88092 Federal Register / Vol. 89, No. 215 / Wednesday, November 6, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 91116 

(February 11, 2021), 86 FR 10154 (February 18, 

2021) (SR–Cboe–2020–050) Order Approving a 

Proposed Rule Change, as Modified by Amendment 

Nos. 1 and 2, To Amend Rules 5.37 and 5.73 

Related to the Solicitation of Market Makers for SPX 

Initiating Orders in the Automated Improvement 

Mechanism and FLEX Automated Improvement 

Mechanism. 

4The ‘‘Initiating Order’’ is an order comprised of 

principal interest or a solicited order(s) submitted 

to trade against the order the submitting agency 

order on behalf of a Public Customer, broker-dealer, 

or any other entity or ‘‘PIXL Order.’’ See Phlx 

Options 3, Section 13. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101488; File No. SR–Phlx– 

2024–54] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing of 

Proposed Rule Change To Amend 

Options 3, Section 13 Related to XND 

October 31, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on October 

18, 2024, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) a proposed rule change 

as described in Items I, II, and III below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Options 3, Section 13, Price 

Improvement XL (‘‘PIXL’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Options 3, Section 13, Price 

Improvement XL (‘‘PIXL’’) to permit 

orders for the accounts of appointed 

Market Makers to be solicited for PIXL 

Auctions for XND options only. XND 

options are options based on 1/100 the 

value of the Nasdaq-100 (‘‘XND’’ or 

‘‘XND options’’). Today, Cboe Exchange, 

Inc. (‘‘Cboe’’) permits orders for the 

accounts of Market-Makers with an 

appointment in SPX to be solicited for 

the Initiating Order submitted for 

execution against an Agency Order in 

SPX options into an AIM Auction 

pursuant to Rule 5.37.3

The Exchange proposes to amend 

Options 3, Section 13(a)(8) to permit 

orders for the accounts of Market 

Makers with an appointment in XND to 

be solicited for the Initiating Order 4

submitted for execution against a PIXL 

Order in XND options into a PIXL 

Auction pursuant to Options 3, Section 

13. Today, Options 3, Section 13(a)(8) 

provides that, ‘‘[a]n Initiating Order may 

not be a solicited order for the account 

of any Exchange Lead Market Maker, 

SQT, RSQT or non-streaming Market 

Maker assigned in the affected series.’’ 

No similar restriction applies to crossing 

transactions in open outcry trading, 

where XND options also trade. As 

further discussed below, brokers seeking 

liquidity to execute against Public 

Customer orders on the trading floor 

regularly solicit appointed XND Market 

Makers for this liquidity, as they are 

generally the primary source of pricing 

and liquidity for those options. 

The Exchange believes not permitting 

Market Makers appointed in XND to 

participate as contras in the PIXL 

Auction in XND makes it difficult for 

brokers to find sufficient liquidity to fill 

their customer orders. For example, if a 

Public Customer order is not fully 

executable against electronic bids and 

offers, a floor broker can attempt to 

execute the order, or remainder thereof, 

on the trading floor, where the liquidity 

to trade with this remainder is generally 

provided by Market Makers in the open 

outcry trading crowd. Additionally, 

brokers may solicit liquidity from 

upstairs Market Maker firms. 

The Exchange believes brokers will 

have difficulty finding sufficient 

liquidity to initiate PIXL Auctions from 

only market participants that are not 

Market-Makers appointed in XND, 

thereby denying smaller, retail-sized 

XND options price improvement 

benefits. The Exchange believes it is 

appropriate to permit orders for the 

account of appointed XND Market 

Makers, similar to Cboe’s SPX, to be 

submitted as the contra order, as the 

Exchange believes the liquidity 

provided by XND Market Makers will 

need to be available for brokers to 

initiate PIXL Auctions in XND and 

create potential price improvement 

opportunities for those retail-sized 

orders. If XND Market Makers cannot be 

solicited for XND PIXL Auctions, the 

Exchange believes brokers may not be 

able to initiate as many XND PIXL 

Auctions for their retail orders, which 

may reduce the price improvement 

opportunities available for those orders. 

The Exchange notes that today, there are 

three electronic Market Maker firms 

with XND appointments. 

In multi-list classes, many Market 

Makers serve as both appointed Market 

Makers on the Exchange and as away 

market makers that are registered on 

other options exchanges. These firms, as 

a result, can use their accounts for their 

away market maker activities for being 

solicited with respect to PIXL Auctions. 

In general, solicited orders submitted as 

the Initiating Order for PIXL Auctions 

are almost always comprised of orders 

for the accounts of away market makers. 

However, XND is an exclusively listed 

class on the Exchange, so a firm cannot 

serve as an XND away market maker. 

Permitting orders for the account of an 

appointed XND Market Makers, similar 

to Cboe’s SPX, to be submitted as the 

contra order will allow brokers to more 

efficiently locate liquidity to initiate 

PIXL Auctions to fill their Public 

Customer orders, particularly during 

times of volatility, which may create 

additional execution and price 

improvement opportunities for Public 

Customers at all times. The Exchange 

believes the proposed rule change will, 

therefore, provide retail-sized orders 

with similar price improvement 

opportunities with PIXL as is the case 

with the trading floor. Permitting XND 

Market Makers to serve as contra parties 

to crossing transactions submitted into a 

PIXL Auction will also further align 

PIXL Auctions with XND crossing 

executions that occur on the trading 

floor. XND Market Makers frequently 

serve as contra parties to crossing 

transactions on the trading floor. 

Implementation 

The Exchange proposes to implement 

this rule change on or before Q2 of 2025. 


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Federal Register / Vol. 89, No. 215 / Wednesday, November 6, 2024 / Notices 88093 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78f(b)(5). 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,5 in general, and furthers the 

objectives of Section 6(b)(5) of the Act.6

Specifically, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 7 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. 

In particular, the Exchange believes 

the proposed rule change will benefit 

investors. The proposed rule change 

will permit the primary XND liquidity 

providers on the Exchange to provide 

the liquidity necessary for brokers to 

initiate XND PIXL Auctions for their 

Public Customer orders. If brokers can 

solicit the primary liquidity providers in 

XND for PIXL Auctions the Exchange 

believes brokers will be able to more 

efficiently locate liquidity to fill their 

Public Customer orders, particularly 

during times of volatility. The Exchange 

believes the proposed rule change will, 

therefore, provide retail-sized orders 

with similar price improvement 

opportunities as on the trading floor. As 

a result, the Exchange believes the 

proposed rule change will permit 

sufficient liquidity to be available for 

PIXL Auctions, which may create 

additional execution and price 

improvement opportunities for Public 

Customers, including retail customers. 

The Exchange also believes the 

proposed rule change will promote just 

and equitable principles of trade and 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

will align the XND PIXL Auction 

process with the open outcry crossing 

process, and thus align the execution 

and price improvement opportunities 

available in both auctions by permitting 

the same participants to be solicited as 

contras in both types of auctions in 

XND. Currently, XND Market Makers 

may be solicited with respect to crossing 

transactions on the trading floor. 

However, pursuant to Options 3, 

Section 13 governing PIXL, XND Market 

Makers would not be able to be solicited 

to initiate PIXL Auctions. The Exchange 

believes there is no reason to restrict 

XND Market Makers’ ability to provide 

liquidity into XND PIXL Auctions when 

they are able to similarly provide, and 

do provide, that liquidity for open 

outcry XND crossing transactions. 

Today, Cboe permits orders for the 

accounts of Market-Makers with an 

appointment in SPX to be solicited for 

the Initiating Order submitted for 

execution against an Agency Order in 

SPX options into an AIM Auction 

pursuant to Cboe Rule 5.37. 

The Exchange believes the proposed 

rule change will promote competition in 

XND PIXL Auctions, including 

competition to initiate XND PIXL 

Auctions, which will remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors. As noted 

above, there are three electronic Market 

Maker firms with XND appointments. 

The Exchange believes the availability 

of this liquidity available to PIXL Orders 

will positively affect the experience for 

PIXL Orders and overall quality of the 

auctions. Furthermore, the Exchange 

believes increasing the number of 

market participants available to be 

solicited may increase competition to 

provide Initiating Orders, which may 

lead to a PIXL Auction being initiated 

at a better price. More market 

participants competing to provide 

Initiating Orders may lead to solicited 

parties providing more aggressive initial 

prices. The Exchange believes the 

ability of all market participants, 

including appointed Market Makers that 

did not submit an Initiating Order, to 

submit responses to a PIXL Auction will 

continue to provide competition for 

executions against Agency Orders. The 

Exchange does not believe the proposed 

rule change will adversely impact the 

quoting behavior of XND Market 

Makers. 

The Exchange believes any risk that 

appointed Market Makers may misuse 

the nonpublic information of an 

upcoming XND PIXL Auction is de 

minimis. Currently, that same risk is 

present for non-appointed Market 

Makers, but the Exchange has not 

observed any trends of solicited market 

participants separately submitting 

unrelated orders as a result of 

knowledge of impending PIXL Auctions 

in other classes. Phlx Options 3, Section 

13(d) prohibits a pattern or practice of 

submitting multiple orders in response 

to a PAN at a particular price point that 

exceeds, in the aggregate, the size of the 

PIXL Order, will be deemed conduct 

inconsistent with just and equitable 

principles of trade and a violation of 

General 9, Section 1(c). Further, Phlx 

General 9, Section 21 requires members 

to establish, maintain, and enforce 

written policies and procedures 

reasonably designed to prevent the 

misuse of material, nonpublic 

information by members and their 

associated persons. 

Finally, the Exchange believes the 

proposed rule change is not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers 

because it will permit orders for 

accounts of appointed XND Market 

Makers to be solicited in the same 

manner as orders for the accounts of all 

other market participants in XND PIXL 

Auctions. Currently, all market 

participants other than appointed XND 

Market Makers would be able to be 

solicited as the contra and submit 

responses in PIXL Auctions, while 

appointed XND Market Makers would 

be restricted to only submitting 

responses. The Exchange believes that 

this proposal may increase execution 

and price improvement opportunities 

for Public Customers’ XND orders, 

where the ability for away market 

makers to provide liquidity is limited. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

The Exchange does not believe the 

proposed rule change will impose any 

burden on intra-market competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because it will provide XND Market 

Makers with the same execution 

opportunities in PIXL Auctions that 

would be available to all other market 

participants. Additionally, the proposed 

rule change will align open outcry and 

electronic crossing auctions for XND 

and the execution and price 

improvement opportunities available in 

both auctions by permitting the same 

participants to be solicited as contras in 

both types of auctions across XND. As 

a result, the Exchange believes it is 

appropriate for the electronic crossing 

mechanism to more closely replicate the 

open outcry crossing process in XND in 

order to minimize any impact on the 

market for those options. Unlike in 

multi-list classes, Market Maker firms 

cannot serve as XND market makers at 

other options exchanges. The Exchange 

further believes the restriction of this 

change to XND will preserve certain 

aspects of market structure that are 

important to maintain Market Maker 


khammond on DSKJM1Z7X2PROD with NOTICES
88094 Federal Register / Vol. 89, No. 215 / Wednesday, November 6, 2024 / Notices 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

incentives to provide electronic 

liquidity in XND options. 

The Exchange does not believe 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 

because it relates to orders in an 

exclusively listed class submitted into a 

PIXL Auction on the Exchange. 

Additionally, the Exchange notes that 

Cboe permits orders for the accounts of 

Market-Makers with an appointment in 

SPX to be solicited for the Initiating 

Order submitted for execution against 

an Agency Order in SPX options into an 

AIM Auction pursuant to Cboe Rule 

5.37. The Exchange believes the 

proposed rule change may improve 

price competition for smaller-sized 

orders within PIXL Auctions for XND 

options, because the primary liquidity 

providers will be available for the 

solicitation necessary to initiate those 

auctions. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) by order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

Phlx–2024–54 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–Phlx–2024–54. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–Phlx–2024–54 and should be 

submitted on or before November 27, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–25728 Filed 11–5–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101489; File No. SR–ICC– 

2024–012] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Notice of Filing of 

Proposed Rule Change Relating to the 

ICC End-of-Day Price Discovery 

Policies and Procedures 

October 31, 2024. 

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

Securities Exchange Act of 1934,1 and 

Rule 19b–4 thereunder,2 notice is 

hereby given that on October 21, 2024, 

ICE Clear Credit LLC (‘‘ICC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II and III below, which Items 

have been primarily prepared by ICC. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The principal purpose of the 

proposed rule change is to revise the 

End-of-Day Price Discovery Policies and 

Procedures (‘‘EOD Procedures’’). These 

revisions do not require any changes to 

the ICC Clearing Rules (the ‘‘Rules’’). 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, ICC 

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. ICC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

(a) Purpose 

ICC proposes to revise the EOD 

Procedures, which sets out ICC’s end-ofday (‘‘EOD’’) price discovery process 

that provides prices for cleared 

contracts using submissions made by 

Clearing Participants (‘‘CPs’’). ICC 

believes such revisions will facilitate 

the prompt and accurate clearance and 

settlement of securities transactions and 

derivative agreements, contracts, and 


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