[Federal Register Volume 86, Number 82 (Friday, April 30, 2021)]
[Notices]
[Pages 22982-22989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09021]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91671; File No. SR-BX-2021-015]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, 
Section 2, ``BX Options Market- Fees and Rebates''

April 26, 2021.
    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 April 13, 2021, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BX Options 7, Section 2, ``BX 
Options Market- Fees and Rebates.''
    The Exchange originally filed the proposed pricing changes on March 
29, 2021 (SR-BX-2021-010). On April 13, 2021, the Exchange withdrew 
that filing and submitted this filing.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on April 1, 
2021.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/bx/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 BX's Pricing Schedule at Options 7, 
Section 2, ``BX Options Market-Fees and Rebates.'' The Exchange 
proposes to amend Options 7, Section 2(1) to qualify the Customer Non-
Penny Symbol Maker Rebate and add certain rule text to make clear the 
manner in which Options 7, Section 2(1) pricing applies today. The 
Exchange also proposes to amend Options 7, Section 2(2) to amend the 
pricing for the Opening Cross. Each change will be described below.
Options 7, Section 2(1)
    Today, Customers are paid a Non-Penny Symbol Maker Rebate of $0.90 
per contract for adding liquidity in Non-Penny Symbols, regardless of 
contra-party. Customers are assessed a Non-Penny Symbol Taker Fee of 
$0.65 per contract for removing liquidity in Non-Penny Symbols, 
regardless of counterparty.
    The Exchange proposes to amend the Customer Non-Penny Symbol Maker 
Rebate of $0.90 per contract. The Exchange proposes to continue to pay 
a Customer Non-Penny Symbol Maker Rebate of $0.90 per contract unless 
the

[[Page 22983]]

contra-side is also a Customer, in which case the Exchange will pay a 
reduced Customer Non-Penny Symbol Market Rebate of $0.45 per contract 
if the quantity of transactions where the contra-side is also a 
Customer is greater than 25% of Participant's total Customer Non-Penny 
Symbol volume which adds liquidity in that month. The aforementioned 
calculation of 25% will not consider orders within the Opening Process 
\3\ per Options 3, Section 8, orders that generate an order exposure 
alert per Options 5, Section 4, or orders transacted in the Price 
Improvement Auction (``PRISM'') per Options 3, Section 13. The Exchange 
proposes to add this rule text to Options 7, Section 2(1) at new note 
``3''.
---------------------------------------------------------------------------

    \3\ The Exchange proposes to rename ``Opening Cross'' within 
Options 7, Section 2(2) as `Opening Process.'' Hereafter, the 
Exchange will refer to Options 7, Section 2(2) as the Opening 
Process and the previous process as the Opening Cross throughout 
this rule change.
---------------------------------------------------------------------------

    The Exchange also proposes to amend Options 7, Section 2(1) to add 
a new note ``*'' which makes clear that orders executed in the Opening 
Process per Options 3, Section 8, orders that generate an order 
exposure alert per Options 5, Section 4, and orders transacted in the 
Price Improvement Auction (``PRISM'') per Options 3, Section 13 are not 
subject to Options 7, Section 2(1) pricing, instead, these orders are 
subject to the pricing within Options 7, Sections 2(2), (4) and (5), 
respectively. The Exchange believes that this note will guide 
Participants to the correct pricing within Options 7, Section 2. This 
new note ``*'' does not represent a substantive change. The proposed 
new note ``*'' is intended to serve as a guidepost to Participants 
referring to the BX Pricing Schedule.
Options 7, Section 2(2)
    As noted above, the Exchange proposes to amend the title of Options 
7, Section 2(2) to align with the title of Options 3, Section 8. The 
Exchange also proposes to add a citation to the rule for the Opening 
Process. The current title, ``Opening Cross'' would be amended to state 
``Opening Process per Options 3, Section 8.'' The Exchange also 
proposes to change the phrase ``Opening Cross'' to ``Opening Process'' 
throughout Options 7, Section 2(2) as well. These amendments are non-
substantive.
    Currently, Options 7, Section 2(2) provides,

    All orders executed in the Opening Cross:
    Customer orders will receive the Rebate to Remove Liquidity 
during the Exchange's Opening Cross, unless the contra-side is also 
a Customer (in which case no Fee to Remove Liquidity is assessed and 
no Rebate to Remove Liquidity is received). Lead Market Makers, BX 
Options Market Makers,\4\ Non-Customers, and Firms will be assessed 
the Fee to Remove Liquidity during the Exchange's Opening Cross.
---------------------------------------------------------------------------

    \4\ The Prior Fee Change renamed ``BX Options Market Maker'' as 
``Market Maker.''

The Exchange recently filed to amend the pricing within Options 7, 
Section 2(1) to remove the current fees, rebates and tier schedules 
applicable to Penny Symbols and Non-Penny Symbols and replace it with a 
new maker/taker fee structure.\5\ Currently, Options 7, Section 2(2) 
continues to reference pricing which was removed with the Prior Fee 
Change. As the current pricing refers to Rebates to Remove Liquidity 
and Fees to Remove Liquidity which no longer exist on the Pricing 
Schedule within Options 7, Section 2(1), the Exchange did not assess 
any Participant a fee nor pay a rebate in March 2021 with respect to 
the Opening Cross.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 91473 (April 5, 
2021) 86 FR 18562 (April 9, 2021) (April 9, 2021) [sic] (SR-BX-2021-
009) (``Prior Fee Change'').
---------------------------------------------------------------------------

    At this time, the Exchange proposes to amend Options 7, Section 
2(2) to provide,

    All orders executed in the Opening Process:
    Customer orders will receive the Maker Rebate during the 
Exchange's Opening Process, unless the contra-side is also a 
Customer, in which case a Maker Rebate will not be paid and a Taker 
Fee will not be assessed. Lead Market Makers, Market Makers, Non-
Customers, and Firms will be assessed the Taker Fee during the 
Exchange's Opening Process and will receive Maker Rebates.

This proposed new rule text would continue to pay Customers a rebate 
during the Exchange's Opening Process, unless the Customer order is 
contra another Customer order as explained in greater detail below.
Penny Symbols
    Previously, during the Opening Cross, Customer orders received a 
Rebate to Remove Liquidity, unless the contra-side was also a Customer, 
in which case no Fee to Remove Liquidity was assessed and no Rebate to 
Remove Liquidity was received. Previously, during the Opening Cross, BX 
paid a Penny Symbol Rebate to Remove Liquidity when trading against a 
Non-Customer, Lead Market Maker, BX Options Market Maker, Customer or 
Firm which ranged from $0.00 to $0.35 per contract.\6\ The proposed new 
pricing which would be applicable to the Exchange's Opening Process 
would pay Customers a Maker Rebate of $0.30 per contract, unless the 
contra-side is also a Customer, in which case a Maker Rebate would not 
be paid and a Taker Fee would not be assessed. The proposed new Penny 
Symbol Customer Maker Rebate of $0.30 per contract would pay 
Participants that previously qualified for now defunct Tiers 1 and 2 
\7\ a higher Customer rebate than was previously paid. Participants 
that qualified for now defunct Tier 3 would receive a lower Customer 
rebate than was previously paid, provided the contra-side was not a 
Customer. Previously, during the Opening Cross, no Rebate was paid to 
Remove Liquidity when a Customer was contra another Customer. With the 
proposed pricing, during the Opening Process, when a Customer is contra 
another Customer a Maker Rebate would not be paid and a Taker Fee would 
not be assessed.
---------------------------------------------------------------------------

    \6\ Participants that executed less than 0.05% of total industry 
customer equity and ETF option ADV contracts per month received no 
Penny Symbol Rebate to Remove Liquidity in Tier 1. Participants that 
executed 0.05% to less than 0.15% of total industry customer equity 
and ETF option ADV contracts per month received a $0.25 per contract 
Penny Symbol Rebate to Remove Liquidity in Tier 2. Participants that 
executed 0.15% or more of total industry customer equity and ETF 
option ADV contracts per month received a $0.35 per contract Penny 
Symbol Rebate to Remove Liquidity in Tier 3.
    \7\ The Prior Fee Change eliminated Tiers 1-3 described herein.
---------------------------------------------------------------------------

    Previously, during the Opening Cross, Lead Market Makers and 
Options Market Makers were assessed the Fee to Remove Liquidity while 
Lead Market Makers and Market Makers paid the Penny Symbol Fee to 
Remove Liquidity when trading against a Customer that ranged from $0.39 
to $0.30 per contract.\8\ Previously, during the Opening Cross, Lead 
Market Makers and Market Makers paid a Penny Symbol Fee to Remove 
Liquidity when trading against a Non-Customer, Lead Market Maker, BX 
Options Market Maker or Firm of $0.46 per contract, regardless of 
tier.\9\ With the proposed new Opening

[[Page 22984]]

Process pricing, the Penny Symbol Taker Fee for Lead Market Maker and 
Market Maker orders of $0.46 per contract would be higher than the 
prior Lead Market Maker and Market Maker tiered Penny Symbol Fee to 
Remove Liquidity when trading against a Customer which ranged from 
$0.39 to $0.30 per contract and would be the same as the previous Lead 
Market Maker and Market Maker tiered Penny Symbol Fees to Remove 
Liquidity when trading against a Non-Customer, Lead Market Maker, 
Options Market Maker or Firm of $0.46 per contract regardless of tier. 
With the proposed new pricing, Lead Market Makers and Market Makers 
would not receive Maker Rebates during the Opening Process.
---------------------------------------------------------------------------

    \8\ Participants that executed less than 0.05% of total industry 
customer equity and ETF option ADV contracts per month pay a Penny 
Symbol Fee to Remove Liquidity of $0.39 per contract in Tier 1. 
Participants that execute 0.05% to less than 0.15% of total industry 
customer equity and ETF option ADV contracts per month pay a Penny 
Symbol Fee to Remove Liquidity of $0.39 per contract in Tier 2. 
Participants that execute 0.15% or more of total industry customer 
equity and ETF option ADV contracts per month pay a Penny Symbol Fee 
to Remove Liquidity of $0.30 per contract in Tier 3.
    \9\ Participants that executed less than 0.05% of total industry 
customer equity and ETF option ADV contracts per month pay a Penny 
Symbol Fee to Remove Liquidity of $0.46 per contract in Tier 1. 
Participants that execute 0.05% to less than 0.15% of total industry 
customer equity and ETF option ADV contracts per month pay a Penny 
Symbol Fee to Remove Liquidity of $0.46 per contract in Tier 2. 
Participants that execute 0.15% or more of total industry customer 
equity and ETF option ADV contracts per month pay a Penny Symbol Fee 
to Remove Liquidity of $0.46 per contract in Tier 3.
---------------------------------------------------------------------------

    Previously, during the Opening Cross, Non-Customers and Firms were 
assessed the Fee to Remove Liquidity. The prior Penny Symbol Fee to 
Remove Liquidity was a flat fee of $0.46 per contract. The proposed new 
Penny Symbol Taker Fee of $0.46 per contract would be the same as the 
prior Penny Symbol Fee to Remove Liquidity of $0.46 per contract. With 
this pricing, Non-Customers and Firms would not receive Maker Rebates 
during the Opening Process.
Non-Penny Symbols
    Previously, during the Opening Cross, Customer orders received a 
Rebate to Remove Liquidity, unless the contra-side was also a Customer, 
in which case no Fee to Remove Liquidity was assessed and no Rebate to 
Remove Liquidity was received. Previously, during the Opening Cross, BX 
paid a Non-Penny Symbol Customer Rebate to Remove Liquidity of $0.80 
per contract,\10\ regardless of the tier and regardless of the contra-
party. The proposed new pricing would similarly pay Customers a Maker 
Rebate during the Exchange's Opening Process, unless the contra-side is 
also a Customer, in which case a Maker Rebate would not be paid and a 
Taker Fee would not be assessed. The proposed new Non-Penny Symbol 
Customer Maker Rebate of $0.90 per contract during the Opening Process 
would be higher than the prior rebates, provided the contra-side is not 
a Customer. During the Opening Process, no Rebate to Remove Liquidity 
was paid when a Customer was contra another Customer. With the proposed 
new pricing, during the Opening Process, when a Customer is contra 
another Customer a Maker Rebate would not be paid and a Taker Fee would 
not be assessed.
---------------------------------------------------------------------------

    \10\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month 
received an $0.80 per contract Non-Penny Symbol Rebate to Remove 
Liquidity in Tier 1. Participants that executed 0.05% to less than 
0.15% of total industry customer equity and ETF option ADV contracts 
per month received an $0.80 per contract Non-Penny Symbol Rebate to 
Remove Liquidity in Tier 2. Participants that executed 0.15% or more 
of total industry customer equity and ETF option ADV contracts per 
month received an $0.80 per contract Non-Penny Symbol Rebate to 
Remove Liquidity in Tier 3.
---------------------------------------------------------------------------

    Previously, during the Opening Cross, Lead Market Makers and BX 
Options Market Makers were assessed the Fee to Remove Liquidity while 
Lead Market Makers and Market Makers paid an $0.89 per contract Non-
Penny Fee to Remove Liquidity when the Lead Market Maker or Market 
Maker traded with any market participant other than a Customer.\11\ 
Previously, during the Opening Cross, if the contra-party was a 
Customer, the Lead Market Maker and Market Maker were charged a Fee to 
Remove Liquidity that ranged from $0.89 to $0.60 per contract depending 
on the volume tier achieved.\12\ The proposed new Taker Fee of $1.10 
per contract for removing liquidity for Lead Market Makers and Market 
Makers in Non-Penny Symbols, during the Opening Process, regardless of 
contra-party would be higher than the prior fees assessed to Lead 
Market Makers and Market Makers for removing liquidity in Non-Penny 
Symbols. With the proposed new pricing, during the Opening Process, 
Lead Market Makers and Market Makers would not receive Maker Rebates.
---------------------------------------------------------------------------

    \11\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 1. Participants that executed 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 2. Participants that executed 0.15% or more of total industry 
customer equity and ETF option ADV contracts per month paid an $0.89 
per contract Non-Penny Symbol Fee to Remove Liquidity in Tier 3.
    \12\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 1. Participants that executed 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 2. Participants that executed 0.15% or more of total industry 
customer equity and ETF option ADV contracts per month paid an $0.60 
per contract Non-Penny Symbol Fee to Remove Liquidity in Tier 3.
---------------------------------------------------------------------------

    Previously, during the Opening Cross, Non-Customers and Firms were 
assessed the Non-Penny Symbol Fee to Remove Liquidity. During the 
Opening Cross, the prior Non-Penny Symbol Fee to Remove Liquidity was a 
flat fee of $0.89 per contract. During the Opening Process, the 
proposed new Non-Penny Symbol Taker Fee of $1.10 per contract for 
removing liquidity for Non-Customers and Firms in Non-Penny Symbols, 
would be higher than the prior Fee to Remove Liquidity. With this 
pricing, Non-Customers and Firms would not receive Maker Rebates during 
the Opening Process.
Options 7, Section 2(5)
    The Exchange proposes to add the words ``per Options 3, Section 
13'' at the end of the title to Options 7, Section 2(5) to provide the 
citation to the BX Price Improvement Auction rule. This amendment is 
non-substantive.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\13\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\14\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78 f(b).
    \14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange's proposed changes to its Pricing Schedule are 
reasonable in several respects. As a threshold matter, the Exchange is 
subject to significant competitive forces in the market for options 
securities transaction services that constrain its pricing 
determinations in that market. The fact that this market is competitive 
has long been recognized by the courts. In NetCoalition v. Securities 
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .'' \15\
---------------------------------------------------------------------------

    \15\ NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the

[[Page 22985]]

current market model, the Commission highlighted the importance of 
market forces in determining prices and SRO revenues and, also, 
recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \16\
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
options security transaction services. The Exchange is only one of 
sixteen options exchanges to which market participants may direct their 
order flow. Within this environment, market participants can freely and 
often do shift their order flow among the Exchange and competing venues 
in response to changes in their respective pricing schedules. As such, 
the proposal represents a reasonable attempt by the Exchange to 
increase its liquidity and market share relative to its competitors.
Options 7, Section 2(1)
    The Exchange's proposal to amend the Customer Non-Penny Symbol 
Maker Rebate of $0.90 per contract for adding liquidity in Non-Penny 
Symbols, regardless of contra-party and, instead, pay a $0.45 per 
contract Customer Non-Penny Symbol Maker Rebate if the quantity of 
transactions where the contra-side is also a Customer is greater than 
25% of Participant's total Customer Non-Penny Symbol volume which adds 
liquidity \17\ in that month is reasonable. BX's current $0.90 per 
contract flat Customer Non-Penny Symbol Maker Rebate is the highest 
simple order base rebate paid that does not consider volume or contra-
party.\18\ Other exchanges have higher simple order rebates, provided 
certain volume criteria are met.\19\ The Exchange's proposal to add a 
volume consideration for the ratio of Customer to Customer orders as 
compared to total Participant volume which adds Non-Penny Symbol 
liquidity in order to receive the $0.90 per contract Customer Non-Penny 
Symbol rebate as compared to the reduced $0.45 per contract rebate is 
reasonable. The Exchange currently assess a $0.65 per contract Customer 
Non-Penny Taker Fee, the lowest BX Taker Fee for Non-Penny Symbols,\20\ 
and, currently, the Exchange pays the highest Customer Maker Rebate of 
$0.90 per contract. The Exchange offers Customers the highest Non-Penny 
Maker Rebate on BX by assessing higher Non-Penny Taker Fees to Non-
Customers.\21\ To the extent a Participant submits a Non-Penny Customer 
order to add liquidity which interacts with a Non-Penny Customer order 
that removes liquidity, both Participants benefit from the higher Non-
Penny Maker Rebate and lower Non-Penny Taker Fee. The Exchange's 
intention for assessing Customer orders with the reduced Non-Penny 
Taker Fee was designed to bolster interaction with Non-Customer 
participants. Today, Non-Penny Customer orders which add liquidity have 
priority \22\ ahead of Non-Penny Non-Customer orders and, therefore, 
the Exchange's intention to enhance Non-Customer liquidity is subverted 
when a Non-Penny Customer order transacts with another Non-Penny 
Customer order. As a result, when Non-Penny Customers interact with 
other Non-Penny Customer orders more than by happenstance, the Exchange 
believes it is reasonable to pay Customer orders which add liquidity a 
lower rebate. The Exchange notes that Participants do occasionally 
submit Non-Penny Customer orders which add liquidity in Non-Penny 
Symbols to the order book that trade against Non-Penny Customer orders 
that remove liquidity in Non-Penny Symbols. The Exchange believes that 
type of behavior occurs, by happenstance, a small percentage of the 
time in a given month. Therefore, the Exchange selected 25% as a number 
to demarcate the point at which a Participant should receive the lower 
Customer Non-Penny Symbol Maker Rebate of $0.45 per contract because it 
does not believe that the type of behavior outlined herein should occur 
more than 25% of a Participant's total Customer Non-Penny Symbol volume 
unless the trading behavior intended. Further, the Exchange believes 
that although Customer orders may receive lower rebates if they 
transact the requisite number of Customer-to Customer trades, the 
Exchange's rebate of $0.45 per contract remains competitive and equal 
to or greater than the rebates that other Participants are 
afforded.\23\ The Exchange's proposal to exclude orders executed in the 
Opening Process per Options 3, Section 8, orders that generate an order 
exposure alert per Options 5, Section 4, and orders transacted in the 
Price Improvement Auction (``PRISM'') per Options 3, Section 13 from 
the aforementioned calculation of 25% is reasonable because orders 
executed in the Opening Process, orders that generate an order exposure 
alert, and orders transacted in PRISM have separate pricing within 
Options 7, Sections 2(2), (4) and (5), respectively. The Exchange's 
proposal to exclude orders executed in the Opening Process, orders that 
generate an order exposure alert, and orders transacted in PRISM from 
the aforementioned calculation of 25% is equitable and not unfairly 
discriminatory as the Exchange will

[[Page 22986]]

uniformly exclude these orders from the aforementioned calculation of 
25%.
---------------------------------------------------------------------------

    \17\ As proposed, the 25% calculation will not consider orders 
within the Opening Process per Options 3, Section 8, orders that 
generate an order exposure alert per BX Options 5, Section 4, or 
orders transacted in the Price Improvement Auction (``PRISM'') per 
Options 3, Section 13.
    \18\ BOX Exchange LLC (``BOX'') pays no Non-Penny Interval Class 
Public Customer Maker Rebate. See BOX's Fee Schedule at Section I, 
A. Cboe Exchange, Inc. (``Cboe'') pays a Non-Penny Class rebate to 
customers of $0.18 per contract only if the original order is <100 
contracts and removing liquidity. See Cboe's Fee Schedule. Cboe C2 
Exchange, Inc. (``C2'') pays a Non-Penny Class rebate to customers 
of $0.80 per contract to transactions which add liquidity. See C2's 
Fee Schedule. Cboe BZX Exchange, Inc. (``CboeBZX'') pays Non-Penny 
Program Securities rebates to customers which range from $0.85 to 
$1.06 per contract to transactions which add liquidity. See 
CboeBZX's Fee Schedule. Cboe EDGX Exchange, Inc. (``CboeEDGX'') pays 
Non-Penny Program Securities rebates to customers which range from 
$0.01 to $0.21 based on customer volume tiers. See CboeEDGX's Fee 
Schedule. Miami International Securities Exchange, LLC (``MIAX'') 
pays no customer rebate for non-penny classes. See MIAX's Fee 
Schedule. MIAX PEARL, LLC (``PEARL'') pays Priority Customer Non-
Penny Classes Maker Rebates which range from $0.85 to $1.04 based on 
volume. See PEARL's Fee Schedule. MIAX Emerald, LLC (``EMERALD'') 
pays Priority Customer Maker Rebates which range from $0.43 to 
$0.53, except that SPY, QQQ and IWM rebates are $0.45 and Priority 
Customer Simple Order rebates when contra is an Affiliated Market 
Maker are $0.49. See EMERALD's Fee Schedule. NYSE Arca, Inc. 
(``NYSEArca'') pays a Customer a $0.75 rebate to post liquidity 
unless contra a lead market maker, in which case no rebate is paid. 
See NYSE Arca Options Fees and Charges. NYSE American LLC 
(``NYSEAmerican'') pays no Customer rebates. See NYSE American 
Options Fee Schedule. The Nasdaq Stock Market LLC (``NOM'') pays an 
$0.80 per contract Customer Non-Penny Symbol Rebate and in some 
cases $1.00, or $1.05 if other criteria are met. See NOM's Pricing 
Schedule. Nasdaq Phlx LLC (``Phlx'') pays Customer Non-Penny rebates 
which range from $0.00 to $0.27. See Phlx's Pricing Schedule. Nasdaq 
ISE, LLC (`ISE'') pays no Non-Penny Priority Customer rebates. See 
ISE's Pricing Schedule. Nasdaq GEMX, LLC (``GEMX'') pays Priority 
Customer Non-Penny Symbol Maker Rebates which range from $0.25 to 
$0.70. See GEMX's Pricing Schedule. Nasdaq MRX, LLC (`MRX'') pays no 
Priority Customer Non-Penny Symbol rebates. See MRX's Pricing 
Schedule.
    \19\ Id.
    \20\ Non-Customer orders are assessed a $1.10 Non-Penny Symbol 
Taker Fee.
    \21\ A Non-Customer includes a Professional, Broker-Dealer and 
Non-BX Options Market Maker. See BX Options 7, Section 1.
    \22\ See Options 3, Section 10.
    \23\ Today, Lead Market Makers are paid $0.45 per contract Non-
Penny Symbol Maker Rebates and Market Maker are paid $0.40 per 
contract Non-Penny Symbol Maker Rebates. Firms and Non-Customers are 
not eligible for Non-Penny Symbol Maker Rebates and instead are 
charged a Maker Fee of $0.45 per contract.
---------------------------------------------------------------------------

    The Exchange's proposal to amend the Customer Non-Penny Symbol 
Maker Rebate of $0.90 per contract for adding liquidity in Non-Penny 
Symbols, regardless of contra-party and, instead, pay a $0.45 per 
contract Customer Non-Penny Symbol Maker Rebate if the quantity of 
transactions where the contra-side is also a Customer is greater than 
25% of Participant's total Customer Non-Penny Symbol volume which adds 
liquidity \24\ in that month is equitable and not unfairly 
discriminatory. The Exchange would uniformly apply the criteria to all 
Customer orders to determine the applicable rebate.
---------------------------------------------------------------------------

    \24\ As proposed, the 25% calculation will not consider orders 
within the Opening Process per Options 3, Section 8, orders that 
generate an order exposure alert per BX Options 5, Section 4, or 
orders transacted in the Price Improvement Auction (``PRISM'') per 
Options 3, Section 13.
---------------------------------------------------------------------------

    The Exchange's proposal to pay a lower $0.45 per contract Customer 
Non-Penny Symbol Maker Rebate when a Participant executes against a 
Customer more than 25% of that Participant's total Customer Non-Penny 
Symbol volume which adds liquidity in a month is equitable and not 
unfairly discriminatory. The Exchange noted above that when Non-Penny 
Customers interact with other Non-Penny Customer orders more than by 
happenstance, the Exchange believes it is reasonable to pay Customer 
orders which add liquidity a lower rebate. The Exchange also noted that 
Participants do occasionally submit Non-Penny Customer orders which add 
liquidity in Non-Penny Symbols to the order book that trade against 
Non-Penny Customer orders that remove liquidity in Non-Penny Symbols. 
The Exchange believes that type of behavior occurs, by happenstance, a 
small percentage of the time in a given month. Therefore, the Exchange 
believes that it is equitable and not unfairly discriminatory to pay a 
lower rebate to Non-Penny Customer orders which interact with other 
Non-Penny Customer orders more than by happenstance, because the 
Exchange's intention to enhance Non-Customer liquidity is subverted. In 
addition, the Exchange notes that Customers may continue to receive the 
highest Non-Penny Symbol Maker Rebate paid by BX,\25\ provided they do 
not execute greater than 25% of that Participant's total Customer Non-
Penny Symbol volume which adds liquidity in a month.
---------------------------------------------------------------------------

    \25\ Id.
---------------------------------------------------------------------------

    The Exchange's proposal to amend Options 7, Section 2(1) to add a 
new note ``*'' which makes clear that orders executed in the Opening 
Process per Options 3, Section 8, orders that generate an order 
exposure alert per Options 5, Section 4, and orders transacted in the 
Price Improvement Auction (``PRISM'') per Options 3, Section 13 are not 
subject to Options 7, Section 2(1) pricing, rather, these orders are 
subject to the pricing within Options 7, Sections 2(2), (4) and (5), 
respectively, is reasonable, equitable and not unfairly discriminatory. 
The Exchange believes that this rule text will be informative in 
guiding Participants to the correct pricing within Options 7, Section 2 
which applies to a specific transaction. This new note ``*'' does not 
represent a substantive change. The proposed new note ``*'' is intended 
to serve as a guidepost to Participants referring to the BX Pricing 
Schedule.
Options 7, Section 2(2)
    The Exchange's proposal to amend the title of Options 7, Section 
2(2) from ``Opening Cross'' to ``Opening Process per Options 3, Section 
8,'' as well as similar changes throughout Options 7, Section 2(2), is 
reasonable, equitable and not unfairly discriminatory. The amendment is 
non-substantive. The proposed title will align with the title of 
Options 3, Section 8.
    The Exchange's proposal to amend the pricing within Options 7, 
Section 2(2) is reasonable, equitable and not unfairly discriminatory 
for the below reasons.
Penny Symbols
Customers
    The Exchange believes that the proposed Opening Process Customer 
pricing in Penny Symbols is reasonable. Previously, during the Opening 
Cross, Customer orders received a Rebate to Remove Liquidity, unless 
the contra-side was also a Customer, in which case no Fee to Remove 
Liquidity was assessed and no Rebate to Remove Liquidity was received. 
Previously, during the Opening Cross, BX paid a Penny Symbol Rebate to 
Remove Liquidity when trading against a Non-Customer, Lead Market 
Maker, BX Options Market Maker, Customer or Firm which ranged from 
$0.00 to $0.35 per contract.\26\ The proposed new pricing which would 
be applicable to the Exchange's Opening Process would pay Customers a 
Maker Rebate of $0.30 per contract, unless the contra-side is also a 
Customer, in which case a Maker Rebate would not be paid and a Taker 
Fee would not be assessed. The proposed new Penny Symbol Customer Maker 
Rebate of $0.30 per contract would pay Participants that previously 
qualified for now defunct Tiers 1 and 2 \27\ a higher Customer rebate 
than was previously paid. Participants that qualified for now defunct 
Tier 3 would receive a lower Customer rebate than was previously paid, 
provided the contra-side was not a Customer. Previously, during the 
Opening Cross, no Rebate was paid to Remove Liquidity when a Customer 
was contra another Customer. With the proposed pricing, during the 
Opening Process, when a Customer is contra another Customer a Maker 
Rebate would not be paid and a Taker Fee would not be assessed. The 
Exchange believes that the proposed pricing will continue to attract 
order flow to BX because, during the Opening Process, unlike other 
market participants Customers will continue to receive rebates, except 
if the Customer order trades against another Customer order. 
Furthermore, Customers would not be assessed a fee during the Opening 
Process. During the Opening Process, the Exchange desires to attract 
Customer liquidity, similar to intra-day, and therefore continuing to 
pay Customer orders a rebate, provided the Customer order is not contra 
another customer order is reasonable. Also, during the Opening Process, 
when a Customer order is contra another Customer order, the Exchange 
notes that neither Customer order is assessed a Taker Fee. The Exchange 
believes that it is reasonable to not pay each Customer order a Maker 
Rebate in these circumstances when no Taker Fees are being assessed to 
those Customer orders. Finally, the Exchange notes that the Opening 
Process seeks liquidity for price discovery and therefore the 
incentives are distinct from trading intra-day, where Participants have 
an opportunity to interact with the order book. Also, the Exchange 
believes that the Non-Penny Symbol Customer pricing during the Opening 
Process remains competitive.\28\
---------------------------------------------------------------------------

    \26\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month 
received no Penny Symbol Rebate to Remove Liquidity in Tier 1. 
Participants that executed 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month 
received a $0.25 per contract Penny Symbol Rebate to Remove 
Liquidity in Tier 2. Participants that executed 0.15% or more of 
total industry customer equity and ETF option ADV contracts per 
month received a $0.35 per contract Penny Symbol Rebate to Remove 
Liquidity in Tier 3.
    \27\ The Prior Fee Change eliminated Tiers 1-3 described herein.
    \28\ NYSEArca currently assesses Customers a Take Liquidity fee 
of $0.49 per contract in Penny Issues. See NYSEArca Options Fees and 
Charges, Transaction Fee for Electronic Executions--Per Contract.

---------------------------------------------------------------------------

[[Page 22987]]

Lead Market Makers and Market Makers
    The Exchange believes that the proposed Opening Process Lead Market 
Maker and Market Maker pricing in Penny Symbols is reasonable. 
Previously, during the Opening Cross, Lead Market Makers and Options 
Market Makers were assessed the Fee to Remove Liquidity. During the 
Opening Cross, Lead Market Makers and Market Makers previously paid a 
Penny Symbol Fee to Remove Liquidity when trading against a Customer 
which ranged from $0.39 to $0.30 per contract \29\ and paid a Penny 
Symbol Fee to Remove Liquidity when trading against a Non-Customer, 
Lead Market Maker, BX Options Market Maker or Firm of $0.46 per 
contract, regardless of tier.\30\ With the proposed new Opening Process 
pricing, the Penny Symbol Taker Fee for Lead Market Maker and Market 
Maker orders of $0.46 per contract would be higher than the prior Lead 
Market Maker and Market Maker tiered Penny Symbol Fee to Remove 
Liquidity when trading against a Customer which ranged from $0.39 to 
$0.30 per contract and would be the same as the current Lead Market 
Maker and Market Maker tiered Penny Symbol Fees to Remove Liquidity 
when trading against a Non-Customer, Lead Market Maker, Options Market 
Maker or Firm of $0.46 per contract regardless of tier. With the 
proposed new pricing, Lead Market Makers and Market Makers would not 
receive Maker Rebates during the Opening Process. The Exchange believes 
its proposed pricing will continue to attract liquidity because the 
pricing remains competitive with other pricing.\31\
---------------------------------------------------------------------------

    \29\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month pay 
a Penny Symbol Fee to Remove Liquidity of $0.39 per contract in Tier 
1. Participants that execute 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month pay 
a Penny Symbol Fee to Remove Liquidity of $0.39 per contract in Tier 
2. Participants that execute 0.15% or more of total industry 
customer equity and ETF option ADV contracts per month pay a Penny 
Symbol Fee to Remove Liquidity of $0.30 per contract in Tier 3.
    \30\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month pay 
a Penny Symbol Fee to Remove Liquidity of $0.46 per contract in Tier 
1. Participants that execute 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month pay 
a Penny Symbol Fee to Remove Liquidity of $0.46 per contract in Tier 
2. Participants that execute 0.15% or more of total industry 
customer equity and ETF option ADV contracts per month pay a Penny 
Symbol Fee to Remove Liquidity of $0.46 per contract in Tier 3.
    \31\ NYSEArca currently assesses LMMs and NYSE Arca Maker Makers 
a Take Liquidity fee of $0.50 per contract in Penny Issues. See 
NYSEArca Options Fees and Charges, Transaction Fee for Electronic 
Executions--Per Contract.
---------------------------------------------------------------------------

Non-Customers and Firms
    The Exchange believes that the proposed Opening Process Non-
Customer and Firm pricing in Penny Symbols is reasonable. Previously, 
during the Opening Cross, Non-Customers and Firms were assessed the Fee 
to Remove Liquidity. The prior Penny Symbol Fee to Remove Liquidity was 
a flat fee of $0.46 per contract. The proposed new Penny Symbol Taker 
Fee of $0.46 per contract would be the same as the prior Penny Symbol 
Fee to Remove Liquidity of $0.46 per contract. With this pricing, Non-
Customers and Firms would not receive Maker Rebates during the Opening 
Process. The Exchange believes its proposed pricing will continue to 
attract liquidity because the pricing remains competitive with other 
pricing.\32\
---------------------------------------------------------------------------

    \32\ NYSEArca assesses all market participants except Customers 
a Take Liquidity fee of $0.50 per contract in Penny Issues. See 
NYSEArca's Options Fees and Charges, Transaction Fee for Electronic 
Executions--Per Contract.
---------------------------------------------------------------------------

Non-Penny Symbols
Customers
    The Exchange believes that the proposed Opening Process Customer 
pricing in Non-Penny Symbols is reasonable. Previously, during the 
Opening Cross, Customer orders received a Rebate to Remove Liquidity, 
unless the contra-side was also a Customer, in which case no Fee to 
Remove Liquidity was assessed and no Rebate to Remove Liquidity was 
received. Previously, during the Opening Cross, BX paid a Non-Penny 
Symbol Customer Rebate to Remove Liquidity of $0.80 per contract,\33\ 
regardless of the tier and regardless of the contra-party. The proposed 
new pricing would similarly pay Customers a Maker Rebate during the 
Exchange's Opening Process, unless the contra-side is also a Customer, 
in which case a Maker Rebate would not be paid and a Taker Fee would 
not be assessed. The proposed new Non-Penny Symbol Customer Maker 
Rebate of $0.90 per contract during the Opening Process would be higher 
than the prior rebates, provided the contra-side is not a Customer. 
Previously, during the Opening Cross, no Rebate to Remove Liquidity was 
paid when a Customer was contra another Customer. With the proposed new 
pricing, during the Opening Process, when a Customer is contra another 
Customer a Maker Rebate would not be paid and a Taker Fee would not be 
assessed. The Exchange believes that the proposed pricing will continue 
to attract order flow to BX because, during the Opening Process, unlike 
other market participants Customers will continue to receive rebates, 
except if the Customer is contra another Customer order, and Customers 
would not be assessed a fee during the Opening Process. The Exchange 
believes that it is reasonable to not pay a Customer a rebate during 
the Opening Process if the Customer is contra another Customer because 
unlike intra-day trading where Participants have the opportunity to 
interact with the order book, the Opening Process seeks liquidity for 
price discovery and therefore the incentives are distinct from the 
trading intra-day. Also, the Exchange believes that the Non-Penny 
Symbol Customer pricing during the Opening Process remains 
competitive.\34\
---------------------------------------------------------------------------

    \33\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month 
received an $0.80 per contract Non-Penny Symbol Rebate to Remove 
Liquidity in Tier 1. Participants that executed 0.05% to less than 
0.15% of total industry customer equity and ETF option ADV contracts 
per month received an $0.80 per contract Non-Penny Symbol Rebate to 
Remove Liquidity in Tier 2. Participants that executed 0.15% or more 
of total industry customer equity and ETF option ADV contracts per 
month received an $0.80 per contract Non-Penny Symbol Rebate to 
Remove Liquidity in Tier 3.
    \34\ NYSEArca currently assesses Customers a Take Liquidity fee 
of $1.10 per contract in Non-Penny Issues. See NYSEArca Options Fees 
and Charges, Transaction Fee for Electronic Executions--Per 
Contract.
---------------------------------------------------------------------------

Lead Market Makers and Market Makers
    The Exchange believes that the proposed Opening Process Lead Market 
Maker and Market Maker pricing in Non-Penny Symbols is reasonable. 
Previously, during the Opening Cross, Lead Market Makers and BX Options 
Market Makers were assessed the Fee to Remove Liquidity. Previously, 
during the Opening Cross, Lead Market Makers and Market Makers paid an 
$0.89 per contract Non-Penny Fee to Remove Liquidity when the Lead 
Market Maker or Market Maker traded with any market participant other 
than a Customer.\35\ Previously, during the Opening Cross, if the 
contra-party was a Customer, the Lead Market Maker and Market Maker 
were charged a Fee to Remove Liquidity that ranged from $0.89 to $0.60 
per contract depending on the volume tier

[[Page 22988]]

achieved.\36\ The proposed new Taker Fee of $1.10 per contract for 
removing liquidity for Lead Market Makers and Market Makers in Non-
Penny Symbols, during the Opening Process, regardless of contra-party 
would be higher than the prior fees assessed to Lead Market Makers and 
Market Makers for removing liquidity in Non-Penny Symbols. With the 
proposed new pricing, during the Opening Process, Lead Market Makers 
and Market Makers would not be subject to Maker Rebates. The Exchange 
believes that the Non-Penny Symbol Lead Market Maker and Market Maker 
pricing during the Opening Process remains competitive.\37\
---------------------------------------------------------------------------

    \35\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 1. Participants that executed 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 2. Participants that executed 0.15% or more of total industry 
customer equity and ETF option ADV contracts per month paid an $0.89 
per contract Non-Penny Symbol Fee to Remove Liquidity in Tier 3.
    \36\ Participants that executed less than 0.05% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 1. Participants that executed 0.05% to less than 0.15% of total 
industry customer equity and ETF option ADV contracts per month paid 
an $0.89 per contract Non-Penny Symbol Fee to Remove Liquidity in 
Tier 2. Participants that executed 0.15% or more of total industry 
customer equity and ETF option ADV contracts per month paid a $0.60 
per contract Non-Penny Symbol Fee to Remove Liquidity in Tier 3.
    \37\ NYSEArca assesses LMMs and NYSE Arca Market Makers a Take 
Liquidity fee of $1.10 per contract in Non-Penny Issues. See 
NYSEArca Options Fees and Charges.
---------------------------------------------------------------------------

Non-Customers and Firms
    The Exchange believes that the proposed Opening Process Non-
Customer and Firm pricing in Non-Penny Symbols is reasonable. 
Previously, during the Opening Cross, Non-Customers and Firms were 
assessed the Non-Penny Symbol Fee to Remove Liquidity. During the 
Opening Cross, the prior Non-Penny Symbol Fee to Remove Liquidity was a 
flat fee of $0.89 per contract. During the Opening Process, the 
proposed new Non-Penny Symbol Taker Fee of $1.10 per contract for 
removing liquidity for Non-Customers and Firms in Non-Penny Symbols 
would be higher than the prior Fee to Remove Liquidity. With this 
pricing, Non-Customers and Firms would not receive Maker Rebates during 
the Opening Process. The Exchange believes that the Non-Penny Symbol 
Non-Customer and Firm pricing during the Opening Process remains 
competitive.\38\
---------------------------------------------------------------------------

    \38\ NYSEArca assesses all market participants except Customers 
a Take Liquidity fee of $1.10 per contract in Non-Penny Issues. See 
NYSEArca Options Fees and Charges.
---------------------------------------------------------------------------

    The Exchange's proposal to amend the Opening Process pricing is 
equitable and not unfairly discriminatory. During the Opening Process, 
Customers will continue to receive rebates, unlike other market 
participants, except if the Customer is contra another Customer order. 
Also, unlike other Participants, Customers would not be assessed a fee 
during the Opening Process. The Exchange believes that it is equitable 
and not unfairly discriminatory to pay rebates to Customers, provided 
they are not contra another customer, and not assess fees to Customers, 
because unlike other Participants, Customer liquidity benefits all 
market participants by offering additional trading opportunities. 
Additionally, Market Makers seeking to interact with Customer liquidity 
are incentivized to tighten quote spreads to interact with the order 
flow. With respect to Customer orders during the Opening Process that 
are contra other Customer orders, the Exchange would not pay the 
Customer a rebate, nor would the Customer be assessed a fee, unlike 
other Non-Customer Participants who would pay a fee during the Opening 
Process. While the Exchange desires to attract Customer liquidity 
during the Opening Process, unlike intra-day trading where Participants 
have the opportunity to interact with the order book, the Opening 
Process seeks liquidity for price discovery and therefore the 
incentives are distinct from the trading intra-day. Finally, the 
Exchange's proposal will uniformly assess all Non-Customers the same 
Taker Fee and pay no Maker Rebates to these Participants during the 
Opening Process.
Options 7, Section 2(5)
    The Exchange's proposal to add the words ``per Options 3, Section 
13'' at the end of the title to Options 7, Section 2(5) is reasonable, 
equitable and not unfairly discriminatory. This non-substantive 
amendment simply provides the citation to the BX Price Improvement 
Auction rule.

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 not necessary or appropriate in 
furtherance of the purposes of the Act.
Inter-market Competition
    The proposal does not impose an undue burden on inter-market 
competition. The Exchange believes its proposal remains competitive 
with other options markets and will offer market participants with 
another choice of where to transact options. The Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
options exchanges. Because competitors are free to modify their own 
fees in response, and because market participants may readily adjust 
their order routing practices, the Exchange believes that the degree to 
which fee changes in this market may impose any burden on competition 
is extremely limited.
Intra-market Competition
Options 7, Section 2(1)
    The Exchange's proposal to amend the Customer Non-Penny Symbol 
Maker Rebate of $0.90 per contract for adding liquidity in Non-Penny 
Symbols, regardless of contra-party and, instead, pay a $0.45 per 
contract Customer Non-Penny Symbol Maker Rebate if the quantity of 
transactions where the contra-side is also a Customer is greater than 
25% of Participant's total Customer Non-Penny Symbol volume which adds 
liquidity \39\ in that month does not impose an undue burden on 
competition as the Exchange would uniformly apply the criteria to all 
Customer orders to determine the applicable rebate. The Exchange's 
proposal to exclude orders executed in the Opening Process, orders that 
generate an order exposure alert, and orders transacted in PRISM from 
the aforementioned calculation of 25% does not impose an undue burden 
on competition as the Exchange will uniformly exclude these orders from 
the aforementioned calculation of 25%.
---------------------------------------------------------------------------

    \39\ As proposed, the 25% calculation will not consider orders 
within the Opening Process per Options 3, Section 8, orders that 
generate an order exposure alert per BX Options 5, Section 4, or 
orders transacted in the Price Improvement Auction (``PRISM'') per 
Options 3, Section 13.
---------------------------------------------------------------------------

    The Exchange's proposal to pay a lower $0.45 per contract Customer 
Non-Penny Symbol Maker Rebate when a Participant executes against a 
Customer more than 25% of that Participant's total Customer Non-Penny 
Symbol volume which adds liquidity in a month does not impose an undue 
burden on competition. Customers may continue to be able to achieve the 
highest Non-Penny Symbol Maker Rebate paid by BX,\40\ provided they do 
not execute greater than 25% of that Participant's total Customer Non-
Penny Symbol volume which adds liquidity in a month.
---------------------------------------------------------------------------

    \40\ Id.
---------------------------------------------------------------------------

    The Exchange's proposal to amend Options 7, Section 2(1) to add a 
new note ``*'' which makes clear that orders executed in the Opening 
Process per Options 3, Section 8, orders that

[[Page 22989]]

generate an order exposure alert per Options 5, Section 4, and orders 
transacted in the Price Improvement Auction (``PRISM'') per Options 3, 
Section 13 are not subject to Options 7, Section 2(1) pricing, rather 
these orders are subject to the pricing within Options 7, Sections 
2(2), (4) and (5), respectively, does not impose an undue burden on 
competition. This amendment is non-substantive. The Exchange believes 
that this rule text will be informative in guiding Participants to the 
correct pricing within Options 7, Section 2 which applies to a specific 
transaction.
Options 7, Section 2(2)
    The Exchange's proposal to amend the Opening Process pricing does 
not impose an undue burden on competition. During the Opening Process, 
Customers would continue to receive rebates, unlike other market 
participants, except if the Customer is contra another Customer order. 
Also, unlike other Participants, Customers would not be assessed a fee 
during the Opening Process. Paying rebates to Customers, provided they 
are not contra another customer, and not assessing fees to Customers 
does not impose an undue burden on competition, because unlike other 
Participants, Customer liquidity benefits all market participants by 
offering additional trading opportunities. Additionally, Market Makers 
seeking to interact with Customer liquidity are incentivized to tighten 
quote spreads to interact with the order flow. With respect to Customer 
orders during the Opening Process that are contra other Customer 
orders, the Exchange would not pay the Customer a rebate, nor would the 
Customer be assessed a fee, unlike other Non-Customer Participants who 
would pay a fee during the Opening Process. While the Exchange desires 
to attract Customer liquidity during the Opening Process, unlike intra-
day trading where Participants have the opportunity to interact with 
the order book, the Opening Process seeks liquidity for price discovery 
and therefore the incentives are distinct from the trading intra-day. 
Finally, the Exchange's proposal will uniformly assess all Non-
Customers the same Taker Fee and pay no Maker Rebates to these 
Participants during the Opening Process.
Options 7, Section 2(5)
    The Exchange's proposal to add the words ``per Options 3, Section 
13'' at the end of the title to Options 7, Section 2(5) does not impose 
an undue burden on competition. This non-substantive rule change simply 
provides the citation to the BX Price Improvement Auction rule.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \41\ and paragraph (f) of Rule 19b-4 
thereunder.\42\
---------------------------------------------------------------------------

    \41\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \42\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule 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-BX-2021-015 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-BX-2021-015. 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 
20549-1090, 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-BX-2021-015 and should 
be submitted on or before May 21, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\43\
---------------------------------------------------------------------------

    \43\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09021 Filed 4-29-21; 8:45 am]
BILLING CODE 8011-01-P


