Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 50411 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3As defined in Exchange Rule 1.5(jj), a ‘‘User’’ is 

a member of the Exchange (‘‘Member’’) or 

sponsored participant of a Member who is 

authorized to obtain access to the System pursuant 

to Exchange Rule 11.3. The term ‘‘System’’ refers to 

the electronic communications and trading facility 

designated by the Board through which securities 

orders of Users are consolidated for ranking, 

execution and, when applicable, routing. See 

Exchange Rule 1.5(gg). 

4See The Evolving Market for Retail Investment 

Services and Forward-Looking Regulation—Adding 

Clarity and Investor Protection while Ensuring 

Access and Choice, Chairman Jay Clayton, 

Commission (May 2, 2018), available at https://

www.sec.gov/news/speech/speech-clayton-2018-05- 

02. 

5 Id. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2021–42 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2021–42. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2021–42, and 

should be submitted on or before 

September 29, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19292 Filed 9–7–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92844; File No. SR–MEMX– 

2021–10] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing of a Proposed 

Rule Change To Establish a Retail 

Midpoint Liquidity Program 

September 1, 2021. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 

18, 2021, MEMX LLC (‘‘MEMX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposed rule change to 

establish a Retail Midpoint Liquidity 

Program. The text of the proposed rule 

change is provided in Exhibit 5. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

Purpose 

Background 

The Exchange proposes to adopt new 

Exchange Rule 11.22 to establish a 

Retail Midpoint Liquidity Program (the 

‘‘RML Program’’). As proposed, the RML 

Program is designed to provide retail 

investors with meaningful price 

improvement opportunities by 

executing at the midpoint of the 

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

such that Users 3 will be incentivized to 

direct additional orders designed to 

execute at the midpoint of the NBBO 

(the ‘‘Midpoint Price’’) to the Exchange 

to interact with orders that originate 

from retail investors that are also 

designed to execute at the Midpoint 

Price. 

As former Commission Chairman Jay 

Clayton noted in a 2018 speech, fortythree million U.S. households hold a 

retirement or brokerage account, with 

$3.6 trillion in balance sheet assets in 

128 million customer accounts serviced 

by more than 2,800 registered brokerdealers.4 He also noted the importance 

of continued broad, long-term retail 

participation in our capital markets, and 

that retail investors count on the capital 

markets to fund major life events such 

as paying for their children’s higher 

education or funding their own 

retirements.5

Against this backdrop, the RML 

Program is designed to provide retail 

investors with access to a pool of 

midpoint liquidity on the Exchange by 

introducing a new mechanism for retailoriented liquidity provision, thereby 

providing enhanced opportunities for 

meaningful price improvement at the 

Midpoint Price for retail investors. The 

Exchange believes that introducing the 

RML Program could provide retail 

investors with a competitive alternative 

to existing exchange and over-thecounter (‘‘OTC’’) retail programs, by 


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6See January 26, 2016 Memorandum entitled 

‘‘Certain Issues Affecting Customers in the Current 

Equity Market Structure’’ from the staff of the 

Commission’s Division of Trading and Markets, 

available at https://www.sec.gov/spotlight/equitymarket-structure/issues-affecting-customers-emsac012616.pdf. 

7See, e.g., U.S. Securities and Exchange 

Commission, Strategic Plan, Fiscal Years 2018– 

2022, available at https://www.sec.gov/files/SEC_

Strategic_Plan_FY18-FY22_FINAL_0.pdf 

(‘‘Commission Strategic Plan’’). 

8A ‘‘Retail Member Organization’’ or ‘‘RMO’’ is 

a Member (or a division thereof) that has been 

approved by the Exchange under Exchange Rule 

11.21 to submit Retail Orders. A ‘‘Retail Order’’ 

means an agency or riskless principal order that 

meets the criteria of FINRA Rule 5320.03 that 

originates from a natural person and is submitted 

to the Exchange by a Retail Member Organization, 

provided that no change is made to the terms of the 

order with respect to price or side of market and 

the order does not originate from a trading 

algorithm or any other computerized methodology. 

See Exchange Rule 11.21(a). 

9See IEX Rule 11.232; see also Securities 

Exchange Act Release No. 92398 (July 13, 2021), 86 

FR 38166 (July 19, 2021) (SR–IEX–2021–06) (order 

approving changes to the IEX Retail Program 

including dissemination of a retail liquidity 

identifier and limiting IEX Retail Liquidity Provider 

orders to midpoint peg orders) (the ‘‘IEX Retail 

Approval Order’’). The Exchange notes that the IEX 

Retail Program, as amended, supports executions of 

retail orders described in IEX Rule 11.190(b)(15) 

(‘‘IEX Retail Orders’’) at the Midpoint Price as well 

as prices that are different than the Midpoint Price 

in certain limited circumstances. While the 

Exchange’s proposed new order types under the 

RML Program would only be eligible to execute at 

the Midpoint Price, as further described below, the 

Exchange notes that Retail Orders would still be 

eligible to execute at prices that are different than 

the Midpoint Price outside of the RML Program as 

they are today. 

10See IEX Retail Approval Order, supra note 9. 

11Pegged Orders are described in Exchange Rules 

11.6(h) and 11.8(c) and generally defined as an 

order that is pegged to a reference price and 

automatically re-prices in response to changes in 

the NBBO. 

12A Midpoint Peg instruction is an instruction 

that may be placed on a Pegged Order that instructs 

the Exchange to peg the order to the midpoint of 

the NBBO. See Exchange Rule 11.6(h)(2). 

13 ‘‘IOC’’ is an instruction the User may attach to 

an order stating the order is to be executed in whole 

or in part as soon as such order is received, and the 

portion not executed immediately on the Exchange 

or another trading center is treated as cancelled and 

is not posted to the MEMX Book. See Exchange 

Rule 11.6(o)(1). The term ‘‘MEMX Book’’ refers to 

the System’s electronic file of orders. See Exchange 

Rule 1.5(q). 

14See Exchange Rule 11.6(o)(2). 

15See Exchange Rule 11.6(o)(5). 

16See Exchange Rule 11.6(o)(4). 

17The Minimum Execution Quantity instruction 

is described in Exchange Rule 11.6(f) and is 

generally defined as an instruction a User may 

attach to an order with a Non-Displayed instruction 

or a TIF of IOC instruction requiring the System to 

execute the order only to the extent that a minimum 

quantity can be satisfied. A Non-Displayed 

instruction is an instruction a User may attach to 

an order stating that the order is not to be displayed 

by the System on the MEMX Book. See Exchange 

Rule 11.6(c)(2). 

attracting counterparty liquidity to the 

Exchange from Users and their clients 

seeking to interact with retail liquidity. 

The Exchange understands that many 

professional market participants, such 

as market makers, view interacting with 

orders of retail investors as more 

desirable than interacting with orders of 

other professional market participants. 

For example, as the Commission staff 

noted in a 2016 memorandum to the 

Equity Market Structure Advisory 

Committee (‘‘EMSAC Memorandum’’), 

‘‘[m]arket makers are interested in retail 

customer order flow because retail 

investors are, on balance, less informed 

than other traders about short-term price 

movements . . . [and t]rading against 

retail customer order flow enables 

market makers to avoid adverse 

selection by informed professional 

traders and to more reliably profit from 

market-making activity.’’ 6 Consistent 

with the EMSAC Memorandum’s 

conclusions, and based on informal 

discussions with market participants 

and the knowledge and experience of its 

staff, the Exchange believes that market 

makers and other sophisticated market 

participants generally value interacting 

with retail orders because they are 

smaller and not likely to be part of a 

larger parent order that can move a 

stock price, causing a loss to the market 

maker. The proposed rule change thus 

seeks to provide enhanced price 

improvement opportunities for retail 

customers by incentivizing Users and 

their clients to provide price-improving 

liquidity to interact with the orders of 

retail investors. The RML Program 

would therefore be consistent with the 

goals of the Commission to encourage 

markets that are structured to benefit 

ordinary investors,7 while facilitating 

order interaction to the benefit of all 

market participants. 

As proposed, through the RML 

Program, the Exchange would enable 

Retail Member Organizations 8 to submit 

a new type of Retail Order designed to 

execute at the Midpoint Price (i.e., a 

Retail Midpoint Order, described below) 

to the Exchange, and any User would be 

permitted to provide price improvement 

to such order in the form of another new 

order type that is designed to execute at 

the Midpoint Price and that is only 

eligible to execute against a Retail 

Midpoint Order (i.e., an RML Order, 

described below). The Exchange expects 

that the introduction of Retail Midpoint 

Orders and RML Orders, through the 

proposed RML Program, would result in 

a balanced mix of retail brokerage firms 

and their wholesaling partners 

submitting Retail Midpoint Orders to 

the Exchange to access the additional 

midpoint liquidity provided by RML 

Orders that the Exchange anticipates 

resulting from the RML Program. 

The Exchange notes that the proposed 

RML Program is comparable in purpose 

and effect to the Investors Exchange LLC 

(‘‘IEX’’) Retail Price Improvement 

Program (the ‘‘IEX Retail Program’’), 

which is also designed to provide retail 

investors with meaningful price 

improvement opportunities.9 Further, 

the Commission recently approved 

several changes to the IEX Retail 

Program that make certain features of 

the IEX Retail Program substantially 

similar to proposed features of the RML 

Program.10 The Exchange will describe 

certain differences between the 

proposed RML Program and the IEX 

Retail Program under the appropriate 

headings below. 

The Exchange will submit a separate 

proposal to amend its Fee Schedule in 

connection with the proposed RML 

Program. Under that proposal, the 

Exchange expects to provide free 

executions or charge a fee to Users for 

executions of their RML Orders against 

Retail Midpoint Orders, and in turn 

would provide a rebate or free 

executions to RMOs for executions of 

their Retail Midpoint Orders against 

RML Orders. 

Definitions 

The Exchange proposes to adopt the 

following definitions under paragraph 

(a) of proposed Exchange Rule 11.22 

(Retail Midpoint Liquidity Program). 

First, the term ‘‘Retail Midpoint Order’’ 

would be defined as a Retail Order 

submitted by an RMO that is a Pegged 

Order 11 with a Midpoint Peg 12

instruction (‘‘Midpoint Peg Order’’) and 

that is only eligible to execute against 

RML Orders (a proposed new order type 

described below), and other orders 

priced more aggressively than the 

Midpoint Price, through the execution 

process described in proposed Exchange 

Rule 11.22(c). As proposed, a Retail 

Midpoint Order must have a time-inforce (‘‘TIF’’) instruction of IOC.13

Second, the term ‘‘Retail Midpoint 

Liquidity Order’’ or ‘‘RML Order’’ 

would be defined as a Midpoint Peg 

Order that is only eligible to execute 

against Retail Midpoint Orders through 

the execution process described in 

proposed Exchange Rule 11.22(c). As 

proposed, an RML Order must have a 

TIF instruction of Day,14 RHO,15 or 

GTT 16 and may not include a Minimum 

Execution Quantity 17 instruction. Any 

User would be permitted, but not 

required, to submit RML Orders. 

Additionally, the Exchange proposes 

that a User may, but is not required to, 

designate an RML Order to be identified 

as RML Order interest (‘‘RML Interest’’) 

for purposes of the Retail Liquidity 


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18A Displayed instruction is an instruction a User 

may attach to an order stating that the order is to 

be displayed by the System on the MEMX Book. See 

Exchange Rule 11.6(c)(1). Under Exchange Rule 

11.8(c)(3), Pegged Orders, including Midpoint Peg 

Orders, are not eligible to include a Displayed 

instruction; however, as proposed, an RML Order 

would be eligible to include a Displayed 

instruction, which would be for the sole purpose of 

indicating to the Exchange that the User has 

designated the RML Order to be identified as RML 

Interest for purposes of the Retail Liquidity 

Identifier pursuant to proposed Exchange Rule 

11.22(b), and inclusion of the Displayed instruction 

would not indicate to the Exchange that the RML 

Order is to be displayed by the System on the 

MEMX Book. The Exchange’s proposal to permit 

Users to include a Displayed instruction for an RML 

Order for this purpose is purely to facilitate the 

implementation of the Retail Liquidity Identifier by 

using an existing but otherwise inapplicable 

instruction type (i.e., the Displayed instruction), 

and the System will otherwise handle an RML 

Order with a Displayed instruction as if no 

Displayed instruction was included. 

19See IEX Rule 11.190(b)(14), which describes the 

IEX RLP Order. See also IEX Retail Approval Order, 

supra note 9. 

20See IEX Rule 11.232(e)(3), which describes the 

priority and order execution processes for IEX 

Retail Orders and provides that such orders are 

eligible to execute against order types other than an 

IEX RLP Order in certain circumstances, including 

against other orders during a locked or crossed 

market, against displayed odd lot orders priced at 

or better than the Midpoint Price, and against other 

non-displayed interest at the Midpoint Price. 

21See, e.g., IEX Rule 11.190(b)(14), which states 

that an IEX RLP Order is only eligible to execute 

against IEX Retail Orders; Nasdaq PSX Rule 

4702(b)(5)(A), which states that on Nasdaq PSX a 

Retail Price Improving Order may only execute 

against a Retail Order. 

22See, e.g., Securities Exchange Act Release No. 

82825 (March 7, 2018), 83 FR 10937 (March 13, 

2018) (SR–NASDAQ–2017–074) (Order Granting 

Accelerated Approval of a Proposed Rule Change, 

as Modified by Amendment Nos. 1, 2, and 3, to 

Adopt the Midpoint Extended Life Order) (the 

‘‘MELO Approval Order’’). As set forth in the MELO 

Approval Order, Nasdaq originally allowed 

executions of Midpoint Extended Life Orders 

(‘‘MELOs’’) only against other eligible MELOs. 

Pursuant to Rule 4702(b)(14)(A) Nasdaq today 

allows executions of MELOs only against eligible 

MELOs and MELO+CB orders. 

23See Exchange Rule 11.8(c)(5), which provides 

that Pegged Orders are not eligible for routing. 

24See Exchange Rule 13.8(a). 

25See Exchange Rule 13.8(b). 

Identifier pursuant to proposed 

Exchange Rule 11.22(b) (such RML 

Interest is sometimes referred to herein 

as ‘‘designated RML Interest’’), as 

further described below, by including a 

Displayed instruction.18 A User would 

be able to designate RML Interest for 

this purpose on an order-by-order basis 

or on a port-by-port basis. The Exchange 

notes that, except with respect to a 

User’s ability to elect whether to 

designate an RML Order to be identified 

as such for purposes of the Retail 

Liquidity Identifier, an RML Order is 

substantially similar in effect to IEX’s 

Retail Liquidity Provider Order (‘‘IEX 

RLP Order’’) offered under the IEX 

Retail Program, in that an RML Order is 

an order that is designed to execute at 

the Midpoint Price, is only eligible to 

execute against retail order interest, and 

may be submitted by any User.19

As further described below, Retail 

Midpoint Orders and RML Orders 

would only be eligible to execute at the 

Midpoint Price. Additionally, as 

reflected in the proposed definitions of 

Retail Midpoint Order and RML Order, 

such orders would only be eligible to 

execute against each other with the 

exception that a Retail Midpoint Order 

would also be eligible to execute against 

other orders in certain limited 

circumstances (i.e., against displayed 

odd lot orders and/or non-displayed 

orders priced more aggressively than the 

Midpoint Price resting on the MEMX 

Book) pursuant to proposed Exchange 

Rule 11.22(c)(2), as further described 

below. The purpose of limiting Retail 

Midpoint Orders and RML Orders to 

interacting with each other (subject to 

the exception of Retail Midpoint Orders 

being eligible to execute against other 

orders priced more aggressively than the 

Midpoint Price) is that the proposed 

RML Program is designed to provide a 

mechanism whereby liquidity-providing 

Users can provide price-improving 

liquidity at the Midpoint Price 

specifically to retail investors, and 

liquidity-removing RMOs submitting 

orders on behalf of retail investors can 

interact with such price-improving 

liquidity at the Midpoint Price, in a 

deterministic manner. The Exchange 

notes that this aspect of the proposed 

RML Program is partially different than 

the IEX Retail Program. Like an IEX RLP 

Order, which is only eligible to execute 

against IEX Retail Orders, the 

Exchange’s proposed RML Order would 

only be eligible to execute against Retail 

Midpoint Orders. However, an IEX 

Retail Order is generally eligible to 

execute against order types other than 

an IEX RLP Order,20 whereas the 

Exchange’s proposed Retail Midpoint 

Order would be generally limited to 

executing against RML Orders (subject 

to the exception of Retail Midpoint 

Orders being eligible to execute against 

other orders priced more aggressively 

than the Midpoint Price). While this 

aspect of the Exchange’s proposal differs 

from the IEX Retail Program, the 

Exchange notes that the concept of an 

order type that is limited to interacting 

with a specific contra-side order type 

has previously been approved by the 

Commission both in the context of 

liquidity-providing orders for retail 

programs 21 and in other contexts.22 The 

Exchange believes the proposed Retail 

Midpoint Order is analogous to such 

order types even though a Retail 

Midpoint Order would be eligible to 

execute against non-RML Orders where 

such orders are priced more aggressively 

than the Midpoint Price because orders 

priced more aggressively than the 

Midpoint Price comprise only a small 

amount of the Exchange’s volume of 

orders, and thus, the Exchange expects 

that Retail Midpoint Orders would 

mostly interact with RML Orders. 

Moreover, the Exchange generally 

expects RMOs to submit Retail 

Midpoint Orders when the Retail 

Liquidity Identifier is disseminated, 

which indicates that there is available 

RML Interest of at least one round lot on 

the MEMX Book, and generally does not 

expect RMOs to submit Retail Midpoint 

Orders when the Retail Liquidity 

Identifier is not disseminated or 

otherwise to specifically seek to interact 

with other orders priced more 

aggressively than the Midpoint Price, 

particularly as any such orders would 

be either non-displayed (and therefore 

not known to the RMO) or less than a 

round lot in size, and RMOs could still 

submit Retail Orders to interact with 

such liquidity using an order type other 

than the Retail Midpoint Order as they 

can today. 

As Retail Midpoint Orders and RML 

Orders are types of Pegged Orders, and 

are designed to execute on the Exchange 

against each other, such orders would 

not be eligible for routing.23

Retail Liquidity Identifier 

Under the RML Program, the 

Exchange proposes to disseminate a 

Retail Liquidity Identifier through the 

Exchange’s proprietary market data 

feeds, MEMOIR Depth 24 and MEMOIR 

Top,25 and the appropriate securities 

information processor (‘‘SIP’’) when 

designated RML Interest aggregated to 

form at least one round lot for a 

particular security is available in the 

System (‘‘Retail Liquidity Identifier’’), 

provided that such designated RML 

Interest is resting at the Midpoint Price 

and is priced at least $0.001 better than 

the national best bid (‘‘NBB’’) or 

national best offer (‘‘NBO’’). 

The purpose of the Retail Liquidity 

Identifier is to provide relevant market 

information to RMOs that there is 

available RML Interest on the Exchange, 

thereby incentivizing them to send 

Retail Midpoint Orders to the Exchange 

seeking execution at the Midpoint Price. 

The Retail Liquidity Identifier would 

reflect the symbol and the side (buy 

and/or sell) of the designated RML 

Interest but would not include the price 

or size. The Exchange does not believe 

that such market information constitutes 

a ‘‘quote’’ within the meaning of 


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26The Exchange plans to submit a letter 

requesting no-action or exemptive relief from 

obligations set forth in Rule 602 of Regulation NMS. 

27The Exchange notes that this aspect of the 

proposed Retail Liquidity Identifier is the same as 

the Retail Liquidity Identifier disseminated by IEX 

under the IEX Retail Program that was recently 

approved by the Commission. See IEX Rule 

11.232(f); see also IEX Retail Approval Order, supra 

note 9, at 38167. 

28See, e.g., IEX Rule 11.232(f), Cboe BYX Rule 

11.24(e), and NYSE Arca Equities Rule 7.44(j). 

29See January 26, 2021 CQS Participant Input 

Binary Specification Version 2.6a, available at 

https://www.ctaplan.com/publicdocs/ctaplan/CQS_

Pillar_Input_Specification.pdf and May 2020 UTP 

Data Feed Services Specification Version 1.5, 

available at https://www.utpplan.com/DOC/ 

UtpBinaryOutputSpec.pdf. 

30The Minimum Price Variation (‘‘MPV’’) for 

bids, offers, or orders in securities priced less than 

$1.00 per share is $0.0001. See Exchange Rule 

11.6(g). 

31See Exchange Rule 11.8(c)(6). 

32For example, if a security’s NBB is $0.505 and 

NBO is $0.506, the Midpoint Price would be 

$0.5055, which is $0.0005 more than the NBB and 

less than the NBO, so it would not represent at least 

$0.001 price improvement over the NBB or NBO, 

and therefore would not comprise eligible RML 

Interest for purposes of the Retail Liquidity 

Identifier. 

33See IEX Rule 11.232(f); see also IEX Retail 

Approval Order, supra note 9, at 38167. 

34As an example, assume the following facts: 

User 1 enters an RML Order that is designated to 

be identified as such for purposes of the Retail 

Liquidity Identifier to buy 50 shares of ABC; User 

2 enters an RML Order that is not designated to be 

identified as such for purposes of the Retail 

Liquidity Identifier to buy 100 shares of ABC; and 

such orders are the only RML Orders resting on the 

MEMX Book. In this event, the Exchange would not 

disseminate the Retail Liquidity Identifier because 

there is not designated RML Interest to buy ABC 

aggregated to form at least one round lot available 

in the System, as only User 1’s RML Order to buy 

50 shares of ABC was designated as such. 

Regulation NMS because it does not 

include a specific price or size of the 

interest; alternatively, if such 

information is deemed a quote, the 

Exchange believes that an exemption 

from applicable rules would be 

appropriate.26 While an explicit price 

would not be disseminated, because 

RML Orders are only eligible to execute 

at the Midpoint Price, dissemination of 

the Retail Liquidity Identifier would 

thus reflect the availability of price 

improvement at the Midpoint Price.27

As noted above, the Exchange would 

only disseminate the Retail Liquidity 

Identifier when designated RML Interest 

would provide at least $0.001 of price 

improvement, which is consistent with 

the rules of the other exchanges that 

disseminate Retail Liquidity 

Identifiers 28 as well as the SIP Plans’ 

requirements.29 Because RML Orders 

are proposed to be only Midpoint Peg 

Orders, they will always represent at 

least $0.001 price improvement over the 

NBB or NBO, with two exceptions: (1) 

In a locked or crossed market; and (2) 

a sub-dollar quote when the security’s 

spread is less than $0.002.30 Under 

Exchange Rule 11.8(c)(6), a Pegged 

Order resting on the MEMX Book is not 

eligible for execution when the market 

is locked or crossed; thus, an RML 

Order would not be eligible for 

execution when the market is locked or 

crossed and would rest on the MEMX 

Book and become eligible for execution 

again when the market ceases to be 

locked or crossed.31 Because an RML 

Order would not be eligible for 

execution when the market is locked or 

crossed, such order would not provide 

any price improvement to an incoming 

Retail Midpoint Order (i.e., would not 

be priced at least $0.001 better than the 

NBB or NBO) and therefore would not 

comprise eligible RML Interest for 

purposes of the Retail Liquidity 

Identifier. Similarly, when a particular 

security is priced less than $1.00 per 

share, its MPV is $0.0001, so the 

Midpoint Price will not always 

represent at least $0.001 in price 

improvement.32 Therefore, the 

Exchange would only disseminate the 

Retail Liquidity Identifier for sub-dollar 

securities if the spread in the security is 

greater than or equal to $0.002, meaning 

the Midpoint Price represents at least 

$0.001 price improvement over the NBB 

or NBO. With respect to the requirement 

that an RML Order must be resting at 

the Midpoint Price in order to be 

included in the designated RML Interest 

to be disseminated pursuant to the 

Retail Liquidity Identifier, the Exchange 

notes that an RML Order could have a 

limit price that is less aggressive than 

the Midpoint Price in which case it 

would not be eligible to trade with an 

incoming Retail Midpoint Order and 

therefore should not be included for 

purposes of Retail Liquidity Identifier 

dissemination since it would not reflect 

interest available to trade with Retail 

Midpoint Orders. The Exchange notes 

that not including: (1) RML Interest for 

a security when the market for the 

security is locked or crossed; (2) RML 

Interest for a sub-dollar security if the 

spread in the security is greater [sic] 

than or equal [sic] to $0.002; and (3) 

RML Interest that is not resting at the 

Midpoint Price (i.e., RML Interest that is 

constrained by a limit price that is less 

aggressive than the Midpoint Price), for 

purposes of Retail Liquidity Identifier 

dissemination is consistent with the 

Retail Liquidity Identifier disseminated 

by IEX under the IEX Retail Program.33

The Exchange also proposes to 

remove the Retail Liquidity Identifier 

previously disseminated through the 

MEMOIR Depth and MEMOIR Top data 

products and through the appropriate 

SIP after executions against Retail 

Midpoint Orders have depleted the 

available designated RML Interest such 

that the remaining designated RML 

Interest does not aggregate to form at 

least one round lot, or in situations 

where there is no actionable RML 

Interest (such as when the market is 

locked or crossed), in order to indicate 

to market participants that there is no 

longer designated RML Interest of at 

least one round lot available. The 

Exchange believes that removing the 

Retail Liquidity Identifier on the market 

data feeds and SIP when there is not 

sufficient eligible RML Interest available 

is consistent with the implementation of 

the other exchanges that disseminate 

Retail Liquidity Identifiers. 

As described above, the Exchange’s 

proposed Retail Liquidity Identifier is 

substantially similar to IEX’s Retail 

Liquidity Identifier. However, the 

Exchange notes one key distinction—the 

Exchange would enable a User to elect 

whether to designate an RML Order to 

be identified as such for purposes of the 

Retail Liquidity Identifier. Similar to the 

proposed RML Program, under the IEX 

Retail Program, eligible IEX RLP Order 

interest that is aggregated to form at 

least one round lot is required to cause 

the dissemination of the Retail Liquidity 

Identifier. Under the IEX Retail 

Program, a User is not able to elect 

whether an IEX RLP Order is to be 

identified as such for purposes of the 

Retail Liquidity Identifier, and thus, all 

IEX RLP Order interest is included in 

determining whether there is a 

sufficient amount of IEX RLP Order 

interest (i.e., one round lot) to cause the 

dissemination of the Retail Liquidity 

Identifier. In contrast, under the 

proposed RML Program, a User may, but 

is not required to, designate an RML 

Order to be identified as such for 

purposes of the Retail Liquidity 

Identifier. Therefore, a User would be 

able to elect whether an RML Order that 

it submits will be included in 

determining whether there is a 

sufficient amount of RML Interest (i.e., 

one round lot) to cause the 

dissemination of the Retail Liquidity 

Identifier (i.e., whether it constitutes 

designated RML Interest).34

As further described below, RML 

Orders that are designated to be 

identified as such for purposes of the 

Retail Liquidity Identifier would receive 

execution priority ahead of RML Orders 

that are not designated to be identified 

as such. The Exchange believes that 

providing Users with the optionality to 

designate their RML Orders to be 

identified as such for purposes of the 

Retail Liquidity Identifier is appropriate 


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35See Exchange Rule 11.8(b). 

36See Exchange Rule 11.6(q)(2). 

37The Exchange notes that Displayed Odd Lot 

Orders and Non-Displayed Orders are the only 

types of orders that could rest on the MEMX Book 

at a price that is more aggressive than the Midpoint 

Price, as any displayed buy (sell) order that is at 

least one round lot in size would be eligible to form 

the NBB (NBO) as a Protected Quotation. The term 

‘‘Protected Quotation’’ refers to a quotation that is 

a Protected Bid or Protected Offer. In turn, the term 

‘‘Protected Bid’’ or ‘‘Protected Offer’’ refers to a bid 

or offer in a stock that is (i) displayed by an 

automated trading center; (ii) disseminated 

pursuant to an effective national market system 

plan; and (iii) an automated quotation that is the 

best bid or best offer of a national securities 

exchange or association. See Exchange Rule 1.5(z). 

38SR–NASDAQ–2017–074, Amendment No. 2, at 

page 20, available at https://www.sec.gov/ 

comments/sr-nasdaq-2017-074/nasdaq2017074- 

2659324-161401.pdf. See also Nasdaq Rule 

4702(b)(14)(A). While the Exchange’s proposed 

handling of Retail Midpoint Orders when there is 

a resting order priced more aggressively than the 

Midpoint Price similarly respects the more 

aggressively priced resting order, it differs from 

Nasdaq’s handling of MELOs in this event, in that 

MELOs will not execute and will be held for 

execution until such resting order is no longer on 

the Nasdaq book or the Midpoint Price matches the 

price of such resting order, and the Exchange 

proposes to execute a Retail Midpoint Order against 

such resting order at the Midpoint Price. Thus, both 

implementations are designed to maintain the 

priority of more aggressively priced orders. 

because some Users submitting RML 

Orders may be concerned with signaling 

to the market that there is interest to buy 

or sell at the non-displayed Midpoint 

Price. In particular, while a User 

submitting a smaller sized RML Order 

as part of a normal liquidity provision 

strategy might prefer to have its interest 

identified through the Retail Liquidity 

Identifier, it is possible that a larger 

sized RML Order could be entered and 

that the User submitting such order may 

prefer not to signal to the market that 

there is significant interest in that 

security at the Midpoint Price. While 

the Retail Liquidity Identifier would not 

identify the size associated with an RML 

Order, a larger RML Order would likely 

result in the Retail Liquidity Identifier 

persisting for a longer period of time 

despite multiple executions of Retail 

Midpoint Orders against such order. 

The Exchange acknowledges that since, 

as proposed, a User may elect not to 

designate an RML Order to be identified 

as such for purposes of the Retail 

Liquidity Identifier, RML Interest could 

be available without causing the 

dissemination of the Retail Liquidity 

Identifier. The Exchange nevertheless 

believes it is appropriate to limit 

dissemination of the Retail Liquidity 

Identifier to those cases when at least 

one round lot of designated RML 

Interest is available in order to maintain 

the proposed optionality available to 

Users that wish to submit RML Orders 

but do not want indications of their 

midpoint interest disseminated by the 

Exchange. While different than the IEX 

Retail Program, the Exchange notes that 

the ability for a User to elect whether to 

designate their RML Interest to be 

identified as such for purposes of the 

Retail Liquidity Identifier is similar in 

purpose and effect to the ability of a 

User to elect whether to designate their 

orders as displayed or non-displayed on 

an exchange’s order book—functionality 

that is offered by most U.S. equities 

exchanges, including the Exchange—as 

it is simply intended to provide Users 

with the ability to decide which 

information they publicize in the 

marketplace. 

Priority and Order Execution 

Retail Midpoint Orders and RML 

Orders would only execute at the 

Midpoint Price, as stated in proposed 

Exchange Rule 11.22(c)(1) and further 

described below. As discussed above, 

Retail Midpoint Orders and RML Orders 

are primarily intended to interact with 

each other; however, proposed 

Exchange Rule 11.22(c)(2) provides that 

if there is: (A) A Limit Order 35 of Odd 

Lot 36 size that is displayed by the 

System (‘‘Displayed Odd Lot Order’’) 

and that is priced more aggressively 

than the Midpoint Price and/or (B) an 

order that is not displayed by the 

System (‘‘Non-Displayed Order’’) and 

that is priced more aggressively than the 

Midpoint Price, resting on the MEMX 

Book, then an incoming Retail Midpoint 

Order would first execute against any 

such orders pursuant to the Exchange’s 

standard price/time priority in 

accordance with Exchange Rule 11.9 

and Exchange Rule 11.10 before 

executing against RML Orders resting on 

the MEMX Book.37 Proposed Exchange 

Rule 11.22(c)(2) further provides that 

any such executions would be at the 

Midpoint Price irrespective of the prices 

at which such Displayed Odd Lot 

Orders and/or Non-Displayed Orders 

were ranked by the System on the 

MEMX Book. 

The purpose of permitting a Retail 

Midpoint Order to first execute against 

Displayed Odd Lot Orders and/or NonDisplayed Orders that are priced more 

aggressively than the Midpoint Price is 

to ensure that the priority of more 

aggressively priced orders over less 

aggressively priced orders is maintained 

on the Exchange, consistent with 

Exchange Rule 11.9. The Exchange 

notes that its proposed handling of a 

Retail Midpoint Order in this regard is 

similar to Nasdaq’s handling of a MELO, 

which is an order type that is similarly 

designed to interact with a specific 

contra-side order type at the Midpoint 

Price, in that MELOs will respect better 

priced liquidity, as MELOs that ‘‘would 

otherwise be eligible to execute, will not 

execute if there is a more aggressively 

priced Order resting on the Nasdaq 

Book.’’ 38 Thus, because the Exchange’s 

proposal introduces new order types 

that are designed to interact with each 

other at the Midpoint Price but provides 

for a mechanism to respect the priority 

of more aggressively priced liquidity on 

the Exchange, similar to Nasdaq’s 

handling of a MELO, the Exchange 

believes that this aspect of the proposal 

does not raise any novel issues for the 

Commission to consider. 

The Exchange believes that it is 

appropriate to execute any such 

Displayed Odd Lot Orders and/or NonDisplayed Orders against a Retail 

Midpoint Order at the Midpoint Price 

instead of the prices at which such 

orders were ranked because RMOs that 

submit Retail Midpoint Orders to the 

Exchange are, by selecting an order type 

that is specifically limited to executing 

at the Midpoint Price, expecting to 

receive an execution at the Midpoint 

Price and not at any other price(s). 

Thus, the Exchange is proposing to 

address the needs of RMOs that focus 

their Retail Order trading on receiving 

executions at the Midpoint Price 

through the adoption of the Retail 

Midpoint Order, and the Exchange notes 

that use of this order type is completely 

voluntary and that RMOs may continue 

to submit their Retail Orders to the 

Exchange to execute against orders at 

prices different than the Midpoint Price, 

outside of the RML Program, as they can 

today. Moreover, based on informal 

discussions with market participants, 

the Exchange believes that there are 

benefits associated with executing Retail 

Orders submitted to the Exchange at one 

price level rather than multiple prices, 

such as simplified record-keeping for 

retail investors and execution reporting 

by RMOs. The Exchange also believes 

the Users submitting the contra-side 

Displayed Odd Lot Orders and/or NonDisplayed Orders would prefer an 

execution against an incoming Retail 

Midpoint Order at the Midpoint Price, 

as this would provide price 

improvement to such orders, which 

were originally priced more aggressively 

than the Midpoint Price. 

After first executing against any 

resting Displayed Odd Lot Orders and/ 

or Non-Displayed Orders priced more 

aggressively than the Midpoint Price, as 

described above, a Retail Midpoint 

Order would then execute against RML 

Orders resting on the MEMX Book in 

accordance with proposed Exchange 

Rule 11.22(c)(3). Specifically, Retail 


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39The Exchange notes that this aspect of the 

proposed RML Program is different than the IEX 

Retail Program since the IEX Retail Program does 

not offer the ability to elect whether to designate an 

IEX RLP Order to be identified as such for purposes 

of IEX’s Retail Liquidity Identifier, as described 

above. 

40 15 U.S.C. 78f(b). 

41 15 U.S.C. 78f(b)(5). 

Midpoint Orders would execute against 

RML Orders resting on the MEMX Book 

at the Midpoint Price in relative time 

priority in accordance with Exchange 

Rule 11.10 as follows: (1) First against 

RML Orders that are designated to be 

identified as RML Interest pursuant to 

proposed Exchange Rule 11.22(b); and 

(2) then against RML Orders that are not 

designated to be identified as RML 

Interest pursuant to proposed Exchange 

Rule 11.22(b). Thus, RML Orders that 

are designated to be identified as such 

for purposes of the Retail Liquidity 

Identifier, as described above, would be 

executed ahead of previously-received 

RML Orders that are not designated to 

be identified as such.39 The execution of 

multiple RML Orders that are 

designated to be identified as such 

would be determined vis-a`-vis each 

other based on time priority. Similarly, 

the execution of multiple RML Orders 

that are not designated to be identified 

as such would be determined vis-a`-vis 

each other based on time priority. 

The Exchange believes it is 

appropriate to provide priority to RML 

Orders that are designated to be 

identified as such for purposes of the 

Retail Liquidity Identifier over orders 

that are not so designated because the 

Retail Liquidity Identifier is likely to be 

an important factor in attracting RMOs 

to send Retail Midpoint Orders, and 

thus increases the likelihood of 

execution for resting RML Orders. Thus, 

similar to the priority afforded to orders 

that are displayed on the MEMX Book, 

which receive priority because they 

contribute to price discovery and attract 

liquidity to the Exchange, the Exchange 

believes that designated RML Orders 

resulting in the dissemination of the 

Retail Liquidity Identifier should 

receive priority over those that do not. 

The following examples, which the 

Exchange proposes to codify in 

proposed Exchange Rule 11.22(c)(3)(B) 

as slightly modified to conform with the 

Rule’s context, illustrate how the 

Exchange would handle orders under 

the proposed RML Program: 

Assume the following facts: 

• The NBBO for security ABC is 

$10.00–$10.10. 

• User 1 enters an RML Order that is 

not designated to be identified as RML 

Interest to buy ABC for 500 shares. The 

RML Order is posted to the MEMX Book 

as an RML Order to buy ABC at $10.05. 

• User 2 then enters an RML Order 

that is designated to be identified as 

RML Interest to buy ABC for 500 shares. 

The RML Order is posted to the MEMX 

Book as an RML Order to buy ABC at 

$10.05. The Exchange publishes through 

the MEMOIR Depth and MEMOIR Top 

data products and through the 

appropriate SIP a Retail Liquidity 

Identifier indicating the presence of 

designated RML Interest of at least one 

round lot to buy ABC. 

• User 3 then enters a Pegged Order 

with a Midpoint Peg instruction to buy 

ABC for 500 shares. The Pegged Order 

is posted to the MEMX Book as a Pegged 

Order to buy ABC at $10.05. 

• User 4 then enters a Limit Order 

with a Non-Displayed instruction to buy 

ABC at $10.07 for 100 shares, which is 

posted to the MEMX Book. 

• There are no other orders resting on 

the MEMX Book. 

Example 1: Retail Member 

Organization enters a Retail Midpoint 

Order to sell 1,200 shares of ABC. The 

Retail Midpoint Order will execute in 

the following order: 

• First, against the full size of User 4’s 

buy order for 100 shares at $10.05 

(because it is priced more aggressively 

than the Midpoint Price, and thus, it is 

eligible to execute against a Retail 

Midpoint Order, it has priority over the 

RML Orders resting on the MEMX Book, 

and it executes at the Midpoint Price 

pursuant to proposed Exchange Rule 

11.22(c)(2)); 

• second, against the full size of User 

2’s buy order for 500 shares at $10.05 

(because it has priority over User 1’s 

RML Order that is not designated to be 

identified as RML Interest pursuant to 

proposed Exchange Rule 

11.22(c)(3)(A)(i) and (ii)); and 

• third, against the full size of User 

1’s buy order for 500 shares at $10.05. 

The Retail Midpoint Order does not 

execute against User 3’s buy order 

because User 3’s buy order is not an 

RML Order. The Retail Midpoint Order 

is filled for 1,100 shares and the balance 

of 100 shares is cancelled back to the 

Retail Member Organization. The 

Exchange removes the Retail Liquidity 

Identifier previously disseminated 

through the MEMOIR Depth and 

MEMOIR Top data products and 

through the appropriate SIP as there is 

no longer designated RML Interest of at 

least one round lot to buy ABC. 

Example 2: Assume the same facts 

above, except that User 3 enters a Limit 

Order with a Displayed instruction to 

buy 50 shares of ABC at $10.06, which 

is posted to the MEMX Book. The 

incoming Retail Midpoint Order to sell 

1,200 shares of ABC will execute in the 

following order: 

• First, against the full size of User 4’s 

buy order for 100 shares at $10.05 

(because it is priced more aggressively 

than User 3’s buy order and is priced 

more aggressively than the Midpoint 

Price, and thus, it is eligible to execute 

against a Retail Midpoint Order, it has 

priority over the RML Orders resting on 

the MEMX Book, and it executes at the 

Midpoint Price pursuant to proposed 

Exchange Rule 11.22(c)(2)); 

• second, against the full size of User 

3’s buy order for 50 shares at $10.05 

(because it is priced more aggressively 

than the Midpoint Price, and thus, it is 

eligible to execute against a Retail 

Midpoint Order, it has priority over the 

RML Orders resting on the MEMX Book, 

and it executes at the Midpoint Price 

pursuant to proposed Exchange Rule 

11.22(c)(2)); 

• third, against the full size of User 

2’s buy order for 500 shares at $10.05 

(because it has priority over User 1’s 

RML Order that is not designated to be 

identified as RML Interest pursuant to 

proposed Exchange Rule 

11.22(c)(3)(A)(i) and (ii)); and 

• fourth, against the full size of User 

1’s buy order for 500 shares at $10.05. 

The Retail Midpoint Order is filled for 

1,150 shares and the balance of 50 

shares is cancelled back to the Retail 

Member Organization. The Exchange 

removes the Retail Liquidity Identifier 

previously disseminated through the 

MEMOIR Depth and MEMOIR Top data 

products and through the appropriate 

SIP as there is no longer designated 

RML Interest of at least one round lot to 

buy ABC. 

Implementation 

The Exchange proposes that all 

securities traded on the Exchange would 

be eligible for inclusion in the RML 

Program. If the Commission approves 

this proposed rule change, the Exchange 

will implement it within 90 days of 

approval and will provide notice to 

Members and market participants of the 

implementation timeline. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act 40 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act 41 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 


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42See IEX Retail Approval Order, supra note 9. 

43See Exchange Rule 11.21. 

44See infra note 47. 

45See Securities Exchange Act Release No. 85160 

(February 15, 2019), 84 FR 5754 (February 22, 2019) 

(SR–NYSE–2018–28) (order approving NYSE’s 

Retail Liquidity Program on a permanent basis). 

46See Commission Strategic Plan, supra note 7. 

47See IEX Rule 11.232. See also NYSE Rule 107C, 

NYSE Arca Equities Rule 7.44, Cboe EDGX Rule 

11.9(a)(2)(A) and (B), Cboe BYX Rule 11.24, and 

Nasdaq BX Rule 4780. 

48An RMO must exercise due diligence and 

monitor orders that it enters as Retail Orders to 

ensure that such orders originate from natural 

persons (i.e., retail investors). See Exchange Rule 

11.21(b)(6). 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. Specifically, the 

Exchange believes that the proposed 

rule change is consistent with these 

principles because it is designed to 

increase competition among execution 

venues and offer the potential for 

meaningful price improvement to orders 

of retail investors, including through 

encouraging market participants to 

provide additional liquidity to execute 

against the orders of retail investors at 

the Midpoint Price. 

As discussed in the Purpose section, 

the Exchange’s proposed RML Program 

is a simple, transparent approach 

designed to provide retail investors with 

meaningful price improvement 

opportunities by executing at the 

Midpoint Price (through RMOs’ use of 

the proposed new Retail Midpoint 

Order) by incentivizing Users who wish 

to interact with such retail liquidity to 

send additional non-displayed resting 

interest also designed to execute at the 

Midpoint Price (through such Users’ use 

of the proposed new RML Order). 

As described above, the proposed 

RML Program is comparable in purpose 

and effect to the IEX Retail Program, and 

the Commission recently approved 

several changes to the IEX Retail 

Program that make certain of its features 

substantially similar to proposed 

features of the RML Program.42

Accordingly, the Exchange’s proposal 

generally encourages competition 

between exchange venues. In this 

connection, the Exchange believes that 

the proposed distinctions between the 

Exchange’s proposal and the approved 

IEX Retail Program will both enhance 

competition amongst market 

participants and encourage competition 

amongst exchange venues. 

Section 6(b)(5) of the Act prohibits an 

exchange from establishing rules that 

treat market participants in an unfairly 

discriminatory manner. However, 

Section 6(b)(5) of the Act does not 

prohibit exchange members or other 

broker-dealers from discriminating, so 

long as their activities are otherwise 

consistent with the federal securities 

laws. Nor does Section 6(b)(5) of the Act 

require exchanges to preclude 

discrimination by broker-dealers, and 

the Exchange understands that brokerdealers commonly differentiate between 

customers based on the nature and 

profitability of their business. 

While the RML Program would 

differentiate among its Users, in that 

Retail Midpoint Orders may only be 

submitted by an RMO, as is the case 

with other Retail Orders on the 

Exchange today, the Exchange believes 

that such differentiation is not unfairly 

discriminatory but rather is designed to 

promote a competitive process for retail 

executions while providing retail 

investors with the potential to receive 

meaningful price improvement at the 

Midpoint Price. In addition to the 

Exchange’s existing rules relating to 

Retail Orders,43 there is ample 

precedent for differentiation of retail 

order flow in the existing approved 

programs of other national securities 

exchanges,44 including the IEX Retail 

Program, as described in the Purpose 

section. As the Commission has 

recognized, retail order segmentation 

was designed to create additional 

competition for retail order flow, 

leading to additional retail order flow to 

the exchange environment and ensuring 

that retail investors benefit from the 

better price that liquidity providers are 

willing to give their orders.45

The Commission consistently 

highlights the need to ensure that the 

U.S. capital markets are structured with 

the interests of retail investors in mind, 

and highlighted its focus on the ‘‘longterm interests of Main Street investors’’ 

as its number one strategic goal for fiscal 

years 2018 to 2022 in the Commission 

Strategic Plan.46 The Exchange believes 

its proposed RML Program would serve 

the retail investing public by providing 

them with the opportunity for 

meaningful price improvement on 

eligible trades. 

The Exchange notes that several other 

national securities exchanges, including 

IEX as described herein, have for several 

years operated retail liquidity programs 

that include market segmentation 

whereby retail orders are permitted to 

interact with specified price-improving 

liquidity or receive execution priority.47

The Exchange understands that these 

programs were designed to promote 

competition for retail order flow among 

execution venues, most of which 

continues to be executed in the OTC 

markets rather than on exchanges. 

Similarly, the Exchange’s proposed 

RML Program is designed to provide an 

additional competitive alternative for 

retail orders to receive price 

improvement. The Exchange believes 

that it is appropriate to provide 

incentives to bring more retail order 

flow to a public exchange. As described 

in the Purpose section, these incentives 

include the opportunity for Retail 

Orders to receive meaningful price 

improvement at the Midpoint Price 

(through RMOs’ use of the proposed 

Retail Midpoint Order) by providing all 

Users with the opportunity to provide 

price-improving liquidity to such orders 

(through Users’ use of the proposed 

RML Order). 

Definitions 

The Exchange believes that it is 

consistent with the Act for a Retail 

Midpoint Order to be a Retail Order that 

is a Midpoint Peg Order with a TIF 

instruction of IOC, as this is designed to 

ensure that such orders are entered on 

behalf of retail investors 48 and will 

receive price improvement at the 

Midpoint Price when executing against 

resting RML Orders. Similarly, the 

Exchange believes that it is consistent 

with the Act for an RML Order to be a 

Midpoint Peg Order with a TIF 

instruction of Day, RHO, or GTT, as this 

is designed to ensure that such orders 

are able to post to the MEMX Book and 

will provide price improvement at the 

Midpoint Price to retail investors when 

executing against incoming Retail 

Midpoint Orders. The Exchange also 

believes that it is appropriate and 

consistent with the Act for Retail 

Midpoint Orders and RML Orders to not 

be eligible for routing because, as noted 

above, such orders are designed to 

execute on the Exchange against each 

other and, as Pegged Orders, are not 

eligible for routing under the Exchange’s 

current rules relating to Pegged Orders. 

The Exchange further believes that it 

is consistent with the Act to structure its 

RML Program such that Retail Midpoint 

Orders and RML Orders are only eligible 

to execute against each other (subject to 

the exception of Retail Midpoint Orders 

being eligible to execute against other 

orders priced more aggressively than the 

Midpoint Price in order to maintain 

price priority on the Exchange, as 

described above) to provide a 

mechanism whereby liquidity-providing 

Users can provide price-improving 

liquidity at the Midpoint Price 

specifically to retail investors, and 

liquidity-removing RMOs submitting 

orders on behalf of retail investors can 

interact with such price-improving 

liquidity at the Midpoint Price in a 

deterministic manner. This structure 


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49See supra notes 21–22 and accompanying text. 

would thus facilitate the interaction of 

such liquidity-providing Users with the 

orders of retail investors, which the 

Exchange believes is desirable for 

certain Users, as described above, while 

avoiding the possibility of such Users 

unintentionally interacting with another 

type of market participant. Accordingly, 

the Exchange believes that it is 

consistent with the Act for RML Orders 

to only execute against Retail Midpoint 

Orders (subject to the exception of 

Retail Midpoint Orders being eligible to 

execute against other orders priced more 

aggressively than the Midpoint Price) so 

as to incentivize the entry of RML 

Orders and thereby provide meaningful 

price improvement to retail investors. 

Further, as noted above, the concept of 

an order type that is only eligible to 

interact with a specific contra-side order 

type has previously been approved by 

the Commission both in the context of 

liquidity-providing orders for retail 

programs and in other contexts.49 The 

Exchange reiterates that RMOs may 

continue to submit their Retail Orders to 

the Exchange to execute against the 

various other order types offered by the 

Exchange, at prices different than the 

Midpoint Price, as they can today. 

For the foregoing reasons, the 

Exchange believes that the proposed 

definitions of Retail Midpoint Order and 

RML Order, and the proposed structure 

of the RML Program whereby such 

orders are only eligible to execute 

against each other (subject to the 

exception of Retail Midpoint Orders 

being eligible to execute against other 

orders priced more aggressively than the 

Midpoint Price) and at the Midpoint 

Price, are designed to promote just and 

equitable principles of trade, foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and 

further the investor protection and 

public interest objectives of Section 6(b) 

of the Act, by establishing a simple, 

transparent structure that is designed to 

facilitate the provision of meaningful 

price improvement (i.e., at the Midpoint 

Price) for orders of retail investors in a 

deterministic manner. 

Retail Liquidity Identifier 

The Exchange believes that it is 

consistent with the Act to disseminate 

a Retail Liquidity Identifier in 

connection with its RML Program, as 

described in the Purpose section. The 

purpose of the Retail Liquidity Identifier 

is to provide relevant market 

information to RMOs that there is 

available RML Interest on the Exchange. 

The dissemination is thus designed to 

augment the total mix of information 

available to RMOs that may benefit the 

Retail Orders they represent by 

encouraging RMOs to send such retail 

liquidity as Retail Midpoint Orders 

designed to receive price improvement 

by executing at the Midpoint Price 

against available RML Interest. 

As noted above, the proposed Retail 

Liquidity Identifier is substantially 

similar to the Retail Liquidity Identifier 

disseminated by IEX, which was 

recently approved by the Commission, 

except that the Exchange would enable 

a User to elect whether to designate an 

RML Order to be identified as such for 

purposes of the Retail Liquidity 

Identifier. The Exchange believes that 

providing Users with the optionality to 

designate an RML Order to be identified 

as such for purposes of the Retail 

Liquidity Identifier is appropriate and 

consistent with the Act because, as 

described above, some Users submitting 

RML Orders, such as those with a larger 

sized RML Order, may be concerned 

about potential information leakage 

when the Retail Liquidity Identifier 

persists for extended periods of time 

despite multiple executions of Retail 

Midpoint Orders against such order. 

The Exchange thus believes that offering 

this optionality would enable such 

Users to manage their RML Orders more 

effectively and would therefore foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities and remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. Further, 

as noted above, the ability for a User to 

elect whether to designate their RML 

Interest to be identified as such for 

purposes of the Retail Liquidity 

Identifier is similar in purpose and 

effect to the ability of a User to elect 

whether to designate their orders as 

displayed or non-displayed on an 

exchange’s order book—functionality 

that is offered by most U.S. equities 

exchanges, including the Exchange—as 

it is simply intended to provide Users 

with the ability to decide which 

information they publicize in the 

marketplace, and thus, the Exchange 

does not believe this aspect of the 

proposal raises any novel issues for the 

Commission to consider. 

The Exchange also believes that 

removing the Retail Liquidity Identifier 

previously disseminated through the 

MEMOIR Depth and MEMOIR Top data 

products and through the appropriate 

SIP after executions against Retail 

Midpoint Orders have depleted the 

available designated RML Interest such 

that the remaining designated RML 

Interest does not aggregate to form at 

least one round lot is consistent with 

the Act, as it would increase 

transparency in the market by indicating 

to RMOs that there is no longer 

designated RML Interest of at least one 

round lot available, which the Exchange 

believes would reduce the amount of 

Retail Midpoint Orders sent to the 

Exchange that are cancelled back to the 

User when there is no actionable RML 

Interest to execute against. In this 

regard, the Exchange believes that its 

proposed implementation of the Retail 

Liquidity Identifier would foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities and remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. As noted 

above, the Exchange also believes this 

implementation is consistent with the 

implementation of the other exchanges 

that disseminate Retail Liquidity 

Identifiers. 

Priority and Order Execution 

The Exchange further believes that its 

priority and order execution approach 

for the RML Program is consistent with 

the Act. As discussed above, the RML 

Program is designed to incentivize 

RMOs to submit Retail Midpoint Orders 

to the Exchange to receive meaningful 

price improvement while 

simultaneously incentivizing Users and 

their clients to enter additional nondisplayed interest in the form of RML 

Orders that will only trade with, and 

offer meaningful price improvement to, 

Retail Midpoint Orders. Thus, the 

proposed RML Program is designed to 

facilitate the provision of meaningful 

price improvement (i.e., at the Midpoint 

Price) for orders of retail investors. 

The Exchange believes that it is 

appropriate and consistent with the Act 

to structure its RML Program such that 

Retail Midpoint Orders and RML Orders 

are only eligible to execute against each 

other at the Midpoint Price, so that 

Retail Midpoint Orders, which are 

entered on behalf of retail investors, 

receive price improvement that is 

meaningful by definition, as they are 

guaranteed, if executed, to execute at 

the Midpoint Price. The Exchange 

believes that introducing a program that 

provides and encourages additional 

liquidity and price improvement to 

Retail Orders, in the form of Retail 

Midpoint Orders designed to execute at 

the Midpoint Price, is appropriate 

because retail investors are typically 

less sophisticated than professional 

market participants and therefore would 


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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 50419 

50All Users that handle customer orders as agent 

are required to be FINRA members, and therefore 

are subject to FINRA guidance. See 17 CFR 

240.15b9–1(a). 

51See FINRA Regulatory Notice 15–46, endnote 

25, available at https://www.finra.org/sites/default/ 

files/notice_doc_file_ref/Notice_Regulatory_15- 

46.pdf. 

52See Securities Exchange Act Release No. 86619 

(August 9, 2019), 84 FR 41769 (August 15, 2019) 

(SR–IEX–2019–05) (order granting approval of a 

proposed rule change to establish the IEX Retail 

Program). The Exchange notes that IEX 

subsequently amended the IEX Retail Program to 

permit executions at prices other than the Midpoint 

Price in certain limited circumstances—i.e., against 

displayed odd lots priced at or more aggressively 

than the Midpoint Price—although the Exchange is 

instead proposing to execute Retail Midpoint 

Orders against Displayed Odd Lot Orders priced 

more aggressively than the Midpoint Price at the 

Midpoint Price in this circumstance, as described 

above. See Securities Exchange Act Release No. 

91324 (March 15, 2021), 86 FR 15015 (March 19, 

2021) (SR–IEX–2021–03) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

to Allow Retail Orders to Trade with Certain 

Aggressively Priced Displayed Odd Lot Orders). 53 15 U.S.C. 78f(b)(5). 

not have the type of technology to 

enable them to compete with such 

market participants. Therefore, the 

Exchange believes that it is consistent 

with the public interest and the 

protection of investors to provide retail 

investors with these enhanced 

execution opportunities. Additionally, 

as discussed above, the Exchange 

believes that the opportunity to obtain 

meaningful price improvement at the 

Midpoint Price should operate as a 

powerful incentive for RMOs to send 

Retail Orders to the Exchange in the 

form of Retail Midpoint Orders, thereby 

contributing to the Exchange’s midpoint 

liquidity to the benefit of all Users. 

While the Exchange typically has 

resting non-displayed liquidity priced to 

execute at the Midpoint Price, a key 

aspect of the proposed RML Program is 

to further incentivize Users and their 

clients to enter additional nondisplayed interest that will trade with 

Retail Orders and offer meaningful price 

improvement at the Midpoint Price (i.e., 

in the form of RML Orders) in a 

deterministic manner. 

In addition, the proposal to execute 

Retail Midpoint Orders against RML 

Orders only at the Midpoint Price is also 

designed to facilitate RMOs’ compliance 

with their best execution obligations 

when acting as agent on behalf of a 

Retail Order.50 Specifically, as noted in 

FINRA Regulatory Notice 15–46 

(Guidance on Best Execution 

Obligations in Equity, Options and 

Fixed Income Markets), when 

conducting its review of execution 

quality in any security, a firm should 

consider, among other things, whether it 

could obtain mid-point price 

improvement on one venue versus less 

price improvement on another venue.51

Further, limiting the execution of Retail 

Midpoint Orders against RML Orders to 

the Midpoint Price is designed to be a 

simple approach that does not introduce 

unnecessary complexity to the order 

entry and execution process on the 

Exchange, as both orders are proposed 

to be a type of Midpoint Peg Order. The 

Exchange notes that under the initial 

implementation of the IEX Retail 

Program, approved by the Commission 

in 2019, IEX Retail Orders and IEX RLP 

Orders were only eligible to trade at the 

Midpoint Price.52 Accordingly, the 

Exchange does not believe this aspect of 

the proposal raises any novel issues that 

have not been considered by the 

Commission. 

The Exchange further believes that it 

is appropriate and consistent with the 

Act to execute Retail Midpoint Orders 

against Displayed Odd Lot Orders and/ 

or Non-Displayed Orders priced more 

aggressively than the Midpoint Price at 

the Midpoint Price, rather than at the 

prices at which such orders are ranked 

on the MEMX Book, as doing so would 

ensure that the priority of more 

aggressively priced orders is maintained 

on the Exchange, as described above, in 

a manner that provides the expected 

execution price to RMOs that submit 

Retail Midpoint Orders and provides 

price improvement to Users that submit 

more aggressively priced orders. As 

noted above, by selecting an order type 

that is specifically limited to executing 

at the Midpoint Price, an RMO would 

expect to receive an execution of their 

Retail Midpoint Order at the Midpoint 

Price and not at any other price(s), and 

thus, the Exchange is proposing to 

address the needs of RMOs that focus 

their Retail Order trading on receiving 

executions at the Midpoint Price in a 

deterministic manner through the 

adoption of the Retail Midpoint Order. 

Additionally, as noted above, use of this 

order type is completely voluntary, and 

RMOs may continue to submit their 

Retail Orders to the Exchange to execute 

against orders at prices different than 

the Midpoint Price, outside of the RML 

Program, as they can today. Moreover, 

the Exchange believes that there are 

benefits associated with executing Retail 

Orders submitted to the Exchange at one 

price level rather than multiple prices, 

such as simplified record-keeping for 

retail investors and execution reporting 

by RMOs. The Exchange believes such 

benefits, in addition to the simplicity 

and transparency of the RML Program 

achieved by permitting executions of 

the proposed new order types only at 

the Midpoint Price, outweigh the 

potential additional price improvement 

that Retail Midpoint Orders could 

receive if they were permitted to 

execute against Displayed Odd Lot 

Orders and/or Non-Displayed Orders 

priced more aggressively than the 

Midpoint Price at the prices at which 

such orders were ranked, in a manner 

consistent with the objectives of Section 

6(b)(5) of the Act 53 described above. 

The Exchange believes that first 

executing a Retail Midpoint Order 

against any resting Displayed Odd Lot 

Orders and/or Non-Displayed Orders 

priced more aggressively than the 

Midpoint Price ahead of RML Orders is 

consistent with the Act because, 

notwithstanding the RML Program’s 

goal of matching Retail Midpoint Orders 

against RML Orders at the Midpoint 

Price in a deterministic manner, doing 

so ensures that the priority of more 

aggressively priced orders is maintained 

on the Exchange, as described above. 

Maintaining price priority in this regard, 

consistent with its current rules, reflects 

the Exchange’s overall goal of 

incentivizing Users to submit 

aggressively priced orders to the 

Exchange, which contribute to the 

overall market quality and attract 

liquidity on the Exchange, thereby 

promoting just and equitable principles 

of trade and removing impediments to 

and perfecting the mechanism of a free 

and open market and a national market 

system. Furthermore, as the proposed 

RML Program provides for a mechanism 

to respect the priority of more 

aggressively priced liquidity on the 

Exchange prior to executing Retail 

Midpoint Orders against RML Orders at 

the Midpoint Price, similar to Nasdaq’s 

handling of MELOs, as described above, 

the Exchange believes that this aspect of 

the proposal does not raise any novel 

issues for the Commission to consider. 

The Exchange believes that providing 

execution priority to RML Orders that 

are designated to be identified as such 

for purposes of the Retail Liquidity 

Identifier ahead of RML Orders that are 

not so designated is consistent with the 

Act, as the Exchange believes that 

designated RML Orders would attract 

additional liquidity to the Exchange. 

Specifically, as noted above, the 

Exchange believes that dissemination of 

the Retail Liquidity Identifier is likely to 

be an important factor in attracting 

incoming Retail Midpoint Orders, and 

thus increases the likelihood of 

execution for resting RML Orders. 

Therefore, the Exchange believes that it 

removes impediments to and perfects 

the mechanism of a free and open 

market and national market system to 

provide execution priority to designated 


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50420 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

54See supra note 47. 55 17 CFR 200.30–3(a)(12). 

RML Orders, which cause the 

dissemination of the Retail Liquidity 

Identifier, over those that do not. 

Additionally, the Exchange believes that 

providing execution priority to 

designated RML Orders is not unfairly 

discriminatory since any User can 

designate their RML Orders to be 

identified as such for purposes of the 

Retail Liquidity Identifier, and the 

Exchange believes that Users would 

only choose not to designate RML 

Orders to be identified as such when 

another purpose, such as the potential 

for information leakage, outweighs the 

importance of execution priority for 

such orders. 

In sum, the Exchange submits that the 

proposed RML Program is a simple, 

transparent approach designed to 

provide an opportunity for retail 

customers’ orders to receive meaningful 

price improvement in a manner 

generally consistent with the approved 

retail programs of other exchanges. 

Thus, the Exchange believes that the 

proposed RML Program is consistent 

with the Act in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

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. To the 

contrary, the Exchange believes that the 

proposed RML Program would enhance 

competition and execution quality for 

retail investors and would enhance 

competition for Users and their clients 

seeking to interact with retail liquidity. 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on intermarket competition 

since competing venues have and can 

continue to adopt similar retail 

programs, subject to the SEC rule 

change process. The Exchange operates 

in a highly competitive market in which 

market participants can easily direct 

their orders to competing venues, 

including off-exchange venues. 

The Exchange also does not believe 

that the proposed rule change will 

impose any burden on intramarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. As described above, 

a Retail Midpoint Order may only be 

submitted by firms approved to send 

Retail Orders on the Exchange (i.e., 

RMOs), which is comparable to an IEX 

Retail Order offered under the IEX 

Retail Program and retail programs on 

other exchanges where specific rules 

have been approved allowing only 

certain participants to send Retail 

Orders.54 All Users would be eligible to 

enter an RML Order, and all Users 

would be eligible to execute against an 

incoming Retail Midpoint Order in price 

priority in accordance with the 

Exchange’s existing rules. Moreover, the 

proposed rule change would provide 

potential benefits to all Users to the 

extent it is successful in attracting 

additional midpoint liquidity. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on 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 within such longer period 

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 Exchange consents, the Commission 

will: (a) By order approve or disapprove 

such 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– 

MEMX–2021–10 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–MEMX–2021–10. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MEMX–2021–10 and 

should be submitted on or before 

September 29, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.55

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19294 Filed 9–7–21; 8:45 am] 

BILLING CODE 8011–01–P 

SURFACE TRANSPORTATION BOARD 

[Docket No. FD 36542] 

NCSR, LLC d/b/a New Castle Southern 

Railroad—Lease and Operation 

Exemption With Interchange 

Commitment—Norfolk Southern 

Railway Company 

NCSR, LLC d/b/a New Castle 

Southern Railroad (NCSR), a noncarrier, 

has filed a verified notice of exemption 

pursuant to 49 CFR 1150.31 to lease 

from Norfolk Southern Railway 

Company (NSR) and operate 

approximately 21 miles of rail line 


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