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Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Notices
Exchange proposes to update the terminology within Options 10, Sections 5, 6 and 9 so that it is consistent with General 4 terminology. The proposed amendments are non-substantive.
Specifically, with respect to Options 10, Section 5, Branch Offices, the manager must be registered as an Options Principal or General Securities Sales Supervisor in accordance with Nasdaq General 4, Section 1220a8 14 and Supplementary Material .04 of that rule.15 The Exchange proposes to replace the qualification Registered Options and Security Futures Principal with Registered Options Principal or General Securities Sales Supervisor.
With respect to Options 10, Section 6, Opening of Accounts, and Options 10, Section 9, Discretionary Accounts, the Exchange proposes to replace the qualification Registered Options and Security Futures Principal with Registered Options Principal to align with the current terminology with General 4, Rule 1220.16
2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6b of the Act,17 in general, and furthers the objectives of Section 6b5 of the Act,18
in particular, in that it is designed to promote just and equitable principles of as applicable, provided that such individual completes a Firm Element program as set forth in proposed Rule 1240 that addresses security futures products before such person engages in security futures activities.
14 General 4, Rule 1220a8 provides, in part, Each member that is engaged in transactions in options with the public shall have at least one Registered Options Principal. In addition, each principal as defined in paragraph a1 of this Rule who is responsible for supervising a members options sales practices with the public shall be required to register with the Exchange as a Registered Options Principal, subject to the following exception. If a principals options activities are limited solely to those activities that may be supervised by a General Securities Sales Supervisor, then such person may register as a General Securities Sales Supervisor pursuant to paragraph a10 of this Rule in lieu of registering as a Registered Options Principal.
15 Supplementary Material .04 to General 4, Rule 1220 provides, in part, Any person required to be registered as a principal who supervises sales activities in corporate, municipal and option securities, investment company products, variable contracts, direct participation program securities and security futures may be registered solely as a General Securities Sales Supervisor. In addition to branch office managers, other persons such as regional and national sales managers may also be registered solely as General Securities Sales Supervisors as long as they supervise only sales activities. BX General 4 is incorporated by reference to Nasdaq General 4.
16 The Exchange also proposes to renumber a paragraph within Options 10, Section 9a from 2
to 3 as there are currently two sections numbered as 2.
17 15 U.S.C. 78fb.
18 15 U.S.C. 78fb5.

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trade and to protect investors and the public interest.
Options 2, Section 10
The Exchanges proposal to amend Options 2, Section 10, Directed Market Makers, to more explicitly describe, within subparagraph a1 of that rule, the price at which a Directed Market Maker must be quoting at to execute against the Directed Order is consistent with the Act. Pursuant to Options 3, Section 4b6, A quote will not be executed at a price that trades through another market or displayed at a price that would lock or cross another market.
If, at the time of entry, a quote would cause a locked or crossed market violation or would cause a tradethrough violation, it will be re-priced to the current national best offer for bids or the current national best bid for offers and displayed at one minimum price variance above for offers or below for bids the national best price.
The re-priced quote may be better than the NBBO but non-displayed on BX.19
Making clear that quoting at the Exchanges best price means quoting at the better of the internal BBO or the NBBO will bring greater clarity to the Directed Market Maker rule.
Options 3, Section 26
The Exchanges proposal to amend Options 3, Section 26, Message Traffic Mitigation, to replace its current rule with a rule identical to Phlx Options 3, Section 26 is consistent with the Act.
The proposal will harmonize BXs Options 3, Section 26 with Phlxs Options 3, Section 26 without an impact to the way BX mitigates message traffic today.
Removing current Options 3, Section 26a, which describes how BX would periodically delist options with an average daily volume of less than 100
contracts and determine the ADV for each series listed on BX and monthly, delist the current series and not list the next series after expiration where the ADV is less than 100 contracts, is consistent with the Act. Options 3, Section 26a was intended to mitigate message traffic by requiring the Exchange to delist certain options.
While, today, BX does not delist options in accordance with Options 3, Section 26a, BX does delist options pursuant to Options 4, Section 5.20 In addition, BX recently filed to delist additional intervals across its weekly programs to See supra note 3.
BX currently delists options pursuant to Options 4, Section 5 at Supplementary Material .01d, Supplementary Material .03d, Supplementary Material .04f, and Supplementary Material .07.
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further reduce message traffic.21 The Exchange notes that other Nasdaq affiliated markets also delist according to similar rules.22 The Exchanges process for delisting options pursuant to Options 4, Section 5 protects investors and the public interest because it accomplishes the same objectives as originally intended for delisting pursuant to subparagraph a and ensures mitigation of message traffic by delisting according to Options 4, Section 5.
Removing current BX Options 3, Section 26b, which describes how BX
will implement a replace on queue functionality whereby an outbound quote message that has not been sent, but is about to be sent, will not be sent if a more current quote message for the same series is available for sending is consistent with the Act. Options 3, Section 26b was intended to mitigate message traffic by implementing the replace on queue functionality to reduce the message traffic by disseminating only the most current quote in certain instances where a quote was recently updated. While the Exchange did not implement the replace on queue functionality, BX has been mitigating quotations by delisting pursuant to Options 4, Section 5 and mitigating pursuant to Options 3, Section 26c.
The proposal would protect investors and the public interest because BXs quote mitigation process would remain unchanged with this proposal. Also, BXs quote mitigation process is consistent with Phlxs current process for mitigating quotes. The Exchange believes that despite not implementing the replace on queue functionality, it continues to mitigate quotes in a fair and equitable manner consistent with Phlxs process for mitigating quotes.
Amending current Options 3, Section 26c, as described above, is consistent with the Act because Options 3, Section 26c was intended to mitigate message traffic by disseminating quotes only when the size associated with a bid or offer increases by an amount greater than or equal to a certain percentage established by the Exchange. While, today, the Exchanges System is not disseminating quotes as specified within Options 3, Section 26c, it is 21 See Securities Exchange Act Release No. 91125
February 12, 2021, 86 FR 10375 February 19, 2021 SRBX2020032 Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Options 4, Section 5, To Limit Short Term Options Series Intervals Between Strikes That Are Available for Quoting and Trading on BX.
22 See Phlx, Nasdaq ISE, LLC ISE, Nasdaq GEMX, LLC GEMX and Nasdaq MRX, LLC
MRX Options 4, Section 5.

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