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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Notices
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substantially similar to access to the physical Trading Floor.16
Pursuant to proposed Rule 7670a1C, Floor Participants may use any equipment to access the Virtual Trading Floor and will not need to register devices they use while on the Virtual Trading Floor.17 According to the Exchange, it will identify the Participant organization of each Participant in the Virtual Trading Pit, and the Exchange will not require Floor Participants and Clerks to display badges on the Virtual Trading Floor.18
Floor Participants, however, will be required to inform the Exchange of the IP address that will be used to access the Virtual Trading Floor, which the Exchange states will allow it to create a secure network available only to approved IP addresses. According to the Exchange, the Exchange will deny any outside and not previously approved connections from entering the Virtual Trading Floor and will secure the virtual trading environment and limit access only to Participants approved by the Exchange.19 The Exchange will disable the ability of Participants to record the Virtual Trading Floor through the communication program and states that, pursuant to Rule 7660i, Floor Participants will not be allowed to record any activities on the Trading Floor.20
Pursuant to proposed Rule 7670a1E, the Exchange will require Floor Brokers to enter their orders into an electronic blotter at the same time the Floor Broker announces an order to the Virtual Trading Crowd.21 And pursuant to proposed Rule 7670a1D, the Exchange may determine to require any Floor Market Maker or Floor Broker in the Virtual Trading Pit that attempts to trade against an order represented for execution to express its bid or offer in 16 See id. at 7. The Exchange states that, currently, admission to the physical Trading Floor is limited to Floor Participants, Exchange employees, Clerks employed by Floor Participants and registered with the Exchange, Exchange visitors that receive authorized admission to the Trading Floor pursuant to Exchange policy, and any other persons that the Exchange authorizes admission to the Trading Floor. See id.
17 See proposed Rule 7670a1C. The Exchange represents that Rule 7660 Communications and Equipment will otherwise apply in the same manner to the Virtual Trading Floor as it does to the physical Trading Floor to the extent the context requires. See Amendment No. 1, supra note 6, at 9.
18 See proposed Rule 7670a1B; Amendment No. 1, supra note 6, at 8 n.7.
19 See Amendment No. 1, supra note 6, at 9 n.8.
20 See id. at 13 n.16.
21 See proposed Rule 7670a1E. The electronic blotter will contain a running list of unexecuted orders that have been represented by Floor Brokers on the Virtual Trading Floor.

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a chat available in the Virtual Trading Pit.22 Chats will be visible to all participants in the Virtual Trading Pit and will not be permitted directly between individual Participants.23 The Exchange states that it would require Participants to utilize the chat function if BOX Trading Floor Officials determine that increased volume or activity in the Virtual Trading Crowd warrants mandatory use of the chat feature to maintain a fair and orderly market.24 Further, pursuant to proposed Rule 7670a1G, the Exchange will retain records of the chats, Participant logs, electronic blotter, and any other records related to the Virtual Trading Floor that are subject to the Exchanges record retention obligations under the Act.
Finally, pursuant to proposed Rule 7670a1F, the Exchange proposes that Floor Market Maker quotes will be considered firm in the event the Floor Market Maker is disconnected from the Virtual Trading Floor and the parties have a Meeting of the Minds with respect to the terms of the transaction.25
In the event that a Floor Market Maker is disconnected from the Virtual Trading Crowd, a Floor Market Maker quote would not be considered firm if the quote was provided and the parties did not have a Meeting of the Minds with respect to the terms of the transaction.26
III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act,27 and the rules and regulations thereunder applicable to a national securities exchange.28 In particular, the 22 See proposed Rule 7670a1D. The Exchange states that the chat functionality will be available to Virtual Trading Floor Participants at all times.
See Amendment No. 1, supra note 6, at 11 n.11.
23 See proposed Rule 7670a1D.
24 See Amendment No. 1, supra note 6, at 910.
The Exchange believes that the chat tool and electronic blotter functionality will benefit Virtual Trading Crowd participants due to the limitations of communication software such as limitations on how many people may be heard at the same time in the Virtual Trading Pit or potential buffering or echoing. See id. at 1011.
25 See proposed Rule 7670a1F. According to the Exchanges proposal, a Meeting of the Minds means the contra-sides verbally confirmed participation in the trade.
26 A Floor Market Maker on the physical Trading Floor that experiences issues with internet connection, makes an error, or otherwise is unaware of recent news in a particular option, would be held to a quote verbalized in open outcry. See Amendment No. 1, supra note 6, at 12.
27 15 U.S.C. 78f.
28 In approving this proposed rule change, the Commission has considered the proposed rules
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Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6b5
of the Act,29 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.
As discussed above, the Exchange proposes to adopt rules to enable a Virtual Trading Floor for open outcry trading if the physical Trading Floor becomes inoperable. According to the Exchange, this would allow the Exchange, when the physical Trading Floor becomes inoperable, to more closely replicate open outcry trading virtually than is currently feasible in an all-electronic trading environment. For example, according to the Exchange, the proposal would help to facilitate the execution of larger orders and high-risk and complicated strategies that benefit from human interactions.30 The proposed rule change would provide an environment in which human interactions would be available despite the inoperability of the physical Trading Floor. As a result, by continuing to provide access to open outcry trading when the physical Trading Floor becomes inoperable, the Exchange believes its proposal removes impediments to a free and open market and will ultimately benefit investors, particularly those executing high-risk and complex trading strategies.
The Exchange states that, although the proposed rule change would allow the Exchange to make a Virtual Trading Floor available, the Exchange retains the discretion not to activate the Virtual Trading Floor if the physical Trading Floor becomes inoperable. In making the determination to move to an allelectronic environment, the Exchange will evaluate the factors that caused the physical Trading Floor to become inoperable to determine if it warrants activating the Virtual Trading Floor.31
The Commission finds that the proposed implementation of rules to impact on efficiency, competition, and capital formation. See 15 U.S.C. 78cf.
29 15 U.S.C. 78fb5.
30 See Amendment No. 1, supra note 6, at 1617.
31 Such factors, may include, but are not limited to, the anticipated duration, cause, and nature of the condition, burden on Floor Participants, and whether the condition that caused the inoperability of the physical Trading Floor is affecting the Exchanges operations broadly in a way that makes operating the Virtual Trading Floor difficult or impossible. See id. at 5.

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