State DOTs are 

responsible for determining which 

projects are federally funded. Projects 

are authorized and federally funded up 

to the maximum Federal share as 

authorized in statute. Section 11107 of 

the Bipartisan Infrastructure Law (BIL), 

enacted as the Infrastructure Investment 

and Jobs Act (IIJA) (Pub. L. 117–58), 

amended section 120(l) of title 23, 

United States Code (U.S.C.) to require 

the establishment of a Pilot Program not 

later than 180 days after the date of 

enactment of the BIL. In accordance 

with 23 U.S.C. 120(l), selected States in 

the Pilot Program are allowed to 

determine the Federal share on an 

individual project that is more than 0 

percent and up to 100 percent as long 

as the average annual Federal share of 

all participating projects does not 

exceed the average of the maximum 

Federal share of those projects if those 

projects were not carried out under the 

Pilot Program. The following guidelines 

have been established for the Pilot 

Program: 

(a) Up to 10 State DOTs may 

participate in the Pilot Program. 

(b) The Pilot Program will expire on 

September 30, 2026. 

(c) The Federal share will be 

determined based on the following 

criteria: 

(1) Determined based on project, 

multiple projects, or program basis. 

(2) Maximum Federal share for an 

individual project under the Pilot 

Program is 100 percent. 

(3) Minimum Federal share for an 

individual project under the Pilot 

Program is greater than 0 percent (i.e., 

any project authorized under the Pilot 

Program cannot be 0 percent). 

(4) The average annual Federal share 

of the total cost of all projects 

authorized under this Pilot Program 

shall not exceed the average of the 

maximum Federal share of those 

projects if those projects were not 

carried out under the Pilot Program. 

(d) State DOTs participating in the 

Pilot Program may determine the 

Federal share on a project, multipleproject, or program basis for projects 

under any of the following programs: 

(1) National Highway Performance 

Program (23 U.S.C. 119). 


ddrumheller on DSK120RN23PROD with NOTICES1