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Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices
Order only because it would never be displayed, even if its limit price doesnt lock or cross the contra-side NBBO.
The Exchange believes that the proposed orders and quotes with instructions not to route i.e., NonRoutable Limit Order, ALO Order, and ISOs would streamline the offerings available for options trading on the Exchange by making the functionality the same for both orders and quotes and consolidating the description of nonroutable orders and quotes in proposed Rule 6.62POe. The Exchange believes that using Pillar terminology, including order type names, that is based on the terminology used for cash equity trading will promote clarity and consistency across the Exchanges cash equity and options trading platforms. The Exchange believes that the proposed Non-Routable Limit Order is not novel because it is based on how the PNP, RPNP, and MMRP orders and quotes currently function on the OX system. The Exchange believes that the proposed differences would provide OTP Holders and OTP Firms with greater determinism of when such orders or quotes may be repriced or be cancelled, including providing additional opportunities to cancel such orders.
Similarly, the proposed ALO Order is not novel because it is based in part on how the RALO and MMLO orders and quotes currently function on the OX
system. Finally, the proposed IOC ISO
is not novel for options trading on the Exchange. The proposed DAY ISO and DAY ISO ALO functionality would be new for options trading and are based in part on how such order types function in the Exchanges cash equity market. In addition, the proposed DAY ISO
functionality is consistent with existing Rule 6.95Ob3, which currently provides an exception to locking or crossing an Away Market Protected Quotation if the OTP Holder or OTP
Firm simultaneously routed an ISO to execute against the full displayed size of any locked or crossed Protected Bid or Protected Offer. The Exchange notes that this exception is not necessary for IOC ISOs because such orders would never be displayed at a price that would lock or cross a Protected Quotation; they cancel if they cannot trade. Accordingly, this existing exception in the Exchanges rules contemplates an ISO
that would be displayed, which would mean it would need a time-in-force modifier of Day. In addition, Day ISOs are available for options trading on other options exchanges, and therefore are not novel.57
57 See
supra notes 39, 40.

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The Exchange believes that the proposed additional detail defining Complex Orders to define the legs and components of such orders would promote transparency in Exchange rules.
On Pillar, the only electronicallyentered crossing orders would be QCC
Orders, which is consistent with current functionality. The Exchange believes that the proposed non-substantive differences, including using Pillar terminology and consolidating rule text relating to QCC Orders in proposed Rule 6.62PO, would promote transparency and clarity in Exchange rules. In addition, the Exchange believes that the proposed descriptions of how a QCC
Order priced at the market would be traded would provide transparency regarding at which price such orders would trade.
The Exchange believes that moving the descriptions of orders available only in open outcry from Rule 6.62O to proposed Rule 6.62POh would ensure that these order types remain in the rulebook after the transition to Pillar is complete. For CTB Orders, the Exchange believes that the proposed substantive difference on Pillar to allow a CTB
Order to satisfy any displayed interest including non-Customer interest at better prices than the latest-arriving displayed Customer interest would increase execution opportunities and achieve the goal of a CTB Order, which is to clear priority on the Consolidated Book for orders executed in open outcry. The Exchange also believes that codifying this order type and the associated regulatory obligations would add clarity and transparency in Exchange rules.
The proposed Proactive if Locked/
Crossed Modifier, STP Modifier, and MTS Modifier are not novel and are based on the Exchanges current cash equity modifiers of the same name. The Exchange believes that extending the availability of these existing modifiers to options trading would provide OTP
Holders and OTP Firms with additional, optional functionality that is not novel and is based on existing Exchange rules.
The Exchange further believes that extending the availability of STP
Modifiers to all orders, and not just Market Maker orders and quotes, would provide additional protections for OTP
Holders and OTP Firms.
Market Maker Quotations The Exchange believes that proposed Rule 6.37APO would remove impediments to and perfect the mechanism of a free and open market and a national market system because it is based on current Rule 6.37AO, with
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such changes as necessary to use Pillar terminology. The Exchange believes that consolidating functionality for orders and quotes, and cross referencing NonRoutable Limit Orders and ALO Orders in proposed Rule 6.37APO, rather than restating how quotations would be processed in proposed Rule 6.37APO, would streamline the Exchanges rules and promote transparency and consistency.
Pre-Trade and Activity-Based Risk Controls The Exchange believes that the proposed Rule 6.40PO, setting forth pre-trade and activity-based risk controls, would remove impediments to and perfect the mechanism of a free and open market and a national market system and promote just and equitable principles of trade because the proposed functionality would incorporate existing activity-based risk controls, without any substantive differences, and augment them with additional pre-trade risk controls and related functionality that are based on the pre-trade risk controls currently available on the Exchanges cash equity trading platform. The Exchange believes that the proposed differences are designed to provide greater flexibility to OTP Holders and OTP Firms in how to set risk controls for both orders and quotes. In addition, the Exchange believes that aggregating a Market Makers quotes and orders for purposes of calculating activity-based risk controls would better reflect the aggregate risk that a Market Maker has with respect to its quotes and orders.
The proposed kill switch functionality would also provide OTP Holders and OTP Firms with greater flexibility to provide bulk instructions to the Exchange with respect to cancelling existing orders and quotes and blocking new orders and quotes.
Price Reasonability ChecksOrders and Quotes The Exchange believes that the proposed Rule 6.41PO, setting forth Price Reasonability Checks, would remove impediments to and perfect the mechanism of a free and open market and a national market system because they are based on existing functionality, with differences designed to use Pillar terminology and promote consistency and transparency in Exchange rules.
Specifically, on Pillar, the Exchange proposes to apply the same types of Price Reasonability Checks to both orders and quotes, and therefore proposes to describe those checks in a single ruleproposed Rule 6.41PO.
The proposed rule also provides specificity regarding when the Price
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