Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 28701 

14 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. 

4Amendment No. 1 replaces and supersedes the 

original filing in its entirety. In Amendment No. 1, 

the Exchange modified the definition of ‘‘child 

order’’ in proposed rule 7.31. 

5The term ‘‘UTP Securities’’ is defined in Rule 

1.1 to mean a security that is listed on a national 

securities exchange other than the Exchange and 

that trades on the Exchange pursuant to unlisted 

trading privileges. 

6The terms ‘‘Priority 2—Display Orders’’ and 

‘‘Priority 3—Non-Display Orders’’ are defined in 

Rule 7.36(e). 

7The terms ‘‘BBO,’’ ‘‘NBBO,’’ ‘‘PBBO,’’ and 

‘‘Away Market’’ are defined in Rule 1.1. 

8See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule 

11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’) 

Rule 7503(h). 

should be submitted on or before July 

11, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13170 Filed 6–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83432; File No. SR–NYSE– 

2018–26] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change, as 

Modified by Amendment No. 1, To 

Amend Pillar Trading Platform Rule 

7.31 Relating to Reserve Orders and 

Rule 7.36 Relating to Setter Priority 

June 14, 2018. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that, on June 1, 

2018, New York Stock Exchange LLC 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule 

change. On June 8, 2018, the Exchange 

filed Amendment No. 1 to the proposed 

rule change, as described in Items I, II, 

and III below, which Items have been 

prepared by the Exchange.4 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 

Pillar trading platform Rule 7.31 relating 

to Reserve Orders and Rule 7.36 relating 

to Setter Priority. This Amendment No. 

1 supersedes the original filing in its 

entirety. The proposed rule change is 

available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 7.31 relating to Reserve Orders and 

Rule 7.36 relating to Setter Priority. 

These proposed changes would be 

operative for trading on the Pillar 

trading platform only. Because the 

Exchange trades only UTP Securities 5

on the Pillar trading platform at this 

time, these proposed changes would not 

be applicable to NYSE-listed securities. 

Background 

Rule 7.31(d)(1) defines a Reserve 

Order as a Limit Order with a quantity 

of the size displayed and with a reserve 

quantity of the size (‘‘reserve interest’’) 

that is not displayed. The displayed 

quantity of a Reserve Order is ranked 

Priority 2—Display Orders and the 

reserve interest is ranked Priority 3— 

Non-Display Orders.6 Rule 7.31(d)(1)(A) 

provides that on entry, the display 

quantity of a Reserve Order must be 

entered in round lots and the displayed 

portion of a Reserve Order will be 

replenished following any execution. 

That rule further provides that the 

Exchange will display the full size of 

the Reserve Order when the unfilled 

quantity is less than the minimum 

display size for the order. Rule 

7.31(d)(1)(B) provides that each time a 

Reserve Order is replenished from 

reserve interest, a new working time is 

assigned to the replenished quantity of 

the Reserve Order, while the reserve 

interest retains the working time of 

original order entry. Pursuant to Rule 

7.31(d)(1)(C), a Reserve Order must be 

designated Day and may be combined 

with a Limit Non-Routable Order or a 

Primary Pegged Order. 

Rule 7.36(h) provides that Setter 

Priority will be assigned to an order 

ranked Priority 2—Display Orders with 

a display quantity of at least a round lot 

if such order (i) establishes a new BBO 

and (ii) either establishes a new NBBO 

or joins an Away Market NBBO and that 

only one order is eligible for Setter 

Priority at each price.7 Rule 7.36(h)(1) 

provides that an order will be evaluated 

for Setter Priority on arrival, which 

includes when any portion of an order 

that has routed returns unexecuted and 

when it becomes eligible to trade for the 

first time upon transitioning to a new 

trading session. 

Proposed Rule Change to Reserve 

Orders 

The Exchange proposes to amend 

Rule 7.31(d)(1) to change the manner by 

which the display portion of a Reserve 

Order would be replenished. As 

proposed, rather than replenishing the 

display quantity following any 

execution, the Exchange proposes to 

replenish the Reserve Order when the 

display quantity is decremented to 

below a round lot. This proposed 

functionality is consistent with how 

Reserve Orders are replenished on other 

equity exchanges.8

As is currently the case, the replenish 

quantity would be the minimum display 

size of the order or the remaining 

quantity of reserve interest if it is less 

than the minimum display quantity. To 

reflect this functionality, the Exchange 

proposes that Rule 7.31(d)(1)(A) would 

be amended as follows (deleted text 

bracketed; new text underlined): 

(A) On entry, the display quantity of 

a Reserve Order must be entered in 

round lots. The displayed portion of a 

Reserve Order will be replenished when 

the display quantity is decremented to 

below a round lot. The replenish 

quantity will be the minimum display 

quantity of the order or the remaining 

quantity of the reserve interest if it is 

less than the minimum display quantity 

[following any execution. The Exchange 

will display the full size of the Reserve 

Order when the unfilled quantity is less 

than the minimum display size for the 

order]. 

Under current functionality, because 

the replenished quantity is assigned a 

new working time, it is feasible for a 

single Reserve Order to have multiple 


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replenished quantities with separate 

working times, each, a ‘‘child’’ order. 

The proposed change to limit when a 

Reserve Order would be replenished to 

when the display quantity is 

decremented to below a round lot only 

would reduce the number of child 

orders for a Reserve Order. The 

Exchange believes that minimizing the 

number of child orders for a Reserve 

Order would reduce the potential for 

market participants to detect that a child 

order displayed on the Exchange’s 

proprietary market data feeds is 

associated with a Reserve Order. 

In most cases, the maximum number 

of child orders for a Reserve Order 

would be two. For example, assume a 

Reserve Order to buy has a display 

quantity of 100 shares and an additional 

200 shares of reserve interest. A sell 

order of 50 shares would trade with the 

display quantity of such Reserve Order, 

which would decrement the display 

quantity to 50 shares. As proposed, the 

Exchange would then replenish the 

Reserve Order with 100 shares from the 

reserve interest, i.e., the minimum 

display size for the order. After this 

second replenishment, the Reserve 

Order would have two child orders, one 

for 50 shares, the other for 100 shares, 

each with different working times. 

Generally, when there are two child 

orders, the older child order of less than 

a round lot will be executed before the 

second child order. However, there are 

limited circumstances when a Reserve 

Order could have two child orders that 

equal less than a round lot, which, as 

proposed, would trigger a 

replenishment. For such circumstance, 

the Exchange proposes that when a 

Reserve Order is replenished from 

reserve interest and already has two 

child orders that equal less than a round 

lot, the child order with the later 

working time would be reassigned the 

new working time assigned to the next 

replenished quantity. 

For example, taking the same Reserve 

Order as above: 

• If 100 shares of such order (‘‘A’’) are 

routed on arrival, it would have a 

display quantity of 100 shares (‘‘B’’) and 

100 shares in reserve interest. 

• While ‘‘A’’ is routed, a sell order of 

50 shares would trade with ‘‘B,’’ 

decrementing ‘‘B’’ to 50 shares and the 

Reserve Order would be replenished 

from reserve interest, creating a second 

child order ‘‘C’’ of 100 shares. 

• Next, the Exchange receives a 

request to reduce the size of the Reserve 

Order from 300 shares to 230 shares. 

Because ‘‘A’’ is still routed away and 

there is no reserve interest, and as 

described in more detail below, this 70 

share reduction in size would be 

applied against the most recent child 

order of ‘‘C,’’ which would be reduced 

to 30 shares. Together with ‘‘B,’’ which 

would still be 50 shares, the two 

displayed child orders would equal less 

than a round lot, but with no quantity 

in reserve interest. 

• Next, ‘‘A’’ is returned unexecuted, 

and as described below, becomes 

reserve interest and is evaluated for 

replenishment. Because the total display 

quantity (‘‘B’’ + ‘‘C’’) is less than a 

round lot, this Reserve Order would be 

replenished. But because the Reserve 

Order already has two child orders, the 

child order with the later working time, 

‘‘C,’’ would be returned to the reserve 

interest, which would now have a 

quantity of 130 shares (‘‘C’’ + ‘‘A’’), and 

the Reserve Order would be replenished 

with 100 shares from the reserve interest 

with a new working time, which would 

be a new child order ‘‘D.’’ 

• After this replenishment, this 

Reserve Order would have two child 

orders of ‘‘B’’ for 50 shares and ‘‘D’’ for 

100 shares, and a reserve interest of 30 

shares. 

To effect these changes, the Exchange 

proposes to amend current Rule 

7.31(d)(1)(B) to specify that each display 

quantity of a Reserve Order with a 

different working time would be 

referred to as a child order. The 

Exchange further proposes new Rule 

7.31(d)(1)(B)(i) that would provide that 

when a Reserve Order is replenished 

from reserve interest and already has 

two child orders that equal less than a 

round lot, the child order with the later 

working time would rejoin the reserve 

interest and be assigned the new 

working time assigned to the next 

replenished quantity. 

The Exchange also proposes new Rule 

7.31(d)(1)(B)(ii) to provide that if a 

Reserve Order is not routable (i.e., is 

combined with either a Limit NonRoutable Order or a Primary Pegged 

Order), the replenish quantity would be 

assigned a display and working price 

consistent with the instructions for the 

order, which represents current 

functionality. For example, for a Limit 

Non-Routable Reserve Order, if the 

display price would lock or cross the 

contra-side PBBO, the replenished 

quantity would be assigned a display 

price one MPV worse than the PBBO 

and a working price equal to the contraside PBBO, as provided for in Rule 

7.31(e)(1)(A)(i). The Exchange believes 

that this proposed rule text would 

provide transparency and clarity to 

Exchange rules. 

For a Primary Pegged Reserve Order, 

the Exchange proposes that the 

replenished quantity would follow Rule 

7.31(h)(2)(B), which provides that a 

Primary Pegged Order would be rejected 

if the PBBO is locked or crossed. 

Because a Primary Pegged Reserve 

Order would have resting reserve 

interest, the Exchange proposes to 

amend Rule 7.31(h)(2)(B) to provide that 

if the PBBO is locked or crossed when 

the display quantity of a Primary Pegged 

Reserve Order is replenished, the entire 

order would be cancelled. The Exchange 

believes that cancelling the entire order 

is consistent with the current rule that 

provides that the entire order would be 

rejected on arrival if the display 

quantity would lock or cross the PBBO. 

The Exchange further proposes to add 

new subsection (D) to Rule 7.31(d)(1) to 

describe when a Reserve Order would 

be routed. As proposed, a routable 

Reserve Order would be evaluated for 

routing both on arrival and each time 

the display quantity is replenished. 

Proposed Rule 7.31(d)(1)(D)(i) would 

provide that if routing is required, the 

Exchange would route from reserve 

interest before publishing the display 

quantity. In addition, if after routing, 

there is less than a round lot available 

to display, the Exchange would wait 

until the routed quantity returns 

(executed or unexecuted) before 

publishing the display quantity. In the 

example described above, the Exchange 

would have published the display 

quantity before the routed quantity 

returned because the display quantity 

was at least a round lot. If, however, 250 

shares of a Reserve Order of 300 shares 

had been routed on arrival, because the 

unrouted quantity was less than a round 

lot (50 shares), the Exchange would wait 

for the routed quantity to return, either 

executed or unexecuted, before 

publishing the display quantity. 

The Exchange proposes this 

functionality to reduce the possibility 

for a Reserve Order to have more than 

one child order. If the Exchange did not 

wait, and instead displayed the 50 

shares when the balance of the Reserve 

Order has routed, if the 250 shares 

returns unexecuted, such Reserve Order 

would be replenished and would have 

two child orders—one for the 50 shares 

that was displayed when the order was 

entered and a second for the 100 shares 

that replenished the Reserve Order from 

the quantity that returned unexecuted. 

By contrast, by waiting for a report on 

the routed quantity, if the routed 

quantity was not executed, the 

Exchange would display the minimum 

display quantity as a single child order. 

If the routed quantity was executed, the 

Exchange would display the 50 shares, 

but only because that would be the full 

remaining quantity of the Reserve 

Order. 


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Proposed Rule 7.31(d)(1)(D)(ii) would 

provide that any quantity of a Reserve 

Order that is returned unexecuted 

would join the working time of the 

reserve interest, which is current 

functionality. If there is no quantity of 

reserve interest to join, the returned 

quantity would be assigned a new 

working time as reserve interest. As 

further proposed, in either case, such 

reserve interest would replenish the 

display quantity as provided for in 

Rules 7.31(d)(1)(A) and (B). The 

Exchange believes that this proposed 

rule text would promote transparency 

and clarity in Exchange rules. The 

Exchange further believes it is 

appropriate for a returned quantity of a 

Reserve Order to join the reserve 

interest first because the order may not 

be eligible for a replenishment to the 

display quantity. 

Proposed Rule 7.31(d)(1)(E) would 

provide that a request to reduce in size 

a Reserve Order would cancel the 

reserve interest before canceling the 

display quantity and if there is more 

than one child order, the child order 

with the later working time would be 

cancelled first. This represents current 

functionality and the example set forth 

above demonstrates how this would 

function. The Exchange believes that 

canceling reserve interest before a child 

order would promote the display of 

liquidity on an exchange. The Exchange 

further believes that canceling a latertimed child order would respect the 

time priority of the first child order, and 

any priority such child order may have 

for allocations. 

Proposed Rule Change for Setter Priority 

The Exchange also proposes to 

expand the opportunity for an order to 

be eligible for Setter Priority pursuant to 

Rule 7.36(h)(1). As noted above, 

currently, an order is eligible for Setter 

Priority on arrival or when it becomes 

eligible to trade for the first time when 

transitioning to a new trading session. 

The Exchange first proposes to amend 

Rule 7.36(h)(1) to specify that an order 

would not be eligible for Setter Priority 

if there is an odd-lot sized order with 

Setter Priority at that price, which is 

current functionality. Because an oddlot order cannot establish a BBO, if there 

is an odd-lot order at a price, an arriving 

order can get Setter Priority if it 

establishes the BBO and either joins or 

establishes the NBBO. However, as set 

forth in Rule 7.36(h)(2)(A), an order 

retains Setter Priority if it is 

decremented to below a round lot. In 

such case, an arriving order that 

establishes the BBO and either joins or 

establishes the NBBO would not be 

eligible for Setter Priority if there is an 

odd-lot sized order at that price with 

Setter Priority. The Exchange believes 

that the proposed rule text would 

promote transparency and clarity in 

Exchange rules. 

The Exchange proposes in new Rule 

7.36(h)(1)(C) that Setter Priority would 

be evaluated for a resting order that is 

assigned a new display price. A resting 

order could be assigned a new display 

price for a number of reasons, including 

because of a change to the PBBO or 

NBBO (as described in Rule 7.31), 

pursuant to Rule 7.11(a)(5), or if a Short 

Sale Period is triggered for a security 

under Rule 7.16(f). In any repricing 

scenario, the repriced order would be 

evaluated for Setter Priority, meaning it 

would have to meet the requirements of 

Rule 7.36(h) that it has a display 

quantity of at least a round lot and (i) 

establishes a new BBO and (ii) either 

establishes a new NBBO or joins an 

Away Market NBBO. The Exchange 

believes that if a repriced resting order 

meets these conditions, it has 

aggressively displayed liquidity on the 

Exchange and should be eligible for the 

additional Setter Priority allocation. 

The Exchange proposes to specify 

what would happen if multiple orders 

reprice at the same time. As proposed in 

the second sentence to new Rule 

7.36(h)(1)(C), if multiple orders reprice 

at the same time, none of the orders 

would be eligible for Setter Priority 

unless one order is equal to or greater 

than a round lot and the sum of all other 

orders at that price is less than a round 

lot. The other orders at that price could 

have been resting orders, e.g., odd-lot 

sized displayed orders, or other repriced 

orders, or both. The Exchange believes 

that this proposed change is consistent 

with how the Exchange evaluates Setter 

Priority on arrival, which is available for 

an incoming order of at least a roundlot size that establishes the BBO and 

either joins or establishes the NBBO, 

notwithstanding other orders at that 

price that equal less than a round lot 

and do not already have Setter Priority. 

The Exchange also proposes in new 

Rule 7.36(h)(1)(D) that a Reserve Order 

would be evaluated for Setter Priority 

when the display quantity is 

replenished. The Exchange proposes 

this change in conjunction with the 

proposed changes to Reserve Order 

replenishment, described above. 

Because a Reserve Order would be 

replenished only if the display quantity 

is decremented to below a round lot, the 

Exchange believes that a replenishment 

event should be eligible for Setter 

Priority if it both establishes a BBO and 

either joins or establishes the NBBO. If 

the second child order meets those 

conditions, such child order would be 

eligible for Setter Priority even if there 

is still the first child order of an oddlot size for such Reserve Order on the 

Exchange Book. However, consistent 

with the proposed change to Rule 

7.36(h)(1), if the first child order of the 

Reserve Order had Setter Priority, the 

second child order of the Reserve Order 

would not be eligible for Setter Priority 

because there is already an order on the 

Exchange Book at that price with Setter 

Priority. 

The second sentence of proposed Rule 

7.36(h)(1)(D) would further provide that 

during a Short Sale Period under Rule 

7.16(f), if a short sale Reserve Order has 

an odd-lot quantity with Setter Priority 

and the Permitted Price at which such 

order would be replenished would be a 

different price, the replenish quantity 

would not be eligible for Setter Priority. 

As set forth in Rule 7.16(f)(5)(B), reserve 

interest that replenishes the displayed 

quantity of a Reserve Order will be 

replenished at a Permitted Price. Even 

though the second child order would be 

at a different price and would otherwise 

meet the conditions for Setter Priority, 

the Exchange believes that a Reserve 

Order should not be eligible for Setter 

Priority at more than one price. 

For example, during a Short Sale 

Period, 

• If the NBB is 10.00, a short sale 

Reserve Order priced at 10.01 would be 

displayed at 10.01. If that short sale 

Reserve Order established the BO and 

either joined or established the NBO, it 

would be assigned Setter Priority. 

• If the NBB subsequently changes to 

10.01, pursuant to Rule 7.16(f)(6), the 

display quantity of the Reserve Order 

would remain displayed at 10.01, but 

the reserve interest would be repriced to 

the Permitted Price of 10.02. 

• If next, the display quantity at 10.01 

is reduced to below a round lot, such 

child order would retain Setter Priority. 

In addition, the Reserve Order would be 

replenished at 10.02, which is the 

Permitted Price. However, as proposed, 

even if the child order at 10.02 would 

establish a new BO and either joined or 

established a new NBO, because it is 

part of the same Reserve Order, it would 

not be eligible to Setter Priority at the 

Permitted Price. 

Finally, the Exchange proposes to 

amend Rule 7.36(h)(3)(C), which 

provides that an order loses its Setter 

Priority if such order is less than a 

round lot and is assigned a new working 

time pursuant to Rule 7.38(d)(2). To 

reflect the proposed change to Reserve 

Orders described above that a child 

order could be assigned a new working 

time, the Exchange proposes that if 

child order of a Reserve Order with 

Setter Priority is assigned a new 


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9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

working time, it would lose that 

priority. However, when it joins the 

reserve interest and replenishes the 

Reserve Order, pursuant to proposed 

Rule 7.36(h)(1)(D), the new child order 

would be evaluated for Setter Priority. 

For example: 

• If the Away Market PBB is 10.05 

and the Exchange receives a Reserve 

Order to buy priced at 10.00 with 100 

shares minimum display quantity and 

an additional 1000 shares in reserve 

interest, the child order ‘‘A’’ of 100 

shares would be displayed at 10.00, but 

would not be eligible for Setter Priority. 

• If the Away Market PBB adjusts to 

9.99 and the Exchange receives a sell 

order with a limit price of 10.00 for 70 

shares, ‘‘A’’ would be decremented to 30 

shares and the Reserve Order would be 

replenished with a new child order ‘‘B’’ 

for 100 shares. Because ‘‘B’’ would 

establish a new BB on the Exchange and 

a new NBB, it would be assigned Setter 

Priority. 

• If next, the Exchange receives an 

order to sell 90 shares at 10.00, because 

‘‘B’’ has Setter Priority, it would trade 

with the new order to sell and would 

decremented to 10 shares, but still 

retain Setter Priority. 

• Because ‘‘A’’ and ‘‘B’’ equal less 

than a round lot, the Reserve Order will 

be replenished. But because ‘‘B’’ would 

lose its working time and join the 

reserve interest pursuant to proposed 

Rule 7.31(d)(1)(B), ‘‘B’’ would also lose 

its Setter Priority pursuant to proposed 

Rule 7.36(h)(3)(C). A new child order 

‘‘C’’ would replenish the order for 100 

shares. 

• In this case, because ‘‘C’’ would 

again establish the BB on the Exchange 

and the NBB, ‘‘C’’ would be assigned 

Setter Priority for 100 shares. 

Finally, the Exchange proposes to 

amend Rule 7.36(h)(4) to delete subparagraph (B) of that Rule, which 

provides that Setter Priority is not 

available when the reserve quantity 

replenishes the display quantity of a 

Reserve Order. The Exchange proposes 

to re-number the rule text so that Rule 

7.36(h)(4) provides that Setter Priority is 

not available for any portion of an order 

that is ranked Priority 3—Non-Display 

Orders, which is currently set forth in 

sub-paragraph (A). 

* * * * * 

Because of the technology changes 

associated with this proposed rule 

change, the Exchange will announce by 

Trader Update when these changes will 

be implemented. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),9 in general, and furthers the 

objectives of Section 6(b)(5),10 in 

particular, because it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, 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. 

The Exchange believes that the 

proposed rule change to replenish a 

Reserve Order only if the display 

quantity is decremented to below a 

round lot would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system because it would reduce the 

number of child orders associated with 

a single Reserve Order. By reducing the 

number of child orders, the Exchange 

believes it would reduce the potential 

for market participants to detect that a 

child order is associated with a Reserve 

Order. This proposed functionality is 

also consistent with how Reserve Orders 

function on BZX and Nasdaq. 

For similar reasons, the Exchange 

believes that if a Reserve Order has two 

child orders that equal less than a round 

lot, it would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system to assign a new working time to 

the later child order so that when such 

Reserve Order is replenished, it would 

have a maximum of only two child 

orders. The Exchange believes that this 

proposed change would streamline the 

operation of Reserve Orders and meet 

the objective to reduce the potential for 

market participants to be able to identify 

that a child order is associated with a 

Reserve Order. 

The Exchange further believes that the 

proposed rule change to evaluate a 

Reserve Order for routing both on 

arrival and when replenishing would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would reduce the potential for the 

display quantity of a Reserve Order to 

lock or cross the PBBO of an away 

market. The Exchange further believes 

that routing from reserve interest would 

promote the display of liquidity on the 

Exchange, because if there is at least a 

round lot remaining of a Reserve Order 

that is not routed, the Exchange would 

display that quantity. The Exchange also 

believes that it would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system to wait to 

display a Reserve Order if there is less 

than a round lot remaining after routing 

because it would reduce the potential 

for such Reserve Order to have more 

than one child order. Finally, the 

Exchange believes that joining any 

quantity of a Reserve Order that is 

returned unexecuted with reserve 

interest first would be consistent with 

the proposed replenishment logic that a 

Reserve Order would be replenished 

only if the display quantity is 

decremented to below a round lot. 

The Exchange believes that it would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system to apply 

a request to reduce in size a Reserve 

Order to the reserve interest first, and 

then next to the child order with the 

later working time, because such 

functionality would promote the display 

of liquidity on the Exchange and honor 

the priority of the first child order with 

the earlier working time. The Exchange 

believes that including this existing 

functionality in Rule 7.31 would 

promote transparency and clarity in 

Exchange rules. 

The Exchange believes that the 

proposed change to Primary Pegged 

Reserve Orders would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

similar to how a Primary Pegged Order 

would function on arrival, if the 

replenish quantity of a Primary Pegged 

Reserve Order would lock or cross the 

PBBO, the entire Reserve Order would 

be cancelled. The Exchange believes 

that by cancelling the entire order, the 

Exchange would reduce the potential for 

such order to be displayed at a price 

that would lock or cross the PBBO. 

The Exchange believes that the 

proposed changes to Rule 7.36 relating 

to Setter Priority would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would provide for additional 

circumstances when an order would be 

eligible to be evaluated for Setter 

Priority. The Exchange believes that a 

resting order that is repriced or a 

Reserve Order that is replenished 

should be entitled to Setter Priority if it 

meets the existing conditions for Setter 

Priority, including that it is at least a 

round lot in size, establishes the BBO, 

and either establishes or joins the 

NBBO. In these circumstances, a 

repriced order or replenished Reserve 

Order would be promoting the 

aggressive display of liquidity on the 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 28705 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Exchange, which would benefit all 

market participants. 

The Exchange believes that the 

proposed changes to Setter Priority are 

designed to operate consistently with 

the existing functionality, which is why 

multiple orders that reprice would not 

be eligible for Setter Priority, unless one 

order is equal to a round lot or more and 

the sum of all other orders at that price 

equal less than a round lot. Similarly, 

the Exchange believes that it would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system for a 

Reserve Order to be eligible for Setter 

Priority at only one price, and therefore, 

during a Short Sale Period, if a Reserve 

Order is replenished at a Permitted 

Price, it would not be eligible for Setter 

Priority at a second price level. 

Finally, the Exchange believes that 

the proposed amendment to Rule 

7.37(h)(3)(C) to add that an order would 

lose Setter Priority if it is less than a 

round lot and assigned a new working 

time pursuant to proposed Rule 

7.31(d)(1)(B)(i) is consistent with 

current behavior that an odd-lot sized 

order would lose Setter Priority if it is 

assigned a new working time. The 

Exchange believes that it would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system for a 

Reserve Order to lose Setter Priority in 

such circumstances because when it is 

assigned a new working time, it would 

be eligible to be reevaluated for Setter 

Priority. 

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 

proposed rule change is not designed to 

address any competitive issues. Rather, 

the proposed rule change to Reserve 

Orders is designed to reduce the 

potential for market participants to 

identify that a child order is related to 

a Reserve Order. The changes to Setter 

Priority are designed to promote the 

aggressive display of liquidity on the 

Exchange to provide additional 

circumstances when an order would be 

eligible for Setter Priority, consistent 

with current rules. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or up to 90 days (i) as the 

Commission may designate if it finds 

such longer period to be appropriate 

and publishes its reasons for so finding 

or (ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

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– 

NYSE–2018–26 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2018–26. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2018–26 and should 

be submitted on or before July 11, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13162 Filed 6–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83446; File No. SR–ISE– 

2018–52] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Increase Certain 

Route-Out Fees Set Forth in Section 

IV.F of the Schedule of Fees 

June 14, 2018. 

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 June 1, 

2018, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘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 increase 

certain route-out fees set forth in 

Section IV.F of the Schedule of Fees, as 

described further below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://ise.cchwallstreet.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 


sradovich on DSK3GMQ082PROD with NOTICES