33420 Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices 

64 15 U.S.C. 78s(b)(2). 

65 15 U.S.C. 78q–1(b)(3)(F) 

66 15 U.S.C. 78s(b)(2). 

67 15 U.S.C. 78q–1. 

68 15 U.S.C. 78s(b)(2). 

69 In approving the Proposed Rule Change, the 

Commission considered the proposals’ impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

70 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 92014 (May 

25, 2021), 86 FR 29334 (June 1, 2021) (SR–FICC– 

2021–003) (‘‘Notice’’). FICC also filed the proposal 

contained in the Proposed Rule Change as advance 

notice SR–FICC–2021–801 (‘‘Advance Notice’’) with 

the Commission pursuant to Section 806(e)(1) of the 

Dodd-Frank Wall Street Reform and Consumer 

Protection Act entitled the Payment, Clearing, and 

Settlement Supervision Act of 2010 (‘‘Clearing 

Supervision Act’’). 12 U.S.C. 5465(e)(1); 17 CFR 

240.19b–4(n)(1)(i). Notice of filing of the Advance 

Notice was published for comment in the Federal 

Register on June 3, 2021. Securities Exchange Act 

Release No. 92019 (May 27, 2021), 86 FR 29834 

(June 3, 2021) (SR–FICC–2021–801) (‘‘Notice of 

Filing’’). The proposal contained in the Proposed 

Rule Change and the Advance Notice shall not take 

effect until all regulatory actions required with 

respect to the proposal are completed. 

4 15 U.S.C. 78s(b)(2). 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

V. Accelerated Approval of the 

Proposed Rule Change, as Modified by 

Partial Amendment No. 1 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,64 to approve the proposed rule 

change prior to the 30th day after the 

date of publication of Partial 

Amendment No. 1 in the Federal 

Register. As discussed in Section II.D 

above, in Partial Amendment No. 1, 

NSCC amends its Form 19b–4, Item 3(a) 

disclosure to provide additional 

description of the purpose of the 

Proposed Rule Change, and Partial 

Amendment No. 1 does change the 

substance of the proposal, the proposed 

text of the Rules that was provided as 

Exhibit 5 to the Proposed Rule Change, 

the manner in which the Proposed Rule 

Change will operate, or the manner in 

which the Proposed Rule Change will 

affect its Members or other interested 

persons. 

Furthermore, as discussed in Section 

III.A above, the Commission believes 

that the Proposed Rule Change, as 

modified by Partial Amendment No. 1, 

should help NSCC ensure it can 

complete settlement for all its Members 

in the event one Member defaults, 

which the Commission believes should 

promote the prompt and accurate 

clearance and settlement of securities 

transactions, consistent with Section 

17A(b)(3)(F).65 Therefore, the 

Commission believes the nature of the 

changes in Partial Amendment No. 1 

and NSCC’s intended enhancements to 

its daily liquidity risk management 

warrants accelerated approval of the 

Proposed Rule Change. Accordingly, the 

Commission finds good cause for 

approving the Proposed Rule Change, as 

modified by Partial Amendment No. 1, 

on an accelerated basis, pursuant to 

Section 19(b)(2) of the Act.66

VI. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Change is consistent with the 

requirements of the Act and in 

particular with the requirements of 

Section 17A of the Act 67 and the rules 

and regulations promulgated 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 68 that 

Proposed Rule Change, as modified by 

Partial Amendment No. 1, SR–NSCC– 

2021–002, be, and hereby is, Approved 

on an accelerated basis.69 70

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.70

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–13413 Filed 6–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92185; File No. SR–FICC– 

2021–003] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Designation of Longer Period for 

Commission Action on a Proposed 

Rule Change To Add the Sponsored 

GC Service and Make Other Changes 

June 15, 2021. 

On May 12, 2021, Fixed Income 

Clearing Corporation (‘‘FICC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–FICC–2021–003 

(‘‘Proposed Rule Change’’) pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder.2 The Proposed Rule 

Change was published for comment in 

the Federal Register on June 1, 2021.3

The Commission has received no 

comment letters on the Proposed Rule 

Change. 

Section 19(b)(2) of the Act 4 provides 

that, within 45 days of the publication 

of notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day after 

publication of the notice for the 

Proposed Rule Change is July 16, 2021. 

The Commission is extending the 45- 

day period for Commission action on 

the Proposed Rule Change. The 

Commission finds that it is appropriate 

to designate a longer period within 

which to take action on the Proposed 

Rule Change so that it has sufficient 

time to consider and take action on the 

Proposed Rule Change. 

Accordingly, pursuant to Section 

19(b)(2) of the Act 5 and for the reasons 

stated above, the Commission 

designates August 30, 2021, as the date 

by which the Commission should either 

approve or disapprove the Proposed 

Rule Change SR–FICC–2021–003. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–13287 Filed 6–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92180; File No. SR– 

NASDAQ–2021–044] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Equity 4, Rules 4702 and 4703 in Light 

of Planned Changes to the System 

June 15, 2021. 

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 4, 

2021, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ 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. 


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3References herein to Nasdaq Rules in the 4000 

Series shall mean Rules in Nasdaq Equity 4. 

4An ‘‘Order Type’’ is a standardized set of 

instructions associated with an Order that define 

how it will behave with respect to pricing, 

execution, and/or posting to the Nasdaq Book when 

submitted to Nasdaq. See Equity 1, Section 1(a)(7). 

5An ‘‘Order Attribute’’ is a further set of variable 

instructions that may be associated with an Order 

to further define how it will behave with respect to 

pricing, execution, and/or posting to the Nasdaq 

Book when submitted to Nasdaq. See id. 

6The RASH (Routing and Special Handling) 

Order entry protocol is a proprietary protocol that 

allows members to enter Orders, cancel existing 

Orders and receive executions. RASH allows 

participants to use advanced functionality, 

including discretion, random reserve, pegging and 

routing. See http://nasdaqtrader.com/content/ 

technicalsupport/specifications/TradingProducts/ 

rash_sb.pdf. 

7The OUCH Order entry protocol is a Nasdaq 

proprietary protocol that allows subscribers to 

quickly enter orders into the System and receive 

executions. OUCH accepts limit Orders from 

members, and if there are matching Orders, they 

will execute. Non-matching Orders are added to the 

Limit Order Book, a database of available limit 

Orders, where they are matched in price-time 

priority. OUCH only provides a method for 

members to send Orders and receive status updates 

on those Orders. See https://

www.nasdaqtrader.com/Trader.aspx?id=OUCH. 

8The Exchange designed the OUCH protocol to 

enable members to enter Orders quickly into the 

System. As such, the Exchange developed OUCH 

with simplicity in mind, and it therefore lacks more 

complex order handling capabilities. By contrast, 

the Exchange specifically designed RASH to 

support advanced functionality, including 

discretion, random reserve, pegging and routing. 

Once the System upgrades occur, then the Exchange 

intends to propose further changes to its Rules to 

permit participants to utilize OUCH, in addition to 

RASH, to enter order types that require advanced 

functionality. 

9The Exchange notes that its sister exchanges, 

Nasdaq BX and Nasdaq PSX, plan to file similar 

proposed rule changes with the Commission 

shortly. 

10See Securities Exchange Act Release No. 34– 

90389 (November 10, 2020), 85 FR 73304 

(November 17, 2020) (SR–NASDAQ–2020–071); 

Securities Exchange Act Release No. 34–91109 

(February 11, 2021), 86 FR 10141 (February 18, 

2021) (SR–NASDAQ–2020–090). 

11See Rule 4703(d). 

12See Rule 4703(m)–(n). 

13See Rule 4703(d) (defining ‘‘Primary Pegging as 

pegging with reference to the inside quotation on 

the same side of the market, ‘‘Market Pegging’’ as 

pegging with reference to the inside quotation on 

the opposite side of the market, and ‘‘Midpoint 

Pegging’’ as pegging with reference to the midpoint 

between the inside bid and the inside offer). 

14This change is applicable to Primary, Market 

and Midpoint Pegging Orders entered via RASH/ 

QIX/FIX; OUCH/FLITE Midpoint Pegging behavior 

is not affected by this change. The Exchange also 

proposes to amend existing language in this 

provision which states that ‘‘if the Inside Bid and 

Inside Offer are crossed or if there is no Inside Bid 

and/or Inside Offer, the Order will not be 

accepted.’’ The proposed amendment would specify 

that this language applies only to Orders with 

Midpoint Pegging entered through OUCH or FLITE. 

The proposed changes to pegged orders entered 

through RASH, QIX, or FIX will allow the Exchange 

to handle the Order more consistent with the 

customer intended instruction, and are necessary to 

facilitate forthcoming System enhancements. 

15Meanwhile, the Exchange proposes to amend 

the Rule to state that if a Pegged Order is assigned 

a Routing Order Attribute, and a permissible 

pegging price is not available upon entry, then the 

Order will continue to be rejected. The Exchange 

proposes to retain existing practice for Pegged 

Orders with Routing Order Attributes because the 

Exchange is not yet prepared to make similar 

changes to such Orders, although it contemplates 

doing so in the near future. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Equity 4, Rules 4702 and 4703 3 in light 

of planned changes to the System, as 

described further below. 

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 

Presently, the Exchange is making 

functional enhancements and 

improvements to specific Order Types 4

and Order Attributes 5 that are currently 

only available via the RASH Order entry 

protocol.6 Specifically, the Exchange 

will be upgrading the logic and 

implementation of these Order Types 

and Order Attributes so that the features 

are more streamlined across the Nasdaq 

Systems and order entry protocols, and 

will enable the Exchange to process 

these Orders more quickly and 

efficiently. Additionally, this System 

upgrade will pave the way for the 

Exchange to enhance the OUCH Order 

entry protocol 7 so that Participants may 

enter such Order Types and Order 

Attributes via OUCH, in addition to the 

RASH Order entry protocols.8 The 

Exchange plans to implement its 

enhancement of the OUCH protocol 

sequentially, by Order Type and Order 

Attribute.9

To support and prepare for these 

upgrades and enhancements, the 

Exchange recently submitted two rule 

filings to the Commission that amended 

its rules pertaining to, among other 

things, Market Maker Peg Orders and 

Orders with Reserve Size.10 The 

Exchange now proposes to further 

amend its Rules governing Order 

Attributes, at Rule 4703. In particular, 

the Exchange proposes to adjust the 

current functionality of the Pegging 11

and Trade Now and Midpoint Trade 

Now Order Attributes,12 as described 

below, so that they align with how the 

System, once upgraded, will handle 

these Order Attributes going forward. 

The Exchange also proposes to make 

several associated clarifications, 

corrections, and other changes to Rule 

4702 as it prepares to enhance its order 

handling processes, including changes 

to Market on Open and Limit on Open 

Orders. 

Changes to Pegging Order Attribute 

First, the Exchange proposes to 

amend Rule 4703(d), which governs the 

Pegging Order Attribute. The Exchange 

offers three types of Pegging: Primary 

Pegging, Market Pegging, and Midpoint 

Pegging.13 The Rule presently provides 

that if, at the time of entry, there is no 

price to which a Pegged Order can be 

pegged, the Order will be rejected, 

provided, however, that a Displayed 

Order that has Market Pegging, or an 

Order with a Non-Display Attribute that 

has Primary Pegging or Market Pegging, 

will be accepted at its limit price. The 

Exchange proposes to replace this text 

by stating that if, at the time of entry, 

there is no price to which a Pegged 

Order, that has not been assigned a 

Routing Order Attribute, can be pegged 

or pegging would lead to a price at 

which the Order cannot be posted, then 

the Order will not be immediately 

available on the Nasdaq Book and will 

be entered once there is a permissible 

price.14 The Exchange proposes this 

change so as to enhance the manner in 

which the Exchange presently handles 

Pegged Orders in this scenario. Rather 

than reject such Orders outright, and 

require customers to continuously 

reenter the Orders thereafter until a 

pegging price emerges, which may cost 

them queue priority, the Exchange 

believes that it would be more efficient 

and customer-friendly to simply hold a 

Pegged Order until a permissible 

pegging price emerges.15

A similar rationale applies to the 

Exchange’s proposal to cease accepting 

certain Market or Primary Pegged 

Orders at their limit prices if no pegging 

price is available. Because participants 

presumably prefer for their orders to 


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16When a Pegged Order lacks a pegging price or 

a permissible pegging price, the System will not 

wait indefinitely for a pegging price or a 

permissible pegging price to become available. 

Instead, the System will cancel the Order if no 

permissible pegging price becomes available within 

one second after Order entry or after the Order was 

removed due to the lack of a permissible pegging 

price and no longer available on the Book. The 

Exchange may, in the exercise of its discretion, 

modify the length of this maximum time period by 

posting advance notice of the applicable new time 

period on its website. 

17 In this paragraph of Rule 4703(d), the Exchange 

again proposes to state that it will continue to reject 

a Pegged Order entered through RASH, QIX, or FIX 

when a permissible pegging price is unavailable, if 

the Pegged Order is assigned a Routing Order 

Attribute. The Exchange will continue to accept 

certain Market and Primary Pegged Orders at their 

limit price where they have Routing Order 

Attributes. The Exchange proposes to retain existing 

practice for Pegged Orders with Routing Order 

Attributes because the Exchange is not yet prepared 

to make similar changes to such Orders, although 

it contemplates doing so in the near future. See n. 

15, supra. 

18An example of a scenario where pegging would 

lead to a price at which an Order cannot be posted 

is as follows. Assume that the NBBO is $0.0002 × 

$0.0003. A Primary Pegged Order to buy is entered 

with a passive offset amount of $0.0003. This would 

result in the Order being made unavailable by the 

Exchange as ¥$0.0001 is not a permissible price. 

Currently, the Exchange accepts such Orders at its 

limit price, and will post the Orders to the Nasdaq 

Book in accordance with the parameters that apply 

to the underlying Order Type. 

19The Exchange proposes to apply a similar time 

limitation to the holding period prescribed above. 

See supra, n.16. Similarly, for an Order with 

Midpoint Pegging, if the Inside Bid or Inside Offer 

become crossed, or there is no Inside Bid or Inside 

Offer, the System will cancel the Order if no 

permissible price becomes available within one 

second after the Order was removed and no longer 

available on the Nasdaq Book (the Exchange may, 

in the exercise of its discretion modify the length 

of this one second time period by posting advance 

notice of the applicable time period on its website). 

For an Order with Midpoint Pegging with a Routing 

Attribute, the new one second time period will be 

applicable. 

20Additionally, the Exchange proposes to replace 

the word ‘‘would’’ with ‘‘could’’ in this provision, 

so as to clarify that collars apply in circumstances 

in which Pegged Orders might execute, but do not 

necessarily do so. An example of a circumstance in 

which such Orders do not execute is as follows. 

Assume that the NBBO is $10.00 × $10.01. A Market 

Pegged Order to buy posts at $10.01. The NBBO 

then updates to $10.00 × $11.00. Because re-pricing 

and posting the Market Pegged Order would result 

in the Order being available on the Book and 

executable at $11.00 (outside of the collars), the 

Order will be canceled. 

21An example of a crossing scenario is as follows. 

A non-displayed Order to buy rests on the Book at 

$0.0015. Thereafter, a Post Only Order to sell is 

entered at $0.0014, which would post on the Book 

and display at $0.0014, thereby crossing the nondisplayed Order as the price improvement 

requirements were not met. 

22The Exchange believes that the proposal to 

combine the Trade Now and Midpoint Trade Now 

Order Attributes will not adversely impact 

participants because those that choose to utilize 

these Order Attributes are seeking opportunities to 

remove liquidity, and they are less fee sensitive in 

their choices. Participants will still be able to 

deactivate Trade Now on an order-by-order basis for 

RASH and FIX. 

23This proposed change in functionality for 

OUCH and FLITE is enabled by the migration of 

Trade Now and Midpoint Trade Now to the 

Exchange’s matching System. 

24The Exchange proposes to add language to Rule 

4703(m) to state that Trade Now allows a resting 

Order that becomes locked ‘‘or crossed, as 

applicable’’ at its non-displayed price by the 

‘‘posted price’’ of an incoming Displayed Order or 

a Midpoint Peg Post-Only Order to execute against 

a locking or crossing Order(s) automatically. The 

Exchange proposes to add the phrase ‘‘or crossed, 

as applicable,’’ for completeness. It also proposes to 

add the phrase ‘‘posted price’’ for purposes of 

clarity. It merely communicates that the incoming 

Displayed Order or Midpoint Peg Post-Only Order 

first posts to the Nasdaq Book, thereby locking or 

crossing the resting Order at its non-displayed 

price. 

post at the pegging price, the Exchange 

believes that participants would prefer 

for the Exchange to hold such orders 

until a permissible pegging price 

emerges, rather than post the orders at 

their limit prices.16 17

The Exchange proposes similar 

changes to the paragraph of Rule 

4703(d) that applies to Pegged Orders 

entered through RASH, QIX, or FIX that 

posted to the Nasdaq Book. The text 

presently provides that if the price to 

which an Order is pegged is not 

available, the Order will be rejected. 

The Exchange proposes instead to state 

that if the price to which an Order is 

pegged becomes unavailable or pegging 

would lead to a price at which the Order 

cannot be posted,18 then the Exchange 

will remove the Order from the Nasdaq 

Book and re-enter it once there is a 

permissible price. Again, the Exchange 

proposes this change to enhance and 

make the System more efficient by 

providing for the Exchange to re-post 

the Pegged Orders rather than rejecting 

them when there is no permissible 

pegging price and requiring participants 

to re-enter them once a valid price 

becomes available.19 The Exchange 

notes that the proposed change will not 

apply to Pegged Orders with Routing 

Attributes assigned to them; the existing 

Rule functionality will continue to 

apply to those Orders. 

Rule 4703(d) also subjects Pegging 

Orders to collars, meaning that any 

portion of a Pegging Order that would 20

execute, either on the Exchange or when 

routed to another market center, at a 

price of more than $0.25 or 5 percent 

worse than the NBBO at the time when 

the order reaches the System, whichever 

is greater, will be cancelled. Although 

the Rule states that it applies this collar 

to Orders with Primary and Market 

Pegging, the Exchange has always 

intended for the collar to also apply to 

Orders with Midpoint Pegging, and in 

practice, it does so. The failure of the 

Rule to reflect the application of the 

collar to Midpoint Pegged Orders was 

an unintended omission. The Exchange 

now proposes to revise Rule 4703(d) to 

correct this omission. 

Changes to Trade Now and Midpoint 

Trade Now Order Attributes 

Additionally, the Exchange proposes 

to amend its rules governing the Trade 

Now and Midpoint Trade Now Order 

Attributes, at Rule 4703(m) and (n), 

respectively. Pursuant to Rule 4703(m), 

Trade Now is an Order Attribute that 

allows a resting Order that becomes 

locked by an incoming Displayed Order 

to execute against a locking or crossing 

Order as a liquidity taker. Pursuant to 

Rule 4703(n), Midpoint Trade Now is an 

Order Attribute that allows: (i) A resting 

Order that becomes locked at its nondisplayed price by an incoming 

Midpoint Peg Post-Only Order to 

execute against a locking or crossing 

Order as a liquidity taker; and (ii) a 

Non-Displayed Order with Midpoint 

Pegging or a Midpoint Peg Post-Only 

Order (collectively, ‘‘Midpoint Orders’’) 

to execute against a M–ELO+CB Order 

Type, subject to certain eligibility 

requirements. 

The Exchange proposes to combine 

Rule 4703(m) and (n) under the general 

header of ‘‘Trade Now.’’ The Exchange 

proposes to combine these two related 

Order Attributes to streamline and 

simplify the instructions that 

participants must enter to address the 

handling of their orders in various 

locking or crossing scenarios.21 Rather 

than having to enable both Trade Now 

and Midpoint Trade Now separately, 

participants will only have to enable 

one Order Attribute to address both 

functionalities.22 Additionally, rather 

than require a participant to manually 

send a Trade Now instruction whenever 

an Order entered through OUCH or 

FLITE becomes locked, the proposed 

amended Rule will allow for a 

participant to enable Trade Now 

functionality on a port-level basis for all 

Order entry protocols and for all Order 

Types that support Trade Now, as well 

as on an order-by-order basis, for the 

Non-Displayed Order Type, when 

entered through OUCH or FLITE.23 For 

Orders entered through RASH or FIX, 

Trade Now will be available on an 

order-by-order basis for all Order Types 

that support Trade Now. The proposal 

will not extend Trade Now (or Midpoint 

Trade Now) functionality to new Order 

Types.24

The Exchange proposes other nonsubstantive changes to Rule 4703(m) to 

incorporate the inclusion of the text of 

the Midpoint Trade Now Order 

Attribute, including a reorganization of 

its bulleted provisions. Furthermore, it 


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25As set forth in Rule 4702(b)(8)(A), a MOO is an 

Order Type entered without a price that may be 

executed only during the Nasdaq Opening Cross. 

Subject to the qualifications provided below, MOO 

Orders may be entered between 4 a.m. ET and 

immediately prior to 9:28 a.m. ET. An MOO Order 

may be cancelled or modified until immediately 

prior to 9:25 a.m. ET. An MOO Order shall execute 

only at the price determined by the Nasdaq 

Opening Cross. 

26As set forth in Rule 4702(b)(9)(A), a LOO is an 

Order Type entered with a price that may be 

executed only in the Nasdaq Opening Cross, and 

only if the price determined by the Nasdaq Opening 

Cross is equal to or better than the price at which 

the LOO Order was entered. Subject to the 

qualifications provided below, LOO Orders may be 

entered between 4 a.m. ET and immediately prior 

to 9:28 a.m. ET but may not be cancelled or 

modified at or after 9:25 a.m. ET. Between 9:28 a.m. 

ET and 9:29:30 a.m. ET, an LOO Order may be 

entered, provided that there is a First Opening 

Reference Price or a Second Opening Reference 

Price. An LOO Order entered after 9:29:30 a.m. ET 

that is designated as an IOC will be rejected. An 

LOO Order entered between 9:28 a.m. ET and 

9:29:30 a.m. ET will be accepted at its limit price, 

unless its limit price is higher (lower) than the 

higher (lower) of the First Opening Reference Price 

and the Second Opening Reference Price for an 

LOO Order to buy (sell), in which case the LOO 

Order will be handled consistent with the 

Participant’s instruction that the LOO Order is to 

be: (1) Rejected; or (2) re-priced to the higher 

(lower) of the First Opening Reference Price and the 

Second Opening Reference Price, provided that if 

either the First Opening Reference Price or the 

Second Opening Reference Price is not at a 

permissible minimum increment, the First Opening 

Reference Price or the Second Opening Reference 

Price, as applicable, will be rounded (i) to the 

nearest permitted minimum increment (with 

midpoint prices being rounded up) if there is no 

imbalance, (ii) up if there is a buy imbalance, or (iii) 

down if there is a sell imbalance. The default 

configuration for Participants that do not specify 

otherwise will be to have such LOO Orders repriced rather than rejected. 27See Rule 4702(b)(9)(B). 

28The Exchange notes that it plans future order 

handling enhancements that may further reduce or 

eliminate the circumstances in which it holds late 

submitted MOO and LOO Orders. The Exchange 

will submit rule filing proposals to the Commission 

before implementing such enhancements. 

29 15 U.S.C. 78f(b). 

30 15 U.S.C. 78f(b)(5). 

31The Exchange notes that as part of this 

proposed change, if there is no Pegging Price upon 

entry for a Displayed Order that has Market 

Pegging, or an Order with a Non-Display Attribute 

that has Primary Pegging or Market Pegging, then 

it will no longer accept such Orders at their limit 

price. The Exchange believes that this proposed 

change is consistent with the Act because it better 

aligns with customer intentions for Pegged Orders 

to post at a Pegging Price. That is, the Exchange 

believes that participants prefer for Pegged Orders 

to be entered at a Pegging Price, rather than its 

entered limit price, even if that means that the 

Order must wait for a Pegging Price to become 

Continued 

proposes to delete Rule 4703(n) in its 

entirety as well as references to 

Midpoint Trade Now in Rule 4702. 

Changes to Market on Open and Limit 

on Open Order Types 

Finally, the Exchange proposes to 

amend Rule 4702(b)(8) and (9), which 

describe the Market on Open 

(‘‘MOO’’) 25 and Limit on Open 

(‘‘LOO’’) 26 Order Types, to account for 

a change in functionality that will occur 

when the Exchange upgrades the logic 

and implementation for processing 

certain aspects of LOO and MOO Orders 

as part of the forthcoming System 

enhancements. When these Order Types 

are assigned Pegging Attributes and 

submitted just prior to the onset of the 

Nasdaq Opening Cross, the proposed 

changes will limit the circumstances in 

which the System will hold these Order 

Types until after the Nasdaq Opening 

Cross occurs. The Exchange proposes 

these changes to streamline the 

handling of LOO and MOO orders, 

thereby reducing the potential for 

confusion about the Exchange’s practice 

for holding these Order Types in these 

circumstances. Additionally, the 

proposed changes will allow these 

Order Types, where applicable, to 

participate and contribute to offsetting 

any order imbalance in the Nasdaq 

Opening Cross. The Exchange notes that 

only a very small number of LOO and 

MOO orders will be affected by these 

changes, such that the overall impact of 

the changes should be minor. 

Specifically, Rule 4702(b)(8)(B) 

presently provides that a MOO with a 

Market Pegging Order Attribute and 

with a Time-in-Force other than 

Immediate-Or-Cancel that is flagged to 

participate in the Nasdaq Opening Cross 

and which is entered at or after 9:28 

a.m. will not participate in the Opening 

Cross, but instead will be held and 

entered into the System after the 

Opening Cross completes. The Exchange 

proposes to amend this provision, such 

that, going forward, a MOO with a 

Market Pegging Order Attribute and 

with a Time-in-Force other than 

Immediate-Or-Cancel that is flagged to 

participate in the Nasdaq Opening Cross 

and which is entered at or after 9:28 

a.m. will be rejected just as the Rule 

presently provides for all other MOOs 

that are entered at or after 9:28 a.m. (and 

prior to the Nasdaq Opening Cross). The 

rule text language, as amended, will 

specify, however, that the existing 

holding practice will continue to apply 

to Orders with Market Pegging and 

Routing Attributes and a Time-in-Force 

other than Immediate-Or-Cancel as the 

Exchange is not yet ready to implement 

a similar change to such Orders, 

although it contemplates doing so in a 

future proposal. The Exchange also 

notes that this clarification will provide 

for LOOs and MOOs with Routing 

Attributes to be handled similarly when 

entered just prior to the time of the 

Nasdaq Opening Cross.27

Meanwhile, Rule 4702(b)(9)(B) 

presently provides that an Opening 

Cross/Market Hours LOO Order that is 

entered between 9:29:30 a.m. and the 

time of the Nasdaq Opening Cross will 

be: (i) Held and entered into the System 

after the completion of the Nasdaq 

Opening Cross if it has been assigned a 

Pegging or Routing Attribute, (ii) treated 

as an Opening Imbalance Only Order 

and entered into the System after the 

completion of the Nasdaq Opening 

Cross if entered through RASH, QIX, or 

FIX but not assigned a Pegging or 

Routing Attribute, or (iii) treated as an 

Opening Imbalance Only Order and 

cancelled after the Nasdaq Opening 

Cross if entered through OUCH or 

FLITE. The Exchange proposes to delete 

references to ‘‘Pegging Attribute’’ in this 

provision, such that going forward, a 

LOO Order with Pegging (and no 

Routing Attribute) entered between 

9:29:30 a.m. and the time of the 

Opening Cross will no longer be held 

and entered into the System after the 

completion of the Opening Cross. 

Instead, if the LOO with Pegging is 

entered through RASH, QIX, or FIX, it 

will be treated as an Opening Imbalance 

Only Order and entered into the System 

after the Opening Cross occurs, and if it 

is entered through OUCH or FLITE, it 

will be treated as an Opening Imbalance 

Only Order and cancelled after the 

Opening Cross.28

The Exchange intends to implement 

the foregoing changes during the Third 

Quarter of 2021. The Exchange will 

issue an Equity Trader Alert at least 7 

days in advance of implementing the 

changes. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,29 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,30

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

The Exchange believes that its 

proposed amendments to the Pegging 

Order Attribute, at Rule 4703(d), are 

consistent with the Act. The proposals 

to eliminate rule text that provides for 

the System to reject certain Pegged 

Orders that lack a permissible pegging 

price, or to post the Orders at their limit 

price, are consistent with the Act 

because they eliminate unwarranted 

inefficiencies that arise when 

participants must repeatedly re-enter 

rejected Pegged Orders until a 

permissible price becomes available.31 32


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33424 Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices 

available. As discussed above, the Exchange does 

not propose this change for Pegged Orders with 

Routing Attributes. 

32 It is also consistent with the Act to limit the 

time period for which the Exchange will hold, 

without canceling, Pegged Orders for which there 

is no pegging price or permissible pegging price 

because the Exchange does not believe that 

customers would want the Exchange to hold their 

orders indefinitely. Moreover, holding such orders 

indefinitely would encumber the Exchange’s 

System. The Exchange believes that a one second 

holding period for such orders is long enough to 

provide the above-stated efficiencies for 

participants, but not too long as to encumber them. 

However, the Exchange believes that it is reasonable 

to reserve discretion to alter the holding period, 

from time to time, should it determine that doing 

so better meets the needs of customers or its System 

resources. 

33Additionally, the Exchange believes that it is 

consistent with the Act to replace the word 

‘‘would’’ with ‘‘could’’ in this provision, because 

doing so would clarify that collars apply in 

circumstances in which Pegged Orders might 

execute, but do not necessarily do so. See supra, 

n.20. 

34As noted above, for Orders entered through 

RASH or FIX, Trade Now will be available on an 

order-by-order basis for all Order Types that 

support Trade Now. 

35The proposal to combine the Trade Now and 

Midpoint Trade Now Order Attributes also will not 

burden competition because participants that 

choose to utilize these Order Attributes are seeking 

opportunities to remove liquidity, and they are less 

fee sensitive in their choices. Allowing participants 

to remove liquidity through one instruction will 

enhance the efficiency of their activities. 

It is also consistent with the Act to 

maintain the existing practice in the 

Rule of rejecting a Pegged Order without 

a permissible pegging price where the 

Order has been assigned a Routing 

Attribute. The Exchange is not yet 

prepared to hold such Orders in the 

same way that it proposes to do so for 

Pegged Orders without Routing 

Attributes, although it contemplates 

doing so in the near future. 

Moreover, the proposal to amend Rule 

4703(d) to state expressly that Midpoint 

Pegging Orders are subject to price 

collars, like Orders with Primary and 

Market Pegging, will correct an 

unintended omission and ensure that 

the Rule is consistent with existing 

Exchange practice and with customer 

expectations. The application of these 

collars will prevent Pegged Orders from 

having prices that deviate too far away 

from where the security was trading 

when the Order was first entered.33

The Exchange’s proposals to amend 

its rules governing the Trade Now and 

Midpoint Trade Now Order Attributes, 

at Rule 4703(m) and (n), respectively, 

are consistent with the Act. The 

proposal to combine these two related 

Order Attributes will streamline and 

simplify the instructions that 

participants must enter to address the 

handling of their orders in various 

locking or crossing scenarios. Rather 

than having to enable both Trade Now 

and Midpoint Trade Now separately, 

participants will only have to enable 

one Order Attribute to address both 

functionalities. Additionally, rather 

than require a participant to manually 

send a Trade Now instruction whenever 

an Order entered through OUCH or 

FLITE becomes locked, the proposed 

amended Rule will allow for a 

participant to enable Trade Now 

functionality on a port-level basis for all 

Order entry protocols and for all Order 

Types that support Trade Now, as well 

as on an order-by-order basis, for the 

Non-Displayed Order Type, when 

entered through OUCH and FLITE.34

The proposal will also make conforming 

changes to Rule 4702 to delete 

references to Midpoint Trade Now, 

which is consistent with the Act 

because the changes will ensure that the 

Rules remain current and accurate. 

Furthermore, it is consistent with the 

Act to add language to Rule 4703(m) to 

state that Trade Now allows a resting 

Order that becomes locked ‘‘or crossed, 

as applicable,’’ at its non-displayed 

price by the ‘‘posted price’’ of an 

incoming Displayed Order or a 

Midpoint Peg Post-Only Order to 

execute against a locking or crossing 

Order(s) automatically. The Exchange 

proposes to add the phrase ‘‘or crossed, 

as applicable,’’ for completeness. The 

Exchange also proposes to add the 

phrase ‘‘posted price’’ for purposes of 

clarity. It merely communicates that the 

incoming Displayed Order or Midpoint 

Peg Post-Only Order first posts to the 

Nasdaq Book, thereby locking or 

crossing the resting Order at its nondisplayed price. 

Finally, it is consistent with the Act 

to amend Rule 4702(b)(8) and (9) to 

limit the circumstances in which the 

Exchange will hold MOO and LOO 

Orders with Pegging Attributes that are 

submitted just prior to the Nasdaq 

Opening Cross. As discussed above, 

these changes will streamline the 

handling of such Orders, by rejecting 

them in the case of MOO Orders or 

allowing them to participate as Opening 

Imbalance Orders in the case of LOO 

Orders, thereby reducing the potential 

for confusion about the Exchange’s 

practice for holding these Order Types 

in these circumstances. Again, the 

Exchange proposes to maintain its 

existing practice of holding Market 

Pegged MOO Orders with Routing 

Attributes and LOO Orders with 

Routing Attributes entered near the time 

of the Opening Cross because the 

Exchange is not yet prepared to handle 

such Orders similarly to how it 

proposes to handle such Orders without 

Routing Attributes, although it 

contemplates submitting a rule filing 

proposal to do so in the near future. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. As a general 

principle, the proposed changes are 

reflective of the significant competition 

among exchanges and non-exchange 

venues for order flow. In this regard, 

proposed changes that facilitate 

enhancements to the Exchange’s System 

and order entry protocols as well as 

those that amend and clarify the 

Exchange’s Rules regarding its Order 

Attributes, are pro-competitive because 

they bolster the efficiency, integrity, and 

overall attractiveness of the Exchange in 

an absolute sense and relative to its 

peers. 

Moreover, none of the proposed 

changes will unduly burden intramarket competition among various 

Exchange participants. Participants will 

experience no competitive impact from 

its proposals to hold (up to one second), 

rather than reject (or accept at their limit 

price), Pegging Orders (other than those 

with Routing Attributes) in 

circumstances in which no permissible 

pegging price is available, as these 

proposals will merely eliminate 

unwarranted inefficiencies that ensue 

from the System requiring participants 

to repeatedly re-enter Pegged Orders 

until a price becomes available, or the 

System posting Pegged Orders at their 

limit prices, if there is no pegging price. 

Moreover, the proposal to amend Rule 

4703(d) to state expressly that Midpoint 

Pegging Orders are subject to price 

collars, like Orders with Primary and 

Market Pegging, will have no 

competitive impact as the proposal is 

consistent with existing Exchange 

practice and with customer 

expectations. 

The Exchange’s proposals to amend 

its rules governing the Trade Now and 

Midpoint Trade Now Order Attributes 

will have no competitive impact on 

participants other than by rendering 

these Order Attributes more efficient 

and easier for participants to utilize.35

Lastly, the Exchange perceives no 

burden on competition arising from its 

proposed changes to the circumstances 

in which it will hold late-submitted 

LOO and MOO Orders with Pegging 

Attributes (other than those Orders with 


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Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices 33425 

36The Exchange’s proposal to add the word 

‘‘Routing’’ to the rule text will merely clarify that 

the existing holding practice will continue for 

certain MOO and LOO Orders. 

37 15 U.S.C. 78s(b)(3)(A). 

38 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

39 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. 91689 

(April 27, 2021), 86 FR 23453 (‘‘Notice’’). 

4 In Amendment No. 1, the Exchange updated 

Exhibit 5 of the proposed rule change to reflect 

another proposed rule change unrelated to this 

proposed rule change. Because Amendment No. 1 

is a technical amendment that does not materially 

alter the substance of the proposed rule change or 

raise unique or novel regulatory issues, it is not 

subject to notice and comment. Amendment No. 1 

to the proposed rule change is available on the 

Commission’s website at: https://www.sec.gov/ 

rules/sro/cboe.htm#SR-CBOE-2021-025. 

Routing Attributes assigned to them). 

The proposed changes will streamline 

the handling of such Orders, thereby 

reducing the potential for confusion 

about the Exchange’s practice for 

holding these Order Types in these 

circumstances. The Exchange proposes 

to maintain its existing practice of 

holding Market Pegged MOO Orders 

with Routing Attributes and LOO 

Orders with Routing Attributes 36

entered near the time of the Opening 

Cross because the Exchange is not yet 

prepared to handle such Orders 

similarly to how it proposes to handle 

such Orders without Routing Attributes, 

although it contemplates submitting a 

rule filing proposal to do so in the near 

future. Moreover, any impact of the 

proposed changes is expected to be 

minimal, as very few MOO and LOO 

Orders have historically been subject to 

holding. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 37 and Rule 19b– 

4(f)(6) thereunder.38

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

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– 

NASDAQ–2021–044 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2021–044. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2021–044, and 

should be submitted on or before July 

15, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–13285 Filed 6–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92203; File No. SR–CBOE– 

2021–025] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Order Granting 

Approval of a Proposed Rule Change, 

as Modified by Amendment No. 1, To 

Amend Cboe Rules 5.37 and 5.38 in 

Connection With Allocations at the 

Conclusion of the Exchange’s 

Automated Improvement Mechanism 

(‘‘AIM’’) and Complex AIM (‘‘C–AIM’’) 

Auctions 

June 17, 2021. 

I. Introduction 

On April 14, 2021, Cboe Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘Cboe 

Options’’) 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 adopt a Priority 

Order Plus status in connection with the 

allocation of exclusively listed index 

option classes at the conclusion of the 

Exchange’s Automated Improvement 

Mechanism (‘‘AIM’’ or ‘‘AIM Auction’’) 

and Complex AIM (‘‘C–AIM’’ or ‘‘C– 

AIM Auction’’) auctions. The proposed 

rule change was published for comment 

in the Federal Register on May 3, 2021.3

The Commission received no comments 

regarding the proposal. On June 8, 2021, 

the Exchange submitted Amendment 

No. 1 to the proposed rule change.4 The 

Commission is approving the proposed 

rule change. 


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