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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices
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Midpoint Orders would execute against RML Orders resting on the MEMX Book at the Midpoint Price in relative time priority in accordance with Exchange Rule 11.10 as follows: 1 First against RML Orders that are designated to be identified as RML Interest pursuant to proposed Exchange Rule 11.22b; and 2 then against RML Orders that are not designated to be identified as RML
Interest pursuant to proposed Exchange Rule 11.22b. Thus, RML Orders that are designated to be identified as such for purposes of the Retail Liquidity Identifier, as described above, would be executed ahead of previously-received RML Orders that are not designated to be identified as such.39 The execution of multiple RML Orders that are designated to be identified as such would be determined vis-a-vis each other based on time priority. Similarly, the execution of multiple RML Orders that are not designated to be identified as such would be determined vis-a-vis each other based on time priority.
The Exchange believes it is appropriate to provide priority to RML
Orders that are designated to be identified as such for purposes of the Retail Liquidity Identifier over orders that are not so designated because the Retail Liquidity Identifier is likely to be an important factor in attracting RMOs to send Retail Midpoint Orders, and thus increases the likelihood of execution for resting RML Orders. Thus, similar to the priority afforded to orders that are displayed on the MEMX Book, which receive priority because they contribute to price discovery and attract liquidity to the Exchange, the Exchange believes that designated RML Orders resulting in the dissemination of the Retail Liquidity Identifier should receive priority over those that do not.
The following examples, which the Exchange proposes to codify in proposed Exchange Rule 11.22c3B
as slightly modified to conform with the Rules context, illustrate how the Exchange would handle orders under the proposed RML Program:
Assume the following facts:
The NBBO for security ABC is $10.00$10.10.
User 1 enters an RML Order that is not designated to be identified as RML
Interest to buy ABC for 500 shares. The RML Order is posted to the MEMX Book as an RML Order to buy ABC at $10.05.
39 The Exchange notes that this aspect of the proposed RML Program is different than the IEX
Retail Program since the IEX Retail Program does not offer the ability to elect whether to designate an IEX RLP Order to be identified as such for purposes of IEXs Retail Liquidity Identifier, as described above.

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User 2 then enters an RML Order that is designated to be identified as RML Interest to buy ABC for 500 shares.
The RML Order is posted to the MEMX
Book as an RML Order to buy ABC at $10.05. The Exchange publishes through the MEMOIR Depth and MEMOIR Top data products and through the appropriate SIP a Retail Liquidity Identifier indicating the presence of designated RML Interest of at least one round lot to buy ABC.
User 3 then enters a Pegged Order with a Midpoint Peg instruction to buy ABC for 500 shares. The Pegged Order is posted to the MEMX Book as a Pegged Order to buy ABC at $10.05.
User 4 then enters a Limit Order with a Non-Displayed instruction to buy ABC at $10.07 for 100 shares, which is posted to the MEMX Book.
There are no other orders resting on the MEMX Book.
Example 1: Retail Member Organization enters a Retail Midpoint Order to sell 1,200 shares of ABC. The Retail Midpoint Order will execute in the following order:
First, against the full size of User 4s buy order for 100 shares at $10.05
because it is priced more aggressively than the Midpoint Price, and thus, it is eligible to execute against a Retail Midpoint Order, it has priority over the RML Orders resting on the MEMX Book, and it executes at the Midpoint Price pursuant to proposed Exchange Rule 11.22c2;
second, against the full size of User 2s buy order for 500 shares at $10.05
because it has priority over User 1s RML Order that is not designated to be identified as RML Interest pursuant to proposed Exchange Rule 11.22c3Ai and ii; and third, against the full size of User 1s buy order for 500 shares at $10.05.
The Retail Midpoint Order does not execute against User 3s buy order because User 3s buy order is not an RML Order. The Retail Midpoint Order is filled for 1,100 shares and the balance of 100 shares is cancelled back to the Retail Member Organization. The Exchange removes the Retail Liquidity Identifier previously disseminated through the MEMOIR Depth and MEMOIR Top data products and through the appropriate SIP as there is no longer designated RML Interest of at least one round lot to buy ABC.
Example 2: Assume the same facts above, except that User 3 enters a Limit Order with a Displayed instruction to buy 50 shares of ABC at $10.06, which is posted to the MEMX Book. The incoming Retail Midpoint Order to sell 1,200 shares of ABC will execute in the following order:

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First, against the full size of User 4s buy order for 100 shares at $10.05
because it is priced more aggressively than User 3s buy order and is priced more aggressively than the Midpoint Price, and thus, it is eligible to execute against a Retail Midpoint Order, it has priority over the RML Orders resting on the MEMX Book, and it executes at the Midpoint Price pursuant to proposed Exchange Rule 11.22c2;
second, against the full size of User 3s buy order for 50 shares at $10.05
because it is priced more aggressively than the Midpoint Price, and thus, it is eligible to execute against a Retail Midpoint Order, it has priority over the RML Orders resting on the MEMX Book, and it executes at the Midpoint Price pursuant to proposed Exchange Rule 11.22c2;
third, against the full size of User 2s buy order for 500 shares at $10.05
because it has priority over User 1s RML Order that is not designated to be identified as RML Interest pursuant to proposed Exchange Rule 11.22c3Ai and ii; and fourth, against the full size of User 1s buy order for 500 shares at $10.05.
The Retail Midpoint Order is filled for 1,150 shares and the balance of 50
shares is cancelled back to the Retail Member Organization. The Exchange removes the Retail Liquidity Identifier previously disseminated through the MEMOIR Depth and MEMOIR Top data products and through the appropriate SIP as there is no longer designated RML Interest of at least one round lot to buy ABC.
Implementation The Exchange proposes that all securities traded on the Exchange would be eligible for inclusion in the RML
Program. If the Commission approves this proposed rule change, the Exchange will implement it within 90 days of approval and will provide notice to Members and market participants of the implementation timeline.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act 40 in general, and furthers the objectives of Section 6b5
of the Act 41 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the 40 15
41 15

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