9112 Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 

32See NASD By-Laws Approval Order, 72 FR at 

42188. 

33See supra note 7 and accompanying text. 

34See Notice, 85 FR at 71389. 

35See id. at 71388, n.12. See also supra note 20 

and accompanying text. 

36See id. at 71388 (citing Article IV, Section 

4.14(a) of the FINRA Regulation By-Laws). 

37 15 U.S.C. 78s(b)(2). 

38 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4An All-or-None Order or AON Order is a 

‘‘Market or Limit Order that is to be executed on 

the Exchange in its entirety or not at all.’’ See Rule 

900.3NY(d)(4). 

5See proposed Commentary .04 to Rule 971.2NY; 

proposed Commentary .05 to Rule 971.1NY. 

Capitalized terms have the same meaning as the 

defined terms in Rules 971.1NY and 971.2NY. 

6See Commentary .05 to Rule 971.1NY; see also 

Securities Exchange Act Release No. 90584 

(December 7, 2020), 85 FR 80196 (December 11, 

2020) (SR–NYSEAmer–2020–60) (order approving 

auction functionality for Single-Leg AON CUBE 

Orders of at least 500 contracts). As proposed, AON 

Complex CUBE Orders would be processed and 

executed in the Complex CUBE Auction in a similar 

manner as Single-Leg AON CUBE Orders are 

processed and executed in the Single-Leg CUBE 

Auction—the differences for Complex relating 

primarily to the underlying differences between 

simple and complex order processing and execution 

(i.e., auction pricing and allocation). 

7See, e.g., Nasdaq ISE LLC (‘‘ISE’’), Options 3, 

Section 11(e) (setting forth its Complex Solicited 

Order Mechanism which allows an agency complex 

order to execute in full against the solicited 

complex order—both of which are designated as 

AON—at the proposed execution net price so long 

provisions in the FINRA By-Laws and 

reflected the governance structure set 

forth in the FINRA By-Laws those 

amendments were consistent with the 

Exchange Act.32 Similarly, this proposal 

will also further conform the FINRA 

Regulation By-Laws with the FINRA ByLaws and will also continue to reflect 

the previously approved governance 

structure of the NAC. As a result, the 

Commission believes that this proposal 

will continue to help assure the fair 

representation of FINRA members in the 

administration of FINRA’s affairs and, 

therefore, is consistent with Section 

15A(b)(4) of the Act. 

The Commission further observes that 

the NAC acts on behalf of the FINRA 

Board in several important capacities, 

including presiding over disciplinary 

matters that have been appealed to or 

called for review by the NAC and acting 

on applications in statutory 

disqualification and membership 

proceeding.33 Given the NAC’s ability to 

perform these actions and prepare 

written decisions on behalf of the 

FINRA Board, and that these decisions 

become FINRA’s final action in the vast 

majority of cases,34 the Commission 

finds that applying the same grounds for 

the removal of a NAC member as those 

that apply for the removal of a governor 

is consistent with the Act. The proposal 

will strengthen the FINRA Board’s 

oversight of the NAC and further 

support the principles outlined in the 

NAC’s Conflict of Interest and Bias 

Policy, which include independence, 

impartiality, integrity, and 

accountability.35 In doing so, the 

proposal will help protect investors and 

further the public interest by expanding 

the scope of the FINRA Board’s 

authority to remove NAC members that, 

in the Board’s view, may be biased or 

have actual or apparent conflicts of 

interest or otherwise impede the NAC’s 

adjudicatory responsibilities.36

In sum, the Commission finds that the 

proposal will continue to help assure 

the fair representation of FINRA 

members in the administration of 

FINRA’s affairs. The Commission also 

finds that this proposal will help protect 

investors and further the public interest 

by supporting fair and impartial 

adjudicatory processes for, among other 

things, FINRA’s disciplinary matters as 

well as statutory disqualification and 

membership proceedings. 

IV. Conclusion 

It is therefore ordered pursuant to 

Section 19(b)(2) of the Exchange Act 37

that the proposal (SR–FINRA–2020– 

037) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02779 Filed 2–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91068; File No. SR– 

NYSEAMER–2021–06] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify Rule 971.2NY 

Regarding Its Complex Customer Best 

Execution Auction 

February 5, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on January 

27, 2021, NYSE American LLC (‘‘NYSE 

American’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘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 modify 

Rule 971.2NY regarding its Complex 

Customer Best Execution (‘‘CUBE’’) 

auction to provide optional all-or-none 

functionality for larger-sized orders and 

to make conforming changes to Rule 

971.1NY to clarify existing functionality 

of the Single-Leg AON CUBE 

functionality. The proposed rule change 

is available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to expand its 

electronic crossing mechanism—the 

CUBE Auction, to provide optional allor-none (‘‘AON’’) 4 functionality for ATP 

Holders to execute larger-sized orders 

(i.e., at least 500 contracts on the 

smallest leg) in the Complex CUBE 

Auction and to make conforming 

changes to Rule 971.1NY to clarify 

existing functionality of the Single-Leg 

AON CUBE functionality.5

The proposed rule change would be 

consistent with the recently approved 

AON CUBE Order functionality for the 

Single-Leg CUBE Auction.6 In this 

regard, the Exchange seeks to expand 

this functionality to the Complex CUBE 

Auction, which functionality is also 

consistent with similar priceimprovement mechanisms for largersized complex orders already available 

on other options exchanges.7 As such, 


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Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 9113 

as, at the time of execution such price is not inferior 

to interest in the ISE leg markets or ISE’s complex 

order book and there are no ISE Priority Customers 

equal to the net execution price. If there is Priority 

Customer interest at the proposed execution price 

and there is sufficient size in the aggregate (i.e., 

Customer interest plus any other quotes, orders, and 

responses) to fill the agency complex order, such 

agency order will trade first with the Priority 

Customer, followed by other interest and the 

solicited order is canceled. If, however, in such a 

scenario, there is insufficient size of the Priority 

Customer and aggregated interest to fill the agency 

order, both the agency complex order and solicited 

order are canceled). See also Cboe Options Rule 

5.40 (Complex Solicitation Auction Mechanism). 

8See Rule 900.2NY(14) (defining Consolidated 

Book (or ‘‘Book’’) and providing that all quotes and 

orders ‘‘that are entered into the Book will be 

ranked and maintained in accordance with the rules 

of priority as provided in Rule 964NY’’). Rule 

964NY (Display, Priority and Order Allocation— 

Trading Systems) dictates the priority of quotes and 

orders. The Exchange has integrated the Complex 

CUBE Auction into the Complex Matching Engine 

(or CME), which ensures that the Complex CUBE 

Auction respects the priority of interest in the 

Consolidated Book. See Rule 971.2NY(a). 

9See generally Rule 971.2NY and Commentary 

.02 (definitions). See also Rule 900.2NY(7)(b),(c) 

(defining Complex BBO and Derived BBO). The 

‘‘same-side CUBE BBO’’ and ‘‘contra-side CUBE 

BBO’’ refer to the CUBE BBO on the same or 

opposite side of the market as the Complex CUBE 

Order, respectively. See Rule 971.2NY(a)(2). 

10See Rule 971.2NY(a)(2). A complex order 

strategy is entered with the ratio expressed in the 

fewest number of contracts for each leg of the ratio. 

For a complex order strategy with a ratio of 2, 3, 

and 6 contracts per leg, the $0.01 figure would be 

multiplied by 2 contracts, which represents the 

smallest leg. To calculate the CUBE BBO for this 

strategy, the Derived BBO would need to be priced 

improved by $0.02. 

11See Rule 971.2NY(a)(2)–(4). 

12See generally Rule 971.2NY (for detailed 

description of operation of Complex CUBE 

Auction). 

13See also proposed Commentary .04 to Rule 

971.2NY. See Rule 971.2NY(b)(1)(A) (setting forth 

parameters for single stop price). An AON Complex 

CUBE Order would be rejected for the same reasons 

as a Complex CUBE Order (see Rule 971.2NY(b)(2)– 

(5)). 

14See also proposed Commentary .04 to Rule 

971.2NY. See also Rule 971.2NY(b)(1)(B) (regarding 

parameters for auto-match limit price). 

15An AON Complex CUBE Order and its paired 

Complex Contra Order would be rejected if it failed 

to meet the pricing parameters. See Rule 

971.2NY(b) (regarding auction eligibility 

requirements). 

16See Rule 971.2NY(c)(3) (setting forth the type 

of interest that causes the early end to a Complex 

CUBE Auction). In particular, to respect priority of 

the leg markets, the AON Complex CUBE Auction 

would end early if during the Auction the Exchange 

receives ‘‘[i]nterest in the leg market that causes the 

contra-side CUBE BBO to be better than the stop 

price or auto-match limit price.’’ See Rule 

971.2NY(c)(3)(F). 

17See proposed Commentary .04(a) to Rule 

971.2NY. The Exchange also proposes to modify 

Commentary .05 to Rule 971.1NY to clarify the 

handling of AON CUBE Orders in a Single-Leg 

CUBE Auction—including by relocating certain text 

to a new paragraph (a), which would not alter 

existing functionality and mirrors the handling of 

AON Complex CUBE Orders in a Complex CUBE 

Auction. See proposed Commentary .05(a) to Rule 

971.1NY (providing that ‘‘[a]n AON CUBE Order to 

buy (sell) will execute in full with the Contra Order 

at the single stop price even if there is nonCustomer interest priced higher (lower) than the 

stop price that, either on its own or when 

aggregated with other non-Customer RFR Responses 

at the stop price or better, is insufficient to satisfy 

the full quantity of the AON CUBE Order’’). In 

addition, the Exchange proposes to make a nonsubstantive change to remove the now extraneous 

text ‘‘provided that’’ and to re-number existing 

paragraphs (a) and (b) to new paragraphs (b) and (c), 

which makes the Rule easier to navigate and would 

align with the AON Complex CUBE rule. See 

proposed Commentary .05(b), (c) to Rule 971.1NY. 

18See proposed Commentary .04(b) to Rule 

971.2NY. The Exchange also proposes to modify 

(new) paragraph (b) to Commentary .05 to Rule 

971.1NY regarding the Single-Leg CUBE Auction to 

make clear that Customer interest ‘‘at the stop price 

or better’’ may prevent the Contra Order from 

executing, which does not alter existing 

functionality and mirrors the handling of AON 

Complex CUBE Orders in a Complex CUBE 

Auction. See proposed Commentary .05(b) to Rule 

971.1NY (emphasis added). In addition, the 

Exchange proposes to make a non-substantive 

change to capitalize the first sentence of this 

paragraph, which makes the Rule easier to navigate 

and would align with the AON Complex CUBE rule. 

See id. 

this is a filing that will allow the 

Exchange to compete with other options 

exchanges for such larger-sized 

Complex Orders which would in turn 

benefit market participants already 

familiar with such price-improvement 

mechanisms in that it would provide 

another venue to trade their larger-sized 

orders. 

The Complex CUBE Auction operates 

seamlessly with the Consolidated 

Book—while still affording Complex 

CUBE Orders an opportunity to receive 

price improvement.8 In particular, the 

Exchange utilizes the concept of a CUBE 

BBO, which requires price improvement 

over resting interest to initiate a 

Complex CUBE Auction.9 Upon entry of 

a Complex CUBE Order in the System, 

the CUBE BBO is determined to be the 

more aggressive of (i) the Complex BBO 

improved by $0.01, or (ii) the Derived 

BBO improved by: $0.01 multiplied by 

the smallest leg of the complex order 

strategy.10 A Complex CUBE Auction 

begins with an ‘‘initiating price,’’ which 

for a Complex CUBE Order is the less 

aggressive of the net debit/credit price 

of such order or the price that locks the 

contra-side CUBE BBO and the ‘‘range 

of permissible executions’’ of a Complex 

CUBE Order is all prices equal to or 

between the initiating price and the 

same-side CUBE BBO.11 As proposed, 

the initiation of, and the range of 

permissible executions for, an AON 

Complex CUBE Order would align with 

the protections afforded a standard 

(non-AON) Complex CUBE Order. 

The proposal to expand the current 

Complex CUBE Auction functionality 

by providing an additional (optional) 

method for market participants to effect 

larger-sized orders in the Complex 

CUBE Auction would likewise operate 

seamlessly with the Consolidated Book. 

The Exchange also believes this 

proposal would encourage ATP Holders 

to compete vigorously to provide the 

opportunity for price improvement for 

larger-sized orders in a competitive 

auction process, which may lead to 

enhanced liquidity and tighter markets. 

Proposed AON Complex CUBE 

Functionality 12

The Exchange proposes to add new 

Commentary .04 to Rule 971.2NY to 

provide that a Complex CUBE Order 

that has at least 500 contracts on the 

smallest leg would execute in full at the 

single stop price against the Complex 

Contra Order, except under specified 

circumstances (the ‘‘AON Complex 

CUBE Order’’).13 As further proposed, a 

Complex Contra Order would not be 

permitted to guarantee an AON 

Complex CUBE Order for auto-match 

limit, which feature is otherwise 

available in a Complex CUBE Auction.14

The CUBE BBO for a proposed AON 

Complex CUBE Order would be 

determined in the same manner as for 

a standard Complex CUBE Order.15 An 

AON Complex CUBE Order Auction 

would also be subject to the same early 

end events as a Complex CUBE Order.16

As proposed, an AON Complex CUBE 

Order would execute in full with the 

Complex Contra Order at the single stop 

price even if there is non-Customer 

interest priced better than the stop price 

that, either on its own or when 

aggregated with other better-priced nonCustomer RFR Responses, is insufficient 

to satisfy the full quantity of the AON 

Complex CUBE Order.17 In addition, as 

proposed, an AON Complex CUBE 

Order would not execute with the 

Complex Contra Order if the entire AON 

Complex CUBE Order can be satisfied in 

full by certain eligible contra-side 

interest. Specifically, the Exchange 

proposes that paragraph (b) to 

Commentary .04 to Rule 971.2NY would 

provide that: 

(b) The Complex Contra Order will not 

receive any allocation and will be cancelled 

(i) if RFR Responses that are priced better 

than the stop price can satisfy the full 

quantity of the AON Complex CUBE Order or 

(ii) there is contra-side Customer interest at 

the stop price or better that on its own, or 

when aggregated with RFR Responses equal 

to or priced better than the stop price, can 

satisfy the full quantity of the AON Complex 

CUBE Order. In either such case, the RFR 

Responses will be allocated as provided for 

in paragraphs (c)(4)(A) and (c)(4)(B)(i) of this 

Rule, as applicable.18

Thus, if there is price-improving 

contra-side interest that can satisfy the 

AON condition of the Auction, the AON 


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19See also Rule 971.2NY (c)(4)(A) (providing 

Customer interest first priority to trade with the 

Complex CUBE Order, at each price level, pursuant 

to the size pro rata algorithm set forth in Rule 

964NY(b)(3)) and (c)(4)(B)(i)(a) (providing RFR 

Responses priced better than the stop price, 

beginning with the most aggressive price within the 

range of permissible executions, pursuant to the 

size pro rata algorithm set forth in Rule 964NY(b)(3) 

at each price point). 

20See, e.g., supra note 7 (regarding Nasdaq ISE’s 

Complex Solicited Order Mechanism and Cboe’s 

Complex Solicitation Auction Mechanism, both of 

which are mechanisms for larger-sized paired 

complex orders designated as AON). 

21See proposed Commentary .04(c) to Rule 

971.2NY. The Exchange also proposes to modify 

(new) paragraph (c) to Commentary .05 to Rule 

971.1NY regarding the Single-Leg CUBE Auction to 

make clear that Customer interest ‘‘at the stop price 

or better’’ would result in cancellation of the AON 

CUBE Order and the Contra Order, which would 

mirror the AON Complex CUBE functionality. See 

proposed Commentary .05(c) to Rule 971.1NY 

(emphasis added). In addition, the Exchange 

proposes to make a non-substantive change to 

capitalize the first sentence of this paragraph, 

which makes the Rule easier to navigate and would 

align with the AON Complex CUBE rule. See id. 

22See Rule 980NY(b) (‘‘Priority of Electronic 

Complex Orders in the Consolidated Book’’). See 

also Rule 971.2NY (regarding processing of 

Complex CUBE Orders per Rule 980NY). 

23See Rule 971.2NY(c)(4)(B)(i)(b) (providing that, 

‘‘[a]t the stop price, if there is sufficient size of the 

Complex CUBE Order still available after executing 

at prices better than the stop price or against 

Customer interest, the Complex Contra Order will 

receive an allocation of the greater of 40% of the 

original Complex CUBE Order size or one contract 

(or the greater of 50% of the original Complex 

CUBE Order size or one contract if there is only one 

RFR Response)’’). 

24See e.g., supra note 7 (regarding Nasdaq ISE’s 

Complex Solicited Order Mechanism and Cboe’s 

Complex Solicitation Auction Mechanism, both of 

which are mechanisms for larger-sized paired 

complex orders designated as AON). 

25See proposed Commentary .04 to Rule 

971.2NY. The Exchange also proposes to modify the 

text in the last paragraph of Commentary .05 to Rule 

971.1NY regarding the Single-Leg CUBE Auction to 

clarify that ‘‘[e]xcept as provided in this 

Commentary .05, an AON CUBE auction will be 

subject to all of the provisions of Rule 971.1NY,’’ 

which makes the Rule easier to navigate and would 

align with the AON Complex CUBE rule. See 

proposed Commentary .05 to Rule 971.1NY. 

26See proposed Commentary .04(d) to Rule 

971.2NY. The Exchange also proposes to add a 

paragraph (d) to Commentary .05 to Rule 971.1NY 

regarding the Single-Leg CUBE Auction to adopt a 

notice provision identical to that being proposed for 

the AON Complex CUBE functionality, which 

clarifies the obligations of ATP Holders to their 

customers and does not alter existing functionality. 

See proposed Commentary .05(d) to Rule 971.1NY. 

27See, e.g., supra note 7, Nasdaq ISE, Options 3, 

Section 11(e)(5) and Cboe Options Rule 5.40, 

Interpretations and Policies .01 (both setting forth 

substantially similar notice requirements for agency 

orders handled on behalf of customers). 

28See Trader Update, October 6, 2020, NYSE 

American Options: AON CUBE Orders Available for 

Testing, available here: https://www.nyse.com/ 

trader-update/history#110000319620. 

29See supra note 6 (regarding recent approval of 

Commentary .05 to Rule 971.1NY). 

Complex CUBE Order would execute in 

full against those price-improving RFR 

Responses and the Complex Contra 

Order would cancel. Or, absent such 

price-improving interest, if there is 

contra-side Customer interest equal to 

the stop price or better that on its own, 

or when combined with equal or betterpriced RFR Responses, can satisfy the 

AON condition of the Auction, the AON 

Complex CUBE Order would execute in 

full against such interest and the 

Complex Contra Order would cancel. 

Under either scenario, the AON 

Complex CUBE Order would be 

allocated against contra-side interest at 

the best price(s) pursuant to the 

Exchange’s priority rules.19 This 

proposal is also consistent with the 

AON nature of similar mechanisms on 

other options exchanges.20

As further proposed, both the AON 

CUBE Order and Contra Order would be 

cancelled, i.e., the Auction would be 

cancelled, if there is contra-side 

Customer interest at the stop price and 

such interest on its own or when 

combined with RFR Responses (at the 

stop price or better) is insufficient to 

satisfy the entire AON Complex CUBE 

Order. To effect this, the Exchange 

proposes that paragraph (b) [sic] to 

Commentary .04 to Rule 971.2NY would 

provide that: 

(c) The AON Complex CUBE Order and 

Complex Contra Order will both be cancelled 

if there is contra-side Customer interest at the 

stop price or better and such interest, either 

on its own or when aggregated with RFR 

Responses equal to or priced better than the 

stop price is insufficient to satisfy the full 

quantity of the AON Complex CUBE Order.21

Thus, as proposed, if there is contraside Customer interest at the stop price, 

but there is not enough size (considering 

the Customer interest and all RFR 

Responses at the stop price or better) to 

satisfy the entire AON Complex CUBE 

Order, then both the AON Complex 

CUBE Order and the Contra Complex 

Order would be cancelled. The 

Exchange believes that this proposal is 

consistent with the terms of how AONs 

function generally without violating the 

Exchange’s general priority rules.22

With respect to allocation, the Exchange 

notes that the proposed functionality 

differs from the allocation of a standard 

Complex CUBE Order in that the 

Complex Contra Order is not guaranteed 

a minimum allocation at the stop price. 

Instead, given the AON nature of the 

functionality, the Complex Contra Order 

either trades with the entire AON 

Complex CUBE Order or not at all.23

This proposal is also consistent with the 

AON nature of similar mechanisms on 

other options exchanges.24

With the exception of differences to 

the minimum size and allocation 

described in proposed Commentary .04 

to Rule 971.2NY, an AON Complex 

CUBE auction would be subject to all of 

the provisions of Rule 971.2NY.25

Finally, proposed paragraph (d) to 

Commentary .04 to Rule 971.2NY would 

provide that prior to entering an agency 

order (i.e., Complex CUBE Order) on 

behalf of a Customer into the Complex 

CUBE Auction as an AON Complex 

CUBE Order, Initiating Participants 

would be required to deliver to the 

Customer a written notification 

informing the Customer that such order 

may be executed using the Complex 

CUBE Auction, which notification 

would disclose the terms and conditions 

of Commentary .04 to Rule 971.2NY and 

be in a form approved by the 

Exchange.26 This notification 

requirement is consistent with the rules 

of other options exchanges that offer an 

AON paired order auction mechanism 

for complex orders.27

Implementation 

The Exchange will announce the 

implementation date of the proposed 

rule change in a Trader Update to be 

published no later than 60 days 

following the approval of this proposed 

rule change. The Exchange has already 

notified ATP Holders about the planned 

implementation of AON Complex CUBE 

functionality, which has provided them 

advance time to prepare their systems 

for participation in the AON Complex 

CUBE Auction once it becomes 

available.28

2. Statutory Basis 

For the reasons set forth above, the 

Exchange believes the proposed rule 

change is consistent with Section 6(b) of 

the Act in general, and furthers the 

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

in that it is designed to promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The proposed optional all-or-none 

functionality for larger-sized orders, 

which is consistent with Exchange’s 

recently approved Single-Leg AON 

CUBE Order functionality,29 is intended 

to benefit investors, because it is 

designed to provide investors seeking to 

execute larger-sized option orders in the 

Complex CUBE Auction with greater 

certainty regarding the price at which 

the order would be executed. In this 

regard, the Exchange seeks to expand 

this functionality to the Complex CUBE 

Auction, which functionality is also 

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30See supra note 7 (regarding Nasdaq ISE’s 

Complex Solicited Order Mechanism and Cboe’s 

Complex Solicitation Auction Mechanism, both of 

which are mechanisms for larger-sized paired 

complex orders designated as AON). 

31See supra notes 17, 18, 21 and 26. 

32See Nasdaq ISE, Options 3, Section 11(e)(5) and 

Cboe Options Rule 5.40, Interpretations and 

Policies .01 (both setting forth substantially similar 

notice requirements for agency orders handled on 

behalf of customers). See supra note 26 (regarding 

the addition of a notice provisions to the Single-Leg 

CUBE auction rule). 

33See supra note 6 (regarding recent approval of 

Commentary .05 to Rule 971.1NY). 

sized complex orders already available 

on other options exchanges. As such, 

this is a filing that will allow the 

Exchange to compete with other options 

exchanges for such larger-sized 

Complex Orders and would benefit 

market participants who are already 

familiar with such price-improvement 

mechanisms.30

This proposal would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would provide ATP Holders that locate 

liquidity for their customers’ largersized orders a facility in which to 

execute those orders at the agreed-upon 

price, while also providing an 

opportunity for such orders to be price 

improved. In addition, ATP Holders that 

opt to utilize this proposed functionality 

would have an equal opportunity to 

initiate their own or to respond with 

their best prices to other AON CUBE 

Auctions. The Exchange believes the 

proposed functionality would promote 

and foster competition and provide 

more options contracts with the 

opportunity for price improvement. 

The Exchange believes that the 

proposed functionality would provide 

more efficient transactions, reduce 

execution risk to ATP Holders, and 

afford greater execution opportunities 

for larger-sized orders. The proposed 

functionality would operate within the 

Complex CUBE (including by 

integrating Complex CUBE into the 

Complex Matching Engine, per Rule 

971.2NY(a)) such that the Exchange is 

able to assure that the proposed 

functionality would continue to respect 

the priority of interest, in particular 

Customer interest. The proposal ensures 

that the AON Complex CUBE Order is 

exposed to ATP Holders for the 

possibility of price improvement and 

that Customer orders on the Exchange 

are protected. As noted above, at the 

conclusion of an AON Complex CUBE 

Auction, the AON Complex CUBE Order 

would be executed in full (against the 

Complex Contra Order or eligible 

contra-side auction interest) or would be 

cancelled, together with the Complex 

Contra Order. 

Further, the proposed functionality is 

reasonable and promotes a fair and 

orderly market and national market 

system, because it is substantially 

similar to the price- improvement 

mechanisms for larger-sized orders 

available on other options exchanges. 

The Exchange believes this proposal 

may lead to an increase in Exchange 

volume and should allow the Exchange 

to better compete against other markets 

that already offer an all-or-none 

electronic solicitation mechanism for 

larger-sized orders. The Exchange 

believes that its proposal would allow 

the Exchange to better compete for 

solicited transactions, while providing 

an opportunity for price improvement 

on the larger-sized orders. In addition, 

the proposed functionality should 

promote and foster competition and 

provide more options contracts with the 

opportunity for price improvement, 

which should benefit market 

participants. 

The proposed clarifications to the 

Single-Leg CUBE Auction Rule would 

protect investors and the public interest 

because the proposed changes add 

clarity, transparency and internal 

consistency to Exchange rules.31

Finally, consistent with other options 

exchanges offering similar priceimprovement auctions, the proposed 

rule change would require ATP Holders 

to provide customers with the terms and 

conditions of agency orders that might 

be submitted as AON Complex CUBE 

Orders on their behalf.32

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange does not believe the proposed 

rule change would impose any burden 

on intramarket competition, as the 

proposed rule change will apply in the 

same manner to all orders submitted as 

AON Complex Orders to the Complex 

CUBE Auction. The Exchange recently 

received rule approval for AON CUBE 

Order functionality in the Single-Leg 

CUBE Auction, which operates in a 

substantially similar manner to the 

complex functionality, accounting for 

differing priority and allocation rules.33

The Exchange is proposing the 

functionality for Complex Orders as an 

optional market enhancement that, if 

utilized, should increase competition 

for ATP Holders seeking to execute such 

larger-sized orders in an electronic 

auction mechanism. ATP Holders that 

opt to utilize this proposed functionality 

would have an equal opportunity to 

initiate their own or to respond with 

their best prices to other AON CUBE 

Auctions. The Exchange notes that other 

options exchanges offer electronic 

auction mechanisms for larger-sized 

orders on an AON basis. The Exchange 

believes the proposed functionality 

would provide ATP Holders with a 

greater choice of exchanges from which 

to execute such orders. The proposal is 

structured to offer the same 

enhancement to all market participants 

and would not impose an intra-market 

competitive burden on any participant. 

The price-improvement functionality for 

the AON Complex CUBE Auction is 

designed to promote competition for 

ATP Holders to compete amongst each 

other by responding with not only their 

best price, but also the full size for a 

particular auction. 

The Exchange notes that it operates in 

a highly competitive market in which 

market participants can readily direct 

order flow to competing venues who 

offer similar functionality. The 

Exchange believes that the proposed 

rule change will relieve any burden on, 

or otherwise promote, competition. The 

Exchange believes this proposed rule 

change is necessary to permit fair 

competition among the options 

exchanges and to establish more 

uniform price-improvement auction 

rules on the various options exchanges. 

The proposed functionality may lead to 

an increase in Exchange volume and 

should allow the Exchange to better 

compete against other markets that 

already offer similar price-improvement 

mechanisms for larger-sized orders. The 

Exchange anticipates that this proposal 

will create new opportunities for the 

Exchange to attract new business and 

compete on equal footing with those 

options exchanges that offer auction 

AON functionality for larger-sized 

Complex Orders and for this reason the 

proposal does not create an undue 

burden on intermarket competition. By 

contrast, not having the proposed 

functionality places the Exchange at a 

competitive disadvantage vis-a`-vis other 

exchanges that offer similar priceimprovement mechanisms for largersized Complex Orders. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 


khammond on DSKJM1Z7X2PROD with NOTICES
9116 Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 

34 15 U.S.C. 78s(b)(3)(A)(iii). 

35 17 CFR 240.19b–4(f)(6). 

36 17 CFR 240.19b–4(f)(6). 

37 17 CFR 240.19b–4(f)(6)(iii). 

38The Exchange notes that it temporarily closed 

its trading floor for several months in 2020 and for 

the last week of December 2020 for reasons related 

to COVID–19. See Trader Update, December 24, 

2020, NYSE American Options to Move 

Temporarily to All-Electronic Trading on December 

28, 2020, available here: https://www.nyse.com/ 

trader-update/history#110000331853. 

39See, e.g., note 7, supra. 

40For purposed only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

41 15 U.S.C. 78s(b)(2)(B). 42 17 CFR 200.30–3(a)(12). 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 34 and Rule 

19b–4(f)(6) thereunder.35 Because the 

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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 36 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),37 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. The 

Exchange has asked the Commission to 

waive the 30-day operative delay so that 

the proposal may become operative 

immediately upon filing. The Exchange 

states that waiver of the operative delay 

would allow the Exchange to deploy the 

new functionality immediately, which 

would help to ease the potential 

disruption to floor trading in the event 

that the Exchange is required to 

temporarily close its trading floor for 

reasons related to COVID–19.38 The 

Commission believes that waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest because it will allow the 

Exchange to implement the proposed 

functionality without delay in the event 

that the Exchange must temporarily 

close its trading floor. As discussed 

above, the proposed AON complex 

CUBE auction is substantially similar to 

the paired solicited complex order 

auctions in place on other options 

exchanges and does not raise new or 

novel regulatory issues.39 In addition, 

the proposed changes to the single-leg 

AON CUBE provisions in Rule 971.1NY 

should help to avoid confusion by 

assuring that the descriptions of the 

single-leg and the complex AON CUBE 

auctions remain consistent. 

Accordingly, the Commission hereby 

waives the 30-day operative delay and 

designates the proposal operative upon 

filing.40

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 41 of the Act to 

determine whether the proposed rule 

change 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– 

NYSEAMER–2021–06 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–NYSEAMER–2021–06. 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–NYSEAMER–2021–06, and 

should be submitted on or before March 

4, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02777 Filed 2–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting; Cancellation 

FEDERAL REGISTER CITATION OF PREVIOUS

ANNOUNCEMENT: 86 FR 8061, February 3, 

2021. 

PREVIOUSLY ANNOUNCED TIME AND DATE OF

THE MEETING: Tuesday, February 9, 2021 

at 5:00 p.m. 

CHANGES IN THE MEETING: The Closed 

Meeting scheduled for Tuesday, 

February 9, 2021 at 5:00 p.m., has been 

cancelled. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Dated: February 9, 2021. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–02961 Filed 2–9–21; 4:15 pm] 

BILLING CODE 8011–01–P 


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