Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81225 

existing purpose 5, to promote 

transparency. 

III. Description of the Modified System 

of Records 

Pursuant to 5 U.S.C. 552a(e)(11), 

interested persons are invited to submit 

written data, views, or arguments on 

this proposal. A report of the proposed 

revisions to this SOR has been sent to 

Congress and to the Office of 

Management and Budget for their 

evaluations. The Postal Service does not 

expect this modified system of records 

to have any adverse effect on individual 

privacy rights. Accordingly, for the 

reasons stated above, the Postal Service 

proposes revisions to this system of 

records as follows: 

SYSTEM NAME AND NUMBER: 

USPS 800.050, Address Mapping 

Directory for Mail Fraud Detection and 

Prevention. 

SECURITY CLASSIFICATION: 

None. 

SYSTEM LOCATION: 

USPS National Customer Support 

Center (NCSC) and USPS IT Eagan Host 

Computing Services Center. 

SYSTEM MANAGER(S) AND ADDRESS: 

Vice President, Product Innovation, 

United States Postal Service, 475 

L’Enfant Plaza SW, Washington, DC 

20260. 

AUTHORITY FOR MAINTENANCE OF THE SYSTEM: 

18 U.S.C. 1341, 1343 and 3061; 39 

U.S.C. 401, 403, 404, 3003 and 3005. 

PURPOSE(S): 

1. To enhance the customer 

experience by improving the security of 

Change-of-Address (COA) and Hold 

Mail processes. 

2. To protect USPS customers from 

becoming potential victims of mail 

fraud and identity theft. 

3. To identify and mitigate potential 

fraud in the COA and Hold Mail 

processes. 

4. To verify a customer’s identity 

when applying for COA and Hold Mail 

services. 

5. To facilitate mail fraud detection 

and prevention for COA and Hold Mail 

service requests through address 

mapping comparisons and cross-checks 

between multiple USPS customer 

systems. 

6. To facilitate the provision of 

accurate and reliable mail and package 

delivery services. 

CATEGORIES OF INDIVIDUALS COVERED BY THE

SYSTEM: 

Customers requesting Change-ofAddress mail forwarding services or 

Hold Mail services. 

CATEGORIES OF RECORDS IN THE SYSTEM: 

1. Customer information: For Changeof-Address requests, customer name(s), 

including first name, middle name or 

initial, last name and suffix, old and 

new address, email address(es), options 

selected for type of move (individual, 

family, or business) and (permanent), 

telephone numbers and device 

identification; for Hold Mail requests, 

customer name(s), including first name, 

middle name or initial, last name and 

suffix, address, email address(es), and 

telephone numbers. 

2. Online user information: Device 

identification, internet Protocol (IP) 

address. 

RECORD SOURCE CATEGORIES: 

Individual customers requesting 

Change-of-Address, mail forwarding, or 

Hold Mail services and other USPS 

Products, Services and features from 

USPS customer systems. 

ROUTINE USES OF RECORDS MAINTAINED IN THE

SYSTEM, INCLUDING CATEGORIES OF USERS AND

THE PURPOSES OF SUCH USES: 

Standard routine uses 1. through 7, 10 

and 11. apply. 

STORING, RETRIEVING, ACCESSING, RETAINING, 

AND DISPOSING OF RECORDS IN THE SYSTEM: 

POLICIES AND PRACTICES FOR STORAGE OF

RECORDS: 

Automated databases. 

POLICIES AND PRACTICES FOR RETRIEVAL OF

RECORDS: 

Retrieval is accomplished by a 

computer-based system, using one or 

more of the following elements: By 

customer name(s), ZIP Code(s), address, 

telephone number, email address, 

device identification and/or IP address. 

POLICIES AND PRACTICES FOR RETENTION AND

DISPOSAL OF RECORDS: 

COA and Hold Mail records are 

retained in an electronic database for 5 

years from the effective date. 

Electronic records existing on 

computer storage media are destroyed 

according to the applicable USPS media 

sanitization practice. 

ADMINISTRATIVE, TECHNICAL, AND PHYSICAL

SAFEGUARDS: 

Electronic records, computers, and 

computer storage media are located in 

controlled-access areas under 

supervision of program personnel. 

Access to records is limited to 

individuals whose official duties require 

such access. Contractors and licensees 

are subject to contract controls and 

unannounced on-site audits and 

inspections. 

Computers are protected by 

mechanical locks, card key systems, or 

other physical access control methods. 

The use of computer systems is 

regulated with installed security 

software, computer logon 

identifications, and operating system 

controls including access controls, 

terminal and transaction logging, and 

file management software. 

Online data transmission and storage 

is protected by encryption, dedicated 

lines, and authorized access codes. 

RECORD ACCESS PROCEDURES: 

Requests for access must be made in 

accordance with the Notification 

Procedure above and the USPS Privacy 

Act regulations regarding access to 

records and verification of identity 

under 39 CFR 266.5. 

CONTESTING RECORD PROCEDURES: 

See Notification Procedure and 

Record Access Procedures above. 

NOTIFICATION PROCEDURES: 

Customers wanting to know if 

information about them is maintained in 

this system of records must address 

inquiries in writing to the system 

manager. Inquiries must contain name, 

address, email, and other identifying 

information. 

EXEMPTIONS PROMULGATED FOR THE SYSTEM: 

None. 

HISTORY: 

December 4, 2018, 83 FR 62631. 

* * * * * 

Joshua J. Hofer, 

Attorney, Federal Compliance. 

[FR Doc. 2020–27514 Filed 12–14–20; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90622; File No. SR– 

NASDAQ–2020–083] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Options 1, Section 1; Options 2, 

Section 5; Options 3, Sections 5, 7, 10, 

15 and 23 

December 9, 2020. 

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

Securities Exchange Act of 1934 

81226 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

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

2 17 CFR 240.19b–4. 

3NOM Options 1, Section 1(a)(47) provides that, 

‘‘The term ‘‘Professional’’ means any person or 

entity that (i) is not a broker or dealer in securities, 

and (ii) places more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial account(s). A Participant or 

a Public Customer may, without limitation, be a 

Professional. All Professional orders shall be 

appropriately marked by Participants.’’ 

4Participants conduct a quarterly review and 

make any appropriate changes to the way in which 

they are representing orders within five days after 

the end of each calendar quarter. While Participants 

only will be required to review their accounts on 

a quarterly basis, if during a quarter the Exchange 

identifies a customer for which orders are being 

represented as Public Customer Orders but that has 

averaged more than 390 orders per day during a 

month, the Exchange will notify the Participant and 

the Participant will be required to change the 

manner in which it is representing the customer’s 

orders within five days. 

5See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

6See Securities Exchange Act Release No. 63028 

(October 1, 2010), 75 FR 62443 (October 8, 2010) 

(SR–NASDAQ–2010–099) (Order Approving a 

Proposed Rule Change To Adopt a Definition of 

Professional and Require That All Professional 

Orders Be Appropriately Marked). 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

30, 2020, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by the Exchange. 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 the 

rules of The Nasdaq Options Market 

LLC (‘‘NOM’’) at Options 1, Section 1 

(Definitions); Options 2, Section 5 

(Market Maker Quotations); Options 3, 

Section 5 (Entry and Display of Orders); 

Options 3, Section 7 (Types of Orders 

and Order and Quote Protocols); 

Options 3, Section 10 (Order Book 

Allocation); Options 3, Section 15 (Risk 

Protections); and Options 3, Section 23 

(Data Feeds and Trade Information). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, 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 

Exchange 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 these 

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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

NOM Rules at Options 1, Section 1 

(Definitions); Options 2, Section 5 

(Market Maker Quotations); Options 3, 

Section 5 (Entry and Display of Orders); 

Options 3, Section 7 (Types of Orders 

and Order and Quote Protocols); 

Options 3, Section 10 (Order Book 

Allocation); Options 3, Section 15 (Risk 

Protections); and Options 3, Section 23 

(Data Feeds and Trade Information). 

Each change is described below. 

Options 1, Section 1 

The Exchange proposes to amend the 

definition of ‘‘Public Customer’’ to 

conform to Nasdaq Phlx LLC’s (‘‘Phlx’’) 

definition at Options 1, Section 1(b)(46). 

The Exchange believes that making clear 

that a Public Customer could be a 

person or entity and clarifying that a 

Public Customer is not a Professional, as 

defined within Options 1, Section 

(a)(47),3 will make clear what it meant 

by that term. Today, a Public Customer 

is not a Professional. In order to 

properly represent orders entered on the 

Exchange, Participants are required to 

indicate whether orders are 

‘‘Professional Orders.’’ To comply with 

this requirement, Participants are 

required to review their Public 

Customers’ activity on at least a 

quarterly basis to determine whether 

orders, which are not for the account of 

a broker-dealer, should be represented 

as Public Customer Orders or 

Professional Orders.4 A Public Customer 

may be a Professional, provided they 

meet the requirements specified within 

NOM Options 1, Section 1(a)(47). If the 

Professional definition is not met, the 

order is treated as a Public Customer 

order. 

The Exchange also proposes to 

remove a sentence within Options 1, 

Section 1(a)(47) which provides, ‘‘A 

Participant or a Public Customers may, 

without limitation, be a Professional.’’ 

This sentence is confusing, unnecessary, 

and adds no information to this defined 

term. By way of comparison, Phlx 

Options 1, Section 1(b)(46) does not 

contain a similar sentence and that 

sentence was recently removed from 

Nasdaq BX, Inc.’s (‘‘BX’’) Rules.5 The 

Exchange adopted a Professional 

designation in 2010 6 and has 

differentiated Public and Professional 

customers since that time. 

The Exchange also proposes to 

remove a sentence, within Options 3, 

Section 10(a)(1)(C)(i), which provides 

that a Public Customer order does not 

include a Professional order. Indicating 

that a Public Customer order is not a 

Professional Order is no longer 

necessary because of the proposed 

definition for Public Customer. Today, 

the definition of a Public Customer does 

not explicitly exclude a Professional. 

The language that the Exchange 

proposes to delete currently indicates 

that Professionals would not be treated 

the same as a Public Customer in terms 

of priority and, therefore, would not 

receive the same allocation that is 

reserved for Public Customer orders. 

Since NOM is amending the definition 

of a Public Customer to explicitly 

exclude Professionals, the language in 

the allocation rule is no longer 

necessary to distinguish these two types 

of market participants. 

Bid/Ask Differentials 

Currently, NOM Market Maker intraday quoting requirements, within 

Options 2, Section 5(d)(2), provide, 

Bid/ask Differentials (Quote Spread 

Parameters). Options on equities (including 

Exchange-Traded Fund Shares), and on index 

options must be quoted with a difference not 

to exceed $5 between the bid and offer 

regardless of the price of the bid, including 

before and during the opening. However, 

respecting in-the-money series where the 

market for the underlying security is wider 

than $5, the bid/ask differential may be as 

wide as the spread between the national best 

bid and offer in the underlying security. The 

Exchange may establish differences other 

than the above for one or more series or 

classes of options. 

The Exchange proposes to amend NOM 

Options 2, Section 5(d)(2) to add the 

words ‘‘Intra-Day’’ before the title ‘‘Bid/ 

ask Differentials (Quote Spread 

Parameters)’’ to make clear that these 

requirements are intra-day. Also, the 

Exchange proposes to amend this 

paragraph to remove the phrase, 

‘‘including before and during the 

opening.’’ The bid/ask differentials, 

within NOM Options 2, Section 5(d)(2), 

will continue to apply intra-day. This is 

consistent with the Exchange’s existing 

practice. Today, the bid/ask differentials 

applicable to the opening are noted 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81227 

7NOM Options 3, Section 8(a)(6) provides, ‘‘Valid 

Width National Best Bid or Offer’’ or ‘‘Valid Width 

NBBO’’ shall mean the combination of all away 

market quotes and any combination of NOMregistered Market Maker orders and quotes received 

over the QUO or SQF Protocols within a specified 

bid/ask differential as established and published by 

the Exchange. The Valid Width NBBO will be 

configurable by underlying, and tables with valid 

width differentials will be posted by Nasdaq on its 

website. Away markets that are crossed will void 

all Valid Width NBBO calculations. If any Market 

Maker orders or quotes on NOM are crossed 

internally, then all such orders and quotes will be 

excluded from the Valid Width NBBO calculation.’’ 

8NOM’s System Settings page is located at: 

https://www.nasdaq.com/docs/2020/07/02/NOM_

SystemSettings.pdf. 

9Phlx has an All-or-None Order type that is nondisplayed. See Options 3, Section 7(b)(5). Phlx 

Options 3, Section 5(c) accounts for this nondisplayed order on the order book. NOM has a Price 

Improving Order is already described within 

Options 3, Section 5(c). A Price Improving Order on 

NOM displays differently than Phlx’s All-Or-None 

Order and therefore is described differently within 

Options 3, Section 5(c). Otherwise, NOM has no 

other non-displayed order types. 

10NOM Options 3, Section 5(d) provides, ‘‘An 

order will not be executed at a price that trades 

through another market or displayed at a price that 

would lock or cross another market. An order that 

is designated by the member as routable will be 

routed in compliance with applicable TradeThrough and Locked and Crossed Markets 

restrictions. An order that is designated by a 

member as non-routable will be re-priced in order 

to comply with applicable Trade-Through and 

Locked and Crossed Markets restrictions. If, at the 

time of entry, an order that the entering party has 

elected not to make eligible for routing would cause 

a locked or crossed market violation or would cause 

a trade-through violation, it will be re-priced to the 

current national best offer (for bids) or the current 

national best bid (for offers) and displayed at one 

minimum price variance above (for offers) or below 

(for bids) the national best price.’’ 

11See Options 5, Section 4 (Order Routing), 

which describes the repricing of orders for both 

routable and non-routable orders within Options 5, 

Section 4(a)(iii)(A), (B) and (C). 

12The final sentence of current NOM Options 3, 

Section 7(a)(1) provides, ‘‘The replacement order 

will not retain the priority of the cancelled order 

except when the replacement order reduces the size 

of the order and all other terms and conditions are 

retained.’’ 

13Options 3, Section 7(a)(1) provides, ‘‘The 

replacement order will not retain the priority of the 

cancelled order except when the replacement order 

reduces the size of the order and all other terms and 

conditions are retained.’’ 

14See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

within Options 3, Section 8(a)(6).7 As 

noted within the rule, NOM publishes 

its specified bid/ask differential on its 

system settings page.8 The bid/ask 

differentials noted for the Valid Width 

NBBO within the opening provide for 

quotations with a difference that does 

not exceed $5 between the bid and offer 

regardless of the price of the bid. It is 

not necessary to discuss the opening 

bid/ask differentials within Options 2, 

Section 5 as those differentials are 

specifically noted within the opening 

rule. 

Options 3, Section 5 

The Exchange proposes to amend 

Options 3, Section 5(c) to add additional 

rule text similar to Phlx Options 3, 

Section 5(c).9 NOM’s current Options 3, 

Section 5(c) states, ‘‘The System 

automatically executes eligible orders 

using the Exchange’s displayed best bid 

and offer (‘‘BBO’’) or the Exchange’s 

non-displayed order book (‘‘internal 

BBO’’).’’ The Exchange proposes to 

state, ‘‘The System automatically 

executes eligible orders using the 

Exchange’s displayed best bid and offer 

(‘‘BBO’’) or the Exchange’s nondisplayed order book (‘‘internal BBO’’) 

if the best bid and/or offer on the 

Exchange has been repriced pursuant to 

subsection (d) below.’’ Today, NOM reprices certain orders to avoid locking 

and crossing away markets, consistent 

with its Trade-Through Compliance and 

Locked or Crossed Markets 

obligations.10 Orders which lock or 

cross an away market automatically reprice one minimum price improvement 

inferior to the original away best bid/ 

offer price to one minimum trading 

increment away from the new away best 

bid/offer price or its original limit 

price.11 The re-priced order is displayed 

on OPRA. The order remains on NOM’s 

Order Book and is accessible at the nondisplayed price. For example, a limit 

order may be accessed on NOM by a 

Participant if the limit order is priced 

better than the NBBO. The Exchange 

believes that the addition of this rule 

text will provide additional clarity. 

Options 3, Section 7 

The Exchange proposes to amend the 

Cancel-Replacement Order, within 

Options 3, Section 7(a)(1). By way of 

background with respect to cancelling 

and replacing an order, a Participant has 

the option of either submitting a cancel 

order and then separately submitting a 

new order, which serves as a 

replacement of the original order, in two 

separate messages, or submitting a 

single cancel and replace order in one 

message (‘‘Cancel-Replacement Order’’). 

Submitting a cancel order and then 

separately submitting a new order will 

not retain the priority of the original 

order. 

Currently, the rule text for CancelReplacement Order provides, ‘‘CancelReplacement Order shall mean a single 

message for the immediate cancellation 

of a previously received order and the 

replacement of that order with a new 

order with new terms and conditions. If 

the previously placed order is already 

filled partially or in its entirety, the 

replacement order is automatically 

canceled or reduced by the number of 

contracts that were executed. The 

replacement order will not retain the 

priority of the cancelled order except 

when the replacement order reduces the 

size of the order and all other terms and 

conditions are retained.’’ The Exchange 

proposes to replace the words ‘‘shall 

mean’’ with ‘‘is’’ and remove the final 

sentence of the rule text.12 The 

Exchange proposes to add a new 

sentence to the end of the rule which 

provides, ‘‘The replacement order will 

retain the priority of the cancelled 

order, if the order posts to the Order 

Book, provided the price is not 

amended, and the size is not increased.’’ 

Unlike the sentence proposed for 

deletion, the proposed sentence states in 

the affirmative the conditions under 

which the Cancel-Replacement Order 

will retain priority. Price and size are 

the terms that will determine if the 

Cancel-Replacement Order retains its 

priority, as is the case today, other terms 

and conditions do not amend the 

priority of the Cancel-Replacement 

Order. 

The Exchange is not amending the 

current System functionality of a 

Cancel-Replacement Order with respect 

to the terms that will cause the order to 

lose priority. Today, and with the 

proposed change, if a Participant does 

not change or increase the size of the 

order, it would not trigger a loss in 

priority. Options 3, Section 7(a)(1) states 

only if the size of the order were 

reduced would a loss of priority occur.13

The proposed rule reverses the phrasing 

in the current rule and, instead, 

describes changes to priority when size 

is increased. Priority is retained if the 

size of the order does not change or is 

not increased. The rule is intended to 

provide transparency regarding changes 

to a Cancel-Replacement Order which 

would trigger a loss in priority. Today, 

and with the proposal, the price of the 

order may not be changed when 

submitting a Cancel-Replacement Order; 

that would be a new order. A similar 

change was recently made to BX’s 

Cancel-Replacement Order.14

The Exchange proposes to amend 

‘‘Limit Orders,’’ within Options 3, 

Section 7(a)(2). The Exchange proposes 

to style ‘‘Limit Orders’’ in the singular 

and change ‘‘are’’ to ‘‘is an’’ and 

‘‘orders’’ to ‘‘order.’’ A Limit Order on 

NOM operates in the same manner as a 

Limit Order on BX. The Exchange 

proposes to conform the rule text of 

NOM’s Limit Order to BX Options 3, 

Section 7(a)(3) by adding a sentence 

describing marketable limit orders. BX 

recently amended its rule to similarly 

81228 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

15 Id. 16See NOM’s Trading Halts rule at Options 3, 

Section 9(d)(2), ‘‘After the opening, the Exchange 

shall reject Market Orders, as defined in Options 3, 

Section 7, and shall notify Participants of the reason 

for such rejection.’’ 

17BX’s rule describes the PRISM mechanism, 

while NOM has no auction mechanisms. 

change its description of Limit Order.15

The Exchange proposes to state, ‘‘A 

marketable limit order is a limit order to 

buy (sell) at or above (below) the best 

offer (bid) on the Exchange.’’ The 

Exchange believes that the rule 

amendment more aptly describes a 

marketable limit order as compared to 

the current rule text, which is 

confusing, but was intended to convey 

the substance of the proposed text. The 

new sentence does not substantively 

amend the current rule text and 

conforms NOM’s description with BX’s 

description. 

The Exchange proposes to amend 

‘‘Minimum Quantity Orders,’’ within 

Options 3, Section 7(a)(3). The 

Exchange proposes to style ‘‘Minimum 

Quantity Orders’’ in the singular and 

change ‘‘are’’ to ‘‘is an’’ and ‘‘orders’’ to 

‘‘order.’’ These amendments are 

technical and non-substantive. The 

Exchange is otherwise not amending the 

Minimum Quantity Order rule text. 

The Exchange proposes to amend 

‘‘Market Orders,’’ within Options 3, 

Section 7(a)(4). The Exchange proposes 

to style ‘‘Market Orders’’ in the singular 

and change ‘‘are’’ to ‘‘is an’’ and 

‘‘orders’’ to ‘‘order.’’ These amendments 

are technical and non-substantive. The 

Exchange also proposes to amend a 

current sentence to state, ‘‘Participants 

can designate that their Market Orders 

not executed after a pre-established 

period of time, as established by the 

Exchange, will be cancelled back to the 

Participant, once an option series has 

opened for trading.’’ Market Orders 

submitted during the opening may be 

executed, or cancelled if the Market 

Order is priced through the opening 

price. The Exchange would only cancel 

those Market Orders that remained on 

the Order Book once an option series 

opened.16 The pre-established period of 

time would commence once the intraday trading session begins for that 

options series and the order would be 

cancelled back to the Participant, 

provided the Participant elected to 

cancel back its Market Orders. The 

Exchange proposes to make clear that 

while the opening is on-going, and the 

intra-day trading session has not 

commenced, the pre-established period 

of time would not commence. Further, 

the Exchange proposes to note that 

‘‘Market Orders on the Order Book 

would be immediately cancelled if an 

options series halted, provided the 

Participant designated the cancellation 

of Market Orders.’’ Once an options 

series halts for trading, the Exchange 

conducts another Opening Process. In 

the case where a Market Order was 

resting on the Order Book, and the 

Participant had designated the 

cancellation of Market Orders, in the 

event of a halt, the Market Orders 

resting on the Order Book would 

immediately cancel. This proposed rule 

text is consistent with existing System 

functionality. The Exchange believes 

that this additional rule text brings 

greater clarity to the Market Order type. 

The Exchange proposes to amend 

‘‘Price Improving Orders,’’ within 

Options 3, Section 7(a)(5). The 

Exchange proposes to style ‘‘Price 

Improving Orders’’ in the singular and 

change ‘‘are’’ to ‘‘is an’’ and ‘‘orders’’ to 

‘‘order.’’ 

The Exchange proposes to amend ‘‘On 

the Open Order,’’ within Options 3, 

Section 7(a)(6) by removing the words 

‘‘The term’’ at the beginning of the 

sentence and change ‘‘shall mean’’ to 

‘‘is.’’ 

The Exchange proposes to amend 

‘‘Intermarket Sweep Order’’ or ‘‘ISO,’’ 

within Options 3, Section 7(a)(7). 

Today, the rule text provides, 

‘‘Intermarket Sweep Order’’ or ‘‘ISO’’ are 

limit orders that are designated as ISOs in the 

manner prescribed by Nasdaq and are 

executed within the System by Participants 

at multiple price levels without respect to 

Protected Quotations of other Eligible 

Exchanges as defined in Options 5, Section 

1. ISOs may have any time-in-force 

designation except WAIT, are handled within 

the System pursuant to Options 3, Section 10 

and shall not be eligible for routing as set out 

in Options 3, Section 19. ISOs with a timein-force designation of GTC are treated as 

having a time-in-force designation of Day. 

(1) Simultaneously with the routing of an 

ISO to the System, one or more additional 

limit orders, as necessary, are routed by the 

entering party to execute against the full 

displayed size of any protected bid or offer 

(as defined in Options 5, Section 1) in the 

case of a limit order to sell or buy with a 

price that is superior to the limit price of the 

limit order identified as an intermarket 

sweep order (as defined in Options 5, Section 

1). These additional routed orders must be 

identified as ISOs. 

The Exchange proposes to replace the 

current rule, within Options 3, Section 

7(a)(7), with the exception of Options 3, 

Section 7(a)(7)(1), which is being 

retained by re-lettered as ‘‘A,’’ with the 

following rule text which is similar to 

BX Options 3, Section 7(a)(6),17 to 

describe an ISO Order, ‘‘is a Limit Order 

that meets the requirements of Options 

5, Section 1(8). Orders submitted to the 

Exchange as ISO are not routable and 

will ignore the ABBO and trade at 

allowable prices on the Exchange. ISOs 

may be entered on the Order Book. ISOs 

may have any time-in-force designation 

and are handled within the System 

pursuant to Options 3, Section 10 and 

shall not be eligible for routing as set 

out in Options 5, Section 4. ISO Orders 

may not be submitted during the 

opening.’’ 

An ISO Order is a Limit Order, as 

noted in the current text and Options 5, 

Section 1, continues to be referenced in 

the proposed text. The Exchange 

continues to note that the orders are not 

routable. The additional text, ‘‘. . . will 

ignore the ABBO and trade at allowable 

prices on the Exchange’’ is more precise 

than the current rule text and describes 

current functionality. The Exchange 

further proposes to state, ‘‘ISOs may be 

entered on the Order Book.’’ That is also 

the case today. The remainder of the 

current rule text is not necessary as 

Options 5, Section 1(8) is cited. 

Removing the current rule text and 

replacing it with text which describes 

the proper time-in-force designation 

will make clear what is acceptable on 

NOM today. This rule text is not 

proposed to change the functionality of 

an ISO Order. The Exchange believes 

the proposed description provides a 

more succinct description. 

Today, ISOs may have any time-inforce designation, except WAIT, and 

further requires that ISOs with a timein-force designation of GTC are treated 

as having a time-in-force designation of 

Day. The Exchange proposes to remove 

the WAIT time-in-force within this 

proposed rule change, as described in 

more detail below, and, therefore, the 

WAIT order type no longer needs to be 

cited. 

Further, today, NOM’s System does 

not treat an ISO with a time-in-force 

designation of GTC as having a time-inforce designation of Day, as provided for 

within NOM’s current rule at Options 3, 

Section 7(a)(6), rather those orders are 

treated as GTC. The current sentence is 

being removed because it is inaccurate. 

The proposed sentence accurately 

describes the System functionality. The 

Exchange does not believe that an ISO 

with a time-in-force designation of GTC 

was ever treated as having a time-inforce designation of Day, the rule text 

was simply inaccurate. 

The Exchange proposes to amend 

‘‘One-Cancels-the-Other Order’’ at 

renumbered Options 3, Section 7(a)(8) 

by changing ‘‘shall mean’’ to ‘‘is.’’ 

The Exchange proposes to amend the 

‘‘All-or-None Order,’’ within 

renumbered Options 3, Section 7(a)(9). 

The Exchange proposes to replace ‘‘shall 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81229 

18BX Options 3, Section 7(b)(1) provides, ‘‘An 

Opening Only order (‘‘OPG’’) is entered with a TIF 

of ‘‘OPG’’. This order can only be executed in the 

Opening Process pursuant to Options 3, Section 8. 

This order type is not subject to any protections 

listed in Options 3, Section 15. Any portion of the 

order that is not executed during the Opening 

Process is cancelled. OPG orders may not route.’’ 

19BX Options 3, Section 7(b)(2) provides, 

‘‘Immediate-or-Cancel’’ or ‘‘IOC’’ is a Market Order 

or Limit Order to be executed in whole or in part 

upon receipt. Any portion not so executed is 

cancelled. (A) Orders entered with a TIF of IOC are 

not eligible for routing. (B) IOC orders may be 

entered through FIX or SQF, provided that an IOC 

Order entered by a Market Maker through SQF is 

not subject to the Limit Order Price Protection or 

the Market Order Spread Protection in Options 3, 

Section 15(a)(1) and (a)(2), respectively; (C) Orders 

entered into the Price Improvement Auction 

(‘‘PRISM’’) Mechanism are considered to have a TIF 

of IOC. By their terms, these orders will be: (1) 

Executed after an exposure period, or (2) cancelled. 

20Phlx Options 3, Section 7(c)(1) provides, ‘‘Day. 

If not executed, an order entered with a TIF of 

‘‘Day’’ expires at the end of the day on which it was 

entered. All orders by their terms are Day Orders 

unless otherwise specified. Day orders may be 

entered through FIX.’’ 

21See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

22Phlx Options 3, Section 7(c)(4) provides, ‘‘A 

Good Til Cancelled (‘‘GTC’’) Order entered with a 

TIF of GTC, if not fully executed, will remain 

available for potential display and/or execution 

unless cancelled by the entering party, or until the 

option expires, whichever comes first. GTC Orders 

shall be available for entry from the time prior to 

market open specified by the Exchange until market 

close.’’ 

23 15 U.S.C. 78s(b)(1). 

mean’’ with ‘‘is’’ and capitalize market 

order and limit orders. 

The Exchange proposes to amend the 

‘‘Post-Only Orders,’’ within renumbered 

Options 3, Section 7(a)(10). The 

Exchange proposes to replace ‘‘are’’ 

with ‘‘is an’’ and make Post-Only Orders 

singular. An extra space is also being 

removed. 

The Exchange proposes to amend 

Options 3, Section 7(b) to define ‘‘Time 

in Force’’ as ‘‘TIF’’. 

With respect to an ‘‘On the Open 

Order,’’ or ‘‘OPG’’ Order, within 

Options 3, Section 7(b)(1), the Exchange 

notes that OPGs may not route. This is 

the case today. This order type 

functions in the same way as BX’s OPG 

Order at Options 3, Section 7(b)(1).18

The Exchange is adding rule text to 

make clear the manner in which an OPG 

Order would be treated, which is similar 

to how a BX OPG Order is treated today. 

The Exchange proposes to amend an 

‘‘Immediate-Or-Cancel’’ Order or ‘‘IOC,’’ 

within Options 3, Section 7(b)(2) to add 

hyphens and make ‘‘Or’’ lowercase. The 

Exchange proposes to remove the 

current description which provides that 

an IOC Order, ‘‘shall mean for orders so 

designated, that if after entry into the 

System a marketable order (or 

unexecuted portion thereof) becomes 

non-marketable, the order (or 

unexecuted portion thereof) shall be 

canceled and returned to the entering 

participant. IOC Orders shall be 

available for entry from the time prior 

to market open specified by the 

Exchange on its website until market 

close and for potential execution from 

9:30 a.m. until market close. IOC Orders 

entered between the time specified by 

the Exchange on its website and 9:30 

a.m. Eastern Time will be held within 

the System until 9:30 a.m. at which time 

the System shall determine whether 

such orders are marketable.’’ The 

Exchange proposes to replace this 

description with rule text similar to BX 

Options 3, Section 7(b)(2) 19 as these 

order types are identical, except that 

NOM has the OTTO protocol and BX 

does not, and also as mentioned 

previously NOM has no auctions. 

Additionally, BX’s rule addresses 

limitations in order protections that do 

not exist today on NOM. The Exchange 

proposes to state that an Immediate-orCancel Order or ‘‘IOC’’ Order is a 

Market Order or Limit Order to be 

executed in whole or in part upon 

receipt. Any portion not so executed is 

cancelled and/or routed pursuant to 

Participant’s instruction. IOC orders 

may be entered through FIX, OTTO or 

SQF; IOC Orders entered through OTTO 

or SQF may not route. Today, IOC 

Orders entered through OTTO or SQF 

do not route; only orders entered 

through FIX may route. The SQF 

interface is a quoting interface, the 

Exchange does not route quotes. With 

respect to OTTO, orders submitted by 

NOM Market Makers over this interface 

are treated as quotes and similarly do 

not route. The Exchange is proposing to 

memorialize this information within the 

description of an IOC Order to add 

clarity. 

The Exchange proposes to amend the 

TIF of ‘‘DAY’’ at Options 5, Section 

7(b)(3) to remove the words ‘‘shall mean 

for orders so designated’’ and add ‘‘is an 

order’’ to conform the rule text to other 

text in this rule. The Exchange also 

proposes to conform the description of 

a TIF of ‘‘DAY’’ similar to Phlx Options 

3, Section 7(c)(1).20 The Exchange 

believes that the remainder of the 

description for a Day Order, ‘‘if after 

entry into the System, the order is not 

fully executed, the order (or unexecuted 

portion thereof) shall remain available 

for potential display and/or execution 

until market close, unless canceled by 

the entering party, after which it shall 

be returned to the entering party. Day 

Orders shall be available for entry from 

the time prior to market open specified 

by the Exchange on its website until 

market close and for potential execution 

from 9:30 a.m. until market close,’’ is 

unnecessarily verbose and proposes to 

remove this rule text. The Exchange 

proposes to state, ‘‘Day’’ is an order 

entered with a TIF of ‘‘Day’’ that expires 

at the end of the day on which it was 

entered, if not executed. All orders by 

their terms are Day Orders unless 

otherwise specified. Day Orders may be 

entered through FIX or OTTO. A Day 

Order on Phlx functions in the same 

way as a Day Order on NOM. The Phlx 

rule text is more succinct in describing 

this order type. Similar changes were 

recently made on BX.21

The Exchange proposes to amend the 

TIF of ‘‘Good Til Cancelled’’ or ‘‘GTC’’ 

at Options 5, Section 7(b)(4). The 

Exchange proposes to remove the words 

‘‘shall mean for orders’’ and add ‘‘is an 

order.’’ The Exchange also proposes to 

conform the rule text similar to Phlx 

Options 3, Section 7(c)(4),22 and provide 

that a ‘‘Good Til Cancelled’’ or ‘‘GTC’’ 

is ‘‘an order entered with a TIF of 

‘‘GTC’’ that, if not fully executed, will 

remain available for potential display 

and/or execution unless cancelled by 

the entering party, or until the option 

expires, whichever comes first. GTC 

Orders shall be available for entry from 

the time prior to market open specified 

by the Exchange until market close. GTC 

Orders may only be entered through 

FIX.’’ The Exchange would remove the 

rule text which provides, ‘‘that if after 

entry into System, the order is not fully 

executed, the order (or unexecuted 

portion thereof) shall remain available 

for potential display and/or execution 

unless cancelled by the entering party, 

or until the option expires, whichever 

comes first. GTC Orders shall be 

available for entry from the time prior 

to market open specified by the 

Exchange on its website until market 

close and for potential execution from 

9:30 a.m. until market close.’’ A GTC 

Order on Phlx functions in the same 

way as a GTC Order on NOM. The 

Exchange is not proposing to amend the 

functionality of a GTC Order, rather the 

Exchange believes the proposed 

description is more succinct. 

The Exchange proposes to no longer 

offer a TIF of ‘‘WAIT.’’ The Exchange 

would remove the rule text at NOM 

Options 3, Section 7(b)(5). If the 

Exchange desires to offer this TIF in the 

future, it would file a proposed rule 

change with the Commission pursuant 

to Section 19(b)(1) of the Act.23 The 

Exchange has provided notice of its 

intention to remove the TIF of 

81230 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

24See Options Trader Alert #2020–26. 

25See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

26See Securities Exchange Act Release No. 89759 

(September 3, 2020). 85 FR 55877 (September 10, 

2020) (SR–BX–2020–023). 

27 15 U.S.C. 78f(b). 

28 15 U.S.C. 78f(b)(5). 

29NOM Options 1, Section 1(a)(47) provides that, 

‘‘The term ‘‘Professional’’ means any person or 

entity that (i) is not a broker or dealer in securities, 

and (ii) places more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial account(s). A Participant or 

a Public Customer may, without limitation, be a 

Professional. All Professional orders shall be 

appropriately marked by Participants.’’ 

30Participants conduct a quarterly review and 

make any appropriate changes to the way in which 

they are representing orders within five days after 

the end of each calendar quarter. While Participants 

only will be required to review their accounts on 

a quarterly basis, if during a quarter the Exchange 

identifies a customer for which orders are being 

represented as Public Customer Orders but that has 

averaged more than 390 orders per day during a 

month, the Exchange will notify the Participant and 

the Participant will be required to change the 

manner in which it is representing the customer’s 

orders within five days. 

31See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

‘‘WAIT’’.24 BX previously offered a 

WAIT order type recently and 

discontinued this order types because it 

was not being utilized to a great 

extent.25

The Exchange proposes to note, 

within NOM Options 3, Section 7(c), the 

various routing options which are 

available. The Exchange proposes to add 

rule text which provides, ‘‘Routing 

Strategies. Orders may be entered on the 

Exchange with a routing strategy of 

SEEK, SRCH or Do-Not-Route (‘‘DNR’’) 

as provided in Options 5, Section 4 

through FIX only.’’ 

Finally, the Exchange proposes to reletter current Options 3, Section 7(c) 

and (d). 

Options 3, Section 15 

The Exchange proposes to amend 

Options 3, Section 15(c) relating to AntiInternalization to make clear that the 

Anti-Internalization functionality does 

not apply during the opening. A similar 

change was recently made to BX’s 

Rules.26 The Exchange proposes to 

clarify that Anti-Internalization does not 

apply during an opening or reopening 

following a trading halt, pursuant to 

Options 3, Section 8, to provide more 

specificity on how this functionality 

currently operates. The Exchange notes 

that the same procedures used during an 

opening are used to reopen an option 

series after a trading halt, and therefore 

proposes to specify that AntiInternalization will not apply during the 

opening (i.e., the opening and halt 

reopening processes). During the 

opening, Market Makers are able to 

observe the primary market and then 

determine how they would like to 

quote. They are not required to quote in 

the opening on NOM. Therefore, AntiInternalization is unnecessary during an 

opening due to the high level of control 

that Market Makers exercise over their 

quotes during this process. 

Options 3, Section 23 

The Exchange proposes to amend 

Options 3, Section 23, Data Feeds and 

Trade Information, to update its 

description of Nasdaq ITCH to Trade 

Options (‘‘ITTO’’). The Exchange 

proposes to amend ITTO at Options 3, 

Section 23(a)(1) to more closely align 

with current System operation. The 

Exchange proposes a technical 

amendment to the first sentence to 

replace a comma with the word ‘‘and.’’ 

The Exchange also proposes to relocate 

rule text concerning order imbalances to 

the end of the description. The 

Exchange proposes to amend the first 

sentence to state that ITTO is a data feed 

that provides full order and quote depth 

information for individual orders and 

quotes on the NOM book, and last sale 

information for trades executed on 

NOM. The Exchange would amend and 

relocate the rule text that provides, ‘‘and 

Order Imbalance Information as set forth 

in NOM Rules Options 3, Section 8’’ at 

the end of the first sentence. The 

Exchange proposes to add a sentence at 

the end of the description within 

Options 3, Section 8 which states, ‘‘The 

feed also provides order imbalances on 

opening/re-opening (size of matched 

contracts and size of the imbalance).’’ 

This sentence makes clear that order 

imbalance information is provided for 

both an opening and re-opening process. 

Today, a re-opening process initiates 

after a trading halt has occurred intraday. Also, the Exchange notes the 

specific information that would be 

provided, namely the size of matched 

contracts and size of the imbalance. The 

Exchange believes that this additional 

context to imbalance messages will 

provide market participants with more 

complete information about what is 

contained in the data feed. The 

Exchange notes that this information is 

available today and the rule text is being 

amended to make clear what 

information is currently provided. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,27 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,28

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

Options 1, Section 1 

The Exchange’s proposal to amend 

the definition of ‘‘Public Customer’’ to 

conform to Phlx’s definition is intended 

to provide greater specificity regarding 

what is meant by the term ‘‘Public 

Customer.’’ The Exchange believes that 

making clear that a Public Customer 

could be a person or entity and 

clarifying that a Public Customer is not 

a Professional, as defined within 

Options 1, Section (a)(47),29 will make 

clear what it meant by that term. Today, 

a Public Customer is not a Professional. 

In order to properly represent orders 

entered on the Exchange, Participants 

are required to indicate whether orders 

are ‘‘Professional Orders.’’ To comply 

with this requirement, Participants are 

required to review their Public 

Customers’ activity on at least a 

quarterly basis to determine whether 

orders, which are not for the account of 

a broker-dealer, should be represented 

as Public Customer Orders or 

Professional Orders.30 A Public 

Customer may be a Professional, 

provided they meet the requirements 

specified within NOM Options 1, 

Section 1(a)(47). If the Professional 

definition is not met, the order is treated 

as a Public Customer order. The 

Exchange believes that it is consistent 

with the Act to state within the 

definition of ‘‘Public Customers’’ that a 

Professional is not a Public Customer. 

As noted above, there is a process for 

determining if a market participant 

qualifies as a ‘‘Professional.’’ This 

specificity will serve to protect investors 

and the public interest in that the terms 

‘‘Public Customer’’ and ‘‘Professional’’ 

are separate categories of market 

participants, as defined. Also, this 

definition conforms to Phlx’s definition 

at Options 1, Section 1(b)(47). 

The Exchange’s proposal to remove a 

sentence within Options 1, Section 

1(a)(47) which provides, ‘‘A Participant 

or a Public Customers may, without 

limitation, be a Professional,’’ is 

consistent with the Act. This sentence is 

confusing, unnecessary, and adds no 

information to this defined term. By 

way of comparison, Phlx Options 1, 

Section 1(b)(46) does not contain a 

similar sentence and that sentence was 

recently removed from Nasdaq BX, 

Inc.’s (‘‘BX’’) Rules.31 The Exchange 

adopted a Professional designation in 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81231 

32See Securities Exchange Act Release No. 63028 

(October 1, 2010), 75 FR 62443 (October 8, 2010) 

(SR–NASDAQ–2020–099) (Order Approving a 

Proposed Rule Change To Adopt a Definition of 

Professional and Require That All Professional 

Orders Be Appropriately Marked). 

33NOM Options 3, Section 8(a)(6) provides, 

‘‘Valid Width National Best Bid or Offer’’ or ‘‘Valid 

Width NBBO’’ shall mean the combination of all 

away market quotes and any combination of NOMregistered Market Maker orders and quotes received 

over the QUO or SQF Protocols within a specified 

bid/ask differential as established and published by 

the Exchange. The Valid Width NBBO will be 

configurable by underlying, and tables with valid 

width differentials will be posted by Nasdaq on its 

website. Away markets that are crossed will void 

all Valid Width NBBO calculations. If any Market 

Maker orders or quotes on NOM are crossed 

internally, then all such orders and quotes will be 

excluded from the Valid Width NBBO calculation.’’ 

34NOM’s System Settings page is located at: 

https://www.nasdaq.com/docs/2020/07/02/NOM_

SystemSettings.pdf. 

35Phlx has an All-or-None Order type that is nondisplayed. See Options 3, Section 7(b)(5). Phlx 

Options 3, Section 5(c) accounts for this nondisplayed order on the order book. NOM has a Price 

Improving Order is already described within 

Options 3, Section 5(c). A Price Improving Order on 

NOM displays differently than Phlx’s All-Or-None 

Order and therefore is described differently within 

Options 3, Section 5(c). Otherwise, NOM has no 

other non-displayed order types. 

36See NOM Options 3, Section 5(d). 

37See Options 5, Section 4 (Order Routing), 

which describes the repricing of orders for both 

routable and non-routable orders within Options 5, 

Section 4(a)(iii)(A), (B) and (C). 

38Options 3, Section 7(a)(1) provides, ‘‘The 

replacement order will not retain the priority of the 

cancelled order except when the replacement order 

reduces the size of the order and all other terms and 

conditions are retained.’’ 

39See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

2010 32 and has differentiated Public 

and Professional customers since that 

time. NOM proposes removing this 

sentence because it does not add useful 

information to understanding who may 

qualify as a Professional. 

The Exchange’s proposal to remove a 

sentence, within Options 3, Section 

10(a)(1)(C)(i), which allocation rule 

provides that a Public Customer order 

does not include a Professional order is 

consistent with the Act. Today, the 

definition of a Public Customer does not 

explicitly exclude a Professional. 

Indicating that a Public Customer order 

is not a Professional Order is no longer 

necessary because of the proposed 

definition for Public Customer. The 

language that the Exchange proposes to 

delete, currently indicates that 

Professionals would not be treated the 

same as a Public Customer in terms of 

priority and, therefore, would not 

receive the same allocation that is 

reserved for Public Customer orders. 

Since NOM is amending the definition 

of a Public Customer to explicitly 

exclude Professionals, the language in 

the allocation rule is no longer 

necessary to distinguish these two types 

of market participants. 

Bid/Ask Differentials 

The Exchange’s proposal to amend 

NOM Options 2, Section 5(d)(2) to add 

the words ‘‘Intra-Day’’ before the title 

‘‘Bid/ask Differentials (Quote Spread 

Parameters)’’ and make clear that 

remove references to the opening, will 

make clear for Market Makers their 

intra-day requirements. The bid/ask 

differentials, within NOM Options 2, 

Section 5(d)(2), will continue to apply 

intra-day. This is consistent with the 

Exchange’s existing practice. Today, the 

bid/ask differentials applicable to the 

opening are noted within Options 3, 

Section 8(a)(6).33 As noted within the 

rule, NOM publishes its specified bid/ 

ask differential on its system settings 

page.34 The bid/ask differentials noted 

for the Valid Width NBBO within the 

opening provide for quotations with a 

difference that does not exceed $5 

between the bid and offer regardless of 

the price of the bid. It is not necessary 

to discuss the opening bid/ask 

differentials within Options 2, Section 5 

as those differentials are specifically 

noted within the opening rule. This 

clarification is consistent with the Act 

because it is designed to avoid any 

confusion for Market Makers as to their 

intra-day requirements versus their 

opening requirements. 

Options 3, Section 5 

The Exchange’s proposal to amend 

Options 3, Section 5(c) to add additional 

rule text similar to Phlx Options 3, 

Section 5(c) 35 is consistent with the 

Act. Today, NOM re-prices certain 

orders to avoid locking and crossing 

away markets, consistent with its TradeThrough Compliance and Locked or 

Crossed Markets obligations.36 Orders 

which lock or cross an away market 

automatically re-price one minimum 

price improvement inferior to the 

original away best bid/offer price to one 

minimum trading increment away from 

the new away best bid/offer price or its 

original limit price.37 The re-priced 

order is displayed on OPRA. The order 

remains on NOM’s Order Book and is 

accessible at the non-displayed price. 

For example, a limit order may be 

accessed on NOM by a Participant if the 

limit order is priced better than the 

NBBO. The Exchange believes that the 

addition of this rule text will add greater 

specificity to the rule. 

Options 3, Section 7 

The Exchange’s proposal to amend 

the Cancel-Replacement Order, within 

Options 3, Section 7(a)(1), is consistent 

with the Act. A Participant has the 

option of either submitting a cancel 

order and then separately submitting a 

new order, which serves as a 

replacement of the original order, in two 

separate messages, or submitting a 

single cancel and replace order in one 

message (‘‘Cancel-Replacement Order’’). 

Submitting a cancel order and then 

separately submitting a new order will 

not retain the priority of the original 

order. The Exchange’s proposal to 

replace the words ‘‘shall mean’’ with 

‘‘is’’ and remove the final sentence of 

the rule text will bring greater clarity to 

this rule. The Exchange addition of a 

new sentence to the end of the rule 

which provides, ‘‘The replacement 

order will retain the priority of the 

cancelled order, if the order posts to the 

Order Book, provided the price is not 

amended, and the size is not increased’’ 

states in the affirmative the conditions 

under which the Cancel-Replacement 

Order will retain priority. Price and size 

are the terms that will determine if the 

Cancel-Replacement Order retains its 

priority, as is the case today, other terms 

and conditions do not amend the 

priority of the Cancel-Replacement 

Order. 

The Exchange’s proposal is not 

amending the current System 

functionality of a Cancel-Replacement 

Order with respect to the terms that will 

cause the order to lose priority. Today, 

and with the proposed change, if a 

Participant does not change or increase 

the size of the order, it would not trigger 

a loss in priority. Options 3, Section 

7(a)(1) states only if the size of the order 

were reduced would a loss of priority 

occur.38 Priority is retained if the size of 

the order does not change or is not 

increased. The rule is intended to 

provide transparency regarding changes 

to a Cancel-Replacement Order which 

would trigger a loss in priority. Today, 

and with the proposal, the price of the 

order may not be changed when 

submitting a Cancel-Replacement Order; 

that would be a new order. A similar 

change was recently made to BX’s 

Cancel-Replacement Order.39 Price and 

size are the terms that will determine if 

the Cancel-Replacement Order retains 

its priority, as is the case today, other 

terms and conditions do not amend the 

priority of the Cancel-Replacement 

Order. 

The Exchange’s proposal to amend 

‘‘Limit Orders,’’ within Options 3, 

Section 7(a)(3), to add the sentence for 

marketable limit orders which is 

currently in BX’s rule is consistent with 

the Act. A Limit Order on NOM 

operates in the same manner as a Limit 

81232 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

40 Id. 

41See NOM’s opening rule at Options 3, Section 

8(d)(2), ‘‘After the opening, the Exchange shall 

reject Market Orders, as defined in Options 3, 

Section 7, and shall notify Participants of the reason 

for such rejection.’’ 

42BX’s rule describes the PRISM mechanism, 

while NOM has no auction mechanisms. 

43BX Options 3, Section 7(b)(1) provides, ‘‘An 

Opening Only order (‘‘OPG’’) is entered with a TIF 

of ‘‘OPG’’. This order can only be executed in the 

Opening Process pursuant to Options 3, Section 8. 

This order type is not subject to any protections 

listed in Options 3, Section 15. Any portion of the 

order that is not executed during the Opening 

Process is cancelled. OPG orders may not route.’’ 

Order on BX. The Exchange proposes to 

conform the rule text of NOM’s Limit 

Order to BX Options 3, Section 7(a)(3) 

by adding the sentence describing 

marketable limit orders. BX recently 

amended its rule to similarly change its 

description of Limit Order.40 The 

Exchange proposes to state, ‘‘A 

marketable limit order is a limit order to 

buy (sell) at or above (below) the best 

offer (bid) on the Exchange.’’ The 

Exchange believes that the rule 

amendment is consistent with the Act as 

it more aptly describes a marketable 

limit order as compared to the current 

rule text, which is confusing, but was 

intended to convey the substance of the 

proposed text. The new sentence does 

not substantively amend the current 

rule text and conforms NOM’s 

description with BX’s description. 

The Exchange’s proposal to amend 

‘‘Minimum Quantity Orders,’’ within 

Options 3, Section 7(a)(3), is nonsubstantive and makes technical edits 

that do not change the meaning of the 

term. The Exchange is otherwise not 

amending the Minimum Quantity Order 

rule text. 

The Exchange’s proposal to amend 

‘‘Market Orders,’’ within Options 3, 

Section 7(a)(4), is consistent with the 

Act. The Exchange’s proposes to style 

‘‘Market Orders’’ in the singular and 

change ‘‘are’’ to ‘‘is an’’ and ‘‘orders’’ to 

‘‘order.’’ These amendments are 

technical and non-substantive. The 

Exchange’s proposal to amend the 

current sentence to state, ‘‘Participants 

can designate that their Market Orders 

not executed after a pre-established 

period of time, as established by the 

Exchange, will be cancelled back to the 

Participant, once an option series has 

opened for trading.’’ Market Orders 

submitted during the opening may be 

executed, or cancelled if the Market 

Order is priced through the opening 

price. The Exchange would only cancel 

those Market Orders that remained on 

the Order Book once an option series 

opened.41 The pre-established period of 

time would commence once the intraday trading session begins for that 

options series and the order would be 

cancelled back to the Participant, 

provided the Participant elected to 

cancel back its Market Orders. The 

Exchange’s proposal makes clear that 

while the opening is on-going, and the 

intra-day trading session has not 

commenced, the pre-established period 

of time would not commence. 

The proposal to note that ‘‘Market 

Orders on the Order Book would be 

immediately cancelled if an options 

series halted, provided the Participant 

designated the cancellation of Market 

Orders’’ is consistent with the Act. Once 

an options series halts for trading, the 

Exchange conducts another Opening 

Process. In the case where a Market 

Order was resting on the Order Book, 

and the Participant had designated the 

cancellation of Market Orders, in the 

event of a halt, the Market Orders 

resting on the Order Book would 

immediately cancel. This proposed rule 

text is consistent with existing System 

functionality. The Exchange believes 

that this additional rule text brings 

greater clarity to the Market Order type. 

The Exchange proposes to amend 

‘‘Price Improving Orders,’’ within 

Options 3, Section 7(a)(5) is consistent 

with the Act. The Exchange proposes to 

style ‘‘Price Improving Orders’’ in the 

singular and change ‘‘are’’ to ‘‘is an’’ 

and ‘‘orders’’ to ‘‘order’’ are nonsubstantive amendments. 

The Exchange’s proposal to amend 

‘‘On the Open Order,’’ within Options 3, 

Section 7(a)(6) by removing the words 

‘‘The term’’ at the beginning of the 

sentence and change ‘‘shall mean’’ to 

‘‘is’’ are non-substantive amendments. 

The Exchange’s proposal to amend 

‘‘Intermarket Sweep Order’’ or ‘‘ISO’’ 

Orders, within Options 3, Section 

7(a)(7), with the exception of Options 3, 

Section 7(a)(7)(1), which is being 

retained by re-lettered as ‘‘A,’’ and 

addition of rule text is consistent with 

the Act. The new rule text is similar to 

BX Options 3, Section 7(a)(6).42

An ISO Order is a Limit Order, as 

noted in the current text and Options 5, 

Section 1, continues to be referenced in 

the proposed text. The Exchange 

continues to note that the orders are not 

routable. The additional text, ‘‘. . .will 

ignore the ABBO and trade at allowable 

prices on the Exchange’’ is more precise 

than the current rule text and describes 

current functionality. The Exchange 

further proposes to state, ‘‘ISOs may be 

entered on the Order Book.’’ That is also 

the case today. The remainder of the 

current rule text is not necessary as 

Options 5, Section 1(8) is cited. 

Removing the current rule text and 

replacing it with text which describes 

the proper time-in-force designation 

will make clear what is acceptable on 

NOM today. This rule text is not 

proposed to change the functionality of 

an ISO Order. The Exchange believes 

the proposed description provides a 

more succinct description. 

Today, the rule provides that ISOs 

may have any time-in-force designation, 

except WAIT, and further requires that 

ISOs with a time-in-force designation of 

GTC are treated as having a time-inforce designation of Day. The Exchange 

proposes to remove the WAIT time-inforce within this proposed rule change, 

as described in more detail below, and, 

therefore, the WAIT order type no 

longer needs to be cited. NOM’s System 

does not treat an ISO with a time-inforce designation of GTC as having a 

time-in-force designation of Day, as 

provided for within NOM’s current rule 

at Options 3, Section 7(a)(6), rather 

those orders are treated as GTC. The 

current sentence is being removed 

because it is inaccurate. The proposed 

sentence is consistent with the Act 

because it accurately describes the 

System functionality. The Exchange 

does not believe that an ISO with a 

time-in-force designation of GTC was 

ever treated as having a time-in-force 

designation of Day, the rule text was 

simply inaccurate. This proposal is 

consistent with the protection of 

investors and the public interest 

because it will clarify the handling of 

ISO Orders for market participants. 

The Exchange’s proposal to amend 

‘‘One-Cancels-the-Other Order’’ within 

renumbered Options 3, Section 7(a)(8) is 

consistent with the Act because the 

changes are technical in nature and nonsubstantive. 

The Exchange’s amendment to ‘‘Allor-None Order,’’ within renumbered 

Options 3, Section 7(a)(9), is nonsubstantive and does not change the 

meaning of the term. 

The Exchange’s amendment to ‘‘PostOnly Orders,’’ within renumbered 

Options 3, Section 7(a)(10), is nonsubstantive and does not change the 

meaning of the term. 

Adding ‘‘TIF to Options 3, Section 

7(b) allows that term to be defined 

within the Rules. 

The Exchange’s proposal to amend 

the ‘‘On the Open Order,’’ or ‘‘OPG’’ 

Order, within Options 3, Section 7(b)(1), 

to note that OPGs may not route, is 

consistent with the Act. The System 

would not route an OPG Order today. 

This order type functions in the same 

way as BX’s OPG Order at Options 3, 

Section 7(b)(1).43 The Exchange is 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81233 

44BX Options 3, Section 7(b)(2) provides, 

‘‘Immediate-or-Cancel’’ or ‘‘IOC’’ is a Market Order 

or Limit Order to be executed in whole or in part 

upon receipt. Any portion not so executed is 

cancelled. (A) Orders entered with a TIF of IOC are 

not eligible for routing. (B) IOC orders may be 

entered through FIX or SQF, provided that an IOC 

Order entered by a Market Maker through SQF is 

not subject to the Limit Order Price Protection or 

the Market Order Spread Protection in Options 3, 

Section 15(a)(1) and (a)(2), respectively; (C) Orders 

entered into the Price Improvement Auction 

(‘‘PRISM’’) Mechanism are considered to have a TIF 

of IOC. By their terms, these orders will be: (1) 

Executed after an exposure period, or (2) cancelled. 

45Phlx Options 3, Section 7(c)(1) provides, ‘‘Day. 

If not executed, an order entered with a TIF of 

‘‘Day’’ expires at the end of the day on which it was 

entered. All orders by their terms are Day Orders 

unless otherwise specified. Day orders may be 

entered through FIX.’’ 

46See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

47Phlx Options 3, Section 7(c)(4) provides, ‘‘A 

Good Til Cancelled (‘‘GTC’’) Order entered with a 

TIF of GTC, if not fully executed, will remain 

available for potential display and/or execution 

unless cancelled by the entering party, or until the 

option expires, whichever comes first. GTC Orders 

shall be available for entry from the time prior to 

market open specified by the Exchange until market 

close.’’ 

48 15 U.S.C. 78s(b)(1). 

49See Options Trader Alert #2020–26. 

50See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

51See Securities Exchange Act Release No. 89759 

(September 3, 2020). 85 FR 55877 (September 10, 

2020) (SR–BX–2020–023). 

adding rule text to make clear the 

manner in which an OPG Order would 

be treated, which is similar to how a BX 

OPG Order is treated today. This 

proposal is consistent with the 

protection of investors and the public 

interest because it will clarify the 

handling of OPG Orders for market 

participants. 

The Exchange’s proposal to amend an 

‘‘Immediate-Or-Cancel’’ Order or ‘‘IOC,’’ 

within Options 3, Section 7(b)(2), is 

consistent with the Act. The Exchange’s 

proposal replaces the current 

description with Phlx’s description at 

Options 3, Section 7(c)(2) as these order 

types are identical. The Exchange’s 

proposal to state that an Immediate-orCancel Order or ‘‘IOC’’ Order is a 

Market Order or Limit Order to be 

executed in whole or in part upon 

receipt will bring greater clarity to the 

rule. Further the Exchange’s proposal to 

add that any portion not so executed is 

cancelled is consistent with the current 

description. The Exchange proposes to 

replace this description with rule text 

similar to BX Options 3, Section 

7(b)(2) 44 as these order types are 

identical, except that NOM has the 

OTTO protocol and BX does not, and 

also as mentioned previously NOM has 

no auctions. Additionally, BX’s rule 

addresses limitations in order 

protections that do not exist today on 

NOM. The Exchange proposes to state 

that an Immediate-or-Cancel Order or 

‘‘IOC’’ Order is a Market Order or Limit 

Order to be executed in whole or in part 

upon receipt. Any portion not so 

executed is cancelled and/or routed 

pursuant to Participant’s instruction. 

IOC orders may be entered through FIX, 

OTTO or SQF; IOC Orders entered 

through OTTO or SQF may not route. 

Today, IOC Orders entered through 

OTTO or SQF do not route; only orders 

entered through FIX may route. The 

SQF interface is a quoting interface, the 

Exchange does not route quotes. With 

respect to OTTO, orders submitted by 

NOM Market Makers over this interface 

are treated as quotes and similarly do 

not route. The Exchange’s amendments 

are consistent with the Act in that the 

changes memorialize pertinent 

information within the description of an 

IOC Order to add clarity. 

The Exchange’s proposal to amend 

the TIF of ‘‘DAY’’ at Options 3, Section 

7(b)(3) to conform the description of a 

TIF of ‘‘DAY’’ to Phlx Options 3, 

Section 7(c)(1) 45 is consistent with the 

Act. The Exchange believes the current 

text describing NOM’s Day TIF is 

unnecessarily verbose and proposes to 

remove this language. A DAY Order on 

Phlx functions in the same way as a 

DAY Order on NOM. The proposal is 

not amending the System functionality 

of a DAY Order. The Phlx rule text is 

more succinct in describing this order 

type. Similar changes were recently 

made on BX.46

The Exchange’s proposal to amend 

the TIF of ‘‘Good Til Cancelled’’ or 

‘‘GTC’’ at Options 3, Section 7(b)(4) is 

consistent with the Act. The Exchange 

proposes to conform the rule text to 

Phlx Options 3, Section 7(c)(4).47 The 

Exchange is not amending the manner 

in which the System function with 

respect to GTC Orders. GTC Orders, if 

not fully executed, will remain available 

for potential display and/or execution 

unless cancelled by the entering party, 

or until the option expires, whichever 

comes first. GTC Orders shall be 

available for entry from the time prior 

to market open, as specified by the 

Exchange, until market close, as is the 

case today. Also, today, a GTC Order 

may only be entered through FIX. A 

GTC Order on Phlx functions in the 

same way as a GTC Order on NOM. The 

Exchange believes that the amended 

rule text will bring greater transparency 

to its rules as the proposed description 

is more succinct and thereby protects 

investors and the general public. 

The Exchange’s proposal to no longer 

offer a TIF of ‘‘WAIT’’ is consistent with 

the Act because it will remove an order 

type that is not in demand on NOM and 

simply the offerings provided by NOM. 

If the Exchange desires to offer this TIF 

in the futures, it would file a proposed 

rule change with the Commission 

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

Act.48 The Exchange has provided 

notice of its intention to remove the TIF 

of ‘‘WAIT’’.49 BX previously offered a 

WAIT order type recently and 

discontinued this order types because it 

was not being utilized to a great 

extent.50

The Exchange’s proposal to note, 

within NOM Options 3, Section 7(c), the 

various routing options which are 

available is consistent with the Act. 

Options 3, Section 15 

The Exchange believes its proposal to 

clarify that Anti-Internalization will not 

apply during an opening is consistent 

with the Act as it would provide more 

specificity on how this functionality 

currently operates. A similar change 

was recently made to BX’s Rules.51 The 

Exchange notes that the same 

procedures used during an opening are 

used to reopen an option series after a 

trading halt, and therefore proposes to 

specify that Anti-Internalization will not 

apply during the opening (i.e., the 

opening and halt reopening processes). 

During the opening, Market Makers are 

able to observe the primary market and 

then determine how they would like to 

quote. They are not required to quote in 

the opening on NOM. Therefore, AntiInternalization is unnecessary during an 

opening due to the high level of control 

that Market Makers exercise over their 

quotes during this process. 

Options 3, Section 23 

The Exchange’s proposal to amend 

Options 3, Section 23, Data Feeds and 

Trade Information, to update its 

descriptions of the ITTO data feed is 

consistent with the Act because the 

updated descriptions will bring greater 

transparency to the Exchange’s rules 

and more closely align with current 

System operation. 

The Exchange’s proposal will make 

clear that order imbalance information 

is provided for both an opening and reopening process. Today, a re-opening 

process initiates after a trading halt has 

occurred intra-day. Also, the Exchange’s 

proposal notes the specific information 

that would be provided, namely the size 

of matched contracts and size of the 

imbalance. The Exchange believes that 

this additional context to imbalance 

messages will provide market 

participants with more complete 

information about what is contained in 

81234 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

52NOM Options 1, Section 1(a)(47) provides that, 

‘‘The term ‘‘Professional’’ means any person or 

entity that (i) is not a broker or dealer in securities, 

and (ii) places more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial account(s). A Participant or 

a Public Customer may, without limitation, be a 

Professional. All Professional orders shall be 

appropriately marked by Participants.’’ 

53Participants conduct a quarterly review and 

make any appropriate changes to the way in which 

they are representing orders within five days after 

the end of each calendar quarter. While Participants 

only will be required to review their accounts on 

a quarterly basis, if during a quarter the Exchange 

identifies a customer for which orders are being 

represented as Public Customer Orders but that has 

averaged more than 390 orders per day during a 

month, the Exchange will notify the Participant and 

the Participant will be required to change the 

manner in which it is representing the customer’s 

orders within five days. 

54See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

55See Securities Exchange Act Release No. 63028 

(October 1, 2010), 75 FR 62443 (October 8, 2010) 

(SR–NASDAQ–2020–099) (Order Approving a 

Proposed Rule Change To Adopt a Definition of 

Professional and Require That All Professional 

Orders Be Appropriately Marked). 

56NOM Options 3, Section 8(a)(6) provides, 

‘‘Valid Width National Best Bid or Offer’’ or ‘‘Valid 

Width NBBO’’ shall mean the combination of all 

away market quotes and any combination of NOMregistered Market Maker orders and quotes received 

over the QUO or SQF Protocols within a specified 

bid/ask differential as established and published by 

the Exchange. The Valid Width NBBO will be 

configurable by underlying, and tables with valid 

width differentials will be posted by Nasdaq on its 

website. Away markets that are crossed will void 

all Valid Width NBBO calculations. If any Market 

Maker orders or quotes on NOM are crossed 

internally, then all such orders and quotes will be 

excluded from the Valid Width NBBO calculation.’’ 

57NOM’s System Settings page is located at: 

https://www.nasdaq.com/docs/2020/07/02/NOM_

SystemSettings.pdf. 58Phlx has an All-or-None Order type that is nondisplayed. See Options 3, Section 7(b)(5). Phlx 

Options 3, Section 5(c) accounts for this nondisplayed order on the order book. NOM has a Price 

Improving Order is already described within 

Options 3, Section 5(c). A Price Improving Order on 

NOM displays differently than Phlx’s All-Or-None 

Order and therefore is described differently within 

Options 3, Section 5(c). Otherwise, NOM has no 

other non-displayed order types. 

59See NOM Options 3, Section 5(d). 

60See Options 5, Section 4 (Order Routing), 

which describes the repricing of orders for both 

the data feed. The Exchange notes that 

this information is available today and 

the rule text is being amended to make 

clear what information is currently 

provided. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Options 1, Section 1 

The Exchange’s proposal to amend 

the definition of ‘‘Public Customer’’ to 

conform to Phlx’s definition is intended 

to provide greater specificity regarding 

what is meant by the term ‘‘Public 

Customer.’’ This proposal does not 

impose an undue burden on 

competition, rather it makes clear that a 

Public Customer could be a person or 

entity and clarifies that a Public 

Customer is not a Professional, as 

defined within Options 1, Section 

(a)(47).52 Today, a Public Customer is 

not a Professional. In order to properly 

represent orders entered on the 

Exchange, Participants are required to 

indicate whether orders are 

‘‘Professional Orders.’’ To comply with 

this requirement, Participants are 

required to review their Public 

Customers’ activity on at least a 

quarterly basis to determine whether 

orders, which are not for the account of 

a broker-dealer, should be represented 

as Public Customer Orders or 

Professional Orders.53 A Public 

Customer may be a Professional, 

provided they meet the requirements 

specified within NOM Options 1, 

Section 1(a)(47). If the Professional 

definition is not met, the order is treated 

as a Public Customer order. The process 

for determining if a market participant 

qualifies as a ‘‘Professional’’ is 

applicable to all Participants. Also, this 

definition conforms to Phlx’s definition 

at Options 1, Section 1(b)(47). 

The Exchange’s proposal to remove a 

sentence within Options 1, Section 

1(a)(47) which provides, ‘‘A Participant 

or a Public Customers may, without 

limitation, be a Professional,’’ does not 

impose an undue burden on 

competition. This sentence is confusing, 

unnecessary, and adds no information 

to this defined term. By way of 

comparison, Phlx Options 1, Section 

1(b)(46) does not contain a similar 

sentence and that sentence was recently 

removed from Nasdaq BX, Inc.’s (‘‘BX’’) 

Rules.54 The Exchange adopted a 

Professional designation in 2010 55 and 

has differentiated Public and 

Professional customers since that time. 

NOM proposes removing this sentence 

because it does not add useful 

information to understanding who may 

qualify as a Professional. 

The Exchange’s proposal to remove a 

sentence, within Options 3, Section 

10(a)(1)(C)(i), which allocation rule 

provides that a Public Customer order 

does not include a Professional order 

does not impose an undue burden on 

competition. Today, the definition of a 

Public Customer does not explicitly 

exclude a Professional. Indicating that a 

Public Customer order is not a 

Professional Order is no longer 

necessary because of the proposed 

definition for Public Customer. The 

language that the Exchange proposes to 

delete, currently indicates that 

Professionals would not be treated the 

same as a Public Customer in terms of 

priority and, therefore, would not 

receive the same allocation that is 

reserved for Public Customer orders. 

Since NOM is amending the definition 

of a Public Customer to explicitly 

exclude Professionals, the language in 

the allocation rule is no longer 

necessary to distinguish these two types 

of market participants. 

Bid/Ask Differentials 

The Exchange’s proposal to amend 

NOM Options 2, Section 5(d)(2) to add 

the words ‘‘Intra-Day’’ before the title 

‘‘Bid/ask Differentials (Quote Spread 

Parameters)’’ and make clear that 

remove references to the opening, will 

make clear for Market Makers their 

intra-day requirements. The bid/ask 

differentials, within NOM Options 2, 

Section 5(d)(2), will continue to apply 

intra-day. This proposal does not 

impose an undue burden on 

competition, rather it conform the 

Exchange’s existing practice. Today, the 

bid/ask differentials applicable to the 

opening are noted within Options 3, 

Section 8(a)(6).56 As noted within the 

rule, NOM publishes its specified bid/ 

ask differential on its system settings 

page.57 The bid/ask differentials noted 

for the Valid Width NBBO within the 

opening provide for quotations with a 

difference that does not exceed $5 

between the bid and offer regardless of 

the price of the bid. It is not necessary 

to discuss the opening bid/ask 

differentials within Options 2, Section 5 

as those differentials are specifically 

noted within the opening rule. This 

clarification avoids any confusion for 

Market Makers as to their intra-day 

requirements versus their opening 

requirements. 

Options 3, Section 5 

The Exchange’s proposal to amend 

Options 3, Section 5(c) to add additional 

rule text similar to Phlx Options 3, 

Section 5(c) 58 does not impose an 

undue burden on competition. Today, 

NOM re-prices certain orders to avoid 

locking and crossing away markets, 

consistent with its Trade-Through 

Compliance and Locked or Crossed 

Markets obligations.59 Orders which 

lock or cross an away market 

automatically re-price one minimum 

price improvement inferior to the 

original away best bid/offer price to one 

minimum trading increment away from 

the new away best bid/offer price or its 

original limit price.60 The re-priced 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81235 

routable and non-routable orders within Options 5, 

Section 4(a)(iii)(A), (B) and (C). 

61Options 3, Section 7(a)(1) provides, ‘‘The 

replacement order will not retain the priority of the 

cancelled order except when the replacement order 

reduces the size of the order and all other terms and 

conditions are retained.’’ 

62See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

63 Id. 

64See NOM’s opening rule at Options 3, Section 

8(d)(2), ‘‘After the opening, the Exchange shall 

reject Market Orders, as defined in Options 3, 

Section 7, and shall notify Participants of the reason 

for such rejection.’’ 

65BX’s rule describes the PRISM mechanism, 

while NOM has no auction mechanisms. 

order is displayed on OPRA. The order 

remains on NOM’s Order Book and is 

accessible at the non-displayed price. 

Options 3, Section 7 

The Exchange’s proposal to amend 

the Cancel-Replacement Order, within 

Options 3, Section 7(a)(1), does not 

impose an undue burden on 

competition. A Participant has the 

option of either submitting a cancel 

order and then separately submitting a 

new order, which serves as a 

replacement of the original order, in two 

separate messages, or submitting a 

single cancel and replace order in one 

message (‘‘Cancel-Replacement Order’’). 

Submitting a cancel order and then 

separately submitting a new order will 

not retain the priority of the original 

order. The Exchange’s proposal to 

replace the words ‘‘shall mean’’ with 

‘‘is’’ and remove the final sentence of 

the rule text will bring greater clarity to 

this rule. The Exchange addition of a 

new sentence to the end of the rule 

states in the affirmative the conditions 

under which the Cancel-Replacement 

Order will retain priority. Price and size 

are the terms that will determine if the 

Cancel-Replacement Order retains its 

priority, as is the case today, other terms 

and conditions do not amend the 

priority of the Cancel-Replacement 

Order. 

The Exchange’s proposal is not 

amending the current System 

functionality of a Cancel-Replacement 

Order with respect to the terms that will 

cause the order to lose priority. Today, 

and with the proposed change, if a 

Participant does not change or increase 

the size of the order, it would not trigger 

a loss in priority. Options 3, Section 

7(a)(1) states only if the size of the order 

were reduced would a loss of priority 

occur.61 Priority is retained if the size of 

the order does not change or is not 

increased. The rule is intended to 

provide transparency regarding changes 

to a Cancel-Replacement Order which 

would trigger a loss in priority. Today, 

and with the proposal, the price of the 

order may not be changed when 

submitting a Cancel-Replacement Order; 

that would be a new order. A similar 

change was recently made to BX’s 

Cancel-Replacement Order.62 Price and 

size are the terms that will determine if 

the Cancel-Replacement Order retains 

its priority, as is the case today, other 

terms and conditions do not amend the 

priority of the Cancel-Replacement 

Order. 

The Exchange’s proposal to amend 

‘‘Limit Orders,’’ within Options 3, 

Section 7(a)(3), to add the sentence for 

marketable limit orders which is 

currently in BX’s rule does not impose 

an undue burden on competition. A 

Limit Order on NOM operates in the 

same manner as a Limit Order on BX. 

The Exchange proposes to conform the 

rule text of NOM’s Limit Order to BX 

Options 3, Section 7(a)(3) by adding a 

sentence describing marketable limit 

orders. BX recently amended its rule to 

similarly change its description of Limit 

Order.63 The proposed text more aptly 

describes a marketable limit order as 

compared to the current rule text, which 

is confusing, but was intended to 

convey the substance of the proposed 

text. The new sentence does not 

substantively amend the current rule 

text and conforms NOM’s description 

with BX’s description. 

The Exchange’s proposal to amend 

‘‘Minimum Quantity Orders,’’ within 

Options 3, Section 7(a)(3), is nonsubstantive and makes technical edits 

that do not change the meaning of the 

term. The Exchange is otherwise not 

amending the Minimum Quantity Order 

rule text. 

The Exchange’s proposal to amend 

‘‘Market Orders,’’ within Options 3, 

Section 7(a)(4), does not impose an 

undue burden on competition. The 

Exchange’s proposes to style ‘‘Market 

Orders’’ in the singular and change 

‘‘are’’ to ‘‘is an’’ and ‘‘orders’’ to 

‘‘order.’’ These amendments are 

technical and non-substantive. Market 

Orders submitted during the opening 

may be executed, or cancelled if the 

Market Order is priced through the 

opening price. The Exchange would 

only cancel those Market Orders that 

remained on the Order Book once an 

option series opened.64 The preestablished period of time would 

commence once the intra-day trading 

session begins for that options series 

and the order would be cancelled back 

to the Participant, provided the 

Participant elected to cancel back its 

Market Orders. The Exchange’s proposal 

makes clear that while the opening is 

on-going, and the intra-day trading 

session has not commenced, the preestablished period of time would not 

commence. 

The proposal to note that ‘‘Market 

Orders on the Order Book would be 

immediately cancelled if an options 

series halted, provided the Participant 

designated the cancellation of Market 

Orders’’ does not impose an undue 

burden on competition. Once an options 

series halts for trading, the Exchange 

conducts another Opening Process. In 

the case where a Market Order was 

resting on the Order Book, and the 

Participant had designated the 

cancellation of Market Orders, in the 

event of a halt, the Market Orders 

resting on the Order Book would 

immediately cancel. This proposed rule 

text is consistent with existing System 

functionality. The Exchange believes 

that this additional rule text brings 

greater clarity to the Market Order type. 

The Exchange proposes to amend 

‘‘Price Improving Orders,’’ within 

Options 3, Section 7(a)(5) does not 

impose an undue burden on 

competition. The Exchange proposes to 

style ‘‘Price Improving Orders’’ in the 

singular and change ‘‘are’’ to ‘‘is an’’ 

and ‘‘orders’’ to ‘‘order’’ are nonsubstantive amendments. 

The Exchange’s proposal to amend 

‘‘On the Open Order,’’ within Options 3, 

Section 7(a)(6) by removing the words 

‘‘The term’’ at the beginning of the 

sentence and change ‘‘shall mean’’ to 

‘‘is’’ are non-substantive amendments. 

The Exchange’s proposal to amend 

‘‘Intermarket Sweep Order’’ or ‘‘ISO’’ 

Orders, within Options 3, Section 

7(a)(7), with the exception of Options 3, 

Section 7(a)(7)(1), which is being 

retained by re-lettered as ‘‘A,’’ and 

addition of rule text does not impose an 

undue burden on competition. The new 

rule text is similar to BX Options 3, 

Section 7(a)(6).65

An ISO Order is a Limit Order, as 

noted in the current text and Options 5, 

Section 1, continues to be referenced in 

the proposed text. The Exchange 

continues to note that the orders are not 

routable. The additional text is more 

precise than the current rule text and 

describes current functionality. The 

Exchange further proposes to state, 

‘‘ISOs may be entered on the Order 

Book.’’ That is also the case today. The 

remainder of the current rule text is not 

necessary as Options 5, Section 1(8) is 

cited. Removing the current rule text 

and replacing it with text which 

describes the proper time-in-force 

designation will make clear what is 

acceptable on NOM today. This rule text 

is not proposed to change the 

81236 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

66BX Options 3, Section 7(b)(1) provides, ‘‘An 

Opening Only order (‘‘OPG’’) is entered with a TIF 

of ‘‘OPG’’. This order can only be executed in the 

Opening Process pursuant to Options 3, Section 8. 

This order type is not subject to any protections 

listed in Options 3, Section 15. Any portion of the 

order that is not executed during the Opening 

Process is cancelled. OPG orders may not route.’’ 

67BX Options 3, Section 7(b)(2) provides, 

‘‘Immediate-or-Cancel’’ or ‘‘IOC’’ is a Market Order 

or Limit Order to be executed in whole or in part 

upon receipt. Any portion not so executed is 

cancelled. (A) Orders entered with a TIF of IOC are 

not eligible for routing. (B) IOC orders may be 

entered through FIX or SQF, provided that an IOC 

Order entered by a Market Maker through SQF is 

not subject to the Limit Order Price Protection or 

the Market Order Spread Protection in Options 3, 

Section 15(a)(1) and (a)(2), respectively; (C) Orders 

entered into the Price Improvement Auction 

(‘‘PRISM’’) Mechanism are considered to have a TIF 

of IOC. By their terms, these orders will be: (1) 

Executed after an exposure period, or (2) cancelled. 

68Phlx Options 3, Section 7(c)(1) provides, ‘‘Day. 

If not executed, an order entered with a TIF of 

‘‘Day’’ expires at the end of the day on which it was 

entered. All orders by their terms are Day Orders 

unless otherwise specified. Day orders may be 

entered through FIX.’’ 

69See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

70Phlx Options 3, Section 7(c)(4) provides, ‘‘A 

Good Til Cancelled (‘‘GTC’’) Order entered with a 

TIF of GTC, if not fully executed, will remain 

available for potential display and/or execution 

unless cancelled by the entering party, or until the 

option expires, whichever comes first. GTC Orders 

shall be available for entry from the time prior to 

market open specified by the Exchange until market 

close.’’ 

71 15 U.S.C. 78s(b)(1). 

72See Options Trader Alert #2020–26. 

73See Securities Exchange Act Release No. 89476 

(August 4, 2020). 85 FR 48274 (August 10, 2020) 

(SR–BX–2020–017). 

functionality of an ISO Order. The 

Exchange believes the proposed 

description does not impose an undue 

burden on competition, rather it 

provides a more succinct description. 

Today, ISOs may have any time-inforce designation, except WAIT, and 

further requires that ISOs with a timein-force designation of GTC are treated 

as having a time-in-force designation of 

Day. The Exchange proposes to remove 

the WAIT time-in-force within this 

proposed rule change, as described in 

more detail below, and, therefore, the 

WAIT order type no longer needs to be 

cited. NOM’s System does not treat an 

ISO with a time-in-force designation of 

GTC as having a time-in-force 

designation of Day, as provided for 

within NOM’s current rule at Options 3, 

Section 7(a)(6), rather those orders are 

treated as GTC. The current sentence is 

being removed because it is inaccurate. 

The proposed sentence does not impose 

an undue burden on competition 

because it accurately describes the 

System functionality. The Exchange 

does not believe that an ISO with a 

time-in-force designation of GTC was 

ever treated as having a time-in-force 

designation of Day, the rule text was 

simply inaccurate. 

The Exchange’s proposal to amend 

‘‘One-Cancels-the-Other Order’’ within 

renumbered Options 3, Section 7(a)(8) 

does not impose an undue burden on 

competition because the changes are 

technical in nature and non-substantive. 

The Exchange’s amendment to ‘‘Allor-None Order,’’ within renumbered 

Options 3, Section 7(a)(9), is nonsubstantive and does not change the 

meaning of the term. 

The Exchange’s amendment to ‘‘PostOnly Orders,’’ within renumbered 

Options 3, Section 7(a)(10), is nonsubstantive and does not change the 

meaning of the term. 

The Exchange’s proposal to amend 

the ‘‘On the Open Order,’’ or ‘‘OPG’’ 

Order, within Options 3, Section 7(b)(1), 

to note that OPGs may not route, does 

not impose an undue burden on 

competition. The System would not 

route an OPG Order today. This order 

type functions in the same way as BX’s 

OPG Order at Options 3, Section 

7(b)(1).66 The Exchange is adding rule 

text to make clear the manner in which 

an OPG Order would be treated, which 

is similar to how a BX OPG Order is 

treated today. 

The Exchange’s proposal to amend an 

‘‘Immediate-Or-Cancel’’ Order or ‘‘IOC,’’ 

within Options 3, Section 7(b)(2), does 

not impose an undue burden on 

competition. The Exchange’s proposal 

replaces the current description with 

Phlx’s description at Options 3, Section 

7(c)(2) as these order types are identical. 

The Exchange’s proposal to state that an 

Immediate-or-Cancel Order or ‘‘IOC’’ 

Order is a Market Order or Limit Order 

to be executed in whole or in part upon 

receipt will bring greater clarity to the 

rule. Further the Exchange’s proposal to 

add that any portion not so executed is 

cancelled is consistent with the current 

description. The Exchange proposes to 

replace this description with rule text 

similar to BX Options 3, Section 

7(b)(2) 67 as these order types are 

identical, except that NOM has the 

OTTO protocol and BX does not, and 

also as mentioned previously NOM has 

no auctions. Additionally, BX’s rule 

addresses limitations in order 

protections that do not exist today on 

NOM. Today, IOC Orders entered 

through OTTO or SQF do not route; 

only orders entered through FIX may 

route. The SQF interface is a quoting 

interface, the Exchange does not route 

quotes. With respect to OTTO, orders 

submitted by NOM Market Makers over 

this interface are treated as quotes and 

similarly do not route. 

The Exchange’s proposal to amend 

the TIF of ‘‘DAY’’ at Options 3, Section 

7(b)(3) to conform the description of a 

TIF of ‘‘DAY’’ to Phlx Options 3, 

Section 7(c)(1) 68 does not impose an 

undue burden on competition. The 

Exchange believes the current text 

describing NOM’s Day TIF is 

unnecessarily verbose and proposes to 

remove this language. A DAY Order on 

Phlx functions in the same way as a 

DAY Order on NOM. The proposal is 

not amending the System functionality 

of a DAY Order. The Phlx rule text is 

more succinct in describing this order 

type. Similar changes were recently 

made on BX.69

The Exchange’s proposal to amend 

the TIF of ‘‘Good Til Cancelled’’ or 

‘‘GTC’’ at Options 3, Section 7(b)(4) 

does not impose an undue burden on 

competition. The Exchange proposes to 

conform the rule text to Phlx Options 3, 

Section 7(c)(4).70 The Exchange is not 

amending the manner in which the 

System function with respect to GTC 

Orders. GTC Orders, if not fully 

executed, will remain available for 

potential display and/or execution 

unless cancelled by the entering party, 

or until the option expires, whichever 

comes first. GTC Orders shall be 

available for entry from the time prior 

to market open, as specified by the 

Exchange, until market close, as is the 

case today. Also, today, a GTC Order 

may only be entered through FIX. A 

GTC Order on Phlx functions in the 

same way as a GTC Order on NOM. The 

Exchange believes that the amended 

rule text will bring greater transparency 

to its rules. 

The Exchange’s proposal to no longer 

offer a TIF of ‘‘WAIT’’ does not impose 

an undue burden on competition 

because it will remove an order type 

that is not in demand on NOM and 

simply the offerings provided by NOM. 

If the Exchange desires to offer this TIF 

in the futures, it would file a proposed 

rule change with the Commission 

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

Act.71 The Exchange has provided 

notice of its intention to remove the TIF 

of ‘‘WAIT’’.72 BX previously offered a 

WAIT order type recently and 

discontinued this order types because it 

was not being utilized to a great 

extent.73

The Exchange’s proposal to note, 

within NOM Options 3, Section 7(c), the 

various routing options which are 

available does not impose an undue 

burden on competition. 

Options 3, Section 15 

The Exchange believes its proposal to 

clarify that Anti-Internalization will not 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81237 

74See Securities Exchange Act Release No. 89759 

(September 3, 2020). 85 FR 55877 (September 10, 

2020) (SR–BX–2020–023). 

75 15 U.S.C. 78s(b)(3)(A)(iii). 

76 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

77 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

apply during an opening does not 

impose an undue burden on 

competition as it would provide more 

specificity on how this functionality 

currently operates. A similar change 

was recently made to BX’s Rules.74 The 

Exchange notes that the same 

procedures used during an opening are 

used to reopen an option series after a 

trading halt, and therefore proposes to 

specify that Anti-Internalization will not 

apply during the opening (i.e., the 

opening and halt reopening processes). 

During the opening, Market Makers are 

able to observe the primary market and 

then determine how they would like to 

quote. They are not required to quote in 

the opening on NOM. Therefore, AntiInternalization is unnecessary during an 

opening due to the high level of control 

that Market Makers exercise over their 

quotes during this process. 

Options 3, Section 23 

The Exchange’s proposal to amend 

Options 3, Section 23, Data Feeds and 

Trade Information, to update its 

descriptions of the ITTO data feed does 

not impose an undue burden on 

competition because the updated 

descriptions will bring greater 

transparency to the Exchange’s rules 

and more closely align with current 

System operation. 

The Exchange’s proposal will make 

clear that order imbalance information 

is provided for both an opening and reopening process. Today, a re-opening 

process initiates after a trading halt has 

occurred intra-day. Also, the Exchange’s 

proposal notes the specific information 

that would be provided, namely the size 

of matched contracts and size of the 

imbalance. The Exchange believes that 

this additional context to imbalance 

messages will provide market 

participants with more complete 

information about what is contained in 

the data feed. The Exchange notes that 

this information is available today and 

the rule text is being amended to make 

clear what information is currently 

provided. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 75 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.76

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2020–083 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–NASDAQ–2020–083. 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–NASDAQ–2020–083, and 

should be submitted on or before 

January 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.77

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27483 Filed 12–14–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90616; File No. SR– 

NASDAQ–2020–086] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Lower the 

Enterprise License Fee for BrokerDealers Distributing Nasdaq Basic to 

Internal Professional Subscribers as 

Set Forth in the Equity 7 Pricing 

Schedule, Section 147, and the 

Enterprise License Fee for BrokerDealers Distributing Nasdaq Last Sale 

to Professional Subscribers at Equity 

7, Section 139 

December 9, 2020. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

7, 2020, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II,