[Federal Register Volume 87, Number 168 (Wednesday, August 31, 2022)]
[Notices]
[Pages 53514-53522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18764]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 95601; File No. SR-CboeBZX-2022-045]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend the Opening Auction Process 
Provided Under Rule 11.23(b)(2)(B)

August 25, 2022.
    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 August 15, 2022, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing 
with the Securities and Exchange Commission (``Commission'') a proposal 
to amend the Opening Auction process provided under Rule 11.23(b)(2)(B) 
(the ``Opening Auction Process'') to better align with current market 
conditions, and, where certain market conditions are not optimal, to 
delay the Opening Auction from occurring until those market conditions 
have improved. 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 (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

[[Page 53515]]

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 11.23(b)(2)(B) to make the 
Opening Auction Process more dynamic by, under certain circumstances 
delaying the Opening Auction in order to incorporate additional 
information into the determination of the Opening Auction price. 
Specifically, as proposed the Rule would provide that when there is no 
Valid NBBO \3\ in a BZX-listed security and there is an Indicative 
Price \4\ that is not within the Collar Price Range,\5\ the Opening 
Auction will be delayed until market conditions improve or the delay 
period has lapsed, as further described below.
---------------------------------------------------------------------------

    \3\ As provided in Rule 11.23(a)(23), an NBBO is a Valid NBBO 
where: (i) there is both a NBB and NBO for the security; (ii) the 
NBBO is not crossed; and (iii) the midpoint of the NBBO is less than 
the Maximum Percentage away from both the NBB and the NBO. See 
Exchange Rule 11.23(a)(23). The Maximum Percentage will vary 
depending on the price of the NBBO midpoint. Currently, the Maximum 
Percentages are as follows: for a NBBO midpoint price less than or 
equal to $25, the Maximum Percentage is 5%; for a NBBO midpoint 
price greater than $25 but less than or equal to $50, the Maximum 
Percentage is 2.5%; for a NBBO midpoint price greater than $50, the 
Maximum Percentage is 1.5%. See Section 1.5 (Definitions) of the US 
Equities Auction Process at https://cdn.cboe.com/resources/membership/Cboe_US_Equities_Auction_Process.pdf.
    \4\ The term ``Indicative Price'' shall mean the price at which 
the most shares from the Auction Book and the Continuous Book would 
match. In the event of a volume based tie at multiple price levels, 
the Indicative Price will be the price which results in the minimum 
total imbalance. In the event of a volume based tie and a tie in 
minimum total imbalance at multiple price levels, the Indicative 
Price will be the price closest to the Volume Based Tie Breaker. See 
Exchange Rule 11.23(a)(10).
    \5\ See Exchange Rule 11.23(a)(6).
---------------------------------------------------------------------------

    The Exchange notes that the official opening price disseminated by 
the primary listing market provides market participants valuable 
information which in most cases is used to calculate the initial limit 
up-limit down (``LULD'') bands and also may serve as the basis for 
trading strategies for that trading day. However, the official opening 
price is not as important or time sensitive as the official closing 
price disseminated by the primary listing market, which is used for the 
pricing and valuation of certain indices, funds and derivative 
products. The Exchange believes the benefit of allowing crossed auction 
interest to execute at the best possible price outweighs the minimal 
and finite delay in the dissemination of the BZX Opening Price and LULD 
bands. Specifically, as discussed further below, the Exchange believes 
that the possible downside of delaying the dissemination of the LULD 
bands is mitigated by the infrequency with which LULD halts occur 
within the first four minutes and 30 seconds of the trading day and is 
also offset by the benefits to the opportunity for increased executions 
in the Opening Auction. As further noted below, this delayed 
dissemination of LULD bands is also a tradeoff that already exists as 
it relates to the opening process on the New York Stock Exchange LLC 
(``NYSE''), which may delay its opening process indefinitely. Finally, 
the Exchange notes that because the proposed functionality would only 
apply where there is crossed interest that is outside the Collar Price 
Range and there is not a Valid NBBO, the Exchange would only delay the 
Opening Auction (and thus delay the dissemination of the LULD bands) in 
certain situations. In those situations, it is more likely that the 
LULD bands disseminated without a delay in the Opening Auction are 
based on a price that is not reflective of current market conditions.
    As such, the Exchange believes that the proposal strikes an 
appropriate balance by providing additional time for the Opening 
Auction Process to occur so that under such circumstances BZX-listed 
securities have an opportunity for more meaningful price formation that 
is more representative of current market conditions, but limiting any 
such delay so that the BZX Official Opening Price is reported to the 
Securities Information Processor (``SIP'') by 9:35 a.m. and will 
therefore be used to set the LULD bands.\6\
---------------------------------------------------------------------------

    \6\ The SIP links the U.S. markets by processing and 
consolidating all protected bid/ask quotes and trades from every 
trading venue into a single data feed.
---------------------------------------------------------------------------

Background
    As noted above, the Exchange is proposing that under limited 
circumstances its current Opening Auction Process would be amended to 
delay the process such that additional information could be 
incorporated into the determination of the Opening Auction price. 
Currently, Rule 11.23(b)(2)(B) sets forth the process by which the BZX 
Official Opening Price \7\ is determined for BZX-listed securities 
during the Opening Auction Process. Specifically, as provided in Rule 
11.23(b)(2)(B), the Opening Auction price will be the price level 
within the Collar Price Range that maximizes the number of shares 
executed between the Continuous Book \8\ and Auction Book \9\ in the 
Opening Auction. In the event of a volume based tie at multiple price 
levels, the Opening Auction price will be the price which results in 
the minimum total imbalance. In the event of a volume based tie and a 
tie in minimum total imbalance at multiple price levels, the Opening 
Auction price will be the price closest to the Volume Based Tie 
Breaker.\10\
---------------------------------------------------------------------------

    \7\ See Exchange Rule 11.23(a)(5).
    \8\ See Exchange Rule 11.23(a)(7).
    \9\ See Exchange Rule 11.23(a)(1).
    \10\ The Volume Based Tie Breaker is the midpoint of the NBBO 
for a particular security where the NBBO is a Valid NBBO. Where the 
NBBO is not a Valid NBBO, the price of the FLSET is used as the 
Volume Based Tie Breaker. See Exchange Rule 11.23(a)(23).
---------------------------------------------------------------------------

    The Volume Based Tie Breaker for an Opening Auction will be the 
midpoint of the NBBO where there is a Valid NBBO. Where there is no 
Valid NBBO, the Final Last Sale Eligible Trade (``FLSET'') \11\ will be 
used as the Volume Based Tie Breaker.\12\ Because the FLSET is 
typically based on the most recent execution in a security during 
Regular Trading Hours, its value may be significantly away from the 
Indicative Price at the time of the Opening Auction Process, especially 
in more thinly traded securities. As a result, the Exchange has 
observed instances where auction eligible orders priced in-line with 
the Indicative Price were not executed in the Opening Auction because 
they were outside the Collar Price Range established using the FLSET. 
Based on analysis by the Exchange and feedback from market 
participants, certain of these instances resulted in orders not 
receiving executions in the Opening Auction that would have otherwise 
occurred at prices that would have been acceptable to both parties to 
the execution. To illustrate this point, the Exchange presents the 
following example.
---------------------------------------------------------------------------

    \11\ See Exchange Rule 11.23(a)(9).
    \12\ The Exchange estimates that there is no Valid NBBO for 
approximately 5.81% of the Exchange's Opening Auctions.
---------------------------------------------------------------------------

Example 1
    Consider a security with a prevailing NBBO at 9:30:00 a.m. of 
$27.10 x $29.54 and two Limit-On-Open orders on the Auction Book--a buy 
for 1,000 shares at $27.90 and a sell for 1,500 shares at $27.90.\13\ 
The Indicative Price, which is the price at which the most shares from 
the Auction Book and the Continuous Book would match, would be $27.90 
because the only crossed interest comes from the two orders on the 
Auction Book. Therefore, there is crossed interest willing to execute 
at a price

[[Page 53516]]

within the NBBO. However, because the midpoint of the NBBO (i.e., 
$28.32) is more than the Maximum Percentage \14\ away from both the NBB 
and NBO, the NBBO is not a Valid NBBO and thus the NBBO midpoint would 
not be used as the Volume Based Tie Breaker. Instead, the Volume Based 
Tie Breaker would be the FLSET, which would, by definition, be the BZX 
Official Closing Price from the previous business day, which was 
$26.52. Using the FLSET as the Collar Midpoint,\15\ the Collar Price 
Range would be $25.19 x $27.85.\16\ Because the Indicative Price is 
outside of the Collar Price Range and there is no crossed interest 
within the Collar Price Range, there would be no execution as part of 
the Opening Auction. Therefore, crossed interest from the Auction Book 
that was priced equal to or more aggressive than the Indicative Price 
and was within the NBBO would be canceled without execution.\17\
---------------------------------------------------------------------------

    \13\ For purposes of this example, there are no orders on the 
Continuous Book.
    \14\ As noted above, the Maximum Percentage for a NBBO midpoint 
price greater than $25 but less than or equal to $50 is 2.5%.
    \15\ As provided in Rule 11.23(a)(6), the Collar Midpoint is the 
Volume Based Tie Breaker for Opening Auctions.
    \16\ The Collar Price Range is always double the Maximum 
Percentage. Therefore, the Collar Price Range in Example 1 is 5%.
    \17\ See Exchange Rule 11.23(b)(3)(C).
---------------------------------------------------------------------------

Proposal
    Based on the scenario described above, the Exchange is proposing to 
change its Opening Auction functionality only in circumstances where 
(i) there is an Indicative Price, (ii) there is not a Valid NBBO, and/
or (iii) the Indicative Price is not within the FLSET-established 
Collar Price Range. As proposed and described in further detail below, 
the Opening Auction would occur pursuant to the Standard Opening 
Auction Process if the NBBO becomes a Valid NBBO (i.e., the spread 
narrows as markets open such that the midpoint of the NBBO is less than 
the Maximum Percentage away from both the NBB and the NBO) before 
9:30:05, or if the Indicative Price moves within the Collar Price Range 
set by the FLSET (i.e., orders on the Auction Book and/or non-displayed 
orders on the Continuous Book change the price level at which the most 
shares from the Auction Book and the Continuous Book would match to be 
within the Collar Price Range) prior to 9:34:30.
    Proposed Rule 11.23(b)(2)(B)(i) would set forth the ``Standard 
Opening Process'', which mirrors the current process described in Rule 
11.23(b)(2)(B). Proposed Rule 11.23(b)(2)(B)(ii) would provide that if 
there is no Valid NBBO and the Indicative Price is within the Collar 
Price Range, the Opening Auction price will be established pursuant to 
the Standard Opening Process. Proposed Rule 11.23(b)(2)(B)(iii) would 
delay and set forth an alternative Opening Auction Process in the event 
there is no Valid NBBO and the Indicative Price is not within the 
Collar Price Range. The proposal is designed to prevent the 
cancellation of auction eligible orders priced equally or more 
aggressive than the Indicative Price which the Exchange believes will 
facilitate the presence of sufficient liquidity and information to make 
the Opening Auction a meaningful price formation event in BZX-listed 
securities.
    Proposed Rule 11.23(b)(2)(B)(iii) would provide that the Opening 
Auction price will be delayed as set forth in subparagraphs (a) and (b) 
as follows:

    (a) If after the one-second delay there is a Valid NBBO or the 
Indicative Price is within the Collar Price Range, the Opening 
Auction price will be established pursuant to the Standard Opening 
Auction Process. If there is no Valid NBBO and the Indicative Price 
is not within the Collar Price Range after the one-second delay, the 
Opening Auction will be delayed by one additional second, at which 
point if there is a Valid NBBO or the Indicative Price is within the 
Collar Price Range, the Opening Auction price will be established 
pursuant to the Standard Opening Process. If after the additional 
one-second delay there is a Valid NBBO or the Indicative Price is 
not within the Collar Price Range, the process described in this 
paragraph (a) will continue to be applied in one-second increments 
until either the Opening Auction occurs or until five seconds has 
lapsed (i.e., 9:30:05 a.m.).
    (b) If the Opening Auction has not occurred by 9:30:05, the 
System will widen the Collar Price Range in the direction of the 
Indicative Price by 5% of the Volume Based Tie Breaker, which will 
be Final Last Sale Eligible Trade as of 9:30:05 a.m. (the ``Widening 
Amount'').\18\ If the Indicative Price is within the widened Collar 
Price Range, the Opening Auction price will be established pursuant 
to the Standard Opening Auction Process. If the Indicative Price is 
not within the widened Collar Price Range, the Opening Auction will 
be further delayed, as discussed below.
---------------------------------------------------------------------------

    \18\ The Exchange notes that Widening Amount will be locked-in 
as of 9:30:05, and will not change between 9:30:05 and 9:34:30 even 
in the event that a round lot trade reported to the consolidated 
tape was received by the Exchange during that time (i.e., a FLSET).
---------------------------------------------------------------------------

    In sum, the process described in proposed paragraph Rule 
11.23(b)(2)(B)(iii)(a) would simply allow for the Opening Auction to 
occur using the Standard Opening Process described in paragraph 
11.23(b)(2)(B)(i), the only difference between the current process 
being that such Opening Auction could instead occur within the first 
five seconds of Regular Trading Hours \19\ based on whether there is 
a Valid NBBO or the Indicative Price is within the Collar Price 
Range. If, after each one-second delay, there is no longer an 
Indicative Price (i.e., there is no longer crossed interest), the 
Opening Auction would occur immediately pursuant to proposed Rule 
11.23(2)(B)(v). After the first five seconds of Regular Trading 
Hours, the System will only check for whether the Indicative Price 
is within the Collar Price Range and will not check for a Valid NBBO 
because the process described in Proposed Rules 
11.23(b)(2)(B)(iii)(b)(1) through (4) is intended to closely follow 
the reopening process that is described in the Twelfth Amendment of 
the Plan to Address Extraordinary Market Volatility \20\ (the 
``Plan'') and corresponding Exchange Rules, as described in further 
detail below.
---------------------------------------------------------------------------

    \19\ See Exchange Rule 1.5(w).
    \20\ See Securities and Exchange Act no. 79410 (November 28, 
2016) 81 FR 87114 (December 2, 2016) (Notice of Filing of the 
Twelfth Amendment to the National Market System Plan To Address 
Extraordinary Market Volatility (``Amendment 12'')).

    Proposed Rules 11.23(b)(2)(B)(iii)(b)(1) through (4) would set 
forth the delay of the Opening Auction if no auction has occurred 
between 9:30:05 and 9:34:30. Specifically, the proposed Rules would 
---------------------------------------------------------------------------
provide:

    (1) The System will check to see whether the Indicative Price is 
inside the widened Collar Price Range every second between 9:30:05 
and 9:30:30 a.m. If an Indicative Price is inside the widened Collar 
Price Range during a check, the Opening Auction price will be 
established pursuant to the Standard Opening Auction Process.
    (2) If by 9:30:30 a.m. the Indicative Price is not within the 
widened Collar Price Range, the Collar Price Range will again widen 
by the Widening Amount. The System will check to see whether the 
Indicative Price is inside the widened Collar Price Range every 
second between 9:30:30 and 9:31:30 a.m. If an Indicative Price is 
inside the widened Collar Price Range during a check, the Opening 
Auction price will be established pursuant to the Standard Opening 
Auction Process.
    (3) If by 9:31:30 a.m. the Indicative Price is not within the 
widened Collar Price Range, the System will check to see whether the 
Indicative Price is inside the widened Collar Price Range every 
second between 9:31:30 and 9:34:30 a.m. If an Indicative Price is 
inside the widened Collar Price Range during a check, the Opening 
Auction price will be established pursuant to the Standard Opening 
Auction Process. Unless the Opening Auction has occurred, the Collar 
Price Range will widen in the direction of the Indicative Price by 
the Widening Amount each minute from 9:31:30 to 9:34:30.
    (4) If no Opening Auction has occurred by 9:34:30 a.m., the 
Opening Auction will occur pursuant to the Standard Opening Auction 
Process using the expanded Collar Price Range as of 9:34:30.

    The Exchange first notes that if, during after each one-second 
delay,

[[Page 53517]]

there is no longer an Indicative Price (i.e., there is no longer 
crossed interest), the Opening Auction would occur immediately pursuant 
to proposed Rule 11.23(2)(B)(v).\21\ The Exchange is also proposing to 
stop extending the Opening Auction Process at 9:34:30 a.m. in part to 
ensure that the Exchange is able to disseminate the BZX Official 
Opening Price with sufficient time to be used in the determination of 
the opening price \22\ pursuant to the Plan, from which the reference 
price \23\ is used to calculate the LULD bands. Specifically, the 
reference price for trading is typically the opening price on the 
primary listing exchange in an NMS Stock if such opening price occurs 
less than five minutes after the start of Regular Trading Hours. 
Therefore, because under the proposal the Opening Auction Process would 
occur no later than 9:34:30, the LULD bands would be determined based 
on the BZX Official Opening Price. While the LULD bands for BZX-listed 
securities could be determined pursuant to the Plan without a BZX 
Official Opening Price, the Exchange believes that the inclusion of 
such price provides for LULD bands that more accurately reflect current 
market conditions.
---------------------------------------------------------------------------

    \21\ The Exchange notes that the BZX Official Opening Price will 
be the price of the FLSET, which will be the previous BZX Official 
Closing Price unless an FLSET occurred after 9:30:00.
    \22\ For purposes of the Plan, ``opening price'' shall mean the 
price of a transaction that opens trading on the primary listing 
exchange. If the primary listing exchange opens with quotations, the 
``opening price'' shall mean the closing price of the NMS Stock on 
the primary listing exchange on the previous trading day, or if no 
such closing price exists, the last sale on the primary listing 
exchange. See section I(I) of the Plan.
    \23\ For purposes of the plan, ``reference price'' shall have 
the meaning provided in Section V of the Plan. See section I(R) of 
the Plan. Section V of the Plan provides that the LULD price bands 
are based on a reference price for each NMS Stock that, for purposes 
of the first reference price for a trading day shall be the opening 
price on the primary listing exchange in an NMS Stock if such 
opening price occurs less than five minutes after the start of 
Regular Trading Hours. If the opening price on the primary listing 
exchange in an NMS Stock does not occur within five minutes after 
the start of Regular Trading Hours, the first reference price for a 
trading day shall be the arithmetic mean price of eligible reported 
transactions for the NMS Stock over the preceding five minute time 
period. If there is no opening price on the primary listing exchange 
in an NMS Stock and no trades have occurred by 9:35:00, the previous 
reference price shall remain in effect.
---------------------------------------------------------------------------

    The Exchange also proposes to move the last two sentences of 
existing Rule 11.23(b)(2)(B) to proposed Rules 11.23(b)(2)(B)(iv) and 
(v), respectively, with certain modifications to Rule 
11.23(b)(2)(B)(v). Specifically, proposed Rule 11.23(b)(2)(B)(iv) would 
provide that the Opening Auction Price will be the BZX Official Opening 
Price. Proposed Rule 11.23(b)(2)(B)(v) would provide that in the event 
that there is no Opening Auction for an issue, the BZX Official Opening 
Price will be the price of the FLSET. The Exchange proposes to 
eliminate the provision that states that the FLSET will be the previous 
BZX Official Closing Price as it is possible that an FLSET may occur 
between 9:30:00 and 9:34:30.
    Based on the above proposed amendments, the Exchange proposes to 
amend Rules 11.23(b)(1)(A) and (B) to reflect that the Opening Auction 
may occur at a time other than 9:30 a.m. Specifically, the Exchange 
proposes to amend paragraph (A) to provide the following: Users may 
submit orders to the Exchange as set forth in Rule 11.1. Any Eligible 
Auction Orders \24\ designated for the Opening Auction will be queued 
for participation in the Opening Auction. Users may submit limit-on-
open (``LOO'') and market-on-open (``MOO'') orders until 9:28 a.m., at 
which point any additional LOO and MOO orders submitted to the Exchange 
will be rejected. Regular Hours Only \25\ (``RHO'') market orders will 
also be rejected from 9:28 a.m. until the Opening Auction has 
concluded. Users may submit late-limit-on-open \26\ (``LLOO'') orders 
from 9:28 a.m. until the Opening Auction has concluded. Any LLOO orders 
submitted before 9:28 a.m. or after the Opening Auction has concluded 
will be rejected. RHO limit orders submitted from 9:28 a.m. until the 
Opening Auction has concluded will be treated as LLOO orders.
---------------------------------------------------------------------------

    \24\ See Exchange Rule 11.23(a)(8).
    \25\ See Exchange Rule 11.9(b)(7).
    \26\ See Exchange Rule 11.23(a)(12).
---------------------------------------------------------------------------

    The Exchange proposes to amend Rule 11.23(b)(1)(B) to provide that 
Eligible Auction Orders designated for the Opening Auction may not be 
cancelled or modified from 9:28 a.m. until the Opening Auction has 
concluded except that RHO limit orders designated for the Opening 
Auction may be modified, but not cancelled, from 9:28 a.m. until the 
time the Opening Auction has concluded. Any such RHO limit orders 
modified from 9:28 a.m. until the Opening Auction has concluded will be 
treated as LLOO orders.
    To illustrate the proposed functionality, consider the following 
examples.
Example 2
    Applying the same facts from Example 1 related to current 
functionality above, assume a security has a prevailing NBBO at 9:30:00 
a.m. of $27.10 x $29.54 and two Limit-On-Open orders on the Auction 
Book--a buy for 1,000 shares at $27.90 and a sell for 1,500 shares at 
$27.90.\27\ The Indicative Price, which is the price at which the most 
shares from the Auction Book and the Continuous Book would match, would 
be $27.90 because the only crossed interest comes from the two orders 
on the Auction Book.
---------------------------------------------------------------------------

    \27\ For purposes of this example, there are no orders on the 
Continuous Book.
---------------------------------------------------------------------------

    Because there was no Valid NBBO and the Indicative Price was 
outside of the Collar Price Range, the System would check at each 
second starting at 9:30:00 and ending at 9:30:05 for a Valid NBBO and 
for the Indicative Price that is within the Collar Price Range. 
Assuming that these checks did not find a Valid NBBO or an Indicative 
Price within the Collar Price Range, after the check at 9:30:05 the 
Collar Price Range is widened in the direction of the Indicative Price 
by 5% of the FLSET (i.e., $26.52) as of 9:30:05, or $1.33, resulting in 
a Collar Price Range of $25.19 x $29.18. Upon the first one second 
check thereafter, the Indicative Price of $27.90 is within the widened 
Collar Price Range and the auction occurs immediately pursuant to the 
Standard Opening Auction Process.
Example 3
    Applying the facts from Example 2 above, but also considering that 
another two orders exist on the Auction Book including a buy order for 
2,000 shares at $30.50 and a sell order for 500 shares at $30.50.\28\ 
The additional orders entered to the Auction Book would move the 
Indicative Price to $30.50 because $30.50 would be the price at which 
the most shares would match (i.e., 2,000 shares). Given that the 
Indicative Price ($30.50) is not within the widened Collar Price Range 
calculated above ($25.19 x $29.18), the Opening Auction would not occur 
after the first collar widening. As such, the System would check at 
each second starting at 9:30:05 and ending at 9:30:30 for an Indicative 
Price that is within the Collar Price Range. Assuming that the 
Indicative Price did not change and thus the checks would not find an 
Indicative Price within the Collar Price Range, after the check at 
9:30:30 the Collar Price Range would once again be widened in the 
direction of the Indicative Price by the same 5% amount used for the 
initial collar widening at 9:30:05 ($1.33). The Collar Price Range from 
9:30:30 to 9:31:30 would then be $25.19 x $30.51. Upon the first one 
second check thereafter, the Indicative Price of $30.50 is within the 
widened

[[Page 53518]]

Collar Price Range and the auction would occur immediately pursuant to 
the Standard Opening Auction Process.
---------------------------------------------------------------------------

    \28\ For purposes of this example, assume there are no orders on 
the BZX Continuous Book.
---------------------------------------------------------------------------

Example 4
    Applying the facts from Example 3 above, but replacing the two 
additional orders to the Auction Book a buy order for 2,000 shares at 
$34.75 and a sell order for 500 shares at $34.75. The orders entered to 
the Auction Book would move the Indicative Price to $34.75 because 
$34.75 would be the price at which the most shares would match (i.e., 
2,000 shares). Given that the Indicative Price ($34.75) is not within 
the widened Collar Price Range calculated above at 9:30:30 ($25.19 x 
$30.51), the Opening Auction would not occur after the second collar 
widening. As such, the System would check at each second starting at 
9:30:30 and ending at 9:31:30 for the Indicative Price being within the 
Collar Price Range. Assuming that the Indicative Price did not change 
and thus the checks would not find an Indicative Price within the 
Collar Price Range, after the check at 9:31:30 the Collar Price Range 
would again widen in the direction of the Indicative Price by the same 
5% amount used for the initial collar widening at 9:30:05 (i.e., 
$1.33). Therefore, the Collar Price Range would be $25.19 x $31.84 for 
the period between 9:31:30 and 9:32:30. Again, assuming there is no 
change to the Indicative Price, at 9:32:30 the Collar Price Range would 
widen by $1.33 in the direction of the Indicative Price, which would be 
$25.19 x $33.17 for the period between 9:32:30 and 9:33:30. Again, 
assuming there is no change to the Indicative Price, at 9:33:30 the 
Collar Price Range would widen by $1.33 in the direction of the 
Indicative Price, which would be $25.19 x $34.50 for the period between 
9:33:30 and 9:34:30. At this point, the Indicative Price (i.e., $34.75) 
remains higher than the top end of the Collar Price Range (i.e., 
$34.50). As such, the Opening Auction would occur at 9:34:30, but would 
occur within the final Collar Price Range at $27.91, which is the price 
level tied for the most volume (i.e., 1,500 shares), lowest imbalance 
(i.e., 500 shares), and closest to the Volume Based Tie Breaker (i.e., 
the FLSET of $26.52), instead of at the Indicative Price.
    As described above, the current functionality described in Example 
1 would result in no opening auction because all crossed interest was 
outside the Collar Price Range set using the FLSET. Examples 2 and 3 
demonstrate scenarios in which the proposed functionality of delaying 
the Opening Auction Process and widening the Collar Price Range would 
allow participants to execute in an opening auction that would occur at 
a price more reflective of current market conditions, and that would 
permit the greatest volume of crossed interest to execute. 
Alternatively, Example 4 demonstrates that even with the proposed delay 
and widened Collar Price Range, the Opening Auction may not occur at a 
price for which any or all crossed interest may execute. The Exchange 
includes Example 4 in order to illustrate that not all crossed interest 
in an auction should necessarily be executed and that at some point the 
benefit of continuing to delay the Opening Auction would be outweighed 
by the need to establish the BZX Official Opening Price, in particular 
to ensure that it is reported to the SIP in advance of 9:35 a.m. so 
that it can be used as the reference price from which the LULD bands 
are calculated.
    Under the proposal, the Opening Auction would be delayed until 
either (1) the NBBO becomes a Valid NBBO, (2) the Indicative Price is 
within the Collar Price Range (i.e., if the Opening Auction occurred 
between 9:30:01 and 9:30:05) or within the widened Collar Price Range 
(i.e., if the Opening Auction occurred between 9:30:06 and 9:34:30), or 
(3) the delay period of four minutes and 30 seconds lapsed. While the 
proposal does not guarantee that certain orders priced equally or more 
aggressive to the Indicative Price will execute in the Opening Auction, 
it provides for additional time for the market to develop at the 
beginning of the trading day before conducting the Opening Auction.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act.\29\ Specifically, the proposed change is 
consistent with Section 6(b)(5) of the Act,\30\ because it would 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general, protect investors and the public 
interest. The Exchange also believes the proposed rule change is 
consistent with Section 6(b)(1) of the Act, which provides that the 
Exchange be organized and have the capacity to be able to carry out the 
purposes of the Act and to enforce compliance by the Exchange's Members 
and persons associated with its Members with the Act, the rules and 
regulations thereunder, and the rules of the Exchange.\31\ Generally, 
the Exchange believes that the proposed changes will improve the price 
discovery process in the Opening Auction for securities listed on the 
Exchange along with additional benefits set forth below.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f(b).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    First, the Exchange believes proposed Rules 11.23(b)(2)(B)(i) and 
(ii) are consistent with the Act as the proposed paragraphs are 
substantially similar to existing Rule 11.23(b)(2)(B) and involve no 
change in the Opening Auction functionality. Second, the Exchange 
believes proposed Rule 11.23(b)(2)(B)(iii) would promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, protect investors and the public interest. The proposal is 
designed to increase the likelihood that auction eligible orders that 
are priced equally or more aggressive than the Indicative Price of the 
security are able to participate in the Opening Auction instead of 
being canceled because they are priced outside the Collar Price Range 
established using the FLSET. As stated above, current Rule 
11.23(b)(2)(B) provides that in the event there is no Valid NBBO, the 
FLSET will be used as the Volume Based Tie Breaker and basis for 
calculating the Collar Price Range. Because the current Opening Auction 
Process occurs at 9:30:00 a.m., such a Collar Price Range is based on 
an FLSET that may not have occurred recently or may not otherwise be 
reflective of current market conditions. As a result, the Exchange has 
observed instances where auction eligible orders priced equally or more 
aggressive than the Indicative Price were canceled without execution 
because they were outside the Collar Price Range established using the 
FLSET. While these observed instances have been infrequent, the 
Exchange believes it is important to ensure that the BZX Opening 
Process is designed to maximize the greatest volume of executions so 
that the BZX Official Opening Price accurately reflects current market 
conditions and to allow for executions between willing buying and 
sellers. Further to this point, Market-On-Open orders (also known as 
MOO orders) \32\ are market orders only eligible for execution in the 
Opening Auction that are designed for participants that want to get an 
execution without regard to price. Because such orders are not price

[[Page 53519]]

sensitive, they are more likely to cross contra-side orders outside of 
the Collar Price Range and the Exchange believes that the greater 
opportunity for execution afforded by the proposed changes will create 
a better opening process for such MOO orders. From January 1, 2022 
through July 12, 2022 there have been 324 instances in which MOO orders 
did not receive an execution in the Opening Auction and were thus 
cancelled. In 168 of those instances the Opening Auction would have 
been extended under the proposed changes to the BZX Opening Process and 
10,936 shares could have potentially received an execution.\33\ As 
noted above, the proposed new functionality would result in extending 
the Opening Auction relatively infrequently, but could be particularly 
meaningful for orders that are willing to execute in the Opening 
Auction, especially where such orders are Market-On-Open orders that 
are looking for an execution without price sensitivity. Further, the 
Exchange believes that the possible downside of delaying the 
dissemination of the LULD bands is mitigated by the infrequency with 
which LULD halts occur within the first four minutes and 30 seconds of 
the trading day and is also offset by the benefits to the opportunity 
for increased executions in the Opening Auction. As further noted 
below, this delayed dissemination of LULD bands is also a tradeoff that 
already exists as it relates to the opening process on the NYSE.
---------------------------------------------------------------------------

    \32\ As defined in Rule 11.23(a)(16), the term ``Market-On-
Open'' or ``MOO'' shall mean a BZX market order that is designated 
for execution only in the Opening Auction.
    \33\ This calculation is across 73,927 total Opening Auctions in 
BZX-listed securities during the applicable period. The Exchange 
notes that this calculation only includes MOO orders that were not 
executed and would thus not include the following scenarios: (i) 
Limit-On-Open orders that were crossed with MOO orders (although the 
MOO order portion is captured), other Limit-On-Open orders, or limit 
orders on the Continuous Book; and (ii) limit orders in the 
Continuous Book that were crossed with MOO orders (although the MOO 
order portion is captured). The Exchange believes that the MOO 
orders likely represent the majority of the instances in which 
crossed-interest was unexecuted because it was outside of the Collar 
Price Range because MOO orders are submitted for participation in 
the Opening Auction more frequently than very aggressively priced 
Limit-On-Open orders.
---------------------------------------------------------------------------

    The Exchange is not aware of any issues that the proposal would 
create and does not expect the proposal to impact other markets that 
trade BZX-listed securities pursuant to unlisted trading privileges 
(``UTP'') in a manner that is not necessary or appropriate in 
furtherance of the purposes of the Act. For example, the proposal will 
have no impact on the UTP opening process for the Exchange's affiliated 
markets, Cboe BYX Exchange, Inc. (``BYX''), Cboe EDGA Exchange, Inc. 
(``EDGA''), and Cboe EDGX Exchange, Inc. (``EDGX'' and collectively 
with BYX and EDGA referred to as the ``Cboe Exchanges''). Each of the 
Cboe Exchanges provide for an opening process for securities listed 
pursuant to UTP (the ``UTP Opening Process''),\34\ which state that the 
opening process ``will be priced at the midpoint of the first NBBO 
subsequent to the first two-sided quotation published by the listing 
exchange after 9:30:00 a.m. Eastern Time.'' \35\ Such process occurs 
regardless of NBBO width. Because the Exchange will continue to 
disseminate an NBBO regardless of the timing of the Opening Auction and 
the UTP Opening Process takes place where there is a ``two-sided 
quotation published by the listing exchange,'' the proposed new 
functionality will have no impact on the UTP Opening Process rules of 
the Cboe Exchanges. Further to this point, the Exchange notes that MIAX 
Pearl Exchange, an exchange that only offers UTP trading, has identical 
language related to its opening process and, therefore, the Exchange 
would not expect this change to have an impact on its opening 
process.\36\
---------------------------------------------------------------------------

    \34\ See BYX Rule 11.23, EDGA Rule 11.7, and EDGX Rule 11.7 
(collectively, the ``UTP Opening Process Rules'').
    \35\ See paragraph (c)(2) of UTP Opening Process Rules.
    \36\ See MIAX Pearl Exchange Rule 2615, particularly Rule 
2615(c)(2).
---------------------------------------------------------------------------

    Furthermore, the Exchange notes that it is the responsibility of 
each exchange that offers UTP trading to establish and maintain their 
opening process for UTP securities such that it works with the opening 
process of the applicable primary listing venue. The Exchange believes 
that it is generally in the public interest for a primary listing venue 
to improve the price discovery process for its listed securities and 
that the rule filing process provides the opportunity for anyone to 
provide public comment on any issues that might offset such benefits, 
including operational issues for exchanges offering UTP trading. The 
Cboe Exchanges' UTP Opening Process was designed with the opening 
process of the primary listing venue for the UTP security in mind and 
provides different processes depending on the listing exchange of the 
applicable UTP security.\37\ Because certain exchanges allow for a 
security to be opened manually, which often results in an opening that 
occurs after 9:30:00 a.m. ET, the UTP Opening Process rules 
differentiate the opening process based on the listing exchange of the 
applicable UTP security. As such, other exchanges have presumably also 
designed and maintain their respective UTP opening processes with an 
eye toward the opening process of the primary listing exchange. To the 
extent that the proposed change hypothetically created issues for the 
UTP opening process of other market centers or that such other market 
centers otherwise disagree with the Exchange's proposed new 
functionality, no such issues have been raised through the public 
comment process. Accordingly, the Exchange believes that its proposal 
benefits investors generally by enhancing the Exchange's price 
discovery process for Opening Auctions without any anticipated impact 
to other UTP exchanges and, as such, that the proposal is consistent 
with the Act.
---------------------------------------------------------------------------

    \37\ See paragraphs (c)(1) and (c)(2) of the UTP Opening Process 
rules.
---------------------------------------------------------------------------

    The Exchange also believes the proposal strikes a balance between 
providing a better price discovery mechanism by offering additional 
execution opportunities for auction eligible orders priced equally or 
more aggressive than the Indicative Price of the security and limiting 
any such delay so that the BZX Official Opening Price is reported to 
the SIP by 9:35 a.m. and will therefore be used to set the LULD bands. 
The Exchange notes that, while there will be no LULD bands until the 
Exchange disseminates a reference price and thus there will be no LULD 
bands during the period before the Opening Auction Process occurs, this 
is a tradeoff that already exists as it relates to the opening process 
on the NYSE, which may delay the opening process for an indefinite 
period of time. The Exchange also notes that LULD bands disseminated 
during the circumstances in which the proposed delay would be applied 
are more likely to be based on a price that may not be reflective of 
current market conditions. For example, in situations where the 
proposed delay would be applied, the LULD bands would be based off an 
FLSET that occurred on the prior trading day, and thus the LULD bands 
could be based on a stale price. The Exchange is only proposing to 
delay the Opening Auction in circumstances where there is crossed 
interest and no Valid NBBO meaning that there are parties willing to 
execute at a particular price and the NBBO is not narrow enough to 
provide any meaningful guidance about the actual market value of the 
security. Therefore, the Exchange believes any potential drawback in a 
delay of the LULD bands is mitigated by the limited circumstances in 
which the delay would occur and that any LULD bands disseminated during 
such a delay may not be reflective of current market conditions. 
Delaying the opening

[[Page 53520]]

auction process under certain circumstances provides an opportunity for 
more meaningful price formation that is more representative of current 
market conditions, especially in thinly traded or less liquid 
securities which are by definition less likely to have executions 
during the period before the Opening Auction Process occurs. Further to 
this point, the Exchange expects that: (i) the Opening Auction Process 
will not be delayed frequently; and (ii) even where the Opening Auction 
Process is delayed, it is unlikely that the price of the underlying 
security will hit a price at which it would have been subject to an 
LULD halt if the Exchange had not delayed the Opening Auction 
Process.\38\
---------------------------------------------------------------------------

    \38\ The Exchange notes that during the period of June 1, 2021 
through May 31, 2022, a LULD halt occurred in BZX listed symbols 
during the first four minutes and 30 seconds of the trading day 
roughly 0.01% of the time (15/134,615).
---------------------------------------------------------------------------

    Separately, the Exchange believes that creating functionality that 
could delay the Opening Auction Process by four minutes and 30 seconds 
is consistent with the Act because it also ensures that the Exchange's 
opening process is used to determine the LULD band reference price. If 
the opening price on a primary listing exchange is not reported to the 
SIPs within five minutes after the start of Regular Trading Hours, the 
first reference price for a trading day is the arithmetic mean price of 
eligible reported transactions for the NMS stock over the preceding 
five minute period.\39\ However, if no eligible reported transactions 
have occurred in the NMS stock over the preceding five minute period, 
there will be no reference price and thus no LULD bands in the security 
until an eligible reported transaction occurs. The Exchange believes 
that LULD bands are an important mechanism for investor protection, 
especially in thinly traded or illiquid securities and, as such, is 
proposing to calculate a BZX Official Opening Price no later than 
9:34:30 a.m. which will allow it to continue to report the BZX Official 
Opening price to the SIP prior to 9:35 a.m. so that it serves as the 
reference price on which the LULD bands are based.
---------------------------------------------------------------------------

    \39\ See Section V(B)(2) of the Plan.
---------------------------------------------------------------------------

    To the extent that the Exchange's proposed opening process results 
in a more accurate BZX Official Opening Price, it follows that such a 
price would also provide a better foundation for the LULD bands without 
negatively impacting the LULD process because the Exchange would 
continue to provide the BZX Official Opening Price to the SIP prior to 
9:35. As a result, the Exchange believes that the proposal would 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system and, in general, protect investors and the public 
interest.
    The Exchange notes that the concept of delaying an auction and 
widening the Collar Price Range as provided in proposed paragraphs 
11.23(b)(2)(B)(iii)(b)(1) through (4) is similar to the Twelfth 
Amendment of the Plan and corresponding amendments by the primary 
listing exchanges. Specifically, Amendment 12 was created to improve 
re-openings following a trading pause,\40\ with an eye towards 
carefully balancing halt auction price quality and the speed with which 
continuous trading can be resumed. Amendment 12 provided that auction 
halt periods would be extended if either the auction price at which the 
most shares would be traded is outside the range of the pre-defined 
price threshold collars (the ``price threshold collars'') or there is a 
market order share imbalance. Further, Amendment 12 provided that the 
price threshold collars would be widened in the event that the 
auction's halt period is extended. In its approval of Amendment 12, the 
Commission stated that it is appropriate in the public interest, for 
the protection of investors and the maintenance of a fair and orderly 
market to provide that a trading pause continue until the primary 
listing exchange has reopened trading using its established reopening 
procedures, even if such reopening is more than 10 minutes after the 
beginning of a trading pause, and to require that trading centers may 
not resume trading in an NMS Stock following a trading pause without 
price bands in such NMS Stock. The Commission stated that these two 
provisions together support a more standardized process for reopening 
trading after a trading pause has been declared.
---------------------------------------------------------------------------

    \40\ A ``trading pause'' refers to a function of the LULD 
mechanism provided under the Plan. Specifically, the Plan sets for 
procedures that provide for market-wide LULD requirements that 
prevent trades in individual NMS stocks from occurring outside of 
the specified price bands and provides for trading pauses to 
accommodate more fundamental price moves.
---------------------------------------------------------------------------

    As a primary listing exchange, the Exchange amended Rule 11.23(d) 
to incorporate the provisions of Amendment 12.\41\ Specifically, under 
Rule 11.23(d)(1)(A) the Quote-Only Period \42\ with respect to a halt 
auction commences five (5) minutes prior to such halt auction. Adopted 
Rule 11.23(d)(2)(C) provides for the Quote-Only Period to be extended 
an additional five (5) minutes should a halt auction be unable to be 
performed due to Market Order \43\ imbalance under 11.23(d)(2)(B)(i) 
\44\ or if the indicative price, before being adjusted for halt auction 
collars, is outside the halt auction collars set forth in adopted 
subparagraphs (i) \45\ and (ii) \46\ to Exchange Rule 11.23(d)(2)(C) 
(either, an ``Impermissible Price'') (``Initial Extension Period''). 
Similar to the proposal, Rule 11.23(d)(2)(C)(ii) provides that at the 
beginning of the Initial Extension Period the upper (lower) halt 
auction collar shall be increased (decreased) by five (5) percent in 
the direction of the Impermissible Price, rounded to the nearest 
minimum price variation. For securities with a halt auction reference 
price of $3.00 or less, the halt auction collar shall be increased 
(decreased) in $0.15 increments in the direction of the Impermissible 
Price. At the beginning of each additional extension period, the halt 
auction collar shall be widened in accordance with this paragraph by 
the same amount as the Initial Extension Period. In its approval 
order,\47\ the Commission stated that ``extending the Trading Pause and 
widening the halt auction collar on the side of the Impermissible Price 
would be a measured approach to provide additional time to attract 
offsetting interest, to help to address an imbalance that may not be 
resolved within the prior halt auction collars, and to reduce the 
potential for triggering another Trading Pause.''
---------------------------------------------------------------------------

    \41\ See Securities Exchange Act No. 75879 (October 26, 2016) 81 
FR 75875 (November 1, 2016) (SR-BatsBZX-2016-61) (Notice of Filing 
of a Proposed Rule Change To Amend Exchange Rule 11.23, Auctions, To 
Enhance the Reopening Auction Process Following a Trading Halt 
Declared Pursuant to the Plan To Address Extraordinary Market 
Volatility Pursuant to Rule 608 of Regulation NMS). See also 
Securities Exchange Act No. 79885 (January 26, 2017) 82 FR 8968 
(February 1, 2017) (SR-BatsBZX-2016-61) (Order Granting Approval of 
Proposed Rule Change, as Modified by Amendment No. 1, To Amend 
Exchange Rule 11.23, Auctions, To Enhance the Reopening Auction 
Process Following a Trading Halt Declared Pursuant to the Plan To 
Address Extraordinary Market Volatility Pursuant to Rule 608 of 
Regulation NMS)
    \42\ ``Quote-Only Period'' is defined as ``a designated period 
of time prior to a halt auction, a Volatility Closing Auction, or an 
IPO Auction during which Users may submit orders to the Exchange for 
participation in the auction.'' See Exchange Rule 11.23(a)(17).
    \43\ See Rule 11.9(a)(2).
    \44\ Under 11.23(d)(2)(B)(i), the Quote-Only Period may be 
extended where there are unmatched Market Orders on the Auction Book 
associated with the auction.
    \45\ Rule 11.23(d)(2)(C)(i) provides for the initial halt 
auction collar calculations.
    \46\ Rule 11.23(d)(2)(C)(ii) provides for the widening of the 
halt auction collars.
    \47\ Supra note 26.
---------------------------------------------------------------------------

    The Exchange notes that the purpose of Amendment 12 and 
corresponding

[[Page 53521]]

Exchange amendment was intended to delay a halt auction to attract 
offsetting interest, while the purpose of this proposal is intended to 
delay the Opening Auction Process in order to provide the Opening 
Auction price additional time to reflect current market conditions. 
While Exchange Rule 11.23(d) and Amendment 12 apply only to re-opening 
auctions that are single venue liquidity events and this proposal 
applies to the opening auction which is not a single venue liquidity 
event,\48\ applying a common functionality across the two remains 
logical because the Exchange believes that delaying the Opening Auction 
Process under certain conditions such that the delay will be coincident 
with the increasing liquidity that comes shortly after the beginning of 
Regular Trading Hours, which the Exchange believes is similar to 
extending halt auctions in order to allow for greater participation and 
simultaneous expansion of executable price range. Even though trading 
is ongoing while the Opening Auction Process is underway, orders on the 
Continuous Book are included in the Opening Auction Process and the 
increased liquidity around the open will generally increase liquidity 
in the Opening Auction Process even if market participants are entering 
orders in the Continuous Book rather than auction specific orders. To 
this point, both are designed to balance auction price quality and the 
speed with which an auction can occur and thus continuous trading can 
be resumed, in the case of a halt auction, or when the Opening Auction 
Process completes, in the case of an Opening Auction. Further, this 
consistency in approach offers a process that market participants are 
already familiar with. Having consistent auction processes benefits all 
investors because market participants are already familiar with the 
proposed functionality and will not have to learn a new set of nuanced 
rules designed to accomplish the same end goal, will understand how the 
functionality operates because of its common usage in the LULD context, 
and will generally help with quick understanding and adoption while 
reducing the need for market participants to build systems designed to 
accommodate an entirely new process. Therefore, the Exchange believes 
the proposal is appropriate, in the public interest, for the protection 
of investors and the maintenance of a fair and orderly market.
---------------------------------------------------------------------------

    \48\ The Exchange's Opening Auction is not a single venue 
liquidity event because trading is occurring on the Exchange's 
Continuous book and at away market centers before and during the 
Opening Auction.
---------------------------------------------------------------------------

    The Exchange also believes its proposal to the last two sentences 
of existing Rule 11.23(b)(2)(B) to paragraphs 11.23(b)(2)(B)(iv) and 
(v), respectively, will improve clarity and readability of the rule. 
Further, the proposal to remove the provision of paragraph 
11.23(b)(2)(B)(v) that states the FLSET will be the previous BZX 
Official Closing Price is consistent with the new proposed 
functionality, which would allow for an FLSET to occur between 9:30 and 
9:34:30.
    Finally, the Exchange believes its proposed clarifications to Rules 
11.23(b)(1)(A) and (B) to reflect that the Opening Auction may occur at 
a time other than 9:30 a.m. will allow the Exchange to more easily 
administer its rules, and Members can more clearly understand how the 
Opening Auction Process may occur. Specifically, the proposed 
amendments to Rules 11.23(b)(1)(A) and (B) will add clarity, 
transparency and internal consistency to Exchange rules making them 
easier to navigate, in light of the other proposed Rule changes 
described herein.

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. To the contrary, allowing the 
Exchange to make the above proposed modifications will allow the 
Exchange to better compete with other exchanges as a listing venue by 
improving the Exchange's auction process by allowing more executions to 
occur at more reasonable prices that are based on the current value of 
the security. As mentioned above, the Exchange has received feedback 
from market participants regarding the issue under the current process, 
and the proposed amendments will both address this feedback and improve 
the Exchange's auction process, allowing it to better compete as both a 
listing and execution venue.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be 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 [email protected]. Please include 
File Number SR-CboeBZX-2022-045 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-2022-045. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such 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

[[Page 53522]]

comment submissions. You should submit only information that you wish 
to make available publicly. All submissions should refer to File Number 
SR-CboeBZX-2022-045 and should be submitted on or before September 21, 
2022.
---------------------------------------------------------------------------

    \49\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\49\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-18764 Filed 8-30-22; 8:45 am]
BILLING CODE 8011-01-P


