95846 Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 

28 17 CFR 240.17ad–25(i). 

29 17 CFR 240.17ad–25. 

30 15 U.S.C. 78q–1(b)(3)(A). 

31 17 CFR 240.17ad–25. 

32 15 U.S.C. 78s(b)(2). 

33 In approving the Proposed Rule Changes, the 

Commission considered its impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

34 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

in the clearance and settlement of 

securities transactions. Accordingly, the 

Proposed Rule Changes are consistent 

with Section 17A(b)(3)(A) and (F) of the 

Act. 

B. Consistency With Rule 17Ad–25(g) 

and (h) Under the Act 

Rule 17Ad–25(g) requires each 

registered clearing agency to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to identify and 

document, and mitigate or eliminate 

existing or potential conflicts of interest 

in the decision-making process of the 

directors or senior managers of the 

registered clearing agency. Also, Rule 

17Ad–25(h) requires each registered 

clearing agency to establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to 

require a director to document and 

inform the registered clearing agency 

promptly of the existence of any 

relationship or interest that reasonably 

could affect the independent judgment 

or decision-making of the director. 

As described above, the Proposed 

Rule Changes outline the written 

policies and procedures that provide 

that the Clearing agencies identify, 

document, and mitigate or eliminate 

existing or potential conflicts of interest 

in the decision-making process 

involving directors or senior managers. 

The Proposed Rule Changes require 

directors to document and inform the 

Corporate Secretary promptly of any 

relationship or interest that reasonably 

could affect the independent judgment 

or decision-making of the director. This 

is then escalated to the General 

Counsel’s office who shall notify the 

Non-Executive Chairman if it is 

determined that a conflict exists. These 

conflicts may be addressed in several 

pre-established ways. Based on the 

foregoing, the proposed changes are 

consistent with the requirements of 

Rules 17ad–25(g) and (h). 

C. Consistency With Rule 17Ad–25(i) 

Under the Act 

Rule 17Ad–25(i) requires each 

registered clearing agency to establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to require senior 

management to: (1) evaluate and 

document the risks related to an 

agreement with a service provider for 

core services, including under changes 

to circumstances and potential 

disruptions, and whether the risks can 

be managed in a manner consistent with 

the clearing agency’s risk management 

framework; (2) submit to the board for 

review and approval any agreement that 

would establish a relationship with a 

service provider for core services; (3) be 

responsible for establishing the policies 

and procedures that govern 

relationships and manage risks related 

to such agreements with service 

providers for core services and require 

the board of directors to be responsible 

for reviewing and approving such 

policies and procedures; and (4) 

perform ongoing monitoring of the 

relationship, and report to the board of 

directors for its evaluation of any action 

taken by senior management to remedy 

significant deterioration in performance 

or address changing risks or material 

issues identified through such 

monitoring; or if the risks or issues 

cannot be remedied, require senior 

management to assess and document 

weaknesses or deficiencies in the 

relationship with the service provider 

for submission to the board of 

directors.28 As described above in 

Section III.C, the Proposed Rule 

Changes require senior management to 

evaluate and document risks related to 

agreements with services providers for 

core services, perform ongoing 

monitoring of the relationship, and 

report to the Boards for their evaluation 

of any action taken by senior 

management to remedy significant 

deterioration in performance or address 

changing risks or material issues 

identified through such monitoring, 

consistent with Rule 17Ad–25(i)(1) and 

(4). The Proposed Rule Changes also 

state that the Boards would review and 

approve the procedures regarding, and 

any agreements that establish a 

relationship with, service providers for 

core services, consistent with Rule 

17Ad–25(i)(2) and (3). The Proposed 

Rule Changes further state that if the 

risk or material issues identified cannot 

be remedied, senior management is 

required to assess and document 

weaknesses or deficiencies in the 

relationship with the service provider 

for core services for submission to the 

Board for evaluation, consistent with 

Rule 17Ad–25(i)(4). Based on the 

foregoing, the proposed changes are 

consistent with the requirements of Rule 

17Ad–25(i). 

D. Consistency With Rule 17Ad–25(j) 

Under the Act 

Rule 17Ad–25(j) requires registered 

clearing agencies to establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to require the board 

of directors to solicit, consider, and 

document its consideration of the views 

of participants and other relevant 

stakeholders of the registered clearing 

agency regarding material developments 

in its risk management and operations 

on a recurring basis. The Proposed Rule 

Changes require a formal and regular 

process for solicitation, consideration, 

and documenting the consideration of 

participants and other relevant 

stakeholders. Based on the foregoing, 

the proposed changes are consistent 

with the requirements of Rules 17ad– 

25(j). 

Accordingly, the Commission finds 

these proposed changes consistent with 

the requirements of Rule 17Ad–25.29

V. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Changes are consistent with the 

requirements of the Act and in 

particular with the requirements of and 

in particular, Section 17A(b)(3)(A) and 

(F) of the Act 30 and Rule 17Ad–25 

thereunder.31

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 32 that 

proposed rule changes SR–NSCC–2024– 

006, SR–DTC–2024–009, and SR–FICC– 

2024–010 be, and hereby are, 

approved.33

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28256 Filed 12–2–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101774; File No. SR–C2– 

2024–021] 

Self-Regulatory Organizations; Cboe 

C2 Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Adopt New 

Functionality Relating to the 

Processing of Auction Responses 

November 27, 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 November 

18, 2024, Cboe C2 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘C2’’) filed with the 


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

4 17 CFR 240.19b–4(f)(6). 

5See Rule 5.33(d). 

6The Exchange notes that its review of auction 

responses during August 2024 indicated that 

approximately 0.19% of auction responses had no 

opportunity to execute in their respective auctions, 

notwithstanding being submitted within the auction 

response period. 

7A User connects to the Exchange using a logical 

port available through an API, such as the industrystandard FIX or BOE protocol. Logical ports 

represent a technical port established by the 

Exchange within the Exchange’s trading system for 

the delivery and/or receipt of trading messages, 

including orders, cancels, and auction responses. 

8The Exchange has numerous order handlers and 

uses an algorithm to determine at random which 

ports connect to which order handlers This 

algorithm attempts to spread out a single TPH’s 

ports across order handlers as well as balance the 

number of ports that connect to a single order 

handler. 

9For example, it currently takes the Exchange’s 

system an approximate average of 13 microseconds 

to process a single order/quote or auction response 

message and, on average, approximately 35 

microseconds to process a mass cancel message. As 

such, under the current system, an auction response 

that is entered after a mass cancel message is more 

likely to be detrimentally delayed as compared to 

a mass cancel message that is entered after an 

auction response (i.e., a 35 microsecond ‘‘wait 

time’’ versus a 13 microsecond ‘‘wait time’’). 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

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

Rule 19b–4(f)(6) thereunder.4 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 C2 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘C2’’) proposes to adopt 

new functionality relating to the 

processing of auction responses. 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 (https://markets.cboe.com/us/ 

options/regulation/rule_filings/ctwo/), 

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 

The Exchange currently offers an 

auction mechanism which provides 

price improvement opportunities for 

eligible orders. Particularly, the 

Exchange offers the Complex Order 

Auction (‘‘COA’’).5 The Exchange notes 

that eligible orders (‘‘auctioned order’’) 

are electronically exposed for an 

Exchange-determined period (referred to 

herein as ‘‘auction response period’’) in 

accordance with the applicable 

Exchange Rule, during which time 

Users may submit responses (referred to 

herein as ‘‘auction responses’’ or 

‘‘auction response messages’’) to an 

auction message. An auction response 

may only execute in the auction and is 

cancelled if it does not execute during 

an auction. If an auction response is 

unable to be processed by the System 

during the auction response period, that 

auction response is unable to receive 

any execution opportunity or provide 

liquidity (and possible price 

improvement) on the Exchange.6

By way of further background, 

Trading Permit Holders (‘‘TPHs’’) may 

submit auction responses via logical 

port connectivity.7 Each logical port 

corresponds to a single running order 

handler application.8 Each order 

handler application processes the 

messages it receives from the connected 

TPH. This processing includes 

determining whether the message 

contains the required information to 

enter the System and where to send that 

message within the System (i.e., to 

which matching engine). Messages are 

sent from an order handler application 

to a matching engine via User Datagram 

Protocol (‘‘UDP’’). The Exchange has 

multiple matching engines, each of 

which controls the book for one or more 

classes of options listed for trading on 

the Exchange. The Exchange may run 

multiple matching engine applications 

on a single server. Once at a matching 

engine, the message is received at a 

server Network Interface Card (‘‘NIC’’), 

which timestamps each message upon 

arrival and places it in a queue. 

Currently, each matching engine 

processes all messages it receives from 

a single queue from the NIC and 

prioritizes the processing of all message 

traffic, including auction responses, in 

the order in which the NIC received 

each message (i.e., in time priority). 

Auction response messages 

historically have waited in the same 

queue as all other order and quote 

message traffic. As such, if an auction 

response is submitted at a time where 

there is a deep queue of other message 

traffic such as mass cancellation 

messages or other orders and quotes, it 

is possible that the auction response 

may not be ‘‘processed’’ by the System 

in sufficient time (i.e., prior to the end 

of the auction response period).9

Particularly, the queued auction 

response may not be able to participate 

in the applicable auction mechanism 

because the System had unprocessed 

(queued) messages at the time of the 

auction execution despite the fact that 

the User submitted the auction response 

prior to the end of the auction response 

period. Auctioned orders may therefore 

be missing out on potential price 

improvement that may have otherwise 

resulted if queued timely auction 

response(s) were able to participate in 

the auction. 

The Exchange proposes to adopt new 

functionality under Rule 5.25, new 

subparagraph (c), which would apply to 

the Exchange’s auction mechanism (i.e., 

COA) to increase the likelihood that 

timely submitted auction responses may 

participate in the auction, even during 

periods of high message traffic. Under 

the proposed functionality, at the time 

an auction response period ends, the 

System will continue to process its 

inbound queue for any messages that 

were received by the System before the 

end of the auction period (including 

auction messages) for up to an 

Exchange-determined period of time, 

not to exceed 100 milliseconds (which 

the Exchange may determine on a classby-class basis which would apply to all 

auction mechanisms and which would 

be announced with reasonable advanced 

notice via Exchange Notice). That is, 

any auction responses that were in the 

queue before the conclusion of the 

auction (as identified by the NIC 

timestamp on the message) would be 

processed as long as the Exchangedetermined time on a class-by-class 

basis (not to exceed 100 milliseconds) is 

not exceeded. Only auction messages 

received prior to the execution of the 

applicable auction are eligible to be 

processed for that auction. The 

applicable auction will execute once all 

messages, including auction responses, 

received before the end time of the 

auction response period have been 

processed or the Exchange-determined 


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10 If, for example, the System processed all 

messages received before 9:00:100 by 9:00:110, then 

the auction would execute at 9:00:110 (i.e., the 

System does not need to wait until 9:00:150 to 

execute an auction if all messages submitted prior 

to the end time of the auction have been processed). 

11 See Securities Exchange Act Release No. 97738 

(June 15, 2023) 88 FR 40878 (June 22, 2023) (SR– 

CBOE–2022–051) (Order Granting Accelerated 

Approval of Proposed Rule Change as Modified by 

Amendment Nos. 1 and 2 Relating to the Processing 

of Auction Responses). See also Securities 

Exchange Act Release No. 101434 (October 25, 

2024) 89 FR 86856 (October 31, 2024) (SR– 

CboeEDGX–2024–067). 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14 Id. 

maximum time limit of up to 100 

milliseconds has elapsed, whichever 

occurs first. This continuation of 

processing the queue for an additional 

amount of time for messages that were 

received before the end of the auction 

allows for auction responses that would 

otherwise have been canceled due to the 

conclusion of the auction response 

period to still have an opportunity to 

participate in the auction. This provides 

such responses with increased 

opportunities to participate in the 

auction, even during periods of high 

message traffic, thereby potentially 

providing customers with additional 

opportunities for price improvement, 

while still providing a processing cut off 

time to ensure auction executions aren’t 

unduly delayed. 

By way of an example, if an auction 

with an auction response period set to 

100 milliseconds were to start at 9:00:00 

a.m., only auction responses that were 

able to be processed by the System by 

the conclusion of the auction at 9:00:100 

would participate in the auction. 

Accordingly, if, for example, an auction 

response that was submitted at 9:00:090 

(within the auction time response 

period), is still in the message queue at 

9:00:100, that response under the 

current System functionality would be 

canceled and not eligible to participate 

in the auction. Under the proposal, at 

9:00:100, because the System continues 

to process all messages timestamped 

before 9:00:100, that same auction 

response submitted at 9:00:090 would 

not automatically be canceled but rather 

included in the auction as long as it was 

able to be processed within an 

additional 50 milliseconds, which is the 

additional processing time set by the 

Exchange and announced to market 

participants with reasonable advance 

notice via Exchange Notice for that class 

in this example. Once that auction 

response is up for processing (because 

the System processes messages 

sequentially in time order sequence), 

the response will be able to participate 

in the auction so long as it’s processed 

by 9:00:150, notwithstanding such 

processing would occur after the 100- 

millisecond auction response period has 

concluded. Any auction responses for 

the pending auction that are still 

pending after the execution of the 

auction would be canceled.10 The 

Exchange notes that using the same 

example, if an auction response was 

submitted at 9:00:120, it would not be 

eligible for processing because the 

timestamp would identify it as being 

submitted outside the auction response 

period which was otherwise set to 

conclude at 9:00:100. 

The Exchange believes the proposed 

rule change will result in increased 

execution opportunities for liquidity 

providers that submit auction responses 

and enhance the potential for price 

improvement for orders submitted to 

COA to the benefit of investors and 

public interest. Indeed, the Exchange 

believes the proposed functionality will 

increase the possibility that timely 

submitted auction responses are 

processed by the Exchange and have an 

opportunity for execution in the 

Exchange’s auction mechanism, even if 

there is a deep pending message queue. 

The Exchange believes the proposed 

maximum amount of additional time for 

processing (i.e., 100 milliseconds) is 

both an adequate amount of time to 

provide pending auction responses with 

such execution opportunity, but also an 

amount minimal enough that impact to 

other message traffic, if any, would be 

de minimis. The Exchange also notes 

that it previously discussed the 

proposed maximum amount with 

market participants who indicated that 

100 milliseconds was acceptable to 

them. The Exchange anticipates that in 

the vast majority of cases, the additional 

time needed after the conclusion of 

auction response period, if any, to 

process all pending auction responses 

will be shorter than the maximum 100 

milliseconds. To the extent the 

Exchange determines a lesser amount of 

time would be sufficient, the Exchange 

could implement an additional amount 

of time for processing auction responses 

that is less than 100 milliseconds, 

which time would be announced with 

reasonable advance notice to market 

participants via Exchange Notice. 

Additionally, all message traffic 

(including auction responses) will 

continue to be processed in timepriority. 

The Exchange also believes the 

proposal will continue to allow the 

Exchange to set the auction response 

period to an amount of time that 

provides TPHs submitting responses 

with sufficient time to respond to, 

compete for, and provide price 

improvement for orders, but also 

continues to provide auctioned orders 

with quick executions that may reduce 

market and execution risk. Further, the 

Exchange believes some market 

participants choose to submit auction 

responses towards the end of an auction 

response period to better ensure the 

response is at a price that the market 

participant is willing to trade given the 

market at the time the auction response 

period concludes. As such, merely 

extending the auction response period 

in each auction would not itself prevent 

auction responses from continuing to 

miss the auction notwithstanding being 

timely submitted. 

Moreover, the Exchange notes that it 

recently adopted the same functionality 

on its affiliated exchanges, Cboe 

Exchange, Inc (‘‘Cboe Options’’) and 

Cboe EDGX Exchange, Inc. (‘‘EDGX 

Options’’).11

Implementation 

The Exchange will announce via 

Exchange Notice the implementation 

date of implement the proposed rule 

change, which shall be no later than 60 

days after the operative date of this rule 

filing. 

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.12 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 13 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) 14 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

modifying its System to allow it to 

potentially process more, if not all, 

timely submitted auction responses may 

provide further opportunities for 

auctioned orders to receive price 


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improvement, which removes 

impediments to a free and open market 

and ultimately protects and benefits 

investors. In particular, the proposed 

rule change will continue to provide 

investors with timely processing of their 

options quote and order messages, while 

providing investors who submit auction 

orders with additional auction liquidity. 

Indeed, the proposed rule change may 

allow more investors additional 

opportunities to receive price 

improvement through an auction 

mechanism. Additionally, because the 

proposed functionality may provide 

liquidity providers that submit auction 

responses with additional execution 

opportunities in auctions, the Exchange 

believes they may be further encouraged 

to submit more auction responses, 

which may contribute to a deeper, more 

liquid auction process that provides 

investors with additional price 

improvement opportunities. 

The Exchange believes the proposed 

rule change will result in increased 

execution opportunities for liquidity 

providers that submit auction responses 

and enhance the potential for price 

improvement for orders submitted to 

each mechanism to the benefit of 

investors and public interest. As 

described above, the Exchange believes 

the proposed functionality will increase 

the possibility that timely submitted 

auction responses are processed by the 

Exchange and have an opportunity for 

execution in the Exchange’s auction 

mechanism, even if there is a deep 

pending message queue. The Exchange 

believes the proposed maximum 

amount of additional time for 

processing (i.e., 100 milliseconds) is 

both an adequate amount of time to 

provide pending auction responses with 

such execution opportunity, but also an 

amount minimal enough that impact to 

other message traffic, if any, would be 

de minimis. The Exchange also 

discussed the proposed maximum 

amount of time with market participants 

who indicated that 100 milliseconds 

was acceptable to them. As represented 

above, the Exchange anticipates that in 

the vast majority of cases, the additional 

time needed after the conclusion of 

auction response period, if any, to 

process all pending auction responses 

will be shorter than the maximum 100 

milliseconds. To the extent the 

Exchange determines a lesser amount of 

time would be sufficient, the Exchange 

could implement an additional amount 

of time for processing auction responses 

that is less than 100 milliseconds, 

which time would be announced with 

reasonable advance notice to market 

participants via Exchange Notice. 

Additionally, all message traffic 

(including auction responses) will 

continue to be processed in timepriority. 

While the Exchange may increase the 

length of the auction response period to 

accommodate more auction responses, 

the Exchange believes the proposed 

functionality better addresses the issue 

of missed auction responses. 

Particularly, the Exchange believes the 

proposed rule change will accommodate 

more auction responses while also 

mitigating market risk that may 

accompany a longer auction period by 

setting the length of an auction response 

period to a timeframe that allows an 

adequate amount of time for TPHs to 

respond to an auction message and 

provides the auctioned order with fast 

executions. Additionally, the Exchange 

believes TPHs may wait until the end of 

an auction response period regardless of 

how long the Exchange sets it to in 

order to ensure they are comfortable 

with the price the response may execute 

at the conclusion of such auction. As 

such, extending the auction response 

period in each auction would not itself 

prevent auction responses from 

continuing to miss the auction 

notwithstanding being timely 

submitted. 

The Exchange believes adopting the 

proposed functionality for auction 

responses would also better provide 

customers with additional opportunities 

for price improvements with little to no 

impact to non-auction response message 

traffic. Currently, auction responses 

account for an incredibly small fraction 

of message traffic submitted to the 

Exchange. Indeed, based on the 

Exchange’s analysis in August 2024, 

auction response messages accounted 

for a mere 0.07% of all message traffic 

submitted to the Exchange. The 

Exchange believe the processing of such 

a small amount of message traffic, even 

after the conclusion of an auction 

response period, would therefore have 

de minimis, if any, impact on the 

processing of non-auction response 

messages waiting in the queue. The 

Exchange also notes that all messages 

are currently processed one at a time by 

the System. Therefore, the System still 

needs to ‘‘process’’ all pending auction 

responses, regardless of whether that 

processing involves canceling the 

pending auction response because it 

wasn’t processed in time to participate 

in the auction or actually processing the 

response to participate in the auction. 

Either way, the non-auction response 

messages will still have to wait for 

processing of any pending responses 

ahead of it. Conversely, the current 

system may cause investors to miss out 

on opportunities to receive price 

improvement through the Exchange’s 

auction mechanism as the System is 

configured to cancel pending auction 

responses that ‘‘miss’’ the auction 

execution, even if such responses were 

timely submitted but not processed due 

to the System being otherwise occupied 

processing messages in queue ahead of 

it. The Exchange therefore believes its 

proposal will make it more likely that 

the System processes timely submitted 

auction responses and includes them in 

its auction mechanism, thus providing 

them with more opportunities to 

execute against auctioned orders, even 

during periods of high message traffic. 

The Exchange believes the proposed 

rule change is not designed to permit 

unfair discrimination between market 

participants as all market participants 

are allowed to submit auction 

responses. Additionally, the Exchange 

believes it’s reasonable to adopt the 

proposed functionality for auction 

responses as compared to other 

messages because auction responses are 

submitted only for the purpose of 

executing (and possibly providing price 

improvement) in auctions with short 

durations, whereas other messages are 

generally submitted to rest in or execute 

against the book (and generally not used 

to submit liquidity into auctions). As 

discussed above, the Exchange believes 

the benefits that result from the 

adoption of the proposed functionality 

for auction responses would outweigh 

any potential negative impact to other 

message traffic, including customer 

orders, which have an incredibly low 

chance of being affected by the 

proposed change as discussed above 

and which continue to receive priority 

allocation in any event. 

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 that the 

proposed changes will impose any 

burden on intra-market competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act, 

as the proposed rule change would 

apply equally to all TPHs that submit 

auction responses. As noted above, all 

market participants are able to submit 

auction responses. Additionally, the 

Exchange believes the adoption of the 

proposed functionality for auction 

responses would have little to no impact 

on non-auction response message traffic. 

As discussed, auction response 

messages account for an incredibly 


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15 Supra note 11. 16 Supra note 11. 

small fraction of message traffic 

submitted to the Exchange. The 

Exchange therefore believes the 

processing of such a small amount of 

message traffic by using the 

functionality would have a de minimis, 

if any, impact on the processing of nonauction response messages. Moreover, 

the Exchange believes it’s reasonable to 

adopt the proposed functionality for 

auction responses as compared to other 

messages because auction responses are 

submitted only for the purpose of 

executing (and possibly providing price 

improvement) in auctions with short 

durations, whereas other messages are 

generally submitted to rest in or execute 

against the book (and generally not used 

to submit liquidity into auctions). 

Lastly, the Exchange does not believe 

the proposed rule change will impose 

any burden on inter-market competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act, 

as the proposed change affects how the 

System processes auction responses that 

may only participate in auctions that 

occur on the Exchange. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange designates that the 

proposed rule change effects a change 

that (i) does not significantly affect the 

protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) by its terms, does not become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest. Additionally, the 

Exchange has given the Commission 

written notice of its intent to file the 

proposed rule change, along with a brief 

description and text of the proposed 

rule change, at least five business days 

prior to the date of filing of the 

proposed rule change, or such shorter 

time as designated by the Commission. 

As described above, the Exchange has 

observed a number of auction responses 

missing opportunities to execute 

auctions, notwithstanding being timely 

submitted within the auction response 

period. The Exchange believes adopting 

the proposed functionality for auction 

responses would better provide market 

participants with additional 

opportunities for price improvements 

with very little, if any, impact to nonauction response message traffic, 

thereby removing impediments to a free 

and open market and ultimately 

protecting and benefiting investors. 

Additionally, because the proposed 

functionality may provide liquidity 

providers that submit auction responses 

with additional execution opportunities 

in auctions, the Exchange believes they 

may be further encouraged to submit 

more auction responses, which may 

contribute to a deeper, more liquid 

auction process that provides investors 

with additional price improvement 

opportunities. 

The Exchange also believes the 

proposed rule change does not impose 

any significant burden on competition, 

as the proposed functionality would 

apply equally to all TPHs that submit 

auction responses and as the proposed 

change only affects how the Exchange’s 

System processes auction responses that 

participate in auctions that occur only 

on the Exchange. 

Finally, the Exchange does not believe 

the proposed functionality raises any 

novel legal or regulatory issues as the 

Exchange’s affiliate Cboe Options 

currently maintains the same 

timestamping functionality, which was 

reviewed and approved by the 

Commission prior to its implementation 

and the same functionality was recently 

adopted on the Exchange’s affiliate and 

EDGX Options, which was also 

reviewed by the Commission.15

For the foregoing reasons, this rule 

filing qualifies as a ‘‘non-controversial’’ 

rule change under Rule 19b–4(f)(6), 

which renders the proposed rule change 

effective upon filing with the 

Commission. At any time within 60 

days of the filing of this 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 will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. The Exchange respectfully 

requests that the Commission waive the 

30-day operative delay period after 

which a proposed rule change under 

Rule 19b–4(f)(6) becomes effective. The 

Exchange believes waiver of the 

operative delay will benefit investors 

because it will permit the proposed rule 

change to be operative as soon as 

practicable. As previously noted, the 

Exchange’s affiliate, Cboe Options 

recently received Commission approval 

of a substantively identical functionality 

and the Exchange’s affiliate EDGX 

Options also recently adopted the same 

functionality.16 Moreover, no comments 

to either of those filings were submitted 

during the respective public comment 

periods. Therefore, given that the 

Commission has noticed for public 

comment substantively identical filings 

and received no comments to such 

filings, the Exchange believes an 

operative delay is not necessary for this 

filing. Additionally, waiver of the 

operative delay will permit the 

Exchange to implement the proposed 

functionality as soon as possible, which 

will benefit investors as the System will 

potentially process more, if not all, 

timely submitted auction responses, 

thereby provide further opportunities 

for auctioned orders to receive price 

improvement, which removes 

impediments to a free and open market 

and ultimately protects and benefits 

investors. 

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– 

C2–2024–021 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–C2–2024–021. 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 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 95851 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See SR–ISE–2024–054 (not yet noticed). 

4See Securities Exchange Act Release No. 101720 

(November 22, 2024), (SR–ISE–2024–12) (not yet 

noticed). This rule change is approved, but not yet 

implemented. 

5 Id. 

6See Securities Exchange Act Release No. 101387 

(October 18, 2024), 89 FR 84948 (October 24, 2024) 

(SR–Cboe–2024–035) (Notice of Filing of 

Amendment Nos. 2 and 3 and Order Granting 

Accelerated Approval of a Proposed Rule Change, 

as Modified by Amendment Nos. 2 and 3, To Permit 

the Listing and Trading of Options on Bitcoin 

Exchange-Traded Funds) (‘‘Cboe Approval Order’’). 

7See Securities Exchange Act Release No. 101386 

(October 18, 2024), 89 FR 84960 (October 24, 2024) 

(SR–NYSEAMER–2024–49) (Notice of Filing of 

Amendment No. 3 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 3, To Permit the Listing and 

Trading of Options on Bitcoin Exchange-Traded 

Funds) (‘‘NYSE American Approval Order’’). 

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

9 15 U.S.C. 78f(b)(5). 

10See supra note 5. 

11See supra note 6. 

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–C2–2024–021 and should be 

submitted on or before December 24, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Stephanie J. Fouse, 

Assistant Secretary. 

[FR Doc. 2024–28342 Filed 12–2–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101765; File No. SR–ISE– 

2024–55] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend FLEX Options 

Listing 

November 26, 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 November 

25, 2024, Nasdaq ISE LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange [sic] to amend Options 

3A, Section 3, FLEX Options Listings. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/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 3A, Section 3, FLEX Options 

Listings, to reflect the addition of the 

listing of options on: (1) the Fidelity 

Wise Origin Bitcoin Fund; (2) the 

ARK21Shares Bitcoin ETF; (3) the 

Grayscale Bitcoin Trust (BTC); (4) the 

Grayscale Bitcoin Mini Trust BTC; (5) 

and the Bitwise Bitcoin ETF 

(collectively ‘‘Bitcoin Trusts’’). 

Specifically, ISE proposes to except 

FLEX Options on the Bitcoin Trusts 

from trading as a [sic] FLEX Options 

contracts. ISE separately filed a rule 

proposal to list and trade the options on 

the Bitcoin Trusts.3

ISE recently received approval to list 

and trade Flexible Exchange Options 

(‘‘FLEX Options’’) on the Exchange’s 

electronic market.4 At this time, the 

Exchange proposes to amend Options 

3A, Section 3, FLEX Options Listings, to 

specify that ISE will not authorize for 

trading a FLEX Option on each of the 

Bitcoin Trusts. For clarity, this 

exclusion will apply to both physicallysettled and cash-settled FLEX ETF 

options, such that options on the 

Bitcoin Trusts will be excluded from 

being eligible to trade as a physicallysettled or a cash-settled FLEX ETF 

option. Options 3A, Section 3 currently 

provides that the Exchange will not 

authorize FLEX Options on shares of the 

iShares Bitcoin Trust ETF.5 The 

Exchange proposes this amendment in 

light of the position and exercise limits 

of 25,000 contracts that were set for the 

Fidelity Wise Origin Bitcoin Fund, the 

ARK21Shares Bitcoin ETF, the 

Grayscale Bitcoin Trust (BTC), the 

Grayscale Bitcoin Mini Trust BTC, and 

the Bitwise Bitcoin ETF in the Cboe 

Approval Order 6 and the NYSE 

American Approval Order,7

respectively. If the Exchange determines 

to allow FLEX Options on the Bitcoin 

Trusts at a later date, it will do so by 

submitting a 19b–4 rule change with the 

Commission. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,8 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,9

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

The Exchange’s proposal to amend 

Options 3A, Section 3, FLEX Options 

Listings, to note that it will not 

authorize for trading a FLEX Option on 

each of the Bitcoin Trusts is consistent 

with the spirit of the Cboe Approval 

Order 10 and the NYSE American 

Approval Order,11 respectively, that 

limited the position and exercise limits 

for each of the Bitcoin Trusts to 25,000 

contracts. The proposal will protect 

investors and the general public because 

without this prohibition, trading a FLEX 

Option on the Bitcoin Trusts would 

otherwise establish different position 

and exercise limits than those set by the 

aforementioned approval orders. For 

clarity, this exclusion will apply to both 

physically-settled and cash-settled 

FLEX ETF options, such that options on 

the Bitcoin Trusts will be excluded from 


lotter on DSK11XQN23PROD with NOTICES1