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Federal Register / Vol. 86, No. 149 / Friday, August 6, 2021 / Notices
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cancelled and a new order must be entered. An order receives a new timestamp when that order receives a new price, its size is increased, or is cancelled in full and replaced by a new order. In addition, an order also receives a new timestamp when it is repriced pursuant to Exchange Rule 2614g.5 For example, an order may be repriced pursuant to the Exchanges Display Price Sliding Process if it would be displayed at a price that would lock or cross the Protected Best Bid or Offer PBBO of an away Trading Center.6
In such case, that order would receive a new timestamp.
Exchange Rule 2616a5 currently provides that in the event an order has been cancelled or replaced in accordance with Exchange Rule 2614e, such order only retains its timestamp if such modification involves a decrease in the size of the order, a change to the Max Floor of an order with a Reserve Quantity, or a change in position from A sell to sell short; B sell to sell short exempt; C sell short to sell; D sell short to sell short exempt; E sell short exempt to sell; and F sell short exempt to sell short. Any other modification to an order, including an increase in the size of the order and/or price change, will result in such order losing time priority as compared to other orders in the MIAX Pearl Equities Book 7 and the timestamp for such order being revised to reflect the time of the modification.
The Exchange now proposes to provide that an order will also receive a new timestamp in one additional scenario where the order may not receive a new price. As proposed, an order would also receive a new timestamp when its position is changed via a Cancel/Replace message during a Short Sale Period. Specifically, the Exchange proposes to amend Exchange Rule 2616a5 to provide that a change in position via a Cancel/Replace message from A sell to sell short; B
sell to sell short exempt; C sell short to sell; D sell short to sell short exempt; E sell short exempt to sell;
and F sell short exempt to sell short during a Short Sale Period will result in a change to the orders timestamp. Such modification to an order during a Short Sale Period will result in such order losing time priority as compared to other orders in the MIAX Pearl Equities 5 See, e.g., Exchange Rule 2614g Repricing Processes to Comply with Regulatory Requirements.
6 See Exchange Rule 2614g1 Display Price Sliding Process.
7 Exchange Rule 1901 defines the term MIAX
Pearl Equities Book as the electronic book of orders in equity securities maintained by the System.

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Book and the timestamp for such order being revised to reflect the time of the modification. The Exchange does not propose to change an orders timestamp where a position change is made via a Cancel/Replace message when a Short Sale Period is not in effect.
The need for proposed rule change became apparent as a result of technology changes related to the Exchanges recent implementation of the Reserve Quantity and Minimum Execution Quantity 8 order instructions.9 As a result of the above technology changes and to ensure the ongoing resiliency of the System,10 the reevaluation of an order for execution as a result of a change to the orders position via a Cancel/Replace message during a Short Sale Period will result in that order receiving a new timestamp, including where the orders price remains unchanged.
The Exchange notes that an order will always receive a new timestamp where the order is re-priced, including where that order is re-priced pursuant to the Exchanges Short Sale Price Sliding Process due to a change in position via a Cancel/Replace message.11 However, pursuant to the proposed rule change, a position change via a Cancel/Replace message during a Short Sale Period would now always result in the order receiving a new timestamp, regardless of whether the re-evaluation of the order results in the order being re-priced.
The proposed rule change reflects a necessary technology change that would ensure continued System resiliency and stability. The Exchange notes that the proposed rule change is designed to address a discrete and potentially limited scenario that a Short Sale Period must be in effect when the position change is made via a Cancel/Replace message. If a Short Sale Period is not in effect, an order would retain its timestamp when its position is changed via a Cancel/Replace message. The proposed rule change is no different than where an order may receive a new timestamp when it is not re-priced, such as when an orders size is increased via a Cancel/Replace message or an order is cancelled in full and replaced with a 8 See
Exchange Rule 2614c7.
MIAX Pearl EquitiesReminder:
Announces Further Expansion of its Equity Trading Platform with the Launch of the Minimum Execution Quantity and Reserve Quantity Order Instructions; Both Available July 1st 2021, available at https www.miaxoptions.com/alerts/2021/06/15/
miax-pearl-equities-reminder-announces-furtherexpansion-its-equity-trading June 15, 2021.
10 The term System means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100.
11 See Exchange Rule 2614g3 for a description of the Exchanges Short Sale Price Sliding Process.
9 See
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new order. In both of these cases, the order would be provided a new timestamp and experience a loss in priority. The same would be true under the proposed rule change where an order would receive a new timestamp where its position is changed via a Cancel/Replace message during a Short Sale Period.

Lastly, the Exchange proposes to make two clarifying changes to Exchange Rules 2614e3 and 2616a5. First, the Exchange proposes to add the word Cancel before the word Replace in Exchange Rule 2614e3. This change is to use consistent terminology when referring to Cancel/Replace messages in the Exchanges rules. Second, the Exchange proposes to clarify within Exchange Rule 2616a5 that an order is being modified by the Cancel/Replace message. In part, Exchange Rule 2616a5 states that in the event an order has been cancelled or replaced in accordance with Exchange Rule 2614e above, . . .. The Exchange proposes to replace the phrase cancelled or replaced in Exchange Rule 2616a5
with modified via a Cancel/Replace message. Doing so would clarify within Exchange Rule 2616a5 that the order is being modified, rather than cancelled and replaced with a new order. Neither of the above changes amend the meaning or operation of either rule.
They are simply intended to clarify each rule and to ensure the use of consistent terminology across the Exchanges rulebook.
2. Statutory Basis The proposed rule change is consistent with Section 6b of the Act,12 in general, and furthers the objectives of Section 6b5,13 in particular, because 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 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.
The proposed rule change promotes just and equitable principles of trade because it is similar to other cases today where an order may lose priority when a modification is made via a Cancel/
Replace message. For example, 12 15
13 15

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