Document ID: SEC-2023-1524-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2023-12-28T05:00Z

[Federal Register Volume 88, Number 248 (Thursday, December 28, 2023)]
[Notices]
[Pages 89745-89747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28610]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99224; File No. SR-CboeBZX-2023-102]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 11.22 To Introduce a New Data Product To Be Known as the Short 
Interest Report

December 21, 2023.
    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 December 11, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
amend Rule 11.22 to introduce a new data product to be known as the 
Short Interest Report. The text of the proposed rule change is provided 
below.
    (additions are italicized; deletions are [bracketed])
* * * * *

Rules of Cboe BZX Exchange, Inc.

* * * * *

Rule 11.22. Data Products

    The Exchange offers the following data products free of charge, 
except as otherwise noted in the Exchange's fee schedule:
    (a)-(m) No change.
    (n) Short Interest Report. The Short Interest Report contains a 
summary of consolidated market short interest positions in all BZX-
listed securities.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 11.22 to adopt new subparagraph 
(n) to include the Short Interest Report as an Exchange data product.
    The Exchange currently makes available via its website, without 
charge, a Short Interest Report.\5\ By way of background, pursuant to 
the Financial Industry Regulatory Authority, Inc. (``FINRA'') Rule 
4560, each FINRA member firm is required to report its ``total'' short 
interest positions in all customer and proprietary firm accounts.\6\ 
FINRA uses the short interest data to, among other things, assess its 
members' short selling activity and compliance with Regulation SHO. The 
short interest data provided by FINRA members also provides analytical 
and investment data that the brokerage industry, academic institutions 
and investors use in developing risk-assessment tools and trading 
models. The Short Interest Report that the Exchange currently makes 
available is a summary of consolidated market short interest positions 
in all BZX-listed securities \7\ only as reported by FINRA. The file is 
provided daily, for each business day, but values are only updated 
twice per month.
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    \5\ https://www.cboe.com/us/equities/market_statistics/short_interest/
    \6\ See FINRA Rule 4560.
    \7\ A BZX-listed security is a security listed on the Exchange 
pursuant to Chapter 14 of the Exchange's Rules and includes both 
corporate listed securities and Exchange Traded Products (``ETPs'').
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    Proposed Rule 11.22(n) provides that the Short Interest Report 
contains a summary of consolidated market short interest positions in 
all BZX-listed securities. The report data fields include Cycle 
Settlement Date,\8\ BATS-Symbol,\9\ Security Name, Number of Shares Net 
Short Current Cycle,\10\ Number of Shares Net Short Previous Cycle,\11\ 
Cycle Average Daily Trade Volume,\12\ Minimum Number of Trade Days to 
Cover Shorts,\13\ Split Indicator,\14\ Manual Revision Indicator,\15\ 
Percent Change in Short Position,\16\ and Change in Short Position from 
Previous.\17\
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    \8\ ``Cycle Settlement Date'' is the reporting period date.
    \9\ ``BATS-Symbol'' is the Exchange-assigned symbol for the 
given security.
    \10\ ``Number Shares Net Short Current Cycle'' is the total of 
uncovered open short interest positions in a particular security in 
shares, for the current reporting period.
    \11\ ``Number of Shares Net Short Previous Cycle'' is the total 
number of uncovered open short interest positions in a particular 
security in shares, for the previous reporting period.
    \12\ ``Cycle Average Daily Trade Volume'' is the number of 
shares traded on average per day in a particular security in shares.
    \13\ ``Minimum Number of Trade Days to Cover Shorts'' is the 
ratio of the current short interest position over the average daily 
volume for the current settlement date.
    \14\ ``Split Indicator'' indicates whether the security has 
undergone a stock split during the current reporting period.
    \15\ ``Manual Revision Indicator'' indicates whether the 
security's short interest for the previous reporting period has been 
revised.
    \16\ ``Percent Change in Short Position'' is the percent change 
from the current reporting period's short interest compared to the 
previous reporting period's short interest.
    \17\ ``Change in Short Position from Previous'' is the 
difference between the current and previous reporting period of 
uncovered short interest positions in a particular security in 
shares.
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    Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the 
Exchange's parent company, Cboe Global Markets, Inc., will make the 
Short Interest Reports available for purchase \18\ to Members and non-
Members on the LiveVol DataShop website.\19\
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    \18\ The Exchange intends to submit a separate filing to 
establish fees for the Short Interest Report.
    \19\ See https://datashop.cboe.com/.
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    The Exchange notes that the data fields included in the Short 
Interest Report are substantially similar to the

[[Page 89746]]

fields included by the Nasdaq Stock Market LLC (``Nasdaq'') \20\ and 
the New York Stock Exchange LLC (``NYSE'') \21\ in their Short Interest 
Report files. Specifically, the Nasdaq Short Interest Report file also 
includes Security Name and Symbol, Current Shares Short, Previous Month 
Shares Short, Change in Shares Short, Percent Change, Average Daily 
Share Volume, Days to Cover, and Stock Split Flag, and New Issue 
Flag.\22\ The proposed Short Interest Report is also similar to NYSE's 
Short Interest Report file, which includes Stock Symbol and Standard 
Suffix, Issue Name, Revision Indicator, Split Indicator Current Short 
Interest Position, Previous Short Interest Position, Change in Short 
Interest Position, Average Daily Volume, and Current Days to Cover.\23\ 
Accordingly, the data fields included in the Short Interest Report are 
nearly identical to the fields included by Nasdaq and NYSE in their 
respective short interest reports, except that the Exchange will not 
include one field that appears within the Nasdaq report (i.e., the New 
Issue Flag) and three fields that appear within the NYSE report (i.e., 
the Change in Days to Cover, Free Float and Change in Average Daily 
Volume). The Exchange's proposed Short Interest Report will include 
only data points provided by FINRA, and as the foregoing fields are not 
included in the FINRA-provided data points, the Exchange will not 
include such fields in the report. Additionally, like NYSE, the 
Exchange will offer historical Short Interest Reports, dating back to 
March 31, 2015, which will include the same data fields as the daily 
end-of-day files.
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    \20\ See Specifications for Short Interest file, available at: 
https://www.nasdaq.com/solutions/short-interest-report.
    \21\ See NYSE Group Short Interest Client Specification, 
available at: 
NYSE_Group_Short_Interest_Client_Specification_v1.5.pdf. Unlike 
NYSE, the proposed Short Volume Report will not include the trading 
exchange, as the proposed report includes short interest information 
only for transactions executed on BZX.
    \22\ See supra note 20.
    \23\ See supra note 21.
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    The Exchange anticipates that a wide variety of market participants 
will purchase the proposed Short Interest Report, including, but not 
limited to, active equity trading firms and academic institutions. For 
example, the Exchange notes that academic institutions may utilize the 
Short Interest Report data and as a result promote research and studies 
of the equities industry to the benefit of all market participants. The 
Exchange further believes the proposed Short Interest Report may 
provide helpful trading information regarding investor sentiment that 
may allow market participants to make more informed trading decisions 
and may be used to create and test trading models and analytical 
strategies and provide comprehensive insight into trading on the 
Exchange. The proposal is a completely voluntary product, in that the 
Exchange is not required by any rule or regulation to make this data 
available and that potential subscribers may purchase it only if they 
voluntarily choose to do so.
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.\24\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \25\ 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) \26\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ Id.
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. The Exchange believes that the proposed Short 
Interest Report, which supplies data on short interest positions for 
all BZX-listed securities as reported by FINRA, broadens the 
availability of U.S. equity market data to investors consistent with 
the principles of Regulation NMS. The proposal also promotes 
transparency through the dissemination of short interest data. The 
proposed rule change would benefit investors by providing access to the 
Short Interest Report data, which may promote better informed trading, 
as well as research and studies of the equities industry. Further, data 
products such as the Short Interest Report are a means by which 
exchanges compete to attract order flow. To the extent that exchanges 
are successful in such competition, they earn trading revenues and also 
enhance the value of their data products by increasing the amount of 
data they provide. The need to compete for order flow places 
substantial pressure upon exchanges to keep their market data offerings 
competitive.
    Moreover, as noted above, Nasdaq offers a Short Interest file which 
provides short interest data that is nearly identical to that currently 
proposed by the Exchange.\27\ The proposed Short Interest Report is 
also nearly identical to NYSE's Short Interest file.\28\ As stated 
previously, the Exchange's Short Interest Report is nearly identical to 
the NYSE and Nasdaq reports in that the Exchange will offer identical 
data fields except that the Exchange will not include one field that 
appears within the Nasdaq report (i.e., the New Issue Flag) and three 
fields that appear within the NYSE report (i.e., the Change in Days to 
Cover, Free Float and Change in Average Daily Volume). As noted above, 
the Exchange's report will include data points provided by FINRA, and 
the foregoing Nasdaq and NYSE fields are not included in the FINRA-
provided data points. Accordingly, the proposed Short Interest Report 
does not provide a unique or novel data offering, but rather offers 
data points consistent with other data products already available and 
utilized by market participants today.
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    \27\ See supra note 20.
    \28\ See supra note 21.
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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. Rather, the Exchange 
believes that the proposal will promote fair competition among the 
national securities exchanges by permitting the Exchange to offer a 
data product that provides substantially the same data offered by other 
competitor equities exchanges, with the only difference, as noted 
above, being that the Exchange's report not include fields outside of 
those provided by FINRA.
    Additionally, the Exchange believes the proposed rule change does 
not impose any burden on intramarket

[[Page 89747]]

competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Short Interest Report will be available 
equally to Members and non-Members. Market participants are not 
required to purchase the Short Interest Report, and the Exchange is not 
required to make the Short Interest Report available to investors. 
Rather, the Exchange is voluntarily making the Short Interest Report 
available, and market participants may choose to receive (and pay for) 
this data based on their own business needs. Potential purchasers may 
request the data at any time if they believe it to be valuable or may 
decline to purchase such data. Given the above, the Exchange does not 
believe the proposed rule change will result in any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
    The Exchange also believes the proposed rule change does not impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Moreover, as 
noted above, Nasdaq offers a Short Interest file which provides short 
interest data that is nearly identical to that currently proposed by 
the Exchange.\29\ The proposed Short Interest Report is also nearly 
identical to NYSE's Short Interest file.\30\ As stated previously, the 
Exchange's Short Interest Report is nearly identical to the NYSE and 
Nasdaq reports in that the Exchange will offer identical data fields 
except that the Exchange will not include one field that appears within 
the Nasdaq report (i.e., the New Issue Flag) and three fields that 
appear within the NYSE report (i.e., the Change in Days to Cover, Free 
Float and Change in Average Daily Volume). As noted above, the 
Exchange's report will include data points provided by FINRA, and the 
foregoing Nasdaq and NYSE fields are not included in the FINRA-provided 
data points. Accordingly, the proposed Short Interest Report does not 
provide a unique or novel data offering, but rather offers data points 
consistent with other data products already available and utilized by 
market participants today.
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    \29\ See supra note 20.
    \30\ See supra note 21.
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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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \31\ and Rule 19b-
4(f)(6) \32\ thereunder.
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    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \33\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\34\ the Commission 
may designate a shorter time of such action is consistent with the 
protection of investor and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative upon filing. The Exchange states that 
waiving the operative delay would allow market participants to realize 
immediately the benefits of the proposal, which the Exchange states 
includes trading information regarding investor sentiment that may 
allow market participants to make more informed trading decisions. The 
proposed change raises no novel legal or regulatory issues. Based on 
the foregoing, the Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the operative 
delay and designates the proposal operative upon filing.
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    \33\ 17 CFR 240.19b-4(f)(6).
    \34\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-102 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CboeBZX-2023-102. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2023-102 and should 
be submitted on or before January 18, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12), (59).
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Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2023-28610 Filed 12-27-23; 8:45 am]
BILLING CODE 8011-01-P