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Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices
Act,9 in particular, in that it designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general protect investors and the public interest.
In particular, the proposed rule change will provide investors with more timely execution of their option orders, while ensuring that there is an adequate exposure of orders in these mechanisms.
Additionally, the proposed change will allow more investors the opportunity to receive price improvement through the mechanisms and will reduce market risk for Participants using the mechanisms.
Finally, as mentioned above, other exchanges have amended their rules to permit response times consistent with those proposed herei.e., no less than 100 milliseconds and no more than 1
second.10 As such, the Exchange believes the proposed rule change would help perfect the mechanism for a free and open national market system, and generally help protect investors and the publics interest.
The Exchange believes the proposed rule change is not unfairly discriminatory because the auction duration would be the same for all Participants. All Participants in the mechanisms have today, and will continue to have, an equal opportunity to receive the broadcast and respond with their best prices during the auction. Additionally, the Exchange believes the reduction in the auction duration reduces the market risk for all Participants. The reduction in the time period reduces the market risk for the Initiating Participant as well as any Participants providing orders in response to a broadcast. Moreover, based on the feedback the Exchange received from its Participants, the Exchange believes that a reduction in 9 15

U.S.C. 78fb5.
supra note 6. The Exchange notes that its Facilitation and Solicitation mechanisms are substantially similar to the Facilitation and Solicitation mechanisms at Nasdaq ISE. The Exchange notes one minor difference. Specifically, ISEs Solicitation Mechanism does not include a surrender quantity provision where BOXs Solicitation Mechanism does. The Exchange believes this is a minor difference and will not have a material impact with respect to the proposed response time discussed herein. Further, as discussed above, Nasdaq ISE has identical rule language to that of the proposed language discussed herein. See Securities Exchange Act Release No.
79352 November 18, 2016, 82 FR 3055 January 10, 2017 Order Approving SRISE201626, a Proposed Rule Change To Modify the Response Times in the Block Mechanism, Facilitation Mechanism, Solicited Order Mechanism, and Price Improvement Mechanism. As such, the Exchange believes the proposed change does not raise any new or novel issues and should be approved by the Commission.

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the auction period to a low of 100
milliseconds would not impair Participants ability to compete in the mechanisms. The Exchange believes these results support the assertion that a reduction in the auction duration would not be unfairly discriminatory and would benefit investors.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange believes the proposal is consistent with Section 6b8 of the Act 11 in that it does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change provides the Exchange flexibility in determining potentially shorter durations for Facilitation and Solicitation auctions does not impose an undue burden on intra-market competition as the Exchange believes that allowing for an auction period of no less than 100
milliseconds and no more than 1 second will benefit Participants utilizing the auction mechanisms. The Exchange believes it is in these Participants best interest to minimize the Facilitation and Solicitation Auction duration while continuing to allow Participants adequate time to respond electronically.
Further, based on the feedback the Exchange received from its Participants, the Exchange believes that a reduction in the auction period to a low of 100
milliseconds would not impair Participants ability to compete in the mechanisms.
The proposed rule allows Participants to respond quickly at the most favorable price while reducing the risk that the market will move against the response.
The Exchange believes that its Participants will be able to compete within a range of no less than 100
milliseconds and no more than 1
second, and that any specific duration within this range is a sufficient amount of time to respond to, compete for, and provide price improvement for orders, and will provide investors and other market participants more timely executions, and reduce their market risk.
The Exchange does not believe its proposed rule change will impose an undue burden on inter-market competition as the Exchange notes other exchanges offer similar mechanisms with similar auction durations.12
For all the reasons stated, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or 11 15

U.S.C. 78fb8.
supra note 6.

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appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19b3Aiii of the Act 13 and Rule 19b4f6 thereunder.14 Because the proposed rule change does not: i Significantly affect the protection of investors or the public interest; ii impose any significant burden on competition; and iii become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19b3A
of the Act 15 and Rule 19b4f6iii thereunder.16
A proposed rule change filed under Rule 19b4f6 17 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4f6iii,18 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange states that waiver of the operative delay will allow the Exchange to immediately decrease the Response time which would allow Participants to respond quickly at their most favorable price, while reducing the risk that the market will move against the response. The Exchange also notes that other exchanges with similar auction mechanisms permit the same 13 15

U.S.C. 78sb3Aiii.
CFR 240.19b4f6.
15 15 U.S.C. 78sb3A.
16 17 CFR 240.19b4f6. In addition, Rule 19b 4f6iii requires the Exchange to give the Commission written notice of the Exchanges intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement.
17 17 CFR 240.19b4f6.
18 17 CFR 240.19b4f6iii.
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