Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices 16279 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 94076 

(January 27, 2022), 87 FR 5926 (‘‘Notice’’). 

4See Nasdaq Equity 4, Rule (‘‘Rule’’) 4702(b)(14). 

5See id. 

6See Nasdaq Rule 4702(b)(15). 

7See id. 

8See Nasdaq Rule 4702(b)(14)(B), (b)(15). An 

order with a TIF of IOC is one that is designated 

to deactivate immediately after determining 

whether the order is marketable. See Nasdaq Rule 

4703(a)(1). 

9See proposed Nasdaq Rule 4702(b)(14)(B). 

Because Nasdaq Rule 4702(b)(15) incorporates by 

reference the M–ELO characteristics and attributes 

set forth in Nasdaq Rule 4702(b)(14), the proposed 

rule change would also allow M–ELO+CBs to be 

entered with a TIF of IOC. 

10See proposed Nasdaq Rule 4702(b)(14)(B). 

11See id. 

12See id.; Notice, supra note 3, at 5928. 

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– 

CboeBZX–2022–015 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–CboeBZX–2022–015. 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–CboeBZX–2022–015 and 

should be submitted on or before April 

12, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05982 Filed 3–21–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94431; File No. SR– 

NASDAQ–2022–006] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Approving Proposed Rule Change To 

Enable Exchange Participants To Enter 

Midpoint Extended Life Orders and M– 

ELO Plus Continuous Book Orders 

With an Immediate-or-Cancel Time-inForce Instruction 

March 16, 2022. 

I. Introduction 

On January 19, 2022, The Nasdaq 

Stock Market LLC (‘‘Exchange’’ or 

‘‘Nasdaq’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to enable 

Exchange participants to enter Midpoint 

Extended Life Orders (‘‘M–ELOs’’) and 

M–ELO Plus Continuous Book Orders 

(‘‘M–ELO+CBs’’) with an immediate-orcancel (‘‘IOC’’) Time-in-Force (‘‘TIF’’) 

instruction. The proposed rule change 

was published for comment in the 

Federal Register on February 2, 2022.3

The Commission has not received any 

comment letters on the proposed rule 

change. This order approves the 

proposed rule change. 

II. Description of the Proposal 

M–ELO is an order type with a nondisplay order attribute that is priced at 

the midpoint between the national best 

bid and national best offer (‘‘NBBO’’) 

and that will not be eligible to execute 

until a holding period of 10 

milliseconds (‘‘Holding Period’’) has 

passed after acceptance of the order by 

the Exchange system.4 Once a M–ELO 

becomes eligible to execute, the order 

may only execute against other eligible 

M–ELOs and M–ELO+CBs.5

M–ELO+CB is an order type that has 

all of the characteristics and attributes 

of a M–ELO, except that after satisfying 

its Holding Period, in addition to 

executing against other eligible M– 

ELO+CBs and M–ELOs, it may also 

execute against certain orders on the 

Exchange’s continuous book.6

Specifically, a M–ELO+CB may also 

execute against non-displayed orders 

with midpoint pegging and midpoint 

peg post-only orders (collectively, 

‘‘Midpoint Orders’’) resting on the 

Exchange’s continuous book, if: (1) The 

Midpoint Order has the midpoint trade 

now order attribute enabled; (2) the 

Midpoint Order has rested on the 

continuous book for at least 10 

milliseconds after the NBBO midpoint 

falls within the limit price set by the 

participant; (3) no other order is resting 

on the continuous book that has a more 

aggressive price than the current NBBO 

midpoint; and (4) the Midpoint Order 

satisfies any minimum quantity 

requirement of the M–ELO+CB.7

Currently, M–ELOs and M–ELO+CBs 

may not be entered with a TIF of IOC.8

The Exchange now proposes to amend 

Nasdaq Rule 4702(b)(14) to enable 

Exchange participants to enter M–ELOs 

and M–ELO+CBs with an IOC 

instruction.9 As proposed, if a M–ELO 

or M–ELO+CB is entered with a TIF of 

IOC, it would execute against eligible 

resting interest immediately upon the 

expiration of the Holding Period.10 If no 

eligible resting interest is available, or 

shares of the order remain unexecuted 

after trading against available eligible 

resting interest, then the system would 

automatically cancel the order or the 

remaining shares of the order, as 

applicable.11 If the order is ineligible to 

begin the Holding Period upon entry 

(i.e., the NBBO is crossed at the time of 

order entry, there is no NBB or NBO at 

the time of order entry, or the order is 

entered with a limit price that is not at 

or better than the NBBO midpoint), then 

the system would cancel the order 

immediately.12

As proposed, M–ELOs and M– 

ELO+CBs with a TIF of IOC would be 

subject to real-time surveillance to 

determine if they are being abused by 


lotter on DSK11XQN23PROD with NOTICES1
16280 Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices 

13See Notice, supra note 3, at 5928. 14See id. 15See id. 16See id. 17 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 18 15 U.S.C. 78f(b)(5). 19The Exchange states that institutional investors 

have approached the Exchange recently to request 

the ability to enter IOC instructions for M–ELOs 

and M–ELO+CBs. See Notice, supra note 3, at 5927. 

The Exchange also understands that some 

participants representing institutional investor 

orders have developed methods that mimic the 

functions of IOC. See id. at 5927 n.10. 

20See id. at 5927. 

21See id. 

22See Securities Exchange Act Release No. 82825 

(March 7, 2018), 83 FR 10937, 10938–39 (March 13, 

2018) (order approving SR–NASDAQ–2017–074). 

The Commission also stated that the M–ELO order 

type is intended to provide additional execution 

opportunities on the Exchange for market 

participants that may not be as sensitive to very 

short-term changes in the NBBO and are willing to 

wait a prescribed period of time following their 

order submission to receive a potential execution 

against other market participants that have similarly 

elected to forgo an immediate execution. See id. at 

10940. In addition, the Commission stated that the 

M–ELO order type is intended to mitigate the risk 

that an opportunistic low-latency trader will be able 

to execute against a member’s order at a time that 

is disadvantageous to the member, such as just prior 

to a change in the NBBO. See id. 

23See Securities Exchange Act Release No. 86938 

(September 11, 2019), 84 FR 48978, 48980–81 

(September 17, 2019) (order approving SR– 

NASDAQ–2019–048). 

24See supra notes 13–16 and accompanying text. 

25 15 U.S.C. 78s(b)(2). 

26 17 CFR 200.30–3(a)(12). 

market participants.13 Moreover, as is 

the case for all other M–ELOs and M– 

ELO+CBs, the Exchange would monitor 

the use of M–ELOs and M–ELO+CBs 

with a TIF of IOC, with the intent to 

apply additional measures, as necessary, 

to ensure that their usage is 

appropriately tied to the intent of the 

order types.14 The Exchange states that 

it is committed to determining whether 

there is opportunity or prevalence of 

behavior that is inconsistent with 

normal risk management behavior, such 

as excessive cancellations.15 According 

to the Exchange, manipulative abuse is 

subject to potential disciplinary action 

under the Exchange’s rules, and other 

behavior that is not necessarily 

manipulative but nonetheless frustrates 

the purposes of M–ELOs or M–ELO+CBs 

may be subject to penalties or other 

participant requirements to discourage 

such behavior, should it occur.16

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.17 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,18 which requires, 

among other things, that the rules of a 

national securities exchange be 

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 Commission believes that the 

proposed IOC functionality could make 

the use of M–ELOs and M–ELO+CBs 

more efficient for Exchange participants 

that choose to use these order types.19

In particular, the proposed functionality 

could be attractive to Exchange 

participants that wish to enhance the 

efficiency of their decision-making 

process regarding whether to send 

additional M–ELOs or M–ELO+CBs to 

the Exchange or to seek liquidity 

elsewhere.20 The proposed functionality 

could also enhance efficiency for 

Exchange participants that submit M– 

ELOs or M–ELO+CBs that do not satisfy 

the conditions for a Holding Period to 

commence upon order entry, because it 

would allow these orders to be 

cancelled immediately rather than be 

held by the system until such time as 

the conditions are met, and therefore 

allow these participants to more quickly 

assess whether they wish to submit new 

M–ELOs or M–ELO+CBs that would 

satisfy the conditions to commence a 

Holding Period upon entry.21 Moreover, 

because M–ELOs and M–ELO+CBs are 

optional order types, if certain Exchange 

participants determine that the proposal 

would make these order types less 

attractive for their particular investment 

objectives, these participants may elect 

to reduce or eliminate their use of these 

order types. 

In its original order approving M–ELO 

on the Exchange, the Commission stated 

its belief that the M–ELO order type 

could create additional and more 

efficient trading opportunities on the 

Exchange for investors with longer 

investment time horizons, including 

institutional investors, and could 

provide these investors with an ability 

to limit the information leakage and the 

market impact that could result from 

their orders.22 In its order approving M– 

ELO+CB, the Commission stated its 

belief that, as with M–ELOs, M– 

ELO+CBs represent a reasonable effort 

to further enhance the ability of longerterm trading interest to participate 

effectively on an exchange.23

The Commission believes that the 

proposed IOC functionality for M–ELOs 

and M–ELO+CBs would not undermine 

the original intent of these order types. 

As proposed, these order types would 

continue to be available to market 

participants that are willing to wait a 

prescribed period of time following 

their order submission to receive a 

potential execution against other market 

participants that have similarly elected 

to forgo an immediate execution. As 

described above, the IOC instruction 

would activate only at the expiration of 

the Holding Period, rather than 

immediately upon order entry. In 

addition, while M–ELOs and M– 

ELO+CBs with an IOC instruction 

would be cancelled immediately upon 

entry if they do not meet the conditions 

to start the Holding Period at the time 

of entry, such cancellation would not 

depend on the availability of eligible 

resting interest on the Exchange, and 

therefore would not provide any 

indication of the availability of such 

interest on the Exchange. Finally, as 

described above, the Exchange will 

continue to conduct real-time 

surveillance and monitor the use of M– 

ELOs and M–ELO+CBs, including those 

with a TIF of IOC, to determine whether 

these order types are being abused by 

market participants and whether their 

usage is appropriately tied to the intent 

of the order types.24

Based on the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,25 that the 

proposed rule change (SR–NASDAQ– 

2022–006) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05979 Filed 3–21–22; 8:45 am] 

BILLING CODE 8011–01–P 


lotter on DSK11XQN23PROD with NOTICES1