Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 6903 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 93445 

(Oct. 28, 2021), 86 FR 60695 (‘‘Notice’’). No 

comments have been received on the proposed rule 

change. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 93790, 

86 FR 72300 (Dec. 21, 2021). The Commission 

designated February 1, 2022, as the date by which 

it should approve, disapprove, or institute 

proceedings to determine whether to disapprove the 

proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Notice, supra note 3. 

8See id. at 60696. Bitwise Investment Advisers, 

LLC (‘‘Sponsor’’) is the sponsor of the Trust, and 

Continued 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–802, OMB Control No. 

3235–0758] 

Proposed Collection; Comment 

Request; Extension: Rule 30e–3 

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 et seq.) (‘‘Paperwork 

Reduction Act’’), the Securities and 

Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

Section 30(e) of the Investment 

Company Act of 1940 (15 U.S.C. 80a–1 

et seq.) (‘‘Investment Company Act’’) 

requires a registered investment 

company (‘‘fund’’) to transmit to its 

shareholders, at least semi-annually, 

reports containing financial statements 

and other financial information as the 

Commission may prescribe by rules and 

regulations. Rules 30e–1 (17 CFR 

270.30e–1) and 30e–2 (17 CFR 270.30e– 

2) under the Investment Company Act 

require most funds to send their 

shareholders annual and semiannual 

reports containing financial information 

on the fund. 

Rule 30e–3 (17 CFR 270.30e–3) under 

the Investment Company Act (15 U.S.C. 

80a–1 et seq.) provides certain funds 

and unit investment trusts with an 

optional method to satisfy shareholder 

report transmission requirements by 

making such reports and certain other 

materials publicly accessible on a 

website, as long as they satisfy certain 

other conditions of the rule regarding: 

(a) Availability of the report and other 

materials; (b) notice to investors of the 

website availability of the report; and (c) 

delivery of paper copies of materials 

upon request. Reliance on the rule is 

voluntary. Responses to the disclosure 

requirements are not kept confidential. 

The Commission estimates that 

13,079 funds could rely on rule 30e–3. 

Of these funds, we estimate that 90% (or 

11,771 funds) are currently relying on 

rule 30e–3. With respect to these 11,771 

funds, we estimate that 90% (or 10,594 

funds) already post shareholder reports 

on their websites for other purposes. In 

total, rule 30e 3 will impose an average 

total annual hour burden of 24,719 

hours on applicable funds. Based on the 

Commission’s estimate of 24,719 hours 

and an estimated wage rate of about 

$362 per hour, the total annual cost to 

registrants of the hour burden for 

complying with rule 30 3 is about $8.9 

million. 

Estimates of average burden hours are 

made solely for the purposes of the 

Paperwork Reduction Act and are not 

derived from a comprehensive or even 

representative survey or study of the 

costs of Commission rules and forms. 

The collection of information under rule 

30e–3 is mandatory. The information 

provided under rule 30e–3 will not be 

kept confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid OMB control number. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the collection of 

information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O John R. 

Pezzullo, 100 F Street NE, Washington, 

DC 20549; or send an email to: PRA_

Mailbox@sec.gov. 

Dated: February 2, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02502 Filed 2–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94126; File No. SR– 

NYSEArca–2021–89] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change To List and Trade Shares 

of the Bitwise Bitcoin ETP Trust Under 

NYSE Arca Rule 8.201–E 

February 1, 2022. 

On October 14, 2021, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the Bitwise Bitcoin ETP 

Trust (‘‘Trust’’) under NYSE Arca Rule 

8.201–E (Commodity-Based Trust 

Shares). The proposed rule change was 

published for comment in the Federal 

Register on November 3, 2021.3

On December 15, 2021, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

I. Summary of the Proposal 

As described in more detail in the 

Notice,7 the Exchange proposes to list 

and trade the Shares of the Trust under 

NYSE Arca Rule 8.201–E, which 

governs the listing and trading of 

Commodity-Based Trust Shares on the 

Exchange. 

The investment objective of the Trust 

is to seek to provide exposure to the 

value of bitcoin held by the Trust, less 

the expenses of the Trust’s operations.8


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6904 Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 

Delaware Trust Company is the trustee. The Trust 

will engage a third party custodian to maintain 

custody of the Trust’s bitcoin assets. The Trust also 

will engage a third party service provider to serve 

as the administrator (‘‘Administrator’’) and transfer 

agent of the Trust. See id. 

9See id. at 60699. 

10See id. at 60696. The Trust may sell bitcoin and 

temporarily hold cash as part of a liquidation of the 

Trust or to pay certain extraordinary expenses not 

assumed by the Sponsor. According to the 

Exchange, the Trust also may, from time to time, 

passively receive, by virtue of holding bitcoin, 

certain additional digital assets or rights to receive 

such digital assets through a fork of the Blockchain 

or an airdrop of assets. See id. n.12. 

11See id. at 60696. 

12See id. at 60696, 60699. 

13See id. at 60699. 

14The Exchange states that the CME US Reference 

Rate utilizes the same methodology as the CME CF 

Bitcoin Reference Rate, which is calculated at 4:00 

p.m. London time and is used to settle bitcoin 

futures on the CME. See id. at 60696 n.11; 60698– 

99. 

15See id. at 60699. 

16See id. at 60715. 17See id. at 60699. The ITV will also be widely 

disseminated by one or more major market data 

vendors during the NYSE Arca Core Trading 

Session. See id. 

18The CME Bitcoin Real Time Price is a 

continuous real-time bitcoin price index published 

by the CME Group and Crypto Facilities Ltd. using 

data from the Constituent Platforms. See id. 

19See id. 

20See id. 

21See id. at 60696. 

22 15 U.S.C. 78s(b)(2)(B). 

23 Id. 

24 15 U.S.C. 78f(b)(5). 

25See Notice, supra note 3. 

26See id. at 60700. 

27See id. 

The Shares will represent units of 

undivided beneficial ownership of the 

Trust.9 Under normal circumstances, 

the Trust’s only asset will be bitcoin, 

and, under limited circumstances, 

cash.10 The Trust will not use 

derivatives that may subject the Trust to 

counterparty and credit risks.11

The Trust’s net asset value (‘‘NAV’’) 

and NAV per Share will be determined 

by the Administrator once each 

Exchange trading day as of 4:00 p.m. 

E.T., or as soon thereafter as practicable, 

by reference to the CF Bitcoin-Dollar US 

Settlement Price (‘‘CME US Reference 

Rate’’).12 The Administrator will 

calculate the NAV by multiplying the 

number of bitcoin held by the Trust by 

the CME US Reference Rate for such 

day, and subtracting the accrued but 

unpaid expenses and liabilities of the 

Trust.13 The CME US Reference Rate is 

a daily reference rate of the U.S. dollar 

price of one bitcoin, calculated at 4:00 

p.m. E.T.14

The CME US Reference Rate 

aggregates during a calculation window 

the trade flow of several spot bitcoin 

trading platforms into the U.S. dollar 

price of one bitcoin as of its calculation 

time. The current constituent bitcoin 

platforms of the CME US Reference Rate 

are Bitstamp, Coinbase, Gemini, itBit, 

and Kraken (‘‘Constituent Platforms’’). 

In calculating the CME US Reference 

Rate, the methodology creates a joint list 

of certain trade prices and sizes from the 

Constituent Platforms. The methodology 

then divides this list into a number of 

equally sized time intervals, and it 

calculates the volume-weighted median 

trade price for each of those intervals. 

The CME US Reference Rate is the 

equally weighted average of the volumeweighted medians of all intervals.15

The Trust will provide website 

disclosure of its holdings daily.16 In 

addition, each trading day, the 

Exchange will calculate and disseminate 

an intraday trust value (‘‘ITV’’) every 15 

seconds during the NYSE Arca Core 

Trading Session.17 The ITV will be 

calculated throughout the trading day 

by using the prior day’s holdings at 

close of business and the most recently 

reported price level of the CME Bitcoin 

Real Time Price 18 as reported by 

Bloomberg, L.P., or another reporting 

service, or another price of bitcoin 

derived from updated bids and offers 

indicative of the spot price of bitcoin.19

The Trust will create and redeem 

Shares from time to time, but only in 

one or more Creation Units. A Creation 

Unit will initially consist of at least 

25,000 Shares, but may be subject to 

change.20 The Trust will process all 

creations and redemptions in-kind, and 

accrue all ordinary fees in bitcoin 

(rather than cash), as a way of seeking 

to ensure that the Trust holds the 

desired amount of bitcoin-per-share. 

The Trust will not purchase or sell 

bitcoin, other than if the Trust 

liquidates or must pay expenses not 

contractually assumed by the Sponsor. 

Instead, financial institutions 

authorized to create and redeem Shares 

(‘‘Authorized Participants’’) will deliver, 

or cause to be delivered, bitcoin to the 

Trust in exchange for Shares of the 

Trust, and the Trust will deliver bitcoin 

to Authorized Participants when those 

Authorized Participants redeem Shares 

of the Trust.21

II. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

NYSEArca–2021–89 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 22 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of proceedings is appropriate 

at this time in view of the legal and 

policy issues raised by the proposed 

rule change, as discussed below. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

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

Act,23 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

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

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 24

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice,25 in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following questions 

and asks commenters to submit data 

where appropriate to support their 

views: 

1. What are commenters’ views on 

whether the proposed Trust and Shares 

would be susceptible to manipulation? 

What are commenters’ views generally 

on whether the Exchange’s proposal is 

designed to prevent fraudulent and 

manipulative acts and practices? What 

are commenters’ views generally with 

respect to the liquidity and transparency 

of the bitcoin markets, the bitcoin 

markets’ susceptibility to manipulation, 

and thus the suitability of bitcoin as an 

underlying asset for an exchange-traded 

product (‘‘ETP’’)? 

2. The Exchange asserts that ‘‘the 

exclusive use of in-kind creations, 

redemptions and fee accruals, in all 

situations except when the Trust is 

required to liquidate or to pay 

extraordinary expenses, provides longterm investors in the Trust with 

redundant but strong protection.’’ 26 The 

Exchange further asserts that ‘‘[t]he inkind structure ensures that the Trust 

maintains the appropriate amount of 

bitcoin-per-Share in all scenarios, 

regardless of the U.S. dollar calculation 

of NAV or the CME US Reference 

Rate.’’ 27 What are commenters’ views of 

these assertions? 

3. The Exchange asserts that, ‘‘through 

extensive statistical analysis and careful 


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28See id. at 60704. 

29See id. at 60716. 

30See id. at 60704–11. 

31See id. at 60705–07. 

32See id. at 60711. 

33See id. at 60711–12. 

34See id. at 60711. 

35See id. at 60712. 

36See id. at 60712–13. 

37See id. at 60713. 

38See id. at 60713–14. 

39See id. at 60714. 

40See id. at 60715. 

41Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Public Law 

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

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Act Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

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

(1975). 

consideration of third-party evaluations 

of these markets, the Sponsor has 

demonstrated that the CME [bitcoin 

futures] Market leads the bitcoin spot 

market and the unregulated bitcoin 

futures market, such that it is reasonably 

likely that a person attempting to 

manipulate the ETP would also have to 

trade on the CME [bitcoin futures] 

Market.’’ 28 The Exchange further asserts 

‘‘both existing academic literature and 

the Sponsor’s own studies show that the 

CME [bitcoin futures] Market leads price 

discovery relative to the bitcoin spot 

market.’’ 29 Do commenters agree or 

disagree? 

• Specifically, what are commenters’ 

views of the Sponsor’s methodology 

used to arrive at this conclusion? The 

Exchange describes how the Sponsor 

used data from the CME Group and Coin 

Metrics, supplemented with data from 

CoinAPI, to perform pairwise 

information share/component share 

(‘‘IS/CS’’) price discovery analysis and 

pairwise time-shift lead-lag (‘‘TSLL’’) 

analysis between the CME bitcoin 

futures market and 10 bitcoin spot 

markets and seven unregulated futures 

markets.30 What are commenters’ views 

on, for example, the Sponsor’s choices 

for, and level of explanation of: The 

sources for the tick-level trade data; the 

aggregation (if any) the Sponsor 

performed on the tick-level trade data; 

the spot and unregulated futures trading 

platforms the Sponsor included in its 

pairwise analyses; the particular IS/CS 

and TSLL paradigms used to perform its 

pairwise analyses; the full-period and 

monthly results of its pairwise analyses; 

the statistical significance of the results; 

and the sensitivity of the results to the 

Sponsor’s methodological choices? 

• What are commenters’ views on 

how the Commission should weigh the 

Sponsor’s pairwise results compared to 

the previous academic and industry 

lead-lag studies that the Sponsor 

cites? 31 What are commenters’ views on 

the accuracy of the Sponsor’s 

summaries of such past studies? 

• What are commenters’ views on the 

robustness of the Sponsor’s twodimensional, pairwise results? Do 

commenters believe the Exchange has 

adequately addressed the extent of any 

relationship between prices on 

unregulated bitcoin futures markets and 

the CME bitcoin futures market, the 

bitcoin spot markets, and/or the 

Constituent Platforms, or where price 

formation occurs when the entirety of 

bitcoin futures markets, not just the 

CME, is considered? 

• What are commenters’ views on 

whether the Sponsor’s lead-lag results 

sufficiently demonstrate a reasonable 

likelihood that a would-be manipulator 

of the proposed ETP would have to 

trade on the CME bitcoin futures market 

to successfully manipulate the proposed 

ETP? Do commenters believe that the 

Exchange has adequately explained 

and/or demonstrated how the Sponsor’s 

market-level, statistical results provide 

sufficient evidence of the likely trading 

behavior of a would-be manipulator? 

4. The Exchange asserts that ‘‘the 

Sponsor’s analysis shows that trading in 

the Trust is unlikely to become the 

predominant influence on prices in the 

CME [bitcoin futures] Market, even 

when assuming aggressive estimates of 

first-year flows of $4.7 billion and 

average daily trading volume of $143 

million.’’ 32 Do commenters agree or 

disagree? 

• Specifically, what are commenters’ 

views of the Exchange’s estimates of the 

Trust’s first-year flows? What are 

commenters’ views of the methodology 

used to arrive at those estimates? 33 Do 

commenters agree with the Exchange 

that ‘‘it is unlikely that a bitcoin ETP 

will experience the highest first-year 

flows in history,’’ 34 and that the 2020 

inflows to the Grayscale Bitcoin Trust 

(GBTC) of $4.7 billion is an ‘‘aggressive’’ 

working estimate for first-year flows 

into a new bitcoin ETP? 35

• The Exchange describes how the 

Sponsor correlated the daily and weekly 

flows into GBTC with the corresponding 

daily or weekly price of bitcoin 

(calculated using the 4:00 p.m. E.T. 

bitcoin reference rate from Coin 

Metrics), and concludes that ‘‘there is 

no meaningful relationship between 

daily and weekly flows into GBTC and 

changes in the price of bitcoin.’’ 36 What 

are commenters’ views on the data 

sources used, methodology selected, 

and results obtained by the Sponsor? 

The Exchange states that the Sponsor 

concluded from this analysis that ‘‘it is 

unlikely that the aggressive estimate of 

first-year flows into a bitcoin ETP ($4.7 

billion) would cause it to become the 

predominant influence on prices in the 

CME [bitcoin futures] Market.’’ 37 What 

are commenters’ views on how well the 

Sponsor’s analysis of the historical 

correlation between GBTC inflows and 

the spot price of bitcoin predicts the 

future impact of inflows into the 

proposed ETP on prices in the CME 

bitcoin futures market? 

• What are commenters’ views of the 

Exchange’s estimate of the likely 

average daily trading volume of the 

Shares ($143 million)? What are 

commenters’ views on the methodology 

used to arrive at that estimate (which 

was based on an assessment of GBTC’s 

and SPDR Gold (GLD)’s ratios of average 

daily trading volume to assets under 

management)? 38 Do commenters agree 

with the Exchange that $143 million is 

an ‘‘aggressive’’ working estimate for 

average daily trading volume of a new 

bitcoin ETP? 39

• The Exchange states that ‘‘[g]iven 

that the average daily trading volume of 

the CME [bitcoin futures] Market in 

2020 was 174% higher at $392 million 

than the Sponsor’s aggressive estimate 

of a new bitcoin ETP’s potential trading 

volume of $143 million, the Sponsor 

found that it is unlikely that trading in 

a new bitcoin ETP will cause such ETP 

to become the predominant influence on 

prices in the CME [bitcoin futures] 

Market.’’ 40 Do commenters agree or 

disagree with the Sponsor’s conclusion? 

Why or why not? 

III. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

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

and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.41


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6906 Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 

42 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3See Arca Rule 6.87–O. See also Securities 

Exchange Act Release No. 93818 (December 17, 

2021), 86 FR 73009 (December 23, 2021) (SR– 

NYSEArca–2021–91) (Order Approving a Proposed 

Rule Change to Amend Rule 6.87–O). 

4The Exchange’s application for registration as a 

national securities exchange, as approved by the 

Commission, incorporated the changes made 

previously by the other options exchanges. See 

Securities Exchange Act Release No. 76998 (January 

29, 2016); 81 FR 6066 (Feb. 4, 2016). 

5See, e.g., Securities Exchange Act Release No. 

81353 (August 8, 2017), 82 FR 37926 (August 14, 

2017) (SR–MRX–2017–16). 

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by February 28, 2022. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by March 14, 2022. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2021–89 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2021–89. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2021–89 and 

should be submitted by February 28, 

2022. Rebuttal comments should be 

submitted by March 14, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02433 Filed 2–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94117; File No. SR–MRX– 

2022–02] 

Self-Regulatory Organizations; Nasdaq 

MRX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Proposed Rule Change 

To Update the Obvious Error Rule 

February 1, 2022. 

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 January 

26, 2022, Nasdaq MRX, LLC (‘‘MRX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘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 

The Exchange proposes to amend 

Options 3, Section 20 (Nullification and 

Adjustment of Options Transactions 

including Obvious Errors). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/mrx/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 purpose of this proposed rule 

change is to amend Options 3, Section 

20 (Nullification and Adjustment of 

Options Transactions including Obvious 

Errors) to improve the operation of the 

Rule. Following discussions with other 

exchanges and a cross-section of 

industry participants and in 

coordination with the Listed Options 

Market Structure Working Group 

(‘‘LOMSWG’’) (collectively, the 

‘‘Industry Working Group’’), the 

Exchange proposes: (1) To amend 

section (b)(3) of the Rule to permit the 

Exchange to determine the Theoretical 

Price of a Customer option transaction 

in a wide market so long as a narrow 

market exists at any point during the 10- 

second period after an opening or reopening; and (2) to amend section 

(c)(4)(B) of the Rule to adjust, rather 

than nullify, Customer transactions in 

Obvious Error situations, provided the 

adjustment does not violate the limit 

price. The foregoing changes are based 

on the recently amended rules of NYSE 

Arca, Inc. (‘‘Arca’’).3 Further, the 

Exchange proposes to make nonsubstantive, corrective changes. Each 

change is discussed in detail below. 

Proposed Change to Section (b)(3) 

Options 3, Section 20 has been part of 

various harmonization efforts by the 

Industry Working Group.4 These efforts 

have often centered around the 

Theoretical Price for which an options 

transaction should be compared to 

determine whether an Obvious Error has 

occurred. For instance, all options 

exchanges have adopted language 

comparable to Supplementary Material 

.06,5 which explains how an exchange 

is to determine Theoretical Price at the 

open, when there are no valid quotes, 

and when there is a wide quote. This 

includes at times the use of a singular 


jspears on DSK121TN23PROD with NOTICES1