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Federal Register / Vol. 86, No. 17 / Thursday, January 28, 2021 / Notices
the series is less than or equal to the Maximum Composite Width as defined in Rule 5.31a, the series is eligible to open. Additionally, if the Composite Market of a series is not crossed, and the Composite Width of the series is greater than the Maximum Composite Width, but there are i no non-M Capacity a market orders or b buy sell limit orders with prices higher lower than the Composite Market midpoint and ii no orders or quotes marketable against each other, the series is eligible to open.
Once a series become eligible to open, the System conducts the opening auction for the series i.e., determines the opening trade price pursuant to Rule 5.31e2 and opens the series pursuant to Rule 5.31e3. The Exchange may also determine to compel a series to open in the interest of fair and orderly markets, including if the opening width is wider than the Maximum Composite Width, pursuant to Rule 5.31h.
Currently, if a series cannot satisfy these conditions described above and thus is not eligible to open, or if the Composite Market of a series is crossed, the series is ineligible to open.7 When that occurs, the Queuing Period 8 for the series continues including the dissemination of opening auction updates until the Maximum Composite Width Check is satisfied or the Exchange determines to open the series pursuant to Rule 5.31h. The proposed rule change adds that such a series may open pursuant to a forced opening as set forth in proposed Rule 5.31f.9
Specifically, as proposed, if a series in an equity or exchange-traded product ETP option class 10 is unable to open because it does not satisfy the Maximum Composite Width Check described above within a time period which the Exchange determines for all equity and the Composite Bid and the Composite Offer of a series. See Rule 5.31a.
7 See Rule 5.31e1C. The proposed rule change codifies in this provision that a series is not eligible to open if there is no Composite Market.
This is true today and implied by the current rule text. If there were no Composite Market, the System would be unable to perform the Maximum Composite Width Check, thus meaning the series could not satisfy that check and thus would not be eligible to open. This proposed change merely adds this detail to the Rules for additional transparency.
8 The term Queuing Period means the time period prior to the initiation of an opening rotation during which the System accepts orders and quotes in the Queuing Book the book into which Users may submit orders for participation in the opening rotation for participation in the opening rotation for the applicable trading session. See Rule 5.31a.
9 The proposed forced opening process has no impact on the modified opening auction process set forth in Rule 5.31j.
10 The proposed rule change is limited to series in equity and ETP option classes because these classes are eligible for listing on all U.S. options exchanges.

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ETP option classes 11 after the occurrence of the opening rotation trigger for the class pursuant to Rule 5.31d, and the Composite Market is not crossed, the System forces the series to open after that time period upon the Systems observation of an away best bid and offer ABBO with a non-zero offer 12 for the series.13 For a series subject to a forced opening, the opening trade price determination and series open set forth in Rule 5.31e2 and 3
i.e., the opening auction do not occur;
instead, the System opens the series without a trade. This will permit a series to open for trading on the Exchange if the series is open for trading on at least one other options exchange, even though the market for the series on the Exchange may be wide.
The proposed change to Rule 5.31f provides that in the event of a forced opening of a series pursuant to proposed Rule 5.31e4 or a compelled opening of a series pursuant to paragraph h, the System enters all of a Users orders in that series in the Queuing Book into the Book in the manner set forth in current Rule 5.31f, unless a User instructs the System to cancel its market orders or all of its orders, in which case the System enters only the non-cancelled orders into the Book in this manner.
Specifically, they will be processed in accordance with Rule 5.32 as unexecuted orders and quotes are handled following the conclusion of the opening rotation, which describes how the System processes, handles, and executes orders. If any order or quote in the Queuing Book is marketable upon the forced opening and the User does not instruct the System to cancel it as proposed, the System would execute marketable orders subject to the priority rules set forth in Rule 5.32. If an order is marketable against away interest and is eligible for routing, the System may route the order for execution to an away exchange. Any non-marketable order would enter the Book or cancel, subject to the User instructions. This proposed change provides Users with flexibility for automated handling of their orders in the event a series opens with a wide market or is otherwise manually opened when the opening conditions may not otherwise be standard.
If a series satisfies the Maximum Composite Width Check prior to the 11 See Rule 1.5 which permits the Exchange to announce determinations by, among other things, notice, regulatory circular, and specification.
12 Such an ABBO would indicate that an away exchange is open, as it would have disseminated an opening quote.
13 The Exchange currently has a similar forced opening after a specified amount of time for complex order strategies. See Rule 5.33c2C.

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Systems observation of an ABBO for the series, the series opens pursuant to Rule 5.31d2 and 3 i.e., the standard opening auction process occurs for the series. For example, suppose the Exchange determined the forced opening timer to be three minutes. If the opening trigger for a series occurs at 9:30:05 Eastern time but the series does not satisfy the Maximum Composite Width Check after the trigger, the System will force the series open after 9:33:05 Eastern time if it has received an ABBO by that time. However, if the series satisfies the Maximum Composite Width Check at 9:32:30, the series will open in accordance with the normal opening auction process.
Finally, the proposed rule change amends the definitions of Maximum Composite Width and Opening Collar in Rule 5.31a. The term Maximum Composite Width means the amount that the Composite Width of a series may generally not be greater than for the series to open subject to certain exceptions set forth in Rule 5.31e1. The term Opening Collar means the price range that establishes limits at or inside which the System determines the Opening Trade Price for a series. The Opening Collar is determined by determining the midpoint of the Composite Market, and adding and subtracting half of the applicable width amount above and below, respectively, that midpoint. The amounts for the Maximum Composite Width and Opening Collar each apply on a Composite Bid basis and are currently the same for all classes and the Maximum Composite Width amounts are the same as the Opening Collar amounts.
The Maximum Composite Width and Opening Collar amounts are currently specified in these defined terms. The proposed rule change deletes these specified amounts and instead states that the Exchange determines each on a class and Composite Bid basis, which amount the Exchange may modify during the opening auction process which modifications the Exchange disseminates to all subscribes to the Exchanges data feeds that deliver opening auction updates.14 The Exchange believes having flexibility to set these amounts is appropriate so that it may consider the different market models and characteristics of different classes, as well as modify amounts in response to then-current market conditions. The Rules currently permit the Exchange to modify these amounts 14 The Exchange would announce the determinations and any changes to those determinations in accordance with Rule 1.5.

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