[Federal Register Volume 84, Number 189 (Monday, September 30, 2019)]
[Notices]
[Pages 51657-51667]
[FR Doc No: 2019-21096]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87096; File No. SR-CboeEDGA-2019-012]

Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Introduce a Liquidity Provider Protection Delay
Mechanism on EDGA

September 24, 2019.

I. Introduction

    On June 7, 2019, Cboe EDGA Exchange, Inc. (``EDGA'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to introduce a delay mechanism on
EDGA. The proposed rule change was published for comment in the Federal
Register on June 26, 2019.\3\ On August 5, 2019, 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 the proposed rule change should be disapproved.\4\
The Commission received twenty-one comment letters from eighteen
commenters on the proposed rule change, including a response from the
Exchange.\5\ This order institutes proceedings under Section
19(b)(2)(B) of the Exchange Act \6\ to determine whether to approve or
disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 86168 (June 20,
2019), 84 FR 30282 (``Notice'').
    \4\ See Securities Exchange Act Release No. 86567, 84 FR 39385
(August 9, 2019).
    \5\ See Letters from: R.T. Leuchtkafer, dated July 12, 2019
(``Leuchtkafer Letter I''); Steve Crutchfield, Head of Market
Structure, CTC Trading Group, LLC, dated July 15, 2019 (``CTC
Letter''); Tyler Gellasch, Executive Director, Healthy Markets,
dated July 16, 2019 (``Healthy Markets Letter''); Larry Tabb,
Founder and Research Chairman, TABB Group, dated July 16, 2019
(``Tabb Group Letter''); Stephen John Berger, Managing Director,
Global Head of Government and Regulatory Policy, Citadel Securities,
dated July 16, 2019 (``Citadel Letter''); Mehmet Kinak, Vice
President & Global Head of Systematic Trading & Market Structure,
and Jonathan D. Siegel, Vice President & Senior Legal Counsel
(Legislative & Regulatory Affairs), T. Rowe Price, dated July 16,
2019 (``T. Rowe Price Letter''); Adam Nunes, Head of Business
Development, Hudson River Trading LLC, dated July 16, 2019 (``Hudson
River Trading Letter''); Joanna Mallers, Secretary, FIA Principal
Traders Group, dated July 16, 2019 (``FIA Letter''); Ray Ross, Chief
Technology Officer, Clearpool, dated July 16, 2019 (``Clearpool
Letter''); Eric Swanson, CEO, XTX Markets LLC (Americas), dated July
16, 2019 (``XTX Letter I''); John Thornton, Co-Chair, Hal S. Scott,
President, and R. Glenn Hubbard, Co-Chair, Committee on Capital
Markets Regulation, dated July 16, 2019 (``CMR Committee Letter'');
Kirsten Wegner, Chief Executive Officer, Modern Markets Initiative,
dated July 17, 2019 (``MMI Letter''); Theodore R. Lazo, Managing
Director and Associate General Counsel, SIFMA, dated July 18, 2019
(``SIFMA Letter''); Eric Swanson, CEO, XTX Markets LLC (Americas),
dated July 31, 2019 (``XTX Letter II''); Mark D. Epley, Executive
Vice President & Managing Director, General Counsel, and Jennifer W.
Han, Associate General Counsel, Managed Funds Association, dated
August 2, 2019 (``MFA Letter''); Hubert De Jesus, Managing Director,
Global Head of Market Structure and Electronic Trading, and Joanne
Medero, Managing Director, Global Public Policy, Black Rock, dated
August 2, 2019 (``Black Rock Letter''); Rich Steiner, Head of Client
Advocacy and Market Innovation, RBC Capital Markets, dated August
15, 2019 (``RBC Letter''); Adrian Griffiths, Assistant General
Counsel, Cboe Global Markets, dated August 22, 2019 (``Exchange
Response Letter''); R.T. Leuchtkafer, dated August 23, 2019
(``Leuchtkafer Letter II''), R.T. Leuchtkafer, dated September 9,
2019 (``Leuchtkafer Letter III''), Joshua Mollner, Assistant
Professor, Kellogg School of Management, Northwestern University,
and Markus Baldauf, Assistant Professor, Sauder School of Business,
University of British Columbia, dated September 12, 2019 (``Mollner
& Baldauf Letter'') available at https://www.sec.gov/comments/sr-cboeedga-2019-012/srcboeedga2019012.htm.
    \6\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposal

    EDGA proposes to adopt the Liquidity Provider Protection (``LP2'')
delay mechanism, which would delay all incoming executable orders for
up to four milliseconds.\7\ If an incoming executable order subject to
the delay is no longer executable against orders resting on the EDGA
Book (e.g., resting orders on the book are cancelled or modified such
that they are no longer marketable against the delayed incoming order),
such incoming order will be immediately released from the queue.\8\
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    \7\ See Notice, 84 FR at 30284.
    \8\ See Notice, 84 FR at 30284.
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    The LP\2\ delay mechanism also would apply to the cancel, cancel/
replace, or modification messages that are associated with liquidity
taking orders.\9\ The Exchange would apply such messages after the
liquidity taking order is released from the delay mechanism.\10\ At the
end of the delay period, incoming orders, cancel, and cancel/replace
messages subjected to the delay mechanism would be processed after the
System has processed, if applicable, all messages in the security
received by the Exchange during such delay period which could result in
a message being delayed for longer than four milliseconds depending on
the volume of messages being processed by the Exchange.\11\
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    \9\ See id.
    \10\ See id.
    \11\ See Notice 84 FR at 30284, n. 11.
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    Certain order types, or orders with instructions, that are not
eligible for execution upon entry would become subject to the LP2 delay
mechanism when a potential execution is triggered by a subsequent
incoming order. For example, orders entered with either a Stop Price or
Stop Limit Price instruction would not be executed until elected, and
would only be subject to the delay mechanism after the order is
converted to either a Market Order or Limit Order. Similarly, orders
entered with a time-in-force instruction of Regular Hours Only would be
subjected to the delay mechanism when entered into the EDGA Book after
an opening or re-opening process.\12\
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    \12\ See EDGA Rule 11.7 relating to the opening and re-opening
process.
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    An incoming order that is not executable upon entry would not be
subject to the delay mechanism. For example, orders with instructions
that

are not executable when entered due to its order instructions (e.g.,
Minimum Quantity and Post Only) would not be subject to the LP2 Delay
Mechanism. The one exception to this would be incoming orders with the
EdgeRisk Self Trade Protection modifier.\13\ These modifiers would be
applied to the order after it is delayed. In addition, incoming
routable orders that bypass the EDGA book would not be subject to the
LP2 delay mechanism, but any returning, executable remainder of such a
routed order would be subject to the delay mechanism.
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    \13\ See Notice, 84 FR at 30283.
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Market Data

    The Exchange proposes that the LP2 delay mechanism would not apply
to inbound or outbound market data. Current, un-delayed data, would be
used for all purposes including regulatory compliance and the pricing
of pegged orders and the quotation and trade data would continue to be
disseminated, without delay, to the applicable securities information
processor (``SIP'') and direct market data feeds.\14\
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    \14\ See id.
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Regulation NMS

    In conjunction with the proposed LP2 delay mechanism, the Exchange
proposes to disseminate a manual, unprotected quotation.\15\ In
addition, because certain Regulation NMS rules related to locked and
crossed markets would apply differently to EDGA's manual, unprotected
quotation, compared to its current automated, protected quotation, the
Exchange proposed to make the two rule changes described below.
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    \15\ Rule 600(a)(37) defines a ``manual quotation'' as any
quotation other than an automated quotation.
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    First, the Exchange proposes to add new EDGA Rule 11.10(a)(6) to
provide that a bid (offer) on the EDGA Book is eligible to remain
posted to the EDGA Book for one second after such bid (offer) is
crossed by a Protected Offer (Protected Bid). The bid (offer) on the
EDGA Book will be cancelled if it continues to be higher (lower) than a
Protected Offer (Protected Bid) after this one second period. Because
the delayed cancellation behavior set forth by proposed EDGA Rule
11.10(a)(6) would allow bids and offers on EDGA to remain posted and
executable for up to one second if crossed by a Protected Bid or
Protected Offer of another market, the Exchange also proposes to amend
EDGA Rule 11.10(a)(2) to provide that the Exchange will not execute any
portion of a bid or offer at a price that is more than the greater of
five cents or 0.5 percent through the lowest Protected Offer or highest
Protected Bid, as applicable.
    Second, the Exchange proposes to amend EDGA Rule 11.10(f) related
to the dissemination and display of ``Locking Quotations or Crossing
Quotations''.\16\ Because the Exchanges' quotations would be marked
manual, Rule 610(d)(1)(ii) of Regulation NMS requires that the Exchange
avoid locking or crossing any quotation in an NMS stock disseminated
pursuant to an effective national market system plan. The Exchange
proposes to amend EDGA Rule 11.10(f)(3) to provide that an EDGA
quotation would not be considered a Locking or Crossing Quotation if
the quotation being locked or crossed is a manual quotation that is
allowed to be locked or crossed pursuant to an exemption request
submitted by the Exchange.\17\ In the Notice, the Exchange notes that
it submitted an exemption request to the Commission pursuant to Rule
610(e) of Regulation NMS that, if granted by the Commission, would
permit the Exchange to lock or cross manual quotations disseminated by
the New York Stock Exchange LLC (``NYSE'').\18\
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    \16\ A ``Locking Quotation'' is the display of a bid for an NMS
stock at a price that equals the price of an offer for such NMS
stock previously disseminated pursuant to an effective national
market system plan, or the display of an offer for an NMS stock at a
price that equals the price of a bid for such NMS stock previously
disseminated pursuant to an effective national market system plan in
violation of Rule 610(d) of Regulation NMS. See EDGA Rule 11.6(g). A
``Crossing Quotation'' is the display of a bid (offer) for an NMS
stock at a price that is higher (lower) than the price of an offer
(bid) for such NMS stock previously disseminated pursuant to an
effective national market system plan in violation of Rule 610(d) of
Regulation NMS. See EDGA Rule 11.6(c).
    \17\ See Notice, 84 FR at 30285.
    \18\ See Notice, 84 FR at 30285; see also Letter from Adrian
Griffiths, Assistant General Counsel, Cboe, to Vanessa Countryman,
Acting Secretary, dated June 7, 2019 (requesting exemptive relief
from certain requirements related to locked and crossed markets
pursuant to Rule 610(e) of Regulation NMS).
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Eliminate or Modify Certain Order Types and Instructions
    The Exchange proposes to eliminate or modify certain order types
and instructions to reduce System complexity in light of the operation
of the proposed LP\2\ delay mechanism. Specifically, the Exchange
proposes to eliminate the:
     Discretionary Range instruction \19\ and the MidPoint
Discretionary Order (``MDO''); \20\
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    \19\ Discretionary Range is an optional instruction that a User
may attach to an order to buy (sell) a stated amount of a security
at a specified, displayed or non-displayed ranked price with
discretion to execute up (down) to another specified, non-displayed
price. See EDGA Rule 11.6(d).
    \20\ A Midpoint Discretionary Order is a limit order to buy that
is pegged to the NBB, with discretion to execute at prices up to and
including the midpoint of the NBBO, or a limit order to sell that is
pegged to the NBO, with discretion to execute at prices down to and
including the midpoint of the NBBO. See EDGA Rule 11.8(e).
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     Pegged instruction,\21\ including the Market Peg \22\ and
Primary Peg instruction;
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    \21\ Pegged is an instruction to automatically re-price an order
in response to changes in the NBBO, and can be entered as either a
Market Peg or Primary Peg. See EDGA Rule 11.8(b)(9).
    \22\ A Market Peg is an order entered with an instruction to peg
to the NBB, for a sell order, or the NBO, for a buy order. See EDGA
Rule 11.6(j)(1).
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     Supplemental Peg Orders; \23\ and
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    \23\ Supplemental Peg Orders are non-displayed Limit Orders that
are eligible for execution at the NBB for a buy order and NBO for a
sell order against an order that is in the process of being routed
to an away Trading Center if such order that is in the process of
being routed away is equal to or less than the aggregate size of the
Supplemental Peg Order interest available at that price. See EDGA
Rule 11.8(g).
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     Non-Displayed Swap and Super Aggressive instructions.\24\
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    \24\ Currently, when an order entered with an NDS or Super
Aggressive instruction is locked by an incoming order with a Post
Only instruction that would not remove liquidity based on the
economic impact of removing liquidity on entry compared to resting
on the order book and subsequently providing liquidity, the order
with the NDS or Super Aggressive instruction is converted to an
executable order and will remove liquidity against such incoming
order. If an order that does not contain a Super Aggressive
instruction maintains higher priority than one or more Super
Aggressive eligible orders, the Super Aggressive eligible order(s)
with lower priority will not be converted and the incoming order
with a Post Only instruction will be posted or cancelled in
accordance with Rule 11.6(n)(4). This does not apply to orders
entered with an NDS instruction. See EDGA Rule 11.6(n)(2), (n)(7).
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    In addition, the Exchange proposes to modify the:
     MidPoint Peg Order (``MPO'') \25\ by eliminating the
optional functionality that allows a User to: (1) Peg the order to the
less aggressive midpoint or one minimum price variation inside the same
side of the NBBO, and (2) opt for executions during a locked market;
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    \25\ MPOs are non-displayed, market or limit orders with an
instruction to execute at the midpoint of the NBBO, or,
alternatively, pegged to the less aggressive of the midpoint of the
NBBO or one minimum price variation inside the same side of the NBBO
as the order. See EDGA Rule 11.9(c)(9).

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     Price Adjust \26\ and Display-Price Sliding \27\
instructions to eliminate the functionality to allow orders with these
instructions to adjust multiple times to a more aggressive price in
response to changes to the prevailing NBBO; \28\
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    \26\ Price Adjust is an order instruction requiring that where
an order would be a locking quotation or crossing quotation of an
external market if displayed by the System on the EDGA Book at the
time of entry, the order will be displayed and ranked at a price
that is one minimum price variation lower (higher) than the locking
price for orders to buy (sell). See EDGA Rule 11.6(l)(1)(A).
    \27\ Display-Price Sliding is an order instruction requiring
that where an order would be a locking quotation or crossing
quotation of an external market if displayed by the System on the
EDGA Book at the time of entry, will be ranked at the locking price
in the EDGA Book and displayed by the System at one minimum price
variation lower (higher) than the locking price for orders to buy
(sell). See EDGA Rule 11.6(l)(1)(B).
    \28\ See EDGA Rule 11.6(l)(1)(A)(i),(B)(iii).
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     Post Only instruction to (1) limit the use of the
instruction to displayed orders and MPOs and (2) eliminate the ability
of such orders to execute on an incoming basis; and
     Market Maker Peg Orders to require the use of a Post Only
instruction with such orders.\29\ Finally, the Exchange proposes
related, conforming changes to rules referencing the current Post Only
functionality that would permit an incoming order to be executed.\30\
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    \29\ A Market Maker Peg Order is designed to assist market
makers maintain compliance with their continuous quoting
obligations. Specifically, it is a limit order that is automatically
priced by the System at the Designated Percentage away from the then
current NBB (in the case of an order to buy) or NBO (in the case of
an order to sell), or if there is no NBB or NBO at such time, at the
Designated Percentage away from the last reported sale from the
responsible single plan processor.
    \30\ See e.g., EDGA Rule 11.6(l)(A)(4),(B)(4) and EDGA Rule
11.8(c)(5).
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III. Summary of Comments

    The Commission received twenty-one comments from eighteen
commenters on the proposed rule change, including a response letter
from the Exchange.\31\ Three commenters supported the proposal \32\ and
twelve commenters opposed the proposal.\33\ One commenter conditioned
support for the proposal on the Exchange's quote not being included in
the SIP.\34\ One commenter did not explicitly express support for, or,
opposition to, the proposed rule change.\35\
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    \31\ See supra note 5.
    \32\ See CTC Letter; Mollner & Baldauf Letter; XTX Letter I; XTX
Letter II.
    \33\ See Black Rock Letter; Citadel Letter; CMR Committee
Letter; FIA Letter; Healthy Markets Letter; Hudson River Trading
Letter; R.T. Leuchtkafer Letters I, II, and III; MFA Letter; MMI
Letter; RBC Letter; SIFMA Letter; T. Rowe Price Letter.
    \34\ See Clearpool Letter at 4.
    \35\ See Tabb Group Letter.
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A. Impact on Market Participants/Impact on Orders

    Two commenters believed that the proposal was consistent with the
Exchange Act.\36\ One commenter believed the proposal was not unfairly
discriminatory under the Exchange Act because it targets a behavior,
latency arbitrage, and not specific market participants.\37\
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    \36\ See CTC Letter at 3-4; XTX Letter I at 2-4; XTX Letter II
at 3.
    \37\ See XTX Letter I at 3. A subsequent comment by the same
commenter also characterized the proposal as ``not discriminatory''
but ``rather a rational response to address behavior that imposes
explicit and implicit costs on investors and the wider market in the
form of spread and market impact.'' See XTX Letter II at 2.
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    Two commenters noted the proposal would protect all orders that add
liquidity.\38\ One commenter suggested that, by protecting the resting
orders of both liquidity providers and end users, the proposal would
afford ``the best service and pricing to investors while still
preserving the opportunity for those who wish to pursue higher speeds
to benefit from doing so.'' \39\ One commenter suggested that the delay
mechanism would protect the passive orders routed by commercially
available order placement algorithms, including the orders of
institutional investors.\40\ The commenter explained that an end users'
passive orders would only miss fills if they cancelled their orders,
and if this were the case, they would only miss adverse fills.\41\ One
commenter noted the proposal would allow market participants to
interact with their resting orders, e.g., by canceling the order or
modifying the order's size, without being subject to the delay.\42\
This commenter believed the ability for liquidity providers to ``fade
away'' was important in light of today's fragmented, fast moving
markets.\43\
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    \38\ See XTX Letter I at 3; CTC Letter at 3.
    \39\ See CTC Letter at 3.
    \40\ See XTX Letter II at 5.
    \41\ See id.
    \42\ See Clearpool Letter at 2.
    \43\ See id.
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    Two commenters believed that the asymmetric delay is not akin to
the ``last look'' practice in foreign exchange markets.\44\ One
commenter explained that the information leakage and pre-hedging
activity associated with ``last look'' would not be possible under the
current proposal because the liquidity provider would have no knowledge
of any order attempting to access the liquidity provider's quote until
an execution occurs against that quote.\45\ One commenter indicated
that the asymmetric speedbump is not a last look because it ``does not
enjoy the ability to fade against a specific order.'' \46\
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    \44\ See Tabb Group Letter at 4; XTX Letter I at 6.
    \45\ See XTX Letter I at 6.
    \46\ See Tabb Group Letter at 4.
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    Eleven comments raised concerns about the proposal being unfairly
discriminatory among market participants.\47\ One commenter stated that
intentional delays associated with speed bumps should be equally
applied, not asymmetrically applied, to all market participants.\48\
Two commenters stated the proposal would discriminate unfairly against
liquidity takers.\49\ Another commenter did not believe that the
Exchange justified why investors accessing EDGA quotations should be
``systematically disadvantaged over those who provide quotations.''
\50\ One commenter suggested the proposal would impede the ability of
ETF market makers to reliably access displayed quotations in underlying
securities for hedging purposes, potentially increasing the risks
associated with providing ETF liquidity and resulting in wider spreads,
the costs of which would be ``disproportionately borne by retail
investors.'' \51\ Two commenters were concerned that EDGA liquidity
providers could be disadvantaged compared to faster EDGA liquidity
providers, and an inability to respond quickly enough to market signals
would create a riskless arbitrage opportunity for faster liquidity
providers.\52\ One commenter believed that market makers with superior
resources would be able to avoid price volatility and the effects of
latency arbitrage would be shifted to market participants without fast
and expensive technology.\53\
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    \47\ See Black Rock Letter at 1-2; Citadel Letter at 3; CMR
Committee Letter at 1-2; Leuchtkafer Letter I at 1, 8, 11 and 15;
FIA Letter at 1; Healthy Markets Letter at 9-10; Hudson River
Trading Letter at 1 and 5; MFA Letter at 1-2; MMI Letter at 2; RBC
Letter at 1; T. Rowe Price Letter at 1.
    \48\ See CMR Committee Letter at 2.
    \49\ See Black Rock Letter at 2; Healthy Markets Letter at 2.
    \50\ See Healthy Markets Letter at 2.
    \51\ See Citadel Letter at 2.
    \52\ See Leuchtkafer Letter I at 8; RBC Letter at 2.
    \53\ See Leuchtkafer Letter I at 8.
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    The Exchange responded that liquidity providers are subject to
asymmetric risks because liquidity takers determine the time of a trade
and are able to remove liquidity before a liquidity provider can
reprice its resting orders.\54\ The Exchange explained that
sophisticated liquidity takers can use information about impending
price changes to purchase or sell shares.\55\ The Exchange stated that
limit orders can essentially serve as a ``free option'' for liquidity
takers that use marketable

orders to access posted liquidity, and that the liquidity takers
essentially can lock in a risk-free profit if the liquidity provider is
not able to react and reprice its posted liquidity.\56\ The Exchange
indicated that liquidity providers are mindful of this ``free option''
when they price their quotes, and reasoned that it is important to
protect liquidity providers ``given the service that they provide to
the market'' and because ``quotations posted by liquidity providers
determine the quality of executions received by investors that submit
marketable order flow.'' \57\ The Exchange suggested different types of
market participants that provide liquidity would benefit from the delay
mechanism since it would attract a wider range of participants that
could compete on factors other than speed, such as quality of
execution, and noted a ``significant amount'' of institutional order
flow is managed through broker-dealer algorithms that could response to
market information in less than the 4 millisecond timeframe.\58\
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    \54\ See Exchange Response Letter at 2, 3, and 7.
    \55\ See id. at 3.
    \56\ See id.
    \57\ See Exchange Response Letter at 4, 7.
    \58\ See id. at 9-10.
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    Five commenters expressed concern about unfair discrimination among
orders because the delay mechanism would apply asymmetrically to only
liquidity-taking orders.\59\ One commenter noted that the speedbumps
previously approved by the Commission are applicable to all inbound and
outbound communications, whereas the EDGA speedbump is asymmetric and
only applies to incoming executable orders.\60\ Another commenter
stated that each time a liquidity provider utilizes the asymmetric
speed bump to cancel or reprice a displayed quote, any incoming order
that would have otherwise immediately executed would be negatively
impacted.\61\ The commenter explained that in the event that a large
institutional order is routed to multiple exchanges simultaneously, the
EDGA portion of the order would likely be filled at a worse price since
EDGA liquidity providers would be able to cancel or reprice their
displayed quotes based on the most recent market data showing liquidity
being taken from other venues.\62\ Another commenter suggested that
enabling market makers to obtain superior order book queue position
could discourage the use of limit orders by retail and institutional
investors over time by increasing these investors' transaction
costs.\63\ One commenter noted that under the proposal non-marketable
orders could be canceled at any time, while marketable orders could not
be cancelled while the order queues because of the delay mechanism.\64\
This commenter suggested that marketable orders would be harmed because
they would not be allowed to be updated during the delay to adjust
market information that is revealed during the delay.\65\
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    \59\ See Citadel Letter at 2-3; Leuchtkafer Letter I at 10;
Hudson River Trading Letter at 3; MFA Letter at 1-2; SIFMA Letter at
2.
    \60\ See MFA Letter at 2.
    \61\ See Citadel Letter at 2.
    \62\ See id.
    \63\ See Leuchtkafer Letter I at 9.
    \64\ See Hudson River Trading Letter at 3.
    \65\ See id.
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    The Exchange responded to the comment suggesting that the proposed
asymmetric delay that would only be applicable to incoming executable
orders is unfairly discriminatory by stating the previously approved
delay mechanisms may delay all incoming and outgoing orders, but treat
orders resting on the book differently.\66\ Specifically, the Exchange
noted that the repricing instructions for non-displayed pegged orders
on IEX and NYSE American are not subject to a delay and suggested that
the proposed delay mechanism would similarly protect resting orders
while allowing liquidity providers to improve displayed prices as
opposed to relying on exchange-driven algorithms ``designed solely to
match prices quoted on other markets.'' \67\
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    \66\ See Exchange Response Letter at 6.
    \67\ See id. at 6-7.
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    Three commenters asserted that the benefit liquidity providers
receive as a result of the proposed rule change would be material or
significant.\68\ Five commenters expressed concern that liquidity
providers with a speed advantage could use the asymmetric delay to
engage in price discovery on other venues in order to gain an
informational advantage at the expense of other market
participants.\69\ These commenters were concerned that liquidity
providers would observe trading on other venues during the delay and
cancel resting orders (i.e., back away or quote fade) on EDGA to avoid
executions against delayed incoming orders.\70\ Two commenters believed
the proposal bore some similarities to the ``last look'' practice in
foreign exchange markets, wherein a market participant disseminates
non-firm quotes to clients, and upon receiving a request to trade
against its quoted price, has a final opportunity to accept or reject
the trade request.\71\ One commenter expressed that approving the
proposal would be ``akin to institutionalizing the practice of `last
look''' but without the ``mitigating controls and prudential
supervision'' associated with that practice.\72\ One commenter believed
that liquidity providers would cancel or reprice displayed quotes to
selectively avoid incoming orders.\73\ This commenter expressed that
EDGA liquidity providers would be advantaged over EDGA liquidity takers
because access to the Exchange's displayed quotations would be
negatively impacted if the market moved in favor of the liquidity
taker, while liquidity takers would have no equivalent mechanism to
avoid executions if the market moves against them.\74\
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    \68\ See Black Rock Letter at 2; Citadel Letter at 2; FIA Letter
at 2.
    \69\ See Citadel Letter at 2; Hudson River Trading Letter at 3;
Leuchtkafer Letter I at 10-11; MFA Letter at 2; RBC Letter at 1.
    \70\ See Citadel Letter at 2-3; Hudson River Trading Letter at
3; Leuchtkafer Letter I at 7; MFA Letter at 2; RBC Letter at 2.
    \71\ See Black Rock Letter at 3; Citadel Letter at 3.
    \72\ See Black Rock Letter at 3.
    \73\ See Citadel Letter at 2.
    \74\ See id. at 5.
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    One commenter stated that the proposal would discriminate unfairly
against liquidity takers since they would be exposed to an increase in
adverse selection and stale executions after the delay.\75\ Another
commenter suggested that the advantages liquidity providers would
receive raise concerns that the proposal ``is inconsistent with the
objectives of Section 11A of the Act to assure fair competition among
brokers and dealers, and among exchange markets.'' \76\ Another
commenter, a long-term institutional trader, indicated that their
exposure to adverse selection and unfavorable fills would increase if
highly sophisticated market makers could adjust their displayed quotes
based on market signals.\77\ This commenter elaborated that the
proposal could lead to an artificial increase in passive bids and
offers by EDGA Market Makers, which could result in EDGA being
``similar to other venues where buy-side participants and other
institutions struggle'' to receive quality executions.\78\
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    \75\ See Black Rock Letter at 2.
    \76\ See MFA Letter at 3.
    \77\ See T. Rowe Price Letter at 2.
    \78\ See id.
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    One commenter suggested that it may be a violation of the Quote
Rule to permit some market participants to modify or cancel their
quotations while incoming orders seeking to access those quotations are
delayed.\79\ Another commenter suggested that the proposal could create
problems for brokers or dealers with respect to complying with

Rule 602(b) of Regulation NMS, which requires a broker or dealer to
honor its quotes when an order is presented to trade with those
prices.\80\ This commenter noted that the speedbump is designed to
delay the incoming order from being presented to a broker or dealer in
order to provide the broker or dealer with additional time to update
its prices, which would effectively allow the broker or dealer to not
honor its quotation when the incoming order was presented (i.e.,
received and processed by the Exchange).\81\
---------------------------------------------------------------------------

    \79\ See Healthy Markets Letter at 11.
    \80\ See Hudson River Trading Letter at 4.
    \81\ See Hudson River Trading Letter at 4.
---------------------------------------------------------------------------

    The Exchange responded that commenter concerns related to quote
fading were unwarranted because post execution prices are relatively
stable for most investors and such liquidity should continue to be
available despite the four millisecond delay.\82\ The Exchange
responded that the proposal is consistent with the Quote Rule.
According to the Exchange, the Quote Rule only requires quotations to
be firm when presented to a broker-dealer for execution.\83\ Under the
proposed rule change, the liquidity provider has no knowledge of the
incoming order and thus the incoming order is not presented to the
liquidity provider for execution until the incoming order exits the
delay mechanism.\84\ The Exchange opined that since the liquidity
provider would be unable to refuse the trade at this point, the
liquidity provider's quotation would be firm ``consistent with both the
letter and the spirit of the Quote Rule.'' \85\ The Exchange also
asserted that the proposal is distinguishable from ``last look''
functionality on the foreign exchange markets because EDGA liquidity
providers would not have the opportunity to avoid executions with an
incoming marketable order after it has been presented for
execution.\86\ Rather, the Exchange suggested that liquidity providers
would continue to quote prices based on available market information,
and the liquidity taking order would only become known when the order
is presented for execution after exiting the delay mechanism.\87\ The
Exchange believed that the proposal could reduce the risk of adverse
selection for liquidity providers by giving them an opportunity to
update their posted quotations before trading at a potentially stale
price.\88\ The Exchange indicated that reduced adverse selection risks
for liquidity providers, as opposed to reduced liquidity for investors,
was the more likely outcome, which could benefit investors by
facilitating more aggressive quoting and effective price discovery on
EDGA.\89\ The Exchange was not persuaded by the argument that liquidity
providers would free ride price discovery because the Exchange believed
such a strategy would be unsuccessful and result in EDGA having
inferior intermarket priority for liquidity taking orders.\90\ The
Exchange noted that liquidity providers on EDGA would still need to
compete with each other to establish the Exchange BBO in order to trade
with incoming marketable order flow, which should improve market
quality on EDGA.\91\
---------------------------------------------------------------------------

    \82\ See Exchange Response Letter at 5. The Exchange believes
that statistics provided in the response letter related to markouts
for liquidity providers on EDGA in July 2019 demonstrate that
published quotations accessed by the majority of investors tend to
be relatively stable in the 20 milliseconds following an investor
removing liquidity posted on the EDGA order book. See id.
    \83\ See Exchange Response Letter at 15-16.
    \84\ See id. at 16.
    \85\ See id.
    \86\ See id. at 15.
    \87\ See Exchange Response Letter at 15-16.
    \88\ See id. at 2, 5.
    \89\ See id. at 5.
    \90\ See id. at 8.
    \91\ See id.
---------------------------------------------------------------------------

B. Competition

    Two commenters asserted that the proposal would reduce barriers to
entry for new liquidity providers,\92\ and three commenters believed
the proposal would encourage competition among existing liquidity
providers.\93\ One commenter expected that the proposal would result in
greater competition between EDGA market makers on the basis of price
and order size.\94\ One commenter characterized the proposal as
``explicitly pro-competitive'' and suggested it would help foster
competition by ensuring all market participants have at least some
minimum amount of time to react to price changes in related markets,
which would likely reduce the advantage that would otherwise be held by
the small number market participants that use ``extreme'' low-latency
technology to ``pick off'' participants who take slightly longer to
reprice resting orders in response to new information.\95\
---------------------------------------------------------------------------

    \92\ See CTC Letter at 3-4; XTX Letter I at 5; XTX Letter II at
1, 8.
    \93\ See CTC Letter at 3-4; Mollner & Baldauf Letter at 2; XTX
Letter I at 5; XTX Letter II at 1, 8.
    \94\ See XTX Letter II at 2.
    \95\ See CTC Letter at 1, 3.
---------------------------------------------------------------------------

    Four commenters were concerned that proposal would impose a burden
on competition.\96\ Three commenters suggested that EDGA liquidity
providers would be advantaged over liquidity providers on other markets
because non-EDGA liquidity providers would not have a mechanism to
avoid unfavorable executions.\97\ One commenter suggested that the
proposal did not address the burden on competition that could be caused
by allowing EDGA liquidity providers to ``free-ride'' on price
discovery on other markets that do not employ an asymmetric delay, and
how such free-riding could discourage the order display of liquidity
providers on competing exchanges and potentially diminish liquidity and
price discovery on those other markets.\98\
---------------------------------------------------------------------------

    \96\ See Citadel Letter at 5; FIA Letter at 2; Hudson River
Trading Letter at 1; MFA Letter at 1.
    \97\ See Citadel Letter at 5; Hudson River Trading Letter at 2;
MFA Letter at 3.
    \98\ See Hudson River Trading Letter at 2.
---------------------------------------------------------------------------

    The Exchange responded that the proposal would serve to increase
competition among liquidity providers by attracting a wider range of
participants that could compete on factors other than speed.\99\ The
Exchange suggested that market participants that routinely enter two
sided quotations and traded actively would benefit from the proposal
relative to the amount of liquidity provided, but the benefits of the
proposal would not be restricted to liquidity providers.\100\ The
Exchange indicated that, for instance, institutional order flow that is
managed by a broker-dealer algorithm would also benefit from the
ability to react to market signals during the four millisecond
delay.\101\ The Exchange stated that different kinds of market
participants would directly benefit from the LP2 delay mechanism as
liquidity providers and liquidity takers because of improved market
quality.\102\
---------------------------------------------------------------------------

    \99\ See Exchange Response Letter at 9.
    \100\ See id. at 8.
    \101\ See id. at 10.
    \102\ See id.
---------------------------------------------------------------------------

C. Impact on Market Quality

    Four commenters expected that the proposal would result in improved
market quality.\103\ One commenter believed that the proposal would aid
in attracting liquidity and positively impact order routing behavior,
execution quality, and general market quality.\104\ One commenter
theorized that liquidity and informative prices were desirable market
attributes but that such objectives sometimes conflicted and thus a
tradeoff was necessary; the commenter suggested an asymmetric speedbump
may be a means to achieve these dual goals because it would help to
eliminate latency arbitrage.\105\ Two commenters believed that the
proposal would allow liquidity providers to

narrow spreads and display larger size.\106\ One commenter indicated
that although high-frequency liquidity providers were likely to be the
immediate beneficiaries of the asymmetric speedbump, competition among
them would likely result in tighter and deeper markets that would
benefit other traders, and these traders may be the ultimate
beneficiaries of the asymmetric speedbump.\107\ This commenter
explained that even though quotes may fade during episodes of latency
arbitrage, these quotes are likely to remain accessible during other
times, to the benefit of most investors.\108\ Another commenter
believed that the proposal would make the market more fair, encourage
displayed liquidity and promote efficient price discovery.\109\
---------------------------------------------------------------------------

    \103\ See Clearpool Letter at 1; CTC Letter at 1-2; Mollner &
Baldauf Letter at 2; XTX Letter I at 3; XTX Letter II at 9.
    \104\ See Clearpool Letter at 1.
    \105\ See Mollner and Baldauf Letter at 1.
    \106\ See XTX letter I at 1; Mollner & Baldauf Letter at 2.
    \107\ See Mollner & Baldauf Letter at 2.
    \108\ See id.
    \109\ See CTC Letter at 1.
---------------------------------------------------------------------------

    Two commenters believed that a positive outcome of the proposal
would be a reduced reliance on the speed of market connectivity, which
would decrease the need for market participants to invest in technology
in order to attain small, incremental speed advantages (i.e.,
microseconds).\110\ One of these commenters suggested that some latency
sensitive firms engage in illegal or untoward activity to attain speed
advantages in order to trade at stale prices, which impose an
operational tax on liquidity providers that is passed on to
investors.\111\ This commenter believed that providing liquidity
providers with the ability to identify and react to latency arbitrage
strategies should result in tighter pricing and deeper books for
investors.\112\ This commenter indicated that even if the LP2 delay
mechanism slowed down price discovery on EDGA, it would not materially
affect investors because investors tend to have long-run economic
exposures (e.g., days, weeks, or months) and their trading or hedging
activity is not motivated by market developments at the millisecond
timescale.\113\ This commenter noted that other commenters referenced
an Australian study suggesting that an asymmetric speedbump had a
negative impact on market liquidity on the TSX Alpha Exchange in
Canada, however this commenter believed a subsequent academic study
lacked evidence that the asymmetric speedbump had a negative impact on
liquidity, trading costs or execution quality.\114\
---------------------------------------------------------------------------

    \110\ See XTX Letter I at 2; CTC Letter at 3.
    \111\ See XTX Letter I at 1-2.
    \112\ See id.
    \113\ See XTX Letter I at 8.
    \114\ See XTX Letter II at 8-9.
---------------------------------------------------------------------------

    Nine commenters were concerned that the proposal could negatively
impact market quality.\115\ Three commenters noted that an asymmetric
speedbump could give a misleading impression of the availability of
firm quotes and therefore result in illusory quotes or liquidity.\116\
One commenter stated that although the proposal may enhance displayed
liquidity on EDGA, such displayed liquidity would be ``conditional and
less accessible'' since liquidity providers would be likely to quote
larger sizes and tighter spreads only because of their ability to back
away from these quotes during the delay.\117\ One commenter expressed
concern about the potential for an increase in quote fading at other
exchanges resulting in adverse change to the NBBO, which could
ultimately reduce the incentive for liquidity providers to post a
larger size on EDGA.\118\ One commenter stated that the proposal does
not explain how it would incentivize ``tighter quotes or other
benefits.'' \119\Another commenter suggested that the proposal
functions as an ``opaque rebate'' to liquidity providers because it
affords them an advantage by allowing them to avoid adverse executions,
and the economic value of this advantage is not quantifiable in
advance.\120\ This commenter suggested that the use of structural
incentives such as LP2 raises concern that transparent pricing will be
replaced by advantages that are difficult to quantify, and such
advantages could impact the efficacy of Rule 610T, the Transaction Fee
Pilot.\121\
---------------------------------------------------------------------------

    \115\ See Black Rock Letter at 1; Citadel Letter at 10; FIA
Letter at 1; Healthy Markets Letter at 7; Hudson River Trading
Letter at 3-4; MMI Letter at 2; RBC Letter at 1-2; Tabb Group Letter
at 2; T. Rowe Price Letter at 2.
    \116\ See Black Rock Letter at 3; FIA Letter at 2; RBC Letter at
2.
    \117\ See Hudson River Trading Letter at 3.
    \118\ See T. Rowe Price Letter at 2.
    \119\ See SIFMA Letter at 2.
    \120\ See Hudson River Trading Letter at 4.
    \121\ See id.
---------------------------------------------------------------------------

    Two commenters were concerned about the potential for the proposal
to have a negative impact on Intermarket Sweep Orders (``ISOs'').\122\
One commenter suggested that it would be likely that the EDGA portion
of an ISO order would be filled at a worse price than other portions of
the order since EDGA liquidity providers would be able to reprice
displayed quotes based on recent market data.\123\ The other commenter
believed that by the time the investor's order would exit the delay,
the order it would have executed against on EDGA would almost certainly
be gone.\124\ Thus, the commenter queried how the market center would
interact with ISOs that are effectively 4 milliseconds old in a
scenario in which a customer seeks to access liquidity across multiple
venues by sweeping the market at a given price level.\125\
---------------------------------------------------------------------------

    \122\ See Citadel Letter at 9; Healthy Markets Letter at 14.
    \123\ See Citadel Letter at 4.
    \124\ See Healthy Markets Letter at 14.
    \125\ See id.
---------------------------------------------------------------------------

    One commenter suggested that marketable orders would likely be
diverted to competing venues, which would result in increased adverse
executions for liquidity providers on those venues since marketable
orders on EDGA would be less likely to contribute to price
discovery.\126\ Two commenters suggested that because liquidity
providers at exchanges without asymmetric delays would be likely to
bear the costs of this increased adverse selection, spreads would
likely widen at those venues.\127\ One commenter suggested that such
adverse selection would serve to reduce liquidity, degrade price
discovery, and widen spreads market-wide.\128\
---------------------------------------------------------------------------

    \126\ See Hudson River Trading Letter at 3.
    \127\ See Black Rock Letter at 2; Hudson River Trading Letter at
3.
    \128\ See Hudson River Trading Letter at 3.
---------------------------------------------------------------------------

    One commenter suggested that because similar proposals could be
adopted by all or a substantial portion of the U.S. equities market,
the potential impact on market quality and investor protection in such
a scenario should be considered.\129\ One commenter suggested approval
should only be given on a pilot basis in order to limit the proposed
rule change's ``deleterious effects and enable collection of empirical
data for assessing its impact on market quality.'' \130\ One commenter
noted that the proposal may encourage other exchanges to implement
additional and longer delays, which could result in exchanges competing
to execute orders more slowly.\131\
---------------------------------------------------------------------------

    \129\ See id. at 4.
    \130\ See Black Rock Letter at 3.
    \131\ See SIFMA Letter at 2.
---------------------------------------------------------------------------

    One commenter expressed that the proposed 4 millisecond delay would
create ``significant uncertainty of execution (``fill rates'') and
severely impede the ability of long-term investors to access displayed
quotations simultaneously.'' \132\ This commenter noted that MIDAS data
indicated that 15.59% of quotes in large stocks are canceled within one
millisecond, and because that timeframe is only one quarter of EDGA's
proposed delay, it

could be expected that arbitrary cancellation rates would rise
considerably if the proposal were implemented.\133\ One commenter did
not believe that the proposal sufficiently addressed the potential
impact on financial products and asset classes traded on other
venues.\134\ Two commenters were concerned that the proposal would
increase locked and crossed markets.\135\ One commenter did not believe
that the proposal addressed how trades would be conducted during locked
and crossed markets which could frustrate investors receiving best
execution.\136\ The commenter also suggested that by ``enabling those
who submit orders to modify or cancel those orders before execution,
but after'' orders that could potentially match have been presented,
the Exchange ``opens the door'' to potentially ``significant
manipulative or abusive practices, including spoofing'', which should
be addressed.'' \137\ This commenter also questioned whether it was
prudent to link a major market structure rule or delay mechanism to
existing technology such as the high speed microwave connection, since
technology is ``prone to frequent changes.'' \138\
---------------------------------------------------------------------------

    \132\ See T. Rowe Price Letter at 2.
    \133\ See T. Rowe Price Letter at 2 (referencing SEC's Quote
Life Data Series on the MIDAS website).
    \134\ See Healthy Markets Letter at 7.
    \135\ See Healthy Markets Letter at 12; RBC Letter at 2.
    \136\ See Healthy Markets Letter at 12.
    \137\ See id. at 13.
    \138\ See id.
---------------------------------------------------------------------------

    Seven commenters referenced studies on the impact of an asymmetric
speedbump on TSX Alpha, an unprotected exchange in Canada that delayed
liquidity-taking orders, as a means to evaluate and critique the
instant proposal.\139\ One commenter noted that an Australian study on
TSX Alpha suggested that even a millisecond of advance knowledge of
institutional investors' trading intentions is valuable and could lead
to substantial information leakage across venues resulting in an
increase in total transaction costs and a reduction in order book
resiliency.\140\ Another commenter indicated that the Australian study
found that liquidity, in the aggregate, was negatively impacted with
increased market-wide costs for liquidity-takers.\141\ One commenter
noted that after the introduction of the speedbump, TSX Alpha's quoting
at the NBBO fell immediately from 60% to 36%.\142\ This commenter,
while noting the structural differences between the Canadian and US
markets, believed that TSX Alpha is analytically relevant to the
current proposal.\143\ One commenter suggested that the data related to
the impact on speedbumps was unsettled because Australian and Canadian
studies had yielded different conclusions, and noted that the Canadian
study did not examine quote fading.\144\ One commenter indicated the
Canadian study found that TSX Alpha did not impact market-wide
liquidity and further found negative effects for certain participants,
such as buy-side investors.\145\ The commenter also referenced an
Ontario Securities Commission (``OSC'') staff notice that reported the
OSC's own market quality measures did not materially change as a result
of the TSX Alpha speedbump, as well as a survey of market participants
by the OSC that found TSX Alpha added complexity into routing decisions
and that fill rates on Alpha had decreased in certain situations, such
as for orders that are expected to go through multiple price levels or
need to be split and sent to multiple marketplaces simultaneously--
e.g., institutional orders.\146\
---------------------------------------------------------------------------

    \139\ See Black Rock Letter at 2; Healthy Markets Letter at 10;
Leuchtkafer Letter I at 13-14; Leuchtkafer Letter II at 5-6;
Leuchtkafer Letter III at 7; MFA Letter at 2; SIFMA Letter at 2.
    \140\ See MFA Letter at 2.
    \141\ See SIFMA Letter at 2.
    \142\ See Black Rock Letter at 2.
    \143\ See id.
    \144\ See Leuchtkafer Letter II at 5-6.
    \145\ See Leuchtkafer Letter III at 7.
    \146\ See Leuchtkafer Letter III at 7.
---------------------------------------------------------------------------

    The Exchange responded that the proposal is designed to improve
market quality by reducing the adverse selection risk for liquidity
providers in order to encourage the provision of liquidity that is more
aggressively priced with greater depth.\147\ The Exchange indicated
that liquidity takers could choose not to route to EDGA if liquidity
providers did not step up and provide the expected market quality
benefits in terms of increased depth or more aggressive prices.\148\
The Exchange believed that the potential for liquidity takers to route
to alternative venues would incent liquidity providers to improve
market quality since their ability to trade is ``wholly contingent on
attracting liquidity taking orders willing to access their
quotations.'' \149\ The Exchange stated that this is consistent with
the current operation of EDGA liquidity providers.\150\ The Exchange
responded to comments related to the Australian TSX Alpha study and
suggested that the results of the study had been contradicted by a
subsequent study and review performed by Canadian regulators which
concluded that the TSX Alpha speedbump did not have an adverse effect
on the market quality of the Canadian equity markets.\151\ The Exchange
also noted the significant differences between the U.S. and Canadian
equities markets in terms of regulation and market structure, as well
as material differences between the current proposal and the TSX Alpha
speedbump.\152\ The Exchange offered that to the extent that the
Canadian perspective is instructive, the analysis done by Canadian
regulators demonstrates the value of offering innovations similar to
the instant proposal.\153\
---------------------------------------------------------------------------

    \147\ See Exchange Response Letter at 1-2.
    \148\ See id. at 8.
    \149\ See id.
    \150\ See id. at 15-16.
    \151\ See id. at 10. The Exchange referenced a joint study on
the impact of the TSX Alpha redesign conducted by the Investment
Industry Regulatory Organization of Canada and the Bank of Canada,
as well as a review conducted by the Ontario Securities Commission.
See id.
    \152\ See Exchange Response Letter at 11.
    \153\ See id.
---------------------------------------------------------------------------

D. Data and Support

    Five commenters expressed concern that the Exchange did not provide
data to support key assertions within the proposal.\154\ One commenter
stated that the proposal was ``inadequate in light of Susquehanna'' and
noted that the proposal lacked ``quantitative detail'' related to
EDGA's current marketplace, and how EDGA would achieve its stated goals
if the proposal were implemented.\155\ Four commenters indicated that
EDGA did not provide the data necessary to demonstrate that cross-asset
latency arbitrage negatively impacts liquidity on EDGA or that the
proposed asymmetric speed bump would improve market quality.\156\ One
commenter noted that EDGA did not provide ``any data or analysis
regarding how many members could be expected to increase quoting as a
result'' of the proposal.\157\ One commenter stated that EDGA did not
provide data to evaluate the impact of the proposal on winners and
losers--for example, the frequency with which liquidity providers are
expected to use the delay, the impact on retail and institutional
orders, and the impact on ETF market makers.\158\ This commenter
compared EDGA and EDGX market quality and postulated that the ``lower
market quality of quotes on EDGA'' could be a function of the

different fee and rebate structures of the exchanges.\159\ This
commenter believed that its comparison of market quality on these
exchanges provided insight into the potential impact of the inverted
fee structure on EDGA, and stated that EDGA did not explain how its
inverted fee structure would interact with the proposal to deliver the
benefits claimed.\160\
---------------------------------------------------------------------------

    \154\ See Citadel Letter at 6 and 10; Leuchtkafer Letter I at 2-
5; FIA Letter at 2; Healthy Markets Letter at 5-6; SIFMA Letter at
2.
    \155\ See Leuchtkafer Letter I at 3, 15 (citing Susquehanna
Int'l Grp., LLP v. SEC, 866 F.3d 442 (D.C. Cir. 2017)).
    \156\ See Citadel Letter at 6-7; FIA Letter at 2; Healthy
Markets Letter at 6; SIFMA Letter at 2.
    \157\ See Healthy Markets Letter at 7.
    \158\ See Citadel Letter at 7.
    \159\ See id. at 7 and 10.
    \160\ See id. at 7.
---------------------------------------------------------------------------

    One commenter believed that the MIDAS data referenced by another
commenter, i.e., that 15.59% of orders in large stocks are cancelled
within one millisecond, were irrelevant to whether the delay mechanism
impacted the fill rates for institutional investors because it is
unlikely that latency arbitrage would occur immediately after order
placement.\161\ Another commenter suggested that ``the proposal [has]
some merits'' and suggested that quote and execution traffic should be
examined in order to estimate how much quote fading would occur via
market makers within 4 milliseconds of a price movement.\162\ The
commenter also suggested that it would be beneficial to analyze how the
proposed Transaction Fee Pilot's reduced and no-rebate pricing tiers
might impact liquidity, and how this could be countered by the
introduction of an asymmetric speedbump.\163\
---------------------------------------------------------------------------

    \161\ See XTX Letter II at 4 (referencing T. Rowe Price Letter,
which provided data from the SEC's Quote Life Data Series on the
MIDAS website).
    \162\ See Tabb Group Letter at 5.
    \163\ See Tabb Group Letter at 5.
---------------------------------------------------------------------------

    The Exchange responded by providing data and analysis that it
believes illustrates the latency arbitrage problem. The Exchange
presented a chart displaying markouts for liquidity providers on EDGA
in SPY for July 2019 that was based on whether a transaction involved a
missed cancel--i.e., instances in which a liquidity provider attempted
and failed to cancel or replace their quotation within 4 milliseconds
after an execution.\164\ The Exchange indicated that ``these statistics
illustrate the difference between the execution price and the midpoint
price at the time of the trade and in the milliseconds following an
execution.'' \165\ The Exchange believed the data demonstrated that the
midpoint price moves dramatically in the milliseconds immediately
following transactions involving missed cancels, and that transactions
in this category often involve a handful of faster firms that are
routinely able to predict and profit from prices that are about to
change.\166\ The Exchange expressed that when prices immediately move
against the resting order in the milliseconds following the trade, the
trade was likely to have been executed at a stale price.\167\ The
Exchange further explained its belief that by offering a four
millisecond period for liquidity providers to update their posted
quotations before trading at a stale price, the LP2 delay mechanism
would reduce the effectiveness of latency arbitrage strategies.\168\
---------------------------------------------------------------------------

    \164\ See Exchange Response Letter at 3-4, Appendix A.
    \165\ See id. at 3.
    \166\ See id.
    \167\ See id.
    \168\ See id. at 2, 4.
---------------------------------------------------------------------------

    In response to the information provided by the Exchange, one
commenter suggested that the sample selection in the chart does not
necessarily show stale quotes being picked off by latency arbitrageurs
in Chicago, but rather may demonstrate that the SPY signal to cancel is
coming from somewhere closer than Chicago, or perhaps that some or all
of the EDGA market makers use something faster than fiber.\169\ This
commenter also suggested that based on the graphs provided by the
Exchange, the proposal could result in providing an ``investor-funded
subsidy'' of $900 a day or more in SPY to EDGA market makers.\170\ This
commenter also suggested that the data likely shows the effect of
investor equities market sweeps as opposed to latency arbitrage
activity based on the futures markets in Chicago.\171\
---------------------------------------------------------------------------

    \169\ See Leuchtkafer Letter III at 3.
    \170\ See id. at 5.
    \171\ See id. at 6.
---------------------------------------------------------------------------

E. Impact of the SIP Disseminating Manual, Unprotected Quotes

    One commenter expressed support for the inclusion of EDGA's
unprotected quote in the SIP, and ultimately emphasized that there
should be an appropriate modifier denoting the unprotected status.\172\
In its second letter, the commenter noted that no market participant
would be required to access EDGA's unprotected quote and thus the
Exchange would stand or fall on its own merits.\173\ The commenter also
stated that it would be reasonable for pegged orders to only peg off
the protected BBO and exclude unprotected quotes, which the Exchange
explained is how the Canadian markets handle the pricing of pegged
orders today in a market with both protected and unprotected
quotes.\174\ The commenter also expressed it would be reasonable to
exclude unprotected quotes from consideration for regulatory references
such as Regulation SHO's price test.\175\
---------------------------------------------------------------------------

    \172\ See XTX Letter I at 5; XTX Letter II at 7.
    \173\ See XTX Letter II at 3.
    \174\ See id. at 6.
    \175\ See XTX Letter II at 6.
---------------------------------------------------------------------------

    Eight commenters expressed concern about the inclusion of EDGA's
quotations to the SIP as manual, unprotected quotes.\176\ Two of these
commenters argued that EDGA quotations should be removed from the
SIP.\177\ One commenter suggested that the inclusion of EDGA's
quotations in the SIP would allow EDGA to free ride the SIP.\178\ Three
commenters were concerned about the potential impact of EDGA quotes on
the pricing of pegged orders, including midpoint orders.\179\ As one
commenter explained, many trading venues use the SIP NBBO for pegged
orders, and to the extent EDGA sets the NBBO, the proposal could impact
mid-point pegging prices on other venues with an inaccessible quotes
that is artificially narrower than those on other venues.\180\ One
commenter suggested considering whether the SIPs should disseminate a
new Protected Best Bid and Offer (``PBBO'') that would not include
EDGA's non-protected quote and how EDGA's non-protected quote should be
used in calculating midpoint values.\181\ One commenter questioned how
the NBBO would be determined when the SIP contains both protected and
unprotected quotes, and whether it would be appropriate for a venue
with only unprotected quotes to publish to the SIP--as well as what the
implications would be for the different SIP Plans and for revenue
sharing.\182\ This commenter also queried how the routing of certain
orders, such as ISOs, would be affected, and whether market
participants would be required to make technological changes as a
result.\183\ Another commenter indicated the dissemination of
unprotected, manual quotes to the SIP would add complexity and
confusion to the national market system that could be harmful to long-
term investors.\184\
---------------------------------------------------------------------------

    \176\ See Black Rock Letter at 3; Citadel Letter at 8; Clearpool
Letter at 3-4; Healthy Markets Letter at 10; Hudson River Trading
Letter at 3; RBC Letter at 3; SIFMA Letter at 3; T. Rowe Price
Letter at 2.
    \177\ See Clearpool Letter at 3-4; Healthy Markets Letter at 13.
    \178\ See Healthy Markets Letter at 12.
    \179\ See Citadel Letter at 9; Healthy Markets Letter at 14;
SIFMA Letter at 3.
    \180\ See Healthy Markets Letter at 14.
    \181\ See SIFMA at 3.
    \182\ See Citadel Letter at 8-9.
    \183\ See id. at 8.
    \184\ See T. Rowe Price Letter at 2.
---------------------------------------------------------------------------

    The Exchange responded to comments suggesting that EDGA's quotation
should be excluded from the NBBO disseminated by the SIP. The Exchange
contended that eliminating EDGA's quotation from the SIP would

only serve to reduce transparency into the best prices available for
securities, which would likely result in investor orders being executed
at worse prices.\185\ The Exchange noted that broker-dealers would
remain free to determine how to use EDGA's manual quotation
information, such as for setting midpoint prices or using it as a
reference price for the execution of customer orders on ATSs or other
off exchange markets.\186\ The Exchange noted the EDGA manual quote
would be identified in SIP feeds in the same manner as manual
quotations disseminated from the NYSE floor, and that firms choosing to
ignore EDGA's quotations could continue to identify the PBBO for order
routing and trade-through compliance purposes, among others.\187\
---------------------------------------------------------------------------

    \185\ See Exchange Response Letter at 13-14.
    \186\ See id. at 14.
    \187\ See id. at 14-15.
---------------------------------------------------------------------------

F. Impact on the National Market System

    Four commenters expressed concern about how the proposal could
impact the National Market System, particularly as it relates to the
publication of manual, unprotected quotations and functions related to
the NBBO.\188\ One commenter questioned whether EDGA would continue to
meet Rule 604 standards for displaying customer limit orders without
protected quote status.\189\ Five commenters were concerned about how
the proposal would impact the calculation of Rule 605 metrics and
execution quality disclosures.\190\ One commenter suggested that the
inclusion of EDGA's quotation in the benchmark used for calculating
execution quality statistics under Rule 605 would allow EDGA to free
ride such metrics.\191\ This commenter explained that because only the
best orders on the exchange would be executed, and statistical measures
of execution quality do not currently account for how many quotations
are ``subject to backing away,'' execution quality metrics would likely
show that EDGA's execution quality is better than execution quality on
other exchanges, even if this is not the case.\192\ Another commenter
suggested that in addition to Rule 605 reporting, EDGA's best bid
should not be used as a reference price for Regulation SHO, best
execution, mid-point executions, or OTC transactions, since it would
not be immediately accessible.\193\
---------------------------------------------------------------------------

    \188\ See Citadel Letter at 8; Healthy Markets Letter at 10-12;
Hudson River Trading Letter at 3; RBC Letter at 3.
    \189\ See Citadel Letter at 8.
    \190\ See Black Rock Letter at 3; Citadel Letter at 8-9; Healthy
Markets Letter at 11-12 and 14-15; Hudson River Trading Letter at 3;
SIFMA Letter at 3.
    \191\ See Healthy Markets Letter at 12 and 14-15.
    \192\ See id. at 12.
    \193\ See Hudson River Trading Letter at 3.
---------------------------------------------------------------------------

    One commenter opined that market data would not be impacted by the
proposal because liquidity providing and quote generating orders would
not be subject to the delay mechanism, and execution information for
those orders would not be delayed once they pass over the
speedbump.\194\
---------------------------------------------------------------------------

    \194\ See Tabb Group Letter at 1.
---------------------------------------------------------------------------

    Three commenters were concerned that the proposal could result in
an increase in locked and crossed markets.\195\ One commenter
questioned whether the proposal is consistent with Rule 610 of
Regulation NMS and was concerned that the proposal did not address
trading during locked and crossed markets, which could increase the
risk of investors not receiving best execution.\196\ One commenter
noted that EDGA would be able to lock and cross automated markets
despite being defined as a manual market, and cautioned that crossed
markets may be more frequent and last longer than expressed in the
proposal.\197\
---------------------------------------------------------------------------

    \195\ See Healthy Markets Letter at 12; Hudson River Trading
Letter at 4 n.7; RBC Letter at 2.
    \196\ See Healthy Markets at 12,14.
    \197\ See RBC Letter at 2.
---------------------------------------------------------------------------

    Nine commenters were concerned that this proposed rule change could
result in increased market complexity if implemented as proposed.\198\
Five commenters were concerned about the potential for this proposal to
establish precedent that could result in substantially similar
proposals from competing exchanges, which could serve to increase
market complexity.\199\ One commenter indicated that the proposal may
actually create an incentive not to trade on EDGA, and suggested that
it would be beneficial to ascertain ``what types of liquidity
incentives are valuable to the market and to the economy.'' \200\ The
commenter explained that because EDGA's inverted pricing model charges
liquidity providers a fee when an order executes, the proposal would
effectively allow liquidity providers to pull their quotes on EDGA as
other markets move and incentivize quote fading to avoid the fee that
would be incurred in the event of an execution.\201\
---------------------------------------------------------------------------

    \198\ See Black Rock Letter at 1; Clearpool Letter at 4; FIA
Letter at 2; Hudson River Trading Letter at 4; Leuchtkafer Letter II
at 5; MMI Letter at 1-2; RBC Letter at 3; SIFMA Letter at 2; T. Rowe
Price Letter at 2 and 3.
    \199\ See Black Rock Letter at 2; Hudson River Trading Letter at
4; RBC Letter at 2; SIFMA Letter at 2; T. Rowe Price Letter at 2.
    \200\ See Tabb Group Letter at 4.
    \201\ See Tabb Group Letter at 4.
---------------------------------------------------------------------------

    One commenter believed that because the proposal would eliminate or
adjust the operation of certain rarely used order types and
instructions, the Exchange was taking steps to reduce the complexity of
its market.\202\
---------------------------------------------------------------------------

    \202\ See XTX Letter I at 6.
---------------------------------------------------------------------------

G. Impact on Best Execution and Broker-Dealer Obligations

    Eight commenters expressed concern about the impact of the proposed
rule change on broker-dealers' regulatory obligations, particularly
with respect to a broker-dealer's obligation to obtain best
execution.\203\ One commenter believed that Commission and FINRA
guidance and the adopting release for Regulation NMS adequately
addressees best execution obligations.\204\ This commenter noted that
the decision to access a manual quotation rests with the broker-
dealer's review of execution quality.\205\ Four commenters conveyed it
would be important to issue new guidance or modernize existing guidance
to address the application of best execution principles to routing
quotes to an unprotected exchange as compared to protected exchanges if
the proposal is approved.\206\ One commenter requested clarification
that broker-dealers do not necessarily have to access or route to an
unprotected venue that displays the best quote.\207\ One commenter
questioned whether EDGA's request to extend the ``Flickering Quote
Exception'' to unprotected quotes would be appropriate, given that this
may result in situations where a quote published on the SIP is locked
or crossed with a protected quote, leading to potential confusion
regarding best execution obligations and executions occurring outside
of the protected NBBO.\208\ One commenter suggested that the proposal
would disincentivize improving the best bid or offer displayed on away
markets.\209\
---------------------------------------------------------------------------

    \203\ See Black Rock Letter at 3; Citadel Letter at 9; Clearpool
Letter at 3-4; Healthy Markets Letter at 11-12; Hudson River Trading
Letter at 4; MFA Letter at 3; RBC Letter at 3; SIFMA Letter at 2.
    \204\ See XTX Markets Letter II at 6-7.
    \205\ See id. at 7.
    \206\ See Black Rock Letter at 3; Healthy Markets Letter at 13-
14; MFA Letter at 3; SIFMA Letter at 3.
    \207\ See SIFMA Letter at 3.
    \208\ See Citadel Letter at 9.
    \209\ See Black Rock Letter at 2.
---------------------------------------------------------------------------

    The Exchange responded to comments related to best execution
concerns. The Exchange posited that the Commission's guidance related
to best execution provided in conjunction with

the adoption of Regulation NMS remained relevant, and broker-dealers
should continue to be able to determine how to best to route their
clients' orders.\210\ The Exchange noted that broker-dealers already
account for different types of execution venues in making best
execution decisions, and the majority of these venues are not national
securities exchanges and do not publicly disseminate a protected
quotation, or display any quotation at all.\211\ The Exchange agreed
with reasoning set forth in the Regulation NMS adopting release
suggesting that that exclusion of manual quotations from the NBBO could
result in broker-dealers ignoring the best available quotations when
executing customer orders.\212\ The Exchange therefore contended that a
similar best execution analysis would apply when determining whether to
route an order to an unprotected exchange disseminating a manual
quotation.\213\ The Exchange further noted that if the proposal does
not yield the intended market quality benefits on EDGA, broker-dealers
would be free to route their clients' orders elsewhere according to
their analysis of the best market for the security under prevailing
market conditions.\214\
---------------------------------------------------------------------------

    \210\ See Exchange Response Letter at 12.
    \211\ See id. at 12-13.
    \212\ See Exchange Response Letter at 14.
    \213\ See Exchange Response Letter at 13.
    \214\ See id.
---------------------------------------------------------------------------

H. Operation of the Delay

    Two commenters noted that there is no precedent for an asymmetric
speedbump in the U.S. equities market.\215\ One commenter noted that
the instant proposal differed from the intentional delays implemented
by NYSE American and IEX in that the 4 millisecond delay is
approximately ten times longer than the 350 microsecond delays on IEX
and NYSE American, and that EDGA proposes to waive order protection for
its quotes, whereas the quotes on IEX and NYSE American would continue
to be protected.\216\ One commenter believed that a delay somewhat
shorter in length than 4 milliseconds would suffice, although the
proposal was a ``step in the right direction.'' \217\
---------------------------------------------------------------------------

    \215\ See Black Rock Letter at 1-2; Citadel Letter at 1.
    \216\ See Tabb Group at 1.
    \217\ See Mollner & Baldauf Letter at 2.
---------------------------------------------------------------------------

    One commenter believed that while the proposed delay is longer in
duration than those of the symmetric speedbumps implemented by IEX and
NYSE American, the four-millisecond speed bump ``appropriately
recognizes the realities of U.S. market structure, where highly
correlated instruments including equities, futures, and ETFs are
variously traded in data centers across the New York-New Jersey metro
area as well as in and around Chicago.'' \218\ This commenter believed
the duration of the proposed delay reasonably reflected the
technological realities of cross-market securities and derivatives
trading and hedging strategies.\219\
---------------------------------------------------------------------------

    \218\ See CTC Letter at 3.
    \219\ See id.
---------------------------------------------------------------------------

    One commenter expressed concern that the proposal was not
sufficiently clear in regard to how the proposed delay mechanism would
operate, particularly in circumstances where intervening actions
occur.\220\ This commenter noted the examples provided by the Exchange
did not address orders of different types or sizes, or orders from
additional market participants.\221\ This commenter posed the following
questions about how a 200 share order that is submitted might interact
with a 100 share order that is resting on the Exchange: (1) Whether the
full 200 share order would be delayed; (2) if 100 shares were delayed,
whether the other 100 shares would be permitted to post; (3) whether
the non-delayed 100 shares would be sent to other market centers; (4)
whether the firm who submitted the resting order that triggered the
delay would be able to modify its order to increase its size in the
interim, perhaps to 200 shares, and the impact of this change; (5)
whether the answers to these questions are dependent upon order types
used or other factors, and if so, what those factors are and how would
they be determinative; (6) whether a new order that is submitted while
a delayed order is waiting would be able to immediately execute against
the now-delayed order once it waits out the four milliseconds, or if it
would also be subject to a delay.\222\ The commenter also requested an
explanation related to why the first cancel or cancel/replace message
entered would be queued and all subsequent messages would be ignored if
a user enters multiple cancel or cancel/replace messages for a
liquidity taking order during the delay period.\223\ The commenter also
inquired about the outcome in a scenario in which a quote is not
canceled for one second in order to comply with the flickering quote
rule.\224\
---------------------------------------------------------------------------

    \220\ See Healthy Markets Letter at 6-7.
    \221\ See id.
    \222\ See id. at 7.
    \223\ See Healthy Markets Letter at 7.
    \224\ See id.
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeEDGA-2019-012 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \225\ to determine whether the proposed
rule change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as stated below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change.
---------------------------------------------------------------------------

    \225\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Exchange Act,\226\ 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: (1)
Section 6(b)(5) of the Exchange Act, which requires, among other
things, that the rules of a national securities exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers;\227\ (2) Section 6(b)(8) of the Exchange Act,
which requires that the rules of a national securities exchange not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act;\228\ and (3) Section
11A of the Exchange Act.\229\
---------------------------------------------------------------------------

    \226\ Id.
    \227\ 15 U.S.C. 78f(b)(5).
    \228\ 15 U.S.C. 78f(b)(8).
    \229\ 15 U.S.C. 78k-1.
---------------------------------------------------------------------------

V. 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 Sections 6(b)(5), 6(b)(8), and 11A of the Exchange Act,
any other provision of the Exchange Act, or any other rule or
regulation under the Exchange Act. 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.\230\
---------------------------------------------------------------------------

    \230\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act 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 Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by October 21, 2019. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
November 4, 2019. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal, 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:
    1. Do commenters agree with the Exchange's assertion that the
proposal would reduce cross-market latency arbitrage and improve market
quality by enabling liquidity providers to maintain tighter spreads for
longer durations and with greater size? Why or why not? How should
enhancements to market quality be measured?
    2. According to several commenters, EDGA liquidity would be
``illusory'' because the Exchange's liquidity providers could update
their quotations while incoming orders are delayed. Do commenters
believe that the proposed rule change would lead to quote fading? Why
or why not? Do commenters believe that the proposed rule change would
impact fill rates? Would the ``illusory'' liquidity be a significant
portion of the Exchange's overall liquidity?
    3. Some commenters assert that the proposal is not unfairly
discriminatory under the Exchange Act because the proposal addresses a
particular behavior as opposed to specific class or type of market
participants. Is this assertion accurate? Why or why not?
    4. Will the proposal increase the risk of adverse selection for
liquidity takers and market participants that are unable to react to
market signals in order to adjust their quotes within four
milliseconds?
    5. Is an intentional delay of four milliseconds necessary to
minimize the effectiveness of latency arbitrage strategies? Will the
delay negate the advantages that trading firms using the latest
microwave connections have over liquidity providers using traditional
fiber connections? Should the delay be shorter or longer to accomplish
this goal? Is four milliseconds an appropriate duration for a delay? Is
such delay consistent with the Act? Why or why not?
    6. Is the proposal tailored in a manner such that its potential
benefits outweigh the potential or likelihood of harm or unintended
consequences to the national market system?
    7. Should the Exchange's unprotected, manual quote be allowed to
lock or cross manual quotations disseminated by another manual market?
Why or why not?
    8. What impact, if any, would the dissemination of an unprotected,
manual quote have on the national market system? Should EDGA's
unprotected, manual quote be disseminated by the SIP? If so, should the
SIP disseminate a modifier to indicate that EDGA's quote is manual?
Should the EDGA quote be used to calculate the NBBO? Should the EDGA
quote be used to calculate midpoint values?
    9. How will the dissemination of EDGA's unprotected, manual quote
impact a broker-dealer's obligation to obtain best execution?
    10. What would be the impact, if any, on the national market system
if other national securities exchanges, with a larger percentage of
overall trading volume, adopted a similar proposal? In particular, how
would the proposal affect market quality?
    11. What are commenters' views on how the proposal would affect
trading activity, in general, and liquidity providers, in particular,
on other markets? Would the LP2 delay mechanism impose systemic risks
and create informational disparities across the national market system?
Would the proposal provide EDGA liquidity providers with the option to
leverage or free ride price discovery that occurs at other trading
venues?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CboeEDGA-2019-012 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-CboeEDGA-2019-012. 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 these filings 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-CboeEDGA-2019-012 and should be
submitted on or before October 21, 2019. Rebuttal comments should be
submitted by November 4, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\231\
---------------------------------------------------------------------------

    \231\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21096 Filed 9-27-19; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 104 (Wednesday, May 30, 2018)]
[Notices]
[Pages 24794-24795]
[FR Doc No: 2018-11546]

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

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OECA-2014-0041; FRL-9975-90-OEI]

Information Collection Request Submitted to OMB for Review and
Approval; Comment Request; NSPS for Glass Manufacturing Plants
(Renewal)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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

SUMMARY: The Environmental Protection Agency (EPA) has submitted an
information collection request (ICR)--NSPS for Glass Manufacturing
Plants (Renewal), EPA ICR Number 1131.12, OMB Control Number 2060-
0054--to the Office of Management and Budget (OMB) for review and
approval in accordance with the Paperwork Reduction Act. This is a
proposed extension of the ICR, which is currently approved through May
31, 2018. Public comments were previously requested via the Federal
Register on June 29, 2017 during a 60-day comment period. This notice
allows for an additional 30 days for public comments. A fuller
description of the ICR is given below, including both its estimated
burden and cost to the public. An agency may neither conduct nor
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.

DATES: Additional comments may be submitted on or before June 29, 2018.

ADDRESSES: Submit your comments, referencing Docket ID Number EPA-HQ-
OECA-2014-0041, to: (1) EPA online using www.regulations.gov (our
preferred method), or by email to [email protected], or by mail to:
EPA Docket Center, Environmental Protection Agency, Mail Code 28221T,
1200 Pennsylvania Ave. NW, Washington, DC 20460; and (2) OMB via email
to [email protected]. Address comments to OMB Desk Officer
for EPA.
    EPA's policy is that all comments received will be included in the
public docket without change, including any personal information
provided, unless the comment includes profanity, threats, information
claimed to be Confidential Business Information (CBI), or other
information whose disclosure is restricted by statute.

FOR FURTHER INFORMATION CONTACT: Patrick Yellin, Monitoring,
Assistance, and Media Programs Division, Office of Compliance, Mail
Code 2227A,

Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington,
DC 20460; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>;
email address: [email protected].

SUPPLEMENTARY INFORMATION: Supporting documents, which explain in
detail the information that the EPA will be collecting, are available
in the public docket for this ICR. The docket can be viewed online at
www.regulations.gov or in person at the EPA Docket Center, WJC West,
Room 3334, 1301 Constitution Ave. NW, Washington, DC. The telephone
number for the Docket Center is<PHONE_NUMBER>. For additional
information about EPA's public docket, visit: http://www.epa.gov/dockets.
    Abstract: The New Source Performance Standards (NSPS) for Glass
Manufacturing Plants (40 CFR part 60, subpart CC) were proposed on June
15, 1979, promulgated on October 7, 1980, and amended on both October
19, 1984 and October 17, 2000. These regulations apply to both existing
and new glass melting furnaces located at glass manufacturing plants.
New facilities include those that commenced construction, modification,
or reconstruction after the date of proposal. Owners and operators of
affected facilities are required to comply with reporting and
recordkeeping requirements for the General Provisions (40 CFR part 60,
subpart A), as well as the specific requirements at 40 CFR part 60,
subpart CC. This includes submitting initial notifications, performance
tests and periodic reports and results, and maintaining records of the
occurrence and duration of any startup, shutdown, or malfunction in the
operation of an affected facility, or any period during which the
monitoring system is inoperative. These reports are used by EPA to
determine compliance with these standards.
    Form Numbers: None.
    Respondents/Affected Entities: Glass manufacturing facilities.
    Respondent's Obligation to Respond: Mandatory (40 CFR part 60,
subpart CC).
    Estimated Number of Respondents: 41 (total).
    Frequency of Response: Initially, semiannually and annually.
    Total Estimated Burden: 850 hours (per year). Burden is defined at
5 CFR 1320.3(b).
    Total Estimated Cost: $327,000 (per year), which includes $238,000
in either annualized capital or operation & maintenance costs.
    Changes in the Estimates: There is no significant change in the
labor hours or cost in this ICR compared to the previous ICR. This is
due to two considerations: (1) The regulations have not changed over
the past three years and are not anticipated to change over the next
three years; and (2) the growth rate for the industry is very low, so
there is no significant change in the overall burden. However, the
calculation of labor costs has been updated to use more recent labor
rates.

Courtney Kerwin,
Director, Regulatory Support Division.
[FR Doc. 2018-11546 Filed 5-29-18; 8:45 am]
 BILLING CODE 6560-50-P