36440 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Exchange’s national securities exchange 

affiliates are the New York Stock Exchange LLC 

(‘‘NYSE’’), NYSE American LLC (‘‘NYSE 

American’’), NYSE National, Inc. (‘‘NYSE 

National’’), and NYSE Chicago, Inc. (‘‘NYSE 

Chicago’’). 

5 ‘‘OX’’ refers to the Exchange’s current 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. See Rule 6.1A–O(13). ‘‘OX Book’’ refers 

to the OX’s electronic file of orders and quotes, 

which contain all of the orders in each of the 

Display Order and Working Order processes and all 

of the Market Makers’ quotes in the Display Order 

Process. See Rule 6.1A–O(14). With the transition 

to Pillar, the Exchange would no longer use the 

terms ‘‘OX’’ or ‘‘OX Book’’ and rules using those 

terms would not be applicable to trading on Pillar. 

Once the transition is complete, the Exchange will 

file a subsequent proposed rule change to delete 

references to OX and OX Book from the rulebook. 

6Trader Updates are available here: https://

www.nyse.com/trader-update/history. Anyone can 

subscribe to email updates of Trader Updates, 

available here: https://www.nyse.com/subscriptions. 

7The Exchange used the same description when 

it transitioned its cash equity platform to Pillar. See 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92304; File No. SR– 

NYSEArca–2021–47] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; 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 

June 30, 2021. 

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 June 21, 

2021, 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 new Rules 

6.1P–O (Applicability), 6.37AP–O 

(Market Maker Quotations), 6.40P–O 

(Pre-Trade and Activity-Based Risk 

Controls), 6.41P–O (Price Reasonability 

Checks—Orders and Quotes), 6.62P–O 

(Orders and Modifiers), 6.64P–O 

(Auction Process), 6.76P–O (Order 

Ranking and Display), and 6.76AP–O 

(Order Execution and Routing) and 

proposes amendments to Rules 1.1 

(Definitions), 6.1–O (Applicability, 

Definitions and References), 6.1A–O 

(Definitions and References—OX), 6.37– 

O (Obligations of Market Makers), 

6.65A–O (Limit-Up and Limit-Down 

During Extraordinary Market Volatility), 

and 6.96–O (Operation of Routing 

Broker) to reflect the implementation of 

the Exchange’s Pillar trading technology 

on its options market. The proposed 

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 

Background 

The Exchange plans to transition its 

options trading platform to its Pillar 

technology platform. The Exchange’s 

and its national securities exchange 

affiliates’ 4 (together with the Exchange, 

the ‘‘NYSE Exchanges’’) cash equity 

markets are currently operating on 

Pillar. For this transition, the Exchange 

proposes to use the same Pillar 

technology already in operation for its 

cash equity market. In doing so, the 

Exchange will be able to offer not only 

common specifications for connecting to 

both of its cash equity and equity 

options markets, but also common 

trading functions. 

The Exchange plans to roll out the 

new technology platform over a period 

of time based on a range of symbols, 

anticipated for the fourth quarter of 

2021. With this transition, certain rules 

would continue to be applicable to 

symbols trading on the current trading 

platform—the OX system,5 but would 

not be applicable to symbols that have 

transitioned to trading on Pillar. 

Instead, the Exchange proposes new 

rules to reflect how options would trade 

on the Exchange once Pillar is 

implemented. These proposed rule 

changes will (1) use Pillar terminology 

that is based on Exchange Rule 7–E 

Pillar terminology governing cash equity 

trading; (2) provide for common 

functionality on both its options and 

cash equity markets; and (3) introduce 

new functionality. 

The Exchange notes that certain of the 

proposed new Pillar rules concern 

functionality not currently available on 

the OX system and that would be 

unique to how option contracts trade, 

and therefore would be new rules with 

no parallel version for the Exchange’s 

cash equity market. 

Proposed Use of ‘‘P’’ Modifier 

As proposed, new rules governing 

options trading on Pillar would have the 

same numbering as current rules that 

address the same functionality, but with 

the modifier ‘‘P’’ appended to the rule 

number. For example, Rule 6.76–O, 

governing Order Ranking and Display— 

OX, would remain unchanged and 

continue to apply to any trading in 

symbols on the OX system. Proposed 

Rule 6.76P–O would govern Order 

Ranking and Display for trading in 

options symbols migrated to the Pillar 

platform. All other current rules that 

have not had a version added with a ‘‘P’’ 

modifier will be applicable to how 

trading functions on both the OX system 

and Pillar. Once all options symbols 

have migrated to the Pillar platform, the 

Exchange will file a separate rule 

proposal to delete rules that are no 

longer operative because they apply 

only to trading on the OX system. 

To reflect how the ‘‘P’’ modifier 

would operate, the Exchange proposes 

to add rule text immediately following 

the title ‘‘Rule 6–O Options Trading,’’ 

and before ‘‘Rules Principally 

Applicable to Trading of Option 

Contracts’’ that would provide that rules 

with a ‘‘P’’ modifier would be operative 

for symbols that are trading on the Pillar 

trading platform. As further proposed, if 

a symbol is trading on the Pillar trading 

platform, a rule with the same number 

as a rule with a ‘‘P’’ modifier would no 

longer be operative for that symbol and 

the Exchange would announce by 

Trader Update 6 when symbols are 

trading on the Pillar trading platform.7


jbell on DSKJLSW7X2PROD with NOTICES2
Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 36441 

Securities Exchange Act Release Nos. 75494 (July 

20, 2015), 80 FR 44170 (July 24, 2015) (SR– 

NYSEArca–2015–38) (Approval Order) and 74951 

(May 13, 2015), 80 FR 28721 (May 19, 2015) 

(Notice). 

8Rule 6.1–O(b) has definitions for: Options 

Clearing Corporation, Rules of the Options Clearing 

Corporation, Clearing Member, Participating 

Exchange, Option Contract, Exchange Option 

Transaction and Exchange Transaction, Type of 

Option, Call, Put, Class of Options, Series of 

Options, Option Issue, Underlying Stock or 

Underlying Security, Exercise Price, Aggregate 

Exercise Price, Expiration Month, Expiration Date, 

Long Position, Short Position, Opening Purchase 

Transaction, Opening Writing Transaction, Closing 

Sale Transaction, Closing Purchase Transaction, 

Covered, Uncovered, Outstanding, Primary Market, 

Options Trading, Customer, Trading Crowd, 

Foreign Broker/Dealer, Exchange-Traded Fund 

Share, Quote with Size, Trading Official, Non-OTP 

Firm or Non-OTP Holder Market Maker, Firm, 

Consolidated Book, Crowd Participants, Electronic 

Order Capture System, Short Term Option Series, 

and Quarterly Options Series. 

9The Exchange is not proposing to delete the 

definitions of either ‘‘Quote with Size’’ or ‘‘Foreign 

Broker/Dealer’’ at this time as such terms would be 

deleted in the subsequent filing to delete Rule 6.1– 

O. 

The Exchange believes that adding 

this explanation regarding the ‘‘P’’ 

modifier in Exchange rules would 

provide transparency regarding which 

rules and definitions would be operative 

during the symbol migration to Pillar. 

Summary of Proposed Rule Changes 

In this filing, the Exchange proposes 

the following new Pillar rules: Rules 

6.1P–O (Applicability), 6.37AP–O 

(Market Maker Quotations), 6.40P–O 

(Pre-Trade and Activity-Based Risk 

Controls), 6.41P–O (Price Reasonability 

Checks—Orders and Quotes), 6.62P–O 

(Orders and Modifiers), 6.64P–O 

(Auction Process), 6.76P–O (Order 

Ranking and Display), and 6.76AP–O 

(Order Execution and Routing). The 

Exchange also proposes to amend Rules 

1.1 (Definitions), 6.1–O (Applicability, 

Definitions and References), and 6.1A– 

O (Definitions and References—OX) to 

reflect definitions that would be 

applicable for options trading on Pillar 

and make conforming amendments to 

Rules 6.37–O (Obligations of Market 

Makers), 6.65A–O (Limit-Up and LimitDown During Extraordinary Market 

Volatility), and 6.96–O (Operation of 

Routing Broker). These proposed rules 

would set forth the foundation of the 

Exchange’s options trading model on 

Pillar and would use existing Pillar 

terminology currently in effect for the 

Exchange’s cash equity platform. 

Because certain proposed rules have 

definitions and functions that carry 

forward to other proposed rules, the 

Exchange proposes to describe the new 

rules in the following order (rather than 

by rule number order): Definitions, 

applicability, ranking and display, 

execution and routing, orders and 

modifiers, market maker quotations, 

pre-trade and activity-based risk 

controls, price reasonability checks, and 

auctions. 

To promote clarity and transparency, 

the Exchange further proposes to add a 

preamble to the following current rules 

specifying that they would not be 

applicable to trading on Pillar: Rule 6.1– 

O (Applicability, Definitions and 

References), 6.1A–O (Definitions and 

References—OX), Rule 6.37A–O (Market 

Maker Quotations), 6.40–O (Risk 

Limitation Mechanism), 6.60–O (Price 

Protection—Orders), 6.61–O (Price 

Protections—Quotes), 6.62–O (Certain 

Types of Orders Defined), 6.64–O (OX 

Opening Process), 6.76–O (Order 

Ranking and Display—OX), 6.76A–O 

(Order Execution—OX), 6.88–O 

(Directed Orders), and 6.90–O 

(Qualified Contingent Crosses). 

As discussed in greater detail below, 

the Exchange is not proposing 

fundamentally different functionality 

applicable to options trading on Pillar 

than on the OX system. However, with 

Pillar, the Exchange would introduce 

new terminology, and as applicable, 

new or updated functionality that 

would be available for options trading 

on the Pillar platform. 

The Exchange notes that new rules 

relating to electronic complex trading 

on Pillar will be addressed in separate 

proposed rule change. 

Proposed Rule Changes 

Rule 1.1—Definitions 

Rule 1.1 sets forth definitions that are 

applicable to both the Exchange’s cash 

equity and options markets. Rule 6.1– 

O(b) sets forth definitions that are 

applicable to the trading of option 

contracts on the Exchange. Rule 6.1A– 

O sets forth definitions that are 

applicable to trading on the Exchange’s 

current OX system. In connection with 

the transition of options trading to 

Pillar, the Exchange proposes to copy 

the definitions currently set forth in 

Rules 6.1–O and 6.1A–O into to Rule 

1.1, with changes as described below. 

This proposed rule change would 

streamline the Exchange’s rules by 

consolidating definitions that would be 

applicable for trading on Pillar into Rule 

1.1. Once the transition to Pillar is 

complete, the Exchange will file a 

subsequent proposed rule change to 

delete current Rules 6.1–O and 6.1A–O. 

In connection with adding definitions 

to Rule 1.1, the Exchange proposes to 

delete the sub-paragraph numbering 

currently set forth in Rule 1.1. The 

Exchange does not believe that the subparagraph numbering is necessary 

because the definitions are organized in 

alphabetical order and would continue 

to be organized in alphabetical order. In 

addition, removing the sub-paragraph 

numbering would make any future 

amendments to Rule 1.1 easier to 

process as any new definitions would 

simply be added in alphabetical order. 

Certain definitions in Rule 1.1 

currently specify that they are only for 

‘‘equities’’ trading. With the proposed 

consolidation of definitions, some of 

those definitions will become applicable 

to both options and cash equity trading, 

and others will continue to be 

applicable only to cash equity trading. 

With the proposed consolidation, the 

Exchange proposes to remove existing 

language limiting those definitions to 

‘‘equities’’ traded on the Exchange if the 

definition would be equally applicable 

to options trading. In addition, to the 

extent that a proposed definition would 

continue to be applicable only to cash 

equity trading, the Exchange proposes to 

make a global change to update 

references to ‘‘equities’’ traded on the 

Exchange to ‘‘cash equity securities’’ 

traded on the Exchange. The Exchange 

believes these proposed modifications 

would add clarity and consistency to 

Exchange rules. 

The Exchange proposes the following 

amendments to Rule 1.1. 

First, definitions set forth in Rule 6.1– 

O(b) would be added to Rule 1.1 in 

alphabetical order without any 

substantive differences.8 To promote 

clarity, if the definition that is being 

copied is not specifically about options 

trading, the Exchange proposes to add 

an introductory clause to the definition 

to specify that the term is for options 

traded on the Exchange. The Exchange 

does not propose to copy the definition 

of ‘‘Quote with Size,’’ which is currently 

defined in Rule 6.1–O(b)(33), to Rule 1.1 

because that term would not be used in 

the Pillar rules, and does not propose to 

copy the definition of ‘‘Short Term 

Options Series,’’ because it is 

duplicative of Commentary .07 to Rule 

6.4–O. In addition, the Exchange is not 

including the definition of ‘‘Foreign 

Broker/Dealer,’’ which is currently 

defined in Rule 6.1–O(b)(31), in Rule 

1.1, as this term is not used anywhere 

else in Exchange rules.9 The Exchange 

also proposes the following clarifying, 

non-substantive changes to definitions 

that are being copied from Rule 6.1–O(b) 

to Rule 1.1: 

• The Exchange proposes to provide 

that the term ‘‘class of options’’ or 

‘‘class’’ would mean all series of 

options, both puts and calls, overlying 

the same underlying security. 

• The Exchange proposes to 

streamline the definitions of ‘‘Closing 


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36442 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 

10Rule 6.1A–O(a) has definitions for: Authorized 

Trader, BBO, Complex BBO, Core Trading Hours, 

Customer, Professional Customer, Lead Market 

Maker, Market Center, Marketable, Market Maker, 

Market Maker Authorized Trader, Minimum Price 

Variation, NBBO, Complex NBBO, NOW Recipient, 

OX, OX Book, Routing Broker, Sponsored 

Participant, Sponsoring OTP Firm, Sponsorship 

Provisions, User, Directed Order Market Maker, and 

Order Flow Provider. 

11The Exchange also proposes a non-substantive 

amendment to the definition of ‘‘Exchange’’ to add 

a period at the end of the sentence. 

Purchase Transaction,’’ Closing Sale 

Transaction,’’ ‘‘Opening Purchase 

Transaction,’’ and ‘‘Opening Writing 

Transaction’’ without any substantive 

differences. 

• The Exchange proposes to revise 

the definition of ‘‘Electronic Order 

Capture System’’ to eliminate reference 

to the Commission’s order Instituting 

Public Administrative Proceedings 

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

Securities Exchange Act of 1934, 

Making Findings and Imposing 

Remedial Sanctions, which was the 

initial authority for the Exchange to 

specify requirements relating to the 

Electronic Order Capture System. The 

Exchange will continue to include 

requirements for the Electronic Order 

Capture System in its rules and does not 

believe it is necessary to continue to cite 

to the original authority for this 

requirement in Exchange rules. 

• The Exchange proposes to 

streamline the definition of ‘‘Expiration 

Date’’ to eliminate now obsolete 

language limiting the definition to 

options expiring before, on, or after 

February 15, 2015. In addition, the 

Exchange does not propose to include 

the following text in the Rule 1.1 

definition of ‘‘Expiration Date’’: 

‘‘Notwithstanding the foregoing, in the 

case of certain long-term options 

expiring on or after February 1, 2015 

that the Options Clearing Corporation 

has designated as grandfathered, the 

term ‘‘expiration date’’ shall mean the 

Saturday immediately following the 

third Friday of the expiration month.’’ 

This rule text is now obsolete as the 

Exchange does not have any series 

trading on the Exchange with such 

Saturday expiration dates. 

• The Exchange proposes to add to 

the definition of ‘‘option contract’’ that 

option contracts would include within 

the definition of ‘‘security’’ or 

‘‘securities’’ as such terms are used in 

the Bylaws and Rules of the Exchange. 

This proposed text is copied from the 

last sentence of current Rule 6.1–O(a). 

As described below, proposed Rule 

6.1P–O would not include this text. 

• The Exchange proposes to amend 

the definition of ‘‘option issue’’ to mean 

the security underlying a class of 

options. 

• The Exchange proposes to 

streamline the definition of 

‘‘outstanding’’ without any substantive 

differences. 

• The Exchange proposes to use the 

term ‘‘underlying security’’ rather than 

referring separately to an ‘‘underlying 

stock or Exchange-Traded Fund Share,’’ 

as an Exchange-Traded Fund Share is a 

security as that term is defined in Rule 

1.1 (and is also an NMS stock). 

Second, definitions set forth in Rule 

6.1A–O(a) would be moved and added 

to Rule 1.1 in alphabetical order without 

any substantive differences.10 Because 

certain of these definitions are already 

set forth in Rule 1.1 for cash equity 

trading, the Exchange proposes to 

amend those existing definitions to 

specify that they would be applicable to 

options trading, and if applicable, set 

forth differences for options trading, as 

described in more detail below. The 

Exchange does not propose to move the 

definition of ‘‘Directed Order Market 

Maker’’ to Rule 1.1 because in Pillar, the 

Exchange would no longer support 

Directed Order Market Makers. In 

addition, the Exchange does not propose 

to move the definitions of ‘‘Complex 

BBO’’ or ‘‘Complex NBBO’’ to Rule 1.1, 

and instead will be proposing to define 

those terms in a separate proposed rule 

change relating to electronic complex 

trading. As noted above, the terms ‘‘OX’’ 

and ‘‘OX Book’’ will not be used in 

Pillar rules. 

Finally, in addition to definitions that 

are being moved without any 

substantive changes, the Exchange 

proposes the following specific changes 

to Rule 1.1 definitions: 11

• Approved Person: The Exchange 

proposes a non-substantive amendment 

to change the word ‘‘a’’ to ‘‘an’’ before 

‘‘OTP Firm.’’ 

• Authorized Trader: The Exchange 

proposes to amend the Rule 1.1 

definition of ‘‘Authorized Trader’’ to 

remove the limitation to equities trading 

so that it is applicable to both cash 

equity securities and options traded on 

the Exchange, and to add that it can 

mean a person who may submit orders 

to the Exchange’s Trading Facilities on 

behalf of his or her OTP Holder. These 

proposed amendments combine the 

definition of Authorized Trader 

currently set forth in Rule 6.1A–O(a)(1) 

with the existing Rule 1.1 definition of 

Authorized Trader without any 

substantive differences. 

• Away Market: The Exchange 

proposes to amend the Rule 1.1 

definition of ‘‘Away Market’’ to add 

how that term would be used for 

options trading on the Exchange. As 

proposed, the new text would provide: 

‘‘[w]ith respect to options traded on the 

Exchange, the term ‘‘Away Market’’ 

means any Trading Center (1) with 

which the Exchange maintains an 

electronic linkage, and (2) that provides 

instantaneous responses to orders 

routed from the Exchange.’’ This 

proposed definition is based on the Rule 

6.1A–O(a)(12) definition of ‘‘NOW 

Recipient’’ with only a non-substantive 

difference to use the Pillar term of 

‘‘Away Market’’ instead of the term 

‘‘NOW Recipient.’’ The Exchange does 

not include in this definition reference 

to designating and publishing to its 

website certain Away Markets because 

such markets are by definition those 

with which the Exchange maintains 

electronic linkage (i.e., pursuant to the 

Options Order Protection and Locked/ 

Crossed Market Plan). 

• BBO: The Exchange proposes to 

amend the Rule 1.1 definition of ‘‘BBO’’ 

to add how that term would be used for 

options trading on the Exchange. As 

proposed, with respect to options traded 

on the Exchange, BBO would mean the 

best displayed bid or best displayed 

offer on the Exchange. This definition is 

based on the Rule 6.1A–O(a)(2)(a) 

definition of BBO without any 

substantive differences. 

• Consolidated Book: The term 

‘‘Consolidated Book’’ is currently 

defined in Rule 6.1–O(b)(37) and the 

term ‘‘OX Book’’ is currently defined in 

Rule 6.1A–O(a)(14). For Pillar, the 

Exchange proposes to define the term 

‘‘Consolidated Book’’ based on both of 

those existing definitions and would 

provide that for options traded on the 

Exchange, the term ‘‘Consolidated 

Book’’ would mean the Exchange’s 

electronic book of orders and quotes and 

that all orders and quotes that are 

entered into the Consolidated Book 

would be ranked and maintained in 

accordance with the rules of priority, as 

provided for in proposed Rule 6.76P–O. 

This proposed definition is also similar 

to the existing Rule 1.1 definition of 

‘‘NYSE Arca Book,’’ which would be 

amended to specify that the definition 

would only be for cash equity securities 

traded on the Exchange. 

• Core Trading Hours: The definition 

of Core Trading Hours would be 

applicable to both cash equity securities 

and options trading on the Exchange. 

Because options trading may extend 

past 4:00 p.m., the Exchange proposes to 

amend the Rule 1.1 to provide that for 

options traded on the Exchange, 

transactions may be effected on the 

Exchange for an equity options class 

until close of trading of the primary 

market for the securities underlying an 

options class. This proposed text is 


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Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 36443 

12The Exchange does not propose to include text 

regarding trading that continues 15 minutes after 

the regular time set for the normal close of trading 

in the primary markets with respect to index 

options classes, as this is already addressed in Rule 

5.20–O(a) (Trading Sessions). 

13The Exchange does not propose to carry over 

the definition of ‘‘Customer’’ that is set forth in Rule 

6.1–O(b)(29) as unnecessary. 

14See Securities Exchange Act Release No. 91564 

(April 14, 2021), 86 FR 20541 (April 20, 2021) (SR– 

NYSEArca–2021–21) (Notice of filing and 

immediate effectiveness of proposed rule change to 

specify when the Exchange may adjust its 

calculation of the PBBO). 

based on current Rule 6.1A–O(a)(3) 

without substantive changes.12

• Customer and Professional 

Customer: The Exchange proposes to 

amend Rule 1.1 to add the definitions of 

‘‘Customer’’ and ‘‘Professional 

Customer.’’ The proposed definitions 

are based on the definitions of Customer 

and Professional Customer set forth in 

Rule 6.1A–O(a)(4) and (4A) with nonsubstantive differences only to specify 

that these definitions would be 

applicable for options traded on the 

Exchange, eliminate redundant headers, 

and re-number the sub-paragraphs. The 

Exchange also proposes to include a 

cross-reference to the definition of a 

broker or dealer as defined Sections 

3(a)(4) and 3(a)(5) of the Exchange Act 

and rules thereunder.13 The Exchange 

believes that this specificity adds clarity 

and transparency to the proposed 

definition. 

• Lead Market Maker: The Exchange 

proposes to amend the Rule 1.1 

definition of ‘‘Lead Market Maker’’ to 

add how that term would be used for 

options trading. As proposed, the new 

text would provide that for options 

traded on the Exchange, the term ‘‘Lead 

Market Maker’’ or ‘‘LMM’’ would ‘‘mean 

a person that has been deemed qualified 

by the Exchange for the purpose of 

making transactions on the Exchange in 

accordance with Rule 6.82–O. Each 

LMM must be registered with the 

Exchange as a Market Maker. Any OTP 

Holder or OTP Firm registered as a 

Market Maker with the Exchange is 

eligible to be qualified as an LMM.’’ 

This proposed definition is based on the 

Rule 6.1A–O(a)(5) definition of Lead 

Market Maker without any differences. 

• Marketable: The Exchange proposes 

to amend the Rule 1.1 definition of 

‘‘Marketable’’ to extend it to address 

options traded on the Exchange. The 

current description of the term 

‘‘Marketable’’ for purposes of Market 

Orders is the same in both Rules 1.1 and 

6.1A–O(a)(7). With respect to Limit 

Orders, in Rule 1.1, the term 

‘‘Marketable’’ currently means an order 

that can be immediately executed or 

routed. The current Rule 6.1A–O(a)(7) 

definition of the term ‘‘Marketable’’ for 

Limit Orders means when the price of 

the order matches or crosses the NBBO 

on the other side of the market. The 

current Rule 1.1 definition relating to 

Limit Orders means substantively the 

same thing as the Rule 6.1A–O(a)(7) 

description for Limit Orders, and the 

Exchange proposes using the existing 

Rule 1.1 definition of the term 

‘‘Marketable’’ for both cash equity and 

options trading of Limit Orders. The 

Exchange also proposes a nonsubstantive amendment to add a comma 

after the phrase, ‘‘the term ‘‘Marketable’’ 

means’’ and before ‘‘for a Limit Order.’’ 

• Market Maker: The Exchange 

proposes to amend the Rule 1.1 

definition of ‘‘Market Maker’’ to add 

how that term would be used for 

options trading. As proposed, the new 

text would provide that for options 

traded on the Exchange, the term 

‘‘Market Maker’’ would refer ‘‘to an OTP 

Holder or OTP Firm that acts as a 

Market Maker pursuant to Rule 6.32– 

O.’’ This proposed definition is based 

on the Rule 6.1A–O(a)(8) definition of 

Market Maker without any differences. 

The Exchange also proposes to include 

in the definition of Market Maker that 

for purposes of the NYSE Arca rules, the 

term Market Maker includes Lead 

Market Makers, unless the context 

otherwise indicates. This proposed text 

is based on Rule 6.1–O(c), References, 

without substantive differences. The 

Exchange believes this proposed change 

would streamline and clarify this 

definition. 

• Market Maker Authorized Trader: 

The Exchange proposes to amend the 

Rule 1.1 definition of ‘‘Market Maker 

Authorized Trader’’ to add how that 

term would be used for options trading. 

As proposed, the new text would 

provide that for options traded on the 

Exchange, the term ‘‘Market Maker 

Authorized Trader’’ or ‘‘MMAT’’ would 

‘‘mean an authorized trader who 

performs market making activities 

pursuant to Rule 6–O on behalf of an 

OTP Firm or OTP Holder registered as 

a Market Maker.’’ This proposed 

definition is based on the Rule 6.1A– 

O(a)(9) definition of Market Maker 

Authorized Trader without any 

differences. 

• Market Participant Identifier 

(‘‘MPID’’): The Exchange proposes to 

add a new definition to Rule 1.1 for 

‘‘Market Participant Identifier (‘MPID’).’’ 

This term is currently used in Rules 

7.19–E and 7.31–E(i)(2). Because this 

term would also be used for options 

trading, the Exchange believes that 

defining this term in Rule 1.1 would 

promote clarity and transparency. The 

proposed definition would provide that 

‘‘Market Participant Identifier’’ or 

‘‘MPID’’ refers to the identification 

number(s) assigned to the orders and 

quotes of a single ETP Holder, OTP 

Holder, or OTP Firm for the execution 

and clearing of trades on the Exchange 

by that permit holder. The definition 

would further provide that an ETP 

Holder, OTP Holder, or OTP Firm may 

obtain multiple MPIDs and each such 

MPID may be associated with one or 

more sub-identifiers of that MPID. 

• Minimum Price Variation or MPV: 

The Exchange proposes to amend Rule 

1.1 to add the definition of ‘‘Minimum 

Price Variation’’ or ‘‘MPV’’ for both cash 

equity securities and options that are 

traded on the Exchange. The Exchange 

proposes that the term ‘‘Minimum Price 

Variation’’ or ‘‘MPV’’ means the 

minimum price variations established 

by the Exchange. The Exchange further 

proposes that the MPV for quoting cash 

equity securities traded on the Exchange 

are set forth in Rule 7.6–E. The 

Exchange further proposes that the MPV 

for quoting and trading options traded 

on the Exchange are set forth in Rule 

6.72–O(a). The proposed definition as it 

relates to options trading is based on the 

Rule 6.1A–O(a)(10) definition of MPV. 

• NBBO: The Exchange proposes to 

amend the Rule 1.1 definition of 

‘‘NBBO, Best Protected Bid, Best 

Protected Offer, Protected Best Bid and 

Offer (PBBO)’’ to add how the term 

NBBO would be used for options 

trading. The Exchange proposes that: 

‘‘[w]ith respect to options traded on the 

Exchange, the term ‘‘NBBO’’ means the 

national best bid or offer. The terms 

‘‘NBB’’ means the national best bid and 

‘‘NBO’’ means the national best offer. 

This proposed definition is based on the 

Rule 6.1A–O(a)(11)(a) definition of 

NBBO without any differences. In 

addition, unless otherwise specified, for 

options trading, the Exchange may 

adjust its calculation of the NBBO based 

on information about orders it sends to 

Away Markets, execution reports 

received from those Away Markets, and 

certain orders received by the Exchange. 

This proposed text reflects how the 

Exchange currently calculates the NBBO 

for options trading and is based on how 

the PBBO is calculated on the 

Exchange’s cash equity market, as 

described in Rule 7.37–E(d)(2).14 The 

Exchange proposes that it would adjust 

its calculation of the NBBO for options 

traded on the Exchange in the same 

manner that the Exchange calculates the 

PBBO for cash equity securities traded 

on the Exchange. The Exchange further 

notes that there are limited 

circumstances when the Exchange 

would not adjust its calculation of the 


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15The Exchange also proposes non-substantive 

amendments to Rule 6.96–O to renumber current 

paragraphs (a), (b), and (c), as paragraphs (b), (c), 

and (d). 

NBBO, and would determine the NBBO 

for options in the same way that the 

Exchange determines the NBBO for cash 

equity securities traded on the 

Exchange. As described in detail below, 

the Exchange will specify in its rules 

when it would be not be using an 

adjusted NBBO for purposes of a 

specific rule. 

The Exchange further proposes that 

the term ‘‘Away Market NBBO’’ would 

refer to a calculation of the NBBO that 

excludes the Exchange’s BBO. 

• NYSE Arca Book: The Exchange 

proposes to amend the Rule 1.1 

definition of ‘‘NYSE Arca Book’’ to 

specify that this term is applicable only 

for cash equity securities traded on the 

Exchange. As noted above, the Exchange 

uses the term ‘‘Consolidated Book’’ for 

options traded on the Exchange. 

• NYSE Arca Marketplace: The 

Exchange proposes to amend the Rule 

1.1 definition of ‘‘NYSE Arca 

Marketplace’’ to specify that this term is 

applicable only for cash equity 

securities traded on the Exchange. 

• Order Flow Provider or OFP: The 

Exchange proposes to add the definition 

of ‘‘Order Flow Provider or OFP’’ to 

Rule 1.1 to mean ‘‘any OTP Holder that 

submits, as agent, orders to the 

Exchange.’’ This proposed definition is 

based on the Rule 6.1A–O(a)(21) 

definition of ‘‘Order Flow Provider’’ 

without any differences. 

• Trading Center: The Exchange 

proposes to amend the Rule 1.1 

definition of ‘‘Trading Center’’ to add 

how this term would be used for options 

trading. As proposed: ‘‘[w]ith respect to 

options traded on the Exchange, for 

purposes of Rule 6–O, the term 

‘‘Trading Center’’ means a national 

securities exchange that has qualified 

for participation in the Options Clearing 

Corporation pursuant to the provisions 

of the rules of the Options Clearing 

Corporation.’’ This proposed definition 

is based on the Rule 6.1A–O(a)(6) 

definition of ‘‘Market Center’’ with a 

non-substantive difference to use the 

term ‘‘Trading Center’’ instead of 

‘‘Market Center.’’ 

• User: The Exchange proposes to 

amend the Rule 1.1 definition of ‘‘User’’ 

to add how this term would be used for 

options trading. As proposed: ‘‘[w]ith 

respect to options traded on the 

Exchange, the term ‘User’ shall mean 

any OTP Holder or OTP Firm who is 

authorized to obtain access to the 

Exchange pursuant to Rule 6.2A–O.’’ 

This proposed definition is based on the 

Rule 6.1A–O(a)(19) definition of User 

with non-substantive differences to use 

Pillar terminology. 

• User Agreement: The Exchange 

proposes a non-substantive amendment 

to the Rule 1.1 definition of ‘‘User 

Agreement’’ to replace the term ‘‘NYSE 

Arca, L.L.C’’ with the term the 

‘‘Exchange.’’ 

In addition to proposed amendments 

to Rule 1.1, the Exchange proposes to 

amend Rule 6.96–O to add the 

definition of ‘‘Routing Broker,’’ which is 

currently defined in Rule 6.1A–O(a)(15). 

For options trading on Pillar, the 

Exchange proposes to define the term in 

Rule 6.96–O (Operation of a Routing 

Broker) to mean ‘‘the broker-dealer 

affiliate of NYSE Arca, Inc. and any 

other non-affiliate that provides services 

for routing orders submitted to the 

Exchange to other Trading Facilities for 

execution whenever such routing is 

required by NYSE Arca Rules and 

federal securities laws.’’ 15 The 

proposed rule text is based on the 

current definition in Rule 6.1A– 

O(a)(15), with non-substantive 

amendments to use Pillar terminology. 

In connection with the proposed 

amendments to Rule 1.1, the Exchange 

proposes to add the following preamble 

to Rule 6.1A–O: ‘‘This Rule will not be 

applicable to trading on Pillar.’’ This 

proposed preamble is designed to 

promote clarity and transparency in 

Exchange rules that Rule 6.1A–O would 

not be applicable to trading on Pillar. 

Proposed Rule 6.1P–O: Applicability 

Current Rule 6.1–O sets forth the 

applicability, definitions, and references 

in connection with options trading. As 

noted above, the definitions in Rule 6.1– 

O(b) and reference to LMMs being 

included in the definition of Market 

Maker will be copied to proposed Rule 

1.1 for purposes of trading on Pillar. 

The Exchange proposes new Rule 

6.1P–O to include only those portions of 

Rule 6.1–O relating to applicability of 

Exchange Rules that would continue to 

be applicable after the transition to 

Pillar. Proposed Rule 6.1P–O(a) would 

be based on current Rule 6.1–O(a) with 

differences that would streamline the 

proposed rule and reduce duplication of 

terms defined in Rule 1.1. Proposed 

Rule 6.1P–O(b) would be based in part 

on Rule 6.1–O(e) regarding the 

‘‘Applicability of Other Exchange 

Rules,’’ with changes to eliminate 

obsolete and duplicative text and to 

clarify the proposed rule to provide that 

unless stated otherwise, Exchange Rules 

would be applicable to transactions on 

the Exchange in option contracts. 

In connection with proposed Rule 

6.1P–O, the Exchange proposes to add 

the following preamble to Rule 6.1–O: 

‘‘This Rule will not be applicable to 

trading on Pillar.’’ This proposed 

preamble is designed to promote clarity 

and transparency in Exchange rules that 

Rule 6.1–O would not be applicable to 

trading on Pillar. 

Proposed Rule 6.76P–O: Order Ranking 

and Display 

Rule 6.76–O governs order ranking 

and display for the current Exchange 

options trading system. Proposed Rule 

6.76P–O would address order ranking 

and display for options trading under 

Pillar. 

With the transition to Pillar, the 

Exchange does not propose any 

substantive differences to how orders 

would be ranked and displayed on the 

Exchange. However, the Exchange 

proposes to eliminate the terminology 

relating to the ‘‘Display Order Process’’ 

and ‘‘Working Order Process’’ and 

instead use Pillar terminology based on 

Rule 7.36–E, which governs order 

ranking and display on the Exchange’s 

cash equity market. The Exchange 

proposes a difference between proposed 

Pillar options rules and the existing 

cash equity Pillar rules to reflect that, in 

addition to entering orders, Market 

Makers enter quotes on the options 

trading platform. Accordingly, when the 

cash equity rules refer to ‘‘orders,’’ the 

proposed options Pillar rules would 

refer to both ‘‘orders and quotes.’’ 

As discussed in detail below, the 

Exchange believes that the proposed 

new rule text provides transparency 

with respect to how the Exchange’s 

price-time priority model would operate 

through the use of new terminology 

applicable to all orders and quotes on 

the Pillar trading platform. 

Proposed Rule 6.76P–O(a) would set 

forth definitions for purposes of all of 

Rule 6–O Options Trading on the Pillar 

trading platform, including proposed 

Rule 6.76AP–O (Order Execution and 

Routing), described below. The 

proposed definitions are based on Rule 

7.36–E(a) definitions for purposes of 

Rule 7–E cash equity trading, with 

differences, as noted above, to reference 

‘‘orders and quotes’’ throughout 

proposed Rule 6.76P–O. The Exchange 

believes that these proposed definitions 

would provide transparency regarding 

how the Exchange would operate its 

options platform on Pillar, and serve as 

the foundation for how orders and 

modifiers would be described for 

options trading on Pillar, as discussed 

in more detail below. 

• Proposed Rule 6.76P–O(a)(1) would 

define the term ‘‘display price’’ to mean 

the price at which an order or quote 

ranked Priority 2—Display Orders or 


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Market Order is displayed, which may 

be different from the limit price or 

working price of the order. This 

proposed definition is based on Rule 

7.36–E(a)(1). The Exchange proposes a 

non-substantive difference to refer to 

‘‘order or quote ranked Priority 2— 

Display Orders,’’ versus referring to 

‘‘Limit Order,’’ as set forth in Rule 7.36– 

E(a)(1). The term ‘‘Priority 2—Display 

Orders’’ is described in more detail 

below. The Exchange also proposes a 

second difference compared to the 

Exchange’s cash equity rules to include 

Market Orders as interest that may have 

a display price (for example, as 

described below and consistent with 

current functionality, a Market Order 

could be displayed at its Trading 

Collar). 

• Proposed Rule 6.76P–O(a)(2) would 

define the term ‘‘limit price’’ to mean 

the highest (lowest) specified price at 

which a Limit Order or quote to buy 

(sell) is eligible to trade. The limit price 

is designated by the User. As noted in 

the proposed definitions of display 

price and working price, the limit price 

designated by the User may differ from 

the price at which the order would be 

displayed or eligible to trade. This 

proposed definition is based on Rule 

7.36–E(a)(2) without any substantive 

differences. The Exchange proposes one 

non-substantive difference to refer to the 

specified price of a ‘‘Limit Order or 

quote,’’ versus referring to ‘‘Limit 

Order,’’ as set forth in Rule 7.36–E(a)(2). 

• Proposed Rule 6.76P–O(a)(3) would 

define the term ‘‘working price’’ to 

mean the price at which an order or 

quote is eligible to trade at any given 

time, which may be different from the 

limit price or display price of an order. 

This proposed definition is based on 

Rule 7.36–E(a)(3) without any 

substantive differences. The Exchange 

proposes one non-substantive difference 

to refer to ‘‘order or quote’’ for purposes 

of determining ranking priority. The 

Exchange believes that the term 

‘‘working price’’ would provide clarity 

regarding the price at which an order 

may be executed at any given time. 

Specifically, the Exchange believes that 

use of the term ‘‘working’’ denotes that 

this is a price that is subject to change, 

depending on the circumstances. The 

Exchange will be using this term in 

connection with orders and modifiers, 

as described in more detail below. 

• Proposed Rule 6.76P–O(a)(4) would 

define the term ‘‘working time’’ to mean 

the effective time sequence assigned to 

an order or quote for purposes of 

determining its priority ranking. The 

Exchange proposes to use the term 

‘‘working time’’ in its rules for trading 

on the Pillar trading platform instead of 

terms such as ‘‘time sequence’’ or ‘‘time 

priority,’’ which are used in rules 

governing trading on the Exchange’s 

current system. The Exchange believes 

that use of the term ‘‘working’’ denotes 

that this is a time assigned to an order 

for purposes of ranking and is subject to 

change, depending on circumstances. 

This proposed definition is based on 

Rule 7.36–E(a)(4) without any 

substantive differences. The Exchange 

proposes one non-substantive difference 

to refer to an ‘‘order or quote,’’ versus 

referring solely to ‘‘an order,’’ as set 

forth in Rule 7.36–E(a)(4). 

• Proposed Rule 6.76P–O(a)(5) would 

define an ‘‘Aggressing Order’’ or 

‘‘Aggressing Quote’’ to mean a buy (sell) 

order or quote that is or becomes 

marketable against sell (buy) interest on 

the Consolidated Book. The proposed 

terms would therefore refer to orders or 

quotes that are marketable against other 

orders or quotes on the Consolidated 

Book, such as incoming orders or quotes 

as well as orders that have returned 

unexecuted after routing. These terms 

would also be applicable to resting 

orders or quotes that become marketable 

due to one or more events. For the most 

part, resting orders or quotes will have 

already traded with contra-side interest 

against which they are marketable. To 

maximize the potential for orders or 

quotes to trade, the Exchange 

continually evaluates whether resting 

interest may become marketable. Events 

that could trigger a resting order to 

become marketable include updates to 

the working price of such order or 

quote, updates to the NBBO, changes to 

other interest resting on the 

Consolidated Book, or processing of 

inbound messages. To address such 

circumstances, the Exchange proposes 

to include in proposed Rule 6.76P– 

O(a)(5) that a resting order or quote may 

become an Aggressing Order or 

Aggressing Quote if its working price 

changes, if the NBBO is updated, 

because of changes to other orders or 

quotes on the Consolidated Book, or 

when processing inbound messages. 

The proposed definition of an 

‘‘Aggressing Order’’ is based on Rule 

7.36–E(a)(5) without any substantive 

differences. The proposed rule includes 

non-substantive differences to account 

for options trading, such as including 

the defined term ‘‘Aggressing Quote’’; 

referring to an ‘‘order or quote’’ versus 

‘‘an order’’; referring to the Consolidated 

Book rather than NYSE Arca Book; and 

referring to the NBBO instead of the 

PBBO, which is not a term used in 

options trading. The Exchange believes 

that these proposed definitions would 

promote transparency in Exchange rules 

by providing detail regarding 

circumstances when a resting order or 

quote may become marketable, and thus 

would be an Aggressing Order or 

Aggressing Quote. 

Proposed Rule 6.76P–O(b) would 

govern the display of non-marketable 

Limit Orders and quotes. The proposed 

Pillar functionality would operate as 

described in current preamble of Rule 

6.76–O and the Display Order Process 

set forth in Rule 6.76–O(a)(1), without 

any substantive differences, but will not 

use the terms ‘‘Display Order Process,’’ 

‘‘Working Order Process,’’ or ‘‘OX,’’ 

because the Exchange is not proposing 

to use that terminology in Pillar. 

Throughout proposed paragraph (b) of 

Rule 6.76P–O, the Exchange proposes to 

use the term ‘‘will’’ in instead of 

‘‘shall.’’ As proposed, the Exchange 

would display ‘‘all non-marketable 

Limit Orders or quotes ranked Priority 

2—Display Orders unless the order or 

modifier instruction specifies that all or 

a portion of the order is not to be 

displayed,’’ which rule text is 

substantially identical to the first 

sentence of the preamble to current Rule 

6.76–O except that Pillar ranking 

terminology would be used. 

Rule 6.76P–O(b)(1), which is 

substantially identical to current Rule 

6.76–O(b), would provide that except as 

otherwise permitted in proposed new 

Rule 6.76AP–O (discussed below), all 

non-marketable displayed interest 

would be displayed on an anonymous 

basis. 

Proposed Rule 6.76P–O(b)(2) is 

substantially identical to the second 

sentence of the preamble to current Rule 

6.76–O, and would provide that the 

Exchange would disseminate current 

consolidated quotations/last sale 

information, and such other market 

information as may be made available 

from time to time pursuant to agreement 

between the Exchange and other Market 

Centers, consistent with the OPRA Plan. 

Finally, proposed Rule 6.76P–O(b)(3) 

would provide that if ‘‘an Away Market 

locks or crosses the Exchange BBO, the 

Exchange will not change the display 

price of any Limit Orders or quotes 

ranked Priority 2—Display Orders and 

any such orders will be eligible to be 

displayed as the Exchange’s BBO.’’ This 

proposed concept, which is based on 

Rule 7.36–E(b)(4) (but omits the cash 

equity-related information regarding 

regulatory halts), ensures that resting 

displayed interest that did not cause a 

locked or crossed market condition can 

stand their ground and maintain priority 

at the price at which they were 

originally displayed. This provision is 

consistent with the treatment of 

displayed orders on the Exchange’s cash 


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equity market as described in Rule 7.36– 

E(b)(4). 

Proposed Rule 6.76P–O(c) would 

describe the Exchange’s general process 

for ranking orders and quotes and 

would be comparable to Rule 6.76–O(a), 

without any substantive differences. As 

proposed, Rule 6.76P–O(c) would 

provide that all non-marketable orders 

and quotes would be ranked and 

maintained in the Consolidated Book 

according to price-time priority in the 

following manner: (1) Price; (2) priority 

category; (3) time; and (4) ranking 

restrictions applicable to an order/quote 

or modifier condition. Accordingly, 

orders and quotes would be first ranked 

by price. Next, at each price level, 

orders and quotes would be assigned a 

priority category. Orders and quotes in 

each priority category would be 

required to be exhausted before moving 

to the next priority category. Within 

each priority category, orders and 

quotes would be ranked by time. These 

general requirements for ranking are 

applicable to all orders and quotes, 

unless an order or quote or modifier has 

a specified exception to this ranking 

methodology, as described in more 

detail below. The Exchange is proposing 

this ranking description instead of using 

the concepts of a Display Order Process 

and Working Order Process in Rule 

6.76–O. However, substantively there 

would be no difference in how the 

Exchange would rank orders and quotes 

on the Pillar trading platform from how 

it ranks orders and quotes in the current 

trading system. For example, a nondisplayed order would always be ranked 

after a displayed order at the same price, 

even if the non-displayed order has an 

earlier working time. In addition, this 

proposed rule is based on Rule 7.36– 

E(c). 

Proposed Rule 6.76P–O(d) would 

describe how orders and quotes would 

be ranked based on price. Specifically, 

as proposed, all orders and quotes 

would be ranked based on the working 

price of an order or quote. Orders and 

quotes to buy would be ranked from 

highest working price to lowest working 

price and orders and quotes to sell 

would be ranked from lowest working 

price to highest working price. The rule 

would further provide that if the 

working price of an order or quote 

changes, the price priority of an order or 

quote would change. This price priority 

is current functionality, but the new 

rule would use Pillar terminology based 

on Rule 7.36–E(d). 

Proposed Rule 6.76P–O(e) would 

describe the proposed priority 

categories for ranking purposes. As 

proposed, at each price, all orders and 

quotes would be assigned a priority 

category. If, at a price, there are no 

orders or quotes in a priority category, 

the next category would have first 

priority. The Exchange does not propose 

to include in Rule 6.76P–O, which sets 

forth the general rule regarding ranking, 

specifics about how one or more order 

or quote types may be ranked and 

displayed. Instead, as described in more 

detail below, the Exchange will address 

separately in new Rule 6.62P–O 

governing orders and modifiers which 

priority category correlates to different 

order types and modifiers. Accordingly, 

details regarding which proposed 

priority categories would be assigned to 

the display and reserve portions of 

Reserve Orders, which is currently 

addressed in Rule 6.76–O(a)(1)(B) and 

(a)(2)(A), will be addressed in proposed 

Rule 6.62P–O and therefore would not 

be included in proposed Rule 6.76P–O. 

The proposed changes are also based 

on the priority categories for cash equity 

trading as set forth in Rule 7.36–E(e)(1)– 

(3), except for the options-specific 

reference to ‘‘orders and quotes’’ rather 

than just orders as relates to interest 

ranked Priority 2 and 3. 

The proposed priority categories 

would be: 

• Proposed Rule 6.76P–O(e)(1) would 

specify ‘‘Priority 1—Market Orders,’’ 

which provides that unexecuted Market 

Orders would have priority over all 

other same-side orders with the same 

working price. As described in greater 

detail below, a Market Order subject to 

a Trading Collar would be displayed on 

the Consolidated Book. In such 

circumstances, the displayed Market 

Order would have priority over all other 

resting orders at that price. 

• Proposed Rule 6.76P–O(e)(2) would 

specify ‘‘Priority 2—Display Orders.’’ 

This proposed priority category would 

replace the ‘‘Display Order Process.’’ As 

proposed, non-marketable Limit Orders 

or quotes with a displayed working 

price would have second priority. For 

an order or quote that has a display 

price that differs from the working price 

of the order or quote, the order or quote 

would be ranked Priority 3—NonDisplay Orders at the working price. 

This priority category is based on how 

Priority 2—Display Orders function on 

the Exchange’s cash equity market, as 

described in Rule 7.36–E(e)(2). 

• Proposed Rule 6.76P–O(e)(3) would 

specify ‘‘Priority 3—Non-Display 

Orders.’’ This priority category would 

be used in Pillar rules instead of 

reference to the ‘‘Working Order 

Process.’’ As proposed, non-marketable 

Limit Orders or quotes for which the 

working price is not displayed, 

including the reserve interest of Reserve 

Orders, would have third priority. This 

priority category is based on how 

Priority 3—Non-Display Orders function 

on the Exchange’s cash equity market, 

as described in Rule 7.36–E(e)(3). 

Proposed Rule 6.76P–O(f) would set 

forth that at each price level within each 

priority category, orders and quotes 

would be ranked based on time priority. 

The proposed changes are based on 

Pillar terminology in Rule 7.36–E(f)(1) 

and (3), except for the non-substantive 

reference to ‘‘orders and quotes’’ rather 

than just orders. 

• Proposed Rule 6.76P–O(f)(1) would 

provide that an order or quote is 

assigned a working time when it is first 

added to the Consolidated Book based 

on the time such order or quote is 

received by the Exchange. This 

proposed process of assigning a working 

time to orders is current functionality 

and is substantively the same as current 

references to the ‘‘time of original order 

entry’’ found in several places in Rule 

6.76–O. This proposed rule uses Pillar 

terminology based on Rule 7.36–E(f)(1) 

without any substantive differences. To 

provide transparency in Exchange rules, 

the Exchange further proposes to 

include in proposed Rule 6.76P–O(f) 

how the working time would be 

determined for orders that are routed. 

As proposed: 

Æ Proposed Rule 6.76P–O(f)(1)(A) 

would specify that an order that is fully 

routed to an Away Market on arrival, 

per proposed Rule 6.76AP–O(b)(1), 

would not be assigned a working time 

unless and until any unexecuted portion 

of the order returns to the Consolidated 

Book. The Exchange notes that this is 

the current process for assigning a 

working time to an order and uses Pillar 

terminology based on Rule 7.36– 

E(f)(1)(A) without any substantive 

differences. 

Æ Proposed Rule 6.76P–O(f)(1)(B) 

would specify that for an order that, on 

arrival, is partially routed to an Away 

Market, the portion that is not routed 

would be assigned a working time. If 

any unexecuted portion of the order 

returns to the Consolidated Book and 

joins any remaining resting portion of 

the original order, the returned portion 

of the order would be assigned the same 

working time as the resting portion of 

the order. If the resting portion of the 

original order has already executed and 

any unexecuted portion of the order 

returns to the Consolidated Book, the 

returned portion of the order would be 

assigned a new working time. This 

process for assigning a working time to 

partially routed orders is the same as 

currently used by the Exchange and 

uses Pillar terminology based on Rule 

7.36–E(f)(1)(B) without any substantive 

differences. 


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16See proposed Rule 6.76P–O(h)(1) (removing ‘‘in 

addition’’) (B) (regarding ‘‘Trading Crowd’’) and (D) 

(updating the cross-reference to new subparagraph 

(B) in connection with the Section 11(a)(1)(G) of the 

Exchange Act and Rule 11a1–1(T) thereunder (‘‘G 

exemption rule’’)). 

17The Exchange proposes to add a preamble to 

Rule 6.88–O (Directed Orders) to provide that the 

Rule would not be applicable to trading on Pillar. 

18See proposed Rule 6.76AP–O, Commentary .01, 

which will not include cross-reference that appears 

in the current rule Commentary .02 to Rule 6.76A– 

O. 

• Proposed Rule 6.76P–O(f)(2) would 

provide that an order or quote would be 

assigned a new working time if: (A) The 

display price of an order or quote 

changes, even if the working price does 

not change, or (B) the working price of 

an order or quote changes, unless the 

working price is adjusted to be the same 

as the display price of an order or quote. 

This proposed text uses Pillar 

terminology based in part on Rule 7.36– 

E(f)(2), which provides that an order is 

assigned a new working time any time 

the working price of an order changes. 

The Exchange is proposing to provide 

greater specificity when the working 

time of an order would change as 

compared to current Rule 7.36–E(f). 

• Proposed Rule 6.76P–O(f)(3) would 

provide that an order or quote would be 

assigned a new working time if the size 

of an order or quote increases and that 

an order or quote retains its working 

time if the size of the order or quote is 

decreased. This process for assigning a 

new working time when the size of an 

order changes is the same as currently 

used by the Exchange and uses Pillar 

terminology based on Rule 7.36–E(f)(3) 

without any substantive differences. 

Proposed Rule 6.76P–O(g) would 

specify that the Exchange would apply 

ranking restrictions applicable to 

specified order or modifier instructions. 

These order and modifier instructions 

would be identified in proposed new 

Rule 6.62P–O, described below. 

Proposed Rule 6.76P–O(g) uses Pillar 

terminology based on Rule 7.36–E(g), 

without any substantive differences. 

Current Rule 6.76–O(a)(2)(C)–(E) discuss 

ranking of certain order types with 

contingencies, but the Exchange 

proposes that for Pillar, ranking details 

regarding orders with contingencies 

would be described in proposed Rule 

6.62P–O. 

Finally, proposed Rule 6.76P–O(h) 

would be applicable to ‘‘Orders 

Executed Manually’’ and would contain 

the same text as set forth in Rule 6.76– 

O(d) without any substantive 

differences except for the nonsubstantive change of capitalizing the 

defined term Trading Crowd (per 

proposed Rule 1.1), removing the 

superfluous clause ‘‘in addition,’’ and 

updating the cross-reference to reflect 

the new Pillar rule.16

In connection with proposed Rule 

6.76P–O, the Exchange proposes to add 

the following preamble to Rule 6.76–O: 

‘‘This Rule will not be applicable to 

trading on Pillar.’’ This proposed 

preamble is designed to promote clarity 

and transparency in Exchange rules that 

Rule 6.76–O would not be applicable to 

trading on Pillar. 

Proposed Rule 6.76AP–O: Order 

Execution and Routing 

Current Rule 6.76A–O, titled ‘‘Order 

Execution—OX,’’ governs order 

execution and routing at the Exchange. 

The Exchange proposes that Rule 

6.76AP–O would set forth the order 

execution and routing rules for options 

trading on Pillar. The Exchange 

proposes that the title for new Rule 

6.76AP–O would be ‘‘Order Execution 

and Routing’’ instead of ‘‘Order 

Execution—OX’’ because the Exchange 

does not propose to use the term ‘‘OX’’ 

in connection with Pillar. The Exchange 

believes that because proposed Rule 

6.76AP–O, like Rule 6.76A–O, would 

specify the Exchange’s routing 

procedures, referencing to ‘‘Routing’’ in 

the rule’s title would provide additional 

transparency in Exchange rules 

regarding what topics would be covered 

in new Rule 6.76AP–O. This proposed 

rule is based on Rule 7.37–E, which 

describes the order execution and 

routing rules for cash equity securities 

trading on the Pillar platform. 

Proposed Rule 6.76AP–O(a) and its 

subparagraphs would set forth the 

Exchange’s order execution process and 

would cover the same subject as the 

preamble to Rule 6.76A–O. However, 

the proposed rule would use Pillar 

terminology of ‘‘Aggressing Order’’ and 

‘‘Aggressing Quote’’—rather than refer 

to an ‘‘incoming marketable bid or 

offer.’’ As proposed, an Aggressing 

Order or Aggressing Quote would be 

matched for execution against contraside orders or quotes in the 

Consolidated Book according to the 

price-time priority ranking of the resting 

interest, subject to specified parameters. 

Proposed Rule 6.76AP–O(a)(1) would 

set forth the LMM Guarantee, which is 

substantively the same as the current 

LMM Guarantee, as described in Rule 

6.76A–O(a)(1). The Exchange proposes a 

substantive difference because on Pillar, 

the Exchange would no longer support 

Directed Order Market Makers or 

Directed Orders. Accordingly, rule text 

relating to Directed Order Market 

Makers or Directed Orders will not be 

included in proposed Rule 6.76AP–O.17

Proposed Rule 6.76AP–O(a)(1) would 

provide that an LMM would be entitled 

to an allocation guarantee when the 

execution price is equal to the NBB 

(NBO) and there is no displayed 

Customer interest in time priority at the 

NBBO in the Consolidated Book. In 

such cases, the Aggressing Order or 

Aggressing Quote would be matched 

against the quote of the LMM for an 

amount equal to 40% of the Aggressing 

Order or Aggressing Quote, up to the 

size of the LMM’s quote (the ‘‘LMM 

Guarantee’’). With respect to how the 

LMM Guarantee would function on 

Pillar, the Exchange does not propose 

any substantive differences from current 

Rule 6.76A–O(a)(1). 

Proposed Rule 6.76AP–O(a)(1)(A) 

proposes new functionality under Pillar 

and provides that if an LMM has more 

than one quote at a price, the LMM 

Guarantee would be applied among 

such quotes in time priority, provided 

there is no displayed Customer interest 

with time priority at each quote. 

Proposed Rule 6.76AP–O(a)(1)(B), 

which is substantively identical to 

current Rule 6.76A–O(a)(1)(B), would 

provide that if an LMM is entitled to an 

LMM Guarantee (pursuant to proposed 

paragraph (a)(1)) and the Aggressing 

Order or Aggressing Quote had an 

original size of five (5) contracts or 

fewer, then such order or quote would 

be matched against the quote of the 

LMM for an amount equal to 100%, up 

to the size of the LMM’s quote. The 

Exchange also proposes to add 

Commentary .01 to the proposed rule 

(which is substantively identical to 

Commentary .02 of current Rule 6.76A– 

O) to make clear that on a quarterly 

basis, the Exchange would evaluate 

what percentage of the volume executed 

on the Exchange comprised of orders for 

five (5) contracts or fewer that was 

allocated to LMMs and would reduce 

the size of the orders included in this 

provision if such percentage is over 

40%.18

Proposed Rule 6.76AP–O(a)(1)(C) 

would specify that if the result of 

applying the LMM Guarantee is a 

fractional allocation of contracts, the 

LMM Guarantee would be rounded 

down to the nearest contract and if the 

result of applying the LMM Guarantee 

results in less than one contract, the 

LMM Guarantee would be equal to one 

contract. The Exchange believes that 

including this additional detail in the 

proposed rule would add transparency 

to Exchange rules. 

Finally, the Exchange proposes Rule 

6.76AP–O(a)(1)(D), which would 

provide that after applying any LMM 

Guarantee, the Aggressing Order or 


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36448 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 

19The ability for a Market Order to be designated 

Day or GTC is based on current Rules 6.62–O(m) 

(describing a ‘‘Day Order’’) and 6.62–O(n) 

(describing a ‘‘Good-til-Cancelled Order’’ or ‘‘GTC 

Order’’) and Commentary .01 to Rule 6.62–O, which 

requires all orders to be either ‘‘day,’’ ‘‘immediate 

or cancel,’’ or ‘‘good ‘til cancelled.’’ As described 

in more detail below, on Pillar, the time-in-force 

designation, e.g., Day or GTC, would be a modifier 

that can be added to an order type and will not be 

described in the rules as a separate order type. 

Similar to Rule 7.31–E, the Exchange will specify 

which time-in-force designations are available for 

each order type. 

Aggressing Quote would be allocated 

pursuant to proposed paragraph (a) of 

this Rule, i.e., that such orders or quotes 

would be matched for execution against 

contra-side interest resting in the 

Consolidated Book according to pricetime priority. This proposed text is 

substantively identical to Rule 6.76A– 

O(a)(1)(C) and uses Pillar terminology. 

Consistent with the Exchange’s 

proposed approach to new Rule 6.76P– 

O, proposed Rule 6.76AP–O would not 

include references to specific order 

types and instead would state the 

Exchange’s general order execution 

methodology. Any exceptions to such 

general requirements would be set forth 

in connection with specific order or 

modifier definitions in proposed Rule 

6.62P–O, described below. 

Proposed Rule 6.76AP–O(b) would set 

forth the Exchange’s routing process and 

is intended to address the same subject 

as Rule 6.76A–O(c), which is currently 

referred to as ‘‘Step 3’’ in order 

processing, without any substantive 

differences. 

Proposed Rule 6.76AP–O(b) would 

provide that, absent an instruction not 

to route, the Exchange would route 

marketable orders to Away Market(s) 

after such orders are matched for 

execution with any contra-side interest 

in the Consolidated Book in accordance 

with proposed paragraph (a) of this Rule 

regarding Order Execution. Proposed 

Rule 6.76AP–O(b) also uses Pillar 

terminology based on current Rule 7.37– 

E(b), which governs the Exchange’s 

routing process on the Exchange’s cash 

equity platform. 

The proposed rule would then set 

forth additional details regarding 

routing: 

• Proposed Rule 6.76AP–O(b)(1) 

would provide that an order that cannot 

meet the pricing parameters of proposed 

Rule 6.76AP–O(a) may be routed to 

Away Market(s) before being matched 

for execution against contra-side interest 

in the Consolidated Book. The Exchange 

believes that this proposed rule text 

provides transparency that an order may 

be routed before being matched for 

execution, for example, to prevent 

locking or crossing or trading through 

the NBBO. This rule uses Pillar 

terminology based on Rule 7.37–E(b)(1), 

with no substantive differences. 

• Proposed Rule 6.76AP–O(b)(2) 

would provide that an order with an 

instruction not to route would be 

processed as provided for in proposed 

Rule 6.62P–O. As described in greater 

detail below, the Exchange proposes to 

describe how orders and quotes with an 

instruction not to route would be 

processed in proposed Rule 6.62P–O(e). 

• Proposed Rule 6.76AP–O(b)(3) 

would provide that any order or portion 

thereof that has been routed would not 

be eligible to trade on the Consolidated 

Book, unless all or a portion of the order 

returns unexecuted. This routing 

methodology is current functionality 

and covers that same subject as current 

Rule 6.76A–O(c)(2) with no substantive 

differences and is based in part on Pillar 

terminology used in Rule 7.37–E(b)(6). 

In contrast to Rule 6.76A–O(c)(2), 

however, the Exchange proposes that 

Rule 6.76AP–O(b)(3) would focus on the 

fact that once routed, an order would 

not be eligible to trade on the 

Consolidated Book, rather than stating 

the obvious that it would be subject to 

the routing destination’s trading rules 

once routed. In addition, because, as 

discussed above, the working time 

assigned to orders that are routed is 

being proposed to be addressed in new 

Rule 6.76P–O(f)(1)(A) and (B), the 

Exchange believes it would be 

unnecessary to restate this information 

in new Rule 6.76AP–O. 

• Proposed Rule 6.76AP–O(b)(4) 

would provide that requests to cancel an 

order that has been routed in whole or 

part would not be processed unless and 

until all or a portion of the order returns 

unexecuted. This proposed rule is based 

on Pillar terminology used in Rule 7.37– 

E(b)(7)(A) without any substantive 

differences. 

• Finally, proposed Rule 6.76AP–O(c) 

would provide that after trading with 

eligible contra-side interest on the 

Consolidated Book and/or returning 

unexecuted after routing to Away 

Market(s), any unexecuted nonmarketable portion of an order would be 

ranked consistent with new Rule 6.76P– 

O. This rule represents current 

functionality and is based on Rule 

6.76A–O generally and paragraph 

(c)(2)(C) as it pertains to orders that 

were routed away without any 

substantive differences. This proposed 

rule is also based on Pillar terminology 

used in Rule 7.37–E(c) without any 

substantive differences. 

The Exchange believes that the 

specific routing methodologies for an 

order type or modifier should be 

included with how the order type is 

defined, which will be in proposed Rule 

6.62P–O. Accordingly, the Exchange 

does not believe it needs to specify in 

proposed Rule 6.76AP–O whether an 

order is eligible to route, and if so, 

whether there are any specific routing 

instructions applicable to the order and 

therefore will not be carrying over such 

specifics that are currently included in 

Rule 6.76A–O. 

In connection with proposed Rule 

6.76AP–O, the Exchange proposes to 

add the following preamble to Rule 

6.76A–O: ‘‘This Rule will not be 

applicable to trading on Pillar.’’ This 

proposed preamble is designed to 

promote clarity and transparency in 

Exchange rules that Rule 6.76A–O 

would not be applicable to trading on 

Pillar. 

Proposed Rule 6.62P–O: Orders and 

Modifiers 

Current Rule 6.62–O (Certain Types of 

Orders Defined) defines the order types 

that are currently available for options 

trading both on the OX system and for 

open outcry trading on the Exchange. 

The Exchange proposes that new Rule 

6.62P–O would set forth the order types 

and modifiers that would be available 

for options trading both on Pillar (i.e., 

electronic order entry) and in open 

outcry trading. The Exchange proposes 

to specify that Rule 6.62–O would not 

be applicable to trading on Pillar. 

Because certain order types and 

modifiers that would be available for 

options trading on Pillar are based on, 

or similar to, order types and modifiers 

available on the Exchange’s cash equity 

market, the Exchange proposes to 

structure proposed Rule 6.62P–O based 

on Rule 7.31–E and use similar 

terminology. The Exchange also 

proposes to title proposed Rule 6.62P– 

O as ‘‘Orders and Modifiers,’’ which is 

the title of Rule 7.31–E. 

Primary Order Types. Proposed Rule 

6.62P–O(a) would specify the 

Exchange’s primary order types, which 

would be Market Orders and Limit 

Orders, and is based on Rule 7.31–E(a), 

which sets forth the Exchange’s cash 

equity primary order types. Similar to 

Rule 7.31–E(a), proposed Rule 6.62P– 

O(a) would also set forth the Exchange’s 

proposed Limit Order Price Protection 

functionality and Trading Collars. 

Market Orders. Proposed Rule 6.62P– 

O(a)(1) would define a Market Order as 

an unpriced order message to buy or sell 

a stated number of option contracts at 

the best price obtainable, subject to the 

Trading Collar assigned to the order, 

and would further specify that 

unexecuted Market Orders may be 

designated Day or GTC, which 

represents current functionality,19 and 


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20See discussion supra, regarding the proposed 

Rule 1.1 definition of ‘‘NBBO.’’ 

21The Exchange will also reject a Market Order 

if it is entered when the underlying NMS stock is 

either in a Limit State or a Straddle State, which 

is current functionality. See Rule 6.65A–O(a)(1). 

The Exchange proposes a non-substantive 

amendment to Rule 6.65A–O(a)(1) to add a cross 

reference to proposed Rule 6.62P–O(a)(1). The 

Exchange also proposes to amend the second 

sentence of Rule 6.65A–O(a)(1) to remove 

references to trading collars, and instead specify 

that the Exchange would cancel any resting Market 

Orders if the underlying NMS stock enters a Limit 

State or a Straddle State and would notify OTP 

Holders of the reason for such cancellation. This 

proposed change would describe both how Market 

Orders function today on the OX system and how 

they would be processed on Pillar. 

22As described above for proposed Rule 6.76P– 

O(b)(3), displayed interest other than displayed 

Market Orders would stand their ground if locked 

or crossed by an Away Market. The Exchange 

would provide an option for Limit Orders to instead 

be routed, see discussion infra, regarding proposed 

Rule 6.62P–O(i)(1) and the proposed Proactive if 

Locked/Crossed Modifier. 

that unexecuted Market Orders would 

be ranked Priority 1—Market Orders. 

This proposed rule text uses Pillar 

terminology similar to Rule 7.31–E(a)(1), 

but with differences to reflect options 

trading. 

Proposed Rule 6.62P–O(a)(1) would 

further provide that for purposes of 

processing Market Orders, the Exchange 

would not use an adjusted NBBO.20 On 

the Exchange’s cash equity market, the 

Exchange does not use an adjusted 

NBBO when processing Market Orders. 

The Exchange proposes to similarly not 

use an adjusted NBBO when processing 

Market Orders on its options market. 

Proposed Rule 6.62P–O(a)(1)(A) 

would provide that a Market Order that 

arrives during continuous trading would 

be rejected, or that was routed, returns 

unexecuted, and has no resting quantity 

to join would be cancelled if it fails the 

validations specified in proposed Rule 

6.62P–O(a)(1)(A)(i)—(iv). This proposed 

rule is based in part on Rule 6.62–O(a), 

which specifies circumstances when a 

Market Order will be rejected during 

Core Trading Hours, with differences to 

use Pillar terminology and to modify the 

circumstances when a Market Order 

would be rejected. As proposed, a 

Market Order would be rejected (or 

cancelled if routed first) if:21

• There is no NBO (proposed Rule 

6.62P–O(a)(1)(A)(i)). 

• There is no NBB and the NBO is 

higher than $0.50 (for sell Market 

Orders only). The Exchange further 

proposes that if there is no NBB and the 

NBO is $0.50 or below, a Market Order 

to sell would not be rejected and would 

have a working price and display price 

one MPV above zero and would not be 

subject to a Trading Collar (proposed 

Rule 6.62P–O(a)(1)(A)(ii)). The proposed 

rule would further provide that a Market 

Order to sell would be cancelled if it 

was assigned a Trading Collar, routed, 

and when it returns unexecuted, it has 

no resting portion to join and there is no 

NBB, regardless of the price of the NBO. 

Accordingly, in this scenario, if there 

were no NBB and an NBO that is $0.50 

or below, the returned, unexecuted 

Market Order would be cancelled rather 

than displayed at one MPV above zero. 

• There are no contra-side Market 

Maker quotes on the Exchange or 

contra-side Away Market NBBO, 

provided that a Market Order to sell 

would be accepted as provided for in 

proposed Rule 6.62P–O(a)(1)(A)(ii) 

(proposed Rule 6.62P–O(a)(1)(A)(iii)). 

• The NBBO is not locked or crossed 

and the spread is equal to or greater 

than a minimum amount based on the 

midpoint of the NBBO (proposed Rule 

6.62P–O(a)(1)(A)(iv)). The proposed 

‘‘wide-spread’’ parameter is based in 

part on Rule 6.87–O(b)(3) with two 

differences. First, the first bucket would 

include $2.00, instead of capping at 

$1.99, and second, the wide-spread 

calculation would be based off of the 

midpoint of the NBBO, rather than off 

of the bid price, as follows: 

The midpoint of the NBBO Spread 

parameter 

$0.00 to $2.00 ...................... $0.75 

Above $2.00 to and including 

$5.00 ................................. 1.25 

Above $5.00 to and including 

$10.00 ............................... 1.50 

Above $10.00 to and including $20.00 ......................... 2.50 

Above $20.00 to and including $50.00 ......................... 3.00 

Above $50.00 to and including $100.00 ....................... 4.50 

Above $100.00 ..................... 6.00 

Proposed Rule 6.62P–O(a)(1)(B) 

would provide that an Aggressing 

Market Order to buy (sell) would trade 

with all orders or quotes to sell (buy) on 

the Consolidated Book priced at or 

below (above) the Trading Collar before 

routing to Away Market(s) at each price. 

Proposed Rule 6.62P–O(a)(1)(B) would 

further provide that after trading or 

routing, or both, a Market Order would 

be displayed at the Trading Collar, 

subject to proposed Rule 6.62P– 

O(a)(1)(C), which is consistent with 

current functionality that Market Orders 

would be displayed at a trading collar, 

per Rule 6.60–O(a)(5). 

Proposed Rule 6.62P–O(a)(1)(C) 

would provide that a Market Order 

would be cancelled before being 

displayed if there are no remaining 

contra-side Market Maker quotes on the 

Exchange or contra-side Away Market 

NBBO. Proposed Rule 6.62P–O(a)(1)(D) 

would provide that a Market Order 

would be cancelled after being 

displayed at its Trading Collar if there 

ceases to be a contra-side NBBO. These 

proposed cancellation events are based 

on a subset of the scenarios of when a 

Market Order would have been rejected 

on arrival, and the Exchange believes it 

is appropriate to cancel a Market Order 

either before it is displayed, or after it 

is displayed, in these circumstances in 

order to prevent the potential for such 

order to be displayed when there is no 

real market in a series. 

Finally, proposed Rule 6.62P– 

O(a)(1)(E) would provide that a resting, 

displayed Market Order that is locked or 

crossed by an Away Market would be 

routed to that Away Market. Because 

Market Orders are intended to obtain 

the best price obtainable, the Exchange 

proposes to route displayed Market 

Orders if they are locked or crossed by 

an Away Market.22

Limit Orders. Proposed Rule 6.62P– 

O(a)(2) would define a Limit Order as an 

order message to buy or sell a stated 

number of option contracts at a 

specified price or better, subject to Limit 

Order Price Protection and the Trading 

Collar assigned to the order, and that a 

Limit Order may be designated Day, 

IOC, or GTC. In addition, unless 

otherwise specified, the working price 

and the display price of a Limit Order 

would be equal to the limit price of the 

order, it is eligible to be routed, and it 

would be ranked Priority 2—Display 

Orders. This proposed rule text uses 

Pillar terminology that is based in part 

on Rule 7.31–E(a)(2). The ability for a 

Limit Order to be designated Day, IOC, 

or GTC is based on current Rules 6.62– 

O(m) and 6.62–O(n). In addition, 

marketable limit orders are currently 

subject to trading collars. 

Proposed Rule 6.62P–O(a)(2)(A) 

would provide that a marketable Limit 

Order to buy (sell) received by the 

Exchange would trade with all orders 

and quotes to sell (buy) on the 

Consolidated Book priced at or below 

(above) the NBO (NBB) before routing to 

an Away Market NBO (NBB) and may 

route to prices higher (lower) than the 

NBO (NBB) only after trading with 

orders and quotes to sell (buy) on the 

Consolidated Book at each price point, 

and once no longer marketable, the 

Limit Order would be ranked and 

displayed on the Consolidated Book. 

This proposed rule text is based on Rule 

7.31–E(a)(2)(A), with non-substantive 

differences to use terminology specific 

to options trading. 

Limit Order Price Protection. The 

Exchange proposes to describe its 


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23See discussion infra, regarding proposed Rule 

6.64P–O(a) and proposed definitions for the terms 

‘‘Auction,’’ ‘‘Auction Price,’’ ‘‘Auction Collar,’’ 

‘‘pre-open state,’’ and ‘‘Trading Halt Auction.’’ 

24References to the NBBO, NBB, and NBO in 

Rule 7.31–E refer to using a determination of the 

national best bid and offer that has not been 

adjusted. 

25See, e.g., CBOE Exchange, Inc. (‘‘Cboe’’) Rule 

5.34(a)(4) (describing the ‘‘Drill-Through 

Protection’’ and that Cboe ‘‘determines the buffer 

amount on a class and premium basis’’); and the 

Nasdaq Stock Market LLC (‘‘Nasdaq’’) Options 3, 

Section 15(a)(1)(B) (specifying that ‘‘Order Price 

Protection’’ can be a configurable dollar amount 

specified by Nasdaq and announced via an Options 

Trader Alert). 

26See Rule 6.60–O(a)(3) (‘‘Trade Collar Protection 

does not apply to quotes, IOC Orders, AON Orders, 

FOK Orders, and NOW Orders.’’). 

proposed Limit Order Price Protection 

functionality in proposed Rule 6.62P– 

O(a)(3). On the OX system, the concept 

of ‘‘Limit Order Price Protection’’ for 

orders is set forth in Rule 6.60–O(b) and 

is called the ‘‘Limit Order Filter.’’ For 

quotes, price protection filters are 

described in Rule 6.61–O. The proposed 

‘‘Limit Order Price Protection’’ on Pillar 

would be applicable to both Limit 

Orders and quotes and would work 

similarly to how the current price 

protection mechanisms function on the 

OX system in that a Limit Order or 

quote would be rejected if it is priced a 

specified percentage away from the 

contra-side NBB or NBO. However, on 

Pillar, the Exchange proposes to use 

new thresholds and reference prices that 

would be applicable to both orders and 

quotes. 

Proposed Rule 6.62P–O(a)(3)(A) 

would provide that each trading day, a 

Limit Order or quote to buy (sell) would 

be rejected or cancelled (if resting) if it 

is priced at a ‘‘Specified Threshold,’’ 

described below, above (below) the 

Reference Price, rounded down to the 

nearest price within the MPV for the 

Series (‘‘Limit Order Price Protection’’). 

In other words, a Limit Order 

designated GTC would be re-evaluated 

for Limit Order Price Protection on each 

day that it is eligible to trade and would 

be cancelled if the limit price is through 

the Specified Threshold. In addition, 

the rounding feature is based on how 

Limit Order Price Protection is 

calculated on the Exchange’s cash 

equity market if it is not within the MPV 

for the security, as described in the last 

sentence of Rule 7.31–E(a)(2)(B). The 

proposed rule would further provide 

that Cross Orders and Limit-on-Open 

(‘‘LOO’’) Orders (described below) 

would not be subject to Limit Order 

Price Protection and that Limit Order 

Price Protection would not be applied to 

a Limit Order or quote if there is no 

Reference Price. 

• Proposed Rule 6.62P–O(a)(3)(A)(i) 

would provide that a Limit Order or 

quote that arrives when a series is open 

would be evaluated for Limit Order 

Price Protection on arrival. 

• Proposed Rule 6.62P–O(a)(3)(A)(ii) 

would provide that a Limit Order or 

quote received during a pre-open state 

would be evaluated for Limit Order 

Price Protection after an Auction 

concludes.23

• Proposed Rule 6.62P–O(a)(3)(A)(iii) 

would provide that a Limit Order or 

quote that was resting on the 

Consolidated Book before a trading halt 

would be evaluated for Limit Order 

Price Protection again after the Trading 

Halt Auction concludes. 

Proposed Rule 6.62P–O(a)(3)(B) 

would specify that the Reference Price 

for calculating Limit Order Price 

Protection for an order or quote to buy 

(sell) would be the NBO (NBB), 

provided that, immediately following an 

Auction, the Reference Price would be 

the Auction Price, or if none, the upper 

(lower) Auction Collar price, or, if none, 

the NBO (NBB). The Exchange believes 

that adjusting the Reference Price for 

Limit Order Price Protection 

immediately following an Auction 

would ensure that the most up-to-date 

price would be used to assess whether 

to cancel a Limit Order that was 

received during a pre-open state or 

would be reevaluated after a Trading 

Halt Auction. The Exchange further 

proposes that for purposes of calculating 

Limit Order Price Protection, the 

Exchange would not use an adjusted 

NBBO, which is based on how Limit 

Order Price Protection currently 

functions on the Exchange’s cash equity 

market, as described in Rule 7.31– 

E(a)(2)(B).24

Proposed Rule 6.62P–O(a)(3)(C) 

would specify the Specified Threshold 

and would provide that unless 

determined otherwise by the Exchange 

and announced to OTP Holders and 

OTP Firms by Trader Update, the 

Specified Threshold applicable to Limit 

Order Price Protection would be: 

Reference price Specified 

threshold 

$0.00 to $1.00 ...................... $0.30 

$1.01 to $10.00 .................... 50% 

$10.01 to $20.00 .................. 40% 

$20.01 to $50.00 .................. 30% 

$50.01 to $100.00 ................ 20% 

$100.01 and higher .............. 10% 

The Exchange believes that the 

proposed thresholds are more granular 

than those currently specified in Rules 

6.60–O(b) (for orders) and 6.61– 

O(a)(1)(A) and (B) (for quotes) and 

therefore determining whether to reject 

a Limit Order or quote will be more 

tailored to the applicable Reference 

Price. In addition, consistent with Rules 

6.60–O(b) and 6.61–O(a)(1), the 

Exchange proposes that these thresholds 

could change, subject to announcing the 

changes by Trader Update. Providing 

flexibility in Exchange rules regarding 

how the Specified Thresholds would be 

set is consistent with the rules of other 

options exchanges.25

Trading Collar. Trading Collars on the 

OX system are currently described in 

Rule 6.60–O(a). Under the current rules, 

incoming Market Orders and marketable 

Limit Orders are limited in having an 

immediate execution if they would 

trade at a price greater than one 

‘‘Trading Collar.’’ A collared order is 

displayed at that price and then can be 

repriced to new collars as the NBBO 

updates. On Pillar, the Exchange 

proposes new Trading Collar 

functionality. 

Unlike current functionality, which 

permits a collared order to be repriced, 

as proposed, a Market Order or Limit 

Order would be assigned a single 

Trading Collar that would be applicable 

to that order until it is fully executed or 

cancelled. The new proposed Trading 

Collar would function as a ceiling (for 

buy orders) or floor (for sell orders) of 

the price at which such order could be 

traded, displayed, or routed. The 

Exchange further proposes that when an 

order is working at its assigned Trading 

Collar, it would cancel if not executed 

within a specified time period. 

Proposed Rule 6.62P–O(a)(4) would 

provide that a Market Order or Limit 

Order to buy (sell) would not trade or 

route to an Away Market at a price 

above (below) the Trading Collar 

assigned to that order. As further 

proposed, Auction-Only Orders, Limit 

Orders designated IOC or FOK, Cross 

Orders, ISOs, and Market Maker quotes 

would not be subject to Trading Collars, 

which is consistent with current 

functionality.26 In addition, Trading 

Collars would not be applicable during 

Auctions. 

Proposed Rule 6.62P–O(a)(4)(A) 

would provide that a Trading Collar 

assigned to an order would be 

calculated once per trading day and 

would not be updated. Accordingly, an 

order designated GTC would receive a 

new Trading Collar each day, but that 

Trading Collar would not be updated 

intraday. The rule would further 

provide that a Market Order or Limit 

Order that is received during 

continuous trading would be assigned a 

Trading Collar before being processed 

for either trading, repricing, or routing 


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and that an order that is routed on 

arrival and returned unexecuted would 

use the Trading Collar assigned upon 

arrival. In addition, a Market Order or 

Limit Order received during a pre-open 

state would be assigned a Trading Collar 

after an Auction concludes. 

Proposed Rule 6.62P–O(a)(4)(B) 

would provide that the Reference Price 

for calculating the Trading Collar for an 

order to buy (sell) would be the NBO 

(NBB). The proposed rule would further 

provide that for Auction-eligible orders 

to buy (sell) that were received during 

a pre-open state and are assigned a 

Trading Collar after the Auction 

concludes, the Reference Price would be 

the Auction Price or, if none, the upper 

(lower) Auction Collar price or, if none, 

the NBO (NBB). For purposes of 

calculating a Trading Collar, the 

Exchange would not use an adjusted 

NBBO. Proposed Rule 6.62P– 

O(a)(4)(B)(i) would further provide that 

a Trading Collar would not be assigned 

to a Limit Order if there is no Reference 

Price at the time of calculation. And 

proposed Rule 6.62P–O(a)(4)(B)(ii) 

would provide that after an Auction, if 

a Market Order has not already been 

assigned a Trading Collar and there is 

no Reference Price, the order would be 

cancelled. 

Proposed Rule 6.62P–O(a)(4)(C) 

would describe how the Trading Collar 

would be calculated and would provide 

that the Trading Collar for an order to 

buy (sell) would be a specified amount 

above (below) the Reference Price, as 

follows: (1) For orders with a Reference 

Price of $1.00 or lower, $0.25; or (2) for 

orders with a Reference Price above 

$1.00, the lower of $2.50 or 25%. 

Proposed Rule 6.62P–O(a)(4)(C)(i) 

would further provide that if the 

calculation of a Trading Collar would 

not be in the MPV for the series, it 

would be rounded down to the nearest 

price within the applicable MPV (this 

proposed functionality is based on how 

Trading Collars are calculated on the 

Exchange’s cash equity market, as 

described in Rule 7.31–E(a)(1)(B)). 

Proposed Rule 6.62P–O(a)(4)(C)(ii) 

would further provide that for orders to 

sell, if subtracting the Trading Collar 

from the Reference Price would result in 

a negative number, the Trading Collar 

for Limit Orders would be the limit 

price and the Trading Collar for Market 

Orders would be one MPV above zero. 

Proposed Rule 6.62P–O(a)(4)(D) 

would describe how the Trading Collar 

would be applied and would provide 

that if an order to buy (sell) would trade 

or route above (below) the Trading 

Collar or would have its working price 

repriced to a Trading Collar that is 

below (above) its limit price, the order 

would be added to the Consolidated 

Book at the Trading Collar for 500 

milliseconds and if not traded within 

that period, would be cancelled. In 

addition, once the 500-millisecond 

timer begins for an order, the order 

would be cancelled at the end of the 

timer even if it repriced or has been 

routed to an Away Market during that 

period, in which case any portion of the 

order that is returned unexecuted would 

be cancelled. 

The Exchange believes that the 

proposed Trading Collar functionality is 

designed to provide a similar type of 

order protection as is currently available 

(as described in Rule 6.60–O(a)) because 

it would limit the price at which a 

marketable order could be traded, 

routed, or displayed. The Exchange 

believes that the proposed differences 

are designed to simplify the 

functionality by applying a static ceiling 

price (for buy orders) or floor price (for 

sell orders) at which such order could 

be traded or routed that would be 

determined at the time of entry, and 

would be applicable to the order until 

it is traded or cancelled. The Exchange 

believes that the proposed functionality 

would provide greater determinism to 

an OTP Holder or OTP Firm of the 

Trading Collar that would be applicable 

to a Market Order or Limit Order and 

when such order may be cancelled if it 

reaches its Trading Collar. 

Time in Force Modifiers. Proposed 

Rule 6.62P–O(b) would set forth the 

time-in-force modifiers that would be 

available for options trading on Pillar 

and is based on Rule 7.31–E(b). The 

Exchange proposes to offer the same 

time-in-force modifiers that are 

currently available for options trading 

on the Exchange and use Pillar 

terminology to describe the 

functionality. As noted above, the 

Exchange proposes to describe the Time 

in Force Modifiers in proposed Rule 

6.62P–O(b), and then specify for each 

order type which Time in Force 

Modifiers would be available for such 

orders or quotes. 

Day Modifier. Proposed Rule 6.62P– 

O(b)(1) would provide that any order or 

quote to buy or sell designated Day, if 

not traded, would expire at the end of 

the trading day on which it was entered 

and that a Day Modifier cannot be 

combined with any other Time in Force 

Modifier. This proposed rule text is 

based on Rule 7.31–E(b)(1) with one 

difference to reference ‘‘quotes’’ in 

addition to orders. This proposed 

functionality would operate no 

differently than how a ‘‘Day Order,’’ as 

described in Rule 6.62–O(m), currently 

functions. 

Immediate-or-Cancel (‘‘IOC’’) 

Modifier. Proposed Rule 6.62P–O(b)(2) 

would provide that a Limit Order may 

be designated IOC or Routable IOC, as 

described in proposed Rules 6.62P– 

O(b)(2)(A) and (B) and that a Limit 

Order designated IOC would not be 

eligible to participate in any Auctions. 

This proposed rule text is based on the 

first and third sentences of Rule 7.31– 

E(b)(2) without any differences and is 

also based on current functionality. The 

Exchange proposes to use Pillar 

terminology based on Rule 7.31–E(b)(2) 

to describe this functionality. 

Proposed Rule 6.62P–O(b)(2)(A) 

would define a ‘‘Limit IOC Order’’ as a 

Limit Order designated IOC that would 

be traded in whole or in part on the 

Exchange as soon as such order is 

received, and the unexecuted quantity 

would be cancelled and that a Limit IOC 

Order does not route. This proposed 

rule text is based on Rule 7.31– 

E(b)(2)(A) without any substantive 

differences. The proposed Pillar Limit 

IOC Order would function the same as 

an ‘‘Immediate-or-Cancel Order (IOC 

Order),’’ as currently described in Rule 

6.62–O(k), without any differences. 

Proposed Rule 6.62P–O(b)(2)(B) 

would define a ‘‘Limit Routable IOC 

Order’’ as a Limit Order designated 

Routable IOC that would be traded in 

whole or in part on the Exchange as 

soon as such order is received, and the 

unexecuted quantity routed to Away 

Market(s) and that any quantity not 

immediately traded either on the 

Exchange or an Away Market would be 

cancelled. This proposed rule text is 

based on Rule 7.31–E(b)(2)(B) without 

any substantive differences. The 

proposed Pillar Limit Routable IOC 

Order is also based on the ‘‘NOW 

Order,’’ as currently described in Rule 

6.62–O(o) and uses Pillar terminology. 

Fill-or-Kill (‘‘FOK’’) Modifier. 

Proposed Rule 6.62P–O(b)(3) would 

provide that a Limit Order designated 

FOK would be traded in whole on the 

Exchange as soon as such order is 

received, and if not so traded is to be 

cancelled and that a Limit Order 

designated FOK does not route and does 

not participate in any Auctions. The 

Exchange does not offer the FOK 

Modifier on its cash equity market, and 

this proposed rule uses Pillar 

terminology to offer the same 

functionality that is currently described 

in Rule 6.62–O(l) as the ‘‘Fill-or-Kill 

Order (FOK Order)’’ without any 

substantive differences. 

Good-‘Til-Cancelled (‘‘GTC’’) 

Modifier. Proposed Rule 6.62P–O(b)(4) 

would provide that a Limit or Market 

Order designated GTC remains in force 

until the order is filled, cancelled, the 


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27See discussion infra, regarding proposed Rule 

6.64P and definitions relating to Auctions. 

28For example, as described in more detail below, 

the proposed Non-Routable Limit Order would be 

eligible to be repriced only once after it is resting 

in the Consolidated Book (see proposed Rule 6.62P– 

O(e)(1)). If the display quantity of a Non-Routable 

Limit Order that is combined with a Reserve Orders 

has already been repriced and is no longer eligible 

to be repriced, and the Away Market NBBO adjusts, 

the reserve quantity would not adjust to a price that 

would be more aggressive than the working price 

of the display quantity of the order. 

MPV in the series changes overnight, 

the option contract expires, or a 

corporate action results in an 

adjustment to the terms of the option 

contract. The Exchange does not offer 

the GTC Modifier on its cash equity 

market, and this proposed rule uses 

Pillar terminology to offer the same 

functionality that is currently described 

in Rule 6.62–O(n) as the ‘‘Good-TillCancelled (GTC Order)’’ without any 

substantive differences. 

Auction-Only Orders. Proposed Rule 

6.62P–O(c) would define an ‘‘AuctionOnly Order’’ as a Limit Order or Market 

Order that is to be traded only in an 

Auction pursuant to Rule 6.64P–O,27

which is text based on Rule 7.31–E(c). 

The proposed rule would further 

provide that an Auction-Only Order 

would not be accepted when a series is 

opened for trading and any portion of an 

Auction-Only Order that is not traded in 

a Core Open Auction or Trading Halt 

Auction would be cancelled. This 

represents current functionality and is 

based in part on the last sentence of 

Rule 7.31–E(c)(1), the last sentence of 

Rule 7.31–E(c)(2), and the last sentence 

of Rule 6.62–O(r), which defines an 

‘‘Opening Only Order.’’ 

Proposed Rule 6.62P–O(c)(1) would 

define a ‘‘Limit-on-Open Order (‘LOO 

Order’)’’ as a Limit Order that is to be 

traded only in an Auction. This 

proposed rule uses Pillar terminology 

based on Rule 7.31–E(c)(1) to describe 

functionality that would be no different 

from current functionality, as described 

in Rule 6.62–O(r). 

Proposed Rule 6.62P–O(c)(2) would 

define a ‘‘Market-on-Open Order (‘MOO 

Order’)’’ as a Market Order that is to be 

traded only in an Auction. This 

proposed rule uses Pillar terminology 

based on Rule 7.31–E(c)(2) to describe 

functionality that would be no different 

from current functionality, as described 

in Rule 6.62–O(r). 

Proposed Rule 6.62P–O(c)(3) would 

define an ‘‘Imbalance Offset Order (‘IO 

Order’).’’ The Exchange currently offers 

an IO Order for participation in Trading 

Halt Auctions on its cash equity market 

but does not offer this order type for 

options trading on the OX system. For 

cash equity trading, the IO Order is a 

conditional order type that is eligible to 

participate in a Trading Halt Auction 

only if it would offset the imbalance. 

For options trading on Pillar, the 

Exchange proposes to offer the IO Order 

for both Core Open Auctions and 

Trading Halt Auctions. 

As proposed, the IO Order would 

function no differently than how an IO 

Order currently functions on the 

Exchange’s cash equity market. 

Accordingly, proposed Rule 6.62P– 

O(c)(3) would define an IO Order as a 

Limit Order that is to be traded only in 

an Auction, which is based in part on 

Rule 7.31–E(c)(5). 

• Proposed Rule 6.62P–O(c)(3)(A) 

would provide that an IO Order would 

participate in an Auction only if: (1) 

There is an Imbalance in the series on 

the opposite side of the market from the 

IO Order after taking into account all 

other orders and quotes eligible to trade 

at the Indicative Match Price; and (2) 

the limit price of the IO Order to buy 

(sell) would be at or above (below) the 

Indicative Match Price. This proposed 

text is based on Rule 7.31–E(c)(5)(B) 

without any substantive differences. 

• Proposed Rule 6.62P–O(c)(3)(B) 

would provide that the working price of 

an IO Order to buy (sell) would be 

adjusted to be equal to the Indicative 

Match Price, provided that the working 

price of an IO Order would not be 

higher (lower) than its limit price. This 

proposed text is based on Rule 7.31– 

E(c)(5)(C) without any differences. 

Orders with a Conditional or 

Undisplayed Price and/or Size. 

Proposed Rule 6.62P–O(d) would set 

forth the orders with a conditional or 

undisplayed price and/or size that 

would be available for options trading 

on Pillar. On Pillar, the Exchange 

proposes to offer the same type of orders 

that are available in the OX system and 

that are currently described in Rule 

6.62–O(d) as a ‘‘Contingency Order or 

Working Order,’’ with changes as 

described below. 

Reserve Order. Reserve Orders are 

currently defined in Rule 6.62–O(d)(3). 

The Exchange proposes that for options 

traded on Pillar, Reserve Orders would 

function similarly to how Reserve 

Orders function on its cash equity 

market, as described in Rule 7.31– 

E(d)(1). Accordingly, the Exchange 

proposes that proposed Rule 6.62P– 

O(d)(1), which would define Reserve 

Orders for options trading on Pillar, 

would be based on Rule 7.31–E(d)(1), 

with differences only to reflect 

differences in options and cash equity 

trading. For example, options trading 

does not have a concept of ‘‘round lot’’ 

or ‘‘odd lot’’ trading, and therefore the 

proposed options trading version of the 

Rule would not include description of 

behavior that correlates to such 

functionality. 

Proposed Rule 6.62P–O(d)(1) would 

define a Reserve Order as a Limit Order 

with a quantity of the size displayed 

and with a reserve quantity of the size 

(‘‘reserve interest’’) that is not displayed 

and that the displayed quantity of a 

Reserve Order is ranked Priority 2— 

Display Orders and the reserve interest 

is ranked Priority 3—Non-Display 

Orders. This proposed rule text is based 

on Rule 7.31–E(d)(1) without any 

differences. Proposed Rule 6.62P– 

O(d)(1) would further provide that both 

the display quantity and the reserve 

interest of an arriving marketable 

Reserve Order would be eligible to trade 

with resting interest in the Consolidated 

Book or route to Away Markets, unless 

designated as a Non-Routable Limit 

Order, which is based on the third 

sentence of Rule 7.31–E(d)(1) with a 

non-substantive difference to add 

reference to Non-Routable Limit Order. 

Proposed Rule 6.62P–O(d)(1) would 

further provide that the working price of 

the reserve interest of a resting Reserve 

Order to buy (sell) would be adjusted in 

the same manner as a Non-Displayed 

Limit Order, as provided for in 

paragraph (d)(2)(A) of this Rule, 

provided that it would never be priced 

higher (lower) than the working price of 

the display quantity of the Reserve 

Order. This proposed rule text is based 

on the last sentence of Rule 7.31–E(d)(1) 

with one difference to reference that the 

reserve interest could never have a 

working price that is more aggressive 

than the working price of the display 

quantity of the Reserve Order, which 

would be new functionality on Pillar 

designed to ensure that the reserve 

interest of a Reserve Order to buy (sell) 

would never trade at a price higher 

(lower) than the working price of the 

display quantity of the Reserve Order.28

• Proposed Rule 6.62P–O(d)(1)(A) 

would provide that the displayed 

portion of a Reserve Order would be 

replenished when the display quantity 

is decremented to zero and that the 

replenish quantity would be the 

minimum display size of the order or 

the remaining quantity of the reserve 

interest if it is less than the minimum 

display quantity. This proposed rule 

text is based on Rule 7.31–E(d)(1)(A) 

with differences to reflect that options 

are not traded in ‘‘round lots’’ or ‘‘odd 

lots.’’ Accordingly, the Exchange would 

not replenish a Reserve Order on the 

options trading platform until the 

display portion is fully decremented. 

• Proposed Rule 6.62P–O(d)(1)(B) 

would provide that each time the 


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29The Exchange notes that a Non-Displayed Limit 

Order would function similarly to a PNP Blind 

Order that locks or crosses the contra-side NBBO. 

In such case, a PNP Blind Order would not be 

displayed, as described in Rule 6.62–O(u) (‘‘if the 

PNP Blind Order would lock or cross the NBBO, the 

price and size of the order will not be 

disseminated’’). 

display quantity of a Reserve Order is 

replenished from reserve interest, a new 

working time would be assigned to the 

replenished quantity. This proposed 

rule text is based in part on Rule 7.31– 

E(d)(1)(B) with differences to reflect that 

for options traded on Pillar, there would 

never be more than one display quantity 

of a Reserve Order, and therefore the 

Exchange would not have different 

‘‘child’’ display quantities of a Reserve 

Order with different working times, as 

could occur for a Reserve Order on the 

Exchange’s cash equity trading platform. 

• Proposed Rule 6.62P–O(d)(1)(C) 

would provide that a Reserve Order may 

be designated as a Non-Routable Limit 

Order and if so designated, the reserve 

interest that replenishes the display 

quantity would be assigned a display 

price and working price consistent with 

the instructions for the order. This 

proposed rule text is based on Rule 

7.31–E(d)(1)(B)(ii) without any 

substantive differences. 

• Proposed Rule 6.62P–O(d)(1)(D) 

would provide that a routable Reserve 

Order would be evaluated for routing 

both on arrival and each time the 

display quantity is replenished. 

Proposed Rule 6.62P–O(d)(1)(D)(i) 

would provide that if routing is 

required, the Exchange would route 

from reserve interest before publishing 

the display quantity. And proposed 

Rule 6.62P–O(d)(1)(D)(ii) would provide 

that any quantity of a Reserve Order that 

is returned unexecuted would join the 

working time of the reserve interest and 

that if there is no reserve interest to join, 

the returned quantity would be assigned 

a new working time. This proposed rule 

text is based on Rule 7.31–E(d)(1)(D) 

and subparagraphs (i) and (ii) with 

differences to reflect that there is no 

concept of round lots or multiple child 

display orders for options trading. 

• Proposed Rule 6.62P–O(d)(1)(E) 

would provide that a request to reduce 

the size of a Reserve Order would cancel 

the reserve interest before cancelling the 

display quantity. This proposed rule 

text is based on Rule 7.31–E(d)(1)(E) 

with differences only to reflect that 

there would not be more than one child 

display order for options trading of 

Reserve Orders on Pillar. 

• Proposed Rule 6.62P–O(d)(1)(F) 

would provide that a Reserve Order may 

be designated Day or GTC, but it may 

not be designated as an ALO Order. This 

proposed rule text is based in part on 

Rule 7.31–E(d)(1)(C), with differences to 

reflect that the GTC Modifier would be 

available for Reserve Orders trading on 

the Pillar options trading platform and 

that Primary Pegged Orders would not 

be available for options traded on Pillar. 

Non-Displayed Limit Order. The 

Exchange proposes to offer the NonDisplayed Limit Order for options 

trading on Pillar, which would be new 

for options trading and is based on the 

existing Non-Displayed Limit Order as 

described in Rule 7.31–E(d)(2).29

Proposed Rule 6.62P–O(d)(2) would 

define a Non-Displayed Limit Order as 

a Limit Order that is not displayed, does 

not route, and is ranked Priority 3— 

Non-Display Orders; and that a NonDisplayed Limit Order may be 

designated Day or GTC and would not 

participate in any Auctions. This 

proposed rule text is based on Rule 

7.31–E(d)(2) with differences to reflect 

that the GTC Time-in-Force Modifier is 

available for options trading on Pillar. 

• Proposed Rule 6.62P–O(d)(2)(A) 

would provide that the working price of 

a Non-Displayed Limit Order would be 

assigned on arrival and adjusted when 

resting on the Consolidated Book and 

that the working price of a NonDisplayed Limit Order to buy (sell) 

would be the lower (higher) of the limit 

price or the NBO (NBB). This proposed 

rule text is based on Rule 7.31– 

E(d)(2)(A) with non-substantive 

differences to reference the 

Consolidated Book instead of the NYSE 

Arca Book and to streamline the rule 

text without any substantive differences. 

• Proposed Rule 6.62P–O(d)(2)(B) 

would provide that a Non-Displayed 

Limit Order may be designated with a 

Non-Display Remove Modifier and if so 

designated, a resting Non-Displayed 

Limit Order to buy (sell) with a working 

price equal to the working price of an 

ALO Order or Day ISO ALO to sell (buy) 

would trade as the liquidity taker 

against such order. This functionality 

would be new for options trading and is 

based on the Non-Display Remove 

Modifier functionality available on the 

cash equity market as described in Rule 

7.31–E(d)(2)(B), without any substantive 

differences. 

All-or-None (‘‘AON’’) Order. AON 

Orders are currently defined in Rule 

6.62–O(d)(4). AON Orders are not 

available on the Exchange’s cash equity 

market, and for options trading on 

Pillar, would function similarly to how 

AON Orders currently function because 

such orders would only execute if they 

can be satisfied in their entirety. 

However, unlike the OX system, where 

AON Orders are not integrated in the 

Consolidated Book, on Pillar, the 

Exchange proposes that AON Orders 

would be ranked in the Consolidated 

Book and function as conditional orders 

that would trade only if their condition 

could be met, similar to how orders 

with a Minimum Trade Size (‘‘MTS’’) 

Modifier function on Pillar on the 

Exchange’s cash equity market. Because 

of the new functionality that would be 

available for AON Orders on Pillar, the 

Exchange proposes to use Pillar 

terminology to describe this order type. 

Proposed Rule 6.62P–O(d)(3) would 

provide that an AON Order is a Limit 

Order that is to be traded in whole on 

the Exchange at the same time or not at 

all, which represents current 

functionality as described in the first 

sentence of Rule 6.62–O(d)(4). Proposed 

Rule 6.62P–O(d)(3) would further 

provide that an AON Order that does 

not trade on arrival would be ranked 

Priority 3—Non-Display Orders and that 

an AON Order may be designated Day 

or GTC, does not route, and would not 

participate in any Auctions. This 

proposed rule text uses Pillar 

terminology to describe the proposed 

new functionality that such orders 

would be ranked on the Consolidated 

Book. 

• Proposed Rule 6.62P–O(d)(3)(A) 

would provide that the working price of 

an AON Order would be assigned on 

arrival and adjusted when resting on the 

Consolidated Book and that the working 

price of an AON Order to buy (sell) 

would be the lower (higher) of the limit 

price or NBO (NBB). Because an AON 

Order is non-displayed, the Exchange 

proposes that its working price should 

be adjusted in the same manner as the 

proposed Non-Displayed Limit Order. 

• Proposed Rule 6.62P–O(d)(3)(B) 

would provide that an Aggressing AON 

Order to buy (sell) would trade with sell 

(buy) orders and quotes that in the 

aggregate can satisfy the AON Order in 

its entirety. This proposed rule text is 

new and promotes clarity in Exchange 

rules that an Aggressing AON Order 

(whether on arrival or as a resting order 

that becomes an Aggressing Order) 

would be eligible to trade with more 

than one contra-side order or quote, 

provided that multiple orders and 

quotes in the aggregate would satisfy the 

AON Order in its entirety. 

• Proposed Rule 6.62P–O(d)(3)(C) 

would provide that a resting AON Order 

to buy (sell) would trade with an 

Aggressing Order or Aggressing Quote to 

sell (buy) that individually can satisfy 

the whole AON Order. This is proposed 

new functionality, because currently, an 

AON Order can trade only against 

resting interest in the Consolidated 

Book. The Exchange believes this 


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30Rule 6.65A(a)(2) currently provides that the 

Exchange will not elect Stop Orders when the 

underlying NMS stock is either in a Limit State or 

a Straddle State, which would continue to be 

applicable on Pillar. The Exchange proposes a nonsubstantive amendment to Rule 6.65A(a)(2) to add 

a cross-reference to proposed Rule 6.62P–O(d)(4). 

31The term ‘‘Consolidated Last Sale’’ is defined 

in proposed Rule 6.62P–O(d)(4). 

32See discussion infra, regarding proposed Rule 

6.41P–O and Price Reasonability Checks. 

proposed change would provide an 

AON Order with additional execution 

opportunities. 

• Proposed Rule 6.62P–O(d)(3)(C)(i) 

would provide that if an Aggressing 

Order or Aggressing Quote to sell (buy) 

does not satisfy the resting AON Order 

to buy (sell), that Aggressing Order or 

Aggressing Quote would not trade with 

and may trade through such AON 

Order. Proposed Rule 6.62P– 

O(d)(3)(C)(ii) would further provide that 

if a resting non-displayed order to sell 

(buy) does not satisfy the quantity of a 

same-priced resting AON Order to buy 

(sell), a subsequently arriving order or 

quote to sell (buy) that satisfies the AON 

Order would trade before such resting 

non-displayed order or quote to sell 

(buy) at that price. Both of these 

proposed rules are consistent with 

current Rule 6.62–O(d)(4), which 

provides that an AON Order does not 

have ‘‘standing in any Order Process in 

the Consolidated Book,’’ i.e., a resting 

AON Order can be ignored if its 

condition is not met. This proposed rule 

text is also based on how the MTS 

Modifier functions on the cash equity 

market, as described in Rule 7.31– 

E(i)(3)(E)(i) and (ii). 

• Proposed Rule 6.62P–O(d)(3)(D) 

would provide that a resting AON Order 

to buy (sell) would not be eligible to 

trade against an Aggressing Order or 

Aggressing Quote to sell (buy): (i) At a 

price equal to or above (below) any 

orders or quotes to sell (buy) that are 

displayed at a price equal to or below 

(above) the working price of such AON 

Order; or (ii) at a price above (below) 

any orders or quotes to sell (buy) that 

are not displayed and that have a 

working price below (above) the 

working price of such AON Order. This 

proposed rule text is new functionality 

for AON Orders that is designed to 

protect the priority of resting orders and 

quotes and is based on how the MTS 

Modifier functions on the cash equity 

market, as described in Rule 7.31– 

E(i)(3)(C) and its subparagraphs (i) and 

(ii). 

• Proposed Rule 6.62P–O(d)(3)(E) 

would provide that if a resting AON 

Order to buy (sell) becomes an 

Aggressing Order it would trade as 

provided in paragraph (d)(3)(B) of this 

Rule; however, other resting orders or 

quotes to buy (sell) ranked Priority 3— 

Non-Display Orders that become 

Aggressing Orders or Aggressing Quotes 

at the same time as the resting AON 

Order would be processed before the 

AON Order. This is proposed new 

functionality and is designed to promote 

clarity in Exchange rules that if multiple 

orders ranked Priority 3—Non-Display 

Orders, including AON and non-AON 

Orders, become Aggressing Orders or 

Aggressing Quotes at the same time, the 

AON Order would not be eligible trade 

until the other orders ranked Priority 3- 

Non-Display Orders have been 

processed, even if they have later 

working times. The Exchange believes 

that it would be consistent with the 

conditional nature of AON Orders for 

other same-side non-displayed orders to 

have a trading opportunity before the 

AON Order. 

• Proposed Rule 6.62P–O(d)(3)(F) 

would provide that an AON Order may 

be designated with a Non-Display 

Remove Modifier and if so designated, 

a resting AON Order to buy (sell) that 

can trade with an ALO Order or Day ISO 

ALO Order to sell (buy) would trade as 

the liquidity-taking order. This 

proposed functionality would be new 

for options trading and is based on the 

Non-Display Remove Modifier available 

on the cash equity market, as described 

in Rules 7.31–E(d)(2)(B) and 7.31– 

E(e)(1)(C). 

Stop Order. Stop Orders are currently 

defined in Rule 6.62–O(d)(1). The 

Exchange proposes to use Pillar 

terminology to describe Stop Orders in 

proposed Rule 6.62P–O(d)(4). Proposed 

Rule 6.62P–O(d)(4) would provide that 

a Stop Order is an order to buy (sell) a 

particular option contract that becomes 

a Market Order (or is ‘‘elected’’) when 

the Exchange BB (BO) or the most recent 

consolidated last sale price reported 

after the order was placed in the 

Consolidated Book (the ‘‘Consolidated 

Last Sale’’) (either, the ‘‘trigger’’) is 

equal to or higher (lower) than the 

specified ‘‘stop’’ price. Because a Stop 

Order becomes a Market Order when it 

is elected, the Exchange proposes that 

when it is elected, it would be cancelled 

if it does not meet the validations 

specified in proposed Rule 6.62P– 

O(a)(1)(A) and if not cancelled, it would 

be assigned a Trading Collar. 

Proposed Rule 6.62P–O(d)(4)(A) 

would provide that a Stop Order would 

be assigned a working time when it is 

received but would not be ranked or 

displayed in the Consolidated Book 

until it is elected and that once 

converted to a Market Order, the order 

would be assigned a new working time 

and be ranked Priority 1- Market Orders. 

The original working time assigned to a 

Stop Order would be used to rank 

multiple Stop Orders elected at the 

same time. 

Proposed Rule 6.62P–O(d)(4)(B) 

would specify additional events that are 

designed to limit when a Stop Order 

may be elected so that a Market Order 

does not trade during a period of pricing 

uncertainty: 

• Proposed Rule 6.62P–O(d)(4)(B)(i) 

would provide that if not elected on 

arrival, a Stop Order that is resting 

would not be eligible to be elected based 

on a Consolidated Last Sale unless the 

Consolidated Last Sale is equal to or in 

between the NBBO. This proposed rule 

text provides additional transparency of 

when a resting Stop Order would be 

eligible to be elected. 

• Proposed Rule 6.62P–O(d)(4)(B)(ii) 

would provide that a Stop Order would 

not be elected if the NBBO is crossed. 

• Proposed Rule 6.62P–O(d)(4)(B)(iii) 

would provide that after a Limit State or 

Straddle State is lifted, the trigger to 

elect a Stop Order would be either the 

Consolidated Last Sale received after 

such state was lifted or the Exchange BB 

(BO).30

Stop Limit Order. Stop Limit Orders 

are currently defined in Rule 6.62– 

O(d)(2). The Exchange proposes to use 

Pillar terminology to describe Stop 

Limit Orders in proposed Rule 6.62P– 

O(d)(5). Proposed Rule 6.62P–O(d)(5) 

would provide that a Stop Limit Order 

is an order to buy (sell) a particular 

option contract that becomes a Limit 

Order (or is ‘‘elected’’) when the 

Exchange BB (BO) or the Consolidated 

Last Sale (either, the ‘‘trigger’’) is equal 

to or higher (lower) than the specified 

‘‘stop’’ price.31 As further proposed, a 

Stop Limit Order to buy (sell) would be 

rejected if the stop price is higher 

(lower) than its limit price. Because a 

Stop Limit Order becomes a Limit Order 

when it is elected, the Exchange 

proposes that when it is elected, it 

would be cancelled if it fails Limit 

Order Price Protection or a Price 

Reasonability Check and if not 

cancelled, it would be assigned a 

Trading Collar.32

Proposed Rule 6.62P–O(d)(5)(A) 

would provide that a Stop Limit Order 

would be assigned a working time when 

it is received but would not be ranked 

or displayed in the Consolidated Book 

until it is elected and that once 

converted to a Limit Order, the order 

would be assigned a new working time 

and be ranked Priority 2—Display 

Orders. 

Proposed Rule 6.62P–O(d)(5)(B) 

would specify additional events that are 

designed to limit when a Stop Limit 

Order may be elected so that a Limit 


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33Because Trading Collars would be applicable to 

Non-Routable Limit Orders, the Exchange does not 

propose to cancel an incoming Non-Routable Limit 

Order if its price is more than a configurable 

number of MPVs outside its initial display price, 

which is how an RPNP currently functions, and 

therefore would not include functionality based on 

Rule 6.62–O(p)(1)(B) in the proposed Pillar rules. 

34For example, on arrival, a Non-Routable Limit 

Order to buy (sell) with a limit price higher (lower) 

than the NBO (NBB), would have a display price 

one MPV below (above) the NBO (NBB) and a 

working price equal to the NBO (NBB). If the Away 

Market NBO (NBB) reprices higher (lower), the 

resting Non-Routable Limit Order to buy (sell) 

would similarly be repriced higher (lower). If the 

NBO (NBB) adjusts higher (lower) again, the resting 

Non-Routable Limit Order would not be adjusted 

again. 

35The working time of a Non-Routable Limit 

Order would be adjusted as described in proposed 

Rule 6.76P–O(f)(2), which would be applicable to 

any scenario when the working time of an order 

may change, including a Non-Routable Limit Order. 

Similar to how the Pillar rules function on the 

Exchange’s cash equity market, the Exchange does 

not propose to separately describe how the working 

time of an order changes in proposed Rule 6.62P– 

O. 

Order would not have a possibility of 

trading or being added to the 

Consolidated Book during a period of 

pricing uncertainty. 

• Proposed Rule 6.62P–O(d)(5)(B)(i) 

would provide that if not elected on 

arrival, a Stop Limit Order that is resting 

would not be eligible to be elected based 

on a Consolidated Last Sale unless the 

Consolidated Last Sale is equal to or in 

between the NBBO. 

• Proposed Rule 6.62P–O(d)(5)(B)(ii) 

would provide that a Stop Limit Order 

would not be elected if the NBBO is 

crossed. 

Orders with Instructions Not to Route. 

Currently, the Exchange defines nonroutable orders in Rule 6.62–O as a PNP 

Order (which includes a Repricing PNP 

Order or RPNP) (current Rule 6.62– 

O(p)), a Liquidity Adding Order 

(‘‘ALO’’) (which includes a Repricing 

ALO (‘‘RALO’’) (current Rule 6.62–O(t)); 

a PNP-Blind Order (current Rule 6.62– 

O(u)); and a PNP-Light Order (Rule 

6.62–O(v)). The Exchange also defines 

the PNP Plus Order (current Rule 6.62– 

O(y)), which is available for Electronic 

Complex Orders, and Intermarket 

Sweep Orders (current Rule 6.62–O(aa)). 

The Exchange separately defines nonroutable quotes in Rule 6.37A–O as a 

Market Maker—Light Only Quotation 

(‘‘MMLO’’) (current Rule 6.37A– 

O(a)(3)(A)); a Market Maker—Add 

Liquidity Only Quotation (‘‘MMALO’’) 

(current Rule 6.37A–O(a)(3)(B)); and a 

Market Maker—Repricing Quotation 

(‘‘MMRP’’) (current Rule 6.37A– 

O(a)(3)(C)). 

On Pillar, the Exchange proposes to 

streamline the non-routable order types 

and quotes that would be available for 

options trading, use terminology that is 

similar to how non-routable orders are 

described for cash equity trading as 

described in Rule 7.31–E(e), and 

describe the functionality that would be 

applicable to both orders and quotes in 

proposed Rule 6.62P–O(e). As described 

in greater detail below, proposed Rule 

6.37AP–O governing Market Maker 

Quotations would no longer define how 

quotations would function. Instead, that 

rule would specify that Market Maker 

quotes must be designated as either a 

Non-Routable Limit Order or ALO 

Order. On Pillar, the Exchange would 

no longer offer functionality based on 

the PNP-Blind Order, PNP-Light Order, 

or MMLO. 

Non-Routable Limit Order. Proposed 

Rule 6.62P–O(e)(1) would define the 

Non-Routable Limit Order. This 

proposed order type incorporates 

functionality currently available in both 

the existing PNP and RPNP order types, 

as defined in Rule 6.62–O, and the 

existing MMRP quotation type, as 

defined in Rule 6.37A–O(a)(3)(C), and 

uses Pillar terminology. 

Proposed Rule 6.62P–O(e)(1) would 

provide that a Non-Routable Limit 

Order is a Limit Order or quote that 

does not route and may be designated 

Day or GTC and would further provide 

that a Non-Routable Limit Order with a 

working price different from the display 

price would be ranked Priority 3-NonDisplay Orders and a Non-Routable 

Limit Order with a working price equal 

to the display price would be ranked 

Priority 2-Display Orders. This 

proposed rule uses Pillar terminology 

similar to how a Non-Routable Limit 

Order is described for the Exchange’s 

cash equity market in Rules 7.31–E(e)(1) 

and 7.31–E(e)(1)(B). 

Proposed Rule 6.62P–O(e)(1)(A) 

would provide that a Non-Routable 

Limit Order would not be displayed at 

a price that would lock or cross an 

Away Market NBBO and that a NonRoutable Limit Order to buy (sell) 

would trade with orders or quotes to sell 

(buy) in the Consolidated Book priced at 

or below (above) the Away Market NBO 

(NBB). 

Proposed Rule 6.62P–O(e)(1)(A)(i) 

would provide that a Non-Routable 

Limit Order can be designated to be 

cancelled if it would be displayed at a 

price other than its limit price. The 

proposed option to cancel a NonRoutable Limit Order is based on how 

a PNP Order currently functions. The 

Exchange proposes a substantive 

difference that if an OTP Holder or OTP 

Firm opts to cancel instead of reprice a 

Non-Routable Limit Order, such order 

would be cancelled if it could not be 

displayed at its limit price, which could 

be because the order would be repriced 

to display at a price that would not lock 

or cross an Away Market NBBO or 

because it would be repriced due to 

Trading Collars.33

Proposed Rule 6.62P–O(e)(1)(A)(ii) 

would provide that if not designated to 

cancel, if the limit price of a NonRoutable Limit Order to buy (sell) 

would lock or cross an Away Market 

NBO (NBB), it would be repriced to 

have a working price equal to the Away 

Market NBO (NBB) and a display price 

one MPV below (above) that NBO 

(NBB). Accordingly, the proposed NonRoutable Limit Order, if not designated 

to cancel, would reprice in the same 

manner as an RPNP order or MMRP 

quotation. 

The Exchange proposes new 

functionality for the Non-Routable Limit 

Order as compared to either the RPNP 

Order or the Non-Routable Limit Order 

on the Exchange’s cash equity market. 

Specifically, proposed Rule 6.62P– 

O(e)(1)(B) would provide that the 

display price of a resting Non-Routable 

Limit Order to buy (sell) that has been 

repriced would be repriced higher 

(lower) only one additional time.34 If 

after that repricing, the display price 

could be repriced higher (lower) again, 

the order can be designated to either 

remain at its last working price and 

display price or be cancelled, provided 

that a resting Non-Routable Limit Order 

that is a quote cannot be designated to 

be cancelled.35

The Exchange notes that this 

designation to cancel is separate from 

the designation to cancel if it cannot be 

displayed at its limit price. If a NonRoutable Limit Order is designated to 

cancel if it cannot be displayed at its 

limit price, this second cancellation 

designation would not be needed as the 

order would have already been 

cancelled. Rather, this second 

cancellation designation is applicable 

only to a resting Non-Routable Limit 

Order that has been designated to 

reprice on arrival and was repriced 

before it was displayed on the 

Consolidated Book, and provides OTP 

Holders and OTP Firms with an option 

to cancel a resting order if market 

conditions were such that a resting 

order could have been repriced again, 

e.g., the contra-side Away Market NBBO 

changes. To assist Market Makers in 

maintaining quotes in their assigned 

series, the Exchange proposes that this 

second cancellation designation would 

not be available to Market Makers for 

their quotes. 

Proposed Rule 6.62P–O(e)(1)(B)(i) 

would provide that if the limit price of 

the resting Non-Routable Limit Order to 


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36For example, if the Away Market NBO is 1.05 

and the Exchange receives a Non-Routable Limit 

Order to buy priced at 1.10, it would be assigned 

a display price of 1.00 and a working price of 1.05. 

If the Away Market NBO adjusts to 1.00, the 

working price of the Non-Routable Limit Order to 

buy would be adjusted to 1.00 to be equal to its 

display price. However, if the Away Market NBO 

moves back to 1.05, the Non-Routable Limit Order’s 

working price would not adjust again to 1.05 and 

would stay at 1.00. 

37For example, a contra-side Market Maker quote 

designated as a Non-Routable Limit Order could 

have a non-displayed working price. 

buy (sell) that has been repriced no 

longer locks or crosses the Away Market 

NBO (NBB), it would be assigned a 

working price and display price equal to 

its limit price. This proposed rule text 

is based on Rule 7.31–E(e)(1)(A)(iv). 

Proposed Rule 6.62P–O(e)(1)(B)(ii) 

would provide that the working price of 

a resting Non-Routable Limit Order to 

buy (sell) that has been repriced would 

be adjusted to be equal to its display 

price if the Away Market NBO (NBB) is 

equal to or lower (higher) than its 

display price. This proposed rule is 

based in part on how an RPNP reprices 

(as described in Rule 6.62–O(p)(1)(A)(i)) 

and uses Pillar terminology. The 

proposed rule would further provide 

that once the working price and display 

price of a Non-Routable Limit Order to 

buy (sell) are the same, the working 

price would be adjusted higher (lower) 

only if the display price of the order is 

adjusted.36

Proposed Rule 6.62P–O(e)(1)(C) 

would provide that a Non-Routable 

Limit Order may be designated with a 

Non-Display Remove Modifier and if so 

designated, a Non-Routable Limit Order 

to buy (sell) with a working price, but 

not display price, equal to the working 

price of an ALO Order or Day ISO ALO 

to sell (buy) would trade as the liquidity 

taker against such order. This 

functionality is based on the NonDisplay Remove Modifier available for 

cash equity trading, as described in Rule 

7.31–E(e)(1)(C), and would be new for 

options trading on Pillar. 

Finally, proposed Rule 6.62P– 

O(e)(1)(D) would provide that the 

designation to cancel a Non-Routable 

Limit Order would not be applicable in 

an Auction and such order will 

participate in an Auction at its limit 

price. This proposed rule text promotes 

clarity and transparency that a NonRoutable Limit Order would be eligible 

to participate in an Auction, but that it 

would be repriced to its limit price for 

participation in such Auction. 

ALO Order. Proposed Rule 6.62P– 

O(e)(2) would define an ALO Order as 

a Limit Order or quote that is a NonRoutable Limit Order that would not 

remove liquidity from the Consolidated 

Book. This proposed order type 

incorporates functionality similar to 

both the existing ALO and RALO order 

types, as defined in Rule 6.62–O, and 

the existing MMALO quotation type, as 

defined in Rule 6.37A–O(a)(3)(B). 

Unless otherwise specified in proposed 

Rule 6.62P–O(e)(2), an ALO Order 

would function as a Non-Routable Limit 

Order, including that it would 

participate in an Auction at its limit 

price. 

Proposed Rule 6.62P–O(e)(2)(A) 

would provide that an ALO Order 

would not be displayed at a price that 

would lock or cross an Away Market 

NBBO, would lock or cross displayed 

interest in the Consolidated Book, or 

would cross non-displayed interest in 

the Consolidated Book. Because an ALO 

Order would never remove liquidity, 

this proposed rule text ensures that such 

order would not be displayed at a price 

that would lock or cross displayed 

interest either on the Exchange or an 

Away Market, and would not be 

displayed at a price that crosses nondisplayed interest in the Consolidated 

Book. 

Proposed Rule 6.62P–O(e)(2)(A)(i) 

would provide that an ALO Order can 

be designated to be cancelled if it would 

be displayed at a price other than its 

limit price. An ALO Order with this 

designation to cancel would function 

similarly to a Liquidity Adding Order as 

defined in Rule 6.62–O(t) and uses 

Pillar terminology. 

Proposed Rule 6.62P–O(e)(2)(A)(ii) 

would provide that an ALO Order to 

buy (sell) would be displayed at its limit 

price if it locks non-displayed orders or 

quotes to sell (buy) on the Consolidated 

Book. Because an ALO Order would not 

be repriced in this scenario, this 

functionality would be the same 

regardless of whether the order includes 

a designation to cancel. 

Proposed Rule 6.62P–O(e)(2)(A)(iii) 

would provide that an ALO Order to 

buy (sell) would not consider an AON 

Order or an order with an MTS Modifier 

to sell (buy) for purposes of determining 

whether it needs to be repriced or 

cancelled. This proposed rule is 

designed to promote transparency that a 

resting contra-side order with 

conditional instructions, i.e., an AON 

Order or an order with an MTS 

Modifier, would not have any bearing 

on whether an Aggressing ALO Order 

would need to be repriced. Accordingly, 

an ALO Order would neither trade as 

the liquidity taker with such orders 

(even if it could satisfy their size 

condition) and could be displayed at a 

price that would lock or cross the price 

of such orders. Once the ALO Order is 

resting on the Consolidated Book, the 

Exchange would reevaluate the orders 

on the Consolidated Book. For example, 

if the ALO Order could satisfy the size 

condition of the resting AON Order, the 

resting AON Order would become the 

Aggressing Order and would trade as 

the liquidity taker with such resting 

ALO Order. 

Proposed Rule 6.62P–O(e)(2)(B) 

would describe how an ALO Order 

would be processed if it is not 

designated to cancel, as follows: 

• If the limit price of an ALO Order 

to buy (sell) would lock or cross 

displayed orders or quotes to sell (buy) 

on the Consolidated Book, it would be 

repriced to have a working price and 

display price one MPV below (above) 

the lowest (highest) priced displayed 

order or quote to sell (buy) on the 

Consolidated Book (proposed Rule 

6.62P–O(e)(2)(B)(i)); 

• If the limit price of an ALO Order 

to buy (sell) would lock or cross an 

Away Market NBO (NBB), it would be 

repriced to have a working price equal 

to the Away Market NBO (NBB) and a 

display price one MPV below (above) 

the NBO (NBB) (proposed Rule 6.62P– 

O(e)(2)(B)(ii)); or 

• If the limit price of an ALO Order 

to buy (sell) would cross non-displayed 

orders or quotes 37 on the Consolidated 

Book, it would be repriced to have a 

working price and display price equal to 

the lowest (highest) priced nondisplayed order or quote to sell (buy) on 

the Consolidated Book (proposed Rule 

6.62P–O(e)(2)(B)(iii). 

Because an ALO would never be a 

liquidity-taking order, the abovedescribed repricing scenarios provide 

clarity and transparency regarding how 

an ALO Order would be repriced to 

prevent either trading with interest on 

the Consolidated Book or routing to an 

Away Market. The proposed option to 

reprice is based in part on how a RALO 

currently functions, as described in Rule 

6.62–O(t)(1)(A). 

Proposed Rule 6.62P–O(e)(2)(C) 

would provide that the display price of 

a resting ALO Order to buy (sell) that 

has been repriced would be repriced 

higher (lower) only one additional time 

and that if, after that repricing, the 

display price could be repriced higher 

(lower) again, the order can be 

designated to either remain at its last 

working price and display price or be 

cancelled, provided that a resting ALO 

Order that is a quote cannot be 

designated to be cancelled. This 

proposed functionality would be new to 

Pillar and is based on how the proposed 

Non-Routable Limit Order would 

function, as described above. 


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38The terms ‘‘Protected Bid,’’ ‘‘Protected Offer,’’ 

and ‘‘Quotation’’ are defined in Rule 6.92–O(a)(15) 

and (16) and the term ‘‘Away Market’’ is defined in 

Rule 1.1. Accordingly, Away Market Protected 

Quotations refer to Protected Bids and Protected 

Offers that are disseminated pursuant to the OPRA 

Plan and are the Best Bid and Best Offer displayed 

by an Eligible Exchange, as those terms are defined 

in Rule 6.92–O. 

39See Nasdaq Options 3, Section 7(a)(7) (‘‘ISOs 

may have any time-in-force designation. . . .’’) and 

CBOE Rules 5.30(a)(2) and (3). See also Cboe US 

Options Fix Specifications, dated June 15, 2021, 

Section 4.4.7, available here: http://cdn.cboe.com/ 

resources/membership/US_Options_FIX_

Specification.pdf, which references how a Day ISO 

would be processed under specified circumstances. 

40The Commission has previously stated that the 

requirements in the Options Linkage Plan relating 

to Locked and Crossed Markets are ‘‘virtually 

identical to those applicable to market centers for 

NMS stock under Regulation NMS.’’ See also 

Securities Exchange Act Release No. 60405 (July 30, 

2009), 74 FR 39362, 39368 (August 6, 2009) (Order 

approving Options Linkage Plan). Accordingly, 

guidance relating to the ISO exception for locked 

and crossed markets for NMS stocks that 

specifically contemplate use of Day ISOs is also 

applicable to options trading. See Responses to 

Frequently Asked Questions Concerning Rule 611 

and Rule 610 of Regulation NMS, FAQ 5.02 (‘‘The 

ISO exception to the SRO lock/cross rules, in 

contrast, requires that ISOs be routed to execute 

against all protected quotations with a price that is 

equal to the display price (i.e., those protected 

quotations that would be locked by the displayed 

quotation), as well as all protected quotations with 

prices that are better than the display price (i.e., 

those protected quotations that would be crossed by 

the displayed quotation).’’ Consistent with this 

guidance, the Exchange implemented Rule 6.95– 

O(b)(3). See also Cboe Rule 5.67(b)(3), and Nasdaq 

Options 5, Section 3(b)(3). 

Proposed Rule 6.62P–O(e)(2)(C)(i) 

would provide that if the limit price of 

an ALO Order to buy (sell) that has been 

repriced no longer locks or crosses 

displayed orders or quotes in the 

Consolidated Book, locks or crosses the 

Away Market NBBO, or crosses nondisplayed orders or quotes in the 

Consolidated Book, it would be assigned 

a working price and display price equal 

to its limit price. This proposed rule text 

is similar to proposed Rule 6.62P– 

O(e)(1)(B)(i) for Non-Routable Limit 

Orders, with differences to reflect the 

additional circumstances when an ALO 

Order would be repriced based off of 

contra-side displayed or non-displayed 

interest in the Consolidated Book. 

Proposed Rule 6.62P–O(e)(2)(D) 

would provide that the working price of 

a resting ALO Order to buy (sell) that 

has been repriced would be adjusted to 

be equal to its display price (and would 

not be adjusted again unless the display 

price of the order is adjusted) if: 

• The Away Market NBO (NBB) reprices to be equal to or lower (higher) 

than the display price of the resting 

ALO Order to buy (sell) (proposed Rule 

6.62P–O(e)(2)(D)(i)); or 

an ALO Order or Day ISO ALO to sell 

(buy) is displayed on the Consolidated 

Book at a price equal to the working 

price of the resting ALO Order to buy 

(sell) (proposed Rule 6.62P– 

O(e)(2)(D)(ii)). 

This proposed rule text is similar to 

proposed Rule 6.62P–O(e)(1)(C) for NonRoutable Limit Orders, with differences 

to reflect the additional circumstances 

when an ALO Order would be repriced 

as a result of contra-side interest on the 

Consolidated Book. Specifically, the 

Exchange proposes that for an ALO 

Order that has been repriced and has a 

non-displayed working price, if the 

Exchange receives a contra-side ALO 

Order (or Day ISO ALO) with a limit 

price that is equal to or crosses the 

working price of the resting ALO Order, 

the working price of the resting ALO 

Order would be adjusted to be equal to 

its display price. This proposed 

functionality would reduce the potential 

for two contra-side ALO Orders to have 

working prices that are locked on the 

Consolidated Book. 

Proposed Rule 6.62P–O(e)(2)(E) 

would provide that when the working 

price and display price of an ALO Order 

to buy (sell) are the same, the working 

price would be adjusted higher (lower) 

only if the display price of the order is 

adjusted. This proposed functionality 

would be new for Pillar. 

Proposed Rule 6.62P–O(e)(2)(F) 

would provide that the ALO designation 

would be ignored for ALO Orders that 

participate in an Auction. This 

proposed rule is based on Rule 7.31– 

E(e)(2)(A), which similarly provides that 

an ALO Order can participate in an 

auction and that its ALO designation 

would be ignored. This is also new 

functionality for options because 

currently, the Exchange rejects ALOs if 

entered outside of Core Trading Hours 

or during a trading halt and if resting, 

are cancelled during a trading halt. 

Proposed Rule 6.62P–O(e)(2)(G) 

would provide that an ALO Order 

cannot be designated with a NonDisplay Remove Modifier. Because an 

ALO Order is a type of Non-Routable 

Limit Order, this proposed rule 

promotes clarity that the Non-Display 

Remove Modifier would not be available 

for an ALO Order. 

Intermarket Sweep Order (‘‘ISO’’). 

ISOs are currently defined in Rule 6.62– 

O as a Limit Order for an options series 

that instructs the Exchange to execute 

the order up to the price of its limit, 

regardless of the Away Market Protected 

Quotations 38 and that ISOs may only be 

entered with a time-in-force of IOC, and 

the entering OTP Holder must comply 

with the provisions of 6.92–O(a)(8). 

Proposed Rule 6.62P–O(e)(3) would 

similarly provide than an ISO is a Limit 

Order that does not route and meets the 

requirements of Rule 6.92–O(a)(8). 

On Pillar, the Exchange will continue 

to offer the same type of ISO 

functionality, and proposes to add the 

ability for an OTP Holder or OTP Firm 

to designate an ISO with a Day time-inforce designation and designate a Day 

ISO as ALO, which functionality is 

available on the Exchange’s cash equity 

market as described in Rule 7.31– 

E(e)(3). The Exchange proposes to 

describe the functionality for each type 

of ISO separately. 

• IOC ISO. Proposed Rule 6.62P– 

O(e)(3)(A) would define an IOC ISO as 

an ISO designated IOC to buy (sell) that 

would be immediately traded with 

orders and quotes to sell (buy) in the 

Consolidated Book up to its full size and 

limit price and may trade through Away 

Market Protected Quotations and any 

untraded quantity of an IOC ISO will be 

immediately and automatically 

cancelled. This proposed rule is based 

on Rule 7.31–E(e)(3)(B) and uses Pillar 

terminology to describe functions that 

are currently available for options 

trading. 

• Day ISO. Proposed Rule 6.62– 

O(e)(3)(B) would define a Day ISO as an 

ISO designated Day to buy (sell) that, if 

marketable on arrival, would be 

immediately traded with orders and 

quotes to sell (buy) in the Consolidated 

Book up to its full size and limit price 

and may trade through Away Market 

Protected Quotations and that any 

untraded quantity of a Day ISO would 

be displayed at its limit price and may 

lock or cross Away Market Protected 

Quotations at the time the Day ISO is 

received by the Exchange. This 

proposed functionality would be new 

on the Exchange for options trading and 

is based on the Day ISO functionality 

available on the Exchange’s cash equity 

market, as described in Rule 7.31– 

E(e)(3)(C). However, the availability of 

the Day time-in-force designation for 

ISOs would not be new for options 

trading, as such orders are currently 

available on other options exchanges.39

The proposed Day ISO is also consistent 

with current Rule 6.95–O(b)(3), which 

describes an exception to the 

prohibition on locking or crossing a 

Protected Quotation if the Member 

simultaneously routed an ISO to execute 

against the full displayed size of any 

locked or crossed Protected Bid or 

Protected Offer.40 Although the 

Exchange has not previously availed 

itself of this exception, this exception to 

locking and crossing Protected Bids and 

Protected Offers would only be needed 

if an ISO is designated as Day and 

therefore would be displayed at a price 

that would lock or cross a Protected 


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41The Exchange does not currently offer Cross 

Orders on its cash equity market. This proposed 

rule text uses Pillar terminology that is based in part 

on NYSE Chicago Rule 7.31(g). 

Quotation; an IOC ISO would never be 

displayed and therefore this existing 

exception would not be applicable to 

such orders. 

• Day ISO ALO. Proposed Rule 

6.62P–O(e)(3)(C) would define a Day 

ISO ALO as a Day ISO with an ALO 

modifier. This proposed order type is 

based in part on the Day ISO ALO 

currently available on the Exchange’s 

cash equity market, as described in Rule 

7.31–E(e)(3)(D), but with differences to 

reflect how the order type would 

function on the Exchange’s options 

market, as described above. As 

proposed, on arrival, a Day ISO ALO to 

buy (sell) may lock or cross Away 

Market Protected Quotations at the time 

of arrival of the Day ISO ALO but would 

not remove liquidity from the 

Consolidated Book. A Day ISO ALO to 

buy (sell) can be designated to be 

cancelled if it would be displayed at a 

price other than its limit price. Proposed 

Rule 6.62P–O(e)(3)(C)(i) would provide 

that if not designated to cancel, a Day 

ISO ALO that would lock or cross orders 

and quotes on the Consolidated Book 

would be repriced as specified in 

proposed Rule 6.62P–O(e)(2)(B). 

Proposed Rule 6.62P–O(e)(3)(C)(ii) 

would provide that once resting, a DAY 

ISO ALO would be processed as an ALO 

Order as specified in proposed Rule 

6.62P–O(e)(2)(C)–(G). 

Complex Orders. Complex Orders are 

defined in Rule 6.62–O(e). The 

Exchange proposes to define Complex 

Orders for Pillar in proposed Rule 

6.62P–O(f) based on Rule 6.62–O(e) and 

its sub-paragraphs (1) and (2) without 

any substantive differences. The 

Exchange proposes to add clarifying text 

that the different options series in a 

Complex Order are also referred to as 

the ‘‘legs’’ or ‘‘components’’ of the 

Complex Order. The Exchange also 

proposes that proposed Rule 6.62P–O(f) 

would provide that a Complex Order 

would be any order involving the 

simultaneous purchase and/or sale of 

‘‘two or more options series in the same 

underlying security,’’ and not use the 

modifier ‘‘different’’ before the phrase 

‘‘more option series.’’ The Exchange 

believes that the word ‘‘different’’ is 

redundant and unnecessary in this 

context. In addition, proposed Rule 

6.62P–O(f)(1) and (2) would not 

reference mini-options contracts, which 

no longer trade on the Exchange. 

Cross Orders. Currently, the only 

electronically-entered cross orders 

available on the Exchange are Qualified 

Contingent Cross Orders, which are 

defined in Rule 6.62–O(bb) and 

Commentary .02 to Rule 6.62–O. In 

addition, Rule 6.90–O describes how 

Qualified Contingent Cross Orders are 

processed. The Exchange proposes to 

define the term ‘‘Cross Orders’’ on Pillar 

in proposed Rule 6.62P–O(g). At this 

time, the only Cross Orders that would 

be available on Pillar for electronic 

entry would be Qualified Contingent 

Cross (‘‘QCC’’) Orders. As proposed, 

QCC Orders on Pillar would function 

identically to how Qualified Contingent 

Cross Orders function on the OX 

system, and for purposes of the rules 

governing trading on Pillar, the 

Exchange proposes to merge language 

from two rules relating to QCC Orders 

into a single rule, proposed Rule 6.62P– 

O(g), using Pillar terminology. Proposed 

Rule 6.62P–O(g) and (g)(1) would 

describe rules generally applicable to 

electronically-entered Cross Orders, 

including QCC Orders, and proposed 

Rule 6.62P–O(g)(2) would address 

requirements specific to QCC Cross 

Orders. 

Proposed Rule 6.62P–O(g) would 

provide that ‘‘Cross Orders’’ would be 

two-sided order messages with 

instructions to match the identified buyside with the identified sell-side at a 

specified price, which could either be 

designated as a limit price or at the 

market (‘‘cross price’’).41 The proposed 

rule would further provide that a Cross 

Order that is not rejected per proposed 

Rule 6.62P–O(g)(1) would immediately 

trade in full at its cross price, would not 

route, and may be entered with an MPV 

of $0.01 regardless of the MPV of the 

options series and that Cross Orders 

may be entered by Floor Brokers from 

the Trading Floor or routed to the 

Exchange from off-Floor. 

Proposed Rule 6.62P–O(g)(1) would 

provide that a Cross Order would be 

rejected if received when the NBBO is 

crossed or if it would be traded at a 

cross price that (i) is at the same price 

as a displayed Customer order on the 

Consolidated Book and (ii) is not at or 

between the NBBO. This proposed rule 

is based on Rule 6.90–O without any 

differences. 

Proposed Rule 6.62P–O(g)(1) would 

further set forth how a Cross Order 

designated to trade at the market would 

be priced. As proposed, a Cross Order 

with a cross price at the market would 

execute at the midpoint of the NBBO; 

provided that: 

• If there is no NBB, a zero bid would 

be used (proposed Rule 6.62P– 

O(g)(1)(A)); 

• if there is displayed Customer 

interest priced equal to the NBB, NBO 

or both, the midpoint would be based 

on the BBO improved by $0.01 for the 

side(s) containing displayed Customer 

interest (proposed Rule 6.62P– 

O(g)(1)(B)); 

• if there is no NBO, such order 

would be rejected (proposed Rule 

6.62P–O(g)(1)(C)); or 

• if the midpoint of the NBBO is in 

sub-pennies, the order would trade at 

the midpoint of the NBBO rounded 

down to the MPV for the series 

(proposed Rule 6.62P–O(g)(1)(D)). 

This proposed rule text is designed to 

promote clarity and transparency in 

Exchange rules regarding how a Cross 

Order ‘‘at the market’’ would execute in 

circumstances when there is no NBB or 

NBO or there is displayed Customer 

interest equal to the NBBO. 

Proposed Rule 6.62P–O(g)(2) would 

define QCC Orders, which would be the 

only Cross Orders available on Pillar at 

this time. As proposed, a QCC Order 

must be comprised of an originating 

order to buy or sell at least 1,000 

contracts that is identified as being part 

of a qualified contingent trade coupled 

with a contra-side order or orders 

totaling an equal number of contracts. 

This proposed rule text is based on Rule 

6.62–O(bb) with a non-substantive 

difference that the Pillar rule would not 

reference mini-options contracts, which 

no longer trade on the Exchange. 

Proposed Rule 6.62P–O(g)(2)(A) and 

subparagraphs (i)–(vi) would define a 

‘‘qualified contingent trade’’ and is 

based on Commentary .02 and subparagraphs (a)–(f) to Rule 6.62–O 

without any substantive differences. 

Proposed Rule 6.62P–O(g)(2)(B) 

would specify rules governing QCC 

Orders entered from the Trading Floor, 

which can be entered only by Floor 

Brokers, and is based on Commentary 

.01 to Rule 6.90–O. The proposed rule 

would provide that while on the 

Trading Floor, only Floor Brokers can 

enter QCC Orders and that Floor Brokers 

may not enter QCC Orders for their own 

account, the account of an associated 

person, or an account with respect to 

which it or an associated person thereof 

exercises investment discretion (each a 

‘‘prohibited account’’). As further 

proposed, when executing such orders, 

Floor Brokers would not be subject to 

Rule 6.47–O regarding ‘‘Crossing’’ 

orders. Floor Brokers must maintain 

books and records demonstrating that 

each QCC Order entered from the Floor 

was not entered for a prohibited 

account. Any QCC Order entered from 

the Floor that does not have a 

corresponding record required by this 

paragraph will be deemed to have been 

entered for a prohibited account in 

violation of this Rule. 


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42See NYSE Arca Options RB–16–04, dated 

February 19, 2016 (Rules of Priority and Order 

Protection in Open Outcry), available here: https:// 

www.nyse.com/publicdocs/nyse/markets/arcaoptions/rule-interpretations/2016/ 

NYSE%20Arca%20Options%20RB%2016-04.pdf. 

43See id. at p. 2–3 (describing regulatory 

responsibilities related to CTB Orders). 

Proposed Rule 6.62P–O(g)(2)(C) 

would specify rules governing QCC 

Orders entered off-Floor and that OTP 

Holders must maintain books and 

records demonstrating that each such 

order was so routed. This proposed rule 

is based on Commentary .02 to Rule 

6.90–O without any substantive 

differences. 

To promote clarity, the Exchange 

proposes to amend Rule 6.90–O to 

specify that the rule would not be 

applicable to trading on Pillar. 

Orders Available Only in Open 

Outcry. The Exchange proposes to add 

to Rule 6.62P–O(h) orders that are 

available only in open outcry, most of 

which are currently defined in Rule 

6.62–O. 

First, proposed Rule 6.62P–O(h)(1) 

would codify an existing order type, the 

Clear-the-Book (‘‘CTB’’) Order, which is 

currently only described in a Regulatory 

Bulletin.42 The proposed definition 

would describe the CTB Order, which 

would be an order type available in 

open outcry that would interface with 

the Consolidated Book, and therefore 

with Pillar. As proposed, a CTB Order 

would be a Limit IOC Order that may be 

entered only by a Floor Broker, 

subsequent to executing an order in 

open outcry, that is approved by a 

Trading Official (the ‘‘TO Approval’’). 

The CTB Order would be eligible to 

trade only with contra-side orders and 

quotes that were resting in the 

Consolidated Book prior to the TO 

Approval. In addition, proposed Rule 

6.62P–O(h)(1)(A)–(C) would provide 

that: 

• A CTB Order to buy (sell) would 

trade with contra-side orders and quotes 

with a display price below (above) the 

limit price of the CTB Order (proposed 

Rule 6.62P–O(h)(1)(A)); 

• A CTB Order to buy (sell) would 

trade with contra-side orders and quotes 

that have a display price and working 

price equal to the limit price of the CTB 

Order only if there is displayed 

Customer sell (buy) interest at that 

price, in which case, the CTB Order to 

buy (sell) would trade with the 

displayed Customer interest to sell (buy) 

and any non-Customer interest to sell 

(buy) with a working time earlier than 

the latest-arriving displayed Customer 

interest to sell (buy) (proposed Rule 

6.62P–O(h)(1)(B)); and 

• Any unexecuted portion of the CTB 

Order would cancel after trading with 

all better-priced interest and eligible 

same-priced interest on the 

Consolidated Book (proposed Rule 

6.62P–O(h)(1)(C)). 

Currently, CTB Orders only trade with 

displayed Customer interest and any 

same-priced displayed non-Customer 

interest ranked ahead of such interest in 

time priority, but do not trade with 

better-priced displayed non-Customer 

interest. In Pillar, per Rule 6.62P– 

O(h)(1)(B), CTB Orders would trade 

with displayed non-Customer interest 

priced better than the latest-arriving 

displayed Customer interest (i.e., a CTB 

order buying with a $1.00 limit would 

now trade with any displayed interest 

offered at $0.99). The Exchange believes 

that this proposed change would 

increase execution opportunities and 

achieve the goal of a CTB Order, which 

is to clear priority on the Consolidated 

Book at the time of the TO Approval. 

In addition, proposed Rule 6.62P– 

O(h)(1)(D) would codify existing 

regulatory responsibilities of Floor 

Brokers utilizing CTB Orders to submit 

such orders in a timely manner after 

receiving TO Approval and would also 

provide that because CTB Orders are 

non-routable, Floor Brokers would be 

obligated to route orders to better-priced 

interest to Away Markets per Rule 6.94– 

O.43

The Exchange also proposes to 

include in Rule 6.62P–O additional 

open outcry order types that are 

currently defined in Rule 6.62–O: 

• Proposed Rule 6.62P–O(h)(2) would 

define ‘‘Facilitation Order’’ and is based 

on the Rule 6.62–O(j) definition of 

Facilitation Order without any 

differences. 

• Proposed Rule 6.62P–O(h)(3) would 

define ‘‘Mid-Point Crossing Order’’ and 

is based on the Rule 6.62–O(q) 

definition of Mid-Point Crossing Order 

without any differences. 

• Proposed Rule 6.62P–O(h)(4) would 

define ‘‘Not Held Order’’ and is based 

on the Rule 6.62–O(f) definition of Not 

Held Order without any differences. 

• Proposed Rule 6.62P–O(h)(5) would 

define ‘‘Single Stock Future (‘‘SSF’’)/ 

Option Order’’ and is based on the Rule 

6.62–O(i) definition of Single Stock 

Future (‘‘SSF’’)/Option Order without 

any differences. 

• Proposed Rule 6.62P–O(h)(6)(A) 

would define a ‘‘Stock/Option Order’’ 

and is based on the Rule 6.62–O(h)(1) 

definition of Stock/Option Order 

without any differences. 

• Proposed Rule 6.62P–O(h)(6)(B) and 

subparagraphs (i) and (ii) would define 

a ‘‘Stock/Complex Order’’ and is based 

on the Rule 6.62–O(h)(2) definition of 

Stock/Complex Order with its subparagraphs without any differences. 

The Exchange proposes that after the 

transition to Pillar, the following open 

outcry order types, which are currently 

described in Rule 6.62–O but are not 

used by Floor Brokers, would not be 

added to proposed Rule 6.62P–O 

governing orders and modifiers: One 

cancels the other (OCO) Order and 

Stock Contingency Order. 

Additional Order Instructions and 

Modifiers. The Exchange proposes to 

specify the additional order instructions 

and modifiers that would be available in 

Pillar in proposed Rule 6.62P–O(i). 

Proactive if Locked/Crossed Modifier. 

Proposed Rule 6.62P–O(i)(1) would 

provide that a Limit Order that is 

displayed and eligible to route and 

designated with a Proactive if Locked/ 

Crossed Modifier would route to an 

Away Market if the Away Market locks 

or crosses the display price of the order 

and that if any quantity of the routed 

order is returned unexecuted, the order 

would be displayed in the Consolidated 

Book. This would be new functionality 

for options trading on the Exchange and 

is based on the Proactive if Locked/ 

Crossed Modifier available on the 

Exchange’s cash equity platform, as 

described in Rule 7.31–E(i)(1) without 

any differences. 

Self-Trade Prevention (‘‘STP’’) 

Modifier. Self-Trade Prevention (‘‘STP’’) 

Modifiers are currently defined in 

Commentary .01 to Rule 6.76A–O and 

are available only for Market Maker 

orders and quotes. On Pillar, the 

Exchange proposes to expand the 

availability of STP to all orders and 

quotes. Because STP Modifiers are an 

instruction that can be added to an 

order or quote, the Exchange proposes 

that for Pillar, STP Modifiers would be 

described in proposed Rule 6.62P– 

O(i)(2). This is based on the structure of 

the Exchange’s cash equity rules, which 

also describe the STP Modifier in Rule 

7.31–E(i). 

Proposed Rule 6.62P–O(i)(2) would 

provide that an Aggressing Order or 

Aggressing Quote to buy (sell) 

designated with one of the STP 

modifiers in proposed Rule 6.62P– 

O(i)(2) would be prevented from trading 

with a resting order or quote to sell 

(buy) also designated with an STP 

modifier from the same MPID, and, if 

specified, any sub-identifier of that 

MPID and that the STP modifier on the 

Aggressing Order or Aggressing Quote 

would control the interaction between 

two orders and/or quotes marked with 

STP modifiers. In addition, STP would 

not be applicable during an auction or 

to Cross Orders or when a Complex 

Order legs out. This proposed rule text 


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44For cash equity trading, the MTS Modifier is 

also available for an MPL Order or Tracking Order, 

which are non-displayed order types available on 

the Exchange’s cash equity trading platform that 

would not be available for options trading on Pillar. 

See Rule 7.31–E(i)(3). 

is based on Commentary .01 to Rule 

6.76A with non-substantive differences 

to use Pillar terminology. 

Proposed Rule 6.62P–O(i)(2) would 

further provide that if the condition for 

a Limit Order designated FOK, an AON 

Order, or an order with an MTS 

modifier cannot be met because of STP 

modifiers, such order would either be 

cancelled or placed on the Consolidated 

Book, as applicable. This proposed rule 

text provides clarity that if a condition 

of an order cannot be met because of 

STP modifiers, the order would either 

cancel (i.e., a Limit Order designated 

FOK), or be added to the Consolidated 

Book (i.e., an AON Order or an order 

with an MTS modifier), and then such 

resting orders would function as 

described in Rule 6.62P–O. 

The proposed rule would further 

provide that Aggressing Orders or 

Aggressing Quotes would be processed 

as follows: 

• Proposed Rule 6.62P–O(i)(2)(A) 

would describe STP Cancel Newest 

(‘‘STPN’’) and provide that an 

Aggressing Order or Aggressing Quote to 

buy (sell) marked with the STPN 

modifier would not trade with resting 

interest to sell (buy) marked with any 

STP modifier from the same MPID; that 

the Aggressing Order or Aggressing 

Quote marked with the STPN modifier 

would be cancelled; and that the resting 

order or quote marked with one of the 

STP modifiers will remain on the 

Consolidated Book. This proposed rule 

is based on Commentary .01(a) to Rule 

6.76A–O with non-substantive 

differences to use Pillar terminology. 

• Proposed Rule 6.62P–O(i)(2)(B) 

would describe STP Cancel Oldest 

(‘‘STPO’’) and provide that an 

Aggressing Order or Aggressing Quote to 

buy (sell) marked with the STPO 

modifier would not trade with resting 

interest to sell (buy) marked with any 

STP modifier from the same MPID; that 

the resting order or quote marked with 

the STP modifier would be cancelled; 

and that the Aggressing Order or 

Aggressing Quote marked with the 

STPO modifier would be placed on the 

Consolidated Book. This proposed rule 

is based on Commentary .01(b) to Rule 

6.76A–O with non-substantive 

differences to use Pillar terminology. 

• Proposed Rule 6.62P–O(i)(2)(C) 

would describe STP Cancel Both 

(‘‘STPC’’) and provide that an 

Aggressing Order or Aggressing Quote to 

buy (sell) marked with the STPC 

modifier would not trade with resting 

interest to sell (buy) marked with any 

STP modifier from the same MPID and 

that the entire size of both orders and/ 

or quotes would be cancelled. This 

proposed rule is based on Commentary 

.01(c) to Rule 6.76A–O with nonsubstantive differences to use Pillar 

terminology. 

Minimum Trade Size Modifier. The 

Exchange proposes to add the Minimum 

Trade Size (‘‘MTS’’) Modifier, which 

would be new functionality for options 

trading on Pillar that is based on the 

same functionality currently available 

for cash equity securities trading on 

Pillar, as described in Rule 7.31–E(i)(3). 

As with the MTS Modifier for cash 

equity trading, the proposed MTS 

Modifier for options traded on Pillar 

would be available only for nondisplayed orders. Accordingly, 

proposed Rule 6.62P–O(i)(3) would 

provide that a Limit IOC Order or NonDisplayed Limit Order may be 

designated with an MTS Modifier.44

Proposed Rule 6.62P–O(i)(3)(A) 

would provide that the quantity of the 

MTS Modifier may be less than the 

order quantity; however, an order would 

be rejected if it has an MTS Modifier 

quantity that is larger than the size of 

the order. This proposed rule is based 

on Rule 7.31–E(i)(3)(A) with differences 

only to reflect that the concept of a 

round lot is not applicable for options 

trading. 

Proposed Rule 6.62P–O(i)(3)(B) would 

provide that one of the following 

instructions must be specified with 

respect to whether an order to buy (sell) 

with an MTS Modifier would trade on 

arrival with: (i) Orders or quotes to sell 

(buy) in the Consolidated Book that in 

the aggregate meet such order’s MTS; or 

(ii) only individual order(s) or quote(s) 

to sell (buy) in the Consolidated Book 

that each meets such order’s MTS. This 

proposed rule is based on Rule 7.31– 

E(i)(3)(B) and sub-paragraphs (i) and (ii) 

with only non-substantive differences to 

use options trading terminology (e.g., 

Consolidated Book instead of NYSE 

Arca Book and reference to quotes). 

Otherwise, the functionality would be 

identical on both the options and cash 

equity trading platforms. 

Proposed Rule 6.62P–O(i)(3)(C) would 

provide that an order with an MTS 

Modifier that is designated Day or GTC 

that cannot be executed immediately on 

arrival would not trade and would be 

ranked in the Consolidated Book. In 

such case, the order to buy (sell) with 

an MTS Modifier to buy (sell) that is 

ranked in the Consolidated Book would 

not be eligible to trade: (i) At a price 

equal to or above (below) any orders or 

quotes to sell (buy) that are displayed at 

a price equal to or below (above) the 

working price of such order with an 

MTS Modifier; or (ii) at a price above 

(below) any orders or quotes to sell 

(buy) that are not displayed and that 

have a working price below (above) the 

working price of such order with an 

MTS Modifier. This proposed rule is 

based on Rule 7.31–E(i)(3)(C) and subparagraphs (i) and (ii) with only nonsubstantive differences to use options 

trading terminology and to reflect the 

availability of the GTC time-in-force 

modifier for Non-Displayed Limit 

Orders. Otherwise, the functionality 

would be identical on both the options 

and cash equity trading platforms. 

Proposed Rule 6.62P–O(i)(3)(D) would 

provide that an order with an MTS 

Modifier that is designated IOC and 

cannot be immediately executed would 

be cancelled. This proposed rule is 

based on Rule 7.31–E(i)(3)(D) without 

any differences and the functionality 

would be identical on both the options 

and cash equity trading platforms. 

Proposed Rule 6.62P–O(i)(3)(E) would 

provide that a resting order to buy (sell) 

with an MTS Modifier would trade with 

individual orders and quotes to sell 

(buy) that each meet the MTS and that 

(i) if an Aggressing Order or Aggressing 

Quote to sell (buy) does not meet the 

MTS of the resting order to buy (sell) 

with an MTS Modifier, that Aggressing 

Order or Aggressing Quote would not 

trade with, and may trade, through such 

resting order with an MTS Modifier; and 

(ii) if a resting non-displayed order or 

quote to sell (buy) did not meet the MTS 

of a same-priced resting order or quote 

to buy (sell) with an MTS Modifier, a 

subsequently arriving order or quote to 

sell (buy) that meets the MTS would 

trade before such resting non-displayed 

order or quote to sell (buy) at that price. 

This proposed rule is based on Rule 

7.31–E(i)(3)(E) and sub-paragraphs (i) 

and (ii) with only non-substantive 

differences to use options trading 

terminology. Otherwise, the 

functionality would be identical on both 

the options and cash equity trading 

platforms. 

Proposed Rule 6.62P–O(i)(3)(F) would 

provide that a resting order with an 

MTS Modifier would be cancelled if it 

is traded in part or reduced in size and 

the remaining quantity is less than such 

order’s MTS. This proposed rule is 

based on Rule 7.31–E(i)(3)(F) without 

any differences and the functionality 

would be identical on both the options 

and cash equity trading platforms. 

In connection with proposed Rule 

6.62P–O, the Exchange proposes to add 

the following preamble to Rule 6.62–O: 

‘‘This Rule will not be applicable to 

trading on Pillar.’’ This proposed 


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Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 36461 

preamble is designed to promote clarity 

and transparency in Exchange rules that 

Rule 6.62–O would not be applicable to 

trading on Pillar. 

Proposed Rule 6.37AP–O: Market Maker 

Quotations 

Current Rule 6.37A–O describes 

Market Maker quoting obligations, 

including defining ‘‘quotations’’ and 

describing the treatment to such 

quotations. Proposed Rule 6.37AP–O 

would set forth Market Maker quoting 

obligations under Pillar. 

• First, Rule 6.37AP–O(a) would be 

based on the current rule and would 

provide that a Market Maker may enter 

quotations only in the issues included 

in its appointment. Proposed Rule 

6.37AP–O(a)(1) would provide that the 

term ‘‘quote’’ or ‘‘quotation’’ means ‘‘a 

bid or offer sent by a Market Maker that 

is not sent as an order’’ and that ‘‘[o]nce 

received by the Exchange, a subsequent 

quotation sent by a Market Maker 

replaces that Market Maker’s previously 

displayed same-side quotation.’’ This 

proposed text adds clarity to the 

existing definition that a Market Maker 

quote is distinct from a Market Maker 

order and that a subsequent quote will 

cancel an existing quote. 

• Proposed Rule 6.37AP–O(a)(2) 

would provide that a Market Maker may 

designate a quote it sends as either a 

Non-Routable Limit Order or an ALO 

Order and such quotes would be 

processed in the same way as those 

orders are processed under proposed 

Rule 6.62P–O. The Exchange notes that 

these two quote types replace the 

existing quote types (i.e., MMLO, 

MMALO and MMRP), which will no 

longer be offered under Pillar. Because 

proposed Rule 6.62P–O(e)(1) and (2) 

would describe the treatment of a quote 

designated as Non-Routable Limit Order 

or an ALO Order, the Exchange will not 

include a section in proposed Rule 

6.37AP–O regarding the treatment of 

such quotes. 

• Proposed Rule 6.37AP–O(b)—(e) 

would be substantively identical to 

current Rule 6.37A–O(b)—(e) with nonsubstantive differences to change the 

term ‘‘shall’’ to ‘‘will.’’ Proposed 

Commentary .01 to Rule 6.37AP–O 

would be substantively identical to 

Commentary .01 to Rule 6.37A–O, with 

non-substantive differences to 

streamline the rule text. 

The Exchange also proposes a nonsubstantive change to paragraph (b) of 

Rule 6.65A–O (Limit-Up and LimitDown During Extraordinary Market 

Volatility) to correct a cross reference to 

Market Maker quoting obligations as set 

forth in Rule 6.37AP–O(b) and (c). 

Current Rule 6.65A(b) erroneously 

cross-references Rule 6.37B–O(b) and 

(c). 

In connection with proposed Rule 

6.37AP–O, the Exchange proposes to 

add the following preamble to Rule 

6.37A–O: ‘‘This Rule will not be 

applicable to trading on Pillar.’’ This 

proposed preamble is designed to 

promote clarity and transparency in 

Exchange rules that Rule 6.37A–O 

would not be applicable to trading on 

Pillar. 

Proposed Rule 6.40P–O: Pre-Trade and 

Activity-Based Risk Controls 

For the OX system, current Rule 6.40– 

O sets forth the activity-based Risk 

Limitation Mechanisms for orders and 

quotes, which are designed to help OTP 

Holders and OTP Firms effectively 

manage risk during periods of increased 

and significant trading activity. With the 

transition to Pillar, the Exchange 

proposes to incorporate new risk control 

functionality that is based on both 

existing activity-based risk controls for 

options and pre-trade risk controls that 

are available on the Exchange’s cash 

equity platform. Proposed Rule 6.40P–O 

would describe the activity-based 

controls with updated functionality 

under Pillar and would also describe 

new optional pre-trade risk controls that 

are based on pre-trade risk controls 

available on the Exchange’s cash equity 

platform, as described in Rule 7.19–E, 

with proposed differences to reference 

quotes and proposed new Pillar 

functionality. 

Proposed Rule 6.40P–O(a) would set 

forth the following definitions that 

would be used for purposes of the Rule: 

• The term ‘‘Entering Firm’’ would 

mean an OTP Holder or OTP Firm 

(including those acting as Market 

Makers) (proposed Rule 6.40P–O(a)(1)). 

This proposed definition is based in 

part on the definition of ‘‘Entering 

Firm’’ in Rule 7.19–E(a)(1) and the 

Exchange believes that the addition of 

this term would add clarity to the 

proposed rule. 

• The term ‘‘Pre-Trade Risk Controls’’ 

would refer to two optional limits that 

an Entering Firm may utilize with 

respect to its trading activity on the 

Exchange (proposed Rule 6.40P– 

O(a)(2)). These controls would be the 

‘‘Single Order Maximum Notional Value 

Risk Limit’’ and the ‘‘Single Order 

Maximum Quantity Risk Limit.’’ The 

proposed Pre-Trade Controls are based 

on the substantially identical risk 

controls available on the Exchange’s 

cash equity market, as described in 

Rules 7.19–E(a)(3) and (4), respectively, 

but differ in that the proposed rule 

would also apply to quotes and specifies 

the treatment of orders designated GTC. 

Æ The term ‘‘Single Order Maximum 

Notional Value Risk Limit’’ would refer 

to a pre-established maximum dollar 

amount for a single order or quote to be 

applied one time (proposed Rule 6.40P– 

O(a)(2)(A)). This definition would also 

provide that orders designated GTC 

would be subject to this pre-trade risk 

control only once. 

Æ The term ‘‘Single Order Maximum 

Quantity Risk Limit’’ would refer to a 

pre-established maximum number of 

contracts that may be included in a 

single order or quote before it can be 

traded (proposed Rule 6.40P– 

O(a)(2)(B)). This definition would also 

provide that orders designated GTC 

would be subject to this pre-trade risk 

control only once. 

• The term ‘‘Activity-Based Risk 

Controls’’ would refer to three activitybased risk limits that an Entering Firm 

may apply to its orders and quotes in an 

options class based on specified 

thresholds measured over the course of 

an Interval (to be defined below) 

(proposed Rule 6.40P–O(a)(3)). The 

proposed Activity-Based Risk Controls 

are based on the substantially identical 

risk controls set forth in current Rule 

6.40–O(b)–(d), except that on Pillar, a 

Market Maker’s orders and quotes 

would be aggregated and applied 

towards each risk limit (as opposed to 

current functionality, where a Market 

Maker’s orders and quotes are counted 

separately). 

Æ The term ‘‘Transaction-Based Risk 

Limit’’ would refer to a pre-established 

limit on the number of an Entering 

Firm’s orders and quotes executed in a 

specified class of options per Interval 

(proposed Rule 6.40P–O(a)(3)(A)). This 

risk control is based on the substantially 

identical risk control set forth in current 

Rule 6.40–O(b), except as noted above. 

Æ The term ‘‘Volume-Based Risk 

Limit’’ would refer to a pre-established 

limit on the number of contracts of an 

Entering Firm’s orders and quotes that 

could be executed in a specified class of 

options per Interval (proposed Rule 

6.40P–O(a)(3)(B)). This risk control is 

based on the substantially identical risk 

control set forth in current Rule 6.40– 

O(c), except as noted above. 

Æ The term ‘‘Percentage-Based Risk 

Limit’’ would refer to a pre-established 

limit on the percentage of contracts 

executed in a specified class of options 

as measured against the full size of such 

Entering Firm’s orders and quotes 

executed per Interval (proposed Rule 

6.40P–O(a)(3)(C)). The proposed 

definition would also provide that to 

determine whether an Entering Firm has 

breached the specified percentage limit, 

the Exchange would calculate the 

percent of each order or quote in a 


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specified class of option that is executed 

during an Interval (each, a 

‘‘percentage’’), and sum up those 

percentages. As further proposed this 

definition would state that this risk 

limit would be breached if the sum of 

the percentages exceeds the preestablished limit. This risk control is 

based on the substantially identical risk 

control set forth in current Rule 6.40– 

O(d), except as noted above. 

• The term ‘‘Global Risk Control’’ 

would refer to a pre-established limit on 

the number of times an Entering Firm 

may breach its Activity-Based Risk 

Controls per Interval (proposed Rule 

6.40P–O(a)(4)). This proposed definition 

is based on the substantially identical 

functionality set forth in current Rule 

6.40–O(f). 

• The term ‘‘Interval’’ would refer to 

the configurable time period during 

which the Exchange would determine if 

an Activity-Based Risk Control or the 

Global Risk Control has been breached 

(proposed Rule 6.40P–O(a)(5)). This 

proposed definition is consistent with 

current Rule 6.40–O, which contains 

references throughout to a ‘‘time 

period’’ during which the Exchange will 

determine whether a breach has 

occurred. The Exchange believes this 

proposed definition would add clarity 

and transparency to Exchange rules. 

Proposed Rule 6.40P–O(b) would set 

forth how the Pre-Trade, Activity-Based 

and Global Risk Controls could be set or 

adjusted. Proposed Rule 6.40P–O(b)(1) 

would provide that these risk controls 

may be set before the beginning of a 

trading day and may be adjusted during 

the trading day. Proposed Rule 6.40P– 

O(b)(2) would provide that Entering 

Firms may set these risk controls at the 

MPID level or at one or more sub-IDs 

associated with that MPID, or both. 

Proposed Rule 6.40P–O(b) is based on 

Rule 7.19–E(b)(3)(A)–(B) but differs in 

that the proposed rule includes 

Activity-Based and Global Risk Controls 

in addition to Pre-Trade Risk Controls. 

Proposed Rule 6.40P–O(c) would set 

forth the Automated Breach Actions that 

the Exchange would take if a designated 

risk limit is breached. Proposed Rule 

6.40P–O(c)(1)(A)(i)–(ii) would set forth 

the automated breach actions for the 

Pre-Trade Risk Controls. 

• Proposed Rule 6.40P–O(c)(1)(A)(i) 

would provide that a Limit Order or 

quote that breaches the designated limit 

of either a Single Order Maximum 

Notional Value Risk Limit or Single 

Order Maximum Quantity Risk Limit 

would be rejected. 

• Proposed Rule 6.40P–O(c)(1)(A)(ii) 

would provide that a Market Order that 

breaches the designated limit of a Single 

Order Maximum Quantity Risk Limit 

would be rejected. The proposed rule 

would also provide that a Market Order 

that breaches the designated limit of a 

Single Order Notional Value Risk Limit 

would be rejected if the order arrived 

during continuous trading or canceled if 

the order was received during a preopen state and the quantity remaining to 

trade after an Auction concludes 

breaches the designated limit. 

Proposed Rule 6.40P–O(c)(1)(A)(i)–(ii) 

is based on Rule 7.19–E(c)(2) but differs 

in that it specifies the treatment of Limit 

Orders and Market Orders (the latter 

having different treatment based on 

when such orders arrive at the 

Exchange) and expands application of 

the check to include quotes. 

Proposed Rule 6.40P–O(c)(2) would 

set forth the automated breach actions 

for the Activity-Based Risk Controls. 

• Proposed Rule 6.40P–O(c)(2)(A) 

would first specify that an Entering 

Firm acting as a Market Maker would be 

required to apply one of the ActivityBased Risk Controls to all of its orders 

and quotes; whereas an Entering Firm 

that is not acting as a Market Maker 

would have the option, but would not 

be required, to apply one of the 

Activity-Based Risk Controls to its 

orders. The requirement that Market 

Makers utilize Activity-Based Risk 

Controls for all quotes mirrors the 

requirements set forth in Rule 6.40–O, 

Commentary .04(a); however, the 

proposed rule differs in that it likewise 

requires Market Makers to apply one of 

the Activity-Based Risk Controls to all 

of its orders. The proposed optionality 

of the Activity-Based Risk controls for 

orders sent by Entering Firms not acting 

as Marker Maker mirrors current Rule 

6.40–O, Commentary .04(b)). 

• Proposed Rule 6.40P–O(c)(2)(B) 

would provide that to determine when 

an Activity-Based Risk Control has been 

breached, the Exchange would maintain 

Trade Counters that would be 

incremented every time an order or 

quote trades, including any leg of a 

Complex Order, and would aggregate 

the number of contracts traded during 

each such execution. As further 

proposed, an Entering Firm may opt to 

exclude any orders designated IOC or 

FOK from being considered by a Trade 

Counter. This is consistent with existing 

functionality set forth in Rule 6.40–O(a) 

and Commentary .07, except, as noted 

above, there would not be separate 

Trade Counters for a Market Maker’s 

quotes and orders. Instead, a Market 

Maker’s quotes and orders in a given 

option class would be aggregated (i.e., 

counted together). 

• Proposed Rule 6.40P–O(c)(2)(C) 

would provide that each Entering Firm 

must select one of three Automated 

Breach Actions for the Exchange to take 

should the Entering Firm breach an 

Activity-Based Risk Control. 

Æ ‘‘Notification Only.’’ As set forth in 

proposed Rule 6.40P–O(c)(2)(C)(i), if 

this option is selected, the Exchange 

would continue to accept new order and 

quote messages and related instructions 

and would not cancel any unexecuted 

orders or quotes in the Consolidated 

Book. With the ‘‘Notification Only’’ 

action, the Exchange would provide 

such notifications, but would not take 

any other automated actions with 

respect to new or unexecuted orders. 

This proposed functionality is not 

currently available in the event of a 

breach of current Rule 6.40–O, but is 

substantially identical to the 

Notification Only option set forth in 

Rule 7.19–E(c)(3)(A)(i) for breach of the 

Gross Credit Risk Limit on the 

Exchange’s cash equity platform. The 

Exchange believes this proposed option 

would provide Entering Firms more 

control over how Activity-Based Risk 

Controls are implemented and would 

add consistency to the risk controls 

already offered under Pillar on the 

Exchange’s cash equity platform. 

Æ ‘‘Block Only.’’ As set forth in 

proposed Rule 6.40P–O(c)(2)(C)(ii), if 

this option is selected, the Exchange 

would reject new order and quote 

messages and related instructions, 

provided that the Exchange would 

continue to process instructions from 

the Entering Firm to cancel one or more 

orders or quotes (including AuctionOnly Orders) in full. The proposed rule 

would also provide that the Exchange 

would follow any instructions specified 

in paragraph (e) of the proposed Rule 

(and described below). This proposed 

functionality is not currently available 

under current Rule 6.40–O, but is 

substantially identical to the Block Only 

option set forth in Rule 7.19– 

E(c)(3)(A)(ii) for breach of the Gross 

Credit Risk Limit on the Exchange’s 

cash equity platform. The Exchange 

believes this proposed option would 

provide Entering Firms more control 

over how Activity-Based Risk Controls 

are implemented and would add 

consistency to the risk controls already 

offered under Pillar on the Exchange’s 

cash equity platform. 

Æ ‘‘Cancel and Block.’’ As set forth in 

proposed Rule 6.40P–O(c)(2)(C)(iii), if 

this option is selected, in addition to the 

Block actions described above, the 

Exchange would also cancel all 

unexecuted orders and quotes in the 

Consolidated Book other than AuctionOnly Orders and orders designated GTC. 

This proposed Cancel and Block 

functionality is substantially similar to 

the automated breach action taken by 


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Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 36463 

the Exchange per current Rule 6.40–O(e) 

and Commentaries .01 and .02 thereto, 

except that under the current rules, this 

is default (not optional) functionality. 

Additionally, this proposed rule is 

substantially identical to the Cancel and 

Block option set forth in Rule 7.19– 

E(c)(3)(A)(iii) for breach of the Gross 

Credit Risk Limit on the Exchange’s 

cash equity platform. The Exchange 

believes this proposed option would 

provide Entering Firms more control 

over how Activity-Based Risk Controls 

are implemented and would add 

consistency to the risk controls already 

offered under Pillar on the Exchange’s 

cash equity platform. 

• Finally, proposed Rule 6.40P– 

O(c)(2)(D) would provide that if an 

Entering Firm breaches an ActivityBased Risk Control, the Automated 

Breach Action selected would be 

applied to its orders and quotes in the 

affected class of options. This proposed 

action is consistent with current Rule 

6.40–O(e) and Commentaries .01 and .02 

thereto which provide that, upon a 

breach, the Exchange will cancel 

existing and suspend new orders and 

quotes trading in the affected class. 

Proposed Rule 6.40P–O(c)(2)(E) 

would provide that the Exchange would 

specify by Trader Update any applicable 

minimum, maximum and/or default 

settings for the Activity-Based Risk 

Controls, subject to the following: 

• For the Transaction-Based Risk 

Limit, the minimum setting would not 

be less than one and the maximum 

setting would not be more than 2,000 

(proposed Rule 6.40P–O(c)(2)(E)(i)). 

• For the Volume-Based Risk Limit, 

the minimum setting would not be less 

than one and the maximum setting 

would not be more than 500,000 

(proposed Rule 6.40P–O(c)(2)(E)(ii)). 

• For the Percentage-Based Risk 

Limit, the minimum setting would not 

be less than 50 and the maximum 

setting would not be more than 200,000 

(proposed Rule 6.40P–O(c)(2)(E)(iii)). 

These proposed settings are identical 

to the Exchange-determined settings 

provided under current Rule 6.40–O, 

Commentary .03. 

Proposed Rule 6.40P–O(c)(2)(F) 

would provide that the Exchange would 

specify by Trader Update the Interval 

for the Activity-Based Risk Controls, 

subject to the following: 

• The Interval would not be less than 

100 milliseconds and would not be 

greater than 300,000 milliseconds, 

inclusive of the duration of any trading 

halt occurring within that time 

(proposed Rule 6.40P–O(c)(2)(F)(i)). 

• For transactions occurring in the 

Core Open Auction, per Rule 6.64P–O, 

the applicable time period would be the 

lesser of (i) the time between the Core 

Open Auction of a series and the initial 

transaction or (ii) the Interval (proposed 

Rule 6.40P–O(c)(2)(F)(ii)). 

These proposed settings are identical 

to the Exchange-specified time periods 

provided under current Rule 6.40–O, 

Commentary .03, except that the 

Exchange has included a maximum 

allowable time period for the Interval, 

which adds clarity to the rule. 

Proposed Rule 6.40P–O(c)(3) would 

set forth the automated breach actions 

for the Global Risk Controls set by an 

Entering Firm. 

• Proposed Rule 6.40P–O(c)(3)(A) 

would provide that if the Global Risk 

Control limit is breached, the Exchange 

would Cancel and Block, per proposed 

Rule 6.40P(c)(2)(C)(iii). 

• Proposed Rule 6.40P–O(c)(3)(B) 

would provide that if an Entering Firm 

breaches the Global Risk Control, the 

Automated Breach Action would be 

applied to all orders and quotes of the 

Entering Firm in all classes of options 

regardless of which class(es) of options 

caused the underlying breach of 

Activity-Based Risk Controls. This 

proposed functionality is consistent 

with the automated breach action taken 

in the event of a breach of current Rule 

6.40–O(f), per current Rule 6.40–O, 

Commentaries .01 and .02. 

• Proposed Rule 6.40P–O(c)(3)(C) 

would provide that the Exchange would 

specify by Trader Update any applicable 

minimum, maximum and/or default 

settings for the Global Risk Controls, 

provided that the minimum setting 

would not be less than 25 and the 

maximum setting would not be more 

than 100. These proposed settings are 

based on the Exchange-determined 

setting provided under current rule 

6.40–O, Commentary .03, except that 

the current rule allows for a minimum 

setting of one (1) whereas the proposed 

rule is increasing that minimum to 

twenty-five (25), which the Exchange 

believes is a more appropriate 

minimum. 

• Proposed Rule 6.40P–O(c)(3)(D) 

would provide that the Exchange would 

specify by Trader Update the Interval 

for the Global Risk Controls, subject to 

the following: 

Æ The Interval would not be less than 

100 milliseconds and would not be 

greater than 300,000 milliseconds, 

inclusive of the duration of any trading 

halt occurring within that time, per 

proposed Rule 6.40P–O(c)(3)(D)(i). 

Æ For transactions occurring in the 

Core Open Auction, per Rule 6.64P–O, 

the applicable time period is the lesser 

of (i) the time between the Core Open 

Auction of a series and the initial 

transaction or (ii) the Interval, per 

proposed Rule 6.40P–O(c)(3)(D)(ii). 

Proposed Rule 6.40P–O(d) describes 

how an Entering Firm’s ability to enter 

orders, quotes, and related instructions 

would be reinstated after a ‘‘Block 

Only’’ or ‘‘Cancel and Block’’ 

Automated Breach Action has been 

triggered. In such case, proposed Rule 

6.40P–O(d) provides that the Exchange 

would not reinstate the Entering Firm’s 

ability to enter orders and quotes and 

related instructions on the Exchange 

(other than instructions to cancel one or 

more orders or quotes (including 

Auction-Only Orders and orders 

designated GTC) in full) without the 

consent of the Entering Firm, which 

may be provided via automated contact 

if it was a breach of an Activity-Based 

Risk Control. As further proposed, an 

Entering Firm that breaches the Global 

Risk Control would not be reinstated 

unless the Entering Firm provides 

consent via non-automated contact with 

the Exchange. This proposed 

functionality is consistent with current 

Rule 6.40–O, Commentary .02 regarding 

the need for an Entering Firm to make 

automated or non-automated contact 

with the Exchange, as applicable, prior 

to being reinstated. Proposed Rule 

6.40P–O(d) is also consistent with the 

more granular level of risk control under 

Pillar functionality available for cash 

equity trading per Rule 7.19–E(d). 

Proposed Rule 6.40P–O(e) would set 

forth new ‘‘kill switch’’ functionality, 

which would allow an Entering Firm to 

direct the Exchange to take certain bulk 

cancel or block actions with respect to 

orders and quotes. In contrast to the 

Automated Breach Actions described 

above, which the Exchange would take 

automatically after the breach of a risk 

limit, the Exchange would not take any 

of the Kill Switch Actions without 

express direction from an Entering Firm. 

Proposed Rule 6.40P–O(e) would 

specify that an Entering Firm could 

direct the Exchange to take one or more 

of the following actions with respect to 

orders and quotes at either an MPID, or 

if designated, sub-ID Level: (1) Cancel 

all Auction-Only Orders; (2) Cancel all 

orders designated GTC; (3) Cancel all 

unexecuted orders and quotes in the 

Consolidated Book other than AuctionOnly Orders and orders designated GTC; 

or (4) Block the entry of any new order 

and quote messages and related 

instructions, provided that the Exchange 

would continue to accept instructions 

from Entering Firms to cancel one or 

more orders or quotes (including 

Auction-Only Orders and orders 

designated GTC) in full, and later, 

reverse that block. The proposed posttrade Kill Switch Actions are not 


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36464 Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Notices 

45 17 CFR 240.15c3–5. 46Current Rule 6.41–O is held as Reserved. The 

Exchange proposes to renumber the proposed rule 

with the ‘‘P’’ modifier and remove reference to 

‘‘Reserved.’’ 

currently available per Rule 6.40–O and 

are substantially identical to the Kill 

Switch Action available on the 

Exchange’s cash equity platform 

pursuant to Rule 7.19–E(e), with a 

difference to address the handling of 

orders designated GTC, which are not 

available on the cash equity platform. 

The Exchange believes that offering this 

functionality for options trading under 

Pillar would give Entering Firms more 

flexibility in setting risk controls for 

options trading and add consistency 

with the Exchange’s risk control 

functionality available for cash equity 

trading. 

Proposed Commentary .01 to Rule 

6.40P–O would provide that the PreTrade, Activity-Based, and Global Risk 

Controls described in the proposed Rule 

6.40P–O are meant to supplement, and 

not replace, the OTP Holder’s or OTP 

Firm’s own internal systems, 

monitoring, and procedures related to 

risk management and are not designed 

for compliance with Rule 15c3–5 under 

the Exchange Act.45 Responsibility for 

compliance with all Exchange and SEC 

rules remains with the OTP Holder or 

OTP Firm. This proposed language is 

not included in existing Rule 6.40–O, 

and is based on Commentary .01 to Rule 

7.19–E. The proposed rule makes clear 

that use of the proposed controls alone 

does not constitute compliance with 

Exchange rules or the Exchange Act. 

In connection with proposed Rule 

6.40P–O, the Exchange proposes to add 

the following preamble to Rule 6.40–O: 

‘‘This Rule will not be applicable to 

trading on Pillar.’’ This proposed 

preamble is designed to promote clarity 

and transparency in Exchange rules that 

Rule 6.40–O would not be applicable to 

trading on Pillar. 

Proposed Rule 6.41P–O: Price 

Reasonability Checks—Orders and 

Quotes 

The Exchange proposes to describe its 

Price Reasonability Checks for orders 

and quotes in proposed Rule 6.41P–O.46

For the OX system, the concept of 

‘‘Price Reasonability Checks’’ for Limit 

Orders are described in Rule 6.60–O(c) 

and the concept of price protection 

filters for quotes are described in Rule 

6.61–O. The proposed ‘‘Price 

Reasonability Checks’’ on Pillar would 

be applicable to both orders and quotes 

and would work similarly to how the 

current price checks for Limit Orders 

function on the OX system, with 

updates to functionality consistent with 

Pillar. The Exchange proposes to locate 

the rule text for the proposed Price 

Reasonability Checks in Rule 6.41P–O 

to immediately follow Rule 6.40P–O 

regarding the Pre-Trade and ActivityBased Controls, as this placement would 

group the risk controls together and 

make Exchange rules easier to navigate. 

Proposed Rule 6.41P–O(a)(1)–(3) 

would set forth the circumstances under 

which the proposed Price Reasonability 

Checks would apply. Proposed Rule 

6.41P–O(a) would provide that the 

Exchange would apply the Price 

Reasonability Checks, as defined in 

proposed paragraphs (b) and (c), to all 

Limit Orders and quotes during 

continuous trading on each trading day, 

subject to the following: 

• Proposed Rule 6.41P–O(a)(1) would 

provide that a Limit Order or quote 

received during a pre-open state would 

be subject to the proposed Price 

Reasonability Checks after an Auction 

concludes; that a Limit Order or quote 

that was resting on the Consolidated 

Book before a trading halt would be 

subject to the proposed Price 

Reasonability Checks again after the 

Trading Halt Auction; and that a put 

option message to buy would be subject 

to the Arbitrage Check regardless of 

when it arrives. This proposed rule is 

based in part on current Rule 6.60–O(a), 

which provides that the Price 

Reasonability Checks (for orders) are 

applied when a series opens or reopens 

for trading. Proposed Rule 6.41P–O(a)(1) 

adds additional detail and granularity 

regarding when the proposed Price 

Reasonability Checks would be applied 

under Pillar. 

• Proposed Rule 6.41P–O(a)(2) would 

provide that if the calculation of the 

Price Reasonability Check is not 

consistent with the MPV for the series, 

it would be rounded down to the 

nearest price within the applicable 

MPV, which text adds new details 

regarding Pillar rounding functionality. 

• Proposed Rule 6.41P–O(a)(3) would 

provide that the proposed Price 

Reasonability Checks would not apply 

to (i) any options series for which the 

underlying security has a non-standard 

cash or stock deliverable as part of a 

corporate action; (ii) any options series 

for which the underlying security is 

identified as over-the-counter (‘‘OTC’’); 

(iii) any option series on an index; and 

(iv) any option series for which the 

Exchange determines it is necessary to 

exclude underlying securities in the 

interests of maintaining a fair and 

orderly market, which the Exchange 

would announce by Trader Update. 

Proposed Rule 6.41P–O(a)(3) is based on 

current Commentary .01 to Rule 6.60–O 

(orders) and 6.61–O (quotes), with a 

non-substantive difference that the 

proposed rule no longer references 

Binary Return Derivatives (‘‘ByRDs’’) 

because ByRDs are no longer traded on 

the Exchange. 

Proposed Rule 6.41P–O(b) would set 

forth the ‘‘Arbitrage Checks’’ for buy 

orders or quotes, which subset of Price 

Reasonability Checks are based on the 

principle that an option order is in error 

and should be rejected (or canceled) 

when the same result can be achieved 

on the market for the underlying equity 

security at a lesser cost. 

• Proposed Rule 6.41P–O(b)(1) relates 

to ‘‘puts’’ and would provide that order 

or quote messages to buy for put options 

would be rejected if the price of the 

order or quote is equal to or greater than 

the strike price of the option, which is 

substantively identical to current Rule 

6.60–O(c)(1)(A) for orders, with a 

proposed difference that proposed 

‘‘Arbitrage Check’’ would also apply to 

quotes. 

• Proposed Rule 6.41P–O(b)(2) relates 

to ‘‘calls’’ and would provide that order 

or quote messages to buy for call options 

would be rejected or canceled (if 

resting) if the price of the order or quote 

is equal to or greater than the last sale 

price of the underlying security on the 

Primary Market, plus a specified dollar 

amount to be determined by the 

Exchange and announced by Trader 

Update. This proposed rule is 

substantially similar to current Rule 

6.60–O(c)(1)(B) for orders, with two 

differences. First, the proposed 

‘‘Arbitrage Checks’’ would also apply to 

quotes. Second, because the Exchange is 

monitoring last sales from the Primary 

Market, the Exchange proposes that the 

Exchange-specified dollar amount for 

the Checks would be based on the last 

sale on the Primary Market rather than 

on the Consolidated Last Sale. 

Proposed Rule 6.41P–O(c) would set 

forth the ‘‘Intrinsic Value Checks’’ for 

orders or quotes to sell, which are 

designed to protect sellers of calls and 

puts from presumptively erroneous 

executions based on the ‘‘Intrinsic 

Value’’ of an option. 

• Proposed Rule 6.41P–O(c)(1)–(2) 

would set forth how the Intrinsic Value 

of an option would be determined. 

Proposed Rule 6.41P–O(c)(1) would 

provide that the Intrinsic Value for a put 

option is equal to the strike price minus 

the last sale price of the underlying 

security on the Primary Market. 

Proposed Rule 6.41P–O(c)(2) would 

provide that the Intrinsic Value for a 

call option is equal to the last sale price 

of the underlying security on the 

Primary Market minus the strike price. 

Proposed Rule 6.41P–O(c)(1)–(2) is 

based on how the intrinsic value is 


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47With the transition to Pillar, the Exchange is 

not making any changes to how Flex Options trade. 

Rule 5.31–O provides that Flex Options 

transactions may be effected during normal 

Exchange options trading hours on any business 

day and there will be no trading rotations in Flex 

Options. Rule 5.33–O sets forth the procedures for 

trading Flex Options. The opening process for 

Electronic Complex Orders is set forth in Rule 6.91– 

O. 

calculated in current Rule 6.60–O(c)(2) 

for orders, with two differences. First, 

the proposed ‘‘Intrinsic Value Checks’’ 

would also apply to quotes. Second, the 

Intrinsic Value of an option would be 

based on the last sale on the Primary 

Market rather than on the Consolidated 

Last Sale. 

• Proposed Rule 6.41P–O(c)(3) would 

provide that ISOs to sell would not be 

subject to the Intrinsic Value Check, 

which carve out is substantively 

identical to current Rule 6.60–O(c)(2). 

• Proposed Rule 6.41P–O(c)(4) would 

describe the application of the Intrinsic 

Value Checks to puts and calls to sell. 

Æ Proposed Rule 6.41P–O(c)(4)(A) 

would provide that orders or quotes to 

sell for both puts and calls would be 

rejected or canceled (if resting) if the 

price of the order or quote is equal to 

or lower than its Intrinsic Value, minus 

a threshold percentage to be determined 

by the Exchange and announced by 

Trader Update. 

Æ Proposed Rule 6.41P–O(c)(4)(B) 

would provide that the Exchangedetermined threshold percentage (per 

paragraph (c)(4)(A)) would be based on 

the NBB, provided that, immediately 

following an Auction, it would be based 

on the Auction Price, or, if none, the 

lower Auction Collar price, or, if none, 

the NBB. This proposed threshold 

percentage is similar to how the 

Reference Price would be determined 

for Trading Collars, as described above 

pursuant to proposed Rule 6.62P– 

O(a)(3). As further proposed, Rule 

6.41P–O(c)(4)(B) would provide that for 

purposes of determining the Intrinsic 

Value, the Exchange would not use an 

adjusted NBBO. The Exchange further 

proposes that the Intrinsic Value Check 

for sell orders and quotes would not be 

applied if the Intrinsic Value cannot be 

calculated. 

Proposed Rule 6.41P–O(c)(4)(A)–(B) is 

substantially similar to current Rule 

6.60–O(a)(2)(A), which sets forth the 

Intrinsic Value for orders, except that 

the proposed rule would also apply to 

quotes and provides additional detail 

regarding how the threshold percentage 

for determining the Intrinsic Value 

would be applied depending on when 

such sell order or quote arrives and the 

potential reference price(s) available to 

calculate this Price Reasonability Check. 

Proposed Rule 6.41P–O(d) would 

provide the Automated Breach Action to 

be applied when a Market Maker’s order 

or quote fails one of the Price 

Reasonability Checks. As proposed, if a 

Market Maker’s order or quote message 

is rejected or cancelled (if resting) 

pursuant to proposed paragraph (b) 

(Arbitrage Checks) or (c) (Intrinsic Value 

Checks) of proposed Rule 6.41P–O, the 

Exchange would Cancel and Block 

orders and quotes in the affected class 

of options as described in Rule 6.40P– 

O(c)(2)(C)(iii) (as described above in 

section ‘‘Proposed Rule 6.40P–O’’). 

Proposed Rule 6.41P–O(d)(1) would 

provide that a breach of proposed Rule 

6.41P–O(d) would count towards a 

Market Maker’s Global Risk Control 

limit per Rule 6.40P–O(a)(4) (as 

described above in section ‘‘Proposed 

Rule 6.40P–O’’). 

Proposed Rule 6.41P–O(d)(2) 

concerns how a Market Maker would be 

reinstated following an automated 

breach action. As proposed, the 

Exchange would not reinstate the 

Market Maker’s ability to enter orders 

and quotes and related instructions on 

the Exchange in that class of options 

(other than instructions to cancel one or 

more orders/quotes (including AuctionOnly Orders and orders designated 

GTC) in full) without the consent of the 

Market Maker, which may be provided 

via automated contact. 

Rule 6.41P–O(d) is substantially 

similar to current Rule 6.61–O(b), 

except that the proposed rule applies to 

both the orders and quotes of a Market 

Maker (not just quotes) and provides the 

additional functionality that a breach of 

the Price Reasonability Checks would 

count towards a Market Maker’s Global 

Risk Control limit under proposed Rule 

6.40P–O(c)(3), which functionality 

would be new under Pillar. 

In connection with proposed Rule 

6.41P–O, the Exchange proposes to add 

the following preamble to Rules 6.60–O 

and 6.61–O: ‘‘This Rule will not be 

applicable to trading on Pillar.’’ This 

proposed preamble is designed to 

promote clarity and transparency in 

Exchange rules that Rules 6.60–O and 

6.61–O would not be applicable to 

trading on Pillar. 

Proposed Rule 6.64P–O: Auction 

Process 

Current Rule 6.64–O, OX Opening 

Process, sets forth the opening process 

currently used on the Exchange’s OX 

system for opening trading in a series 

each day and reopening trading in a 

series following a trading halt. The 

Exchange proposes that new Rule 

6.64P–O would set forth the auction 

process for both opening and reopening 

trading in a series on the Exchange. The 

Exchange proposes to specify that Rule 

6.64–O would not be applicable to 

trading on Pillar. 

With the transition to Pillar, the 

Exchange proposes new functionality 

regarding the auction process on the 

Exchange. In addition, certain 

functionality available on the 

Exchange’s cash equity platform will 

now be available for options trading. 

Accordingly, the Exchange proposes 

that proposed Rule 6.64P–O would use 

Pillar terminology relating to auctions 

that is based on Pillar terminology set 

forth in Rule 7.35–E for cash equity 

trading. 

Definitions. Proposed Rule 6.64P–O(a) 

would provide that the Rule would be 

applicable to all series that trade on the 

Exchange other than Flex Options.47

Proposed Rule 6.64P–O(a) would further 

set forth the definitions that would be 

used for purposes of Rule 6–O Options 

Trading that would be applicable to 

trading on Pillar. 

• Proposed Rule 6.64P–O(a)(1) would 

define the term ‘‘Auction’’ to mean the 

opening or reopening of a series for 

trading either on a trade or a quote. This 

proposed definition is based in part on 

current Rule 6.64–O(a), which defines 

the term ‘‘Trading Auction’’ to be a 

process by which trading is initiated in 

a specified options class that may be 

employed at the opening of the 

Exchange each business day or to reopen trading after a trading halt. On 

Pillar, the Exchange proposes that the 

term ‘‘Auction’’ would refer to the point 

in the process where the Exchange 

determines that a series can be opened 

or reopened either on a trade or a quote. 

Proposed Rule 6.64P–O(a)(1)(A) 

would provide that a ‘‘Core Open 

Auction’’ means the Auction that opens 

trading after the beginning of Core 

Trading Hours and proposed Rule 

6.64P–O(a)(1)(B) would provide that a 

‘‘Trading Halt Auction’’ means the 

Auction that reopens trading following 

a trading halt. These are Pillar terms 

currently used in Rule 7.35–E for the 

same purposes. 

• Proposed Rule 6.64P–O(a)(2) would 

define the term ‘‘Auction Collar’’ to 

mean the price collar thresholds for the 

Indicative Match Price for an Auction. 

As further proposed, the upper Auction 

Collar would be the offer of the Legal 

Width Quote (defined below) and the 

lower Auction Collar would be the bid 

of the Legal Width Quote, provided that 

if the bid of the Legal Width Quote is 

zero, the lower Auction Collar would be 

one MPV above zero for the series. The 

proposed rule would further provide 

that if there is no Legal Width Quote, 

the Auction Collars would be published 


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48See Rule 6.64–O(b)(D) and (E). 

49This is consistent with the order information 

included in Auction Imbalance Information for cash 

equity trading. See Rule 7.35–E(a)(7) and 7.35– 

E(a)(8). The Exchange proposes to exclude IO 

Orders because they are conditional offsetting 

orders that would not contribute to price discovery 

in the Auction Process. 50See Rule 7.35–E(a)(13). 

in the Auction Imbalance Information 

(defined below) as zero. 

The proposed terminology of 

‘‘Auction Collars’’ would be new for 

options trading and is based on the 

same term used in Rule 7.35–E for 

trading cash equity securities. However, 

the concept would not be novel because 

currently, the Exchange will not open a 

series if the bid-ask differential is not 

within the bid-ask differential 

guidelines established under Rule 6.37– 

O(b)(4).48 Auction Collars would 

function similarly to prevent an Auction 

that results in a trade from being priced 

outside the Legal Width Quote. 

• Proposed Rule 6.64P–O(a)(3) would 

define the term ‘‘Auction Imbalance 

Information’’ to mean the information 

that the Exchange disseminates about an 

Auction via its proprietary data feeds 

and includes the Auction Collars, 

Auction Indicator, Book Clearing Price, 

Far Clearing Price, Indicative Match 

Price, Matched Volume, Market 

Imbalance, and Total Imbalance. With 

Pillar, the Exchange proposes to 

disseminate Auction Imbalance 

Information for its options market in the 

same manner that such information is 

disseminated for its cash equity market. 

Accordingly, this proposed definition is 

based on Rule 7.35–E, with differences 

to reflect the content that would be 

included in Auction Imbalance 

Information for options trading. In 

addition, the Exchange proposes that 

the Auction Imbalance Information 

would reflect the orders and quotes 

eligible to participate in an Auction and 

that contribute to price discovery. 

Accordingly, proposed Rule 6.64P– 

O(a)(3) would further provide that 

Auction Imbalance Information would 

be based on all orders and quotes 

(including the non-displayed quantity of 

Reserve Orders) eligible to participate in 

an Auction, excluding IO Orders.49

Proposed Rule 6.64P–O(a)(3)(A) 

would define the term ‘‘Auction 

Indicator’’ to mean the indicator that 

provides a status update of whether an 

Auction cannot be conducted because 

either (i) there is no Legal Width Quote, 

or (ii) a Market Maker quote has not 

been received during the Opening MMQ 

Time Parameter (defined below). The 

Exchange currently disseminates an 

Auction Indicator on its cash equity 

market and proposes similar 

functionality for options trading on the 

Exchange.50

Proposed Rule 6.64P–O(a)(3)(B) 

would define the term ‘‘Book Clearing 

Price’’ to mean the price at which all 

contracts could be traded in an Auction 

if not subject to the Auction Collar and 

that the Book Clearing Price would be 

zero if a sell (buy) Imbalance cannot be 

filled by any buy (sell) interest. The 

Exchange proposes that the manner that 

the Book Clearing Price would be 

calculated for options trading would be 

the same as how it is calculated for cash 

equity trading. Accordingly, this 

proposed definition is based in part on 

the definition of ‘‘Book Clearing Price’’ 

set forth in Rule 7.35–E(a)(11), with 

differences to reflect options trading 

terminology. 

Proposed Rule 6.64P–O(a)(3)(C) 

would define the term ‘‘Far Clearing 

Price’’ to mean the price at which all 

Auction-Only Orders could be traded in 

an Auction within the Auction Collar. 

The Exchange proposes that the manner 

that the Far Clearing Price would be 

calculated for options trading would be 

the same as how it is calculated for cash 

equity trading. Accordingly, this 

proposed definition is based on the 

definition of ‘‘Far Clearing Price’’ set 

forth in Rule 7.35–E(a)(12), without any 

differences. 

Proposed Rule 6.64P–O(a)(3)(D) 

would define the term ‘‘Imbalance’’ to 

mean the number of buy (sell) contracts 

that cannot be matched with sell (buy) 

contracts at the Indicative Match Price 

at any given time. The Exchange 

proposes that the manner that the 

Imbalance would be calculated for 

options trading would be the same as 

how it is calculated for cash equity 

trading. Accordingly, this proposed 

definition is based in part on the 

definition of ‘‘Imbalance’’ set forth in 

Rule 7.35–E(a)(7), with differences to 

reflect options trading terminology. 

Proposed Rule 6.64P–O(a)(3)(D)(i) 

would define the term ‘‘Total 

Imbalance’’ to mean the Imbalance of all 

buy (sell) contracts at the Indicative 

Match Price for all orders and quotes 

eligible to trade in an Auction. The 

Exchange proposes that the manner that 

the Total Imbalance would be calculated 

for options trading would be the same 

as how it is calculated for cash equity 

trading. Accordingly, this proposed 

definition is based in part on the 

definition of ‘‘Total Imbalance’’ set forth 

in Rule 7.35–E(a)(7)(A), with differences 

to reflect options trading terminology. 

Proposed Rule 6.64P–O(a)(3)(D)(ii) 

would define the term ‘‘Market 

Imbalance’’ to mean the Imbalance of 

any remaining buy (sell) Market Orders 

and MOO Orders that are not matched 

for trading in the Auction. The 

Exchange proposes that the manner that 

the Market Imbalance would be 

calculated for options trading would be 

the same as how it is calculated for cash 

equity trading. Accordingly, this 

proposed definition is based in part on 

the definition of ‘‘Market Imbalance’’ set 

forth in Rule 7.35–E(a)(7)(B), with 

differences to reflect options trading 

terminology. 

• Proposed Rule 6.64P–O(a)(4) would 

define the term ‘‘Auction Process’’ to 

mean the process that begins when the 

Exchange receives an Auction Trigger 

(defined below) for a series and ends 

when the Auction is conducted. This 

would be a new term and is designed to 

address all steps in the process that 

culminates in an Auction, as described 

in proposed Rule 6.64P–O(d). 

• Proposed Rule 6.64P–O(a)(5) would 

define the term ‘‘Auction Processing 

Period’’ to mean the period during 

which the Auction is being processed. 

The Exchange proposes that this term 

would have the same meaning as the 

same term on its cash equity market. 

Accordingly, this proposed definition is 

based in part on the definition of 

‘‘Auction Processing Period’’ set forth in 

Rule 7.35–E(a)(2), without any 

differences. 

• Proposed Rule 6.64P–O(a)(6) would 

define the term ‘‘Auction Trigger’’ to 

mean the information disseminated by 

the Primary Market in the underlying 

security that triggers the Auction 

Process for a series to begin. For a Core 

Open Auction, the Auction Trigger 

would be when the Primary Market first 

disseminates at or after 9:30 a.m. 

Eastern Time both a two-sided quote 

and a trade of any size that is at or 

within the quote. For a Trading Halt 

Auction, the Auction Trigger would be 

when the Primary Market disseminates 

at the end of a trading halt or pause a 

resume message, a two-sided quote, and 

a trade of any size that is at or within 

the quote. This proposed functionality 

is not new and is based on how the 

Exchange currently opens or reopens a 

series for trading, as set forth in the last 

sentence of current Rule 6.64–O(b). The 

Exchange proposes to use Pillar 

terminology, including to specify that 

an odd-lot transaction on the Primary 

Market could be used as an Auction 

Trigger, which would be new on Pillar. 

• Proposed Rule 6.64P–O(a)(7) would 

define the term ‘‘Indicative Match 

Price’’ to mean the price at which the 

maximum number of contracts can be 

traded in an Auction, including the nondisplayed quantity of Reserve Orders 

and excluding IO Orders, subject to the 


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Auction Collars. This proposed 

definition is based on Rule 7.35–E(a)(8) 

with non-substantive differences to 

reflect options trading terminology (i.e., 

contracts instead of shares). Proposed 

Rule 6.64P–O(a)(7) would further 

provide that if there is no Legal Width 

Quote, the Indicative Match Price 

included in the Auction Imbalance 

Information would be calculated 

without Auction Collars. This would be 

a new feature applicable only to options 

trading and an Indicative Match Price 

without Auction Collars would be 

accompanied with an Auction Indicator 

that the Auction cannot be conducted 

because there is no Legal Width Quote. 

Proposed Rule 6.64P–O(a)(7)(A) 

would provide that if there is more than 

one price level at which the maximum 

number of contracts can be traded 

within the Auction Collars, the 

Indicative Match Price would be the 

price closest to the midpoint of the 

Legal Width Quote, rounded to the 

nearest MPV for the series, provided 

that the Indicative Match Price will not 

be lower (higher) than the highest 

(lowest) price of a Limit Order to buy 

(sell) ranked Priority 2—Display Orders 

that is eligible to participate in the 

Auction. This proposed rule text is 

based on Rule 7.31–E(a)(8)(A) with a 

substantive difference only to reflect 

that in such circumstances, the 

Indicative Match Price would be the 

price closest to the midpoint of the 

Legal Width Quote rather than the price 

closest to an auction reference price. 

Proposed Rule 6.64P–O(a)(7)(B) 

would provide that an Indicative Match 

Price that is higher (lower) than the 

upper (lower) Auction Collar would be 

adjusted to the upper (lower) Auction 

Collar and orders eligible to participate 

in the Auction would trade at the 

collared Indicative Match Price. 

Proposed Rule 6.64P–O(a)(7)(B)(i) 

would provide that Limit Orders to buy 

(sell) with a limit price above (below) 

the upper (lower) Auction Collar would 

be included in the Auction Imbalance 

Information at the collared Indicative 

Match Price and would be eligible to 

trade at the Indicative Match Price. 

Proposed Rule 6.64P–O(a)(7)(B)(ii) 

would provide that Limit Orders and 

quotes to buy (sell) with a limit price 

below (above) the lower (upper) Auction 

Collar would not be included in the 

Auction Imbalance Information and 

would not participate in an Auction. 

The Exchange proposes that the manner 

that orders and quotes priced outside of 

the Auction Collar would be included in 

the Indicative Match Price would be the 

same as how it is determined for cash 

equity trading. Accordingly, this 

proposed rule text is based on Rules 

7.31–E(a)(10)(A), (B), and (C) with a 

difference only to reflect when the 

proposed rule would be applicable to 

quotes. 

Proposed Rule 6.64P–O(a)(7)(C) 

would provide that if the Matched 

Volume (defined below) for an Auction 

consists of only buy and sell Market 

Orders, the Indicative Match Price 

would be the midpoint of the Legal 

Width Quote, rounded to the MPV for 

the series, or, if the Legal Width Quote 

is locked, the locked price. This 

proposed rule text is based in part on 

Rule 7.31–E(a)(8)(C), with differences to 

reflect that options trading is based on 

a Legal Width Quote. 

Proposed Rule 6.64P–O(a)(7)(D) 

would provide that if there is no 

Matched Volume, including if there are 

Market Orders on only one side of the 

Market, the Indicative Match Price and 

Total Imbalance for the Auction 

Imbalance Information would be zero. 

This proposed rule text is based on Rule 

7.31–E(a)(8)(D) and (E) with differences 

to reflect that on options, the Indicative 

Match Price would be zero in both 

circumstances. 

• Proposed Rule 6.64P–O(a)(8) would 

define the term ‘‘Legal Width Quote’’ to 

mean the highest bid and lowest offer 

among all Market Maker quotes and the 

Away Market NBBO (together, 

‘‘Calculated NBBO’’) during the Auction 

Process. The proposed rule would 

further provide that the Calculated 

NBBO can be a Legal Width Quote if it: 

(A) It is locked, but not crossed; (B) does 

not contain a zero offer; and (C) has a 

spread between the Calculated NBBO 

for each option contract that does not 

exceed the following differentials, 

which can be widened as provided for 

in Rule 6.37–O(c): (i) No more than .25 

where the bid not does exceed $2; (ii) 

no more than .40 where the bid is more 

than $2 but does not exceed $5; (iii) no 

more than .50 where the bid is more 

than $5 but does not exceed $10; (iv) no 

more than .80 where the bid is more 

than $10 but does not exceed $20; and 

(v) no more than $1 where the bid is 

more than $20, provided that a Trading 

Official may establish differences other 

than the above for one or more series or 

classes of options. 

Requiring that a bid-ask spread meet 

specified differentials before an Auction 

can proceed is based on the current OX 

Opening Process, which requires the 

bid-ask differential for a series to be in 

an acceptable range. The proposed 

differential spread for the Pillar Auction 

Process is based on the bid-ask 

differentials currently set forth in Rule 

6.37–O(b)(4) with a difference that for 

Auctions on Pillar, for option contracts 

with a bid of $2, the differential will be 

.25 instead of .40. The Exchange 

believes that including the proposed 

bid-ask differential in the rule governing 

the Auction Process would promote 

clarity and transparency in Exchange 

rules regarding which quotes—both 

Market Maker quotes on the Exchange 

and the Away Market NBBO—that the 

Exchange would use to determine if 

there is a Legal Width Quote. The 

Exchange also proposes to make a 

conforming change to Rule 6.37–O(c) to 

add a cross-reference to proposed Rule 

6.64P–O(a)(8). This proposed 

amendment would ensure that the 

existing procedures for auctions 

specified in Rule 6.37–O(c) would 

continue to be available for option 

symbols that have transitioned to Pillar. 

• Proposed Rule 6.64P–O(a)(9) would 

define the term ‘‘Matched Volume’’ to 

mean the number of buy and sell 

contracts that can be matched at the 

Indicative Match Price, excluding IO 

Orders. This proposed rule text is based 

on the definition of ‘‘Matched Volume’’ 

set forth in Rule 7.31–E(a)(9) with a 

non-substantive difference to reference 

contracts instead of shares and to be 

clear that the Matched Volume would 

not include IO Orders. 

• Proposed Rule 6.64P–O(a)(10) 

would define the term ‘‘pre-open state’’ 

to mean the period before a series is 

opened or reopened and that during the 

pre-open state, the Exchange would 

accept Auction-Only Orders, quotes, 

and orders designated Day or GTC, 

including orders ranked Priority 3— 

Non-Display Orders that are not eligible 

to participate in an Auction. The 

proposed rule would further provide 

that the pre-open state for the Core 

Open Auction would begin at 6:00 a.m. 

Eastern Time and would end when the 

Auction Processing Period begins and 

that during the pre-open state before the 

Core Open Auction, the Exchange 

would re-enter orders designated GTC. 

The proposed rule would also provide 

that pre-open state for a Trading Halt 

Auction would begin at the beginning of 

the trading halt and would end when 

the Auction Processing Period begins. 

This proposed definition would be new 

for Pillar and is designed to distinguish 

from both the Auction Processing Period 

and the period when a series is opened 

for trading. As noted above, this 

proposed definition would also be used 

in proposed Rules 6.40P–O, 6.41P–O, 

and 6.62P–O. 

• Proposed Rule 6.64P–O(a)(11) 

would define the term ‘‘Rotational 

Quote’’ to mean the highest Market 

Maker bid and lowest Market Maker 

offer on the Exchange when the Auction 

Process begins and that during the 

Auction Process, the Exchange would 


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51Current Rule 6.64–O(b)(B) provides that 

‘‘orders will have priority over Market Maker quotes 

at the same price.’’ 

52See discussion supra, regarding proposed Rule 

6.62P–O(c)(3) and how IO Orders would function. 

update the price and size of the 

Rotational Quote and a Rotational Quote 

can be locked or crossed. The Exchange 

further proposes that if there are no 

Market Maker quotes, the Rotational 

Quote would be published with a zero 

price and size. The Exchange notes that 

it currently publishes a ‘‘rotational 

quote’’ when it is in the process of 

opening or reopening a series, i.e., a 

quote that is comprised only of Market 

Maker quotes and does not include 

orders. The Exchange proposes a 

difference on Pillar because currently, if 

the Market Maker Quotes are crossed, 

the Exchange flips the bid and offer 

prices. In Pillar, the Exchange would 

publish a Rotational Quote with the 

actual bid and offer prices, even if 

crossed. 

Auction Ranking. Proposed Rule 

6.64P–O(b) would describe the ranking 

for Auctions and would provide that 

orders and quotes on the side of the 

Imbalance are not guaranteed to 

participate in the Auction and would be 

ranked in price-time priority under 

proposed Rule 6.76P–O consistent with 

the priority ranking associated with 

each order or quote, provided that: (1) 

Limit Orders, quotes, and LOO Orders 

would be ranked based on their limit 

price and not the price at which they 

would participate in the Auction; (2) 

MOO Orders would be ranked Priority 

1—Market Orders; (3) LOO Orders 

would be ranked Priority 2—Display 

Orders; and (4) IO Orders would be 

ranked based on time among IO Orders, 

subject to eligibility to participate at the 

Indicative Match Price based on their 

limit price. 

This proposed rule is based on 

current Rule 6.62–O(b)(B), which 

provides that orders and quotes in the 

system will be matched up with one 

another based on price-time priority. 

The Exchange proposes a difference in 

Pillar that orders in the same priority 

category as quotes would not have 

priority over Market Maker quotes at the 

same price, which is current 

functionality.51 Instead, orders and 

Market Marker quotes in the same 

priority category would be ranked based 

on time, consistent with proposed Rule 

6.76P–O. Because the Exchange 

proposes that orders and quotes in an 

options Auction would be processed in 

the same manner as on its cash equity 

platform, including that orders on the 

side of the Imbalance would not be 

guaranteed to participate in an Auction, 

the remaining rule text is based in part 

on Rule 7.35–E(a)(6)(A)—(D), with 

differences to reflect options trading and 

to be clear that IO Orders would be 

ranked on working time among IO 

Orders, subject to such orders’ eligibility 

to participate at the Indicative Match 

Price based on their limit price.52

Auction Imbalance Information. 

Proposed Rule 6.64P–O(c) would 

provide that Auction Imbalance 

Information would be updated at least 

every second until the Auction is 

conducted, unless there is no change to 

the information and that the Exchange 

would begin disseminating Auction 

Imbalance Information at the following 

times: (1) Core Open Auction Imbalance 

Information would begin at 8:00 a.m. 

Eastern Time; and (2) Trading Halt 

Auction Imbalance Information would 

begin at the beginning of the trading 

halt. Because the Exchange proposes to 

disseminate Auction Imbalance 

Information for its options market in the 

same manner that such information is 

disseminated for its cash equity market, 

this proposed rule text is based in part 

on Rule 7.35–E(a)(4)(A) and (C). 

Auction Process. Proposed Rule 

6.64P–O(d) would set forth the 

Exchange’s proposed Auction Process 

on Pillar. Similar to current 

functionality, a series would not be 

opened or reopened for trading if there 

is no Legal Width Quote. The Exchange 

proposes to add on Pillar that a series 

should also have Market Maker quotes 

and the Exchange proposes to provide 

time for this requirement to be 

established, and if not established 

within those time frames, providing for 

a mechanism to open or reopen a series 

even if there are no Market Maker 

quotes. 

Proposed Rule 6.64P–O(d)(1) would 

concern the Rotational Quote and would 

provide that when the Exchange 

receives the Auction Trigger for a series, 

the Exchange would send a Rotational 

Quote to both OPRA and proprietary 

data feeds indicating that the Exchange 

is in the process of transitioning from a 

pre-open state to continuous trading for 

that series. 

Proposed Rule 6.64P–O(d)(2) would 

provide that once a Rotational Quote 

has been sent, the Exchange would 

conduct an Auction when there is both 

a Legal Width Quote and, if applicable, 

Market Maker quote with a non-zero 

offer in the series (subject to the 

Opening MMQ Time Parameter 

requirements specified in proposed Rule 

6.64P–O(d)(3)). The proposed rule 

would further provide that the Exchange 

would wait a minimum of two 

milliseconds after the Rotational Quote 

has been sent before an Auction can be 

conducted. This proposed rule text is 

designed to provide transparency and 

determinism in Exchange rules of the 

earliest potential time that a series could 

be opened after the Exchange receives 

an Auction Trigger, and subject to the 

series meeting all other requirements for 

opening or reopening. 

Proposed Rule 6.64P–O(d)(2)(A) 

would provide that if there is Matched 

Volume that can trade at or within the 

Auction Collars, the Auction would 

result in a trade at the Indicative Match 

Price. Proposed Rule 6.64P–O(d)(2)(B) 

would provide that if there is no 

Matched Volume that can trade at or 

within the Auction Collars, the 

Exchange would transition to 

continuous trading as described in 

proposed Rule 6.64P–O(f) below and the 

Auction would result in a quote. This 

proposed rule text is designed to 

provide transparency of when an 

Auction would result in a trade or a 

quote. 

Proposed Rule 6.64P–O(d)(3) would 

specify the Opening MMQ Time 

Parameter. As proposed, once the 

Auction Process begins, the Exchange 

would begin a one-minute timer for the 

Market Maker(s) assigned to a series to 

submit a quote with a non-zero offer. 

This one-minute timer would be the 

Opening MMQ Time Parameter. The 

Opening MMQ Time Parameter is 

designed to provide the Market Makers 

assigned to a series an opportunity to 

submit a quote, and provide 

transparency in Exchange rules of the 

circumstances of when the Exchange 

would open a series for trading if the 

assigned Market Maker(s) does not 

submit a quote within the specified time 

periods, as follows: 

• Proposed Rule 6.64P–O(d)(3)(A) 

would provide that if there are no 

Market Makers assigned to a series, the 

Exchange would conduct an Auction in 

that series based on only a Legal Width 

Quote, without waiting for the Opening 

MMQ Time Parameter to end. 

• Proposed Rule 6.64P–O(d)(3)(B) 

would provide that if there is only one 

Market Maker assigned to a series: 

Æ The Exchange would conduct the 

Auction, without waiting for the 

Opening MMQ Time Parameter to end, 

as soon as there is both a Legal Width 

Quote and the assigned Market Maker 

has submitted a quote with a non-zero 

offer (proposed Rule 6.64P– 

O(d)(3)(B)(i)). 

Æ If the Market Maker has not 

submitted a quote with a non-zero offer 

by the end of the Opening MMQ Time 

Parameter and there is a Legal Width 

Quote, the Exchange would conduct the 


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53The Exchange expects this to be a rare race 

condition that would result when the Exchange 

receives orders and quotes at virtually the same 

time it is evaluating whether it can open a series 

based on a wide Calculated NBBO and that as a 

result of that race condition, those new orders or 

quotes are marketable against contra-side interest at 

the same time that the Exchange concludes, based 

on interest that had previously been received, that 

it can open on a quote. 

Auction (proposed Rule 6.64P– 

O(d)(3)(B)(ii)). 

• Proposed Rule 6.64P–O(d)(3)(C) 

would provide that if there are two or 

more Market Makers assigned to a 

series: 

Æ The Exchange would conduct the 

Auction, without waiting for the 

Opening MMQ Time Parameter to end, 

as soon as there is both a Legal Width 

Quote and at least two assigned Market 

Makers have submitted a quote with a 

non-zero offer (proposed Rule 6.64P– 

O(d)(3)(C)(i)). 

Æ If at least two Market Makers have 

not submitted a quote with a non-zero 

offer by the end of the Opening MMQ 

Time Parameter, the Exchange would 

begin a second Opening MMQ Time 

Parameter and that during the second 

Opening MMQ Time Parameter, the 

Exchange would conduct the Auction, 

without waiting for the second Opening 

MMQ Time Parameter to end, if there is 

both a Legal Width Quote and at least 

one Market Maker has submitted a quote 

with a non-zero offer (proposed Rule 

6.64P–O(d)(3)(C)(ii)). 

Æ If no Market Maker has submitted 

a quote with a non-zero offer by the end 

of the second Opening MMQ Time 

Parameter and there is a Legal Width 

Quote, the Exchange would conduct the 

Auction (proposed Rule 6.64P– 

O(d)(3)(C)(iii). 

Proposed Rule 6.64P–O(d)(4) would 

provide that for the first five minutes of 

the Auction Process, if there is no Legal 

Width Quote, the Exchange would not 

conduct an Auction, even if there is 

Matched Volume. This proposed rule 

text provides transparency that when 

there is Matched Volume, the Exchange 

would not open a series if there is no 

Legal Width Quote. 

The Exchange proposes new 

functionality for Pillar to allow the 

Exchange to open a series when there is 

a Calculated NBBO wider than the Legal 

Width Quote, provided that there is also 

no Matched Volume. As proposed, five 

minutes after the Auction Process 

begins: 

• Proposed Rule 6.64P–O(d)(4)(A) 

would provide that if there is no 

Matched Volume and the Calculated 

NBBO is wider than the Legal Width 

Quote, is not crossed, and does not 

contain a zero offer, the Exchange 

would transition to continuous trading 

as described in paragraph (f) of this 

Rule. As further proposed, in such case, 

the Auction would result in a quote, 

provided that there may be an Auction 

trade even if there is no Legal Width 

Quote if orders or quotes arrive during 

the period when the Exchange is 

evaluating the status of orders and 

quotes.53 The Exchange believes this 

proposed rule would provide an 

opportunity for more series to open for 

trading when there is a Calculated 

NBBO in a series that is wider than the 

Legal Width Quote and is not crossed 

and does not contain a zero offer. 

• Proposed Rule 6.64P–O(d)(4)(A)(i) 

would provide that any time a series is 

opened or reopened when there is no 

Legal Width Quote, Market Orders and 

MOO Orders would not participate in 

the Auction and would be cancelled 

before the Exchange transitions to 

continuous trading. 

• Proposed Rule 6.64P–O(d)(4)(B) 

would provide that if the Exchange still 

cannot conduct an Auction, the 

Exchange would continue to evaluate 

both the Calculated NBBO and interest 

on the Consolidated Book until the 

earlier of: (i) A Legal Width Quote is 

established and an Auction can be 

conducted; (ii) the series can be opened 

as provided for in proposed Rule 6.64P– 

O(d)(4)(A); (iii) the series is halted; or 

(iv) the end of Core Trading Hours. The 

proposed rule provides transparency 

that the Exchange would continue to 

look for an opportunity to open a series 

based on changes to the Calculated 

NBBO or orders and quotes on the 

Consolidated Book. 

Proposed Rule 6.64P–O(d)(5) would 

provide that the Exchange may deviate 

from the standard manner of the 

Auction Process, including adjusting the 

timing of the Auction Process in any 

option series or opening or reopening a 

series when there is no Legal Width 

Quote, when it believes it is necessary 

in the interests of a fair and orderly 

market. This proposed rule is based on 

Rule 6.64–O(b)(F) and is designed to 

provide the Exchange with flexibility to 

open a series even if there is no Legal 

Width Quote. For example, a Floor 

Broker may have a two-sided open 

outcry order. If the series is not opened, 

that trade could not be consummated. 

Accordingly, this proposed rule would 

allow the Exchange to open a series for 

trading to facilitate open outcry trading. 

Order Processing during an Auction 

Processing Period. As described above, 

the Auction Processing Period is the 

abbreviated time period (i.e., generally 

measured in less than a second) when 

the Exchange conducts the Auction. For 

example, if there is a Legal Width 

Quote, Market Maker quotes, and 

Matched Volume, the Auction 

Processing Period is when that Matched 

Volume will trade at the Indicative 

Match Price. New orders and quotes 

received during the Auction Processing 

Period would not be eligible to 

participate in an Auction. Because the 

Exchange will be using the same Pillar 

auction functionality for options trading 

that is used for its cash equity market, 

the Exchange proposes that proposed 

Rule 6.64P–O(e) would be based on 

Rule 7.35–E(g) and sub-paragraphs (1) 

and (2) with differences only to 

references quotes in addition to orders. 

Accordingly, as proposed, during an 

Auction Processing Period, new order 

and quote messages received during the 

Auction Processing Period would be 

accepted but would not be processed 

until after the Auction Processing 

Period. As with Rule 7.35–E(g), for 

purposes of proposed Rule 6.64P–O(e) 

and (f), an ‘‘order instruction’’ would 

refer to a request to cancel, cancel and 

replace, or modify an order or quote. 

As proposed, during the Auction 

Processing Period, order instructions 

would be processed as follows: 

• An order instruction that arrives 

during the Auction Processing Period 

would not be processed until after the 

Auction Processing Period if it relates to 

an order or quote that was received 

before the Auction Processing Period. 

Any subsequent order instructions 

relating to such order would be rejected 

(proposed Rule 6.64P–O(e)(1)). 

• An order instruction that arrives 

during the Auction Processing Period 

would be processed on arrival if it 

relates to an order that was received 

during the Auction Processing Period 

(proposed Rule 6.64P–O(e)(2)). 

Transition to Continuous Trading. 

After the Auction Processing Period 

concludes, i.e., once the Auction is 

done, the Exchange transitions to 

continuous trading. During this 

transition, the way orders, quotes, and 

order instructions are processed differs 

depending on when such messages 

arrived at the Exchange. Proposed Rule 

6.64P–O(f) would describe how the 

Exchange would transition to 

continuous trading after the Auction 

Processing Period concludes, and is 

based on how the Exchange transitions 

to continuous trading on its cash equity 

market following a Trading Halt 

Auction, as described in Rule 7.35–E(h). 

The transition to continuous trading 

would proceed as follows. 

Proposed Rule 6.64P–O(f)(1) would 

provide that orders that are no longer 

eligible to trade would be cancelled. 

This proposed rule text is based in part 

on Pillar terminology used in Rule 7.35– 


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54For example, as described in proposed Rule 

6.62P–O(d)(4)(A), if there is no Legal Width Quote, 

after five minutes, the Exchange could open a series 

for trading if there is no Matched Volume and 

would transition to continuous trading as described 

in proposed Rule 6.62P–O(f). 

E(h)(1). For options trading, the only 

orders that would no longer be eligible 

to trade would be Auction-Only Orders. 

Proposed Rule 6.64P–O(f)(2) would 

provide that order instructions would be 

processed as follows: 

• An order instruction that arrives 

during the transition to continuous 

trading or the Auction Processing Period 

under paragraph (e)(1) of this Rule 

would be processed in time sequence 

with the processing of orders and quotes 

as specified in paragraphs (f)(3)(A) or 

(B) of this Rule if it relates to an order 

or quote that was received before the 

Auction Processing Period or that has 

already transitioned to continuous 

trading and any subsequent order 

instructions relating to such order or 

quote would be rejected (proposed Rule 

6.64P–O(f)(2)(A)). This proposed rule 

text is based on Rule 7.35–E(h)(2)(A) 

without any substantive differences. 

This proposed rule text provides 

transparency regarding how order 

instructions that arrived during the 

Auction Processing Period would be 

processed if they relate to order or 

quotes that were received before the 

Auction Processing Period. 

• An order instruction that arrives 

during the transition to continuous 

trading would be processed on arrival if 

it relates to an order or quote that was 

entered during either the Auction 

Processing Period or the transition to 

continuous trading and such order or 

quote has not yet transitioned to 

continuous trading (proposed Rule 

6.64P–O(f)(2)(B)). This proposed rule 

text is based on Rule 7.35–E(h)(2)(B) 

without any substantive differences. 

Proposed Rule 6.64P–O(f)(3) would 

set forth how orders and quotes would 

be processed during the transition to 

continuous trading following an 

Auction. The Exchange proposes that it 

would process Auction-eligible orders 

and quotes that were received before the 

Auction Processing Period and orders 

ranked Priority 3—Non-Display Orders 

received before a trading halt as follows: 

• Proposed Rule 6.64P–O(f)(3)(A)(i) 

would provide that Limit Orders and 

quotes would be subject to the Limit 

Order Price Check, Arbitrage Check, and 

Intrinsic Value Check, as applicable. 

This proposed rule is new for Pillar, and 

is consistent with the proposed rule 

changes, described above, regarding 

when the Limit Order Price Check, 

Arbitrage Check, and Intrinsic Value 

Check would be applied against orders 

and quotes that were received during a 

pre-open state. The Exchange proposes 

to apply these checks to orders and 

quotes before they become eligible for 

trading or routing during continuous 

trading. 

• Proposed Rule 6.64P–O(f)(3)(A)(ii) 

would provide that Limit Orders that 

are not cancelled and Market Orders 

would be subject to the Trading Collar 

assigned to it. This proposed rule is also 

consistent with the proposed changes to 

Trading Collars, described above, that 

an order received during a pre-open 

state would be assigned a Trading Collar 

after an Auction concludes. 

• Proposed Rule 6.64P–O(f)(3)(A)(iii) 

would provide that orders eligible to 

route that are marketable against Away 

Market Protected Quotations would 

route based on the ranking of such 

orders as set forth in Rule 6.76P–O(c). 

This proposed rule is based on Rule 

7.35–E(h)(3)(A)(ii)(b) with nonsubstantive differences to use the term 

‘‘Away Market Protected Quotations’’ 

instead of ‘‘protected quotations on 

Away Markets.’’ 

• Proposed Rule 6.64P–O(f)(3)(A)(iv) 

would provide that after routing eligible 

orders, orders and quotes not eligible to 

route that are marketable against Away 

Market Protected Quotations would 

cancel. This proposed rule is based on 

Rule 7.35–E(h)(3)(A)(ii)(b) with nonsubstantive differences to use the term 

‘‘Away Market Protected Quotations’’ 

instead of ‘‘protected quotations on 

Away Markets.’’ 

• Proposed Rule 6.64P–O(f)(3)(A)(v) 

would provide that once there are no 

more unexecuted orders marketable 

against Away Market Protected 

Quotations, orders and quotes that are 

marketable against other orders and 

quotes in the Consolidated Book would 

trade or be repriced. This proposed rule 

is based on Rule 7.35–E(h)(3)(A)(ii)(c) 

with a clarifying, non-substantive 

difference to be clear that an order could 

be repriced based on this assessment. 

For example, an ALO Order that would 

be marketable against a contra-side 

order or quote on the Consolidated Book 

would be repriced as provided for in 

proposed Rule 6.62P–O(e)(2). The 

Exchange further notes that, similar to 

the Exchange’s cash equity market, the 

Exchange could transition to continuous 

trading without any Matched Volume 

that trades at the Indicative Match Price, 

and yet still report a trade to OPRA 

before its first quote.54 The Exchange 

would not consider a trade that occurs 

during the transition to continuous 

trading to be an Auction trade. 

• Proposed Rule 6.64P–O(f)(3)(A)(vi) 

would provide that Market Orders 

received during a pre-open state would 

be subject to the validation specified in 

proposed Rule 6.62P–O(a)(1)(C). The 

Exchange notes that because such 

Market Orders would have been already 

received by the Exchange, if they fail 

one of those validations, they would be 

cancelled instead of rejected. This 

would be new rule text as compared to 

the Exchange’s cash equity rules to 

reflect the validations that would be 

applicable to Market Orders for options 

trading on Pillar. 

• Proposed Rule 6.64P–O(f)(3)(A)(vii) 

would provide that the display quantity 

of Reserve Orders would be replenished. 

This proposed rule is based on Rule 

7.35–E(h)(3)(A)(ii)(d). 

• Proposed Rule 6.64P– 

O(f)(3)(A)(viii) would describe the last 

step in this process, which is that the 

Exchange would send a quote to OPRA 

and proprietary data feeds representing 

the highest-priced bid and lowest-priced 

offer of any remaining unexecuted 

Auction-eligible orders and quotes that 

were received before the Auction 

Processing Period. This proposed rule is 

based on current cash equity 

functionality, as set forth in Rule 7.35– 

E(h)(3)(a)(ii). Although the functionality 

would be the same for both markets, for 

options traded on the Exchange, the 

Exchange proposes to describe this 

aspect of the process in sequence, and 

reference both orders and quotes. The 

Exchange notes that this quote would be 

different than the Rotational Quote sent 

at the beginning of the Auction Process 

as it could be comprised of both orders 

and quotes. 

Proposed Rule 6.64P–O(f)(3)(B) would 

provide that next, orders ranked Priority 

3—Non-Display Orders that were 

received during a pre-open state would 

be assigned a new working time in time 

sequence relative to one another based 

on original entry time and would be 

subject to the Limit Order Price Check, 

Arbitrage Check, and Intrinsic Value 

Check, as applicable, and if not 

cancelled, would be traded or repriced. 

This proposed functionality would be 

new for Pillar and applicable only for 

options traded on the Exchange. Even 

though orders ranked Priority 3—NonDisplay Orders would not be eligible to 

trade in an Auction (other than the 

reserve interest of Reserve Orders), the 

Exchange proposes to accept such 

orders during a pre-open state. These 

orders would transition to continuous 

trading after orders and quotes that were 

eligible to trade in an Auction would 

have transitioned to continuous trading, 

as described above in proposed Rule 

6.64P–O(f)(3)(A)(i)–(viii). The Exchange 

believes that waiting to process nondisplayed orders in this sequence would 

ensure that there is an NBBO against 


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55 15 U.S.C. 78f(b). 

56 15 U.S.C. 78f(b)(5). 

which such orders could be priced, as 

described in proposed Rule 6.62P–O(d) 

above. 

Proposed Rule 6.64P–O(f)(3)(C) would 

provide that next, orders and quotes that 

were received during the Auction 

Processing Period would be assigned a 

new working time in time sequence 

relative to one another based on original 

entry time and would be subject to the 

Limit Order Price Check, Pre-Trade Risk 

Controls, Arbitrage Check, Intrinsic 

Value Check, and validations specified 

in proposed Rule 6.62P–O(a)(1)(A), as 

applicable, and if not cancelled would 

be processed consistent with the terms 

of the order or quote. This proposed rule 

text is designed to reflect that even 

though orders and quotes were received 

during the Auction Processing Period, 

they would not be subjected to these 

validations until after the Exchange has 

transitioned to continuous trading, and 

that if they fail these validations, such 

orders or quotes would be cancelled 

instead of rejected. This proposed rule 

text is based in part on Rule 7.35– 

E(h)(3)(B) with differences to reflect the 

validations that would be applicable to 

orders and quotes for options trading. 

Proposed Rule 6.64P–O(f)(3)(D) would 

further provide that when transitioning 

to continuous trading: 

• The display price and working 

price of orders and quotes would be 

adjusted based on the contra-side 

interest in the Consolidated Book or 

Away Market NBBO, as provided for in 

Rule 6.62P–O (proposed Rule 6.64P– 

O(f)(3)(D)(i)). This proposed rule is 

based in part on Rule 7.35–E(h)(3)(C) 

with differences to reflect that for 

options trading, the display price or 

working price of an order may be 

adjusted based either on contra-side 

interest on the Consolidated Book or the 

Away Market NBBO. 

• The display price and working 

price of a Day ISO would be adjusted in 

the same manner as a Non-Routable 

Limit Order until the Day ISO is either 

traded in full or displayed at its limit 

price and the display price and working 

price of a Day ISO ALO would be 

adjusted in the same manner as an ALO 

Order until the Day ISO ALO is either 

traded in full or displayed at its limit 

price (proposed Rule 6.64P– 

O(f)(3)(D)(ii)). This proposed rule is 

based in part on Rule 7.35–E(h)(3)(D) 

with differences to reflect how a Day 

ISO ALO would be processed. 

Proposed Rule 6.64P–O(g) would 

describe order processing during a 

trading halt. The proposed rule is based 

in part on Rule 7.18–E(c) with 

differences to reflect how options would 

trade on Pillar. As proposed, the 

Exchange would process new and 

existing orders and quotes in a series 

during a trading halt as follows: 

• Maintain any unexecuted portion of 

orders ranked Priority 3—Non-Display 

Orders (proposed Rule 6.64P–O(g)(1)). 

This proposed rule would be unique to 

options traded on the Exchange because 

the Exchange cancels non-displayed 

orders on its cash equity market during 

a trading halt (see, e.g., Rule 7.18– 

E(c)(1)). 

• Cancel any unexecuted quantity of 

orders displayed at a Trading Collar and 

Market Maker quotes (proposed Rule 

6.64P–O(g)(2)). This proposed rule 

would be unique for options traded on 

the Exchange. The Exchange proposes to 

cancel resting Market Maker quotes 

during a trading halt, but as noted 

below, would accept new Market Maker 

quotes during a trading halt, which 

would be the basis for the Rotational 

Quote that would be published for a 

Trading Halt Auction. The Exchange 

also proposes to cancel any unexecuted 

quantity of orders displayed at a 

Trading Collar because such orders 

would have already been subject to a 

500-millisecond timer, which would 

have ended during a trading halt. 

• Re-price all other resting orders on 

the Consolidated Book to their limit 

price. The repricing of a Non-Routable 

Limit Order, ALO Order, or Day ISO 

ALO to its limit price during a trading 

halt would not be counted toward the 

number of times such order may be 

repriced and any subsequent repricing 

of such order during the transition to 

continuous trading would be permitted 

as the additional repricing event as 

provided for in Rule 6.62P–O(e)(1)(B) 

and (e)(2)(C) (proposed Rule 6.64P– 

O(g)(3)). As described above, once 

resting, a Non-Routable Limit Order, 

ALO Order, or Day ISO ALO that was 

repriced on arrival is eligible to be 

repriced only one additional time. This 

proposed rule provides transparency 

that the repricing of such orders to their 

limit price during a trading halt would 

not count towards that ‘‘one’’ additional 

repricing, but that any subsequent 

repricing after the Auction concludes 

would count. 

• Accept and process all 

cancellations (proposed Rule 6.64P– 

O(g)(4)). This proposed rule is based on 

Rule 7.18–E(c)(4) without any 

differences. 

• Reject Incoming Limit Orders 

designated IOC or FOK (proposed Rule 

6.64P–O(g)(5)). This proposed rule is 

based in part on Rule 7.18–E(c)(5) with 

a difference to add orders designated 

FOK and not include non-displayed 

orders. 

• Accept all other incoming order and 

quote messages and instructions until 

the Auction Processing Period for the 

Trading Halt Auction, at which point, 

paragraph (e) of proposed Rule 6.64P–O 

would govern the entry of incoming 

orders, quotes, and order instructions 

(proposed Rule 6.64P–O(g)(6)). This 

proposed rule is based on Rule 7.18– 

E(c)(6) with non-substantive differences 

to cross reference the options rule 

relating to the transition to continuous 

trading. 

• Disseminate a zero bid and zero 

offer quote to OPRA and proprietary 

data feeds (proposed Rule 6.64P– 

O(g)(7)). This proposed rule is based on 

current functionality and is designed to 

promote clarity and transparency in 

Exchange rules that when a trading halt 

begins, the Exchange will ‘‘zero’’ out the 

Exchange’s BBO. 

Finally, proposed Rule 6.64P–O(h) 

would provide that whenever in the 

judgment of the Exchange the interests 

of a fair and orderly market so require, 

the Exchange may adjust the timing of 

or suspend the Auctions set forth in this 

Rule with prior notice to ATP Holders. 

This proposed rule is based on Rule 

7.35–E(i) without any differences. 

In connection with proposed Rule 

6.64P–O, the Exchange proposes to add 

the following preamble to Rule 6.64–O: 

‘‘This Rule will not be applicable to 

trading on Pillar.’’ This proposed 

preamble is designed to promote clarity 

and transparency in Exchange rules that 

Rule 6.64–O would not be applicable to 

trading on Pillar. 

As discussed above, because of the 

technology changes associated with the 

migration to the Pillar trading platform, 

subject to approval of this proposed rule 

change, the Exchange will announce by 

Trader Update when rules with a ‘‘P’’ 

modifier will become operative and for 

which symbols. The Exchange believes 

that keeping existing rules on the 

rulebook pending the full migration of 

Pillar will reduce confusion because it 

will ensure that the rules governing 

trading on the OX system will continue 

to be available pending the full 

migration to Pillar. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),55 in general, and furthers the 

objectives of Section 6(b)(5),56 in 

particular, because it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 


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transactions in securities, to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The Exchange believes 

that the proposed rules to support Pillar 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system because the proposed rules 

would promote transparency in 

Exchange rules by using consistent 

terminology governing trading on both 

the Exchange’s cash equity and options 

trading platforms, thereby ensuring that 

members, regulators, and the public can 

more easily navigate the Exchange’s 

rulebook and better understand how 

options trading is conducted on the 

Exchange. 

Generally, the Exchange believes that 

adding new rules with the modifier ‘‘P’’ 

to denote those rules that would be 

operative for the Pillar trading platform 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system by providing transparency of 

which rules would govern trading once 

a symbol has been migrated to the Pillar 

platform. The Exchange similarly 

believes that adding a preamble to those 

current rules that would not be 

applicable to trading on Pillar would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would promote transparency regarding 

which rules would govern trading on 

the Exchange during and after the 

transition to Pillar. 

In addition, the Exchange believes 

that incorporating functionality 

currently available on the Exchange’s 

cash equity market for options trading 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system because the Exchange would be 

able to offer consistent functionality 

across both its options and cash equity 

trading platforms, adapted as applicable 

for options trading. Accordingly, with 

the transition to Pillar, the Exchange 

will be able to offer additional features 

to its OTP Holders and OTP Firms that 

are currently available only on the 

Exchange’s cash equity platform. For 

similar reasons, the Exchange believes 

that using Pillar terminology for the 

proposed new rules would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would promote consistency in the 

Exchange’s rules across both its options 

and cash equity platforms. 

Definitions and Applicability 

The Exchange believes that the 

proposed amendments to Rule 1.1, 

including moving definitions from Rule 

6.1–O and Rule 6.1A–O to Rule 1.1, 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system because the proposed changes 

are designed to promote clarity and 

transparency in Exchange rules by 

consolidating into Rule 1.1 definitions 

relating to both cash equity and options 

trading. The Exchange believes that the 

proposed changes to eliminate obsolete 

definitions and make non-substantive 

edits to existing definitions would 

further remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system because it would ensure that the 

definitions used in Exchange rules are 

updated and consistent. Finally, the 

Exchange believes that organizing Rule 

1.1 alphabetically and eliminating subparagraph numbering would make the 

proposed rules easier to navigate. 

The Exchange further believes that 

proposed new Rule 6.1P–O relating to 

applicability would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the proposed rule would include those 

elements of current Rule 6.1–O that 

would remain applicable and eliminates 

duplicative text that would no longer be 

necessary after the transition to Pillar. 

The Exchange further notes that 

proposed Rule 6.1P–O is similar to 

NYSE American Rule 900.1NY. 

Order Ranking and Display 

The Exchange believes that proposed 

new Rule 6.76P–O would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the Exchange is not proposing 

substantive changes to how the 

Exchange would rank and display 

orders and quotes on Pillar as compared 

to the OX system. Rather, the proposed 

revisions to the Exchange’s options 

trading rules would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the proposed changes are designed to 

simplify the structure of the Exchange’s 

options rules and use consistent Pillar 

terminology for both cash equity and 

options trading, without changing the 

underlying functionality. For example, 

the Exchange believes the proposed 

definitions set forth in Rule 6.76P–O, 

i.e., display price, limit price, working 

price, working time, and Aggressing 

Order/Aggressing Quote, would 

promote transparency in Exchange rules 

and make them easier to navigate 

because these proposed definitions 

would be used in other proposed Pillar 

options trading rules. The Exchange 

notes that these proposed definitions are 

consistent with the definitions set forth 

in Rule 7.36–E for cash equity trading 

with differences only as necessary to 

address functionality associated with 

options trading that are not applicable 

to cash equity trading, e.g., reference to 

quotes. 

The Exchange further believes that 

moving descriptions of order type 

behavior, which are currently set forth 

in Rule 6.76–O, to proposed Rule 6.62P– 

O, and therefore not include such detail 

in proposed Rule 6.76P–O, would make 

Exchange rules easier to navigate 

because information regarding how a 

specific order type would operate would 

be in a single location in the Exchange’s 

rulebook. The Exchange notes that this 

proposed structure is consistent with 

the Exchange’s cash equity rules, which 

similarly set forth information relating 

to an order type’s ranking in Rule 7.31– 

E. Moreover, the Exchange is not 

proposing any functional changes to 

how it would rank and display orders 

and quotes on Pillar as compared to the 

OX system. 

Order Execution and Routing 

The Exchange believes that proposed 

new Rule 6.76AP–O would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the proposed rule would set forth a 

price-time priority model for Pillar that 

is substantively the same as the 

Exchange’s current price-time priority 

model as set forth in Rule 6.76A–O. The 

proposed differences as compared to 

Rule 6.76A–O are designed to use Pillar 

terminology that is based in part on 

Rule 7.37–E, if applicable, without 

changing the functionality that is 

currently available for options trading. 

The Exchange believes that the 

proposed modifications to the LMM 

Guarantee would remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system because it provides clarity of 

how multiple quotes from an LMM 

would be allocated. The Exchange 

similarly believes that eliminating 

Directed Order Market Makers and 

Directed Orders would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

these features are not currently used on 

the Exchange, and therefore eliminating 

Directed Orders and Directed Order 


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Market Makers would streamline the 

Exchange’s rules. The Exchange notes 

that the remaining differences in 

proposed Rule 6.76AP–O relating to the 

LMM Guarantee are designed to 

promote clarity and transparency in 

Exchange rules and would not introduce 

new functionality. 

The Exchange believes that the 

structure and content of the rule text in 

proposed Rule 6.76AP–O promotes 

transparency by using consistent Pillar 

terminology. The Exchange also believes 

that adding more detail regarding 

current functionality in new Rule 

6.76AP–O, as described above, would 

promote transparency by providing 

notice of when orders would be 

executed or routed by the Exchange. 

Orders and Modifiers 

The Exchange believes that proposed 

new Rule 6.62P–O would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would use existing Pillar terminology to 

describe the order types and modifiers 

that would be available on the 

Exchange’s options Pillar trading 

system. As noted above, the Exchange 

proposes to offer order types and 

modifiers that are either based on 

existing order types available on the OX 

system as described in Rule 6.62–O, or 

orders and modifiers available on the 

Exchange’s cash equity trading platform, 

as described in Rule 7.31–E. The 

Exchange believes that structuring 

proposed Rule 6.62P–O based on the 

structure of Rule 7.31–E would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would promote transparency and 

consistency in the Exchange’s rulebook. 

In addition to the terminology 

changes to describe the order types and 

modifiers that are currently available on 

the Exchange, the Exchange further 

believes that the order types and 

modifiers proposed for options trading 

on Pillar that either differ from order 

types and modifiers available on the OX 

system or that would be new would 

remove impediments to and perfect the 

mechanism of a free and open market 

and national market system because: 

• Market Orders on Pillar would 

function similarly to how Market Orders 

function under current options trading 

rules, including being subject to Trading 

Collars, with additional proposed 

functionality that is designed to ensure 

that Market Orders do not execute either 

when there is no prevailing market in a 

series, or if the displayed prices are too 

wide to assure a fair and orderly 

execution of a Market Order. The 

Exchange believes that the proposed 

rule describing Market Orders would 

promote transparency by providing 

notice of when a Market Order would be 

subject to such validations. 

• The Exchange is not proposing any 

new or different behavior for Limit 

Orders than is currently available for 

options trading on the Exchange, other 

than the application of Limit Order 

Price Protection and Trading Collars, 

which would differ on Pillar. The 

Exchange believes using Pillar 

terminology based on Rule 7.31–E(a)(2) 

to describe Limit Orders would promote 

consistency and clarity in Exchange 

rules. 

• The proposed Limit Order Price 

Protection functionality is based in part 

on the existing ‘‘Limit Order Filter’’ for 

orders and price protection filters for 

quotes because an order or quote would 

be rejected if it is priced a specified 

percentage away from the contra-side 

NBB or NBO. The proposed Limit Order 

Price Protection functionality is also 

based in part on the functionality 

available on the Exchange’s cash equity 

trading platform, and therefore is not 

novel. The Exchange believes that using 

the same mechanism for both orders and 

quotes would simplify the operation of 

the Exchange and achieve similar 

results as the current rules, which is to 

reject an order or quote that is priced 

too far away from the prevailing market. 

The Exchange believes that re-applying 

Limit Order Price Protection after an 

Auction concludes would ensure that 

Limit Orders and quotes continue to be 

priced consistent with the prevailing 

market, and that using an Auction Price 

(if available, and if not available, 

Auction Collars, and if not available, the 

NBBO) to assess Limit Orders and 

quotes after an Auction concludes 

would ensure that the Exchange would 

be applying the most recent price in a 

series in assessing whether such orders 

or quotes should be cancelled. 

• The proposed Trading Collar 

functionality is based in part on how 

trading collars currently function on the 

Exchange because the proposed 

functionality would create a ceiling or 

floor price at which an order could be 

traded or routed. The proposed Pillar 

Trading Collar functionality is designed 

to simplify the process by applying a 

static ceiling price (for buy orders) or 

floor price (for sell orders) at which 

such order could be traded or routed 

that would be applicable to the order 

until it is traded or cancelled. The 

Exchange believes that the proposed 

functionality would provide greater 

determinism to an OTP Holder or OTP 

Firm of the Trading Collar that would be 

applicable to its orders and when such 

orders may be cancelled if it reaches its 

Trading Collar. 

• The Exchange is not proposing any 

new or different Time-in-Force 

modifiers than are currently available 

for options trading on the Exchange. 

The Exchange believes using Pillar 

terminology based on Rule 7.31–E(b) to 

describe the time-in-force modifiers 

would promote consistency and clarity 

in Exchange rules. 

• Auction-Only Orders, and 

specifically, the proposed MOO and 

LOO Orders, would operate no 

differently than how ‘‘Opening-Only 

Orders’’ currently function on the OX 

system. The Exchange proposes nonsubstantive differences to use Pillar 

terminology that is based on Rule 7.31– 

E(c) terminology. The Exchange further 

believes that offering its IO Order type, 

which is currently available for Trading 

Halt Auctions on the Exchange’s cash 

equity platform, for Auctions on the 

options trading platform would provide 

OTP Holders and OTP Firms with new, 

optional functionality to offset an 

Imbalance in an Auction. 

• The Exchange would continue to 

offer Reserve Orders, AON Orders, Stop 

Orders, and Stop Limit Orders, which 

are currently available on the OX 

system. The proposed differences to 

Reserve Orders for options trading 

would harmonize with how Reserve 

Orders function on the Exchange’s cash 

equity market, with changes as 

applicable to address options trading 

(e.g., no round lot/odd lot concept for 

options trading). The proposed changes 

to AON Orders would provide greater 

execution opportunities for such orders 

by allowing them to be integrated in the 

Consolidated Book and once resting, 

trade with incoming orders and quotes. 

The changes are also based on how 

orders with an MTS Modifier, which are 

also conditional orders, function on the 

Exchange’s cash equity market. The 

proposed differences for Stop Orders 

and Stop Limit Orders are designed to 

promote transparency by providing 

clarity of circumstances when either 

order may be elected. Finally, the 

Exchange believes that offering NonDisplayed Limit Orders for options 

trading on Pillar, which are available on 

the Exchange’s cash equity platform, 

would provide additional, optional 

trading functionality for OTP Holders 

and OTP Firms. The Exchange notes 

that the proposed Non-Displayed Limit 

Order would function similarly to how 

a PNP Blind Order that locks or crosses 

the contra-side NBBO would be 

processed because in such 

circumstances, a PNP Blind Order is not 

displayed. A Non-Displayed Limit 

Order would differ from a PNP Blind 


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57See supra notes 39, 40. 

Order only because it would never be 

displayed, even if its limit price doesn’t 

lock or cross the contra-side NBBO. 

• The Exchange believes that the 

proposed orders (and quotes) with 

instructions not to route (i.e., NonRoutable Limit Order, ALO Order, and 

ISOs) would streamline the offerings 

available for options trading on the 

Exchange by making the functionality 

the same for both orders and quotes and 

consolidating the description of nonroutable orders and quotes in proposed 

Rule 6.62P–O(e). The Exchange believes 

that using Pillar terminology, including 

order type names, that is based on the 

terminology used for cash equity trading 

will promote clarity and consistency 

across the Exchange’s cash equity and 

options trading platforms. The Exchange 

believes that the proposed Non-Routable 

Limit Order is not novel because it is 

based on how the PNP, RPNP, and 

MMRP orders and quotes currently 

function on the OX system. The 

Exchange believes that the proposed 

differences would provide OTP Holders 

and OTP Firms with greater 

determinism of when such orders or 

quotes may be repriced or be cancelled, 

including providing additional 

opportunities to cancel such orders. 

Similarly, the proposed ALO Order is 

not novel because it is based in part on 

how the RALO and MMLO orders and 

quotes currently function on the OX 

system. Finally, the proposed IOC ISO 

is not novel for options trading on the 

Exchange. The proposed DAY ISO and 

DAY ISO ALO functionality would be 

new for options trading and are based in 

part on how such order types function 

in the Exchange’s cash equity market. In 

addition, the proposed DAY ISO 

functionality is consistent with existing 

Rule 6.95–O(b)(3), which currently 

provides an exception to locking or 

crossing an Away Market Protected 

Quotation if the OTP Holder or OTP 

Firm simultaneously routed an ISO to 

execute against the full displayed size of 

any locked or crossed Protected Bid or 

Protected Offer. The Exchange notes 

that this exception is not necessary for 

IOC ISOs because such orders would 

never be displayed at a price that would 

lock or cross a Protected Quotation; they 

cancel if they cannot trade. Accordingly, 

this existing exception in the 

Exchange’s rules contemplates an ISO 

that would be displayed, which would 

mean it would need a time-in-force 

modifier of ‘‘Day.’’ In addition, Day 

ISOs are available for options trading on 

other options exchanges, and therefore 

are not novel.57

• The Exchange believes that the 

proposed additional detail defining 

Complex Orders to define the ‘‘legs’’ 

and ‘‘components’’ of such orders 

would promote transparency in 

Exchange rules. 

• On Pillar, the only electronicallyentered crossing orders would be QCC 

Orders, which is consistent with current 

functionality. The Exchange believes 

that the proposed non-substantive 

differences, including using Pillar 

terminology and consolidating rule text 

relating to QCC Orders in proposed Rule 

6.62P–O, would promote transparency 

and clarity in Exchange rules. In 

addition, the Exchange believes that the 

proposed descriptions of how a QCC 

Order priced at the market would be 

traded would provide transparency 

regarding at which price such orders 

would trade. 

• The Exchange believes that moving 

the descriptions of orders available only 

in open outcry from Rule 6.62–O to 

proposed Rule 6.62P–O(h) would ensure 

that these order types remain in the 

rulebook after the transition to Pillar is 

complete. For CTB Orders, the Exchange 

believes that the proposed substantive 

difference on Pillar to allow a CTB 

Order to satisfy any displayed interest 

(including non-Customer interest) at 

better prices than the latest-arriving 

displayed Customer interest would 

increase execution opportunities and 

achieve the goal of a CTB Order, which 

is to clear priority on the Consolidated 

Book for orders executed in open 

outcry. The Exchange also believes that 

codifying this order type and the 

associated regulatory obligations would 

add clarity and transparency in 

Exchange rules. 

• The proposed Proactive if Locked/ 

Crossed Modifier, STP Modifier, and 

MTS Modifier are not novel and are 

based on the Exchange’s current cash 

equity modifiers of the same name. The 

Exchange believes that extending the 

availability of these existing modifiers 

to options trading would provide OTP 

Holders and OTP Firms with additional, 

optional functionality that is not novel 

and is based on existing Exchange rules. 

The Exchange further believes that 

extending the availability of STP 

Modifiers to all orders, and not just 

Market Maker orders and quotes, would 

provide additional protections for OTP 

Holders and OTP Firms. 

Market Maker Quotations 

The Exchange believes that proposed 

Rule 6.37AP–O would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

is based on current Rule 6.37A–O, with 

such changes as necessary to use Pillar 

terminology. The Exchange believes that 

consolidating functionality for orders 

and quotes, and cross referencing NonRoutable Limit Orders and ALO Orders 

in proposed Rule 6.37AP–O, rather than 

restating how quotations would be 

processed in proposed Rule 6.37AP–O, 

would streamline the Exchange’s rules 

and promote transparency and 

consistency. 

Pre-Trade and Activity-Based Risk 

Controls 

The Exchange believes that the 

proposed Rule 6.40P–O, setting forth 

pre-trade and activity-based risk 

controls, would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system and promote just and equitable 

principles of trade because the proposed 

functionality would incorporate existing 

activity-based risk controls, without any 

substantive differences, and augment 

them with additional pre-trade risk 

controls and related functionality that 

are based on the pre-trade risk controls 

currently available on the Exchange’s 

cash equity trading platform. The 

Exchange believes that the proposed 

differences are designed to provide 

greater flexibility to OTP Holders and 

OTP Firms in how to set risk controls 

for both orders and quotes. In addition, 

the Exchange believes that aggregating a 

Market Maker’s quotes and orders for 

purposes of calculating activity-based 

risk controls would better reflect the 

aggregate risk that a Market Maker has 

with respect to its quotes and orders. 

The proposed kill switch functionality 

would also provide OTP Holders and 

OTP Firms with greater flexibility to 

provide bulk instructions to the 

Exchange with respect to cancelling 

existing orders and quotes and blocking 

new orders and quotes. 

Price Reasonability Checks—Orders and 

Quotes 

The Exchange believes that the 

proposed Rule 6.41P–O, setting forth 

Price Reasonability Checks, would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

they are based on existing functionality, 

with differences designed to use Pillar 

terminology and promote consistency 

and transparency in Exchange rules. 

Specifically, on Pillar, the Exchange 

proposes to apply the same types of 

Price Reasonability Checks to both 

orders and quotes, and therefore 

proposes to describe those checks in a 

single rule—proposed Rule 6.41P–O. 

The proposed rule also provides 

specificity regarding when the Price 


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Reasonability Checks would be applied 

to an order or quote, which would 

promote transparency and clarity in 

Exchange rules. 

Auction Process 

The Exchange believes that proposed 

Rule 6.64P–O would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the proposed rule maintains the 

fundamentals of an auction process that 

is tailored for options trading while at 

the same time enhancing the process by 

incorporating Pillar auction 

functionality that is currently available 

on the Exchange’s cash equity platform, 

as described in Rule 7.35–E. For 

example, the Exchange proposes to 

augment the imbalance information that 

would be disseminated in advance of an 

Auction to include fields available on 

the Exchange’s cash equity market (e.g., 

Book Clearing Price and Far Clearing 

Price) as well as information specific to 

options trading (e.g., Auction Collars 

based on a Legal Width Quote and 

Auction Indicator). The Exchange 

believes that the proposed Auction 

Imbalance Information would promote 

transparency to market participants in 

advance of an Auction. The Exchange 

also proposes to transition to 

continuous trading following an 

Auction in a manner similar to how the 

Exchange’s cash equity market 

transitions to continuous trading 

following a cash equity Trading Halt 

Auction, including how orders and 

quotes that are received during an 

Auction Processing Period would be 

processed, which the Exchange believes 

would promote consistency across the 

Exchange’s options and cash equity 

trading platforms. Because the Exchange 

would be harnessing Pillar technology 

to support Auctions for options trading, 

the Exchange believes that structuring 

proposed Rule 6.64P–O based on Rule 

7.35–E would promote transparency in 

the Exchange’s trading rules. 

The Exchange further believes that the 

proposed Auction Process for options 

trading on Pillar would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. The 

proposed process is based on the 

current options auction process, 

including that orders are matched based 

on price-time priority and that an 

Auction would not be conducted if the 

bid-ask differential is not within an 

acceptable range. As proposed, the 

Auction Process on Pillar would begin 

with the proposed Rotational Quote, 

which would provide notice not only of 

when the process would begin, but also 

whether Market Makers on the 

Exchange have quoted in a series. The 

Exchange believes that the proposed 

Opening MMQ Time Parameter would 

promote transparency in Exchange rules 

of when the Exchange could open a 

series, including circumstances of when 

the Exchange would wait to provide 

Market Makers time to submit a twosided quotation in a series and when the 

Exchange would proceed with opening 

or reopening a series based on a Legal 

Width Quote even if there are no Market 

Maker quotes in that series. The 

proposed rule would also provide 

transparency of when the Exchange 

would open or reopen a series for 

trading when the Calculated NBBO is 

wider than the Legal Width Quote for 

the series. The Exchange believes that 

the proposed process is designed to 

provide opportunities for a series to 

open or reopen, while at the same time 

preserving the existing requirement that 

a series would not open on a trade if 

there is no Legal Width Quote. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange operates in a competitive 

market and regularly competes with 

other options exchanges for order flow. 

The Exchange believes that the 

transition to Pillar would promote 

competition among options exchanges 

by offering a low-latency, deterministic 

trading platform. The proposed rule 

changes would support that intermarket competition by allowing the 

Exchange to offer additional 

functionality to its OTP Holders and 

OTP Firms, thereby potentially 

attracting additional order flow to the 

Exchange. Otherwise, the proposed 

changes are not designed to address any 

competitive issues, but rather to amend 

the Exchange’s rules relating to options 

trading to support the transition to 

Pillar. As discussed in detail above, 

with this rule filing, the Exchange is not 

proposing to change its core 

functionality regarding its price-time 

priority model, and in particular, how it 

would rank, display, execute or route 

orders and quotes. Rather, the Exchange 

believes that the proposed rule changes 

would promote consistent use of 

terminology to support both options and 

cash equity trading on the Exchange, 

making the Exchange’s rules easier to 

navigate. The Exchange does not believe 

that the proposed rule changes would 

raise any intra-market competition as 

the proposed rule changes would be 

applicable to all OTP Holders and OTP 

Firms, and reflects the Exchange’s 

existing price-time priority model, 

including existing LMM Guarantee, 

without proposing any substantive 

changes. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or up to 90 days (i) as the 

Commission may designate if it finds 

such longer period to be appropriate 

and publishes its reasons for so finding 

or (ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2021–47 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–2021–47. 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 


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58 17 CFR 200.30–3(a)(12). 

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–2021–47 and 

should be submitted on or before July 

30, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.58

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–14391 Filed 7–8–21; 8:45 am] 

BILLING CODE 8011–01–P 


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