Voglio sapere a riguardo di…

jbell on DSKJLSW7X2PROD with NOTICES2

Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices Proposed Rule 6.62POe2Ci would provide that if the limit price of an ALO Order to buy sell that has been repriced no longer locks or crosses displayed orders or quotes in the Consolidated Book, locks or crosses the Away Market NBBO, or crosses nondisplayed orders or quotes in the Consolidated Book, it would be assigned a working price and display price equal to its limit price. This proposed rule text is similar to proposed Rule 6.62P
Oe1Bi for Non-Routable Limit Orders, with differences to reflect the additional circumstances when an ALO
Order would be repriced based off of contra-side displayed or non-displayed interest in the Consolidated Book.
Proposed Rule 6.62POe2D
would provide that the working price of a resting ALO Order to buy sell that has been repriced would be adjusted to be equal to its display price and would not be adjusted again unless the display price of the order is adjusted if:
The Away Market NBO NBB reprices to be equal to or lower higher than the display price of the resting ALO Order to buy sell proposed Rule 6.62POe2Di; or an ALO Order or Day ISO ALO to sell buy is displayed on the Consolidated Book at a price equal to the working price of the resting ALO Order to buy sell proposed Rule 6.62P
Oe2Dii.
This proposed rule text is similar to proposed Rule 6.62POe1C for NonRoutable Limit Orders, with differences to reflect the additional circumstances when an ALO Order would be repriced as a result of contra-side interest on the Consolidated Book. Specifically, the Exchange proposes that for an ALO
Order that has been repriced and has a non-displayed working price, if the Exchange receives a contra-side ALO
Order or Day ISO ALO with a limit price that is equal to or crosses the working price of the resting ALO Order, the working price of the resting ALO
Order would be adjusted to be equal to its display price. This proposed functionality would reduce the potential for two contra-side ALO Orders to have working prices that are locked on the Consolidated Book.
Proposed Rule 6.62POe2E
would provide that when the working price and display price of an ALO Order to buy sell are the same, the working price would be adjusted higher lower only if the display price of the order is adjusted. This proposed functionality would be new for Pillar.
Proposed Rule 6.62POe2F
would provide that the ALO designation would be ignored for ALO Orders that participate in an Auction. This
VerDate Sep<11>2014

20:01 Jul 08, 2021

Jkt 253001

proposed rule is based on Rule 7.31
Ee2A, which similarly provides that an ALO Order can participate in an auction and that its ALO designation would be ignored. This is also new functionality for options because currently, the Exchange rejects ALOs if entered outside of Core Trading Hours or during a trading halt and if resting, are cancelled during a trading halt.
Proposed Rule 6.62POe2G
would provide that an ALO Order cannot be designated with a NonDisplay Remove Modifier. Because an ALO Order is a type of Non-Routable Limit Order, this proposed rule promotes clarity that the Non-Display Remove Modifier would not be available for an ALO Order.
Intermarket Sweep Order ISO.
ISOs are currently defined in Rule 6.62
O as a Limit Order for an options series that instructs the Exchange to execute the order up to the price of its limit, regardless of the Away Market Protected Quotations 38 and that ISOs may only be entered with a time-in-force of IOC, and the entering OTP Holder must comply with the provisions of 6.92Oa8.
Proposed Rule 6.62POe3 would similarly provide than an ISO is a Limit Order that does not route and meets the requirements of Rule 6.92Oa8.
On Pillar, the Exchange will continue to offer the same type of ISO
functionality, and proposes to add the ability for an OTP Holder or OTP Firm to designate an ISO with a Day time-inforce designation and designate a Day ISO as ALO, which functionality is available on the Exchanges cash equity market as described in Rule 7.31
Ee3. The Exchange proposes to describe the functionality for each type of ISO separately.
IOC ISO. Proposed Rule 6.62P
Oe3A would define an IOC ISO as an ISO designated IOC to buy sell that would be immediately traded with orders and quotes to sell buy in the Consolidated Book up to its full size and limit price and may trade through Away Market Protected Quotations and any untraded quantity of an IOC ISO will be immediately and automatically cancelled. This proposed rule is based on Rule 7.31Ee3B and uses Pillar terminology to describe functions that are currently available for options trading.
38 The terms Protected Bid, Protected Offer, and Quotation are defined in Rule 6.92Oa15
and 16 and the term Away Market is defined in Rule 1.1. Accordingly, Away Market Protected Quotations refer to Protected Bids and Protected Offers that are disseminated pursuant to the OPRA
Plan and are the Best Bid and Best Offer displayed by an Eligible Exchange, as those terms are defined in Rule 6.92O.

PO 00000

Frm 00019

Fmt 4701

Sfmt 4703

36457

Day ISO. Proposed Rule 6.62
Oe3B would define a Day ISO as an ISO designated Day to buy sell that, if marketable on arrival, would be immediately traded with orders and quotes to sell buy in the Consolidated Book up to its full size and limit price and may trade through Away Market Protected Quotations and that any untraded quantity of a Day ISO would be displayed at its limit price and may lock or cross Away Market Protected Quotations at the time the Day ISO is received by the Exchange. This proposed functionality would be new on the Exchange for options trading and is based on the Day ISO functionality available on the Exchanges cash equity market, as described in Rule 7.31
Ee3C. However, the availability of the Day time-in-force designation for ISOs would not be new for options trading, as such orders are currently available on other options exchanges.39
The proposed Day ISO is also consistent with current Rule 6.95Ob3, which describes an exception to the prohibition on locking or crossing a Protected Quotation if the Member simultaneously routed an ISO to execute against the full displayed size of any locked or crossed Protected Bid or Protected Offer.40 Although the Exchange has not previously availed itself of this exception, this exception to locking and crossing Protected Bids and Protected Offers would only be needed if an ISO is designated as Day and therefore would be displayed at a price that would lock or cross a Protected 39 See Nasdaq Options 3, Section 7a7 ISOs may have any time-in-force designation. . . . and CBOE Rules 5.30a2 and 3. See also Cboe US
Options Fix Specifications, dated June 15, 2021, Section 4.4.7, available here: http cdn.cboe.com/
resources/membership/US_Options_FIX_
Specification.pdf, which references how a Day ISO
would be processed under specified circumstances.
40 The Commission has previously stated that the requirements in the Options Linkage Plan relating to Locked and Crossed Markets are virtually identical to those applicable to market centers for NMS stock under Regulation NMS. See also Securities Exchange Act Release No. 60405 July 30, 2009, 74 FR 39362, 39368 August 6, 2009 Order approving Options Linkage Plan. Accordingly, guidance relating to the ISO exception for locked and crossed markets for NMS stocks that specifically contemplate use of Day ISOs is also applicable to options trading. See Responses to Frequently Asked Questions Concerning Rule 611
and Rule 610 of Regulation NMS, FAQ 5.02 The ISO exception to the SRO lock/cross rules, in contrast, requires that ISOs be routed to execute against all protected quotations with a price that is equal to the display price i.e., those protected quotations that would be locked by the displayed quotation, as well as all protected quotations with prices that are better than the display price i.e., those protected quotations that would be crossed by the displayed quotation. Consistent with this guidance, the Exchange implemented Rule 6.95
Ob3. See also Cboe Rule 5.67b3, and Nasdaq Options 5, Section 3b3.

E:FRFM09JYN2.SGM

09JYN2