6910 Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See NYSE Arca Rule 6.1A–O(a)(13). 

5The Exchange has announced that, pending 

regulatory approval, it will begin migrating 

Exchange-listed options to Pillar on February 7, 

2022, available here: https://www.nyse.com/traderupdate/history#110000322291. See also Securities 

Exchange Act Release No. 92304 (June 30, 2021), 86 

FR 36440 (July 9, 2021) (SR–NYSEArca–2021–47) 

(Notice of Filing of Proposed Rule Change for New 

Rules 6.1P–O, 6.37AP–O, 6.40P–O, 6.41P–O, 6.62P– 

O, 6.64P–O, 6.76P–O, and 6.76AP–O and 

Amendments to Rules 1.1, 6.1–O, 6.1A–O, 6.37–O, 

6.65A–O and 6.96–O) and Amendment No. 4 to SR– 

NYSEArca–2021–47, available here: https://

www.sec.gov/comments/sr-nysearca-2021-47/ 

srnysearca202147-20112491-265389.pdf. 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–MRX–2022–02. 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–MRX–2022–02 and should 

be submitted on or before February 28, 

2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02432 Filed 2–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94125; No. SR–NYSEArca– 

2022–05] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the NYSE Arca 

Options Fee Schedule 

February 1, 2022. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on January 

25, 2022, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NYSE Arca Options Fee Schedule (the 

‘‘Fee Schedule’’) regarding eligibility for 

certain tiers, incentives, and discounts 

during the Exchange’s migration to a 

new trading platform. The Exchange 

proposes to implement the fee change 

effective January 25, 2022. 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 purpose of this filing is to amend 

the Fee Schedule to provide OTP 

Holders and OTP Firms (collectively, 

‘‘OTP Holders’’) with certainty 

regarding their eligibility for certain 

tiers, incentives, and discounts during 

the Exchange’s migration to a new 

electronic trading platform, as an effort 

to mitigate fees during this transition 

period. 

Currently, the Exchange conducts 

options trading on an electronic 

platform known as ‘‘OX.’’ OX refers to 

the Exchange’s electronic order 

delivery, execution, and reporting 

system for designated option issues 

through which orders and quotes of 

Users are consolidated for execution 

and/or display.4 On or about February 7, 

2022, the Exchange anticipates 

beginning the migration of its options 

trading to a new technology platform 

known as Pillar.5

The Exchange currently offers various 

volume- and performance-based 

incentives and discounts to encourage 

OTP Holders to use the Exchange as 

their primary venue for order routing 

and execution and for market making 

activity. Many of these incentive and 

discount programs include multiple 

tiers, which are intended to encourage 

greater participation in the programs 

and to incent OTP Holders to 

continually grow their business on the 

Exchange in order to qualify for the 

benefits offered in a higher tier. 

In advance of the Exchange’s 

migration to the Pillar platform, the 

Exchange has noted concern among 

OTP Holders regarding their ability to 

achieve various volume qualifications 

and thresholds during the migration. 

Specifically, because OTP Holders may 

choose to moderate their order flow and 

quotation sizes to reduce risk as they 

familiarize themselves with the new 

trading platform, they may not achieve 

the tier(s), incentive(s), and discount(s) 


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Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 6911 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(4) and (5). 

8See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(S7–10–04) (‘‘Reg NMS Adopting Release’’). 

9The OCC publishes options and futures volume 

in a variety of formats, including daily and monthly 

volume by exchange, available here: https://

www.theocc.com/Market-Data/Market-DataReports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics. 

10Based on a compilation of OCC data for 

monthly volume of equity-based options and 

monthly volume of ETF-based options, see id., the 

Exchange’s market share in equity-based options 

increased from 9.65% for the month of December 

2020 to 13.21% for the month of December 2021. 

they qualified for pre-migration. 

Accordingly, the Exchange believes that 

providing OTP Holders with certainty 

with respect to certain pricing they 

would receive during the transition to 

Pillar would provide OTP Holders with 

an opportunity to adjust to new 

functionality and new order handling 

mechanisms without taking on an 

additional financial burden. 

To this end, the Exchange proposes to 

amend Endnote 8 of the Fee Schedule 

to provide that for the month during 

which the Exchange commences its 

migration to the Pillar platform (the 

‘‘Migration Month’’), OTP Holders will 

receive the tier(s), incentive(s), and 

discount(s) they achieved in the month 

prior to the Migration Month or the 

tier(s), incentive(s), and discount(s) 

achieved during the Migration Month, 

whichever are better. Specifically, the 

Exchange will compare an OTP Holder’s 

performance in each of the programs set 

forth below during the Migration Month 

and during the month prior (currently 

anticipated to be January 2022) and will 

bill the OTP Holder for the Migration 

Month at the most favorable rates based 

on each qualification level achieved. 

The following tiers, incentives, and 

discount programs would be covered by 

the proposed change: 

• Customer Penny Posting Credit Tiers 

• Firm and Broker Dealer Penny Posting 

Credit Tiers 

• Firm and Broker Dealer Incentive 

Program 

• Non-Customer, Non-Penny Posting 

Credit Tiers 

• Customer Incentive Program 

• Customer Posting Credit Tiers in NonPenny Issues 

• Discount in Take Liquidity Fees for 

Professional Customer and NonCustomer Liquidity Removing Interest 

• Market Maker Incentive For Penny 

Issues 

• Market Maker Incentive For NonPenny Issues 

• Market Maker Incentives for SPY 

• Market Maker Penny and SPY Posting 

Credit Tiers 

• LMM Rights Fee Discount 

The Exchange believes that, to the 

extent OTP Holders choose to modify 

their trading activity during the 

Migration Month, the proposed change 

would mitigate the impact of potential 

pricing disruption by providing OTP 

Holders with certainty regarding the 

tier(s), incentive(s), and discount(s) they 

would be eligible for in the Migration 

Month, which would in turn encourage 

OTP Holders to continue to send orders 

and quotes to the Exchange during the 

transition to Pillar. 

In addition, by offering OTP Holders 

the better pricing of the month before 

the Migration Month or the Migration 

Month, the Exchange believes OTP 

Holders will be incented to take full 

advantage of new Pillar functionality 

and possibly even increase their volume 

and participation during the migration. 

The Exchange is not proposing any 

changes to the underlying tiers, 

incentives, or discounts covered by the 

proposed change described above. 

The Exchange proposes to implement 

this change effective January 25, 2022. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,6 in general, and 

furthers the objectives of Sections 

6(b)(4) and (5) of the Act,7 in particular, 

because it provides for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members, 

issuers and other persons using its 

facilities and does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. 

The Proposed Rule Change Is 

Reasonable 

The Exchange operates in a highly 

competitive market. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 8

There are currently 16 registered 

options exchanges competing for order 

flow. Based on publicly-available 

information, and excluding index-based 

options, no single exchange has more 

than 16% of the market share of 

executed volume of multiply-listed 

equity and ETF options trades.9

Therefore, currently no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity & 

ETF options order flow. More 

specifically, in December 2021, the 

Exchange had less than 14% market 

share of executed volume of multiplylisted equity & ETF options trades.10

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue or 

reduce use of certain categories of 

products, in response to fee changes. 

Accordingly, competitive forces 

constrain options exchange transaction 

fees. 

The Exchange believes that the 

proposed change is reasonably designed 

to continue to incent OTP Holders to 

maintain active participation on the 

Exchange during the Pillar migration by 

offering OTP Holders pricing at each of 

the tier(s), incentive(s), and discount(s) 

they qualify for during either the 

Migration Month or in the month prior 

to the Migration Month, whichever is 

more favorable to the OTP Holder. The 

Exchange further believes that the 

proposed change would lessen the 

impact of the migration on OTP Holders 

by enabling them to adapt their trading 

activity as needed to transition to Pillar 

functionality during the Migration 

Month and would thus encourage OTP 

Holders to promptly transition to the 

more efficient Pillar platform. 

To the extent the proposed rule 

change encourages OTP Holders to 

migrate to the new platform while 

maintaining their level of trading 

activity, the Exchange believes the 

proposed change would sustain the 

Exchange’s overall competitiveness and 

its market quality for all market 

participants. In the backdrop of the 

competitive environment in which the 

Exchange operates, the proposed rule 

change is a reasonable attempt by the 

Exchange to mitigate the expense of the 

migration without affecting its 

competitiveness. 

The Proposed Rule Change Is an 

Equitable Allocation of Credits and Fees 

The Exchange believes the proposed 

rule change is an equitable allocation of 

its fees and credits because it would be 

available to all OTP Holders. In 

addition, the proposal is based on each 

OTP Holder’s activity levels before and 

during the Migration Month and would 

afford OTP Holders the flexibility to 

moderate their activity as needed during 

the Migration Month and still receive 

the more favorable rates between the 

tier(s), incentive(s), and discount(s) they 

achieve in the Migration Month or in 


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6912 Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 

11See Reg NMS Adopting Release, supra note 8, 

at 37499. 

12See supra note 9. 

13Based on a compilation of OCC data for 

monthly volume of equity-based options and 

monthly volume of ETF-based options, see id., the 

Exchange’s market share in equity-based options 

increased from 9.65% for the month of December 

2020 to 13.21% for the month of December 2021. 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(2). 

16 15 U.S.C. 78s(b)(2)(B). 

the month prior. Thus, the Exchange 

believes the proposed rule change 

would facilitate a smooth transition to 

the Pillar technology platform for all 

market participants on the Exchange by 

encouraging OTP Holders to send orders 

and quotes to the Exchange during the 

transition period, thereby improving 

market-wide quality. 

The Proposed Rule Change Is Not 

Unfairly Discriminatory 

The Exchange believes the proposed 

rule change is not unfairly 

discriminatory because it would be 

available to all similarly-situated market 

participants on an equal and nondiscriminatory basis. 

The proposal is based on an OTP 

Holder’s achievement of tiers, 

incentives, and discounts prior to and 

during the Migration Month and would 

provide all OTP Holders with certainty 

that they would at least qualify for the 

same tier(s), incentive(s), and 

discount(s) as in the month prior to the 

Migration Month. The proposed change 

would thus allow OTP Holders to adjust 

their interactions with Exchange 

systems during the Migration Month as 

needed and take advantage of the new 

functionality offered by Pillar by 

mitigating the impact of potential 

pricing disruptions. Thus, to the extent 

the proposal encourages OTP Holders to 

maintain or increase their current level 

of activity on the Exchange, such 

activity would result in trading 

opportunities for all market participants 

and thus would promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, protect investors and the public 

interest. 

Finally, the Exchange believes that it 

is subject to significant competitive 

forces, as described below in the 

Exchange’s statement regarding the 

burden on competition. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

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

the Act, the Exchange does not believe 

that the proposed rule change would 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Instead, as discussed above, the 

Exchange believes that the proposed 

changes would encourage the 

submission of additional liquidity to a 

public exchange, thereby promoting 

market depth, price discovery and 

transparency and enhancing order 

execution opportunities for all market 

participants. As a result, the Exchange 

believes that the proposed change 

furthers the Commission’s goal in 

adopting Regulation NMS of fostering 

integrated competition among orders, 

which promotes ‘‘more efficient pricing 

of individual stocks for all types of 

orders, large and small.’’ 11

Intramarket Competition. The 

Exchange does not believe the proposed 

rule change would impose any burden 

on intramarket competition that is not 

necessary or appropriate because it 

would apply equally to all OTP Holders 

that submit orders and quotes 

electronically to the Exchange. All OTP 

Holders would be eligible to receive the 

rates under each of the tier(s), 

incentive(s), and discount(s) they 

achieved in the Migration Month or in 

the month prior to the Migration Month, 

whichever are better. 

Intermarket Competition. The 

Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

16 competing option exchanges if they 

deem fee levels at a particular venue to 

be excessive. In such an environment, 

the Exchange must continually adjust its 

fees to remain competitive with other 

exchanges and to attract order flow to 

the Exchange. Based on publiclyavailable information, and excluding 

index-based options, no single exchange 

has more than 16% of the market share 

of executed volume of multiply-listed 

equity and ETF options trades.12

Therefore, currently no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity & 

ETF options order flow. More 

specifically, in December 2021, the 

Exchange had less than 14% market 

share of executed volume of multiplylisted equity & ETF options trades.13

The Exchange does not believe the 

proposed rule change would impose any 

burden on intermarket competition that 

is not necessary or appropriate because 

the Exchange operates in a highly 

competitive market in which market 

participants can readily choose to send 

their orders to other exchanges if they 

deem fee levels at those other venues to 

be more favorable. The Exchange 

believes that its fees are constrained by 

the robust competition for order flow 

among exchanges and thus believes that 

the proposed change is reasonably 

designed to encourage OTP Holders to 

transition to the Pillar platform while 

mitigating the risk of a significant 

change to the fees they would be subject 

to during the Migration Month. 

Accordingly, the Exchange believes that 

the proposed change would continue to 

make the Exchange a competitive venue 

for order execution by enabling OTP 

Holders to maintain their current levels 

of interaction with the Exchange (or 

make adjustments as needed) during the 

Migration Month, thus encouraging 

prompt migration to the newer, more 

efficient Pillar technology platform and 

sustained activity on the Exchange 

during the Pillar transition. 

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 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 14 of the Act and 

subparagraph (f)(2) of Rule 19b–4 15

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

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) 16 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 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 25 / Monday, February 7, 2022 / Notices 6913 

17 17 CFR 200.30–3(a)(12). 

1 See Arca Rule 6.87–O. See also Securities 

Exchange Act Release No. 93818 (December 17, 

2021), 86 FR 73009 (December 23, 2021) (SR– 

NYSEArca–2021–91) (Order Approving a Proposed 

Rule Change to Amend Rule 6.87–O). 

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

74915 (May 8, 2015), 80 FR 27801 (May 14, 2015) 

(SR–NASDAQ–2015–054). 

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

81323 (August 7, 2017), 82 FR 37639 (August 11, 

2017) (SR–NASDAQ–2017–078). 

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

74915 (May 8, 2015), 80 FR 27801 (May 14, 2015) 

(SR–NASDAQ–2015–054). 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2022–05 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–NYSEArca–2022–05. 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–NYSEArca–2022–05, and 

should be submitted on or before 

February 28, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02428 Filed 2–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94116; File No. SR– 

NASDAQ–2022–010] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Update the 

Obvious Error Rule 

February 1, 2022. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on January 

26, 2022, 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, 

and III, 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 

Options 3, Section 20 (Nullification and 

Adjustment of Options Transactions 

including Obvious Errors). 

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 purpose of this proposed rule 

change is to amend Options 3, Section 

20 (Nullification and Adjustment of 

Options Transactions including Obvious 

Errors) to improve the operation of the 

Rule. Following discussions with other 

exchanges and a cross-section of 

industry participants and in 

coordination with the Listed Options 

Market Structure Working Group 

(‘‘LOMSWG’’) (collectively, the 

‘‘Industry Working Group’’), the 

Exchange proposes: (1) To amend 

section (b)(3) of the Rule to permit the 

Exchange to determine the Theoretical 

Price of a Customer option transaction 

in a wide market so long as a narrow 

market exists at any point during the 10- 

second period after an opening or reopening; and (2) to amend section 

(c)(4)(B) of the Rule to adjust, rather 

than nullify, Customer transactions in 

Obvious Error situations, provided the 

adjustment does not violate the limit 

price. The foregoing changes are based 

on the recently amended rules of NYSE 

Arca, Inc. (‘‘Arca’’).1 Further, the 

Exchange proposes to make nonsubstantive, corrective changes. Each 

change is discussed in detail below. 

Proposed Change to Section (b)(3) 

Options 3, Section 20 has been part of 

various harmonization efforts by the 

Industry Working Group.2 These efforts 

have often centered around the 

Theoretical Price for which an options 

transaction should be compared to 

determine whether an Obvious Error has 

occurred. For instance, all options 

exchanges have adopted language 

comparable to Supplementary Material 

.03,3 which explains how an exchange 

is to determine Theoretical Price at the 

open, when there are no valid quotes, 

and when there is a wide quote. This 

includes at times the use of a singular 

third-party vendor, known as a TP 

Provider (currently CBOE Livevol, LLC). 

Similarly, section (b)(3) of Options 3, 

Section 20 was previously harmonized 

across all options exchanges to handle 

situations where executions occur in 

markets that are wide (as set forth in the 

rule).4 Under that section, the Exchange 

determines the Theoretical Price if the 

NBBO for the subject series is wide 

immediately before execution and a 

narrow market (as set forth in the rule) 

existed ‘‘during the 10 seconds prior to 

the transaction.’’ The rule goes on to 


jspears on DSK121TN23PROD with NOTICES1