Quiero saber acerca de...

29654

Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES2

investors and the public interest, consistent with Section 6b5 of the Exchange Act,214 because it will provide the Exchange with information necessary to carry out its oversight role.
Without being able to identify the source and terms of a particular order, the Exchanges ability to adequately surveil its market, with or through another SRO, for trading inconsistent with applicable regulatory requirements would be impeded. In order to promote compliance with Rule 201 of Regulation SHO, proposed Rule 25080b3
provides that when a short sale price test restriction is in effect, the execution price of the short sale order must be higher than i.e., above the best bid, unless the sell order is marked short exempt pursuant to Regulation SHO.
Rule 25080Execution and Price Time Priority Proposed Rule 25080 governs the execution of orders on the BSTX
System, providing a price-time priority model. The proposed rule provides that orders of BSTX Participants shall be ranked and maintained in the BSTX
Book according to price-time priority, such that within each price level, all orders shall be organized by the time of entry. The proposed rule further provides that sell orders may not execute a price below the best bid in the marketplace and buy orders cannot execute at a price above the best offer in the marketplace. Further, the proposed rule ensures compliance with Regulation SHO, Regulation NMS, and the LULD Plan, in a manner consistent with the rulebooks of other national securities exchanges.215
The Exchange believes that proposed Rule 25080 is consistent with Section 6b5 of the Exchange Act 216 because it is designed to promote just and equitable principles of trade and foster cooperation and coordination with persons facilitating transactions in securities by setting forth the order execution priority scheme for Security transactions. Numerous other exchanges similarly operate a price-time priority structure for effecting transactions. The proposed rule also does not permit unfair discrimination among BSTX
Participants because all BSTX
Participants are subject to the same price-time priority structure. In addition, the Exchange believes that specifying in proposed Rule 25080b3
that execution of short sale orders when a short sale price test restriction is in 214 15

U.S.C. 78fb5.
e.g., Cboe BZX Rule 11.13a23
governing regular trading hours.
216 15 U.S.C. 78fb5.
215 See
VerDate Sep<11>2014

18:31 Jun 01, 2021

Jkt 253001

effect must occur at a price above the best bid unless the order is market short exempt, is consistent with the Exchange Act because it is intended promote compliance with Regulation SHO in furtherance of the protection of investors and the public interest.
Rule 25090BSTX Risk Controls Proposed Rule 25090 sets forth certain risk controls applicable to orders submitted to the BSTX System. The proposed risk controls are designed to prevent the submission and execution of potentially erroneous orders. Under the proposed rule, the BSTX System will reject orders that exceed a maximum order size, as designated by each BSTX
Participant. The Exchange, however may set default values for this control.
The proposed rule also provides a means by which all of a BSTX
Participants orders will be canceled in the event that the BSTX Participant loses its connection to the BSTX
System. Proposed Rule 25090c provides a risk control that prevents incoming limit orders from being accepted by the BSTX System if the orders price is more than a designated percentage away from the National Best Bid or Offer in the marketplace.
Proposed Rule 25090d provides a maximum order rate control whereby the BSTX System will reject an incoming order if the rate of orders received by the BSTX System exceeds a designated threshold. With respect to both of these risk controls price protection for limit orders and maximum order rate, BSTX
Participants may designate the appropriate thresholds, but the Exchange may also provide default values and mandatory minimum levels.
The Exchange believes the proposed risk controls in Rule 25090 are consistent with Section 6b5 of the Exchange Act 217 because they are designed to help prevent the execution of potentially erroneous orders, which furthers the protection of investors and the public interest. Among other things, erroneous orders can be disruptive to the operation of an exchange marketplace, can lead to temporary price dislocations, and can hinder price formation. The Exchange believes that offering configurable risk controls to BSTX Participants, along with default values where a BSTX Participant has not designated its desired controls, will protect investors by reducing the number of erroneous executions on the BSTX System and will remove impediments to and perfect the mechanism of a free and open market 217 15

PO 00000

U.S.C. 78fb5.

Frm 00022

Fmt 4701

Sfmt 4703

system. The proposed risk controls are also similar to existing risk controls provided by the Exchange to Options Participants.
Rule 25100Trade Execution, Reporting, and Dissemination of Quotations Proposed Rule 25100 provides that the Exchange shall collect and disseminate last sale information for transactions executed on the BSTX
system. The proposed rule further provides that the aggregate of the bestranked non-marketable Limit Orders, pursuant to Rule 25080, to buy and the best-ranked non-marketable Limit Orders to sell in the BSTX Book shall be collected and made available to quotation vendors for dissemination.
Proposed Rule 25100 further provides that the BSTX System will operate as an automated market center within the meaning of Regulation NMS and will display automated quotations at all times except in the event of a system malfunction.218 In addition, the proposed Rule specifies that the Exchange shall identify all trades executed pursuant to an exception or an exemption of Regulation NMS. The Exchange will disseminate last sale and quotation information pursuant to Rule 602 of Regulation NMS and will maintain connectivity to the securities information processors for dissemination of quotation information.219 BSTX Participants may obtain access to this information through the securities information processors.
Proposed Rule 25100d provides that executions that occur as a result of orders matched against the BSTX Book, pursuant to Rule 25080, shall clear and settle pursuant to the rules, policies, and procedures of a registered clearing agency. Rule 25100e obliges BSTX
Participants, or a clearing member/
participant clearing on behalf of a BSTX
Participant to honor trades effected on the BSTX System on the scheduled settlement date, and the Exchange shall not be liable for the failure of BSTX
218 17 CFR 242.600b4 and 5. The general purpose of an exchange being deemed an automated trading center displaying automated quotations relates to whether or not an exchanges quotations may be considered protected under Regulation NMS. See Exchange Act Release No.
51808, 70 FR 37495, 37520 June 29, 2005. Other trading centers may not effect transactions that would trade through a protected quotation of another trading center. The Exchange believes that it is useful to specify that it will operate as an automated trading center at this time to make clear to market participants that it is not operating a manual market with respect to Securities.
219 17 CFR 242.602.

E:FRFM02JNN2.SGM

02JNN2