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Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices
equity market as described in Rule 7.36
Eb4.
Proposed Rule 6.76POc would describe the Exchanges general process for ranking orders and quotes and would be comparable to Rule 6.76Oa, without any substantive differences. As proposed, Rule 6.76POc would provide that all non-marketable orders and quotes would be ranked and maintained in the Consolidated Book according to price-time priority in the following manner: 1 Price; 2 priority category; 3 time; and 4 ranking restrictions applicable to an order/quote or modifier condition. Accordingly, orders and quotes would be first ranked by price. Next, at each price level, orders and quotes would be assigned a priority category. Orders and quotes in each priority category would be required to be exhausted before moving to the next priority category. Within each priority category, orders and quotes would be ranked by time. These general requirements for ranking are applicable to all orders and quotes, unless an order or quote or modifier has a specified exception to this ranking methodology, as described in more detail below. The Exchange is proposing this ranking description instead of using the concepts of a Display Order Process and Working Order Process in Rule 6.76O. However, substantively there would be no difference in how the Exchange would rank orders and quotes on the Pillar trading platform from how it ranks orders and quotes in the current trading system. For example, a nondisplayed order would always be ranked after a displayed order at the same price, even if the non-displayed order has an earlier working time. In addition, this proposed rule is based on Rule 7.36
Ec.
Proposed Rule 6.76POd would describe how orders and quotes would be ranked based on price. Specifically, as proposed, all orders and quotes would be ranked based on the working price of an order or quote. Orders and quotes to buy would be ranked from highest working price to lowest working price and orders and quotes to sell would be ranked from lowest working price to highest working price. The rule would further provide that if the working price of an order or quote changes, the price priority of an order or quote would change. This price priority is current functionality, but the new rule would use Pillar terminology based on Rule 7.36Ed.
Proposed Rule 6.76POe would describe the proposed priority categories for ranking purposes. As proposed, at each price, all orders and quotes would be assigned a priority
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category. If, at a price, there are no orders or quotes in a priority category, the next category would have first priority. The Exchange does not propose to include in Rule 6.76PO, which sets forth the general rule regarding ranking, specifics about how one or more order or quote types may be ranked and displayed. Instead, as described in more detail below, the Exchange will address separately in new Rule 6.62PO
governing orders and modifiers which priority category correlates to different order types and modifiers. Accordingly, details regarding which proposed priority categories would be assigned to the display and reserve portions of Reserve Orders, which is currently addressed in Rule 6.76Oa1B and a2A, will be addressed in proposed Rule 6.62PO and therefore would not be included in proposed Rule 6.76PO.
The proposed changes are also based on the priority categories for cash equity trading as set forth in Rule 7.36Ee1
3, except for the options-specific reference to orders and quotes rather than just orders as relates to interest ranked Priority 2 and 3.
The proposed priority categories would be:
Proposed Rule 6.76POe1 would specify Priority 1Market Orders, which provides that unexecuted Market Orders would have priority over all other same-side orders with the same working price. As described in greater detail below, a Market Order subject to a Trading Collar would be displayed on the Consolidated Book. In such circumstances, the displayed Market Order would have priority over all other resting orders at that price.
Proposed Rule 6.76POe2 would specify Priority 2Display Orders.
This proposed priority category would replace the Display Order Process. As proposed, non-marketable Limit Orders or quotes with a displayed working price would have second priority. For an order or quote that has a display price that differs from the working price of the order or quote, the order or quote would be ranked Priority 3NonDisplay Orders at the working price.
This priority category is based on how Priority 2Display Orders function on the Exchanges cash equity market, as described in Rule 7.36Ee2.
Proposed Rule 6.76POe3 would specify Priority 3Non-Display Orders. This priority category would be used in Pillar rules instead of reference to the Working Order Process. As proposed, non-marketable Limit Orders or quotes for which the working price is not displayed, including the reserve interest of Reserve Orders, would have third priority. This
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priority category is based on how Priority 3Non-Display Orders function on the Exchanges cash equity market, as described in Rule 7.36Ee3.
Proposed Rule 6.76POf would set forth that at each price level within each priority category, orders and quotes would be ranked based on time priority.
The proposed changes are based on Pillar terminology in Rule 7.36Ef1
and 3, except for the non-substantive reference to orders and quotes rather than just orders.
Proposed Rule 6.76POf1 would provide that an order or quote is assigned a working time when it is first added to the Consolidated Book based on the time such order or quote is received by the Exchange. This proposed process of assigning a working time to orders is current functionality and is substantively the same as current references to the time of original order entry found in several places in Rule 6.76O. This proposed rule uses Pillar terminology based on Rule 7.36Ef1
without any substantive differences. To provide transparency in Exchange rules, the Exchange further proposes to include in proposed Rule 6.76POf how the working time would be determined for orders that are routed.
As proposed:
Proposed Rule 6.76POf1A
would specify that an order that is fully routed to an Away Market on arrival, per proposed Rule 6.76APOb1, would not be assigned a working time unless and until any unexecuted portion of the order returns to the Consolidated Book. The Exchange notes that this is the current process for assigning a working time to an order and uses Pillar terminology based on Rule 7.36
Ef1A without any substantive differences.
Proposed Rule 6.76POf1B
would specify that for an order that, on arrival, is partially routed to an Away Market, the portion that is not routed would be assigned a working time. If any unexecuted portion of the order returns to the Consolidated Book and joins any remaining resting portion of the original order, the returned portion of the order would be assigned the same working time as the resting portion of the order. If the resting portion of the original order has already executed and any unexecuted portion of the order returns to the Consolidated Book, the returned portion of the order would be assigned a new working time. This process for assigning a working time to partially routed orders is the same as currently used by the Exchange and uses Pillar terminology based on Rule 7.36Ef1B without any substantive differences.

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