Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Notices 64913 

21 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Supplementary Material .25 to Rule 70 

(‘‘Rule 70.25’’). 

5See Rule 13(f)(4). 

6See Rule 70(a)(ii) and (iii). 

7 ‘‘UTP Security’’ is defined as a security that is 

listed on a national securities exchange other than 

the Exchange and that trades on the Exchange 

Continued 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2018–58 and should 

be submitted on or before January 8, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27278 Filed 12–17–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

December 20, 2018. 

PLACE: The meeting will be held at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

Commissioner Jackson, as duty 

officer, voted to consider the items 

listed for the closed meeting in closed 

session. 

The subject matters of the closed 

meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Resolution of litigation claims; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 

what, if any, matters have been added, 

deleted or postponed; please contact 

Brent J. Fields from the Office of the 

Secretary at (202) 551–5400. 

Dated: December 13, 2018. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27417 Filed 12–14–18; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84806; File No. SR–NYSE– 

2018–52] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Amend Rule 7.31 Relating to 

Discretionary Orders, Auction-Only 

Orders, Discretionary Modifier, and 

Yielding Modifier and Related 

Amendments to Rules 7.16, 7.34, 7.36, 

and 7.37 

December 12, 2018. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 29, 2018, New York Stock 

Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 7.31 (Orders and Modifiers) to: (i) 

Add a new order type, Discretionary 

Orders; (ii) add two new order type 

modifiers, the Last Sale Peg Modifier 

and the Yielding Modifier; and (iii) 

make related changes to Rules 7.16, 

7.34, 7.36, and 7.37. The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 7.31 (Orders and Modifiers) to: (i) 

Add a new order type, Discretionary 

Orders; (ii) add two new order type 

modifiers, the Last Sale Peg Modifier 

and the Yielding Modifier; and (iii) 

make related changes to Rules 7.16, 

7.34, 7.36, and 7.37. 

Each of these proposed changes is 

designed to introduce on Pillar order 

types and modifiers that are currently 

available for trading securities listed on 

the Exchange. First, the proposed new 

order type, Discretionary Orders, or ‘‘D 

Orders,’’ is based on current d-Quote 

functionality.4 Second, the proposed 

Last Sale Peg Modifier is based on the 

Buy Minus Zero Plus Instruction.5

Finally, the proposed Yielding Modifier 

is based on e-Quotes that yield (‘‘gQuotes’’).6 The Exchange also proposes 

to make related changes to Rules 7.16 

(Short Sales), 7.34 (Trading Sessions), 

7.36 (Order Ranking and Display), and 

7.37 (Order Execution and Routing). 

Currently, only UTP Securities are 

traded on the Exchange’s Pillar trading 

platform.7 Accordingly, at this time, the 


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pursuant to unlisted trading privileges. See Rule 

1.1(x). 

8The proposed D Order, Last Sale Peg Modifier, 

and Yielding Modifier would function in an 

identical manner as proposed herein when made 

available for Exchange-listed securities. 

9See Rule 70.25. See also Securities Exchange 

Act Release Nos. 54577 (October 5, 2006), 71 FR 

60208 (October 12, 2006) (SR–NYSE–2006–25) (‘‘dQuote Approval Order’’); 60251 (July 7, 2009), 74 

FR 34068 (July 14, 2009) (SR–NYSE–2009–55); 

61072 (November 30, 2009), 74 FR 64103 

(December 7, 2009) (SR–NYSE–2009–106); and 

75444 (July 13, 2015), 80 FR 42575 (July 17, 2015) 

(SR–NYSE–2015–15). 

10See Rule 70.25(a)(i). 

11See Rule 70.25(a)(ii). 

12See id. 

13See Rule 70.25(a)(vi) and (vjj). 

14See Rule 70.25(b). 

15See Rule 70.25(c). 

16See Rule 70.25(d). 

17See Rule 70.25(e)(ii). 

18A d-Quote can be combined with a Do Not Ship 

‘‘DNS’’ Order, which is an order that would be 

cancelled if it were required to be routed. See Rule 

13(e)(2). Accordingly, a d-Quote combined with 

DNS is a non-routable d-Quote. 

19Currently, Reserve Orders available to Floor 

brokers do not require a display quantity. See Rule 

70(f). 

20The Core Trading Session begins at 9:30 a.m. 

Eastern Time and ends at the conclusion of Core 

Trading Hours. See Rule 7.34(a)(2). The term ‘‘Core 

Trading Hours’’ means ‘‘the hours of 9:30 a.m. 

Eastern Time through 4:00 p.m. Eastern Time or 

such other hours as may be determined by the 

Exchange from time to time.’’ See Rule 1.1(d). 

21See Rule 70.25(e)(vii) (a d-Quote may initiate 

a sweep to the extent of their price and volume 

discretion). 

22Rule 7.31(d)(1)(D) provides that a routable 

Reserve Order will be evaluated for routing both on 

arrival and each time the display quantity is 

replenished. 

proposed D Order, Last Sale Peg 

Modifier, and Yielding Modifier would 

be available only for UTP Securities. 

When the Exchange transitions 

Exchange-listed securities to Pillar, 

these order types and modifiers would 

be available for those securities as well.8

Proposed Discretionary Order 

The Exchange proposes a new order 

type, a Discretionary Order or ‘‘D 

Order’’, under paragraph (d)(4) of Rule 

7.31 for securities trading on Pillar. 

Today, the Exchange offers d-Quotes 9

for trading in Exchange-listed securities 

only, which operate in a similar manner 

as the proposed D Order, including that 

such order type is available to Floor 

brokers only. 

Under Rule 70.25, a d-Quote is a 

quotation entered by a Floor broker that 

includes discretionary instructions as to 

size and/or price.10 Such discretionary 

instructions are active during the 

trading day, unless the PBBO is 

crossed.11 A Floor broker can also 

include an instruction for the 

discretionary instructions to participate 

in the opening or closing transaction 

only.12 Discretionary instructions are 

not displayed and such instructions 

apply to both displayed and reserve 

interest.13 Currently, price discretion 

can apply to all or a portion of a dQuote and a d-Quote with a midpoint 

modifier has a discretionary price range 

to the midpoint of the PBBO.14

With respect to discretionary size, a 

Floor broker may designate the amount 

of d-Quote volume to which the 

discretionary price instructions shall 

apply, and can also designate that a 

minimum size of contra-side volume 

with which it is willing to trade using 

discretionary size instructions.15 A 

Floor broker may also designate a 

minimum trade size (‘‘MTS’’) that must 

be met before the d-Quote is executed.16

A resting d-Quote will be triggered to 

exercise discretion so long as the contraside interest’s price is within the 

discretionary price range and meets the 

MTS that has been set for the d-Quote.17

On Pillar, the Exchange proposes to 

offer Floor brokers functionality similar 

to d-Quotes in the form of D Orders. 

However, the Exchange proposes to 

simplify and streamline D Order 

functionality on Pillar as compared to 

how d-Quotes function. Among other 

things, the Exchange would not offer 

discretionary size instructions for D 

Orders that are available to d-Quotes. 

Also unlike d-Quotes, the discretionary 

price instructions would be applicable 

to the entirety of the D Order. In 

addition, all D Orders would have a 

discretionary price range capped at the 

midpoint of the PBBO, which is 

currently optional functionality for dQuotes. 

Overview. Proposed Rule 7.31(d)(4) 

would set forth the general requirements 

for D Orders and would provide that a 

D Order is a Limit Order that may trade 

at an undisplayed discretionary price. 

As further proposed, a D Order must be 

designated Day, may be designated as 

routable or non-routable,18 and on 

entry, must have a minimum of one 

round lot displayed. This proposed rule 

text is based in part on how d-Quotes 

currently function, with a proposed 

difference that on Pillar, D Orders 

would be required to have a display 

quantity.19 The Exchange proposes that, 

as currently available for d-Quotes, D 

Orders could be combined with a 

Reserve Order, which would be 

addressed in an amendment to Rule 

7.31(d)(1)(C). 

Proposed Rule 7.31(d)(4) would 

further provide that a D Order is 

available only to Floor brokers and is 

eligible to be traded in the Core Trading 

Session 20 only. This proposed rule text 

is based on current rules that d-Quotes 

are available only to Floor brokers. The 

requirement that D Orders would be 

eligible to trade in the Core Trading 

Session only is consistent with current 

d-Quote functionality, which trade 

during ‘‘regular trading hours’’ only. 

The Exchange proposes to apply this 

same time frame when making D Orders 

available to all securities that trade on 

Pillar, including UTP Securities 

because, as discussed below, D Order 

functionality would operate similarly to 

Pegged Orders, which are also only 

available during Core Trading Hours. 

The Exchange also proposes to amend 

Rule 7.34(c)(1)(A) to specify when a D 

Order may be entered and be eligible for 

execution. 

Upon Arrival. Proposed Rule 

7.31(d)(4)(A) would provide that the 

Floor broker would be required to 

specify one of the following instructions 

for a D Order: (i) Limit Price D Order; 

or (ii) Midpoint Price D Order. 

• Proposed Rule 7.31(d)(4)(A)(i) 

would provide that on arrival, a Limit 

Price D Order to buy (sell) would trade 

with sell (buy) orders on the Exchange 

Book, or, if designated as routable, route 

to an Away Market up (down) to the 

limit price of the order. If after trading 

or routing the PBBO is locked or crossed 

or there is no PBB (PBO), a Limit Price 

D Order would be cancelled. For a Limit 

Price D Order that is partially routed to 

an Away Market on arrival, any 

returned quantity of such D Order 

would join the working price of the 

resting odd-lot quantity of the D Order. 

Because the limit price of a D Order 

would function similarly to the upper 

(lower) discretionary price range of a dQuote, this proposed operation of a 

Limit Price D Order on arrival is similar 

to how d-Quotes currently function.21

• Proposed Rule 7.31(d)(4)(A)(ii) 

would provide that on arrival, a 

Midpoint Price D Order to buy (sell) 

would trade with sell (buy) orders on 

the Exchange Book up (down) to the 

lower (higher) of the midpoint of the 

PBBO (‘‘Midpoint Price’’) or the order’s 

limit price. The rule would further 

provide that a Midpoint Price D Order 

would not route on arrival, even if 

designated as routable. If designated as 

routable, a Midpoint D Order combined 

with a Reserve Order would be 

evaluated for routing each time the 

display quantity is replenished as 

provided for in Rule 7.31(d)(1)(D).22 The 

rule would further provide that if the 

PBBO is locked or crossed or if the 

Midpoint Price is unavailable, the 

Midpoint Price D Order would be 

rejected. The Midpoint Price D Order is 

based on current functionality that a dQuote may be designated with a 


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23See Rule 70.25(b)(v). 

24See Rule 7.31(h) for a description of Pegged 

Orders. 

25See Rule 7.31(h)(2) and (h)(2)(B) (‘‘A Primary 

Pegged Order will be rejected if the PBBO is locked 

or crossed.’’). 

26See Rule 7.31(h)(2) (‘‘A Primary Pegged Order 

to buy (sell) will be rejected on arrival, or cancelled 

when resting, if there is no PBB (PBO) against 

which to peg.’’) 

27See Rule 70.25(a)(ii). 

28 ‘‘Working price’’ means the price at which an 

order is eligible to trade at any given time, which 

may be different from the limit price or display 

price of the order. See Rule 7.36(a)(3). 

29 ‘‘Display price’’ means the price at which a 

Limit Order is displayed, which may be different 

from the limit price or working price of the order. 

See Rule 7.36(a)(1). 

30Rule 7.36(e) governs execution priority for 

orders resting on the Exchange Book and currently 

sets forth three priority categories: Priority 1— 

Market Orders, Priority 2—Display Orders, and 

Priority 3—Non-Display Orders. If a D Order is 

combined with a Reserve Order, the reserve interest 

of such order would be ranked Priority 3—NonDisplay Orders. See Rule 7.31(d)(1). 

31Currently, d-Quotes resting at the depth of book 

can exercise discretion. See Rule 70.25(e)(i)(A). 

32See Rule 70.25(a)(ii). 

33An Aggressing Order is a buy (sell) order that 

is or becomes marketable against sell (buy) interest 

on the Exchange Book. See Rule 7.36(a)(6). A 

resting order may become an Aggressing Order if its 

working price changes, if the PBBO or NBBO is 

updated, because of changes to other orders on the 

Exchange Book, or when processing inbound 

messages. Id. 

34See Rule 70.25(e)(ii). 

35The MPV for securities is defined in Rule 7.6. 

36See Rule 70.25(e)(i)(A). 

37Pursuant to Rule 7.36(f)(2), each time a D Order 

is assigned a new working and display price, i.e., 

with each change to the same-side PBBO pursuant 

to proposed Rule 7.31(d)(4)(B)(i), such D Order 

would be assigned a new working time. 

midpoint modifier and the discretionary 

price range of such d-Quote is the 

midpoint of the PBBO.23

The Exchange notes that the proposed 

functionality to either cancel or reject a 

D Order when the PBBO is locked or 

crossed is based on how Primary Pegged 

Orders 24 currently function.25 As 

discussed below, the Exchange proposes 

that D Orders would function similarly 

to Primary Pegged Orders because they 

would be pegged to the same-side 

PBBO. The Exchange therefore believes 

that a D Order should be rejected or 

cancelled under the same circumstances 

when a Primary Pegged Order would be 

cancelled or rejected.26 In addition, this 

is consistent with current d-Quote 

functionality that provides that 

discretionary instructions are not active 

when the PBBO is crossed.27

Display Price. Proposed Rule 

7.31(d)(4)(B) would set forth how a D 

Order would be displayed when resting 

on the Exchange Book and would 

provide that the working 28 and display 

price of a D Order to buy (sell) would 

be pegged to the PBB (PBO). If the PBB 

(PBO) is higher (lower) than the limit 

price of a D Order to buy (sell), the 

working and display price would be the 

limit price of the order. The rule would 

further provide that a D Order to buy 

(sell) would be cancelled if there is no 

PBB (PBO) against which to peg. At its 

display price,29 a D Order would be 

ranked Priority 2—Display Orders.30

This proposed functionality for D 

Orders would be new for Pillar and is 

based on how Primary Pegged Orders 

function, including that a D Order 

would be cancelled if there is nothing 

against which to peg. The Exchange 

believes this proposed difference would 

streamline and simplify the operation of 

D Orders as compared to d-Quotes.31

Exercising Discretion. Proposed Rule 

7.31(d)(4)(C) would provide that a 

resting D Order to buy (sell) would be 

eligible to exercise discretion up (down) 

to the limit price of the order. This 

proposed rule text is new for Pillar and 

reflects that the limit price of the D 

Order would function as the ceiling or 

floor of the discretionary price range for 

such order. As noted above, the display 

price of a D Order would be pegged to 

the same-side PBBO and would not be 

based on the limit price. 

The proposed rule would further 

provide that such D Order would not 

exercise discretion if the PBBO is locked 

or crossed or if there is no Midpoint 

Price. This functionality is based in part 

on how d-Quotes currently function and 

adds that D Orders would not exercise 

discretion if the market is locked 

(because a D Order would be pegged to 

the same-side PBBO and there is no 

midpoint) or if there is no Midpoint 

Price (meaning there is no price 

available for a D Order to extend its 

discretion to).32

Proposed Rule 7.31(d)(4)(C)(i) would 

provide that a D Order to buy (sell) 

would be triggered to exercise discretion 

if the price of an Aggressing Order 33 to 

sell (buy) is above (below) the PBB 

(PBO) and at or below the Midpoint 

Price (the ‘‘discretionary price range’’). 

This would be new functionality for D 

Orders. Currently, any contra-side order 

that is within the discretionary price 

range of a d-Quote would trigger a dQuote to trade.34 The Exchange believes 

the proposed difference for D Orders 

would streamline and simplify the 

function of D Orders. More specifically, 

because the discretionary price range for 

a D Order would be one minimum price 

variation (‘‘MPV’’) better than the sameside PBBO capped by the Midpoint 

Price, the Exchange believes that only 

contra-side orders with a limit price 

within that same discretionary price 

range should trigger a D Order to 

exercise discretion. 

Proposed Rule 7.31(d)(4)(C)(ii) would 

provide that the discretionary price at 

which a D Order to buy (sell) would 

trade would be the price of the sell (buy) 

order. This proposed functionality 

would be new for Pillar and is to be read 

together with proposed Rule 

7.31(d)(4)(C)(i), which defines the price 

range of the contra-side order that could 

trigger the D Order to exercise 

discretion. In addition, the Exchange 

proposes to define the term 

‘‘discretionary price’’ in new Rule 

7.36(a)(7) to mean the undisplayed price 

at which a D Order would trade if it 

exercises discretion. 

Proposed Rule 7.31(d)(4)(C)(ii) would 

further provide that if there is other 

interest to buy (sell) on the Exchange 

Book priced equal to or higher (lower) 

than the price of the sell (buy) order, the 

discretionary price would be one MPV 

higher (lower) than the highest (lowest) 

priced resting order to buy (sell), capped 

by the Midpoint Price.35 This would be 

new functionality for Pillar and is based 

in part on current functionality that 

requires a d-Quote to exercise the least 

amount of price discretion.36 The 

following example illustrates this 

behavior: 

• If the PBBO is $10.00 by $10.10 

with a Midpoint Price of $10.05 and a 

Floor broker enters a D Order to buy 100 

shares with a limit price of $10.08 

(‘‘Order 1’’), Order 1 would be pegged 

to and displayed at $10.00, the PBB, 

with a discretionary price range up to 

the $10.05 Midpoint Price. If a nondisplayed Limit Order to buy 100 shares 

at $10.03 is placed on the Exchange 

Book (‘‘Order 2’’) and next, a Limit 

Order to sell 200 shares at $10.01 is 

entered (‘‘Order 3’’), because Order 3 is 

marketable against Order 2 at $10.03, 

Order 1’s discretionary price range 

would extend to $10.04, one MPV 

higher than Order 2’s limit price. Order 

3 would execute 100 shares against 

Order 1 at $10.04, providing Order 3 

with $0.03 of price improvement 

relative to its limit price. The remaining 

100 shares of Order 3 would execute 

against Order 2 at $10.03. 

Ranking and Working Time. As 

provided for in Rule 7.36(f)(1), an order 

is assigned its working time based on its 

original entry time, which is the time 

when an order is placed on the 

Exchange Book. Rule 7.36(f)(2) further 

provides that an order is assigned a new 

working time any time its working price 

changes.37 Because a D Order can trade 

at more than one price—its display 

price or its discretionary price, the 

Exchange proposes to address the 

working time associated with each such 


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38See Rule 13(f)(3)(B). 

39See Rule 7.31(d)(3) for a description of MPL 

Orders. 

40 In sum, an order with an MTS Modifier would 

only trade with contra-side orders that, either 

individually or in the aggregate, satisfy the order’s 

minimum trade size condition. See Rule 7.31(i)(3) 

for a full description of the MTS Modifier. 

41See Rule 7.36(a)(5) for the definition of the term 

‘‘Floor Broker Participant.’’ 

price in proposed Rule 7.31(d)(4)(D). As 

proposed, the trigger to exercise 

discretion would not change the 

working time of a D Order’s display and 

working price. 

Proposed Rule 7.31(d)(4)(D)(i) would 

provide that at its discretionary price, a 

D Order would be assigned a new 

temporary working time that is later 

than any same-side resting interest at 

that price. This temporary working time 

is distinct from the working time 

associated with the display and working 

price of the D Order, which are pegged 

to the same-side PBBO. 

Proposed Rule 7.31(d)(4)(D)(ii) would 

provide that multiple D Orders eligible 

to trade at the same discretionary price 

would be ranked by limit price and 

time. This is new functionality for 

Pillar. Current Rule 70.25(e)(iii) and (iv) 

describe how competing d-Quotes from 

more than one Floor broker trade. The 

Exchange does not propose to replicate 

this functionality on Pillar and believes 

that ranking multiple same-side D 

Orders based on limit price and time 

would simplify the process for 

allocation among competing D Orders. 

Finally, proposed Rule 7.31(d)(4)(D)(iii) 

would provide that any quantity of a D 

Order that does not execute at a 

discretionary price would return to the 

working time associated with its 

working and display price. 

The Exchange believes that the 

proposed temporary working time 

associated with the discretionary price 

would respect the priority of the 

working times of orders that may have 

a working price equal to the D Order’s 

discretionary price. By assigning a 

temporary working time, the D Order 

would be ranked behind other orders at 

that price. In addition, because the D 

Order would continue to be displayed at 

its display price, even if it were 

triggered to exercise discretion, the 

proposal would honor such D Order’s 

original working time if it were to trade 

at its display price. 

Resting D Order that Becomes 

Marketable. Proposed Rule 7.31(d)(4)(E) 

would provide that after the PBBO 

unlocks or uncrosses or a Midpoint 

Price becomes accessible, resting D 

Orders to buy (sell) would be ranked 

based on the lower (higher) of the 

Midpoint Price or limit price of the 

order to determine whether a D Order is 

marketable within the discretionary 

price range with contra-side orders on 

the Exchange Book. This proposed rule 

text is new and reflects the difference in 

Pillar that D Orders would not exercise 

discretion when the PBBO is locked or 

crossed or if a Midpoint Price is 

unavailable. This proposed rule text 

addresses how a resting D Order would 

be ranked for trading when the PBBO 

unlocks or uncrosses or if a Midpoint 

Price becomes accessible. 

D Orders Rejected and Modifiers. 

Proposed Rule 7.31(d)(4)(F) would 

provide that a D Order may be 

designated with a Self Trade Prevention 

Modifier (‘‘STP’’) and would be rejected 

if combined with any other modifiers or 

if the same-side PBBO is zero. This 

proposed functionality is new, as dQuotes cannot currently be designated 

with an STP Modifier.38 The Exchange 

believes that making STP Modifiers 

available for D Orders would provide 

Floor brokers with more tools to reduce 

the potential for two orders to interact 

if they are from the same customer. By 

specifying that D Orders cannot be 

combined with other modifiers, the rule 

provides transparency that a D Order 

cannot be combined with other 

modifiers defined in Rule 7.31(i). 

Regarding STP, Rule 7.31(i)(2) 

describes the Exchange’s STP Modifier. 

Generally, if two orders from the same 

Client ID both have an STP Modifier, 

the Exchange will cancel one of the two 

orders, based on instruction from the 

member organization. For D Orders, 

because the discretionary price is 

temporary, the Exchange proposes that 

if a D Order exercising discretion would 

trade with another order with an STP 

Modifier from the same Client ID, the 

two orders would not trade, but nor 

would either order be cancelled. The 

Exchange does not believe it would be 

appropriate to cancel the D Order in 

such scenario because if the D Order is 

not cancelled, it would be eligible to 

trade with another order at either its 

display price or a different discretionary 

price at a later time. To effect this 

change, the Exchange proposes to 

amend Rule 7.31(i)(2) to add new 

subparagraph (C) that would provide 

that a resting D Order with an STP 

Modifier that is triggered to exercise 

discretion and is not an Aggressing 

Order will not trade at a discretionary 

price against a contra-side order that is 

also designated with an STP Modifier 

and from the same Client ID and that in 

such case, the D Order would not be 

cancelled. 

Last 10 Seconds of Trading. Proposed 

Rule 7.31(d)(4)(G) would provide that a 

request to enter a D Order in any 

security 10 seconds or less before the 

scheduled close of trading would be 

rejected. This proposed rule text is 

based in part on the second sentence of 

current Rule 70.25(a)(ii), which 

provides that the Exchange will reject 

any d-Quotes that are entered 10 

seconds or less before the scheduled 

end of trading. The proposed 

functionality for UTP Securities would 

be identical to Rule 70.25(a)(ii). 

Allocation of D Orders. Rule 7.37(b) 

describes how an Aggressing Order is 

allocated among contra-side orders at 

each price. The Exchange maintains 

separate allocation wheels on each side 

of the market for displayed and nondisplayed orders at each price. The 

Exchange proposes to amend Rule 

7.37(b) to set forth how D Orders would 

participate in the allocation process. 

Rule 7.37(b)(1) sets forth the following 

allocation sequence: (1) Market Orders 

trade first based on time; (2) orders with 

Setter Priority as described in Exchange 

Rule 7.36(h) receive an allocation; (3) 

orders ranked Priority 2—Displayed 

Orders are allocated on parity by 

Participant; (4) orders ranked Priority 

3—Non-Display Orders, other than MidPoint Liquidity (‘‘MPL’’) Orders 39 with 

an MTS Modifier, are allocated on 

parity by Participant; 40 and then (5) 

MPL Orders with an MTS Modifier are 

allocated based on MTS size (smallest to 

largest) and time. 

As proposed, D Orders trading at a 

discretionary price would be allocated 

next on parity by Floor Broker 

Participant.41 Accordingly, at their 

discretionary price, D Orders would be 

allocated after all other orders at that 

price, except, as described below, 

Yielding Orders. To effect this change, 

the Exchange proposes to amend Rule 

7.37(b)(1) to add new sub-paragraph (F) 

to provide that next, D Orders trading at 

a discretionary price would be allocated 

on parity by Floor Broker Participant. 

This proposed functionality is based in 

part on current Rule 70.25(a)(ii), which 

provides that executions of d-Quotes 

within the discretionary price range are 

considered non-displayable for 

purposes of Rule 72. 

Rule 7.37(b)(2) describes the process 

for the parity allocation wheel. 

Currently, the Exchange creates separate 

allocation wheels for orders ranked 

Priority 2—Display Orders and orders 

ranked Priority 3—Non-Display Orders. 

The Exchange proposes to create a third 

allocation wheel if there is more than 

one D Order eligible to trade at a 

discretionary price. In such case, the 

Exchange would create an allocation 


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42See proposed amendment to Rule 7.37(b)(2). 43A ‘‘Short Sale Period’’ is defined in Rule 

7.16(f)(4) to mean the period when a Short Sale 

Price Test is in effect. A ‘‘Short Sale Price Test’’ is 

defined in Rule 7.16(f)(3) to mean the period during 

which Exchange systems will not execute or display 

a short sale order with respect to a covered security 

at a price that is less than or equal to the current 

NBB in compliance with Rule 201 of Regulation 

SHO. 17 CFR 242.201. 

44See Rule 13(f)(4). 

45See Rule 13(f)(4). Limit Orders with a BMZP 

instruction that are systemically delivered to 

Exchange systems are eligible to be automatically 

executed in accordance with, and to the extent 

provided by, Rules 1000–1004, consistent with the 

order’s instructions. Id. Odd-lot sized transactions 

are not be considered the last sale for purposes of 

executing an order with a BMZP instruction. Id. 

46See 17 CFR 240.10b–18. See also Securities 

Exchange Act Release No. 78679 (August 25, 2016), 

81 FR 60080 (August 31, 2016) (SR–NYSE–2016– 

59). 

47See 17 CFR 240.10b–18(b)(3). The other three 

conditions relate to time of purchases, volume of 

purchases, and a requirement that only one broker 

or dealer be involved in such repurchases on a 

single day. 

48The Exchange does not represent that an order 

with a BMZP instruction or the proposed Last Sale 

Peg Modifier are guaranteed to meet the 

requirements of the safe harbor provision of Rule 

10b–18; rather, these instruction are available to 

member organizations to facilitate their own 

compliance with Rule 10b–18. 

49A last-sale eligible trade must be of at least one 

round lot. 

50A consolidated last-sale eligible trade is the 

last-sale eligible trade reported to the responsible 

single plan processor. 

wheel for D Orders at that discretionary 

price.42

The Exchange proposes that an 

allocation wheel for D Orders trading at 

a discretionary price would function the 

same as allocation wheels for display 

and non-display orders, with one 

proposed difference. Because the 

discretionary price at which a D Order 

would trade is a temporary price 

established based on whether a contraside order triggers a D Order to exercise 

discretion, the Exchange proposes to 

amend Rule 7.37(b)(2)(A) to provide that 

for each D Order parity allocation 

wheel, a D Order to buy (sell) with the 

highest (lowest) limit price would 

establish the first position on that 

allocation wheel. This proposed rule 

text is consistent with the proposed 

ranking of D Orders as set forth in 

proposed Rule 7.31(d)(4)(D)(ii), which 

would require multiple D Orders 

eligible to trade at the same 

discretionary price to be ranked by limit 

price and time as described above. 

The following example illustrates 

how the parity allocation wheel for D 

Orders would be established: 

• If the PBBO is $10.00 by $10.10 

with a Midpoint Price of $10.05 and a 

Floor broker enters a D Order to buy 

1,000 shares with a limit price of $10.06 

(‘‘Order 1’’), Order 1 would be pegged 

to and displayed at $10.00, the PBB, 

with discretion to the $10.05, the 

Midpoint Price. If another Floor broker 

enters a separate D Order to buy 1,000 

shares with a limit price of $10.07 

(‘‘Order 2’’), like Order 1, Order 2 would 

be pegged to and displayed at $10.00, 

the PBB, with discretion to $10.05, the 

Midpoint Price. 

• If a Limit Order to sell 100 shares 

at $10.05 is entered (‘‘Order 3’’), Order 

3 would trigger both Order 1 and 2 to 

exercise discretion at the Midpoint 

Price. Because Order 2 has the more 

aggressive limit price, it would establish 

the first position on the D Order parity 

wheel. In this example, Order 3 would 

trade 100 shares with Order 2 at $10.05. 

Because there is no remaining quantity 

of Order 3, Order 1 would not receive 

an allocation. 

Re-pricing of D Orders during a Short 

Sale Period. Rule 7.16(f)(5) sets forth 

how the Exchange processes short sale 

orders during a Short Sale Period.43 The 

Exchange proposes to amend Rule 

7.16(f)(5)(C) to address how the 

Exchange would process D Orders 

marked ‘‘short’’ during a Short Sale 

Period. As proposed, during a Short 

Sale Period, the Exchange proposes to 

process sell short D Orders like Pegged 

Orders and MPL Orders. To effect this 

change, the Exchange proposes to 

amend Rule 7.16(f)(5)(C) to add that D 

Orders, like Pegged Orders and MPL 

Orders today, including orders marked 

buy, sell long and sell short exempt, 

would use the National Best Bid and 

Offer (‘‘NBBO’’) instead of the PBBO as 

the reference price. Because the 

Exchange has defined the term 

‘‘Midpoint Price’’ for D Orders, the 

Exchange further proposes to amend 

that rule to provide that the Midpoint 

Price of D Orders would be the 

midpoint price of the NBBO, including 

situations where the midpoint is less 

than one minimum price increment 

above the National Best Bid (‘‘NBB’’). 

This functionality would be new for D 

Orders on Pillar as compared to how dQuotes function and is based on 

applying existing Pillar logic for orders 

that peg to the PBBO to D Orders. 

Proposed Last Sale Peg Modifier 

The Exchange proposes to add a new 

order type modifier, Last Sale Peg, 

which would be set forth in proposed 

paragraph (i)(4) of Rule 7.31. Today, the 

Exchange offers the Buy Minus Zero 

Plus (‘‘BMZP’’) 44 instruction for trading 

in Exchange-listed securities. The Last 

Sale Peg Modifier is designed to achieve 

the same purpose as the BMZP 

instruction for securities trading on 

Pillar, with specified differences to 

reflect Pillar functions and terminology. 

Under Rule 13(f)(4), for Exchangelisted securities, an order with a BMZP 

instruction will not trade at a price that 

is higher than the last sale, subject to the 

limit price of an order, if applicable.45

Odd-lot sized transactions are not 

considered the last sale for purposes of 

executing BMZP orders. 

The BMZP instruction is available to 

buy Limit Orders only and is designed 

to assist member organizations in their 

compliance with the ‘‘safe harbor’’ 

provisions of Rule 10b–18 under the Act 

(‘‘Rule 10b–18’’) for issuer 

repurchases.46 One of the four 

provisions required to fall under Rule 

10b–18’s safe harbor is that the purchase 

price of a security may not exceed the 

highest independent bid or the last 

independent transaction price for the 

security.47 Because an order with a 

BMZP instruction will not trade at a 

price that is higher than the last sale, 

member organizations can use this 

instruction to facilitate their compliance 

with at least one of the conditions of the 

safe harbor provision of Rule 10b–18.48

On Pillar, the Exchange proposes to 

offer functionality that is based on the 

BMZP instruction and rename it the 

Last Sale Peg Modifier. Proposed 

7.31(i)(4) would set forth the general 

requirements for the Last Sale Peg 

Modifier. As proposed, a Non-Routable 

Limit Order to buy may be designated 

with a Last Sale Peg Modifier, which 

would be referred to as a ‘‘Last Sale Peg 

Order.’’ Proposed 7.31(i)(4) would also 

provide that a Last Sale Peg Order 

would not trade or be displayed at a 

price higher than the later of the most 

recent last-sale eligible trade 49 executed 

on the Exchange or the most recent 

consolidated last-sale eligible trade 50

which would be defined for purposes of 

this Rule as the ‘‘last-sale price.’’ This 

rule text is based on Rule 13(f)(4)(A), 

but with greater specificity of what it 

means to be a last sale price for 

purposes of a Last Sale Peg Order. 

The proposed functionality to restrict 

Last Sale Peg Orders to Non-Routable 

Limit Orders would be new because 

currently, the BMZP instruction can be 

included on both routable and nonroutable buy orders. The Exchange 

believes that limiting the availability of 

this modifier to Non-Routable Limit 

Orders would simplify the operation of 

this modifier, while at the same time 

achieving the goal of the modifier, 

which is to provide an instruction to 

facilitate compliance with the safe 

harbor provisions of Rule 10b–18. Like 

the BMZP instruction, the proposed Last 

Sale Peg Order would be available only 

for buy orders. 


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51Under Rule 7.31(e)(1), Non-Routable Limit 

Orders would be re-priced as follows: (i) It will 

have a working price of the PBO (PBB) of an Away 

Market and a display price one MPV below (above) 

that PBO (PBB); (ii) if the PBO (PBB) of an Away 

Market re-prices higher (lower), it will be assigned 

a new working price of the updated PBO (PBB) and 

a new display price of one MPV below (above) that 

updated PBO (PBB); (iii) if the PBO (PBB) of an 

Away Market re-prices to be equal to or lower 

(higher) than its last display price, its display price 

will not change, but the working price will be 

adjusted to be equal to its display price; or (iv) if 

its limit price no longer locks or crosses the PBO 

(PBB) of an Away Market, it will be assigned a 

working price and display price equal to its limit 

price and will not be assigned a new working price 

or display price based on changes to the PBO (PBB). 

52See Rule 70(a)(ii) and (iii). 

53 15 U.S.C. 78k(a)(1). 

54Under the G Rule, G orders are not required to 

yield to other orders that are for the account of a 

member, e.g., Designated Market Maker (‘‘DMM’’) 

interest or other g-Quotes. 

55See Rule 115A(a)(1) and Rule 123C(7)(a)(vii). 

Proposed Rule 7.31(i)(4)(A) would 

provide that the working price of a Last 

Sale Peg Order would be pegged to the 

lower of the last-sale price, the limit 

price of the order, or the PBO. To reflect 

which last-sale price would be 

applicable, proposed Rule 7.31(i)(4)(A) 

would further provide that the working 

price of a resting Last Sale Peg Order 

would not be adjusted until an 

Aggressing Order is fully processed. In 

other words, if an Aggressing Order 

trades at multiple prices, the Exchange 

would wait for the last price at which 

such order trades to determine the lastsale price for purposes of re-pricing the 

working price of a resting Last Sale Peg 

Order. 

The rule would further provide that if 

the last-sale price is not at a permissible 

MPV, the working price of the order 

would be rounded down to the nearest 

MPV. This last provision would be 

applicable, for example, if the last-sale 

price were at the midpoint of a pennyspread security, which would not be in 

two decimals. In such case, the 

Exchange would round the working 

price of the Last Sale Peg Order down 

to the MPV for the security. This 

proposed rule text would be new for 

Pillar and the Exchange believes that it 

would promote transparency regarding 

how a Last Sale Peg Order would be 

displayed on the Exchange Book in a 

manner to facilitate compliance with the 

safe-harbor provisions of Rule 10b–18. 

Proposed Rule 7.31(i)(4)(B) would 

provide that the display price of a Last 

Sale Peg Order would be the same as the 

working price, unless the working price 

is pegged to the PBO, in which case, the 

display price would be determined 

under paragraph (e)(1) of Rule 7.31. 

Rule 7.31(e)(1) describes how a NonRoutable Limit Order to buy that, at the 

time of entry and after trading with any 

sell orders in the Exchange Book priced 

at or below the PBO is priced.51 Because 

a Last Sale Peg Order would be a NonRoutable Limit Order, it would follow 

the pricing instructions of such order. 

Proposed Rule 7.31(i)(4)(C) would 

provide that a Last Sale Peg Order may 

be designated with an STP Modifier and 

would be rejected if combined with any 

other modifiers or if there is no last-sale 

price. This proposed rule text promotes 

transparency that a Non-Routable Limit 

Order with a Last Sale Peg Modifier can 

include an STP, but could not be 

combined with any other modifiers 

described in Rule 7.31. 

The Exchange proposes that Last Sale 

Peg Orders would be eligible for 

execution only during the Core Trading 

Session. As further proposed, similar to 

Primary Pegged Orders, the Exchange 

proposes that Last Sale Peg Orders 

would be accepted prior to the 

commencement of the Core Trading 

Session, but would not be eligible for 

execution until the Core Trading 

Session begins. To effect this change, 

the Exchange proposes to amend Rule 

7.34(c)(1)(A) to add Last Sale Peg Orders 

to the description of orders that may be 

accepted but not eligible to trade during 

the Early Trading Session. 

Proposed Yielding Modifier 

The Exchange proposes to add a 

second new order type modifier, the 

Yielding Modifier, under paragraph 

(i)(5) of Rule 7.31, for trading on Pillar. 

Today, the Exchange offers Floor 

brokers g-Quotes 52 for trading in 

Exchange-listed securities only. The 

proposed Yielding Modifier is based on 

how g-Quotes currently function and as 

with g-Quotes, would be available only 

to Floor brokers. 

Currently, g-Quotes are designed to 

assist Floor brokers with compliance 

with Section 11(a)(1) of the Act,53 which 

generally prohibits a member of a 

national securities exchange from 

effecting transactions on that exchange 

for its own account, the account of an 

associated person, or any account over 

which it or an associated person 

exercises discretion. Subsection (G) of 

Section 11(a)(1) provides an exemption 

from this prohibition, allowing an 

exchange member to have its own floor 

broker execute a proprietary order, also 

known as a ‘‘G order,’’ provided such 

order yields priority, parity, and 

precedence (the ‘‘G Rule’’). For 

Exchange-listed securities, the Exchange 

offers g-Quotes, which are an electronic 

method for Floor brokers to represent 

orders that yield priority, parity and 

precedence based on size to all other 

displayed and non-displayed orders on 

the Exchange Book, in compliance with 

the G Rule.54

Like g-Quotes, the proposed Yielding 

Modifier would aid Floor brokers in 

complying with the G Rule when 

trading on Pillar. Proposed Rule 

7.31(i)(5) would set forth the general 

requirements for the Yielding Modifier 

and would provide that a Limit Order, 

Non-Routable Limit Order, or Reserve 

Order may be designated with a 

Yielding Modifier, which for purposes 

of this Rule, would be referred to as a 

‘‘Yielding Order.’’ This proposed rule 

text is based on how the Exchange 

currently functions, because a g-Quote 

is a form of an e-Quote, and pursuant to 

Rule 70.25, e-Quotes may be displayed 

or non-displayed and routable or nonroutable. The proposed rule text uses 

Pillar terminology to reflect these 

functions. Proposed Rule 7.31(i)(5) 

would also provide that a Yielding 

Order would yield priority to all other 

displayed and non-displayed orders at 

the same price, and, similar to g-Quotes, 

may be entered by a Floor broker only. 

Proposed Rule 7.31(i)(5) would also 

provide that a Yielding Order would be 

ranked Priority 4—Yielding Orders. The 

Exchange would make a related 

amendment to Rule 7.36(e) to add this 

additional priority category. Proposed 

Rule 7.36(e)(4) would provide that 

Priority 4—Yielding Orders would have 

fourth priority. The Exchange believes 

that these proposed priority categories 

are consistent with current g-Quote 

functionality because Yielding Orders 

would be ranked behind all other 

displayed and non-displayed orders. 

Proposed Rule 7.31(i)(5)(A) and (B) 

would describe how an Aggressing 

Yielding Order would trade. Proposed 

Rule 7.31(i)(5)(A) would provide that an 

Aggressing Yielding Order to buy (sell) 

with a limit price higher (lower) than 

the limit price of a resting order to buy 

(sell) would trade ahead of such resting 

order. This proposed rule text is 

consistent with how g-Quotes are 

ranked and traded in an auction; a 

better-priced g-Quote will trade ahead of 

an at-priced limit order because it has 

price priority.55 The Exchange proposes 

to make this explicit in the rules for all 

executions of a Yielding Order. For 

example, if the Exchange has a NonDisplayed Limit Order to buy with a 

limit price of 10.00 (‘‘Order 1’’) that is 

locked by an ALO Order to sell at 10.00 

(‘‘Order 2’’), an arriving Yielding Order 

to buy with a limit price of 10.03 


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56See, e.g., Securities Exchange Act Release No. 

67686 (August 17, 2012), 77 FR 51596, 51599 

(August 24, 2012) (SR–NYSE–2012–19) (Approval 

Order) (approving the Exchange’s proposal that 

better-priced G Orders would be guaranteed to 

participate in a closing auction and would have 

priority over same-side limit orders on the 

Exchange Book that are at the same price as the 

closing auction). 

57See Rule 7.31(e)(2) for a description of the ALO 

Order. An MPL Order may be designated with the 

ALO modifier. See Rule 7.31(d)(3)(E). 

58See Rule 7.31(d)(3)(E)(i) (providing that ‘‘[a]n 

Aggressing MPL–ALO Order to buy (sell) will trade 

with resting orders to sell (buy) with a working 

price below (above) the midpoint of the PBBO at the 

working price of the resting orders, but will not 

trade with resting orders to sell (buy) priced at the 

midpoint of the PBBO.’’). 

59 15 U.S.C. 78f(b). 

60 15 U.S.C. 78f(b)(5). 

(‘‘Order 3’’) would trade with Order 2 at 

10.00. Because Order 3 is willing to 

trade at a more aggressive price than 

Order 1 and therefore has price priority, 

the Exchange believes that Order 3 

would not need to yield to Order 1 

when trading at 10.00. The Exchange 

therefore believes that this proposed 

execution would be consistent with the 

G Rule.56

Proposed Rule 7.31(i)(5)(B) would 

provide that an Aggressing Yielding 

Order to buy (sell) with a limit price 

equal to the limit price of a resting order 

to buy (sell) would either: (i) Trigger the 

resting order to become an Aggressing 

Order, unless the order to sell (buy) is 

an MPL–ALO Order,57 or an MPL Order 

with an MTS Modifier, in which case 

neither the Yielding Order nor the sameside resting order would trade; or (ii) 

trade ahead of such resting order if such 

resting order is not eligible to trade (e.g., 

an ALO Order or an order with an MTS 

Modifier). 

In the first scenario, the Exchange 

believes that triggering the resting order 

to trade ahead of the Yielding Order 

would respect the priority of the resting 

order at that price. Neither order would 

trade if the contra-side order is either an 

MPL ALO or MPL Order with an MTS 

Modifier and has a conditional 

instruction that does not allow it to 

trade at that price. The Exchange 

believes that not permitting either order 

to trade in this circumstance would 

ensure that the Yielding Order does not 

trade ahead of a same-priced resting 

order in accordance with the G Rule. 

In the second scenario, the Exchange 

believes that if a resting order has a 

condition that has not been met and is 

therefore not eligible to trade, such 

order cedes execution priority to a 

same-side Yielding Order at the same 

price, and therefore, the Yielding Order 

would not be trading ahead of such 

order in violation of the G Rule. The 

execution of both an ALO Order and an 

order with an MTS Modifier are both 

contingent on a pre-condition being 

met. The ALO Order requires that the 

contra-side order be a liquidity remover 

and the order with a MTS Modifier 

requires that the contra-side order be of 

a certain size to meet its minimum 

quantity condition. Because the 

condition of either resting order has not 

been met and such order cannot 

participate in an execution, the 

Exchange believes this order cedes 

execution priority to the Yielding Order 

and the Yielding Order would not be 

required to yield to it under the G Rule. 

The following example illustrates 

how an order with a Yielding Modifier 

would interact with conditional orders, 

such as ALO orders, MPL ALO orders, 

or MPL orders with an MTS Modifier. 

• If the PBBO is $10.00 by $10.20 

resulting in a Midpoint Price of $10.10, 

a Limit Order to buy 40 shares at $10.10 

is entered and is placed on the 

Exchange Book (‘‘Order 1’’), and an MPL 

ALO order to sell 100 shares at 10.00 is 

then entered (‘‘Order 2’’) and placed on 

the Exchange Book at the Midpoint 

Price, the Exchange Book would become 

internally locked because Order 2 

cannot trade with Order 1.58 Next, a 

Floor broker enters a Yielding Order to 

buy 50 shares at $10.10 (‘‘Order 3’’). 

Order 3 would not execute against 

Order 2 because Order 3 is priced equal 

to Order 1 and must yield priority, 

parity and precedence to Order 1. Order 

3 would be placed on the Exchange 

Book at $10.10. 

• If the Away Market PBB is $10.00, 

a Non-Displayed Limit Order to sell 

1,000 shares at $10.00 is entered 

(‘‘Order 1’’), and an ALO order to buy 

100 shares at $10.00 is entered (‘‘Order 

2’’), Order 2 would not trade with Order 

1 because it cannot act as a liquidity 

remover. Order 2 would be placed on 

the Exchange Book at $10.00. Next, a 

Yielding Order to buy 1,000 shares at 

$10.00 is entered (‘‘Order 3’’), which 

would execute 1,000 shares against 

Order 1 at $10.00. Order 3 would not be 

required to yield to Order 2 because 

Order 2 was an ALO order that chose to 

forgo the execution in favor of being 

placed on the Exchange Book and acting 

as a liquidity provider. 

Similar to the Last Sale Peg Order, 

proposed Rule 7.31(i)(5)(C) would 

provide that a Yielding Order may be 

designated with an STP Modifier and 

would be rejected if combined with any 

other modifiers. 

The Exchange also proposes to amend 

Rule 7.37(b) to describe how orders with 

a Yielding Modifier would participate in 

the allocation process. As described 

above, the Exchange proposes that after 

all other displayed and non-displayed 

orders are allocated, D Orders would be 

allocated on parity. The Exchange 

proposes to amend Rule 7.37(b)(1) to 

add subparagraph (G) to provide that 

after D Orders have been allocated, the 

display quantity of orders ranked 

Priority 4—Yielding Orders would be 

allocated based on time. The Exchange 

would further add subparagraph (H) to 

provide that next, the non-display 

quantity of orders ranked Priority 4— 

Yielding Orders would be allocated on 

time. This proposed allocation process 

is based in part on how g-Quotes are 

allocated after all other displayed and 

non-displayed orders in Exchange-listed 

securities. The Exchange proposes new 

functionality for Pillar that within each 

Yielding Order priority ranking, orders 

would be allocated on time rather than 

on parity. The Exchange believes that 

this proposed difference would 

streamline and simplify the allocation of 

Yielding Orders and is consistent with 

their intended compliance with the G 

Rule. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 6(b) 

of the Act,59 in general, and furthers the 

objectives of Sections 6(b)(5) of the 

Act,60 in particular, because it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to, and perfect the 

mechanisms of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest and because it is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The proposed rule change extends the 

availability of orders and modifiers 

currently available for trading of 

Exchange-listed securities to trading of 

UTP Securities on Pillar. Specifically, 

the proposed D Order, Last Sale Peg 

Modifier, and Yielding Modifier that the 

Exchange proposes for Pillar would 

operate in a similar manner as d-Quotes, 

BMZP, and g-Quotes, respectively, 

which are currently available for trading 

in Exchange-listed securities. The 

proposed rule changes are all based on 

existing functionality with differences 

in rule text only to reflect Pillar 

terminology. 

D Orders. The Exchange believes that 

the proposed D Order would remove 


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61See, e.g., Securities Exchange Act Release No. 

34–60251 (July 7, 2009), 74 FR 34068 (July 14, 

2009) (Approval Order) (noting that d-Quotes 

provide Floor brokers with similar functionality 

that was previously available to Floor brokers). 

impediments to, and perfect the 

mechanisms of, a free and open market 

and a national market system and, in 

general, protect investors and the public 

interest because it would expand 

existing functionality available to 

trading of Exchange-listed securities to 

trading of UTP Securities on Pillar. This 

proposed rule change would also ensure 

that this functionality would continue 

to be available to Floor brokers when 

the Exchange transitions trading of 

Exchange-listed securities to Pillar. The 

Exchange notes that D Orders would 

operate in a manner similar to d-Quotes. 

For example, a D Order would be 

eligible to trade at an undisplayed, 

discretionary price. In addition, D 

Orders could still be designated as 

routable or non-routable and could be 

combined with a Reserve Order. 

However, the Exchange proposes to 

simplify and streamline D Order 

functionality as compared to how dQuotes function. More specifically, the 

Exchange proposes to cap the 

discretionary price range to the 

midpoint of the PBBO, define the 

discretionary price range of such order 

based on the limit price, limit the 

circumstances when a D Order would be 

triggered to exercise discretion, and peg 

the display price of a D Order to the 

same-side PBBO. 

The Exchange believes that these 

proposed differences would simplify the 

operation of D Orders as compared to dQuotes, while at the same time allow 

such orders to both contribute to the 

display of liquidity at the Exchange and 

offer price improvement opportunities 

to contra-side orders. Accordingly, the 

Exchange believes that the proposed D 

Order would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system by promoting price improvement 

to incoming orders, thereby improving 

execution opportunities for market 

participants. These increased price 

improvement opportunities are 

designed to attract additional order flow 

to the Exchange. 

The Exchange believes that making 

the proposed D Order available to Floor 

brokers only is not designed to permit 

unfair discrimination among customers, 

issuers, brokers, or dealers. First, D 

Orders are based on current d-Quote 

functionality, which is available only to 

Floor brokers and is designed to 

replicate electronically the Floor 

broker’s agency role to exercise price 

discretion on an order on behalf of a 

customer.61 Floor brokers fulfill an 

agency broker role on behalf of their 

customers without conflicts and fill a 

void for firms that have chosen to 

allocate resources away from trading 

desks. In addition to this role, Floor 

brokers provide services for more 

illiquid securities, which upstairs 

trading desks may not be staffed to 

manage. Importantly, when providing 

such agency trading services, a Floor 

broker is unconflicted because a Floor 

broker is not trading for the member’s 

own account and does not sell research 

to customers. Floor brokers therefore 

can focus on price discovery and 

volume discovery on behalf of their 

customers, while at the same time 

managing their customers’ order flow to 

ensure that it does not impact pricing on 

the market (e.g., executing large 

positions on behalf of a customer). Use 

of the D Order would facilitate this 

agency function by allowing Floor 

brokers to enter orders on behalf of their 

customers without pricing impact 

because the discretionary price range 

would be undisplayed. When managing 

such customer order flow, Floor brokers 

trading in UTP Securities would 

continue to be subject to Exchange rules 

that are unique to Floor brokers, 

including Rules 95, 122, 123, and 

paragraphs (d)–(j) of Rule 134. In 

addition, any member organization can 

choose to have a Floor broker operation 

and thus have direct access to D Orders 

on behalf of its customers. 

In addition, the Exchange notes that 

while D Orders would be available only 

to Floor brokers, such orders would not 

receive any execution priority or benefit 

when trading at a discretionary price. 

To the contrary, as proposed, if a D 

Order were to exercise discretion and 

trade at an undisplayed, discretionary 

price, such D Order would be ranked 

behind all other same-side orders at that 

price, except for a Yielding Order, 

which by definition yields to all other 

orders and can only be entered by 

another Floor broker. The Exchange 

therefore believes that the proposed 

changes to Rule 7.37, which sets forth 

the allocation process for D Orders, 

would remove impediments to, and 

perfect the mechanisms of, a free and 

open market and a national market 

system by providing transparency 

regarding the priority of such orders. 

More specifically, the Exchange 

believes it would remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system for a D Order trading at a 

discretionary price to yield to other 

orders at that price because any such 

resting order, whether displayed (which 

could only be an odd-lot sized order) or 

non-displayed, would have time priority 

over the D Order trading at a 

discretionary price. To reflect this time 

priority, the Exchange proposes to 

assign a D Order a temporary working 

time associated with the discretionary 

price, which the Exchange believes 

would respect the priority of the 

working times of orders that may have 

a working price equal to the D Order’s 

discretionary price. By assigning a 

temporary working time, the D Order 

would be ranked behind other orders at 

that price. The Exchange further 

believes that maintaining the working 

time of a D Order if it trades at its 

displayed price would reflect that even 

if triggered to exercise discretion, it 

would remain displayed at the sameside PBBO until it is executed. If a D 

Order that is triggered to exercise 

discretion is not fully executed, it 

would remain available for execution at 

its displayed price. Because that display 

price would not be changing, the 

Exchange believes it is reasonable to 

maintain time priority for that D Order 

if it were to execute at that displayed 

price. 

The Exchange believes that the 

manner by which the discretionary 

price for a D Order would be 

determined would remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system because the principles are the 

same as how d-Quotes function, which 

is to provide price improvement while 

exercising the least amount of price 

discretion. Consistent with that current 

behavior, a proposed D Order would be 

able to trade at a discretionary price that 

provides price improvement over 

resting orders on the Exchange Book, 

subject to a cap at the Midpoint Price. 

The Exchange also believes it is 

reasonable for D Orders to be allocated 

among multiple Floor brokers at a price 

based on parity as such model is 

consistent with the Exchange’s current 

parity allocation for Floor brokers. As 

noted above, this parity allocation is 

only among the Floor broker D Orders— 

other resting orders at that price, 

whether displayed or undisplayed, 

would have first priority. The Exchange 

further believes that with this parity 

allocation, it would be appropriate to 

create a separate allocation wheel for D 

Orders when more than one D Order is 

eligible to trade at the same 

discretionary price. The Exchange 

further believes that it is appropriate for 

the most aggressively-priced D Order to 

establish the first position on any such 

allocation wheel as it would encourage 

the entry of aggressively-priced orders 


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Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Notices 64921 

62See Section 11(a)(1) of the Act, 15 U.S.C. 

78k(a)(1). 

63See Rule 70(a)(ii) and (iii). 

64See Securities Exchange Act Release No. 82945 

(March 26, 2018), 83 FR 13553, 13568 (March 29, 

2018) (SR–NYSE–2018–36) (‘‘Approval Order’’). 65 15 U.S.C. 78f(b)(8). 

available to provide price improvement 

to contra-side orders. 

Last Sale Peg Modifier. The Exchange 

believes that the proposed Last Sale Peg 

Modifier would remove impediments to, 

and perfect the mechanisms of, a free 

and open market and a national market 

system and, in general, protect investors 

and the public interest because it would 

expand existing functionality available 

to trading of Exchange-listed securities 

to trading on Pillar, which would aid 

member organizations in their 

compliance with provision of Rule 10b– 

18. Today, the Exchange offers the 

BMZP instruction, which prevents a buy 

order from trading at a price higher than 

the last sale. As proposed, the Last Sale 

Peg Modifier would offer functionality 

based on the BMZP instruction for all 

orders that trade on the Exchange. 

Similar to the BMZP instruction, the 

proposed Last Sale Peg Modifier would 

be available to buy orders and is 

designed to facilitate compliance with 

one of the conditions of the safe harbor 

provision of Rule 10b–18. The Exchange 

believes that the proposed differences 

between the proposed Last Sale Peg 

Modifier and the BMZP instruction are 

designed to streamline the operation of 

the order modifier and promote 

transparency, while at the same time 

maintaining the core purpose of such 

modifier. For example, the Exchange 

believes that limiting this modifier to 

Non-Routable Limit Orders would 

simplify its operation because the 

Exchange would not be able to assist a 

member organization to comply with 

Rule 10b–18 if such order were routed 

to an Away Market. 

Yielding Modifier. The Exchange 

believes that the proposed Yielding 

Modifier would remove impediments to, 

and perfect the mechanisms of, a free 

and open market and a national market 

system and, in general, protect investors 

and the public interest because it would 

expand functionality currently available 

on the Exchange to Floor brokers in 

Exchange-listed securities to all 

securities trading on Pillar by providing 

Floor brokers an electronic method to 

represent orders on Pillar that yield 

priority, parity and precedence to 

displayed and non-displayed orders on 

the Exchange’s book in compliance with 

the G Rule.62 Today, the Exchange offers 

g-Quotes 63 for trading in Exchangelisted securities. The proposed Yielding 

Modifier is based on current g-Quote 

functionality, including that it would 

only be available to Floor brokers. The 

Exchange notes that there is no need to 

offer this modifier to non-Floor brokers 

because the only members with the 

specified G Rule obligations today are 

Floor brokers—the electronic, off-Floor 

entry of orders is subject to an exception 

to the G Rule.64

The Exchange believes the proposed 

rule for the Yielding Modifier is 

designed to provide transparency of 

how the proposed modifier would 

function if there are resting orders on 

both sides of the Exchange book locking 

each other at the same price. The 

Exchange believes that the proposed 

functionality to allow an arriving 

Yielding Order that is priced better than 

a resting order that is locked with a 

contra-side order to trade ahead of such 

same-side resting order is consistent 

with the G Rule because in such 

scenario, the Yielding Order is willing 

to trade at a better price than the resting 

order, and therefore has price priority 

over such resting order. Likewise, the 

Exchange believes it would be 

appropriate to trigger a resting order 

eligible to trade ahead of a same-priced, 

same-side Yielding Order because if 

such resting order is eligible to be 

executed and the Yielding Order does 

not have price priority, the resting order 

should have an opportunity to trade 

first. If it cannot trade, then neither it 

nor the Yielding Order would trade. 

Finally, the Exchange believes it would 

be consistent with the G Rule for a 

Yielding Order to trade ahead of a samepriced resting order that is unable to 

trade because one or more conditions 

cannot be met for such resting order. 

The Exchange believes this trading 

scenario would be consistent with the G 

Rule because the resting order is not 

eligible to trade, and therefore it would 

yield priority to the Yielding Order; the 

Yielding Order would not trade ahead of 

any orders in that execution. 

Lastly, the Exchange believes the 

proposed changes to Rules 7.36 and 7.37 

regarding the priority and parity 

allocation process for orders with a 

Yielding Modifier would remove 

impediments to, and perfect the 

mechanisms of, a free and open market 

and a national market system. The 

Exchange believes it is reasonable to 

prioritize for execution and parity 

purposes orders with a Yielding 

Modifier behind all other orders at the 

same price because doing so is 

consistent with the modifier’s purpose, 

which is to yield priority and parity to 

all other displayed and non-displayed 

orders at the same price, in compliance 

with the G Rule. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,65 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed change extends the 

availability of order types that are 

currently available for Exchange-listed 

securities to trading on Pillar. The 

Exchange operates in a highly 

competitive environment in which its 

unaffiliated exchange competitors 

operate under common rules for the 

trading of securities listed on their 

markets as well as those that they trade 

pursuant to unlisted trading privileges. 

By extending the availability of order 

types that are currently available for 

Exchange-listed securities to trading on 

Pillar, the Exchange would provide its 

members with consistency across 

trading of all securities in the Exchange. 

Doing so would also enable the 

Exchange to further compete with 

unaffiliated exchange competitors that 

also trade UTP securities. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or up to 90 days (i) as the 

Commission may designate if it finds 

such longer period to be appropriate 

and publishes its reasons for so finding 

or (ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 


amozie on DSK3GDR082PROD with NOTICES
64922 Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Notices 

66 17 CFR 200.30–3(a)(12). 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2018–52 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2018–52. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number SR–NYSE–2018–52 and 

should be submitted on or before 

January 8, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.66

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27280 Filed 12–17–18; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration # 15831 and # 15832; 

Connecticut Disaster Number CT–00044] 

Presidential Declaration of a Major 

Disaster for Public Assistance Only for 

the State of Connecticut 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a Notice of the 

Presidential declaration of a major 

disaster for Public Assistance Only for 

the State of Connecticut (FEMA–4410– 

DR), dated 12/05/2018. 

Incident: Severe Storms and Flooding. 

Incident Period: 09/25/2018 through 

09/26/2018. 

DATES: Issued on 12/05/2018. 

Physical Loan Application Deadline 

Date: 02/04/2019. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 09/05/2019. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street SW, Suite 6050, 

Washington, DC 20416, (202) 205–6734. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

President’s major disaster declaration on 

12/05/2018, Private Non-Profit 

organizations that provide essential 

services of a governmental nature may 

file disaster loan applications at the 

address listed above or other locally 

announced locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties/Areas: Middlesex and 

New London Counties, including 

the Mashantucket Pequot Indian 

Tribe and Mohegan Tribe of Indians 

of Connecticut located within New 

London County. 

The Interest Rates are: 

Percent 

For Physical Damage: 

Non-Profit Organizations with 

Credit Available Elsewhere ... 2.500 

Non-Profit Organizations without Credit Available Elsewhere ..................................... 2.500 

For Economic Injury: 

Non-Profit Organizations without Credit Available Elsewhere ..................................... 2.500 

The number assigned to this disaster 

for physical damage is 158316 and for 

economic injury is 158320. 

(Catalog of Federal Domestic Assistance 

Number 59008) 

James Rivera, 

Associate Administrator for Disaster 

Assistance. 

[FR Doc. 2018–27372 Filed 12–17–18; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #15836 and #15837; 

Pennsylvania Disaster Number PA–00088] 

Administrative Declaration of a 

Disaster for the Commonwealth of 

Pennsylvania 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the Commonwealth of Pennsylvania 

dated 12/11/2018. 

Incident: Flooding. 

Incident Period: 08/10/2018 through 

08/15/2018. 

DATES: Issued on 12/11/2018. 

Physical Loan Application Deadline 

Date: 02/11/2019. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 09/11/2019. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street SW, Suite 6050, 

Washington, DC 20416, (202) 205–6734. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

Administrator’s disaster declaration, 

applications for disaster loans may be 

filed at the address listed above or other 

locally announced locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties: Bradford, Columbia, 

Delaware, Northumberland, 

Schuylkill, Susquehanna 

Contiguous Counties: 

Pennsylvania: Berks, Carbon, Chester, 

Dauphin, Juniata, Lackawanna, 

Lebanon, Lehigh, Luzerne, 

Lycoming, Montgomery, Montour, 

Perry, Philadelphia, Snyder, 

Sullivan, Tioga, Union, Wayne, 

Wyoming 

Delaware: New Castle 


amozie on DSK3GDR082PROD with NOTICES