[Federal Register Volume 88, Number 153 (Thursday, August 10, 2023)]
[Notices]
[Pages 54384-54389]
[FR Doc No: 2023-17106]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98059; File No. SR-CboeBZX-2023-053]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Enhance
Its Drill-Through Protection Processes for Simple Orders and Make Other
Clarifying Changes

August 4, 2023.
    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 July 24, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
enhance its drill-through protection processes for simple orders and
make other clarifying changes. The text of the proposed rule change is
provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of 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 rule filing is to amend Rule 21.17, Additional
Price Protection Mechanisms and Risk Controls, to enhance the drill-
through protection process for simple orders and make other clarifying
changes.
    Drill-through price protection is currently described in Exchange
Rule 21.17(d). Under Rule 21.17(d)(1), if a buy (sell) order enters the
BZX Options Book \3\ (``Book'') at the conclusion of the opening
auction process or would execute or post to the Book at the time of
order entry, the System \4\ executes the order up to a buffer amount
(the Exchange determines the buffer amount on a class and premium
basis) above (below) the offer (bid) limit of the Opening Collar \5\ or
the National Best Offer (``NBO'') (National Best Bid (``NBB'')) that
existed at the time of order entry, respectively (the ``drill-through
price'').\6\
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    \3\ ``BZX Book'' means the System's electronic file of orders.
See Rule 1.5 (e).
    \4\ ``System'' means the electronic communications and trading
facility designated by the Board through which securities orders of
Users are consolidated for ranking, execution and, when applicable,
routing away. See Rule 1.5 (aa).
    \5\ See Rule 21.7(a) for the definition of Opening Collar.
    \6\ See Rule 21.17(d)(1).
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    Current Rule 21.17(d)(2) (as amended, proposed Rule 21.17(d)(3))
\7\ establishes an iterative drill-through process, whereby the
Exchange permits orders to rest in the Book for multiple time periods
and at more aggressive displayed prices during each time period.\8\
Specifically, the System enters the order in the Book with a displayed
price equal to the drill-through price (unless the terms of the order
instruct otherwise).\9\ The order (or unexecuted portion) will rest in
the Book at the drill-through price for the duration of consecutive
time periods (the Exchange determines on a class-by-class basis the

length of the time period in milliseconds, which may not exceed three
seconds).\10\ Following the end of each period, the System adds (if a
buy order) or subtracts (if a sell order) one buffer amount (the
Exchange determines the buffer amount on a class-by-class basis) to the
drill-through price displayed during the immediately preceding period
(each new price becomes the ``drill-through price'').\11\ The order (or
unexecuted portion) rests in the Book at that new drill-through price
for the duration of the subsequent period. The System applies a
timestamp to the order (or unexecuted portion) based on the time it
enters or is re-priced in the Book for priority reasons. The order
continues through this iterative process until the earliest of the
following to occur: (a) the order fully executes; (b) the User \12\
cancels the order; and (c) the buy (sell) order's limit price equals or
is less (greater) than the drill-through price at any time during
application of the drill-through mechanism, in which case the order
rests in the Book at its limit price, subject to a User's instructions.
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    \7\ As part of the rule changes described herein, the Exchange
proposes to renumber current subparagraph (d)(2) to be proposed
subparagraph (d)(3), and to renumber current subparagraph (d)(3) to
be proposed subparagraph (d)(4).
    \8\ The Exchange will announce to Members the buffer amount and
the length of the time periods. The Exchange notes that each time
period will be the same length (as designated by the Exchange), and
the buffer amount applied for each time period will be the same.
    \9\ Currently, the drill-through protections described under
current Rule 21.17(d)(2) apply only to a limit order with a Time-in-
Force of Day, Good-til-Cancel (``GTC''), or Good-til-Day (``GTD'').
This rule proposal also seeks to clarify which orders are subject to
the drill-through protections, as described herein.
    \10\ See current Rule 21.17(d)(2)(A) (as amended, Rule
21.17(d)(3)(A)). The proposed rule change defines this time period
as an ``iteration.''
    \11\ See current Rule 21.17(d)(2)(B) (as amended, Rule
21.17(d)(3)(B)).
    \12\ The term ``User'' shall mean any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3. See Rule 1.5(cc).
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    Currently, the above-described iterative drill-through process does
not apply to market orders. Specifically, if a buy (sell) market order
would execute at the time of order entry, the System executes the order
up to the Exchange-determined buffer amount above (below) the NBO (NBB)
at the time of order entry and then rejects any remaining amount. For
example, suppose a market order to buy two contracts enters the System;
assume that the drill-through price buffer for a certain option series
is $0.90 and that the following quotes are in the Book: Quote 1 (NBBO):
1 @5.00 x 1 @7.00; Quote 2: 2 @4.00 x 1 @8.00. One contract in the
market order will execute against the 7.00 offer quote. The remaining
one contract of the market order is cancelled, because the next best
offer of 8.00 is 1.00 above the NBO, which is more than the 0.90 buffer
amount.
    The Exchange proposes for market orders with a Time-in-Force of Day
to go through the iterative drill-through process described above.\13\
The Exchange also proposes to amend current Rule 21.17(d)(2) (as
amended, proposed Rule 21.17(d)(3)) to clarify that limit orders with a
Time-in-Force of Day, GTC, or GTD also go through the iterative drill-
through process. In the above example, rather than cancel the remaining
one contract, the System would rest the one contract in the Book at the
drill-through price of 7.90 (i.e. the NBO plus the buffer amount) for
the Exchange-determined time period. At the end of that time period,
assuming the market has not changed, the remaining one contract would
execute against the 8.00 offer, which is within a buffer amount of the
subsequent drill-through price of 8.80. As a result, like super-
aggressive limit orders (except for those with Time-in-Force of
Immediate-or-Cancel (``IOC'') or Fill-or-Kill (``FOK'')) do today,
market orders (except for those with Time-in-Force of IOC) will have
additional execution opportunities pursuant to the drill-through
process. As the proposed rule change only applies to market orders with
a Time-in-Force of Day, and the drill through protections described
under current Rule 21.17(d)(2) continue to apply only to limit orders
with a Time-in-Force of Day, GTC, or GTD, the Exchange also proposes to
adopt proposed Rule 21.17(d)(2) \14\ to specify that the System will
cancel or reject any market order with Time-in-Force of IOC (or
unexecuted portion) or limit order with a Time-in-Force of IOC or FOK
(or unexecuted portion) not executed pursuant to 21.17(d)(1).\15\ The
Exchange believes it is appropriate to not have a market order with a
Time-in-Force of IOC to go through the iteration process, because the
iteration process would be inconsistent with the IOC instruction (and
thus the user's intent). Further, the Exchange proposes to amend Rule
21.17(d)(1) to more generally describe when applicable order types may
become subject to drill-through protection. Specifically, the Exchange
proposes to specify that the protections described in Rule 21.17(d)(1)
become applicable if a buy (sell) order, to which Rule 21.17(d)(1)
would apply, (i) enters the Book at the conclusion of opening auction
process, or (ii) would execute or post to the Book when it enters the
Book.\16\
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    \13\ See proposed Rule 21.17(d)(3).
    \14\ See supra note 9.
    \15\ There is no change to the handling of market orders with a
Time-in-Force of GTC or GTD as a result of this rule change; such
orders will continue to be rejected by the Exchange.
    \16\ This includes, for example, when a Stop (Stop-Loss) or
Stop-Limit order is elected.
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    The Exchange also proposes to amend Rule 21.17(e)(1)(B) to exclude
from the current protections for market orders in no-bid series certain
orders that would be otherwise subject to the drill-through protection
under the proposed rule changes. Currently, under Rule 21.17(e)(1)(B),
if the System receives a sell market order in a series after it is open
for trading with an NBB of zero, and the NBO in the series is greater
than $0.50, the System cancels or rejects the market order. The
Exchange proposes amending this protection in the event a drill-through
process is in progress. Specifically, the Exchange proposes to amend
Rule 21.17(e)(1)(B) to note that in the event the System receives a
sell market order in a series after it is open for trading with an NBB
of zero and the NBO in the series is greater than $0.50, if the drill-
through process is in progress for sell orders and the sell market
order would be subject to drill-through protection, then the order
would join the on-going drill-through process in the then-current
iteration and at the then-current drill-through price, regardless of
NBBO. The Exchange believes it is not optimal for these orders to be
immediately booked at the minimum tick increment, as under the proposed
rule change, such orders would instead, be subject to the drill-through
protection mechanism described under Rule 21.17(d), which may allow
opportunity for execution at a more beneficial price level than the
minimum tick increment.
    Further, the Exchange proposes to amend Rule 21.17(a) to
specifically exclude orders that would be subject to drill-through
protection from the market order NBBO width protections described
therein. Currently, under Rule 21.17(a), if a User submits a market
order to the System when the NBBO width is greater than x% of the
midpoint of the NBBO, subject to a minimum and maximum dollar amount
(as determined by the Exchange on a class-by-class basis), the System
cancels or rejects the market order. The Exchange proposes amending
Rule 21.17(a) to exclude Stop Orders \17\ and Market-on-Close orders
from this protection. Such orders may intentionally be further away
from the NBBO at the time the order is entered, and the protection may
cause the orders to be inadvertently rejected pursuant to this check.
The Exchange believes it is not optimal for these orders to be subject
to the market order NBBO width protection, as the check may

inadvertently cause rejections for orders that may otherwise not have
an opportunity to execute if they are immediately cancelled due to
market width. Under the proposed rule change, such orders would
instead, upon entry into the Book (when elected in accordance with
their definitions), be subject to the drill-through protection
mechanism described under Rule 21.17(d). The Exchange also proposes a
clarification to proposed Rule 21.17(d)(4).\18\ Currently, under Rule
21.17(d)(4), if multiple Stop (Stop-Loss) or Stop-Limit \19\ orders to
buy (sell) have the same stop price and are thus triggered by the same
trade price or NBBO, and would execute or post to the Book, the System
uses the contra-side NBBO that existed at the time the first order in
sequence was entered into the Book as the drill-through price for all
orders. The Exchange proposes to remove the conditional language noting
that such Stop (Stop-Loss) or Stop-Limit orders to buy (sell) must have
the same stop price, as it is possible that orders with different stop
prices may be triggered by the same trade price or NBBO. Further, the
Exchange proposes to add language stating that, where multiple orders
are simultaneously re-priced, the orders will be prioritized under
proposed Rule 21.17(d)(3)(E) \20\ and will be sequenced based on the
original time each order was entered into the Book.
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    \17\ A ``Stop Order'', or Stop (Stop-Loss) Order, is an order
that becomes a BZX market order when the stop price is elected. A
Stop Order to buy is elected when the consolidated last sale in the
security occurs at, or above, the specified stop price. A Stop Order
to sell becomes a limit order when the consolidated last sale in the
security occurs at, or below, the specified stop price. See Rule
11.9(c)(16).
    \18\ See supra note 9.
    \19\ A ``Stop-Limit'' order is an order that becomes a limit
order when the stop price is elected. A Stop Limit Order to buy is
elected when the consolidated last sale in the security occurs at,
or above, the specified stop price. A Stop Limit Order to sell
becomes a sell limit order when the consolidated last sale in the
security occurs at, or below, the specified stop price. See Rule
11.9(c)(17).
    \20\ See supra note 9.
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    For example, assume that the drill-through price buffer for a
certain option series is $0.90, and that the following quotes are in
the Book: Quote 1 (NBBO): 1 @5.00 x 1 @7.00; Quote 2: 2 @4.00 x 1
@8.00. Additionally, the following Stop orders are being held in the
System when Quote 2 is updated to 2 @4.00 x 1 @6.50 (the System
received these stop orders in the below sequence):

Order 1: Sell 1 @Market, Stop Price = $6.50
Order 2: Sell 1 @Market, Stop Price = $6.55
Order 3: Sell 1 @$3.95, Stop Price = $6.60

    Each of orders 1, 2 and 3 have a stop price less than the NBO, and
will therefore be triggered by the 6.50 quote and enter the Book for
execution or posting. A drill-through price for all three orders is set
at the contra-side NBB of 5.00. Per proposed Rule 21.17(d)(3), the
orders will go through the drill-through process as follows:
    1. Order 1 will execute against Quote 1 @$5.00.
    2. Orders 2 and 3 are posted to sell at $4.10 for the Exchange-
determined time period.
    3. Drill-through process continues for orders 2 and 3 until they
are canceled or executed.
    As amended, under Rule 21.17(d)(4), all Stop (Stop-Loss) and Stop-
Limit orders elected as a result of the same election trigger (NBBO
update or last sale price) will continue to use the same reference
price for drill-through (even though they may have different stop
prices).
    The Exchange proposes to amend Rule 21.17(d)(3)(B),\21\ to specify
that if at any time during the drill-through process, the NBO (NBB)
changes to be below (above) the current drill-through price, such NBO
(NBB) will become the new drill-through price and a new drill-through
will immediately begin. As a result, any improvements to the market
that occur while the drill-through is in process will be incorporated,
thereby providing Users with further opportunity to be priced within
the market while still being protected. Under the proposed rule change,
any limit order with a price that is less aggressive than the new
drill-through price would be entered in the Book at its limit price.
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    \21\ See supra note 9.
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    The Exchange also proposes to add Rule 21.17(d)(3)(D) \22\ to
provide that if the System receives a market or limit order that would
be subject to the drill-through process while a drill-through is in
progress in the same series, the order joins the ongoing drill-through
process in the then-current iteration and at the then-current drill-
through price. Under the proposed rule, orders that come in while a
drill-through is in process receive the benefit of joining the drill-
through at the NBBO at the time of entry, as opposed to immediately
executing or being displayed at a more aggressive price than the drill-
through price. By way of illustration, consider the following example:
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    \22\ As a result of the additional provisions described herein,
the proposed rule change renumbers current subparagraph (D) to be
proposed subparagraph (F) and current subparagraph (E) to be
proposed subparagraph (H). See also supra note 9.
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    Assume that the drill-through price buffer for a certain option
series is $0.90, and that the following quotes are in the Book: Quote 1
(NBBO): 1 @5.00 x 1 @7.00; Quote 2: 2 @4.00 x 1 @8.00. The System
receives the following orders in the below sequence:
Order 1: Sell 1 @Market, Stop Price = $6.50
Order 2: Sell 1 @Market, Stop Price = $6.55
Order 3: Sell 1 @$3.95, Stop Price $6.60
Order 4: Sell 2 @Market, Stop Price = $4.50

    During this time, Quote 2 is updated to: 2 @4.00 x 1 @6.50. Orders
1, 2, and 3 are elected, and the drill-through reference price for all
three orders is set to contra-side NBB of 5.00.
    1. Order 1 executes Quote 1 @$5.00.
    2. Orders 2 and 3 are posted to sell @$4.10 (drill-through price)
for the Exchange-determined time period.
    3. Order 4 is elected due to updated best offer of $4.10, and joins
Orders 2 and 3 at the iterative drill-through price of $4.10. The offer
is updated to 4 @$4.10.
    4. Order 5 (Sell 10 @Market (Day)) and Order 6 (Sell 1 @$4.05 Limit
(Day)) enter the Book. Per proposed Rule 21.17(d)(3)(D), Orders 5 and 6
join the drill-through iteration at the drill-through reference price
of $4.10, and the best offer is updated to 15 @$4.10.
    5. The drill-through process continues for orders 2, 3, 4, 5, and 6
until the contracts are canceled or executed.
    Because the proposed rule change may result in multiple orders
going through the drill-through process at the same price and at the
same time, the proposed rule change also describes how these orders
will be prioritized and allocated when executing against resting
interest or incoming interest. Specifically, proposed Rule
21.17(d)(3)(E) \23\ states the System prioritizes orders that are part
of the same drill-through iteration (A) based on the time the System
enters or reprices them in the Book (i.e., in time priority) when,
after an iteration, the new drill-through price makes the order(s)
marketable against resting orders and (B) in accordance with the
applicable base allocation algorithm when executing against any
incoming interest. The Exchange believes this is appropriate because
incoming marketable orders would ultimately execute in time priority
today. Additionally, having multiple orders execute in accordance with
the applicable base allocation algorithm when executing against
incoming interest is consistent with how resting orders execute against
incoming interest.
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    \23\ Id.
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    Continuing from the above example, assume the drill-through process
iterates to the next drill-through price, which would be $3.20. In
doing so, Order 6 posts at its limit price of $4.05, and the rest of
the orders are eligible to execute in time sequence against the resting
$4.00 bid. Per proposed Rule 21.17(d)(3)(E), the orders will go through
the drill-through process as follows:

    1. Order 2 (Sell 1 @Market) will execute against Quote 2 @$4.00.
    2. Order 3 (Sell 1 @$3.95) will execute against Quote 2 @$4.00.
    3. The Quote 2 is exhausted, and the next best bid is Quote 1 for 5
@$3.00.
    4. Remaining drill-through is Order 4 (Sell 2 @Market) and Order 5
(Sell 10 @Market). Market is now 5 @$3.00 x 12 @$3.20, and the drill-
through process continues until these contracts are executed or
cancelled.
    If, prior to the next drill-through iteration, Order 7 (buy 5
@$3.25) is entered and executes against Orders 4 and 5 at $3.20, the
allocation will depend on the allocation algorithm for the relevant
class, under the amended Rule.
    1. If pro-rata, Order 7 trades 1 contract against Order 4 and 4
contracts against Order 5.
    2. If price-time, Order 7 trades 2 contracts against Order 4 and 3
contracts against Order 5.
    3. Remaining size on Order 4 (if applicable) and Order 5 will
continue to drill-through as described in previous examples.
    The Exchange also proposes to amend Rule 21.17(d)(3)(F).\24\
Currently, the rule states that an order will continue through the
drill-through process until the earliest of the following to occur: (a)
the order fully executes; (b) the User cancels the order; and (c) the
buy (sell) order's limit price equals or is less (greater) than the
drill-through price at any time during application of the drill-through
mechanism, in which case the orders rests in the Book at its limit
price, subject to a User's instruction. The Exchange proposes to amend
part (c) to remove reference to when the order's limit price equals the
drill-through price, since under the drill-through process, if a buy
(sell) order's limit price equals the drill-through price during the
application of the drill-through mechanism it will remain part of the
drill-through process, until the order's limit price is less (greater)
than the drill-through price, at which point it will rest in the Book
at its limit price. The Exchange also proposes to remove reference to a
User's instruction, as there is no additional instruction that would
allow a User to choose a different order handling option once the buy
(sell) order limit price is less (greater) than the drill-through
price.
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    \24\ Id.
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    Finally, the Exchange proposes to add Rule 21.17(d)(3)(G) to
specify that if an order(s) (or unexecuted portion(s)) is undergoing
the drill-through process at the end of its last eligible trading
session for that trading day (i.e., RTH), the drill-through process
concludes. Any order (or unexecuted portion) with a Time-in-Force of
(i) Day is canceled, and (ii) GTC or GTD enters the Queuing Book for
the next eligible trading session as a market order or limit order (at
its limit price).
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\25\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \26\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \27\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
    \27\ Id.
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    In particular, the Exchange believes the proposed rule change to
enhance drill-through protections for simple orders and to make certain
market orders eligible for drill-through protection will remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, protect investors, because
it will provide these orders with additional and consistent execution
opportunities and protections. The primary purpose of the drill-through
price protection is to prevent orders from executing at prices ``too
far away'' from the market when they enter the Book for potential
execution. The Exchange believes the proposed rule change is consistent
with this purpose, because Users who submit market orders with a Time-
in-Force of Day will receive the same level of drill-through price
protection against execution at potentially erroneous prices that is
currently afforded to supermarketable limit orders while receiving the
same additional execution opportunities. Supermarketable limit orders
currently go through the drill-through process, and market orders with
a Time-in-Force of Day are functionally similar to supermarketable
limit orders. Therefore, the Exchange believes it is appropriate to
provide both types of orders with the same price protection.
    Further, the proposed rule change to provide that any new market
and limit orders that would be subject to drill-through protection will
join any in-progress drill-through iterations and display at the then-
current drill-through price (and the corresponding changes regarding
allocation and prioritization) allows new orders to receive the same
level of price protection as other orders undergoing the drill-through
process. The proposed rule change will allow all orders additional
execution opportunities while continuing to protect them against
execution at potentially erroneous prices. Similarly, the Exchange
believes the proposed change to consider changes to the NBO (NBB)
during drill-through and to update the drill-through price to such NBO
(NBB) should it be lower (higher) than the drill-through price will
further provide opportunity for execution at reasonable prices by
capturing any market moves that may result in more aggressive prices.
    The Exchange believes the proposal will enhance risk protections,
the individual firm benefits of which flow downstream to counterparties
both at the Exchange and at other options exchanges, which increases
systemic protections as well. The Exchange believes enhancing risk
protections will allow Users to enter orders and quotes with further
reduced fear of inadvertent exposure to excessive risk, which will
benefit investors through increased exposure to liquidity for the
execution of their orders.
    Additionally, the Exchange believes changes to specifically exclude
from market order NBBO width and market order in no-bid series
protections certain orders that would be subject to drill-through
protection will remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
protect investors. Specifically, the Exchange believes the changes to
exclude certain orders that would be subject to drill-through
protection from market order NBBO width protections may reduce
inadvertent rejection of such orders which may be purposely priced far
away from the NBBO at the time of entry and may otherwise miss an
opportunity for execution if immediately cancelled. The Exchange also
believes the changes to exclude

certain orders that would be subject to drill-through protection from
market order in no-bid series protections may allow opportunity for
execution at a more beneficial price level than if they were
immediately booked at the minimum tick increment. This proposed rule
change may increase execution opportunities for Users that submit such
Stop (Stop-Loss) and Market-on-Close orders (in the case of market
order NBBO width protections) and sell market orders with an NBB of
zero when the NBO in the series is greater than $0.50 (in the case of
market orders in no-bid series protections).
    The Exchange believes the proposed change to Rule 21.17(d)(4) will
protect investors because it clarifies that if multiple Stop (Stop-
Loss) and Stop-Limit orders are triggered by the same trade price or
NBBO (even if the orders have different stop prices), and would execute
or post to the Book, the System uses the contra-side NBBO that existed
at the time the first order in sequence was entered into the Book as
the drill-through price for all orders. The Exchange believes that the
proposed rule change will bring greater transparency and clarity to the
rulebook, thus benefitting investors.
    Finally, the Exchange believes the proposed changes to specify what
happens to orders undergoing drill-through at the end of a trading
session will protect investors by adding transparency to the rules
regarding the drill-through functionality and provide greater certainty
as to the application of the drill-through process.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the enhanced drill-
through protection will apply to all marketable orders in the same
manner. Additionally, it will provide the same price protection and
execution opportunities to relevant market orders that are currently
provided to supermarketable limit orders, which function in a similar
manner.
    The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
enhancement to the drill-through protection is consistent with the
current protection and provides relevant market orders with improved
protection against execution at potentially erroneous prices through
drill-through price protection in accordance with User instructions.
Additionally, the proposed rule change relates specifically to a price
protection offered on the Exchange and how the System handles orders as
part of this price protection mechanism.
    The Exchange believes the proposed rule change would ultimately
provide all market participants with additional execution opportunities
when appropriate while providing protection from erroneous execution.
The Exchange believes the proposal will enhance risk protections, the
individual firm benefits of which flow downstream to counterparties
both at the Exchange and at other options exchanges, which increases
systemic protections as well. The Exchange believes enhancing risk
protections will allow Users to enter orders and quotes with further
reduced fear of inadvertent exposure to excessive risk, which will
benefit investors through increased exposure to liquidity for the
execution of their orders. Without adequate risk management tools,
Members could reduce the amount of order flow and liquidity they
provide. Such actions may undermine the quality of the markets
available to customers and other market participants. Accordingly, the
proposed rule change is designed to encourage Members to submit
additional order flow and liquidity to the Exchange. Accordingly, the
proposed rule change is designed to encourage Members to submit
additional order flow and liquidity to the Exchange. The proposed
flexibility may similarly provide additional execution opportunities,
which further benefits liquidity in potentially volatile markets. In
addition, providing Members with more tools for managing risk will
facilitate transactions in securities because, as noted above, Members
will have more confidence protections are in place that reduce the
risks from potential system errors and market events.
    Finally, the proposed clarifying changes are not intended to have
any impact on competition, but rather codify current functionality to
add transparency to the Rules.

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

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

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

    Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \28\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\29\
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-CboeBZX-2023-053 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CboeBZX-2023-053. 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 (https://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 a.m. and 3 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to file number SR-CboeBZX-2023-053 and
should be submitted on or before August 31, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
---------------------------------------------------------------------------

    \30\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17106 Filed 8-9-23; 8:45 am]
BILLING CODE 8011-01-P


                    UNITED STATES OF AMERICA

            DEPARTMENT OF TRANSPORTATION

                    OFFICE OF THE SECRETARY

                             WASHINGTON, DC

Issued by the Department of Transportation on February 4, 2003

NOTICE OF ACTION TAKEN -- DOCKETS OST-2000-6937

________________________________________________________________________
_____________

This serves as notice to the public of the action described below, taken
by the Department official indicated (no additional confirming order
will be issued in this matter).

Application of   DHL Airways, Inc.   filed  12/11/2002   to:

XX  Renew exemption for two years under 49 U.S.C. §40109 to provide the
following service:

Scheduled foreign air transportation of property and mail between the
United States and Kuwait.  DHL Airways also requests renewal of
authority to integrate its exemption here with its certificate authority
for all-cargo service on Route 692.

DHL Airways intends to use this authority to operate service between New
York and Kuwait via Brussels and Bahrain under code-share arrangements
with Gemini Air Cargo and DHL International E.C.

No answers to the application were filed.

Applicant rep:  Stephen H. Lachter<PHONE_NUMBER>  DOT Analyst:
Michael D. Bodman<PHONE_NUMBER>

D I S P O S I T I O N

XX  Granted, subject to conditions (see below).

The above action was effective when taken: February 4, 2003,  through
February 4, 2005.

Action taken by:   Paul L. Gretch, Director

		    Office of International Aviation

XX   The authority granted is consistent with the overall state of
aviation relations between the United States and Kuwait.

Except to the extent exempted or waived, this authority is subject to
the terms, conditions, and limitations indicated:

XX  Holder’s certificates of public convenience and necessity

		XX  Standard Exemption Conditions (attached)

XX  Statement of Authorization dated March 6, 2000, authorizing DHL/DHL
International E.C. code-share operations, and conditions therein.

________________________________________________________________________
____________

Conditions:  The route integration authority granted is subject to the
condition that such operations are consistent with the applicable
bilateral aviation agreements.  Furthermore, (a) nothing in the award of
the route integration authority requested should be construed as
conferring upon DHL Airways additional rights (including fifth-freedom
intermediate and/or beyond rights) to serve markets where U.S. carrier
entry is limited unless DHL Airways first notifies the Department of DHL
Airways’ intent to serve such a market and unless and until the
Department has completed any necessary carrier selection procedures to
determine which carrier(s) should be authorized to exercise such rights;
and (b) should there be a request by any carrier to use the
limited-entry route rights that are included in DHL Airways’ authority
by virtue of the route integration authority granted here, but that are
not then being used by DHL Airways, the holding of such authority by
route integration will not be considered as providing any preference for
DHL Airways in a competitive carrier selection proceeding to determine
which carrier(s) should be entitled to use the authority at issue.

_____________________________

On the basis of data officially noticeable under Rule 24(g) of the
Department’s regulations, we found the applicant qualified to provide
the services authorized.

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) our action was consistent with Department
policy; (2) grant of the authority was consistent with the public
interest; and (3) grant of the authority would not constitute a major
regulatory action under the Energy Policy and Conservation Act of 1975.
To the extent not granted, we denied all requests in the referenced
Docket.  We may amend, modify, or revoke the authority granted in this
Notice at any time without hearing at our discretion.

Persons entitled to petition the Department for review of the action set
forth in this Notice under the Department’s regulations, 14 CFR §
385.30, may file their petitions within seven (7) days after the date of
issuance of this Notice.  This action was effective when taken, and the
filing of a petition for review will not alter such effectiveness.

An electronic version of this order is available on the World Wide Web
at

http://dms.dot.gov//reports/reports_ aviation.asp

APPENDIX

U.S. CARRIER

Standard Exemption Conditions

In the conduct of operations authorized by the attached notice, the
applicant(s) shall:

(1)  Hold at all times effective operating authority from the government
of each country served;

(2)  Comply with applicable requirements concerning oversales contained
in 14 CFR 250 (for scheduled operations, if authorized);

(3)  Comply with the requirements for reporting data contained in 14 CFR
241;

(4)  Comply with requirements for minimum insurance coverage, and for
certifying that coverage to the Department, contained in 14 CFR 205;

(5)  Except as specifically exempted or otherwise provided for in a
Department Order, comply with the requirements of 14 CFR 203, concerning
waiver of Warsaw Convention liability limits and defenses;

(6)  Comply with the applicable requirements of the Federal Aviation
Administration Regulations and with all applicable U.S. Government
requirements concerning security; and

(7)  Comply with such other reasonable terms, conditions, and
limitations required by the public interest as may be prescribed by the
Department of Transportation, with all applicable orders and regulations
of other U.S. agencies and courts, and with all applicable laws of the
United States.

The authority granted shall be effective only during the period when the
holder is in compliance with the conditions imposed above.

To assure compliance with all applicable U.S. Government requirements
concerning security, the holder should, before commencing any new
service (including charter flights) to or from a foreign airport, inform
its Principal Security Inspector of its plans.

 PAGE

 PAGE   3


[Federal Register Volume 86, Number 119 (Thursday, June 24, 2021)]
[Rules and Regulations]
[Pages 33110-33112]
[FR Doc No: 2021-13125]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2021-0017; Project Identifier AD-2020-01186-T;
Amendment 39-21600; AD 2021-12-13]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: The FAA is adopting a new airworthiness directive (AD) for
certain The Boeing Company Model 737-8 and 737-9 airplanes. This AD was
prompted by a report that during refueling of the right main tank, if
there is a failure of the automatic shutoff system, the refueling panel
does not provide the required indication that the automatic shutoff has
failed. This AD requires installing a new fuel quantity processor unit
(FQPU) and doing an FQPU software check. The FAA is issuing this AD to
address the unsafe condition on these products.

DATES: This AD is effective July 29, 2021.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in this AD as of July 29,
2021.

ADDRESSES: For service information identified in this final rule,
contact Boeing Commercial Airplanes, Attention: Contractual & Data
Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA
90740-5600; telephone<PHONE_NUMBER>; internet https://www.myboeingfleet.com. You may view this service information at the
FAA, Airworthiness Products Section, Operational Safety Branch, 2200
South 216th St., Des Moines, WA. For information on the availability of
this material at the FAA, call<PHONE_NUMBER>. It is also available at
https://www.regulations.gov by searching for and locating Docket No.
FAA-2021-0017.

Examining the AD Docket

    You may examine the AD docket at https://www.regulations.gov by
searching for and locating Docket No. FAA-2021-0017; or in person at
Docket Operations between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket contains this final rule, any
comments received, and other information. The address for Docket
Operations is U.S. Department of

Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Chris Baker, Aerospace Engineer,
Propulsion Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des
Moines, WA 98198; phone and fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to certain The Boeing
Company Model 737-8 and 737-9 airplanes. The NPRM published in the
Federal Register on April 2, 2021 (86 FR 17324). The NPRM was prompted
by a report that during refueling of the right main tank, if there is a
failure of the automatic shutoff system, the refueling panel does not
provide the required indication that the automatic shutoff has failed.
In the NPRM, the FAA proposed to require installing a new FQPU and
doing an FQPU software check. The FAA is issuing this AD to address
this indication failure to warn the person fueling the airplane, which
could cause overfill of the right main tank, spilled fuel, and pooling
on the ground that could come in contact with an ignition source,
resulting in a ground fire.

Discussion of Final Airworthiness Directive

Comments

    The FAA received comments from Boeing and United Airlines who
supported the NPRM without change.

Conclusion

    The FAA reviewed the relevant data, considered any comments
received, and determined that air safety requires adopting this AD as
proposed. Except for minor editorial changes, this AD is adopted as
proposed in the NPRM. None of the changes will increase the economic
burden on any operator.

Related Service Information Under 1 CFR Part 51

    The FAA reviewed Boeing Special Attention Requirements Bulletin
737-28-1363 RB, dated June 2, 2020. The service information specifies
procedures for replacing the FQPU having an incorrect indication
threshold with an FQPU with part number 30128-06 or 30128-58, as
applicable, or an FQPU with a later-approved part number, and doing an
FQPU software check. This service information is reasonably available
because the interested parties have access to it through their normal
course of business or by the means identified in ADDRESSES.

Costs of Compliance

    The FAA estimates that this AD affects 66 airplanes of U.S.
registry. The FAA estimates the following costs to comply with this AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per      Cost on U.S.
                Action                         Labor cost           Parts cost        product        operators
----------------------------------------------------------------------------------------------------------------
Installation and software check.......  3 work-hour x $85 per                 $0            $255         $16,830
                                         hour = $255.
----------------------------------------------------------------------------------------------------------------

    The FAA has included all known costs in this cost estimate.
According to the manufacturer, however, some or all of the costs of
this AD may be covered under warranty, thereby reducing the cost impact
on affected operators.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil aircraft in air commerce by prescribing regulations for
practices, methods, and procedures the Administrator finds necessary
for safety in air commerce. This regulation is within the scope of that
authority because it addresses an unsafe condition that is likely to
exist or develop on products identified in this rulemaking action.

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Will not affect intrastate aviation in Alaska, and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive:

2021-12-13 The Boeing Company: Amendment 39-21600; Docket No. FAA-
2021-0017; Project Identifier AD-2020-01186-T.

(a) Effective Date

    This airworthiness directive (AD) is effective July 29, 2021.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to The Boeing Company Model 737-8 and 737-9
airplanes, certificated in any category, as identified in Boeing
Special Attention Requirements Bulletin 737-28-1363 RB, dated June
2, 2020.

(d) Subject

    Air Transport Association (ATA) of America Code 28, Fuel.

(e) Unsafe Condition

    This AD was prompted by a report that during refueling of the
right main tank, if there is a failure of the automatic shutoff
system, the refueling panel does not provide the required flashing
indication that the automatic shutoff has failed to shut off the
fuel. The FAA is issuing this AD to address this indication failure
to warn the person fueling the airplane, which could cause overfill
of the right main tank, spilled fuel, and pooling on the ground that
could come in contact with an ignition source, resulting in a ground
fire.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Required Actions

    Except as specified by paragraph (h) of this AD, at the
applicable times specified in the ``Compliance'' paragraph of Boeing
Special Attention Requirements Bulletin 737-28-1363 RB, dated June
2, 2020, do all applicable actions identified in, and in accordance
with, the Accomplishment Instructions of Boeing Special Attention
Requirements Bulletin 737-28-1363 RB, dated June 2, 2020.
    Note 1 to paragraph (g): Guidance for accomplishing the actions
required by this AD can be found in Boeing Special Attention Service
Bulletin 737-28-1363, dated June 2, 2020, which is referred to in
Boeing Special Attention Requirements Bulletin 737-28-1363 RB, dated
June 2, 2020.

(h) Exception to Service Information Specifications

    Where Boeing Special Attention Requirements Bulletin 737-28-1363
RB, dated June 2, 2020, uses the phrase ``the Original Issue date of
Requirements Bulletin 737-28-1363 RB,'' this AD requires using ``the
effective date of this AD.''

(i) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle ACO Branch, FAA, has the authority to
approve AMOCs for this AD, if requested using the procedures found
in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request
to your principal inspector or responsible Flight Standards Office,
as appropriate. If sending information directly to the manager of
the certification office, send it to the attention of the person
identified in paragraph (j)(1) of this AD. Information may be
emailed to<EMAIL_ADDRESS>    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the responsible Flight Standards Office.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair, modification, or alteration required by this AD
if it is approved by The Boeing Company Organization Designation
Authorization (ODA) that has been authorized by the Manager, Seattle
ACO Branch, FAA, to make those findings. To be approved, the repair
method, modification deviation, or alteration deviation must meet
the certification basis of the airplane, and the approval must
specifically refer to this AD.

(j) Related Information

    (1) For more information about this AD, contact Chris Baker,
Aerospace Engineer, Propulsion Section, FAA, Seattle ACO Branch,
2200 South 216th St., Des Moines, WA 98198; phone and fax: 206-231-
3552; email<EMAIL_ADDRESS>    (2) Service information identified in this AD that is not
incorporated by reference is available at the addresses specified in
paragraphs (k)(3) and (4) of this AD.

(k) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) Boeing Special Attention Requirements Bulletin 737-28-1363
RB, dated June 2, 2020.
    (ii) [Reserved]
    (3) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Contractual & Data Services
(C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-
5600; telephone<PHONE_NUMBER>; internet https://www.myboeingfleet.com.
    (4) You may view this service information at the FAA,
Airworthiness Products Section, Operational Safety Branch, 2200
South 216th St., Des Moines, WA. For information on the availability
of this material at the FAA, call<PHONE_NUMBER>.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, email<EMAIL_ADDRESS>or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on June 3, 2021.
Gaetano A. Sciortino,
Deputy Director for Strategic Initiatives, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2021-13125 Filed 6-23-21; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68768-68770]
[FR Doc No: 2023-21948]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98610; File No. SR-NASDAQ-2023-016]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To List and Trade Shares of the iShares Bitcoin
Trust Under Nasdaq Rule 5711(d), Commodity-Based Trust Shares

September 28, 2023.
    On June 29, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
iShares Bitcoin Trust (``Trust'') under Nasdaq Rule 5711(d), Commodity-
Based Trust Shares. The proposed rule change was published for comment
in the Federal Register on July 19, 2023.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 97905 (July 13,
2023), 88 FR 46342 (``Notice''). Comments on the proposed rule
change are available at: https://www.sec.gov/comments/sr-nasdaq-2023-016/srnasdaq2023016.htm.
---------------------------------------------------------------------------

    On August 31, 2023, pursuant to Section 19(b)(2) of the Act,\4\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ This order institutes proceedings under Section 19(b)(2)(B)
of the Act \6\ to determine whether to approve or disapprove the
proposed rule change.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 98267, 88 FR 61652
(Sept. 7, 2023). The Commission designated October 17, 2023, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

I. Summary of the Proposal

    As described in more detail in the Notice,\7\ the Exchange proposes
to list and trade the Shares of the Trust under Nasdaq Rule 5711(d),
which governs the listing and trading of Commodity-Based Trust Shares
on the Exchange.
---------------------------------------------------------------------------

    \7\ See Notice, supra note 3.
---------------------------------------------------------------------------

    The investment objective of the Trust is to reflect generally the
performance of the price of bitcoin before payment of the Trust's
expenses and liabilities.\8\ The assets of the Trust will consist
primarily of bitcoin held by a custodian on behalf of the Trust.\9\ On
each Business Day, as soon as practicable after 4:00 p.m. Eastern Time,
the administrator of the Trust will evaluate the bitcoin held by the
Trust as reflected by the CF Benchmarks Index and determine the net
asset value of the Trust.\10\ The Trust will issue and redeem baskets
of Shares on a continuous basis only in exchange for an amount of
bitcoin determined by the trustee of the Trust.\11\
---------------------------------------------------------------------------

    \8\ See id. at 46342. iShares Delaware Trust Sponsor LLC
(``Sponsor''), a Delaware limited liability company and an indirect
subsidiary of BlackRock, Inc., is the sponsor of the Trust.
    \9\ See id.
    \10\ See id. at 46343.
    \11\ See id.
---------------------------------------------------------------------------

II. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2023-016 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \12\ to determine whether the proposed rule
change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change, as discussed below. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described below, the Commission seeks and encourages interested persons
to provide comments on the proposed rule change.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\13\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \14\
---------------------------------------------------------------------------

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

    The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on the following questions and asks commenters to submit
data

where appropriate to support their views:
    1. What are commenters' views on whether the proposed Trust and
Shares would be susceptible to manipulation? What are commenters' views
generally on whether the Exchange's proposal is designed to prevent
fraudulent and manipulative acts and practices? What are commenters'
views generally with respect to the liquidity and transparency of the
bitcoin markets and the bitcoin markets' susceptibility to
manipulation?
    2. Based on data and analysis provided by the Exchange,\15\ do
commenters agree with the Exchange that the Chicago Mercantile Exchange
(``CME''), on which CME bitcoin futures trade, represents a regulated
market of significant size related to spot bitcoin? \16\ What are
commenters' views on whether there is a reasonable likelihood that a
person attempting to manipulate the Shares would also have to trade on
the CME to manipulate the Shares? \17\ Do commenters agree with the
Exchange that trading in the Shares would not be the predominant
influence on prices in the CME bitcoin futures market? \18\
---------------------------------------------------------------------------

    \15\ See Notice, 88 FR at 46349-53.
    \16\ See id. at 46352.
    \17\ See id. at 46352-53.
    \18\ See id. at 46353.
---------------------------------------------------------------------------

    3. The Exchange states that bitcoin is resistant to price
manipulation and that other means to prevent fraudulent and
manipulative acts and practices ``exist to justify dispensing with the
requisite surveillance sharing agreement'' with a regulated market of
significant size related to spot bitcoin.\19\ In support, the Exchange
states, among other things, that the geographically diverse and
continuous nature of bitcoin trading make it difficult and
prohibitively costly to manipulate the price of bitcoin, and that the
fragmentation across bitcoin platforms, the relatively slow speed of
transactions, and the capital necessary to maintain a significant
presence on each trading platform make manipulation of bitcoin prices
through continuous trading activity challenging.\20\ The Exchange also
states that offering only in-kind creations and redemptions provides
``unique protections against potential attempts to manipulate the
Shares'' and that the price the Sponsor uses to value the Trust's
bitcoin ``is not particularly important.'' \21\ Do commenters agree
with the Exchange's statements regarding the bitcoin market's
resistance to price manipulation?
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    \19\ See id. at 46352 n.23.
    \20\ See id.
    \21\ See id. at 46353.
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    4. The Exchange also states that it will execute a surveillance-
sharing agreement with Coinbase, Inc. (``Coinbase'') that is intended
to supplement the Exchange's market surveillance program.\22\ According
to the Exchange, the agreement is ``expected to have the hallmarks of a
surveillance-sharing agreement between two members of the [Intermarket
Surveillance Group], which would give the Exchange supplemental access
to data regarding spot [b]itcoin trades on Coinbase where the Exchange
determines it is necessary as part of its surveillance program for the
Commodity-Based Trust Shares.'' \23\ Based on the description of the
surveillance-sharing agreement as provided by the Exchange, what are
commenters' views of such an agreement if finalized and executed? Do
commenters agree with the Exchange that such an agreement with Coinbase
would be ``helpful in detecting, investigating, and deterring fraud and
manipulation in the Commodity-Based Trust Shares''? \24\
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    \22\ See id.
    \23\ See id. The Exchange states that ``[t]his means that the
Exchange expects to receive market data for orders and trades from
Coinbase, which it will utilize in surveillance of the trading of
Commodity-Based Trust Shares.'' Id.
    \24\ See id.
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    5. Some sponsors of proposed spot bitcoin exchange-traded products
have also provided data regarding the correlation between certain
bitcoin spot markets and the CME bitcoin futures market.\25\ What are
commenters' views on the correlation between the bitcoin spot market
and the CME bitcoin futures market? What are commenters' views on the
extent to which that correlation provides evidence that the CME bitcoin
futures market is ``significant'' related to spot bitcoin?
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    \25\ See, e.g. Notice of Filing of Amendment No. 3 to, and Order
Instituting Proceedings to Determine Whether to Approve or
Disapprove, a Proposed Rule Change to List and Trade Shares of the
ARK 21Shares Bitcoin ETF under BZX Rule 14.11(e)(4), Commodity-Based
Trust Shares, Securities Exchange Act Release No. 98112 (Aug. 11,
2023), 88 FR 55743 (Aug. 16, 2023) (including data from sponsor
21Shares US LLC that purports to show correlations of returns across
the two-year period from January 20, 2021, to February 1, 2023, of
no less than 92% among certain spot bitcoin platforms and between
the CME bitcoin futures market and such spot bitcoin platforms on an
hourly basis, and no less than 78% on a minutely basis).
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III. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\26\
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    \26\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by October 25, 2023. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
November 8, 2023.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-NASDAQ-2023-016 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-NASDAQ-2023-016. 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 (https://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 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-NASDAQ-2023-016 and should be submitted on or before October 25,
2023. Rebuttal comments should be submitted by November 8, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21948 Filed 10-3-23; 8:45 am]
BILLING CODE 8011-01-P