Quiero saber acerca de...

jbell on DSKJLSW7X2PROD with NOTICES

Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices Identifier pursuant to proposed Exchange Rule 11.22b such RML
Interest is sometimes referred to herein as designated RML Interest, as further described below, by including a Displayed instruction.18 A User would be able to designate RML Interest for this purpose on an order-by-order basis or on a port-by-port basis. The Exchange notes that, except with respect to a Users ability to elect whether to designate an RML Order to be identified as such for purposes of the Retail Liquidity Identifier, an RML Order is substantially similar in effect to IEXs Retail Liquidity Provider Order IEX
RLP Order offered under the IEX
Retail Program, in that an RML Order is an order that is designed to execute at the Midpoint Price, is only eligible to execute against retail order interest, and may be submitted by any User.19
As further described below, Retail Midpoint Orders and RML Orders would only be eligible to execute at the Midpoint Price. Additionally, as reflected in the proposed definitions of Retail Midpoint Order and RML Order, such orders would only be eligible to execute against each other with the exception that a Retail Midpoint Order would also be eligible to execute against other orders in certain limited circumstances i.e., against displayed odd lot orders and/or non-displayed orders priced more aggressively than the Midpoint Price resting on the MEMX
Book pursuant to proposed Exchange Rule 11.22c2, as further described below. The purpose of limiting Retail Midpoint Orders and RML Orders to interacting with each other subject to the exception of Retail Midpoint Orders being eligible to execute against other orders priced more aggressively than the
Midpoint Price is that the proposed RML Program is designed to provide a mechanism whereby liquidity-providing Users can provide price-improving liquidity at the Midpoint Price specifically to retail investors, and liquidity-removing RMOs submitting orders on behalf of retail investors can interact with such price-improving liquidity at the Midpoint Price, in a deterministic manner. The Exchange notes that this aspect of the proposed RML Program is partially different than the IEX Retail Program. Like an IEX RLP
Order, which is only eligible to execute against IEX Retail Orders, the Exchanges proposed RML Order would only be eligible to execute against Retail Midpoint Orders. However, an IEX
Retail Order is generally eligible to execute against order types other than an IEX RLP Order,20 whereas the Exchanges proposed Retail Midpoint Order would be generally limited to executing against RML Orders subject to the exception of Retail Midpoint Orders being eligible to execute against other orders priced more aggressively than the Midpoint Price. While this aspect of the Exchanges proposal differs from the IEX Retail Program, the Exchange notes that the concept of an order type that is limited to interacting with a specific contra-side order type has previously been approved by the Commission both in the context of liquidity-providing orders for retail programs 21 and in other contexts.22 The Exchange believes the proposed Retail Midpoint Order is analogous to such order types even though a Retail Midpoint Order would be eligible to execute against non-RML Orders where such orders are priced more aggressively than the Midpoint Price because orders
18 A Displayed instruction is an instruction a User may attach to an order stating that the order is to be displayed by the System on the MEMX Book. See Exchange Rule 11.6c1. Under Exchange Rule 11.8c3, Pegged Orders, including Midpoint Peg Orders, are not eligible to include a Displayed instruction; however, as proposed, an RML Order would be eligible to include a Displayed instruction, which would be for the sole purpose of indicating to the Exchange that the User has designated the RML Order to be identified as RML
Interest for purposes of the Retail Liquidity Identifier pursuant to proposed Exchange Rule 11.22b, and inclusion of the Displayed instruction would not indicate to the Exchange that the RML
Order is to be displayed by the System on the MEMX Book. The Exchanges proposal to permit Users to include a Displayed instruction for an RML
Order for this purpose is purely to facilitate the implementation of the Retail Liquidity Identifier by using an existing but otherwise inapplicable instruction type i.e., the Displayed instruction, and the System will otherwise handle an RML
Order with a Displayed instruction as if no Displayed instruction was included.
19 See IEX Rule 11.190b14, which describes the IEX RLP Order. See also IEX Retail Approval Order, supra note 9.

20 See IEX Rule 11.232e3, which describes the priority and order execution processes for IEX
Retail Orders and provides that such orders are eligible to execute against order types other than an IEX RLP Order in certain circumstances, including against other orders during a locked or crossed market, against displayed odd lot orders priced at or better than the Midpoint Price, and against other non-displayed interest at the Midpoint Price.
21 See, e.g., IEX Rule 11.190b14, which states that an IEX RLP Order is only eligible to execute against IEX Retail Orders; Nasdaq PSX Rule 4702b5A, which states that on Nasdaq PSX a Retail Price Improving Order may only execute against a Retail Order.
22 See, e.g., Securities Exchange Act Release No.
82825 March 7, 2018, 83 FR 10937 March 13, 2018 SRNASDAQ2017074 Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1, 2, and 3, to Adopt the Midpoint Extended Life Order the MELO Approval Order. As set forth in the MELO
Approval Order, Nasdaq originally allowed executions of Midpoint Extended Life Orders MELOs only against other eligible MELOs.
Pursuant to Rule 4702b14A Nasdaq today allows executions of MELOs only against eligible MELOs and MELO+CB orders.

VerDate Sep<11>2014

17:21 Sep 07, 2021

Jkt 253001

PO 00000

Frm 00091

Fmt 4703

Sfmt 4703

50413

priced more aggressively than the Midpoint Price comprise only a small amount of the Exchanges volume of orders, and thus, the Exchange expects that Retail Midpoint Orders would mostly interact with RML Orders.
Moreover, the Exchange generally expects RMOs to submit Retail Midpoint Orders when the Retail Liquidity Identifier is disseminated, which indicates that there is available RML Interest of at least one round lot on the MEMX Book, and generally does not expect RMOs to submit Retail Midpoint Orders when the Retail Liquidity Identifier is not disseminated or otherwise to specifically seek to interact with other orders priced more aggressively than the Midpoint Price, particularly as any such orders would be either non-displayed and therefore not known to the RMO or less than a round lot in size, and RMOs could still submit Retail Orders to interact with such liquidity using an order type other than the Retail Midpoint Order as they can today.
As Retail Midpoint Orders and RML
Orders are types of Pegged Orders, and are designed to execute on the Exchange against each other, such orders would not be eligible for routing.23
Retail Liquidity Identifier Under the RML Program, the Exchange proposes to disseminate a Retail Liquidity Identifier through the Exchanges proprietary market data feeds, MEMOIR Depth 24 and MEMOIR
Top,25 and the appropriate securities information processor SIP when designated RML Interest aggregated to form at least one round lot for a particular security is available in the System Retail Liquidity Identifier, provided that such designated RML
Interest is resting at the Midpoint Price and is priced at least $0.001 better than the national best bid NBB or national best offer NBO.
The purpose of the Retail Liquidity Identifier is to provide relevant market information to RMOs that there is available RML Interest on the Exchange, thereby incentivizing them to send Retail Midpoint Orders to the Exchange seeking execution at the Midpoint Price.
The Retail Liquidity Identifier would reflect the symbol and the side buy and/or sell of the designated RML
Interest but would not include the price or size. The Exchange does not believe that such market information constitutes a quote within the meaning of 23 See Exchange Rule 11.8c5, which provides that Pegged Orders are not eligible for routing.
24 See Exchange Rule 13.8a.
25 See Exchange Rule 13.8b.

E:FRFM08SEN1.SGM

08SEN1