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Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices
The second sentence is being amended to add and complex in lieu of single and Complex Orders, and Complex Order Live Auction COLA
for all symbols listed on Phlx. The sentence, as proposed, would state, PHLX Orders is currently provided as part of the TOPO Plus Orders data product. PHLX Orders provides realtime information to enable users to keep track of the single and complex order books. The Exchange believes the proposed sentence is more succinct.
Finally, the Exchange proposes to add a sentence to the end of the description of PHLX Order feed that provides, The feed also provides auction and exposure notifications and order imbalances on opening/reopening size of matched contracts and size of the imbalance.
This additional information will more clearly describe the PHLX Orders feed.
The Exchange also proposes to add the same sentence to the end of the description for the PHLX Depth of Market feed within Options 3, Section 23a3 to also add the same specificity to that feed. The additional sentence reflects the current information provided in both the PHLX Orders and PHLX Depth of Market feeds.
The removal of the word PHLX
within Options 3, Section 23a3 and addition of the word order are nonsubstantive technical amendments.
Options 5, Section 4
The Exchange proposes to amend the sixth sentence of Options 5, Section 4a and make some technical amendments.
As proposed, the sentence would provide, For purposes of this rule, the Phlxs best bid or offer or PBBO does not include All-or-None Orders or Stop Orders which have not been triggered.
The internal PBBO shall refer to the actual better price of an order resting on Phlxs Order Book, which is not displayed, but available for execution, excluding Stop Orders which have not been triggered and All-or-None Orders which cannot be satisfied. Stop Orders must be triggered to be included in the internal PBBO. A Stop Order is not available until such time as its contingency is trigged and then that Stop Order becomes available for execution. Also, the Exchange inadvertently did not include the phrase, which cannot be satisfied when referencing All-or-None Orders within Options 5, Section 4. The limitation is noted in other places within this rule. An All-or-None Order contingency must be met for this order type to execute, otherwise it will be executed at such time as the contingency could be met. Unlike the Stop Order which is only available once
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triggered,24 the All-or-None Order is available for execution once the contingency is met. This proposed amendment reflects current System operation.
Options 8, Section 2
The Exchange proposes to add a sentence within Options 8, Section 2a which provides The following terms as used in the Rules shall, unless the context otherwise indicates, have the meanings herein specified:. The Exchange proposes this sentence for context to the information which follows thereafter. This is a nonsubstantive change.
The Exchange proposes to add a new defined term, Floor Lead Market Maker. This defined term will bring greater clarity to the Options 8 rules.
The Exchange proposes to state, The term Floor Lead Market Maker is a member who is registered as an options Lead Market Maker pursuant to Options 2, Section 12a and has a physical presence on the Exchanges trading floor. This term is currently utilized within the Options 8 rules.
The Exchange proposes to add the word Organization within Options 8, Section 2a5. The word was inadvertently left out. This is not a substantive change. The term Member Organization is a defined term within General 1, Section 117.
Options 8, Section 32
The Exchange proposes to amend Options 8, Section 32 to add FLEX
Option to the list of order types that are available on Phlx. The Exchange proposes to provide that a FLEX Option is as described within Options 8, Section 34. Further, FLEX Options are not eligible for entry by a member for execution through the Options Floor Based Management System FBMS.25
Phlx Options 8, Section 22 provides, 24 Stop orders are inactive until they are elected. Stop orders are elected when either the bid offer is updated to a price equal to or greater less than the stop price of a Buy Sell Stop order or an execution on the Exchange occurs at a price equal to or greater less than the stop price of a BuySell stop order. Stop order election takes place at the end of the transaction that caused the election and at that time the stop order enters the book as a new market or limit order depending on the participant instructions. Stop orders that are electable upon entry are rejected.
25 FBMS, an order management system, is the gateway for the electronic execution of equity, equity index and U.S. dollar-settled foreign currency option orders represented by Floor Brokers on the Exchanges Options Floor. Floor Brokers contemporaneously upon receipt of an order and prior to the representation of such an order in the trading crowd, record all options orders represented by such Floor Broker into FBMS, which creates an electronic audit trail. The execution of orders into Phlxs electronic trading system also occurs via FBMS.

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a Options transactions on the Exchanges Trading Floor shall be executed in one of the following ways:
1 automatically by the Exchange Trading System as provided in applicable Exchange Rules;
2 through the Options Floor Based Management System. Members authorized to operate on the floor are not permitted to execute orders in the Exchanges options trading crowd, except as follows:
A The Exchange may determine to permit executions otherwise than in accordance with subparagraphs 1 and 2 above respecting an option or all options in the event of a problem with Exchange systems.
B In addition, members can execute orders in the options trading crowd pursuant to Options 8, Section 33, Accommodation Transactions cabinet trades, and Options 8, Section 34, FLEX Equity, Index and Currency Options.
C Multi-leg orders with more than 15 legs can be executed in the trading crowd.
D The following split price orders that, due to FBMS system limitations, require manual calculation:
i Simple orders not expressed in the applicable minimum increment sub-MPV
and that cannot be evenly split into two whole numbers to create a price at the midpoint of the minimum increment; and ii complex and multi-leg orders with at least one option leg with an odd-numbered volume that must trade at a sub-MPV price or one leg that qualifies under i above.
E As set forth in Options 8, Section 29ev, members may use the Snapshot feature of the Options Floor Based Management System to provisionally execute orders in the options trading crowd.

Today, FLEX Options are executed in open outcry on the Trading Floor and not through the Options Floor Broker Management System as provided for within Options 8, Section 22a1B.26
The Exchange believes that the addition of FLEX Options within Options 8, Section 34 will make clear the order types that are available for execution on the Trading Floor and also clearly note 26 The Exchange has previously noted that FLEX
may be executed manually. See Securities and Exchange Act Release No. 69471 April 29, 2013, 78 FR 26096 May 3, 2013 SRPhlx201309. The rule change noted that FLEX orders will continue to be executable by Floor Brokers in the trading crowd, rather than through FBMS because FBMS
will not be able to accept FLEX orders, which have varied and complicated terms. Further, the Exchange requires floor brokers or their employees to enter the certain data elements into the Exchanges electronic audit trail in the same electronic format as the required information for equity and index options. Floor brokers or their employees must enter the required information for FLEX Options into the electronic audit trail on the same business day that a specific event surrounding the lifecycle of an order in FLEX including, without limitation, orders, price or size changes, execution or cancellation occurs. See Securities and Exchange Act Release No. 50997 January 7, 2005, 70 FR 2444 January 3, 2013 SRPhlx 200340. See also Options 8, Section 28f.

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