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Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices
Makers and Lead Market Makers, is protected by Automation Quotation Adjustments. The Exchange also proposes to note that OPG orders may not route. Both of these amendments represent current System functionality.
This additional information is proposed to bring greater clarity to this TIF.
Options 3, Section 10
The Exchange proposes to make a grammatical correction to Options 3, Section 10 which is non-substantive.
Options 3, Section 13
The Exchange proposes to update incorrect rule references within Options 3, Section 13.
The Exchange proposes to amend various references within Options 3, Section 13 to make clear the manner in which All-Or-None Orders 14 are treated within a PIXL Auction. Specifically, the Exchange proposes to make clear that the term Reference BBO, as described within Options 3, Section 13a2, describes displayed and non-displayed orders, however, All-Or-None Orders are not considered. The Exchange does not consider All-Or-None Orders, until the order is being allocated because the System is unable to determine whether an All-Or-None Order can be satisfied until the System receives responses to the PIXL Order and is able to allocate the PIXL Order. The Exchange proposes to add rule text to make clear where the Reference BBO or the Reference cPBBO 15 is mentioned, whether All-OrNone Orders are included or excluded.
With respect to PIXL entry checks and, thereafter, the treatment of auction responses, All-Or-None Orders are not considered for price checks. The Exchange does consider All-Or-None Orders for allocation purposes. Options 3, Section 13a5Bi, which is not proposed to be amended, provides, If the Initiating Member selected the single stop price option of the PIXL Auction except if it is a Complex Order, PIXL executions 14 Options 3, Section 7b5 provides, An All-orNone Order is a Limit Order or Market Order that is to be executed in its entirety or not at all. An Allor None Order may only be submitted by a Public Customer. All-or-None Orders are non-displayed and non-routable. All-or-None Orders are executed in price-time priority among all Public Customer orders if the size contingency can be met. The Acceptable Trade Range protection in Options 3, Section 15a is not applied to All-Or-None Orders.
The Exchange is proposing to amend Options 3, Section 7b5, please see discussion regarding Allor-None Order on page 9.
15 The term cPBBO means the best net debit or credit price for a Complex Order Strategy based on the PBBO for the individual options components of such Complex Order Strategy, and, where the underlying security is a component of the Complex Order, the National Best Bid and/or Offer for the underlying security. See Options 3, Section 14aiv.

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will occur at prices that improve the stop price, and then at the stop price with up to 40% of the remaining contracts after Public Customer interest is satisfied being allocated to the Initiating Member at the stop price.
However, if only one other participant matches the stop price, then the Initiating Member may be allocated up to 50% of the contracts executed at such price. Remaining contracts shall be allocated pursuant to the algorithm set forth in Options 3, Section 10a1G among remaining quotes, orders and PAN responses at the stop price.
Thereafter, remaining contracts, if any, shall be allocated to the Initiating Member. The allocation will account for Surrender, if applicable.

Options 3, Section 10 considers AllOr-None Orders that can be satisfied.
This proposal clarifies the current System operation.
The Exchange also proposes to add rule text, within Options 3, Section 13f, to provide that with respect to a PIXL Order for the account of a Public Customer that is paired with an order for the account of another Public Customer, that All-or-None Orders that can be satisfied are included within the Reference BBO. The Exchange considers All-Or-None Orders when checking the Order Book for other Public Customer Orders. The proposed rule text within Options 3, Section 13f clarifies the current System operation. The addition of including Reference BBO is necessary with respect to Complex Orders because a Complex Public Customer-to-Public Customer Cross Order cannot trade equal to or through a non-displayed price. The Complex Public Customer-to-Public Customer Cross Order would be rejected if the result were that it would trade at a price equal to or through the cPBBO.
The Exchange proposes to note including Reference BBO within Options 3, Section 13b2C and 13f to conform the rule text throughout the rule. These amendments represent current System operation. The Reference BBO also pertains to Complex Orders because the cPBBO is derived from displayed quotes for the individual legs.
These amendments are intended to bring greater clarity to the representation of All-Or-None Orders within this Rule.
The Exchange proposes to amend Options 3, Section 13 in various places to replace one minimum price improvement increment, with $0.01.
This amendment is non-substantive.
The Exchange proposes amendments to Options 3, Section 13b7 and 8 to clarify the rule text. The proposed amendments are non-substantive and are similar to amendments recently made to BX Options 3, Section 13iiI.

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The Exchange proposes to add some context to the rule to better reflect the current System operation. First, the Exchange purposes to add the word execution in the first sentences of Options 3, Section 13 b7 and 8. The execution price of the PIXL Auction is utilized to compare to the price of an order on the Limit Order book. The Exchange utilizes the execution price today on Phlx. Adding the word execution makes clear to members that the initial PIXL Order stop price is not utilized to compare the same side of the market transactions at execution. If the potential execution price of the PIXL
Order would be the same or better than the price of an order on the Limit Order book on the same side of the market as the PIXL Order then, today, the PIXL
Order would be executed at a price $0.01 better than such limit order, regardless of whether such limit was a Public or Non-Public Customer Order.
Second, while the phrase or better is not clearly specified in the rule text, today, the System captures cases where PAN responses provide price improvement for the PIXL Order at prices that are crossed with the same side interest mentioned above. Third, the remainder of the changes are grammatical and technical in nature.
The Exchange is creating two separate sentences for readability.
The remainder of the proposed changes within Options 3, Section 13
are grammatical or technical in nature and therefore non-substantive.
Options 3, Section 15
The Exchange proposes to amend Options 3, Section 15c1 to make clear that the Anti-Internalization functionality does not apply during the Opening Process described within Options 3, Section 8. A similar change was recently made to BXs Rules.16 The Exchange proposes to clarify that AntiInternalization does not apply during an Opening Process or reopening following a trading halt, pursuant to Options 3, Section 8, to provide more specificity on how this functionality currently operates. The same procedures used during an Opening Process are used to reopen an option series after a trading halt, and therefore proposes to specify that Anti-Internalization will not apply during the Opening Process i.e., the opening and halt reopening processes.
During the Opening Process, Lead Market Makers are able to observe the primary market and then determine how they would like to submit a Valid Width 16 See Securities Exchange Act Release No. 89759
September 3, 2020. 85 FR 55877 September 10, 2020 SRBX2020023.

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