Federal Register / Vol. 87, No. 28 / Thursday, February 10, 2022 / Notices 7885 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

4See Securities Exchange Act Release Nos. 93775 

(December 14, 2021), 86 FR 71996 (SR–MIAX– 

2021–59); 93774 (December 14, 2021), 86 FR 71952 

(SR–PEARL–2021–57). 

5 15 U.S.C. 78s(b)(2)(B). 

6See Securities Exchange Act Release No. 94088, 

87 FR 5901 (February 2, 2022). 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

4See Securities Exchange Act Release Nos. 93771 

(December 14, 2021), 86 FR 71940 (December 20, 

2021) (SR–MIAX–2021–60); 93772 (December 14, 

2021), 86 FR 71965 (December 20, 2021) (SR– 

EMERALD–2021–43). 

5 15 U.S.C. 78s(b)(2)(B). 

6See Securities Exchange Act Release No. 94087, 

87 FR 5918 (February 2, 2022). 

7 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94157; File Nos. SR–MIAX– 

2021–59, SR–PEARL–2021–57] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC, MIAX PEARL, LLC; Notice of 

Withdrawal of Proposed Rule Changes 

To Amend the Fee Schedules To Adopt 

a Tiered-Pricing Structure for Certain 

Connectivity Fees 

February 4, 2022. 

On December 1, 2021, Miami 

International Securities Exchange, LLC 

(‘‘MIAX’’) and MIAX PEARL, LLC 

(‘‘MIAX Pearl’’) (collectively, the 

‘‘Exchanges’’) each 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 

(File Numbers SR–MIAX–2021–59 and 

SR–PEARL–2021–57) to amend the 

MIAX Fee Schedule and MIAX Pearl 

Options Fee Schedule to adopt a tiered 

pricing structure for certain connectivity 

fees. The proposed rule changes were 

immediately effective upon filing with 

the Commission pursuant to Section 

19(b)(3)(A) of the Act.3 The proposed 

rule changes were published for 

comment in the Federal Register on 

December 20, 2021.4 On January 27, 

2022, the Commission temporarily 

suspended the proposed rule changes 

and instituted proceedings under 

Section 19(b)(2)(B) of the Act 5 to 

determine whether to approve or 

disapprove the proposed rule changes.6

On February 1, 2022, the Exchanges 

withdrew the proposed rule changes 

(SR–MIAX–2021–59 and SR–PEARL– 

2021–57). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02785 Filed 2–9–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94155; File Nos. SR–MIAX– 

2021–60, SR–EMERALD–2021–43] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC, MIAX Emerald, LLC; Notice of 

Withdrawal of Proposed Rule Changes 

To Amend Fee Schedules To Adopt 

Tiered-Pricing Structures for 

Additional Limited Service MIAX and 

MIAX Emerald Express Interface Ports 

Feburary 4, 2022. 

On December 1, 2021, Miami 

International Securities Exchange, LLC 

(‘‘MIAX’’) and MIAX Emerald, LLC 

(‘‘MIAX Emerald’’) (collectively, the 

‘‘Exchanges’’) each 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 

(File Numbers SR–MIAX–2021–60 and 

SR–EMERALD–2021–43) to adopt a 

tiered-pricing structure for additional 

limited service express interface ports. 

The proposed rule changes were 

immediately effective upon filing with 

the Commission pursuant to Section 

19(b)(3)(A) of the Act.3 The proposed 

rule changes were published for 

comment in the Federal Register on 

December 20, 2021.4 On January 27, 

2022, the Commission temporarily 

suspended the proposed rule changes 

and instituted proceedings under 

Section 19(b)(2)(B) of the Act 5 to 

determine whether to approve or 

disapprove the proposed rule changes.6

On February 1, 2022, the Exchanges 

withdrew the proposed rule changes 

(SR–MIAX–2021–60 and SR– 

EMERALD–2021–43). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02783 Filed 2–9–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94152; File No. SR– 

NYSEAMER–2022–10] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 975NY 

February 4, 2022. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on January 

31, 2022, NYSE American LLC (‘‘NYSE 

American’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 975NY (Nullification and 

Adjustment of Options Transactions 

including Obvious Errors) to improve 

the operation of the Rule. The proposed 

rule change is available on the 

Exchange’s website at www.nyse.com, 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 

self-regulatory organization 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 those 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, 


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7886 Federal Register / Vol. 87, No. 28 / Thursday, February 10, 2022 / Notices 

4 See, e.g., Securities Exchange Act Release Nos. 

74920 (May 8, 2015), 80 FR 27816 (May 14, 2015) 

(SR–NYSEMKT–2015–39); 80497 (April 20, 2017), 

82 FR 19290 (April 26, 2017) (SR–NYSEMKT– 

2017–22). 

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

81582 (September 12, 2017), 82 FR 43601 

(September 18, 2017) (SR–NYSEAMER–2017–12). 

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

74920 (May 8, 2015), 80 FR 27816 (May 14, 2015) 

(SR–NYSEMKT–2015–39). 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this rule change is to 

amend Rule 975NY (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. 

Proposed Change to Section (b)(3) 

Rule 975NY 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 

Commentary .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 third-party vendor, known as 

a TP Provider (currently CBOE Livevol, 

LLC). 

Similarly, section (b)(3) of Rule 

975NY was previously harmonized 

across all options exchanges to handle 

situations where executions occur in 

markets that are wide (as set forth in the 

rule).6 Under that section, the Exchange 

determines the Theoretical Price if the 

NBBO for the subject series is wide 

immediately before execution and a 

narrow market (as set forth in the rule) 

existed ‘‘during the 10 seconds prior to 

the transaction.’’ The rule goes on to 

clarify that, should there be no narrow 

quotes ‘‘during the 10 seconds prior to 

the transaction,’’ the Theoretical Price 

for the affected series is the NBBO that 

existed at the time of execution 

(regardless of its width). 

In recent discussions, the Industry 

Working Group has identified proposed 

changes to section (b)(3) of Rule 975NY 

that would improve the Rule’s 

functioning. Currently, section (b)(3) 

does not permit the Exchange to 

determine the Theoretical Price unless 

there is a narrow quote 10 seconds prior 

to the transaction. However, in the first 

seconds of trading, there is no 10- 

second period ‘‘prior to the 

transaction.’’ Further, the Industry 

Working Group has observed that prices 

in certain series can be disjointed at the 

start of trading. Accordingly, the 

Exchange proposes to provide 

additional protections to trading in 

certain circumstances immediately after 

the opening before liquidity has had a 

chance to enter the market. The 

Exchange proposes to amend section 

(b)(3) to allow the Exchange to 

determine the Theoretical Price in a 

wide market so long as a narrow market 

exists at any point during the 10-second 

period after an opening or re-opening. 

Specifically, the Exchange proposes 

that the existing text of section (b)(3) 

would become sub-section ‘‘A.’’ The 

Exchange proposes to add the following 

heading and text as sub-section ‘‘B.’’: 

B. Customer Transactions Occurring 

Within 10 Seconds or less After an Opening 

or Re-Opening: 

(i) The Exchange will determine the 

Theoretical Price if the bid/ask differential of 

the NBB and NBO for the affected series just 

prior to the Customer’s erroneous transaction 

was equal to or greater than the Minimum 

Amount set forth in paragraph A above and 

there was a bid/ask differential less than the 

Minimum Amount during the 10 seconds 

prior to the transaction. 

(ii) If there was no bid/ask differential less 

than the Minimum Amount during the 10 

seconds prior to the transaction, then the 

Exchange will determine the Theoretical 

Price if the bid/ask differential of the NBB 

and NBO for the affected series just prior to 

the Customer’s erroneous transaction was 

equal to or greater than the Minimum 

Amount set forth in paragraph A above and 

there was a bid/ask differential less than the 

Minimum Amount anytime during the 10 

seconds after an opening or re-opening. 

(iii) If there was no bid/ask differential less 

than the Minimum Amount during the 10 

seconds following an Opening or ReOpening, then the Theoretical Price of an 

option series is the last NBB or NBO just 

prior to the Customer transaction in question, 

as set forth in paragraph (b) above. 

(iv) Customer transactions occurring more 

than 10 seconds after an opening or reopening are subject to paragraph A above. 

The following examples illustrate the 

functioning of the proposed rule change. 

Consider that the NBBO of a series 

opens as $0.01 at $4.00. A marketable 

limit order to buy one contract arrives 

one second later and is executed at 

$4.00. In the third second of trading, the 

NBBO narrows from $0.01 at $4.00 to 

$2.00 at $2.10. While the execution 

occurred in a market with wide widths, 

there was no tight market within the 10 

seconds prior to execution. Accordingly, 

under the current rule, the trade would 

not qualify for obvious error review, in 

part due to the fact that there was only 

a single second of trading before the 

execution. Under the proposal, since a 

tight market existed at some point in the 

first 10 seconds of trading (i.e., in the 

third second), the Exchange would be 

able to determine the Theoretical Price 

as provided in Commentary .06. 

As another example, the NBBO for a 

series opens as $0.01 at $4.00. In the 

seventh second of trading, a marketable 

limit order is received to buy one 

contract and is executed at $4.00. Five 

seconds later (i.e., in the twelfth second 

of trading), the NBBO narrows from 

$0.01 at $4.00 to $2.00 at $2.10. While 

the execution occurred in a market with 

wide widths, there was no tight market 

within 10 seconds prior to execution. 

Accordingly, under the current rule, the 

trade would not qualify for obvious 

error review. Under the proposal, since 

no tight market existed at any point 

during the first 10 seconds of trading 

(i.e., the narrow market occurred in the 

twelfth second), the trade would not 

qualify for obvious error review. 

The proposed rule change would also 

better harmonize section (b)(3) with 

section (b)(1) of the Rule. Under section 

(b)(1), the Exchange is permitted to 

determine the Theoretical Price for 

transactions occurring as part of the 

opening auction process (as defined in 

Rule 952NY) if there is no NBB or NBO 

for the affected series just prior to the 

erroneous transaction. However, under 

the current version of section (b)(3), a 

core trading transaction could occur in 

the same wide market but the Exchange 

would not be permitted to determine the 

Theoretical Price. Consider an example 

where one second after the Exchange 

opens a selected series, the NBBO is 

$1.00 at $5.00. At 9:30:03, a customer 

submits a marketable buy order to the 

Exchange and pays $5.00. At 9:30:03, a 

different exchange runs an opening 

auction that results in a customer 

paying $5.00 for the same selected 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 28 / Thursday, February 10, 2022 / Notices 7887 

7Specifically, the current Rule provides at section 

(c)(4)(C) that if an OTP Holder has 200 or more 

Customer transactions under review concurrently 

and the orders resulting in such transactions were 

submitted during the course of 2 minutes or less, 

where at least one party to the Obvious Error is a 

non-Customer, then the Exchange will apply the 

non-Customer adjustment criteria found in section 

(c)(4)(A). 

8See 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). 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

series. At 9:30:06, the NBBO changes 

from $1.00 at $5.00 to $1.35 at $1.45. 

Under the current version of section 

(b)(3), the Exchange would not be able 

to determine the Theoretical Price for 

the trade occurring during core trading. 

However, the trade on the other 

exchange could be submitted for review 

under (b)(1) and that exchange would be 

able to determine the Theoretical Price. 

If the proposed change to section (b)(3) 

were approved, both of the trades 

occurring at 9:30:03 (on the Exchange 

during core trading and on another 

exchange via auction) would also be 

entitled to the same review regarding 

the same Theoretical Price based upon 

the same time. 

The proposal would not change any 

obvious error review beyond the first 10 

seconds of an opening or re-opening. 

Proposed Change to Section (c)(4)(B) 

The Exchange proposes to amend 

section (c)(4)(B)—the ‘‘Adjust or Bust’’ 

rule for Customer transactions in 

Obvious Error situations—to adjust 

rather than nullify such orders, 

provided the adjustment does not 

violate the Customer’s limit price. 

Currently, the Rule provides that in 

Obvious Error situations, transactions 

involving non-Customers should be 

adjusted, while transactions involving 

Customers are nullified, unless a certain 

condition applies.7 The Industry 

Working Group has concluded that the 

treatment of these transactions should 

be harmonized under the Rule, such 

that transactions involving Customers 

may benefit from adjustment, just as 

non-Customer transactions currently do, 

except where such adjustment would 

violate the Customer’s limit price; in 

that instance, the trade would be 

nullified. 

Specifically, the Exchange proposes to 

amend the text of section (c)(4)(B) to 

add that where at least one party to the 

Obvious Error is a Customer, ‘‘the 

execution price of the transaction will 

be adjusted by the Official pursuant to 

the table immediately above. Any 

Customer Obvious Error exceeding 50 

contracts will be subject to the Size 

Adjustment Modifier defined in subparagraph (a)(4) above. However, if such 

adjustment(s) would result in an 

execution price higher (for buy 

transactions) or lower (for sell 

transactions) than the Customer’s limit 

price,’’ the trade will be nullified. The 

‘‘table immediately above’’ referenced in 

the proposed text refers to the table at 

current Section (c)(4)(A), which 

provides for the adjustment of prices a 

specified amount away from the 

Theoretical Price, rather than adjusting 

the Theoretical Price. 

The Exchange proposes no other 

changes at this time. 

Implementation Date 

The proposed rule change will 

become operative no sooner than six 

months following the approval of SR– 

NYSEArca–2021–91 8 to coincide with 

implementation on other options 

exchanges. The Exchange will announce 

the effective date of the proposed 

changes in a Trader Update distributed 

to all OTP Holders and OTP Firms. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,9 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,10

in particular, because it is 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 and 

because it is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes that the 

proposed change to section (b)(3) of the 

Rule would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest 

because it provides a method for 

addressing Obvious Error Customer 

transactions that occur in a wide market 

at the opening of trading. Generally, a 

wide market is an indication of a lack 

of liquidity in the market such that the 

market is unreliable. Current section 

(b)(3) recognizes that a persistently wide 

quote (i.e., more than 10 seconds) 

should be considered the reliable 

market regardless of its width, but does 

not address transactions that occur in a 

wide market in the first seconds of 

trading, where there is no preceding 10- 

second period to reference. Accordingly, 

in the first 10 seconds of trading, there 

is no opportunity for a wide quote to 

have persisted for a sufficiently lengthy 

period such that the market should 

consider it a reliable market for the 

purposes of determining an Obvious 

Error transaction. 

The proposed change would rectify 

this disparity and permit the Exchange 

to consider whether a narrow quote is 

present at any time during the 10- 

second period after an opening or reopening. The presence of such a narrow 

quote would indicate that the market 

has gained sufficient liquidity and that 

the previous wide market was 

unreliable, such that it would be 

appropriate for the Exchange to 

determine the Theoretical Price of an 

Obvious Error transaction. In this way, 

the proposed rule harmonizes the 

treatment of Customer transactions that 

execute in an unreliable market at any 

point of the trading day, by making 

them uniformly subject to Exchange 

determination of the Theoretical Price. 

The Exchange believes that the 

proposed change to section (c)(4)(B) of 

the Rule would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system and enhance the protection of 

investors by harmonizing the treatment 

of non-Customer transactions and 

Customer transactions under the Rule. 

Under the current Rule, Obvious Error 

situations involving non-Customer 

transactions are adjusted, while those 

involving Customer transactions are 

generally nullified, unless they meet the 

additional requirements of section 

(c)(4)(C) (i.e., where an OTP Holder has 

200 or more Customer transactions 

under review concurrently and the 

orders resulting in such transactions 

were submitted during the course of 2 

minutes or less). The proposal would 

harmonize the treatment of nonCustomer and Customer transactions by 

providing for the adjustment of all such 

transactions, except where such 

adjustment would violate the 

Customer’s limit price. 

When it proposed the current rule in 

2015, the Exchange believed there were 

sound reasons for treating non-Customer 

transactions and Customer transactions 

differently. At the time, the Exchange 

stated its belief that ‘‘Customers are not 

necessarily immersed in the day-to-day 

trading of the markets, are less likely to 

be watching trading activity in a 

particular option throughout the day, 

and may have limited funds in their 

trading accounts,’’ and that nullifying 

Obvious Error transactions involving 


jspears on DSK121TN23PROD with NOTICES1
7888 Federal Register / Vol. 87, No. 28 / Thursday, February 10, 2022 / Notices 

11See, e.g., Securities Exchange Act Release No. 

74920 (May 8, 2015), 80 FR 27816, 27829 (May 14, 

2015) (SR–NYSEMKT–2015–39). 

12See ‘‘Retail Traders Adopt Options En Masse’’ 

by Dan Raju, available at https://www.nasdaq.com/ 

articles/retail-traders-adopt-options-en-masse-2020- 

12-08. 

13 15 U.S.C. 78f(b)(8). 

14 15 U.S.C. 78s(b)(3)(A)(iii). 

Customers would give Customers 

‘‘greater protections’’ than adjusting 

such transactions by eliminating the 

possibility that a Customer’s order will 

be adjusted to a significantly different 

price. The Exchange also noted its belief 

that ‘‘Customers are . . . less likely to 

have engaged in significant hedging or 

other trading activity based on earlier 

transactions, and thus, are less in need 

of maintaining a position at an adjusted 

price than non-Customers.’’ 11

Those assumptions about Customer 

trading and hedging activity no longer 

hold. The Exchange and the Industry 

Working Group believe that over the 

course of the last five years, Customers 

that use options have become more 

sophisticated, as retail broker-dealers 

have enhanced the trading tools 

available. Pursuant to OCC data, 

volumes clearing in the Customer range 

have expanded from 12,022,163 ADV in 

2015 to 35,081,130 ADV in 2021. This 

increase in trading activity underscores 

the greater understanding of options by 

Customers as a trading tool and its use 

in the markets. Customers who trade 

options today largely are more educated, 

have better trading tools, and have 

better access to financial news than any 

time prior.12 The proposed rule would 

extend the hedging protections 

currently enjoyed by non-Customers to 

Customers, by allowing them to 

maintain an option position at an 

adjusted price, which would in turn 

prevent a cascading effect by 

maintaining the hedge relationship 

between the option transaction and any 

other transactions in a related security. 

The Exchange believes that extending 

such hedging protections to Customer 

transactions would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and 

enhance the protection of investors by 

providing greater certainty of execution 

for all participants to options 

transactions. Under the current Rule, a 

Customer that believes its transaction 

was executed pursuant to an Obvious 

Error may be disincentivized from 

submitting the transaction for review, 

since during the review process, the 

Customer would be uncertain whether 

the trade would be nullified, and if so, 

whether market conditions would still 

permit the opportunity to execute a 

related order at a better price after the 

nullification ruling is finalized. In 

contrast, under the proposed rule, the 

Customer would know that the only 

likely outcomes of submitting a trade to 

Obvious Error review would be that the 

trade would stand or be re-executed at 

a better price; the trade would only be 

nullified if the adjustment would violate 

the order’s limit. Similarly, under the 

current Rule, during the review period, 

a market maker who traded contra to the 

Customer would be uncertain if it 

should retain any position executed to 

hedge the original trade, or attempt to 

unwind it, possibly at a significant loss. 

Under the proposed rule change, this 

uncertainty is largely eliminated, and 

the question would be whether the 

already-executed and hedged trade 

would be adjusted to a better price for 

the Customer, or if it would stand as 

originally executed. In this way, the 

proposed rule enhances the protection 

of investors and removes impediments 

to and perfects the mechanism of a free 

and open market and a national market 

system. 

The proposed rule also addresses the 

concern the Exchange cited in its 2015 

filing that adjusting, rather than 

nullifying, Customer transactions could 

lead to a Customer’s order being 

adjusted to a significantly different 

price. To address that concern, the 

proposed rule would prevent Customer 

transactions from being adjusted to a 

price that violates the order’s limit; if 

the adjustment would violate a 

Customer’s limit, the trade would 

instead be nullified. The Exchange 

believes it is in the best interest of 

investors to expand the availability of 

adjustments to Customer transactions in 

all Obvious Error situations except 

where the adjustment would violate the 

Customer’s limit price. 

Further, the Exchange believes that, 

with respect to such proposed 

adjustments to Customer transactions, it 

is appropriate to use the same form of 

adjustment as is currently in place with 

respect to non-Customer transactions as 

laid out in the table in section (c)(4)(A). 

That is, the Exchange believes that it is 

appropriate to adjust to prices a 

specified amount away from the 

Theoretical Price rather than to adjust 

the Theoretical Price, even though the 

Exchange has determined a given trade 

to be erroneous in nature, because the 

parties in question should have had 

some expectation of execution at the 

price or prices submitted. Also, it is 

common that by the time it is 

determined that an Obvious Error has 

occurred, additional hedging and 

trading activity has already occurred 

based on the executions that previously 

happened. The Exchange believes that 

providing an adjustment to the 

Theoretical Price in all cases would not 

appropriately incentivize market 

participants to maintain appropriate 

controls to avoid potential errors, while 

adjusting to prices a specified amount 

away from the Theoretical Price would 

incentivize such behavior. 

The Exchange believes that the 

proposal is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The proposed change to section (b)(3) 

would apply to all instances of a wide 

market occurring within the first 10 

seconds of trading followed by a narrow 

market at any point in the subsequent 

10-second period, regardless of the 

types of market participants involved in 

such transactions. The proposed change 

to section (c)(4)(B) would harmonize the 

treatment of Obvious Error transactions 

involving Customers and nonCustomers, no matter what type of 

market participants those parties may 

be. 

For these reasons, the Exchange 

believes that the proposal is consistent 

with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes that the 

proposal will not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of Section 6(b)(8) of the Act.13

The Exchange anticipates that the other 

options exchanges will adopt 

substantively similar proposals, such 

that there would be no burden on 

intermarket competition from the 

Exchange’s proposal. Accordingly, the 

proposed change is not meant to affect 

competition among the options 

exchanges. For these reasons, the 

Exchange believes that the proposed 

rule change reflects this competitive 

environment and does not impose any 

undue burden on intermarket 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 14 and Rule 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 28 / Thursday, February 10, 2022 / Notices 7889 

15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

16 15 U.S.C. 78s(b)(2)(B). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 93504 

(Nov. 2, 2021), 86 FR 61804 (‘‘Notice’’). Comments 

received on the proposed rule change are available 

at: https://www.sec.gov/comments/sr-nysearca2021-90/srnysearca202190.htm. 

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

5See Securities Exchange Act Release No. 93788, 

86 FR 72291 (Dec. 21, 2021). The Commission 

designated February 6, 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 61805. Grayscale Investments, LLC 

(‘‘Sponsor’’) is the sponsor of the Trust and is a 

wholly-owned subsidiary of Digital Currency 

Group, Inc. Delaware Trust Company (‘‘Trustee’’) is 

the trustee of the Trust, the custodian for the Trust 

is Coinbase Custody Trust Company, LLC 

(‘‘Custodian’’), and the distribution and marketing 

agent for the Trust is Genesis. The Trust operates 

pursuant to a trust agreement (‘‘Trust Agreement’’) 

between the Sponsor and the Trustee. See id. 

9See id. at 61810. The index provider for the 

Trust is TradeBlock, Inc. (‘‘Index Provider’’). See id. 

at 61805. While the Exchange does not name the 

Index that the Trust would use to value the bitcoin 

held by the Trust, the Exchange provides that the 

value of the Index, as well as additional information 

regarding the Index, may be found at: https://

tradeblock.com/markets/index/xbx. See id. at 

61817. 

19b–4(f)(6) thereunder.15 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

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

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 16 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEAMER–2022–10 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–NYSEAMER–2022–10. 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–NYSEAMER–2022– 

10 and should be submitted on or before 

March 3, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02782 Filed 2–9–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94151; File No. SR– 

NYSEArca–2021–90] 

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 Grayscale Bitcoin Trust (BTC) Under 

NYSE Arca Rule 8.201–E 

February 4, 2022. 

On October 19, 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 Grayscale Bitcoin Trust 

(BTC) (‘‘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 8, 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 for the value of the Shares (based on 

bitcoin per Share) to reflect the value of 

the bitcoins held by the Trust, as 

determined by reference to the ‘‘Index 

Price,’’ less the Trust’s expenses and 

other liabilities.8 The ‘‘Index Price’’ is 

the U.S. dollar value of a bitcoin as 

represented by the ‘‘Index,’’ calculated 

at 4:00 p.m., New York time, on each 

business day.9 According to the 

Exchange, the Index Provider develops, 

calculates, and publishes the Index on 


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