[Federal Register Volume 88, Number 20 (Tuesday, January 31, 2023)]
[Notices]
[Pages 6352-6353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01881]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96748; File No. SR-CboeEDGX-2023-005]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rule 21.1 Concerning All-or-None Orders With the Size of One 
Contract

January 25, 2023.
    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 January 13, 2023, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to 
amend Rule 21.1. The text of the proposed rule change is provided 
below.
    (additions are italicized; deletions are [bracketed])
* * * * *
    Rules of Cboe EDGX Exchange, Inc.
* * * * *
Rule 21.1. Definitions
    The following definitions apply to Chapter XXI for the trading of 
options listed on EDGX Options.
    (a)-(c) No changes.
    (d) The term ``Order Type'' shall mean the unique processing 
prescribed for designated orders, subject to the restrictions set forth 
in paragraph (j) below with respect to orders and bulk messages 
submitted through bulk ports, that are eligible for entry into the 
System. An Order Type applied to a bulk message applies to each bid and 
offer within that bulk message. Unless otherwise specified in the Rules 
or the context indicates otherwise, the Exchange determines which of 
the following Order Types are available on a class, system, or trading 
session basis. Rule 21.20 sets forth the Order Types the Exchange may 
make available for complex orders.
    (1)-(3) No changes.
    (4) ``All-or-None orders'' or ``AON orders'' are orders to be 
executed in their entirety or not at all. AON orders may be market or 
limit orders. Users may not designate an AON order as All Sessions. 
Users may not designate bulk messages as AON orders.
    (A)-(E) No change.
    (F) The System disregards an AON instruction on an order with a 
size of one contract.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 21.1. Specifically, the 
proposed rule change codifies in new subparagraph (F) of the definition 
of an All-or-None (``AON'') order in Rule 21.1(d)(4) that the System 
will disregard an AON instruction on an order with a size of one 
contract. An AON order is an order to be executed in its entirety or 
not at all.\3\ Any order for one contract (regardless of whether it has 
an AON instruction) may only be executed in its entirety or not at all, 
as the Exchange does not permit executions of partial contracts. 
Therefore, an AON instruction on such an order is unnecessary. If a 
market participant submits an order for one contract with an AON 
instruction, that order would execute in the same manner as an order 
for one contract without an AON instruction. However, in certain 
circumstances, the System handles orders with AON instructions 
differently than non-AON orders. For example, pursuant to Rule 21.8(m), 
AON orders are generally last in priority. Such provisions may prevent 
or delay executions of one-lot orders with AON instructions, despite 
the fact that they would otherwise execute in the same manner as one-
lot orders without AON instructions. The Exchange believes it is 
appropriate to treat all one-lot orders (which are functionally like 
AON orders (as they can only execute in their entirety or not at all)) 
as non-AON orders so such orders that unnecessarily include an AON 
instruction, including AON orders from customers, do not lose otherwise 
lose priority.
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    \3\ Rule 21.1(d)(4).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Id.
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    The Exchange believes the proposed rule change will promote just 
and equitable principles of trade and remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
because the System will handle and prioritize all one-lot orders, which 
are functionally like AON orders (as they can only execute in their 
entirety or not at all), in the same manner. The Exchange believes it 
is equitable to treat all one-lot AON orders as non-AON orders so such 
orders do not lose priority despite inclusion of an instruction that 
has no practical impact on its execution. The

[[Page 6353]]

Exchange believes the proposed rule change may benefit and protect 
market participants that submit one-lot orders with unnecessary AON 
instructions, as it may improve the priority (and possibly increase 
execution opportunities) of such orders. Additionally, because the 
proposed rule change codifies current System behavior, it adds 
transparency and clarity to the Rules, which ultimately benefits 
investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed rule change will impose any intramarket 
burden that is not necessary or appropriate in furtherance of the 
purposes of the Act because it applies to all orders for one contract 
with AON instructions in the same manner. Additionally, as described 
above, by disregarding an AON instruction on an order for one contract, 
the System handles and prioritizes all one-lot orders that may execute 
in their entirety or not at all (and thus all one-lot orders) in the 
same manner. The Exchange does not believe that the proposed rule 
change will impose any intermarket burden that is not necessary or 
appropriate in furtherance of the purposes of the Act because it only 
impacts how the System internally handles and prioritizes one-lot 
orders with AON instructions on the Exchange.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \9\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requested 
that the Commission waive the 30-day operative delay so that the 
proposal may become operative immediately upon filing. The codification 
of the new System functionality to treat all one-lot AON orders as non-
AON orders, so that such orders do not lose priority, may benefit and 
protect investors sooner with the waiver of the operative delay. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
the proposed rule change does not raise any new or novel issues. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposed rule change operative upon filing.\10\
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    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-CboeEDGX-2023-005 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-CboeEDGX-2023-005. 
This file number should be included on the subject line if email is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE, Washington, DC 20549, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change.
    Persons submitting comments are cautioned that we do not redact or 
edit personal identifying information from comment submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-CboeEDGX-2023-
005 and should be submitted on or before February 21, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-01881 Filed 1-30-23; 8:45 am]
BILLING CODE 8011-01-P


