[Federal Register Volume 79, Number 239 (Friday, December 12, 2014)]
[Notices]
[Pages 73930-73938]
[FR Doc No: 2014-29109]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73784; File No. SR-BX-2014-049]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing of Proposed Rule Change Relating to Directed Market Makers

December 8, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 25, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``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.
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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

    The Exchange proposes to add definitions of Directed Order and
Directed Market Maker (``DMM''), as well as provisions concerning the
designation of an order as a Directed Order and DMM market making
obligations. The proposal also revises priority rules to provide for a
DMM participation entitlement. Finally, the rule makes certain
clarifications to the text of rules governing Lead Market Makers
(``LMMs''). The proposal seeks to enable BX to compete with the many
options exchanges that offer directed orders in their respective
markets.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxbx.cchwallstreet.com, 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to adopt rules to permit
BX Market Makers to act as Designated Market Makers, or DMMs, in their
appointed options classes, provided the DMM meets certain obligations
and quoting requirements as provided for in the new proposed Exchange
Rules. The Exchange proposes to provide DMMs with certain participation
entitlements. The Exchange believes that these amendments, described
below in greater detail, will enhance competition by affording the BX
Options market the opportunity to compete for directed order flow.
Current Categories of BX Options Participants
    Today on BX there are three types of Options Participants: Options
Order Entry Firms, Options market makers and LMMs. Options Order Entry
Firms, or OEFs, are Options Participants who represent customer orders
as agent on BX Options and non-market maker Participants conducting
proprietary trading as principal.
    Options market makers are Options Participants registered with the
Exchange as options market makers in one or more listed options on
BX.\3\ BX Options market makers are required to electronically engage
in a course of dealing to enhance liquidity available on BX and to
assist in the maintenance of fair and orderly markets.\4\ Among

other things, Options market makers must quote 60 percent of the
trading day (as a percentage of the total number of minutes in such
trading day) or such higher percentage as BX may announce in
advance.\5\
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    \3\ See BX Options Rules at Chapter VII.
    \4\ Options market makers receive certain benefits for carrying
out their duties. For example, a lender may extend credit to a
broker-dealer without regard to the restrictions in Regulation T of
the Board of Governors of the Federal Reserve System if the credit
is to be used to finance the broker-dealer's activities as market
maker on a national securities exchange. Thus, an Options market
maker has a corresponding obligation to hold itself out as willing
to buy and sell options for its own account on a regular or
continuous basis to justify this favorable treatment.
    \5\ BX Regulation may consider exceptions to the requirement to
quote 60 percent (or higher) of the trading day based on
demonstrated legal or regulatory requirements or other mitigating
circumstances. Market makers are not required to make two-sided
markets pursuant to Section 5(a)(i) of Chapter VII in any Quarterly
Option Series, adjusted option series, or any option series until
the time to expiration for such series is less than nine months.
Accordingly, the continuous quotation obligations set forth in this
rule do not apply to market makers respecting Quarterly Option
Series, adjusted option series, or any series with an expiration of
nine months or greater. If a technical failure or limitation of a
system of BX prevents a market maker from maintaining, or prevents a
market maker from communicating to BX Options, timely and accurate
quotes, the duration of such failure or limitation shall not be
included in any of these calculations with respect to the affected
quotes. Substantial or continued failure by an Options market maker
to meet any of its obligations and duties, will subject the Options
market maker to disciplinary action, suspension, or revocation of
the Options market maker's registration in one or more options
series. See obligations of Options market makers in Chapter VII,
Section 6.
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    Recently, the Exchange adopted rules providing that an approved BX
Options market maker may become an LMM in one or more listed options,
provided that each class is limited to one LMM.\6\ BX does not limit
the number of entities that may become LMMs. LMMs are subject to more
extensive obligations than other BX Options market makers, including an
obligation to provide continuous two-sided quotations meeting certain
quote width requirements throughout the trading day in its appointed
issues for 90 percent of the time the Exchange is open for trading in
each issue.\7\ The Exchange provides LMMs with specific participation
entitlements in Chapter VI (Trading Systems) at Section 10, entitled
``Book Processing.''
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    \6\ See Chapter VII, Section 13.
    \7\ See Chapter VII, Section 14.
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DMM Designation and Directed Orders
    The Exchange is now proposing to define Directed Orders and to
provide for another category of market maker, the DMM. A ``Directed
Order'' would be defined as an order to buy or sell which has been
directed (pursuant to the Exchange's instructions on how to direct an
order) to a particular market maker (the DMM with respect to that
Directed Order).\8\ Pursuant to a proposed amendment to Chapter VI,
Section 6(a)(2), Limit Orders,\9\ Minimum Quantity Orders,\10\ Market
Orders,\11\ Price Improving Orders,\12\ All-or-None Orders \13\ and
Post-Only Orders \14\ may all be designated as Directed Orders. A
Directed Order may also be designated as Immediate or Cancel
(``IOC''),\15\ Good-till-Cancelled (``GTC''),\16\ Day (``DAY'') \17\ or
a WAIT \18\ order pursuant to Chapter VI, Section 6(a)(1) as proposed
to be amended. New Section 15, DMMs, of Chapter VII, Market
Participants, provides that market makers may receive Directed Orders
in their appointed classes as provided therein, provided they indicated
to the Exchange, in a form specified, that they will receive Directed
Orders. Directed Orders may be available only in certain options.\19\
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    \8\ See proposed Chapter VI, Section 1(e)(1), which replaces a
Reserved section with a definition of Directed Order. The new
provision also states that Directed Orders are handled within the
System pursuant to Chapter VI, Section 10.
    \9\ See Chapter VI, Section 1(e)(2). ``Limit Orders'' are orders
to buy or sell an option at a specified price or better. A limit
order is marketable when, for a limit order to buy, at the time it
is entered into the System, the order is priced at the current
inside offer or higher, or for a limit order to sell, at the time it
is entered into the System, the order is priced at the inside bid or
lower.
    \10\ See Chapter VI, Section 1(e)(3). ``Minimum Quantity
Orders'' are orders that require that a specified minimum quantity
of contracts be obtained, or the order is cancelled. Minimum
Quantity Orders are treated as having a time-in-force designation of
Immediate or Cancel. Minimum Quantity Orders received prior to the
opening cross or after market close will be rejected.
    \11\ See Chapter VI, Section 1(e)(5). ``Market Orders'' are
orders to buy or sell at the best price available at the time of
execution. Participants can designate that their Market Orders not
executed after a pre-established period of time, as established by
the Exchange, will be cancelled back to the Participant.
    \12\ See Chapter VI, Section 1(a)(6). ``Price Improving Orders''
are orders to buy or sell an option at a specified price at an
increment smaller than the minimum price variation in the security.
Price Improving Orders may be entered in increments as small as one
cent. Price Improving Orders that are available for display shall be
displayed at the minimum price variation in that security and shall
be rounded up for sell orders and rounded down for buy orders.
    \13\ See Chapter VI, Section 1(e)(10). ``All-or-none'' shall
mean a market or limit order which is to be executed in its entirety
or not at all. All-or-None Orders are treated as having a time-in-
force designation of Immediate or Cancel. All-or-None Orders
received prior to the opening cross or after market close will be
rejected.
    \14\ See Chapter VI, Section 1(e)(11). ``Post-Only Orders'' are
orders that will not remove liquidity from the System. Post-Only
Orders are to be ranked and executed on the Exchange or cancelled,
as appropriate, without routing away to another market. Post-Only
Orders are evaluated at the time of entry with respect to locking or
crossing other orders as follows: (i) If a Post-Only Order would
lock or cross an order on the System, the order will be re-priced to
$.01 below the current low offer (for bids) or above the current
best bid (for offers) and displayed by the System at one minimum
price increment below the current low offer (for bids) or above the
current best bid (for offers); and (ii) if a Post-Only Order would
not lock or cross an order on the System but would lock or cross the
NBBO as reflected in the protected quotation of another market
center, the order will be handled pursuant to Chapter VI, Section
7(b)(3)(C). Participants may choose to have their Post-Only Orders
returned whenever the order would lock or cross the NBBO or be
placed on the book at a price other than its limit price. Post-Only
Orders received prior to the opening cross or after market close
will be rejected. Post-Only Orders may not have a time-in-force
designation of Good Til Cancelled or Immediate or Cancel. Although a
Post-Only Order may be designated as a Directed Order, because it is
not executed immediately upon receipt it will never result in the
awarding of a DMM participation entitlement as discussed below.
    \15\ See Chapter VI, Section 1(g)(2). ``Immediate Or Cancel'' or
``IOC'' shall mean for orders so designated, that if after entry
into the System a marketable order (or unexecuted portion thereof)
becomes non-marketable, the order (or unexecuted portion thereof)
shall be canceled and returned to the entering participant. IOC
Orders shall be available for entry from the time prior to market
open specified by the Exchange on its Web site until market close
and for potential execution from 9:30 a.m. until market close. IOC
Orders entered between the time specified by the Exchange on its Web
site and 9:30 a.m. Eastern Time will be held within the System until
9:30 a.m. at which time the System shall determine whether such
orders are marketable. IOC orders can be routed if designated as
routable.
    \16\ See Chapter VI, Section 1(g)(4). ``Good Til Cancelled'' or
``GTC'' shall mean for orders so designated, that if after entry
into System, the order is not fully executed, the order (or
unexecuted portion thereof) shall remain available for potential
display and/or execution unless cancelled by the entering party, or
until the option expires, whichever comes first. GTC Orders shall be
available for entry from the time prior to market open specified by
the Exchange on its Web site until market close and for potential
execution from 9:30 a.m. until market close.
    \17\ See Chapter VI, Section 1(g)(3). ``DAY'' shall mean for
orders so designated, that if after entry into the System, the order
is not fully executed, the order (or unexecuted portion thereof)
shall remain available for potential display and/or execution until
market close, unless canceled by the entering party, after which it
shall be returned to the entering party. DAY Orders shall be
available for entry from the time prior to market open specified by
the Exchange on its Web site until market close and for potential
execution from 9:30 a.m. until market close.
    \18\ See Chapter VI, Section 1(g)(5). ``WAIT'' shall mean for
orders so designated, that upon entry into the System, the order is
held for one second without processing for potential display and/or
execution. After one second, the order is processed for potential
display and/or execution in accordance with all order entry
instructions as determined by the entering party.
    \19\ The Exchange would specify via an Options Trader Alert
which options would be subject to the Directed Orders provisions
specified herein.
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    Pursuant to new Chapter VII, Market Participants, Section 15, when
the Exchange's disseminated price is the NBBO at the time of receipt of
the Directed Order, and the DMM is quoting at or improving \20\ the
Exchange's

disseminated price, the Directed Order will be automatically executed
and allocated in accordance with Chapter VI, Section 10 such that the
DMM will receive a DMM participation entitlement provided for in
Chapter VI, Section 10, discussed below.\21\ If the DMM participation
entitlement is not awarded at the time of receipt of the Directed
Order, no DMM participation entitlement will apply and the order will
be handled as though it were not a Directed Order for the remainder of
the life of the order. However, when (a) the Exchange's disseminated
price is the NBBO, and the quotation disseminated by the DMM on the
opposite side of the market from the Directed Order is inferior to the
NBBO at the time of receipt of the Directed Order, or (b) the
Exchange's disseminated price is not the NBBO at the time of receipt of
the Directed Order, the Directed Order will be processed as though it
were not a Directed Order.\22\
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    \20\ Today, BX Options Participants enter Price Improving
Orders, which orders have a specified price smaller than the minimum
price variation (``MPV'') in the option. Price Improving Orders may
be entered in increments as small as one cent. Price Improving
Orders will be displayed at the MPV in that security and rounded up
for sell orders and down for buy orders. Without this order type,
market participants would not be able to submit orders priced
between the MPV. Instead, orders, if submitted, would be priced (and
displayed) at the MPV. The treatment of Price Improving Orders is
not altered by this rule change. It is consistent to account for the
possibility that the DMM improves the Exchange's disseminated price
by submitting a marketable order in a non-standard increment, which
in this case, would aggressively improve the NBBO. Awarding a
participation entitlement to a DMM will not otherwise change the
manner in which Price Improving Orders will be displayed at the MPV
and available to be executed at price improving increments.
    \21\ Chapter VII, Market Participants, Section 15, Directed
Market Makers, subsection (i) Price Improving Orders from a DMM
participant which are reflected on OPRA at the NBBO retain price
priority and are eligible for a DMM participation entitlement.
    \22\ See Chapter VII, Market Participants, Section 15, Directed
Market Makers, subsection (ii).
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    New Section 15 requires a DMM to provide continuous two-sided
quotations throughout the trading day in all options issues in which
the DMM is assigned for 90 percent of the time the Exchange is open for
trading in each issue. Such quotations must meet the legal quote width
requirements of Chapter VII, Section 6. These obligations will apply
collectively to all series in all of the issues, rather than on an
issue-by-issue basis once the market maker has indicated to the
Exchange that the market maker will be receiving Directed Orders. While
the Market Maker's quoting requirement is a daily obligation, the
Exchange is able to determine compliance with these obligations on a
monthly basis. BX Regulation may consider exceptions to the requirement
to quote 90% (or higher) of the trading day based on demonstrated legal
or regulatory requirements or other mitigating circumstances.\23\ If a
technical failure or limitation of a system of the Exchange prevents a
DMM from maintaining, or prevents a DMM from communicating to the
Exchange, timely and accurate electronic quotes in an issue, the
duration of such failure shall not be considered in determining whether
the DMM has satisfied the 90 percent quoting standard with respect to
that option issue. Further, these obligations shall not apply to DMMs
with respect to Quarterly Options Series, adjusted option series,\24\
or any series with a time to expiration of nine months or greater.
However, a DMM may still receive a participation entitlement in such
series if it elects to quote in such series and otherwise satisfies the
requirements of Chapter VI, Section 10.
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    \23\ Chapter VII, Market Participants, Section 15, Directed
Market Makers, subsection (iii).
    \24\ An adjusted option series is an option series wherein, as a
result of a corporate action by the issuer of the underlying
security, one option contract in the s [sic]
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LMM and New DMM Participation Entitlements
    By way of background, Chapter VI, Trading System, Section 10, Book
Processing, currently provides that the Exchange will determine to
apply, for each option, either a Price/Time or a Size Pro-Rata
execution algorithm. In addition to describing each execution
algorithm, Chapter VI, Section 10 also describes certain priority
overlays applicable to each of those algorithms.
    Currently, under both Price/Time and Size Pro-Rata algorithms,
Public Customer Priority is always in effect and provides that the
highest bid and lowest offer have priority except that Public Customer
orders have priority over non-Public Customer orders at the same price.
If there are two or more Public Customer orders for the same options
series at the same price, priority is afforded to such Public Customers
orders in the sequence in which they are received by the System. For
purposes of the Public Customer Priority overlay, a Public Customer
order does not include a Professional \25\ order.
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    \25\ See Chapter I, Section 1(a)(49). The term ``Professional''
means any person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s). A Participant or a Public Customer may, without
limitation, be a Professional. All Professional orders shall be
appropriately marked by Participants.
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    Chapter VI, Section 10 also currently provides for a LMM priority
overlay after all Public Customer orders have been fully executed, upon
receipt of an order, provided the LMM's bid/offer is at the Exchange's
disseminated price. The LMM priority overlay applies under both the
Price/Time and the Size Pro-Rata execution algorithms, if applicable.
    Specifically, with respect to Size Pro-Rata executions, the
Exchange affords an LMM a participation entitlement if the LMM's bid/
offer is at or better than the Exchange's disseminated price and all
Public Customer \26\ orders have been fully executed.\27\ The LMM is
not entitled to receive a number of contracts that is greater than the
displayed size associated with such LMM. LMM participation entitlements
are considered after the opening process. The LMM participation
entitlement provides a BX Options LMM with the greater of: The LMM's
Size Pro-Rata share; 50 percent of remaining interest if there is one
or no other market maker at that price; 40 percent of remaining
interest if there are two other market makers at that price; or 30
percent of remaining interest if there are more than two other market
makers at that price; or if rounding would result in an allocation of
less than one contract, a BX Options LMM receives one contract.
Rounding is up or down to the nearest integer.\28\ After all Public
Customer orders have been fully executed and LMM participation
entitlements applied, if applicable, BX Options market makers then have
priority over all other Participant orders at the same price.\29\
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    \26\ See Chapter I, Section 1(50). The term ``Public Customer''
means a person that is not a broker or dealer in securities.
    \27\ Price Improving Orders retain price priority before an LMM
participation entitlement is provided at the Exchange's disseminated
price. See Chapter VI, Sections 1(a)(6) and 7(b)(3)(B).
    \28\ When the decimal is exactly 0.5, the rounding direction is
up to the nearest integer.
    \29\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsection (C)(2)(ii)(1).
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    For symbols trading under the Price/Time algorithm, the Public
Customer Priority Overlay is always in effect. Chapter VI, Section 10
also currently provides for a LMM priority overlay after all Public
Customer orders have been fully executed, upon receipt of an order,
provided the LMM's bid/offer is at or better than the Exchange's
disseminated price, the LMM is afforded a participation
entitlement.\30\ The LMM is not entitled to receive a number of
contracts that is greater than the displayed size associated with such
LMM. After Public Customers orders have been executed, a BX Options LMM

receives the greater of: (a) Contracts the LMM would receive if the
allocation was based on time priority with Public Customer priority;
(b) 50 percent of remaining interest if there is one or no other market
maker at that price; (c) 40 percent of remaining interest if there are
two other market makers at that price; or (d) 30 percent of remaining
interest if there are more than two other market makers at that price
or if rounding would result in an allocation of less than one contract,
a BX Options LMM receives one contract. Rounding is up or down to the
nearest integer.\31\
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    \30\ As is the case with Size Pro-Rata executions discussed
above, Price Improving Orders retain price priority before an LMM
participation entitlement is provided at the Exchange's disseminated
price. See Chapter VI, Sections 1(a)(6) and 7(b)(3)(B).
    \31\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsection (C)(1)(b)(1).
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    Under both the Price/Time algorithm and the Size Pro-Rata
algorithm, Orders for 5 contracts or fewer are allocated to the LMM.
The Exchange reviews this provision quarterly and maintains the small
order size at a level that will not allow orders of 5 contracts or less
executed by the LMM to account for more than 40 percent of the volume
executed on the Exchange.\32\
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    \32\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsections (C)(1)(b)(2) and (C)(2)(ii)(2).
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    The Exchange is now proposing to amend its rules to provide for a
DMM priority entitlement under both the Price/Time and the Size Pro-
Rata algorithm, and to make certain corresponding changes and
clarifications to the current LMM participation entitlements. Under
both Price/Time and Size Pro-Rata algorithms, a market maker which
receives a Directed Order is a DMM with respect to that Directed Order.
After all Public Customer orders at a given price point have been fully
executed, upon receipt of a Directed Order, provided the DMM's bid/
offer is at or improves the NBBO, the DMM will be afforded a
participation entitlement \33\ at the last execution price, which is
equal to or better than the NBBO if the DMM executed the order at such
price. The DMM shall not be entitled to receive a number of contracts
that is greater than the displayed size at a given price point
associated with such DMM. DMM participation entitlements will be
considered after the opening process. Chapter VI, Section 10(C)(1)(c)
specifies that under the Price/Time execution algorithm, DMM
participant entitlements (like LMM participation entitlements) \34\
shall only be in effect when the Public Customer Priority Overlay is
also in effect.
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    \33\ As with the LMM participation entitlements discussed above,
Price Improving Orders retain price priority. A DMM participation
entitlement will only be provided at the last price executed which
is equal to or better than the Exchange's disseminated price. See
Chapter VI, Sections 1(a)(6) and 7(b)(3)(B).
    \34\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsection (C)(1)(b).
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    Pursuant to the DMM participation entitlement in effect under the
Price/Time algorithm, the DMM would receive, with respect to a Directed
Order, the greater of: (1) Contracts the DMM would receive if the
allocation was based on time priority pursuant to subparagraph
(C)(1)(a) with Public Customer priority; (2) after Public Customer
orders are executed, 40 percent of remaining interest; or (3) the LMM
participation entitlement (if the DMM is also the LMM). If there are
multiple DMM quotes at the same price which are at or improve the NBBO
when the Directed Order is received, the DMM participation entitlement
would apply only once to the one which has the highest time priority at
the last price executed upon receipt of the Directed Order which is
equal to or better than the NBBO. If rounding would result in an
allocation of less than one contract, the DMM would receive one
contract. Rounding would be up or down to the nearest integer.\35\
Under no circumstances would the DMM receive an allocation of greater
than 40% of an order at a price at which they receive a directed
entitlement, unless it resulted from rounding.
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    \35\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsections (C)(1)(c).
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    Pursuant to the DMM participation entitlement in effect under the
Size Pro-Rata algorithm, the DMM would receive, with respect to a
Directed Order, the greater of: (1) The DMM's Size Pro-Rata share under
subsection (1)(C)(2)(iv); (2) after Public Customer orders are
executed, 40 percent of remaining interest; or (3) the LMM
participation entitlement (if the DMM is also the LMM). If there are
multiple DMM quotes at the same price which are at or improve the NBBO
when the Directed Order is received, the DMM participation entitlement
would apply only to the one which has the highest time priority at the
last price executed upon receipt of the Directed Order which is equal
to or better than the NBBO. Additional DMM quotes at such price will
receive no further allocation of the Directed Order. Like the DMM
participation entitlement applicable to executions under the Price/Time
algorithm, if rounding would result in an allocation of less than one
contract, the DMM would receive one contract, and rounding would be up
or down to the nearest integer.\36\ Under no circumstances would the
DMM receive an allocation of greater than 40% of an order at a price at
which they receive a directed entitlement, unless it resulted from
rounding.
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    \36\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsection (C)(2)(iii).
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    As noted above, under both execution algorithms only one
participation entitlement, LMM or DMM, may be applied on a given order.
The Exchange is amending the current LMM entitlements under each
algorithm to provide with respect to a Directed Order that if the LMM
is also the DMM, the LMM shall receive the DMM participation
entitlement applicable to that algorithm, if any, if such DMM
participation entitlement is greater than the LMM participation
entitlement the LMM would otherwise receive pursuant to Chapter VI,
Section 10, subsections (C)(1)(b)(1)(a)-(d) (in the case of Price/Time
symbols) or (C)(2)(ii)(1)(a)-(d) (in the case of Size Pro-Rata
symbols). The Exchange is also modifying the LMM priority rules so that
the LMM participation entitlement will not apply to a Directed Order if
when it is received the DMM's bid/offer is at or improves \37\ the NBBO
and the LMM is at the same price level and the LMM is not the DMM.\38\
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    \37\ See note 20.
    \38\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsections (C)(1)(b)(1) (with respect to Price/Time symbols) and
(C)(2)(ii)(1) (with respect to Size Pro-Rata Symbols).
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    The Exchange is also proposing to revise the current allocation to
the LMM of orders for five contracts or fewer (which applies under both
algorithms). As revised, the provision would not apply if the order of
5 contracts or fewer is directed to a DMM who is quoting at the
NBBO.\39\
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    \39\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsections (C)(1)(b)(2) (with respect to Price/Time symbols) and
(C)(2)(ii)(2) (with respect to Size Pro-Rata Symbols).
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    Currently, with respect to executions under the Size Pro-Rata
algorithm, BX Options market makers have priority over all other
Participant orders at the same price after all Public Customer orders
have been fully executed and LMM participation entitlements applied.
The Exchange proposes to amend this provision so that this BX Options
market maker priority applies only after any DMM participation
entitlements have been applied as well.\40\
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    \40\ Chapter VI, Trading Systems, Section 10, Book Processing,
subsection (C)(2)(iv).
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    Finally, the Exchange proposes to clarify with respect to LMMs
under both execution algorithms that after all Public Customer orders
have been fully executed, upon receipt of an order, the LMM will be
afforded a participation entitlement provided that LMM's bid/offer is
at or improves upon the

Exchange's disseminated price. The addition of the reference to an
improved bid/offer will conform the LMM provision to the corresponding
new DMM provision.\41\ The Exchange is also making a clarifying change
in Chapter VI, Section 10(1)(C)(1)(b)(1)(a) by changing ``subparagraph
(1)(a) above'' to ``subparagraph (C)(1)(a) above.''
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    \41\ See note 20.
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Examples of DMM Participation Entitlement Under Price/Time Algorithm
    Examples 1 through 3 below illustrate the manner in which a DMM
will be allocated pursuant to the Price/Time model.

Example Number 1

    Assume an LMM has been assigned and that the DMM is not the LMM.

ABBO = 1.00-1.10
BX BBO = 1.00-1.10 comprised of the following in order of receipt

    Market Maker 1 (``MM1'') 1.00 (10)-1.10 (10)
    Customer A 5 offered at 1.10
    Firm 5 offered at 1.10
    DMM 1.00 (10)-1.10 (20)
    LMM 1.00 (10)-1.10 (10)
    Customer B 2 offered at 1.10

    Incoming Directed Order to pay 1.10 for 40 contracts.
    Determination of Allocation:
    Price/Time with Customer Priority would result in Customer A
trading 5, Customer B trading 2, MM1 trading 10, Firm trading 5, and
DMM trading 18.
    The DMM allocation would result in Customer A trading 5, Customer B
trading 2, and DMM trading 40% of remaining 33 = 13 (13.2 rounded
down); then normal price/time would resume and MM1 would trade 10, Firm
would trade 5, and LMM would trade 5.
    The LMM allocation is not calculated.
    In this example, Price/Time with Customer Priority would prevail
since the DMM would receive a greater allocation this way.

Example Number 2

    Assume an LMM is assigned and that the DMM is not the LMM.

ABBO = 1.00-1.10
BX BBO = 1.00-1.10 comprised of the following in order of receipt

    MM1 1.00 (10)-1.10 (10)
    Customer A 5 offered at 1.10
    Firm 5 offered at 1.10
    Market Maker 2 (``MM2'') 1.00 (10)-1.10 (10)
    DMM 1.00 (10)-1.10 (20)
    Customer B 2 offered at 1.10

    Incoming Directed Order to pay 1.10 for 40 contracts.
    Determination of Allocation:
    Price/Time with Customer Priority would result in Customer A
trading 5, Customer B trading 2, MM1 trading 10, Firm trading 5, MM2
trading 10 and DMM trading 8.
    The DMM allocation would result in Customer A trading 5, Customer B
trading 2, DMM trading 40% of remaining 33 = 13 (13.2 rounded down);
then normal price/time would resume with MM1 trading 10, Firm trading 5
and MM2 trading 5.
    The LMM allocation would not be calculated.
    In this example, the DMM allocation would prevail since the DMM
receives a greater allocation this way.

Example Number 3

    Assume an LMM is assigned and that the DMM is also the LMM.

ABBO = 1.00-1.10
BX BBO = 1.00-1.10 comprised of the following in order of receipt:

    MM1 1.00 (10)-1.10 (10)
    Firm 25 offered at 1.10
    DMM/LMM 1.00 (10)-1.10 (20)
    Customer B 2 offered at 1.10

    Incoming Directed Order to pay 1.10 for 40 contracts.
    Determination of Allocation:
    Price/Time with Customer Priority would result in Customer B
trading 2, MM1 trading 10, Firm trading 25, and DMM/LMM trading 3.
    DMM allocation would result in Customer B trading 2 and DMM/LMM
trading 40% of remaining 38 = 15 (15.2 rounded down); then normal
price/time would resume and MM1 would trade 10 and Firm would trade 13.
    LMM allocation would result in Customer B trading 2 and DMM/LMM
trading 50% of remaining 38 = 19; then normal price time would resume
and MM1 would trade 10 and Firm would trade 9.
    In this example, the LMM allocation would prevail since the DMM/LMM
would receive a greater allocation this way.
Examples of DMM Participation Entitlement Under Size Pro-Rata Algorithm
    Examples 4 through 6 below illustrate the manner in which a DMM
will be allocated pursuant to the Size Pro-Rata model.

Example Number 4

    Assume an LMM is assigned and the DMM is not the LMM.

ABBO = 1.00-1.10
BX BBO = 1.00-1.10 comprised of the following in order of receipt:

    LMM 1.00 (10)-1.10 (15)
    Customer A 5 offered at 1.10
    Firm 5 offered at 1.10
    DMM 1.00 (10)-1.10 (20)
    MM1 1.00 (10)-1.10 (10)
    Customer B 2 offered at 1.10

    Incoming Directed Order to pay 1.10 for 40 contracts.
    Determination of Allocation:
    Size Pro-Rata would result in Customer A trading 5, Customer B
trading 2, LMM trading 11 (15/45*33remaining), DMM trading 14 (20/
45*33), MM1 trading 7 (10/45*33), and then LMM based on time receiving
the residual 1 lot.
    The DMM allocation would result in Customer A trading 5, Customer B
trading 2, and DMM trading 40% of remaining 33 = 13 (13.2 rounded
down); then normal Size Pro-Rata for remaining with the LMM trading 12
(15/25*20) and MM1 trading 8 (10/25*20).
    The LMM allocation would not be calculated.
    In this example, the Size Pro-Rata allocation would prevail since
the DMM would receive the greater allocation this way.

Example Number 5

    Assume that no LMM is assigned.

ABBO = 1.00-1.10
BX BBO = 1.00-1.10 comprised of the following in order of receipt:

    DMM 1.00 (10)-1.10 (15)
    Customer A 5 offered at 1.10
    Firm 5 offered at 1.10
    MM1 1.00 (10)-1.10 (20)
    MM2 1.00 (10)-1.10 (10)
    Customer B 2 offered at 1.10

    Incoming Directed Order to pay 1.10 for 40 contracts.
    Determination of Allocation:
    Size Pro-Rata would result in Customer A trading 5, Customer B
trading 2, DMM trading 11 (15/45*33remaining), MM1 trading 14 (20/
45*33), MM2 trading 7 (10/45*33), and the DMM based on time receiving
the residual 1 lot.
    The DMM allocation would result in Customer A trading 5, Customer B
trading 2, and DMM trading 40% of remaining 33 = 13 (13.2 rounded
down); then normal Size Pro-Rata for remaining with MM1 trading 13 (20/
30*20) and MM2 trading 6 (10/30*20), and the DMM based on time
receiving the residual 1 lot.
    The LMM allocation would not be calculated.
    In this example, the DMM allocation would prevail since the DMM
would receive the greater allocation this way.

Example Number 6

    Assume that an LMM is assigned and that the DMM is also the LMM.

ABBO = 1.00-1.10
BX BBO = 1.00-1.10 comprised of the following in order of receipt:

    DMM/LMM 1.00 (10)-1.10 (15)
    Customer A 5 offered at 1.10
    Firm 5 offered at 1.10
    MM1 1.00 (10)-1.10 (30)
    Customer B 2 offered at 1.10

    Incoming Directed Order to pay 1.10 for 40 contracts.
    Determination of Allocation:
    Size Pro-Rata would result in Customer A trading 5, Customer B
trading 2, DMM/LMM trading 11 (15/45*33 remaining), MM1 trading 22 (30/
45*33).
    The DMM allocation would result in Customer A trading 5, Customer B
trading 2, and DMM/LMM trading 40% of remaining 33 = 13 (13.2 rounded
down); then Size Pro-Rata for remaining with MM1 trading full size of
20.
    The LMM allocation would result in Customer A trading 5, Customer B
trading 2, and DMM/LMM entitled to 50% of remaining 33 = 17 (16.5
rounded up) but capped at his size of 15 thus trading 15; then normal
Size Pro-Rata for remaining with MM1 trading 18.
    In this example, the LMM allocation would prevail since the DMM is
the LMM and would receive a greater allocation this way.
Examples of Price Improving Orders

Example Number 1

    For this scenario assume the NBBO is at 1.00 (bid) and 1.20
(offer).
    Assume a Price Improving Order (O1) from a Customer is present on
BX to sell 20 contracts at 1.18. Also assume a Directed Market Maker
(DMM1) and two other Market Makers (MM2 and MM3) are each quoting 1.00-
1.20 with a size of 50 contracts on each side. O1 and the Market Maker
quotes are reflected in the BX BBO as 1.00-1.20 with a size of 150
contracts on the bid and 170 contracts on the offer. If an order (O2)
is received to buy 50 contracts at a limit of 1.20 which is directed to
DMM1, the order will execute upon receipt with 20 contracts trading
against O1 at 1.18, 12 contracts trading against DMM1 at 1.20 (40% of
remaining 30 contracts), 9 contracts trading against MM2 at 1.20, and 9
contracts trading against MM3 at 1.20.

Example Number 2

    For this scenario assume the NBBO is at 1.00 (bid) and 1.20
(offer).
    Assume two Price Improving Orders (O1 and O2) from a Customer (C1)
and Directed Market Maker (DMM1), respectively, are present on BX to
sell 10 contracts each at 1.18. Also assume the Directed Market Maker
(DMM1) and two other Market Makers (MM2 and MM3) are each quoting 1.00-
1.20 with a size of 50 contracts on each side. O1, O2, and the Market
Maker quotes are reflected in the BX BBO as 1.00-1.20 with a size of
150 contracts on the bid and 170 contracts on the offer. If an order
(O3) is received to buy 50 contracts at a limit of 1.20 which is
directed to DMM1, the order will execute upon receipt with 10 contracts
trading against O1 at 1.18 and 10 contracts trading against DMM1's
Price Improving Order (O2) at 1.18. The remaining 30 contracts will
trade at 1.20 with 12 contracts trading against DMM1 (40% of remaining
30 contracts), 9 contracts trading against MM2, and 9 contracts trading
against MM3.

Example Number 3

    Assume the following orders exist in the Order book for Market
Maker 2 and 3 (MM2 and MM3 respectively) and the following DMM quotes:

1.19 offer 10 MM2 (Price Improving Order)
1.20 offer 20 MM3
1.20 offer 10 DMM Quote 1
1.20 offer 10 DMM Quote 2

    If an order was directed to the DMM to buy 15 contracts at 1.20, 10
contracts would be executed at 1.19 contra MM2. The DMM would receive
40% of the remaining 5 contracts (2 contracts) which would be allocated
to DMM Quote 1. The remaining 3 contracts would be allocated as per
Price Time priority to MM3.

Example Number 4

    Assume the following orders exist in the Order book for Market
Maker 2 and 3 (MM2 and MM3 respectively) and the following DMM quotes:

1.18 offer 10 MM2 (Price Improving Order)
1.19 offer 20 MM3
1.19 offer 10 DMM Quote 1
1.19 offer 10 DMM Quote 2
1.20 offer 10 MM3

    If an order directed to the DMM to buy 15 contracts for 1.20, 10
contracts would be executed at 1.18 contra MM2. The DMM would receive
40% of remaining 5 contracts (2 contracts), because it was the last
price executed pursuant to Chapter VI, Section 10(1)(C)(1)(c), which
would be allocated to DMM Quote 1. The remaining 3 contracts would be
allocated as per Price Time priority to MM3.
Priority Overlays
    The Exchange is proposing to amend language in Chapter VI, Section
10(1)(C)(2) which applies to priority overlays. The language currently
states that ``the Exchange will apply the following designated
Participant priority overlays, which are always in effect when the Size
Pro-Rata execution algorithm is in effect.'' The priority overlays
which are references are Public Customer, LMM, DMM and market maker
priority. The Exchange is proposing to amend the sentence to state,
``the Exchange may apply the following designated Participant priority
overlays, when the Size Pro-Rata execution algorithm is in effect.''
The amendment is intended to provide more specificity to the rule text
as Public Customer priority will be in effect always for Size Pro-Rata,
but may be in effect for the other types of priorities. The amendment
also conforms the language to the Price/Time rule text in Chapter VI,
Section 10(1)(C)(1).
Implementation.
    Within thirty (30) days the Exchange will begin to implement the
proposal and will issue an Options Trader Alert in advance to inform
market participants of such date.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \42\ in general, and furthers the objectives of Section
6(b)(5) of the Act \43\ in particular, in that it is 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 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, because it will establish a
Directed Order process similar to what operates on other exchanges, as
explained herein, which will provide Participants with additional
choices among the many competing exchanges with regard to their
execution needs and strategies. BX Options operates in an intensely
competitive environment and seeks to offer the same services that its
competitors offer and in which its customers find value.
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    \42\ 15 U.S.C. 78f(b).
    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In its approval of other options exchange directed order programs,
the Commission has, like proposals to amend a specialist guarantee,
focused on whether the percentage of the ``entitlement'' would rise to
a level that could have a material adverse impact on quote competition
within a particular

exchange, and concluded that such programs do not jeopardize market
integrity or the incentive for market participants to post competitive
quotes.\44\ BX's proposed DMM participation entitlement of 40 percent,
is consistent with the directed order allocations of other options
exchanges. BX notes that the remaining portion of each order will
continue to be allocated based on the competitive bids/offers of market
participants. In addition, at the time of receipt of the Directed
Order, a DMM will have to be quoting at or improving \45\ the NBBO
which is intended to incent the DMM to quote aggressively. BX also
notes that DMMs will have heightened quoting obligations as compared to
other BX Options market makers.
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    \44\ See Securities Exchange Act Release No. 51759 (May 27,
2005), 70 FR 32860 (June 6, 2005) (SR-Phlx-2004-91).
    \45\ See note 20. Price Improving Orders, provide for investors
the opportunity to trade at a better price than would otherwise be
available--inside the disseminated best bid and offer for a
security. The opportunity for investors to receive executions inside
the disseminated best bid or offer could result in better executions
for investors.
---------------------------------------------------------------------------

    A DMM will have to be quoting at or improving the NBBO at the time
the order is received to capitalize on the guarantee and will only
receive a participation entitlement at one such price point. The DMM
must be publicly quoting at that price when the order is received. In
this regard, the proposal prohibits an order flow provider from
notifying a DMM regarding its intention to submit a Directed Order so
that such DMM could change its quotation immediately prior to
submission of the directed order. The Exchange's rules already provide
the necessary protections against coordinated action as between a DMM
and an order entry firm.\46\ Furthermore, BX will proactively conduct
surveillance for, and enforce against, such violations.\47\
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    \46\ See BX Chapter III, Section 4, Prevention of the Misuse of
Material Nonpublic Information. BX prohibits an order flow provider
from notifying a DMM of its intention to submit a directed order so
that the DMM could change its quotation to match the national best
bid or offer (``NBBO'') immediately prior to the submission of the
directed order.
    \47\ The Exchange will submit a letter detailing its
surveillance and enforcement to the Commission.
---------------------------------------------------------------------------

    In addition, this proposal does not affect a broker-dealer's duty
of best execution. A broker-dealer has a legal duty to seek to obtain
best execution of customer orders, and any decision to preference a
particular DMM must be consistent with this duty.\48\ A broker-dealer's
duty of best execution derives from common law agency principles and
fiduciary obligations, and is incorporated in SRO rules and, through
judicial and Commission decisions, the antifraud provisions of the
federal securities laws.\49\ The duty of best execution requires
broker-dealers to execute customer trades at the most favorable terms
reasonably available under the circumstances, i.e., at the best
reasonably available price.\50\ The duty of best execution requires
broker-dealers to periodically assess the quality of competing markets
to assure that order flow is directed to the markets providing the most
beneficial terms for their customer orders.\51\ Broker-dealers must
examine their procedures for seeking to obtain best execution in light
of market and technology changes and modify those practices if
necessary to enable their customers to obtain the best reasonably
available prices.\52\ In doing so, broker-dealers must take into
account price improvement opportunities, and whether different markets
may be more suitable for different types of orders or particular
securities.\53\
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    \48\ See, e.g., Newton v. Merrill, Lynch, Pierce, Fenner &
Smith, Inc., 135 F.3d 266, 269-70, 274 (3d Cir.), cert. denied, 525
U.S. 811 (1998); Certain Market Making Activities on Nasdaq,
Securities Exchange Act Release No. 40900 (January 11, 1999)
(settled case) (citing Sinclair v. SEC, 444 F.2d 399 (2d Cir. 1971);
Arleen Hughes, 27 SEC 629, 636 (1948), aff'd sub nom. Hughes v. SEC,
174 F.2d 969 (D.C. Cir. 1949)). See also Order Execution
Obligations, Securities Exchange Act Release No. 37619A (September
6, 1996), 61 FR 48290 (September 12, 1996) (``Order Handling Rules
Release'').
    \49\ Order Handling Rules Release, 61 FR at 48322. See also
Newton, 135 F.3d at 270. Failure to satisfy the duty of best
execution can constitute fraud because a broker-dealer, in agreeing
to execute a customer's order, makes an implied representation that
it will execute it in a manner that maximizes the customer's
economic gain in the transaction. See Newton, 135 F.3d at 273
(``[T]he basis for the duty of best execution is the mutual
understanding that the client is engaging in the trade--and
retaining the services of the broker as his agent--solely for the
purpose of maximizing his own economic benefit, and that the broker
receives her compensation because she assists the client in reaching
that goal.''); Marc N. Geman, Securities Exchange Act Release No.
43963 (February 14, 2001) (citing Newton, but concluding that
respondent fulfilled his duty of best execution). See also Payment
for Order Flow, Securities Exchange Act Release No. 34902 (October
27, 1994), 59 FR 55006, 55009 (Nov. 2, 1994) (``Payment for Order
Flow Final Rules''). If the broker-dealer intends not to act in a
manner that maximizes the customer's benefit when he accepts the
order and does not disclose this to the customer, the broker-
dealer's implied representation is false. See Newton, 135 F.3d at
273-274.
    \50\ Newton, 135 F.3d at 270. Newton also noted certain factors
relevant to best execution--order size, trading characteristics of
the security, speed of execution, learning costs, and the cost and
difficulty of executing an order in a particular market. Id. at 270
n. 2 (citing Payment for Order Flow, Securities Exchange Act Release
No. 33026 (October 6, 1993), 58 FR 52934, 52937-38 (October 13,
1993) (Proposed Rules)). See In re E.F. Hutton & Co. (``Manning''),
Securities Exchange Act Release No. 25887 (July 6, 1988). See also
Payment for Order Flow Final Rules, 59 FR at 55008-55009.
    \51\ Order Handling Rules Release, 61 FR at 48322-48333 (``In
conducting the requisite evaluation of its internal order handling
procedures, a broker-dealer must regularly and rigorously examine
execution quality likely to be obtained from different markets or
market makers trading a security.''). See also Newton, 135 F.3d at
271; Market 2000: An Examination of Current Equity Market
Developments V-4 (SEC Division of Market Regulation January 1994)
(``Without specific instructions from a customer, however, a broker-
dealer should periodically assess the quality of competing markets
to ensure that its order flow is directed to markets providing the
most advantageous terms for the customer's order.''); Payment for
Order Flow Final Rules, 59 FR at 55009.
    \52\ Order Handling Rules, 61 FR at 48323.
    \53\ Order Handling Rules, 61 FR at 48323. For example, in
connection with orders that are to be executed at a market opening
price, ``[b]roker-dealers are subject to a best execution duty in
executing customer orders at the opening, and should take into
account the alternative methods in determining how to obtain best
execution for their customer orders.'' Disclosure of Order Execution
and Routing Practices, Securities Exchange Act Release No. 43590
(November 17, 2000), 65 FR 75414, 75422 (December 1, 2000) (adopting
new Exchange Act Rules 11Ac1-5 and 11Ac1-6 and noting that
alternative methods offered by some Nasdaq market centers for pre-
open orders included the mid-point of the spread or at the bid or
offer).
---------------------------------------------------------------------------

    With respect to a DMM's obligations, the Exchange would require
DMMs be subject to heightened standards as compared to other market
makers. A DMM must provide continuous two-sided quotations throughout
the trading day in all options classes in which the DMM is assigned,
once the market maker indicates to the Exchange an intent to receive
Directed Orders, for 90% of the time the Exchange is open for trading
in each issue. Such quotations must meet the legal quote width
requirements herein. These obligations will apply to all of the DMM's
option issues collectively, rather than on an option-by-option basis.
While the Market Maker's quoting requirement is a daily obligation, the
Exchange is able to determine compliance with these obligations on a
monthly basis. BX Regulation may consider exceptions to the requirement
to quote 90% (or higher) of the trading day based on demonstrated legal
or regulatory requirements or other mitigating circumstances. However,
determining compliance with the continuous quoting requirement on a
monthly basis does not relieve a DMM of the obligation to provide
continuous two-sided quotes on a daily basis, nor will it prohibit the
Exchange from taking disciplinary action against a DMM for failing to
meet the continuous quoting obligation each trading day.
    The Exchange believes that offering DMMs participation entitlements
promotes just and equitable principles of trade because DMMs will be
held to a higher standard as compared to other

market participants including market makers. A market maker would be
required, pursuant to this proposal, to quote 60% of the trading day.
DMMs are being held to a higher obligation and therefore are being
rewarded with participation entitlements. Similar to market makers,
DMMs add value through continuous quoting \54\ and the commitment of
capital. In addition, the DMM quoting requirements promote liquidity
and continuity in the marketplace in requiring DMMs to be held to a
higher standard of quoting. The Exchange also believes that the
proposed rule change supports the quality of the Exchange's markets
because it maintains the quoting obligations of market makers as DMMs
at 90%. DMM transactions must constitute a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market. Accordingly, the proposed rule change supports the
quality of the Exchange's trading markets by helping to ensure that
DMMs will be required to meet a higher quoting standard in order to
reap the benefits of the participation entitlements. The Exchange
believes this proposed change to offer participation entitlements to
DMMs is offset by DMMs' continued responsibilities to provide
significant liquidity to the market to the benefit of market
participants.
---------------------------------------------------------------------------

    \54\ Pursuant to Chapter VII (Market Participants), Section 5
(Obligations of Market Makers), in registering as a market maker, an
Options Participant commits himself to various obligations.
Transactions of a market maker in its market making capacity must
constitute a course of dealings reasonably calculated to contribute
to the maintenance of a fair and orderly market, and market makers
should not make bids or offers or enter into transactions that are
inconsistent with such course of dealings. See Chapter VII, Section
5. Further, all market makers are designated as specialists on BX
for all purposes under the Act or rules thereunder. See Chapter VII,
Section 2.
---------------------------------------------------------------------------

    The Exchange also notes that it believes that while rounding is up
or down to the nearest integer, thereby having the potential to result
in an allocation that is slightly greater than 40% of the remaining
interest, this concept is not novel. Today, the rounding is computed in
the same manner for LMM allocations, thereby resulting in the potential
for slightly greater than 40% of remaining allocation for the LMM. It
is also important to note that if the rounding results in computing the
nearest lower integer, the DMM would receive slightly less than the
percentages noted herein. The Exchange believes that the manner in
which it rounds is not an impediment to a free and open market and a
national market system. The rounding computation described herein is
consistent with the manner in which rounding is computed on BX's
System, where appropriate. The Exchange applies the rounding
methodology in all BX functionality related to allocation computations,
not just in relation to DMM allocation computations. The Exchange
believes that its method of rounding is transparent, just and
equitable. The rounding provisions, unlike the allocation provisions,
are not a guarantee but simply the result of a mathematical computation
that can only be computed after the transactions are executed. The
Exchange's proposal is focused on the guarantees that a DMM could
expect as a result of quoting competitively, that is, quoting at or
better than the NBBO. The rounding outcome is not guaranteed and is
only the result of necessity of allocating shares in a just, equitable
and transparent manner to market participants.
    The proposed rule change also removes impediments to and allows for
a free and open market, while protecting investors, by promoting
transparency regarding DMMs' obligations and benefits in the Exchange
Rules. In addition, the Exchange believes that the proposed rule change
is designed to not permit unfair discrimination among DMMs.

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

    The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The competition among the options exchanges is vigorous and
this proposal is intended to afford the BX Options market the
opportunity to compete for directed order flow. In that regard, the
proposal is pro-competitive and will offer market participants an
additional venue for the execution of Directed Orders. The Exchange
does not believe the proposal imposes a burden on intra-market
competition not necessary or appropriate in furtherance of the purposes
of the Act, because the ability to send Directed Orders is available to
all Participants, and the ability to become a DMM is available to all
market makers. Further, the Exchange does not believe the proposal will
negatively impact quote competition on BX and create an unfair burden
on competition. The directed order will be allocated based on the
competitive bidding of market participants. A DMM will have to be
quoting at the NBBO at the time the order is received to capitalize on
the guarantee.
    DMMs will be subject to enhanced quoting obligations and the
obligations would apply to all options classes, once the market maker
indicates to the Exchange an intent to receive Directed Orders, for 90%
of the time the Exchange is open for trading in each issue collectively
to all appointed issues, rather than on an option-by-option basis and
compliance with this obligation will be determined on a monthly basis.
Further, the proposal will not diminish, and in fact may increase,
market making activity on the Exchange and thereby enhance intermarket
competition. Moreover, the proposed rule change will not impose any
burden on intra-market competition because it will affect all DMMs the
same. DMMs will be subject to heightened quoting obligations as
compared to other BX market makers. All market makers may become DMMs.
    The Exchange does not believe the proposed rule change will cause
any unnecessary burden on intra-market competition because it provides
all market makers the opportunity to benefit from participation
entitlements as a DMM. The Exchange believes that the proposed rule
change will promote competition among market participants to the
benefit of the Exchange, its Members, and market participants. This
proposal puts in place a structure by which all Options Participants
can both compete for order flow by contributing to price and size
discovery for the entire market. Further, market makers must enter
orders that assume the risk of trading with all participants at NBBO
without knowing the details of the particular order. Market makers are
incentivized to aggressively quote at the NBBO with this proposal to
the benefit of all market participants, while maintaining their quoting
obligations. The Exchange believes the proposal will encourage greater
order flow to be sent to the Exchange through Directed Orders and that
this increased order flow will benefit all market participants on the
Exchange. The Exchange is not limiting the class of market participants
that can be directed orders, any market maker may apply to receive
directed orders and those market participants would be required to meet
the heightened standards for quoting. DMMs must meet additional quoting
and other regulatory obligations compared to certain other Exchange
Participants and have thus demonstrated a commitment to providing
liquidity on the Exchange. The Exchange believes that limiting the
benefit of the participation entitlement to DMMs is fair and reasonable
because

these DMMs must satisfy additional quoting and other obligations.
    The Exchange does not believe the proposed change will cause any
unnecessary burden on inter-market competition because all market
makers are entitled to receive participation entitlements provided they
direct orders and those orders are executed by those DMMs. In addition,
the Exchange believes that the proposed rule change will in fact
promote competition. The Exchange believes allowing DMMs to receive
participation entitlements will promote trading activity on the
Exchange because it will provide incentives to DMMs to quote in series
which they are not obligated to do so, to the benefit of the Exchange,
its Members, and market participants.
    The Exchange does not believe that the method in which it rounds up
or down to the nearest integer creates an undue burden on competition.
The rounding outcome is not guaranteed and is only the result of
necessity of allocating shares in a just, equitable and transparent
manner to market participants.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date 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 shall: (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_ADDRESS>Please include
File Number SR-BX-2014-049 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-2014-049. 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 Web site (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 Web site 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; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BX-2014-049, and should be
submitted on or before January 2, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\55\
---------------------------------------------------------------------------

    \55\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29109 Filed 12-11-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 201 (Monday, October 19, 2015)]
[Notices]
[Pages 63280-63281]
[FR Doc No: 2015-26251]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

Hazardous Materials: Notice of Application for Modification of
Special Permit

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
DOT.

ACTION: List of applications for modification of special permits.

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

SUMMARY: In accordance with the procedures governing the application
for, and the processing of, special permits from the Department of
Transportation's Hazardous Material Regulations (49 CFR part 107,
subpart B), notice is hereby given that the Office of Hazardous
Materials Safety has received the applications described herein. This
notice is abbreviated to expedite docketing and public notice. Because
the sections affected, modes of transportation, and the nature of
application have been shown in earlier Federal Register publications,
they are not repeated here. Requests for modification of special
permits (e.g. to provide for additional hazardous materials, packaging
design changes, additional mode of transportation, etc.) are described
in footnotes to the application number. Application numbers with the
suffix ``M'' denote a modification request. These applications have
been separated from the new application for special permits to
facilitate processing.

DATES: Comments must be received on or before November 3, 2015.

ADDRESSES: Record Center, Pipeline and Hazardous Materials Safety
Administration, U.S. Department of Transportation, Washington, DC
20590.
    Comments should refer to the application number and be submitted in
triplicate. If confirmation of receipt of comments is desired, include
a self-addressed stamped postcard showing the special permit number.

FOR FURTHER INFORMATION CONTACT: Ryan Paquet, Director, Office of
Hazardous Materials Approvals and Permits Division, Pipeline and
Hazardous Materials Safety Administration, U.S. Department of
Transportation, East Building, PHH-30, 1200 New Jersey Avenue
Southeast, Washington, DC 20590-0001,<PHONE_NUMBER>.
    Copies of the applications are available for inspection in the
Records Center, East Building, PHH-30, 1200 New Jersey Avenue
Southeast, Washington, DC or at http://regulations.gov.
    This notice of receipt of applications for modification of special
permit is published in accordance with Part 107 of the Federal
hazardous materials transportation law (49 U.S.C. 5117(b); 49 CFR
1.53(b)).

    Issued in Washington, DC, October 5, 2015.
Don Burger,
Chief, General Approvals and Permits.

----------------------------------------------------------------------------------------------------------------
                                                                     Regulation(s)      Nature of special permit
    Application No.        Docket No.           Applicant              affected                 thereof
----------------------------------------------------------------------------------------------------------------
                                          Modification Special Permits
----------------------------------------------------------------------------------------------------------------
6530-M................  ................  Linde Gas, North       49 CFR 173.302(c)...  To modify the special
                                           America, LLC, New                            permit to authorize
                                           Providence, NJ.                              Deuterium and Deuterium
                                                                                gas mixtures to be
                                                                                transported in certain
                                                                                cylinders filled to 110%
                                                                                of the cylinder marked
                                                                                service pressure.
12187-M...............  ................  ITW Sexton, Decatur,   49 CFR 173.304(a);    To modify the special
                                           AL.                    175.3; 178.65.        permit to add Compressed
                                                                                air, n.o.s. and
                                                                                eliminate the
                                                                                restriction on the
                                                                                maximum pressures of the
                                                                                lading of 264 psig at 70
                                                                                [deg]F and 357 psig at
                                                                                130 [deg]F.
14778-M...............  ................  Metalcraft/Sea-Fire    49 CFR 173.302(f)...  To modify the special
                                           Marine, Baltimore,                           permit to authorize six
                                           MD.                                          Non-DOT Specification
                                                                                cylinders designs
                                                                                similar to a DOT
                                                                                Specification 48W
                                                                                cylinder, manufactured
                                                                                in accordance with EN84-
                                                                                527-EEC or EN13322-
                                                                                1:2003.
16394-M...............  ................  Cellco Partnership,    49 CFR Subparts C     To modify the special
                                           Basking Ridge, NJ.     through H of Part     permit to authorize
                                                                  172, 173.185(f).      cargo vessel.
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2015-26251 Filed 10-16-15; 8:45 am]
 BILLING CODE 4909-60-M


[Federal Register Volume 86, Number 176 (Wednesday, September 15, 2021)]
[Notices]
[Pages 51391-51393]
[FR Doc No: 2021-19863]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92918; File No. SR-ICC-2021-017]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating to the ICE Clear Credit
Operating Agreement and Governance Playbook

September 9, 2021.

I. Introduction

    On July 20, 2021, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities and Exchange Act of 1934 (the
``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend and restate ICC's Fifth Amended and Restated Operating Agreement
(the ``Operating Agreement'') and make changes to the ICE Clear Credit
LLC Governance Playbook (the ``Governance Playbook''). The proposed
rule change was published for comment in the Federal Register on July
30, 2021.\3\ The Commission did not receive comments regarding the
proposed rule change. For the reasons discussed below, the Commission
is approving the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Filing of Proposed Rule Change Relating to the ICE Clear Credit
Operating Agreement and Governance Playbook, Exchange Act Release
No. 92504 (July 26, 2021); 86 FR 41123 (July 30, 2021) (SR-ICC-2021-
017) (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

A. Operating Agreement

    The proposed rule change would amend and restate the Operating
Agreement to (i) reduce the number of managers on ICC's Board of
Managers (the ``Board'') designated by its parent company, ICE US
Holding Company L.P. (``Parent''); (ii) remove certain outdated
provisions; and (iii) incorporate certain prior amendments and make
other non-substantive updates. After making such amendments with the
proposed rule change, ICC would adopt the amended Operating Agreement
as the Sixth Amended and Restated Operating Agreement.\4\
---------------------------------------------------------------------------

    \4\ This description is substantially excerpted from the Notice.
Capitalized terms not otherwise defined herein have the meanings
assigned to them in the Operating Agreement or ICE Clear Credit
Rulebook, as applicable.
---------------------------------------------------------------------------

i. Reduction in the Number of Managers Designated by Parent
    Currently, the Operating Agreement provides that the Board will
consist of, among other managers, four managers elected by Parent and
at all times be independent in accordance with the requirements of each
of the New York Stock Exchange listing standards, the Act, and ICE's
Board of Director Governance Principles (collectively, the ``Parent
Independent Managers''). The proposed rule change would reduce the
number of Parent Independent Managers from four to three.
    Similarly, the Operating Agreement currently provides that the
Board will consist of, among other managers, three other managers
elected by Parent (collectively, the ``Parent Non-Independent
Managers''). The proposed rule change would reduce the number of Parent
Non-Independent Managers from three to two.
    As part of these changes, the proposed rule change would also
remove the names of the Parent Independent Managers and Parent Non-
Independent Managers. The Operating Agreement currently lists out the
names of the individual Parent Independent Managers and Parent Non-
Independent Managers. The proposed rule change would remove the names
of these individuals and instead would refer to the Parent Independent
Managers and Parent Non-Independent Managers only.
    Finally, consistent with these changes, the proposed rule change
would reduce the total number of managers on the Board from eleven to
nine, reflecting one less Parent Independent Manager and one less
Parent Non-Independent Manager.
ii. Removal of Outdated Provisions
    The proposed rule change would next remove outdated provisions
related to the conversion of ICC from a New York trust company to a
Delaware limited liability company in 2011 and ICC's operation prior to
the conversion. The Operating Agreement currently describes how ICC
made such a conversion and how ICC operated prior to the 2011
conversion. The proposed rule change would remove these provisions as
they are outdated and no longer need to be included in the Operating
Agreement. The proposed rule change would update related defined terms
and references as needed.
iii. Prior Amendments and Other Updates
    Finally, the proposed rule change would make certain other
amendments and updates to the Operating Agreement. First, the proposed
rule change would update Section 3.03 to reflect prior amendments that
ICC made to the Operating Agreement without filing a proposed rule
change or restating the Operating Agreement. Section 3.03 provided that
the Board shall meet (i) in person no less frequently than quarterly
and (ii) telephonically no less frequently than two times per calendar
year. ICC previously amended this provision to provide instead that the
Board will meet no less frequently than quarterly at such time and
place as the Chair shall determine, and may meet more frequently
(either in person or telephonically) as circumstances dictate. ICC also
previously amended this provision to remove the requirement that the
Board meet telephonically no less than twice per calendar year.
Although ICC previously amended the Operating Agreement to make these
changes, it did not file a proposed rule change or restate the
Operating Agreement at such time. Thus, the proposed rule change would
reflect these prior amendments and ensure their inclusion in the Sixth
Amended and Restated Operating Agreement.
    Second, throughout the Operating Agreement, the proposed rule
change would correct outdated references to the name, jurisdiction of
organization, and governing document of Parent and certain related
legal entities and would replace references to the Chief Executive
Officer of ICC with references to the President (which is the correct
title). ICC previously amended the Operating Agreement to include these
changes but, like the changes to Board meetings described immediately
above, did not file a proposed rule change and did not restate the
Operating Agreement after making these changes. Thus, the proposed rule
change would reflect these prior amendments and ensure their inclusion
in the Sixth Amended and Restated Operating Agreement.
    Third, the proposed rule change would update the contact
information and addresses listed in Section 7.01 that are used for
providing notice to ICC and Parent under the Operating Agreement.

    Fourth, the proposed rule change would update the contact
information and address for ICC's registered office and agent in
Delaware listed in Section 2.06.
    Fifth, the proposed rule change would update references throughout
the Operating Agreement to refer to the Sixth Amended and Restated
Operating Agreement or the Fifth Amended and Restated Operating
Agreement, as needed in the context of the section.
    Sixth, the proposed rule change would update the definition of
ICE's Board of Director Governance Principles to refer to the current
Independence Policy of the Board of Directors of ICE.
    Finally, the proposed rule change would correct minor typographical
and grammatical errors.

B. Governance Playbook

    The proposed rule change would update the Governance Playbook to
reflect the changes to the Operating Agreement described above. First,
the proposed rule change would update Section III.A to reflect the
revised composition of the Board--nine total managers with three Parent
Independent Managers and two Parent Non-Independent Managers. The
proposed rule change would make a similar change to Section III.F.
    Second, the proposed rule change would update certain references
found in Footnote 1. Footnote 1 describes an aspect of the partnership
agreement of ICC's Parent. The proposed rule change would update the
name of the partnership agreement to reflect the current name of that
agreement and would correct the description of Parent's jurisdiction of
organization.
    Third, the proposed rule change would update Footnote 5 to link to
the current Independence Policy of the Board of Directors of ICE,
similar to the change to the Operating Agreement discussed above
amending the definition of ICE's Board of Director Governance
Principles to refer to the current Independence Policy of the Board of
Directors of ICE.
    Finally, the proposed rule change would make a minor revision to
Section III.C. That section currently provides that upon the
resignation of a manager, ICC's legal group is responsible for
obtaining a resignation letter. The proposed rule change would revise
this provision to provide that ICC's legal group is responsible for
reviewing a resignation letter if received, rather than obtaining one.
While it is common practice for a resigning manager to submit a
resignation letter, there is no overall requirement that a resigning
manager submit a resignation letter, and thus the legal group would no
longer be responsible for obtaining one.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization.\5\ After careful review, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to ICC. In particular,
the Commission finds that the proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act \6\ and Rules 17Ad-22(e)(2)(i) and
(v).\7\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
---------------------------------------------------------------------------

A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) requires, among other things, that the rules
of ICC be designed to promote the prompt and accurate clearance and
settlement of securities transactions and, to the extent applicable,
derivative agreements, contracts, and transactions, as well as to
assure the safeguarding of securities and funds which are in the
custody or control of ICC or for which it is responsible.\8\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes that the changes discussed in Part II.A.i
above would improve the operation of the Board and clarity of the
Operating Agreement. In particular, the Commission believes that
reducing the overall number of managers from eleven to nine, by
reducing the number of Parent Independent Managers from four to three
and reducing the number of Parent Non-Independent Managers from three
to two, would help to ensure the efficient operation of the Board and
clarify the extent of Parent's ability to appoint managers. Moreover,
the Commission believes that removing the names of the individual
Parent Independent Managers and Parent Non-Independent Managers would
help to ensure that ICC is not required to amend the Operating
Agreement due to changes in such managers, thereby helping to ensure
the efficiency and flexibility of the Operating Agreement.
    Similarly, the Commission believes that removal of the outdated
provisions related to the conversion of ICC and its operation prior to
2011, as discussed in Part II.A.ii above would help to promote the
promote consistency and readability of the Operating Agreement.
    Moreover, the Commission believes that the other changes to the
Operating Agreement discussed in Part II.B.iii above would help to
ensure the clarity and efficient operation of the Operating Agreement.
Specifically, the Commission believes that requiring the Board to meet
no less frequently than quarterly at such time and place as determined
by the Chair and authorizing the Board to meet more frequently (either
in person or telephonically) as circumstances dictate, would help to
ensure the efficient operation of the Board and provide flexibility as
to how and when the Board meets. Similarly, the Commission believes
that correcting (i) outdated references to the name, jurisdiction of
organization, and governing document of Parent and certain related
legal entities; (ii) references to the Chief Executive Officer of ICC
so they refer instead to the President; (iii) references to the Sixth
Amended and Restated Operating Agreement and the Fifth Amended and
Restated Operating Agreement; (iv) the definition of ICE's Board of
Director Governance Principles to refer to the current Independence
Policy of the Board of Directors of ICE; and (v) minor typographical
and grammatical errors would help to ensure that the Operating
Agreement is clear, understandable, free of errors, and correctly
applied. Updating the contact information and addresses that are used
for providing notice to ICC and Parent and the contact information and
address for ICC's registered office and agent in Delaware would
similarly help to ensure that the Operating Agreement is clear and
correctly applied.
    For similar reasons, the Commission believes that updating the
Governance Playbook to reflect these changes to the Operating
Agreement, as discussed in Part II.B above, would help to ensure the
clarity and efficient operation of the Governance Playbook. In
particular, the Commission believes that updating Section III.A to
reflect the revised composition of the Board--nine total managers with
three Parent Independent Managers and two Parent Non-Independent
Managers--would, for the reasons discussed above, help to ensure the
efficient operation of the Board. Moreover, the Commission believes
that updating the description related to Parent in Footnote 1 and the
link to the current Independence Policy of the Board of Directors of
ICE in Footnote 5 would help to ensure that the Governance Playbook is
clear, understandable, and correctly applied.

Finally, the Commission believes that revising Section III.C to specify
that ICC's legal group is responsible for reviewing a resignation
letter if received, rather than obtaining one, would clarify the role
of ICC's legal group.
    Thus, the Commission believes that all of these changes, as
discussed above, would help to ensure the efficient operation of the
Board, Operating Agreement, and Governance Playbook and help to ensure
the Operating Agreement and Governance Playbook are clear, free of
errors, understandable, and correctly applied. Because ICC operates
pursuant to Board oversight and the governance set forth in the
Operating Agreement and Governance Playbook, the Commission believes
that these improvements would thereby generally help to improve the
efficiency and consistency of ICC's operations. The Commission also
believes that in so doing, these improvements would thereby help to
ensure that ICC is able to promptly and accurately clear and settle
securities transactions and assure the safeguarding of securities and
funds in ICC's custody or control or for which it is responsible.
Therefore, the Commission finds the proposed rule change is consistent
with Section 17A(b)(3)(F) of the Act.\9\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(2)(i) and (v)

    Rules 17Ad-22(e)(2)(i) and (v) require that ICC establish,
implement, maintain and enforce written policies and procedures
reasonably designed to provide for governance arrangements that are
clear and transparent and specify clear and direct lines of
responsibility.\10\ As discussed above, the Commission believes that
the changes to the Operating Agreement and Governance Playbook would
help to ensure that both documents are clear, understandable, and free
from error. Because ICC's governance operates pursuant to the Operating
Agreement and Governance Playbook, the Commission therefore believes
the proposed rule change would help to ensure that ICC's governance
arrangements are clear. Moreover, the Commission believes that revising
Section III.C of the Governance Playbook to specify that ICC's legal
group is responsible for reviewing a resignation letter if received,
rather than obtaining one, would specify a clear and direct
responsibility of the legal group. Therefore, the Commission finds the
proposed rule change is consistent with Rule 17Ad-22(e)(2)(i) and
(v).\11\
---------------------------------------------------------------------------

    \10\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
    \11\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of Section 17A(b)(3)(F) of the
Act \12\ and Rules 17Ad-22(e)(2)(i) and (v).\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q-1(b)(3)(F).
    \13\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
---------------------------------------------------------------------------

    It is therefore ordered pursuant to Section 19(b)(2) of the Act
\14\ that the proposed rule change (SR-ICC-2021-017) be, and hereby is,
approved.\15\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(2).
    \15\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19863 Filed 9-14-21; 8:45 am]
BILLING CODE 8011-01-P