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Federal Register / Vol. 86, No. 26 / Wednesday, February 10, 2021 / Notices
15, except for Automated Quotation Adjustments. The Exchange proposes to remove the phrase except for Automated Quotation Adjustments because, today, an OPG order is not subject to Automated Quotation Adjustments. The Exchange believes that it is consistent with the Act to not apply any risk protections during the Opening Process as the Opening Process itself has boundaries within which orders will be executed. As provided for within Options 3, Section 15c, Automated Quotation Adjustments protections are available to Market Makers and Lead Market Makers only.
Any participant may enter an Opening Only Order. Typically Market Makers and Lead Market Makers submit Valid Width Quotes, as provided for within Options 3, Section 8, during the Opening Process. Further, an Opening Sweep,32 which is utilized by Market Makers and Lead Market Makers, is protected by Automation Quotation Adjustments. The Exchanges proposal to note that OPG orders may not route will bring greater transparency to the rule.
Options 3, Section 10
The Exchanges proposal to make a grammatical correction to Options 3, Section 10 is non-substantive.
Options 3, Section 13
The Exchanges proposal to update certain rule references within Options 3, Section 13 is non-substantive.
The Exchanges proposal to amend various references within Options 3, Section 13 to make clear the manner in which All-Or-None Orders are treated within a PIXL Auction is consistent with the Act as this rule text will bring greater clarity to the current System operation. All-or None Orders are Limit Orders or Market Orders that are to be executed in their entirety or not at all, and are non-displayed.33 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. Today, the System does not consider All-Or-None Orders, until the 32 An Opening Sweep is a one-sided order entered by a Specialist or ROT through SQF for execution against eligible interest in the System during the Opening Process. This order type is not subject to any protections listed in Options 3, Section 15, except for Automated Quotation Adjustments. The Opening Sweep will only participate in the Opening Process pursuant to Options 3, Section 8
and will be cancelled upon the open if not executed. See Options 3, Section 7b6. This definition is being amended herein to update the terms Specialist and ROT to Lead Market Maker and Market Maker.
33 See Options 3, Section 7b5.

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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
is mentioned, whether All-Or-None 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 Exchanges proposal protects investors and the general public by considering the contingency associated with an AllOr-None Order when it can be determined if the All-Or-None Order can be satisfied based on allocation priority and responses received to the PIXL Order.
The Exchanges proposal 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 is consistent with the Act. Today, Phlx does consider All-OrNone 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. Specifically, 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 Exchanges proposal to amend Options 3, Section 13 in various places to replace one minimum price improvement increment, with $0.01
is a non-substantive amendment.
The Exchanges proposed amendments to Options 3, Section 13b7 and 8 are consistent with the Act because they clarify the current rule text by adding or better to make clear that the execution price may be better than an order on the Limit Order Book.
Today, this is the case. This context reflects the current System operation.
Similar amendments were made recently made to BX Options 3, Section 13iiI.
The remainder of the proposed changes within Options 3, Section 13
are grammatical or technical in nature and therefore non-substantive.

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Options 3, Section 15
The Exchanges proposal to amend Options 3, Section 7c3, Opening Only, to correct incorrect rule text, and also add a clarifying sentence is consistent with the Act. The Exchanges proposal to remove the phrase except for Automated Quotation Adjustments because, today, an OPG order is not subject to Automated Quotation Adjustments. As provided for within Options 3, Section 15c, Automated Quotation Adjustments protections are available to Market Makers and Lead Market Makers only. Any participant may enter an Opening Only Order.
Typically Market Makers and Lead Market Makers submit Valid Width Quotes, as provided for within Options 3, Section 8, during the Opening Process. Further, an Opening Sweep, which is utilized by Market Makers and Lead Market Makers, is protected by Automation Quotation Adjustments.
Nasdaq BX, Inc. recently adopted a similar rule.34 This proposal represent current System functionality.
The Exchanges proposal to note that OPG orders may not route is consistent with the Act. This additional information will bring greater clarity to this TIF. This proposal represent current System functionality.
The Exchanges proposal 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 is consistent with the Act. Anti-Internalization will not apply during an Opening Process is consistent with the Act as it would provide more specificity on how this functionality currently operates. During the Opening Process, Lead Market Makers are able to observe the primary market and then determine how they would like to quote. Anti-Internalization is unnecessary during an Opening Process due to the high level of control that Lead Market Makers exercise over their quotes during this process. A
similar change was recently made to BXs Rules.35
Options 3, Section 23
The Exchanges proposal to amend Options 3, Section 23a2, which describes the PHLX Orders data feed, is consistent with the Act. All-or-None Orders are non-displayed and nonroutable. They are executed in price34 See Securities Exchange Act Release No. 89731
September 1, 2020, 85 FR 55524 September 8, 2020 SRBX2020016 Order Approving Proposed Rule Change To Amend BXs Opening Process in Connection With a Technology Migration.
35 See note 16 above.

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