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Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices As such, the proposed rule change is intended to alleviate potential difficulty for Users that generally begin participating in the markets beginning at 7:00 a.m. ET, and to facilitate a fair and orderly market on the Exchange where retail investors and other market participants can benefit from trading opportunities present in the Exchanges Early Trading Session. As such, the proposed 7:00 a.m. Start designation will provide Users with greater control over their orders and more flexibility to carry out their investment strategies and manage their needs based on market conditions. In turn, Users may continue to provide meaningful liquidity and benefit from trading opportunities present on the Exchange throughout the duration of the Early Trading Session.
The Exchange notes that, as proposed, orders eligible for execution beginning at 7:00 a.m. ET will function in the same manner as they currently do today upon the 7:00 a.m. ET commencement of the Early Trading Session and as they will upon the 4:00 a.m. ET commencement for the extended Early Trading Session hours. That is, Users will submit orders eligible for a 7:00 a.m. ET Start during the Early Trading Session in the same manner as they may currently submit orders eligible for execution during the Early Trading Session, and will continue to be able to submit all such orders at the beginning of the early order acceptance period. As orders with a 7:00 a.m. Start designation will not be activated until 7:00 a.m., Users will have through 7:00 a.m. to submit such orders. The Exchange will continue not to accept the same order types listed in Rule 11.1 prior to the commencement of an orders eligible start time in the Early Trading Session. The proposed rule change makes it clear that 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 will continue to be rejected prior to an orders eligible start time in the Early Trading Session, as they are today. Additionally, the System will continue to handle all orders eligible for execution during the Early Trading Session, including those with a 7:00 a.m. Start designation, pursuant to Rule 11.1. In particular, the proposed rule language makes it clear that all orders eligible for execution during the Early Trading Session will continue to be handled in time participate in the Early Trading Session without a 7 a.m. Start feature.

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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, beginning at the Start time either 4:00 a.m. or 7:00
a.m. ET at which they become eligible for execution in the Early Trading Session.15 At 7:00 a.m., orders with a 7:00 a.m. Start designation will simply be handled as any incoming order is handled during the Early Trading Session, and merge, in time sequence, onto the already active EDGX Order Book for the Early Trading Session. A
User must continue to select the appropriate TIF to allow the order to execute in the Early Trading and a port setting will merely permit a User to designate an order that is already marked for the Early Trading Session to become active later in the Early Trading Session. The Exchange notes that the proposal does not extend or otherwise modify any trading hours during which trading is currently permissible on the Exchange but simply permits a User to activate an order at a specific time during an ongoing trading session.
Additionally, the Exchange notes that permitting Users to designate a 7:00 a.m.
ET Start for which orders may become active during an early trading session that begins at 4:00 a.m. is consistent with the rules currently in place on Nasdaq Stock Market LLC Nasdaq.
Nasdaqs early trading session currently begins at 4:00 a.m. and continues until the 9:30 a.m. commencement of Nasdaqs regular trading hours.16
Nasdaq Rule 4703a allows participants to designate a time at which certain orders 17 may become active and includes 7:00 a.m. ET as an available time at which participants may activate such orders entered prior to 7:00 a.m.
ET.18
15 The System may delay the release of 7:00 a.m.
Start orders if the System is experiencing an unusually significant amount of orders with a 7:00
a.m. Start designation that would potentially impact other System performance and processing functions during the Early Trading Session. The Exchange does not anticipate an occasion in which the System would have to implement a delayed release for orders with a 7:00 a.m. Start during the Early Trading Session. As the System does not have unlimited capacity, the proposed System flexibility to delay the release of orders with a 7:00 a.m. Start designation is a reasonable preventative measure to ensure that the System has the capacity to maintain fair and orderly markets in the event that there is an unusually significant amount of orders queued for 7:00 a.m. ET activation.
16 See Nasdaq Rule 4701g.
17 Orders using the SCAN or RTFY routing strategy available on Nasdaq.
18 The Exchange notes that the designation for orders to become active at 7:00 a.m. ET on Nasdaq is similarly a port level setting. See Securities Exchange Act Release No. 83125 April 27, 2018, 83 FR 19586 May 3, 2018 SRNASDAQ2017
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2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6b of the Act.19 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6b5 20 requirements that the rules of an exchange be 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is consistent with the Section 6b5 21 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
In particular, the proposed rule change to allow Users to submit orders that become eligible for execution beginning at 7:00 a.m. ET, once the Exchange extends its Early Trading Session hours to begin at 4:00 a.m. ET, will remove impediments to and perfect the mechanism of a free and open market and national market system and will benefit investors by continuing to provide Users with the option to activate their orders for execution beginning at 7:00 a.m. ET and thus the opportunity to continue to source and access liquidity at a specific time in which there are additional trading opportunities in the markets. The Exchange does not believe that the proposed rule change will present any unique or novel issues nor affect the maintenance of a fair and orderly market, as many market participants have configured their systems for trading beginning at 7:00 a.m. ET in line with the commencement of the early trading sessions on other equities exchanges, including the Exchanges affiliated equities exchanges.22 Rather, the proposed rule change is designed to benefit investors, as well as overall liquidity in the Early Trading Session, by providing Users with the option to continue to activate their orders for execution during the Early Trading 19 15
20 15

U.S.C. 78fb.
U.S.C. 78fb5.

21 Id.
22 See
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supra note 12.

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