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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices
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would thus facilitate the interaction of such liquidity-providing Users with the orders of retail investors, which the Exchange believes is desirable for certain Users, as described above, while avoiding the possibility of such Users unintentionally interacting with another type of market participant. Accordingly, the Exchange believes that it is consistent with the Act for RML Orders to only execute against Retail Midpoint Orders subject to the exception of Retail Midpoint Orders being eligible to execute against other orders priced more aggressively than the Midpoint Price so as to incentivize the entry of RML
Orders and thereby provide meaningful price improvement to retail investors.
Further, as noted above, the concept of an order type that is only eligible to interact with a specific contra-side order type has previously been approved by the Commission both in the context of liquidity-providing orders for retail programs and in other contexts.49 The Exchange reiterates that RMOs may continue to submit their Retail Orders to the Exchange to execute against the various other order types offered by the Exchange, at prices different than the Midpoint Price, as they can today.
For the foregoing reasons, the Exchange believes that the proposed definitions of Retail Midpoint Order and RML Order, and the proposed structure of the RML Program whereby such orders are only eligible to execute against each other subject to the exception of Retail Midpoint Orders being eligible to execute against other orders priced more aggressively than the Midpoint Price and at the Midpoint Price, are designed to promote just and equitable principles of trade, foster cooperation and coordination with persons engaged in facilitating transactions in securities, remove impediments to and perfect the mechanism of a free and open market and a national market system, and further the investor protection and public interest objectives of Section 6b of the Act, by establishing a simple, transparent structure that is designed to facilitate the provision of meaningful price improvement i.e., at the Midpoint Price for orders of retail investors in a deterministic manner.
Retail Liquidity Identifier The Exchange believes that it is consistent with the Act to disseminate a Retail Liquidity Identifier in connection with its RML Program, as described in the Purpose section. The purpose of the Retail Liquidity Identifier is to provide relevant market 49 See
supra notes 2122 and accompanying text.

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information to RMOs that there is available RML Interest on the Exchange.
The dissemination is thus designed to augment the total mix of information available to RMOs that may benefit the Retail Orders they represent by encouraging RMOs to send such retail liquidity as Retail Midpoint Orders designed to receive price improvement by executing at the Midpoint Price against available RML Interest.
As noted above, the proposed Retail Liquidity Identifier is substantially similar to the Retail Liquidity Identifier disseminated by IEX, which was recently approved by the Commission, except that the Exchange would enable a User to elect whether to designate an RML Order to be identified as such for purposes of the Retail Liquidity Identifier. The Exchange believes that providing Users with the optionality to designate an RML Order to be identified as such for purposes of the Retail Liquidity Identifier is appropriate and consistent with the Act because, as described above, some Users submitting RML Orders, such as those with a larger sized RML Order, may be concerned about potential information leakage when the Retail Liquidity Identifier persists for extended periods of time despite multiple executions of Retail Midpoint Orders against such order.
The Exchange thus believes that offering this optionality would enable such Users to manage their RML Orders more effectively and would therefore foster cooperation and coordination with persons engaged in facilitating transactions in securities and remove impediments to and perfect the mechanism of a free and open market and a national market system. Further, as noted above, the ability for a User to elect whether to designate their RML
Interest to be identified as such for purposes of the Retail Liquidity Identifier is similar in purpose and effect to the ability of a User to elect whether to designate their orders as displayed or non-displayed on an exchanges order bookfunctionality that is offered by most U.S. equities exchanges, including the Exchangeas it is simply intended to provide Users with the ability to decide which information they publicize in the marketplace, and thus, the Exchange does not believe this aspect of the proposal raises any novel issues for the Commission to consider.
The Exchange also believes that removing the Retail Liquidity Identifier previously disseminated through the MEMOIR Depth and MEMOIR Top data products and through the appropriate SIP after executions against Retail Midpoint Orders have depleted the
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available designated RML Interest such that the remaining designated RML
Interest does not aggregate to form at least one round lot is consistent with the Act, as it would increase transparency in the market by indicating to RMOs that there is no longer designated RML Interest of at least one round lot available, which the Exchange believes would reduce the amount of Retail Midpoint Orders sent to the Exchange that are cancelled back to the User when there is no actionable RML
Interest to execute against. In this regard, the Exchange believes that its proposed implementation of the Retail Liquidity Identifier would foster cooperation and coordination with persons engaged in facilitating transactions in securities and remove impediments to and perfect the mechanism of a free and open market and a national market system. As noted above, the Exchange also believes this implementation is consistent with the implementation of the other exchanges that disseminate Retail Liquidity Identifiers.
Priority and Order Execution The Exchange further believes that its priority and order execution approach for the RML Program is consistent with the Act. As discussed above, the RML
Program is designed to incentivize RMOs to submit Retail Midpoint Orders to the Exchange to receive meaningful price improvement while simultaneously incentivizing Users and their clients to enter additional nondisplayed interest in the form of RML
Orders that will only trade with, and offer meaningful price improvement to, Retail Midpoint Orders. Thus, the proposed RML Program is designed to facilitate the provision of meaningful price improvement i.e., at the Midpoint Price for orders of retail investors.
The Exchange believes that it is appropriate and consistent with the Act to structure its RML Program such that Retail Midpoint Orders and RML Orders are only eligible to execute against each other at the Midpoint Price, so that Retail Midpoint Orders, which are entered on behalf of retail investors, receive price improvement that is meaningful by definition, as they are guaranteed, if executed, to execute at the Midpoint Price. The Exchange believes that introducing a program that provides and encourages additional liquidity and price improvement to Retail Orders, in the form of Retail Midpoint Orders designed to execute at the Midpoint Price, is appropriate because retail investors are typically less sophisticated than professional market participants and therefore would
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