[Federal Register Volume 86, Number 204 (Tuesday, October 26, 2021)]
[Notices]
[Pages 59202-59208]
[FR Doc No: 2021-23257]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93390; File No. SR-CboeBYX-2021-024]

Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Make Certain Clarifying Changes to
Its Rule Related to Periodic Auctions

October 20, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 14, 2021, Cboe BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe BYX Exchange, Inc. (``BYX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to make certain clarifying changes to its rule
related to periodic auctions for the trading of U.S. equity securities.
The text of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/byx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this proposed rule change is to make certain
clarifying changes to Exchange Rule 11.25 related to periodic auctions
for the trading of U.S. equity securities (``Periodic Auctions'').\3\
The Commission approved the Exchange's proposal to introduce Periodic
Auctions on March 26, 2021.\4\ The Exchange has not yet implemented
Periodic Auctions. The Exchange is submitting this proposal in order to
simplify certain portions of the Periodic Auction process and to add
clarity to the rule text prior to implementation.
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    \3\ The term ``Periodic Auction'' shall mean an auction
conducted pursuant to Rule 11.25. See Rule 11.25(a)(4).
    \4\ See Securities Exchange Act Release No. 91423 (March 26,
2021), 86 FR 17230 (April 1, 2021) (SR-BYX-2020-021, Amendments No.
3 and 4) (the ``Approved Proposal''). The Exchange also notes that
the original proposal to adopt Periodic Auctions (the ``Original
Proposal'') was submitted on July 17, 2020. See Securities Exchange
Act Release No. 89424 (July 29, 2020), 85 FR 47262 (August 4, 2020).
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    Specifically, the Exchange is proposing to make clear that: (i)
Periodic Auction Eligible Orders \5\ will be ranked as non-displayed
limit orders consistent with the priority of orders outlined in Rule
11.12(a); (ii) incoming Periodic Auction Eligible Orders will upon
entry interact with Continuous Book Orders \6\ and other Periodic
Auction Eligible Orders according to their rank under Rule 11.12(a);
and (iii) Periodic Auction Eligible Orders that are also Minimum
Quantity Orders \7\ will only initiate a Periodic Auction upon entry
where a single contra-side Periodic Auction Order would satisfy the
specified minimum size. The Exchange is also proposing to make a
simplifying change to reject Periodic Auction Orders that are
immediate-or-cancel (``IOC''). Finally, the Exchange is proposing to
make certain clean-up

changes to Rule 11.25(b)(1), (2), and (3) to eliminate certain typos
from the rule text.
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    \5\ The term ``Periodic Auction Order'' shall mean a ``Periodic
Auction Only Order'' or ``Periodic Auction Eligible Order'' as those
terms are defined in Rules 11.25(b)(1)-(2), and the term ``Periodic
Auction Book'' shall mean the System's electronic file of such
Periodic Auction Orders. See Rule 11.25(a)(6).
    \6\ The term ``Continuous Book Order'' shall mean an order on
the BYX Book that is not a Periodic Auction Order, and the term
``Continuous Book'' shall mean System's electronic file of such
Continuous Book Orders. See Rule 11.25(a)(2).
    \7\ See BYX Rule 11.9(c)(5).
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Ranking Periodic Auction Eligible Orders
    Rule 11.25(b)(2) currently reads as follows:

    Periodic Auction Eligible Orders. A ``Periodic Auction Eligible
Order'' is a Non-Displayed Limit Order eligible to trade on the
Continuous Book that is entered with an instruction to also initiate
a Periodic Auction, if possible, pursuant to this Rule 11.25. An
incoming Periodic Auction Eligible Order that is eligible both to
trade on the Continuous Book and initiate a Periodic Auction will
trade immediately with the Continuous Book.

    The first sentence makes clear that Periodic Auction Eligible
Orders are eligible to trade on the Continuous Book and suggests that
Periodic Auction Eligible Orders would be ranked as non-displayed limit
orders by referring to such as orders as types of non-displayed limit
orders. However, reading this sentence together with the second
sentence could make it unclear as to how Periodic Auction Eligible
Orders are ranked and how an incoming Periodic Auction Eligible Order
would interact with other Periodic Auction Orders and resting orders on
the Continuous Book.\8\
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    \8\ The Exchange notes that in the Original Proposal the second
sentence of Rule 11.25(b)(2) originally said ``An incoming PAE Order
that is eligible both to trade on the Continuous Book and initiate a
Periodic Auction will initiate a Periodic Auction.'' In Amendment 1,
the Exchange instead proposed the current language which remained in
the Approved Proposal. The intent of this change in the rule text
was to make clear that the Exchange would not prioritize a Periodic
Auction Order over every other resting order, which is made clear in
the examples and in the Approved Proposal. The proposed new language
further clarifies this intent from Amendment 1 in the rule text.
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    As such, the Exchange is proposing to add a new sentence in between
the two sentences that reads ``Periodic Auction Eligible Orders will be
ranked as non-displayed limit orders consistent with the priority of
orders outlined in Rule 11.12(a).'' \9\ This will make explicit that
Periodic Auction Eligible Orders will be ranked in price-time priority
among Continuous Book Orders and will also help to make clear how
incoming orders (both Periodic Auction Eligible Orders and Continuous
Book Orders) will interact with resting orders, as further discussed
below. Practically, the Exchange believes this clarifying change is
reasonably inferred from the definition of Periodic Auction Eligible
Orders, which defines a Periodic Auction Eligible Order as (emphases
added) ``a Non-Displayed Limit Order eligible to trade on the
Continuous Book that is entered with an instruction to also initiate a
Periodic Auction, if possible, pursuant to this Rule 11.25.'' If such
orders are eligible to trade on the Continuous Book, they would need to
be prioritized by the System and it would only make sense for them to
be prioritized in accordance with the Exchange's existing priority
rules. Rather than rely on this implication, the Exchange is proposing
to explicitly state this in the Rules by adding the language proposed
above.
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    \9\ Rule 11.12(a)(1) and (2) relate to the priority and ranking
of orders and specifically state: ``(a) Ranking. Orders of Users
shall be ranked and maintained in the BYX Book based on the
following priority: (1) Price. The highest-priced order to buy (or
lowest-priced order to sell) shall have priority over all other
orders to buy (or orders to sell) in all cases. (2) Time. Subject to
the execution process described in Rule 11.13(a) below, where orders
to buy (or sell) are made at the same price, the order clearly
established as the first entered into the System at such particular
price shall have precedence at that price, up to the number of
shares of stock specified in the order. The System shall rank
equally priced trading interest within the System in time priority
in the following order: (A) Displayed size of limit orders; (B) Non-
Displayed limit orders; (C) Non-Displayed Pegged Orders; (D) Mid-
Point Peg Orders; (E) Reserve size of orders; (F) Discretionary
portion of Discretionary Orders as set forth in Rule 11.9(c)(9); (G)
Supplemental Peg Orders.''

Example 1:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 2: Buy 100 shares @ $10.02 Displayed--Continuous Book Order
Order 3: Sell 100 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible

    Order 2 is ranked ahead of Order 1 because it is a displayed limit
order in accordance with Rule 11.12(a)(1), meaning that Order 3 would
execute 100 shares against Order 2.
Incoming Periodic Auction Eligible Orders
    As described above, Rule 11.25(b)(2) currently states that ``An
incoming Periodic Auction Eligible Order that is eligible both to trade
on the Continuous Book and initiate a Periodic Auction will trade
immediately with the Continuous Book.'' This language was originally
introduced to make clear that an incoming Periodic Auction Eligible
Order would interact with other Periodic Auction Eligible Orders and
Continuous Book Orders before interacting with Periodic Auction Only
Orders, as made clear in Example 3 in the Approved Proposal (``AP
Example 3'').\10\ While the rule is made clear by the surrounding rule
text and the clarifying context from the Approved Proposal, on its own
it could be read to imply that all resting Periodic Auction Eligible
Orders would either be prioritized behind any executable Continuous
Book Order or that such resting orders should immediately execute
against an incoming Periodic Auction Eligible Order instead of
initiating a Periodic Auction, which is not the case.
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    \10\ AP Example 3 specifically provides the following example:
    NBBO: $10.00 x $10.10
    Order 1: Buy 100 shares @ 10.05 Midpoint Peg--Periodic Auction
Only
    Order 2: Buy 100 shares @ 10.05 Midpoint Peg--Continuous Book
Order
    Order 3: Sell 100 shares @ 10.05 Midpoint Peg--Periodic Auction
Eligible
    A Periodic Auction is not initiated. Instead, Order 3, which is
a Periodic Auction Eligible Order, would trade immediately with the
Continuous Book and execute 100 shares against Order 2 at $10.05.
Although Order 1 is available to initiate a Periodic Auction, a
Periodic Auction Eligible Order would trade immediately with
Continuous Book Orders on entry if it can do so instead of
initiating a Periodic Auction.
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    As such, the Exchange is proposing to add language to that sentence
in Rule 11.25(b)(2) such that the sentence will instead read (additions
in italics): ``An incoming Periodic Auction Eligible Order that is
eligible both to trade on the Continuous Book and initiate a Periodic
Auction will trade immediately with the Continuous Book and will upon
entry interact with Continuous Book Orders and other Periodic Auction
Eligible Orders according to their rank under Rule 11.12(a).'' This
language will make explicit in the rule text the outcome described in
AP Example 3. Further, this proposed change will add further clarity to
the language in Rule 11.25(c) describing when a Periodic Auction will
be initiated. Specifically, Rule 11.25(c) provides that a Periodic
Auction will be initiated in a security when ``one or more Periodic
Auction Orders to buy become executable against one or more Periodic
Auction Orders to sell.'' The proposed amendment to specifically
describe how incoming Periodic Auction Eligible Orders will interact
with resting orders will add clarity regarding what it means when
Periodic Auction Orders become ``executable'' against one another in
this context.

Example 2:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 2: Buy 100 shares @ $10.02 Displayed--Continuous Book Order
Order 3: Sell 400 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible

    Order 3 would execute 100 shares against Order 2 (consistent with
Example 1). Order 3 and Order 1 would then be executable against one
another and are both Periodic Auction Eligible Orders, so the remaining
300 shares from Order 3 would be sent to the Periodic Auction Book and
the Periodic Auction initiation process would begin.\11\
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    \11\ As noted in the Approved Proposal, Periodic Auctions would
operate alongside trading on the Continuous Book. The Exchange has
therefore developed its system for processing Periodic Auctions with
the goal of minimizing interference with trading in the continuous
market. Thus, in rare circumstances where a number of Periodic
Auctions could potentially be triggered at or around the same time,
the Exchange may throttle the initiation of such Periodic Auctions
if needed to maintain appropriate system performance and latency. In
the event that the System was throttling Periodic Auctions during
this example, it would delay the Periodic Auction initiation
process. See Approved Proposal at 17234.

Example 3:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 2: Buy 100 shares @ $10.02 Non-Displayed--Continuous Book Order
Order 3: Sell 400 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible

    This example is identical to Example 2 except that Order 2 is Non-
Displayed rather than Displayed. Upon entry, Order 3 would be
executable against Order 1 and both are Periodic Auction Eligible
Orders, so the 400 shares from Order 3 would be sent to the Periodic
Auction Book and the Periodic Auction initiation process would
begin.\12\
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    \12\ See supra note 11.

Example 4:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction Only
Order 2: Buy 100 shares @ $10.02 Non-Displayed--Continuous Book Order
Order 3: Sell 100 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible

    Because an incoming Periodic Auction Eligible Order that ``is
eligible both to trade on the Continuous Book and initiate a Periodic
Auction will trade immediately with the Continuous Book,'' Order 3
would execute 100 shares against Order 2 and a Periodic Auction would
not be initiated.

Example 5:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.03 Non-Displayed--Periodic Auction Only
Order 2: Buy 100 shares @ $10.02 Non-Displayed--Continuous Book Order
Order 3: Sell 100 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
    Because an incoming Periodic Auction Eligible Order that ``is
eligible both to trade on the Continuous Book and initiate a Periodic
Auction will trade immediately with the Continuous Book,'' Order 3
would execute 100 shares against Order 2 and a Periodic Auction would
not be initiated.\13\
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    \13\ The Exchange notes that this example is meant to illustrate
the same functionality captured in Example 6 as laid out in
Amendment No. 3 to the Approved Proposal as corrected in Amendment
No. 4 to the Approved Proposal (``Corrected Example 6 from Amendment
No. 3''). While this example was technically replaced as part of
Amendment No. 4, it was laid out in Amendment No. 3 with an
incorrect outcome and Amendment No. 4 provided some explanation
about what should have happened before laying out a new replacement
Example 6. This example is relevant because it specifically
illustrates the interaction of a Periodic Auction Only Order that is
priced more aggressively than a resting Continuous Book Order when
contra-side executable Periodic Auction Eligible Orders are entered.
What follows is the example as laid out in Amendment No. 3 and
followed by the explanation from Amendment No. 4.
    NBBO: $10.00 x $10.10
    Order 1: Buy 500 shares @ $10.05 Non-Displayed--Periodic Auction
Only
    Order 2: Buy 300 shares @ $10.04 Non-Displayed--Continuous Book
Order
    Order 3: Sell 100 shares @ $10.04 Non-Displayed--Periodic
Auction Eligible
    Order 4: Sell 200 shares @ $10.04 Non-Displayed--Periodic
Auction Eligible
    Specifically, this example is consistent with the explanation of
what the outcome should have been in described in Amendment No. 4
stating ``the amended functionality would require that Order 3 and
Order 4, which are Periodic Auction Eligible Orders, each trade
immediately with Order 2, which is a Non-Displayed Continuous Book
Order.'' As provided in Amendment No. 4 to the Approved Proposal:
    ``Example 6 was added to the Proposal in Amendment No. 1 to
illustrate the Exchange's proposed Periodic Auction Price
calculation. Prior to the submission of Amendment No. 1, the
Proposal provided that an incoming Periodic Auction Eligible Order
that is eligible both to trade on the Continuous Book and initiate a
Periodic Auction would initiate a Periodic Auction. However,
Amendment No. 1 changed this proposed behavior such that an incoming
Periodic Auction Eligible Order that is eligible both to trade on
the Continuous Book and initiate a Periodic Auction would instead
trade immediately with the Continuous Book, including any Displayed
or Non-Displayed Continuous Book Orders.''
     Consistent with Corrected Example 6 from Amendment No. 3, an
order that is eligible both to trade on the Continuous Book and
initiate a Periodic Auction will trade immediately with the
Continuous Book, even where the Periodic Auction Only Order is more
aggressively priced than the Continuous Book Order. Such
functionality is consistent with language in the Approved Proposal
related to securing a guaranteed execution for an order.

Example 6:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.03 Non-Displayed--Periodic Auction Only
Order 2: Buy 100 shares @ $10.02 Non-Displayed--Continuous Book Order
Order 3: Sell 100 shares @ $10.03 Non-Displayed--Periodic Auction
Eligible

    This example is identical to Example 5 except that Order 3 has a
limit of $10.03 instead of $10.02. Because an incoming Periodic Auction
Eligible Order that ``is eligible both to trade on the Continuous Book
and initiate a Periodic Auction will trade immediately with the
Continuous Book and will upon entry interact with Continuous Book
Orders and other Periodic Auction Eligible Orders according to their
rank,'' the System will look to see if Order 3 could interact with any
Continuous Book Orders or Periodic Auction Eligible Orders prior to
looking to Order 1. In this instance, Order 3 would not be able to
execute against Order 2. As such, Order 3 would post and the System
would check to see whether a Periodic Auction could be initiated (which
it could because Order 3 and Order 1 are executable against one
another), and the Periodic Auction initiation process would begin.
Periodic Auction Eligible Orders With a Minimum Quantity
    Rule 11.25(b)(2)(C) describes how Minimum Quantity Orders will
participate in Periodic Auctions and the use of such orders with
Periodic Auction Eligible Orders, but does not address how such orders
will be handled in initiating Periodic Auctions. It states that
``Minimum Quantity Orders, as defined in Rule 11.9(c)(5),\14\ will be
executed in a Periodic Auction only if the minimum size specified can
be executed against one or more contra-side orders. Orders entered with
the alternative instruction that requires the minimum size specified to
be satisfied by each individual contra-side order cannot be entered as
Periodic Auction Eligible Orders.''
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    \14\ See Rule 11.9(c)(5).
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    The current rule and the Approved Proposal are clear in describing
how Minimum Quantity Orders will be handled in a Periodic Auction (they
``will be executed in a Periodic Auction only if the minimum size
specified can be executed against one or more contra-side orders''),
but as noted above they do not describe how incoming Periodic Auction
Eligible Orders with minimum size requirements will be handled in
initiating Periodic Auctions. Because Periodic Auction Eligible Orders
are eligible to both execute against orders on the book or to initiate
a Periodic Auction where they would execute against a Periodic Auction
Order, an incoming order with a minimum size requirement creates unique
issues

related to how to calculate executable quantity and determining whether
an order should be executed or initiate a Periodic Auction, especially
where resting orders also have minimum size requirements. As such, the
Exchange is proposing to explain how it intends to handle such orders
by adding a sentence that states ``A Periodic Auction Eligible Order
entered with a minimum execution quantity will only initiate a Periodic
Auction upon entry where a single contra-side Periodic Auction Order
would satisfy the specified minimum size.'' This provides a
straightforward approach to managing minimum execution quantity that
makes the interaction of minimum execution quantity more easily
understandable and predictable while ensuring that the minimum
execution quantity will be satisfied if the incoming order initiates a
Periodic Auction. This proposed change is consistent with the
protection of investors and the public interest as it would help to
simplify the minimum execution quantity functionality. The following
examples represent basic illustrations of the unique issues and
explanation of how the Exchange will manage incoming Periodic Auction
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Eligible Orders with minimum size requirements.

Example 7:
NBBO: $10.00 x $10.05
Order 1: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 2: Buy 100 shares @ $10.02 Displayed--Continuous Book Order
Order 3: Buy 400 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 4: Sell 1000 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible; Minimum Quantity = 500

    Order 4 would execute 700 shares upon entry against Orders 2, 1,
and 3, and would post 300 shares. Even though there are a collective
600 shares of Periodic Auction Orders between Orders 1 and 3 (enough to
satisfy the minimum size requirement for Order 4), the Periodic Auction
initiation process would not occur because no single Periodic Auction
Order satisfies the Minimum Quantity of 500 shares.

Example 8:
NBBO: $10.00 x $10.05
Order 1: Buy 300 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 2: Buy 500 shares @ $10.02 Non-Displayed--Continuous Book Order
Order 3: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 4: Sell 800 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible; Minimum Quantity = 500

    Order 4 would execute 800 shares upon entry against Orders 1 and 2.
Even though there are a collective 500 shares of Periodic Auction
Orders between Orders 1 and 3 (enough to satisfy the minimum size
requirement for Order 4), the Periodic Auction initiation process would
not occur because no single Periodic Auction Order would satisfy the
Minimum Quantity of 500 shares.

Example 9:
NBBO: $10.00 x $10.05
Order 1: Buy 500 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 2: Buy 500 shares @ $10.02 Non-Displayed--Continuous Book Order
Order 3: Buy 200 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible
Order 4: Sell 800 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible; Minimum Quantity = 500

    The only difference between this Example 9 and Example 8 above is
that Order 1 has 500 shares instead of 300. This change means that
Order 1 would on its own satisfy the 500 share minimum size requirement
of Order 4 and would thus be ``a single contra-side Periodic Auction
Order'' that ``would satisfy the specified minimum size'' of the
incoming order. As such, Order 4 would be sent to the Periodic Auction
Book and the Periodic Auction initiation process would begin.\15\
Similarly, where a Periodic Auction Eligible Order with a minimum size
requirement is already on the book, incoming orders that do not
individually satisfy the minimum size requirements will not execute
immediately. However, consistent with the Exchange's treatment of
Minimum Quantity Orders generally, such orders will aggregate after
posting.
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    \15\ See supra note 11.

Example 10:
NBBO: $10.00 x $10.05
Order 1: Buy 1000 shares @ $10.02 Non-Displayed--Periodic Auction
Eligible; Minimum Quantity = 500
Order 2: Sell 400 shares @$10.02 Non-Displayed--Periodic Auction
Eligible
Order 3: Sell 400 shares @$10.02 Non-Displayed--Periodic Auction
Eligible

    Orders 2 and 3 do not satisfy the minimum size requirement of Order
1 and therefore would not execute or initiate a Periodic Auction upon
entry. After the orders are resting, however, the System will aggregate
the size of Orders 2 and 3, check whether a Periodic Auction can be
initiated (which it could because the minimum size requirement for
Order 1 is satisfied), and the Periodic Auction initiation process
would begin.\16\
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    \16\ See supra note 11.
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IOC Orders
    The Exchange is also proposing to amend Rule 11.25(b)(2)(A) in
order to reject Periodic Auction Orders that are IOC. Based on industry
feedback, the Exchange believes that the majority of participants would
use RHO \17\ orders to initiate or participate in a Periodic Auction
and would not generally enter IOC orders to participate in the Periodic
Auction process.\18\ Allowing for IOCs to participate in Periodic
Auctions requires additional development work and, because the Exchange
believes that there would not at the outset be significant interest in
using such functionality, the Exchange believes that rejecting Periodic
Auction Orders that are IOCs would simplify the Periodic Auction
process without meaningfully impacting its practical functionality.
Stated another way, the minimal benefits that would come from including
IOCs at this time are outweighed by the cost to implement the
functionality and rejecting IOCs would simplify the Periodic Auction
process. As such, the Exchange is proposing to reject Periodic Auction
Orders that are IOC orders.
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    \17\ As provided in Rule 11.9(b)(7), an RHO order is an order
that is designated for execution only during Regular Trading Hours.
    \18\ The Exchange notes that it may consider adding IOC
functionality in the future in the event that there was meaningful
interest from participants.
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Clean-Up Changes
    The Exchange is also proposing to make non-substantive clean-up
changes to make references to ``Non-Displayed Limit Order'' in Rules
11.25(b)(1) and (2) instead read ``non-displayed limit order'' and to
delete an extra instance of the word ``be'' from Rule 11.25(b)(3).
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\19\ in general, and
Section 6(b)(5) of the Act,\20\ in particular, in that it is designed
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest

and not to permit unfair discrimination between customers, issuers,
brokers, or dealers. As further described below, the Exchange believes
that the proposed rule change is consistent with the protection of
investors and the public interest as it would help to clarify and
simplify the Exchange's Periodic Auction process, which itself is
intended to facilitate improved price formation and provide additional
execution opportunities for investors, particularly in securities that
may suffer from limited liquidity, including thinly-traded securities.
Specifically, the Exchange believes that its proposed changes to
further clarify in the rule text that: (i) Periodic Auction Eligible
Orders will be ranked as non-displayed limit orders consistent with the
priority of orders outlined in Rule 11.12(a); (ii) incoming Periodic
Auction Eligible Orders will upon entry interact with Continuous Book
Orders and other Periodic Auction Eligible Orders according to their
rank under Rule 11.12(a); and (iii) Periodic Auction Eligible Orders
that are also Minimum Quantity Orders will only initiate a Periodic
Auction upon entry where a single contra-side Periodic Auction Order
would satisfy the specified minimum size, are all consistent with the
Act because they are designed to promote just and equitable principles
of trade and, in general, to protect investors and the public interest
because the changes make the rules of the Exchange more straightforward
and easily understandable. The Exchange also believes that its
simplifying change to reject Periodic Auction Orders that are IOC is
consistent with the Act because it is designed to promote just and
equitable principles of trade and, in general, to protect investors and
the public interest because it will simplify Periodic Auction
functionality without meaningfully impacting its utility. Finally, the
Exchange believes that its proposed non-substantive clean-up changes to
Rule 11.25(b)(1), (2), and (3) are consistent with the Act because they
are designed to promote just and equitable principles of trade and, in
general, to protect investors and the public interest because the
changes are designed to make the rules of the Exchange more easily
understandable.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
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Ranking Periodic Auction Eligible Orders
    The Exchange believes that the proposed change to add a new
clarifying sentence to Rule 11.25(b)(2) is consistent with the Act
because it is designed to promote just and equitable principles of
trade and, in general, to protect investors and the public interest
because the changes are designed to make the rules of the Exchange more
straightforward and easily understandable by making explicit that
Periodic Auction Eligible Orders will be ranked in price-time priority
among Continuous Book Orders and will also help to make clear how
incoming orders (both Periodic Auction Eligible Orders and Continuous
Book Orders) will interact with resting orders. As described above, the
point that is being clarified could reasonably be inferred from the
definition of Periodic Auctions Orders and is consistent with the
intent of current Rule 11.25(b)(2). The Exchange believes that adding
the clarifying change will promote just and equitable principles of
trade and remove impediments to a free and open market by making
explicit how Periodic Auction Eligible Orders will be ranked and how
incoming orders will interact with resting orders.
Incoming Periodic Auction Eligible Orders
    The Exchange believes that the proposed change to Rule 11.25(b)(2)
is consistent with the Act because it is designed to promote just and
equitable principles of trade and, in general, to protect investors and
the public interest because the changes are designed to make the rules
of the Exchange more straightforward and easily understandable by
making more clear how incoming Periodic Auction Eligible Orders will
interact with resting orders. The current rule text was originally
introduced to make clear that an incoming Periodic Auction Eligible
Order would interact with other Periodic Auction Eligible Orders and
Continuous Book Orders before interacting with Periodic Auction Only
Orders, as made clear in AP Example 3 and further articulated in
Corrected Example 6 from Amendment No. 3. The Exchange believes that
the proposed new language is consistent with the Act in that it will
make the rule text more clear and easily understandable. Further to
this point, the Exchange also notes that the proposed change will also
clarify what it means when Periodic Auction Orders become
``executable'' against one another. Additionally, consistent with
Corrected Example 6 from Amendment No. 3, this proposal makes clear
that an order that is eligible both to trade on the Continuous Book and
initiate a Periodic Auction will trade immediately with the Continuous
Book, even where the Periodic Auction Only Order is more aggressively
priced than the Continuous Book Order. The Exchange believes that such
functionality is consistent with the functionality previously described
in Corrected Example 6 from Amendment No. 3 and remains consistent with
the rationale applied in the Approved Proposal related to securing a
guaranteed execution for an order. As such, the Exchange believes that
the proposed change would promote just and equitable principles of
trade and remove impediments to a free and open market by adding
additional detail already memorialized in the Approved Proposal and
making the Exchange's rules related to Periodic Auctions more explicit.
Periodic Auction Eligible Orders With a Minimum Quantity
    The Exchange believes that its proposed change to Rule
11.25(b)(2)(C) is also consistent with the Act because it is designed
to promote just and equitable principles of trade and, in general, to
protect investors and the public interest because the changes are
designed to make the rules of the Exchange more straightforward and
easily understandable by making clear how Minimum Quantity Orders will
be handled in initiating Periodic Auctions. Specifically, Rule
11.25(b)(2) currently describes how Minimum Quantity Orders will
participate in Periodic Auctions and the use of such orders with
Periodic Auction Eligible Orders, but does not explicitly address how
such orders will be handled in initiating Periodic Auctions.
    The current rule and the Approved Proposal are clear in describing
how Minimum Quantity Orders will be handled in a Periodic Auction (they
``will be executed in a Periodic Auction only if the minimum size
specified can be executed against one or more contra-side orders''),
but they do not describe how incoming Periodic Auction Eligible Orders
with minimum size requirements will be handled in initiating Periodic
Auctions. Because Periodic Auction Eligible Orders are eligible to both
execute against orders on the book or to initiate a Periodic Auction
where they would execute against a Periodic Auction Order, an incoming
order with a minimum size requirement creates unique issues related to
how to calculate executable quantity and determining whether an order
should be executed or initiate a Periodic Auction, especially where
resting orders also have minimum size requirements. As such, the
Exchange believes that it will benefit investors to explain how it
intends to handle such Minimum Quantity Orders. The Exchange believes
that having a Periodic Auction Eligible Order entered with a minimum
execution quantity

only initiate a Periodic Auction upon entry where a single contra-side
Periodic Auction Order would satisfy the specified minimum size
represents a straightforward approach to managing minimum execution
quantity that makes the interaction of minimum execution quantity more
easily understandable and predictable while ensuring that the minimum
execution quantity will be satisfied if the incoming order initiates a
Periodic Auction. This proposed change is consistent with the
protection of investors and the public interest as it would help to
simplify the minimum execution quantity functionality. As such, the
Exchange believes that the proposed change to Rule 11.25(b)(2)(C)
related to Minimum Quantity Orders is consistent with the Act.
IOC Orders
    The Exchange believes that the proposed change to reject Periodic
Auction Orders that are IOC orders will remove impediments to and
perfect a national market system by simplifying the Periodic Auction
process without meaningfully impacting its functionality. Specifically,
based on industry feedback, the Exchange believes that the majority of
participants would use RHO orders to initiate or participate in a
Periodic Auction and would not generally enter IOC orders to
participate in the Periodic Auction process. Allowing for IOCs to
participate in Periodic Auctions requires additional development work
and, because the Exchange believes that there would not at the outset
be significant interest in using such functionality, the Exchange
believes that rejecting Periodic Auction Orders that are IOCs would
simplify the Periodic Auction process without meaningfully impacting
its practical functionality. Stated another way, the minimal benefits
that would come from including IOCs at this time are outweighed by the
cost to implement the functionality and rejecting IOCs would simplify
the Periodic Auction process. The Exchange also believes that
eliminating this order instruction is consistent with the public
interest and the protection of investors given the expected limited
demand for use of this order instruction upon implementation. As such,
the Exchange believes that this proposed change is consistent with the
Act because it is designed to promote just and equitable principles of
trade and, in general, to protect investors and the public interest
because it will simplify Periodic Auction functionality without
meaningfully impacting its utility.
Clean-Up Changes
    Finally, the Exchange believes that making the non-substantive
clean up changes including changing references to ``Non-Displayed Limit
Order'' in Rules 11.25(b)(1) and (2) instead read ``non-displayed limit
order'' and to delete an extra instance of the word ``be'' from Rule
11.25(b)(3) are consistent with the Act because they are designed to
promote just and equitable principles of trade and, in general, to
protect investors and the public interest because the changes are
designed to make the rules of the Exchange more easily understandable.

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

    The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the proposed rule
change would allow the Exchange to make certain clarifying and
simplifying changes to the Exchange's rules and functionality related
to Periodic Auctions in a manner consistent with the current Rules (and
the Approved Proposal), making the Periodic Auction functionality more
straightforward and transparent prior to implementation. The Exchange's
Periodic Auction functionality is designed to introduce innovative
functionality to allow competition and to improve market quality in
thinly-traded and other securities. The equities industry is fiercely
competitive as the Exchange must compete with other equities exchanges
and off-exchange venues for order flow and this proposal will allow the
Exchange to implement certain simplifying and clarifying changes to its
Periodic Auction rules and functionality that will allow it to better
compete in this market.

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

    No written comments were solicited or received on the proposed rule
change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-CboeBYX-2021-024 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-CboeBYX-2021-024. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBYX-2021-024, and

should be submitted on or before November 16, 2021.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23257 Filed 10-25-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9783-9784]
[FR Doc No: 2020-03312]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2018-D-4533]

Compounding Animal Drugs From Bulk Drug Substances; Draft
Guidance for Industry; Availability; Reopening of Comment Period

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of availability; reopening of comment period.

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

SUMMARY: The Food and Drug Administration (FDA or the Agency) is
reopening the comment period for the notice of availability that
published in the Federal Register on November 20, 2019. In that notice,
FDA requested comments on the draft guidance for industry (GFI) #256
entitled ``Compounding Animal Drugs from Bulk Drug Substances.'' FDA is
reopening the comment period to update comments and to receive any new
information.

DATES: FDA is reopening the comment period on the document published
November 20, 2019 (84 FR 64085). Submit either electronic or written
comments on the draft guidance by June 17, 2020, to ensure that the
Agency considers your comments on this draft guidance before it begins
work on the final version of the guidance.

ADDRESSES: You may submit comments on any guidance at any time as
follows:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand Delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Dockets
Management Staff, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2018-D-4533 for ``Compounding Animal Drugs From Bulk Drug
Substances.'' Received comments will be placed in the docket and,
except for those submitted as ``Confidential Submissions,'' publicly
viewable at https://www.regulations.gov or at the Dockets Management
Staff between 9 a.m. and 4 p.m., Monday through Friday.

     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on https://www.regulations.gov.
Submit both copies to the Dockets Management Staff. If you do not wish
your name and contact information to be made publicly available, you
can provide this information on the cover sheet and not in the body of
your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For more information about FDA's posting of
comments to public dockets, see 80 FR 56469, September 18, 2015, or
access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Eric Nelson, Division of Compliance
(HFV-230), Center for Veterinary Medicine, Food and Drug
Administration, 7519 Standish Pl., Rockville, MD 20855,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: In the Federal Register of November 20,
2019, FDA published a notice announcing the availability of draft GFI
#256 entitled ``Compounding Animal Drugs From Bulk Drug Substances''
with a 90-day comment period. We requested comments on the draft
guidance with respect to animal drug compounding from bulk drug
substances under certain circumstances when no other medically
appropriate treatment option exists.
    Interested persons were originally given until February 18, 2020,
to comment on the draft guidance.
    The Agency has received several requests to allow interested
persons additional time to comment. The requests conveyed concern that
the current 90-day comment period does not allow sufficient time to
develop a comprehensive response.
    FDA has considered the requests and is reopening the comment period
for the notice of availability for 120 days, until June 17, 2020. The
Agency believes that a 120-day reopening allows adequate time for
interested persons to submit comments.

    Dated: February 13, 2020.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2020-03312 Filed 2-19-20; 8:45 am]
 BILLING CODE 4164-01-P