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Federal Register / Vol. 86, No. 17 / Thursday, January 28, 2021 / Notices
if a series is eligible to open. If the Composite Market 5 of a series is not crossed, and the Composite Width 6 of the series is less than or equal to the Maximum Composite Width as defined in Rule 21.7a, the series is eligible to open. Additionally, if the Composite Market of a series is not crossed, and the Composite Width of the series is greater than the Maximum Composite Width, but there are i no non-M Capacity a market orders or b buy sell limit orders with prices higher lower than the Composite Market midpoint and ii no orders or quotes marketable against each other, the series is eligible to open.
Once a series become eligible to open, the System conducts the opening auction for the series i.e., determines the opening trade price pursuant to Rule 21.7e2 and opens the series pursuant to Rule 21.7e3. The Exchange may also determine to compel a series to open in the interest of fair and orderly markets, including if the opening width is wider than the Maximum Composite Width, pursuant to Rule 21.7h.
Currently, if a series cannot satisfy these conditions described above and thus is not eligible to open, the series is ineligible to open.7 When that occurs, the Queuing Period 8 for the series continues including the dissemination of opening auction updates until the 5 The term Composite Market means the market for a series comprised of 1 the higher of the thencurrent best appointed Market-Maker bulk message bid on the Exchange and the away best bid ABB
if there is an ABB and 2 the lower of the thencurrent best appointed Market-Maker bulk message offer on the Exchange and the away best offer ABO if there is an ABO. The term Composite Bid Offer means the bid offer used to determine the Composite Market. See Rule 21.7a.
6 The term Composite Width means the width of the Composite Market i.e., the width between the Composite Bid and the Composite Offer of a series. See Rule 21.7a.
7 See Rule 21.7e1C. The proposed rule change codifies in this provision that a series is not eligible to open if there is no Composite Market or if the Composite Market is crossed. This is true today and implied by the current rule text. Rule 21.7e1A and B both state that the Maximum Composite Width Check is only satisfied if the Composite Market of a series is not crossed, and the proposed rule change merely adds the same language to subparagraph C i.e., if the Composite Market of a series is crossed, then neither of the conditions in subparagraph A or B could be satisfied, and the series would be ineligible to open. Additionally, if there were no Composite Market or if it were crossed, the System would be unable to perform the Maximum Composite Width Check, thus meaning the series could not satisfy that check and thus would not be eligible to open.
This proposed change merely adds detail to the Rules for additional transparency.
8 The term Queuing Period means the time period prior to the initiation of an opening rotation during which the System accepts orders and quotes in the Queuing Book the book into which Users may submit orders for participation in the opening rotation for participation in the opening rotation for the applicable trading session. See Rule 21.7a.

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Maximum Composite Width Check is satisfied or the Exchange determines to open the series pursuant to Rule 21.7h.
The proposed rule change adds that such a series may open pursuant to a forced opening as set forth in proposed Rule 21.7f.9 Specifically, as proposed, if a series in an equity or exchangetraded product ETP option class 10 is unable to open because it does not satisfy the Maximum Composite Width Check described above within a time period which the Exchange determines for all equity and ETP option classes 11
after the occurrence of the opening rotation trigger for the class pursuant to Rule 21.7d, and the Composite Market is not crossed, the System forces the series to open after that time period upon the Systems observation of an away best bid and offer ABBO with a non-zero offer 12 for the series.13 For a series subject to a forced opening, the opening trade price determination and series open set forth in Rule 21.7e2
and 3 i.e., the opening auction do not occur; instead, the System opens the series without a trade. This will permit a series to open for trading on the Exchange if the series is open for trading on at least one other options exchange, even though the market for the series on the Exchange may be wide.
The proposed change to Rule 21.7f provides that in the event of a forced opening of a series pursuant to proposed Rule 21.7e4 or a compelled opening of a series pursuant to paragraph h, the System enters all of a Users orders in that series in the Queuing Book into the Book in the manner set forth in current Rule 21.7f, unless a User instructs the System to cancel its market orders or all of its orders, in which case the System enters only the non-cancelled orders into the Book in this manner.
Specifically, they will be processed in accordance with Rule 21.8 as unexecuted orders and quotes are handled following the conclusion of the opening rotation, which describes how the System processes, handles, and executes orders. If any order or quote in the Queuing Book is marketable upon 9 The proposed forced opening process has no impact on the modified opening auction process set forth in Rule 21.7j.
10 The proposed rule change is limited to series in equity and ETP option classes because these classes are eligible for listing on all U.S. options exchanges.
11 See Rule 16.3 which permits the Exchange to announce determinations by, among other things, notice, regulatory circular, and specification.
12 Such an ABBO would indicate that an away exchange is open, as it would have disseminated an opening quote.
13 The Exchange currently has a similar forced opening after a specified amount of time for complex order strategies. See Rule 21.20c2C.

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the forced opening and the User does not instruct the System to cancel it as proposed, the System would execute marketable orders subject to the priority rules set forth in Rule 21.8. If an order is marketable against away interest and is eligible for routing, the System may route the order for execution to an away exchange. Any non-marketable order would enter the Book or cancel, subject to the User instructions. This proposed change provides Users with flexibility for automated handling of their orders in the event a series opens with a wide market or is otherwise manually opened when the opening conditions may not otherwise be standard. If a series satisfies the Maximum Composite Width Check prior to the Systems observation of an ABBO for the series, the series opens pursuant to Rule 21.7d2 and 3 i.e., the standard opening auction process occurs for the series. For example, suppose the Exchange determined the forced opening timer to be three minutes. If the opening trigger for a series occurs at 9:30:05 Eastern time but the series does not satisfy the Maximum Composite Width Check after the trigger, the System will force the series open after 9:33:05 Eastern time if it has received an ABBO by that time. However, if the series satisfies the Maximum Composite Width Check at 9:32:30, the series will open in accordance with the normal opening auction process.
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.14 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6b5 15 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 16 requirement that 14 15
15 15

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