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Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices
proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchanges website http markets.cboe.com/us/
options/regulation/rule_filings/edgx/, at the Exchanges Office of the Secretary, and at the Commissions Public Reference Room.
II. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 11.1 to allow Users to designate their orders to become eligible for execution at 7:00 a.m. Eastern Time ET during the new Early Trading Session extended hours.
The Exchange currently offers four distinct trading sessions where the Exchange accepts orders for potential execution: 1 The Early Trading Session, which begins at 4:00 a.m. ET
and continues until 8:00 a.m. ET,3 2
the Pre-Opening Session, which begins at 8:00 a.m. ET and continues until 9:30 a.m. ET,4 3 Regular Trading Hours, which begin at 9:30 a.m. ET and continue until 4:00 p.m. ET,5 and 4 the Post-Closing Trading Session, which begins at 4:00 p.m. ET and continues until 8:00 p.m. ET.6
The Exchange recently submitted an immediately effective rule filing which amended the Early Trading Session to extend its hours from a 7:00 a.m. ET
start to a 4:00 a.m. ET start, and to allow Users to begin entering orders into the 3 Early Trading Session means the time between 4:00 a.m. and 8:00 a.m. ET. See Rule 1.5ii.
4 Pre-Opening Session means the time between 8:00 a.m. and 9:30 a.m. ET. See Rule 1.5s.
5 Regular Trading Hours means the time between 9:30 a.m. and 4:00 p.m. ET. See Rule 1.5y.
6 Post-Closing Trading Session means the time between 4:00 p.m. and 8:00 p.m. ET. See Rule 1.5r.

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System prior to the Early Trading Session at 3:30 a.m. ET.7 The Exchange intends to launch the new Early Trading Session extended hours on March 8, 2021.8 As amended, Rule 11.1 now provides that the Exchange will not accept the following orders prior to 4:00
a.m. ET: Orders with a Post Only instruction, ISOs, Market Orders other than those with a TIF instruction of Regular Hours Only or a Stop Price, orders with a Minimum Execution Quantity instruction that also include a TIF instruction of Regular Hours Only, and all orders with a TIF instruction of IOC or FOK. Further, at the commencement of the Early Trading Session, orders entered between 3:30
a.m. and 4:00 a.m. ET will be handled in time sequence, beginning with the order with the oldest time stamp, and will be placed on the EDGX Book, routed, cancelled, or executed in accordance with the terms of the order.
In light of the planned extension of the Early Trading Session, the Exchange seeks to continue to provide Users with the option to submit orders that become eligible for execution during the Early Trading Session beginning at 7:00 a.m.
ET. In particular, the proposed rule change amends Rule 11.1 to provide that at the commencement of the Early Trading Session, orders entered between 3:30 a.m. and 4:00 a.m. ET, will become eligible for execution 4:00 a.m. Start, unless designated as eligible for execution during the Early Trading Session beginning at 7:00 a.m. ET 7:00
a.m. Start. Orders with a 7:00 a.m.
Start designation may be entered between 3:30 a.m. and 7:00 a.m. ET. At each Start time that orders may become eligible for execution in the Early Trading Session 4:00 a.m. or 7:00 a.m.
ET, orders will be handled in time sequence, beginning with the order with the oldest time stamp, and will be placed on the EDGX Book, routed, cancelled, or executed in accordance with the terms of the order.9 The Exchange will not accept the following orders prior to 4:00 a.m. Eastern Time or prior to 7:00 a.m. Eastern Time for orders eligible for a 7:00 a.m. Start:
Orders with a Post Only instruction, ISOs, Market Orders other than those with a TIF instruction of Regular Hours Only or a Stop Price, orders with a 7 See Securities Exchange Act Release No. 90509
November 24, 2020, 85 FR 77310 December 1, 2020 SRCboeEDGX2020056.
8 The Exchange will announce the implementation of the extended Early Trading Session to Members in advance via Trade Desk Notice.
9 A User will be able to designate orders with a 7:00 a.m. Start through the use of a port setting. See also infra note 14.

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Minimum Execution Quantity instruction that also include a TIF
instruction of Regular Hours Only, and all orders with a TIF instruction of IOC
or FOK.
The proposed rule change allows Users to continue to be able to choose to submit orders that become eligible for execution during the Early Trading Session beginning at 7:00 a.m. ET, as they may today in connection with the current Early Trading Session hours.10
As the Exchanges Early Trading Session currently begins at 7:00 a.m. ET and other equities exchanges, including the Exchanges affiliated equities exchanges,11 have early trading sessions that begin at 7:00 a.m. ET,12 the Exchange understands that many market participants have configured their systems for trading beginning at 7:00
a.m. ET and find 7:00 a.m. ET to be a time at which there are additional opportunities across the industry to access and source liquidity. For example, the Exchange understands that retail brokerage firms generally have standard agreements in place with their retail customers which provide that retail customer orders may not become eligible for execution until a specific time, and is aware of at least one such firm on the Exchange that has standard agreements in place with their retail customers that limit this time to 7:00
a.m. ET. The Exchange also understands that multiple liquidity providers wish to continue to participate in the Early Trading Session beginning at 7:00 a.m.
given the particular liquidity and activity present across the U.S. equity markets at this specific time.13 Without a 7:00 a.m. Start designation available, certain retail investors may be limited in their ability to source liquidity that is available at this time during the Exchanges Early Trading Session, and liquidity providers may similarly choose not to participate in this trading session, thereby reducing liquidity available to other market participants and investors.14
10 The Exchange notes that the extended hours are intended to provide market participants with additional opportunities to source and access liquidity for their orders on the Exchange. See supra note 7.
11 The Exchanges affiliated equities exchange are Cboe BZX Exchange, Inc. BZX, Cboe BYX
Exchange, Inc. BYX, and Cboe EDGA Exchange, Inc. EDGA.
12 See e.g., BZX Rule 1.5ee, BYX Rule 1.5ee, EDGA Rule 1.5ii, NYSE Rule 7.34a1, NYSE
American Rule 7.34E, and Nasdaq BX Rule 4120b4, each of which provide that their respective early trading sessions open at 7:00 a.m.
ET.
13 See id.
14 The Exchange is aware are at least one liquidity provider that has expressed that it will not
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