43072 Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 

55 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4As noted above, the Exchange also proposes in 

this filing to permit ALO Orders to be designated 

as non-displayed, and discussion of the proposed 

modification of Rule 7.31E(e)(2) to effect that 

change appears in the ‘‘Non-Displayed ALO’’ 

section below. The proposed new designation to 

cancel would be inapplicable to Non-Displayed 

ALO Orders, as proposed, because such orders are 

not eligible to be displayed. 

5See, e.g., Members Exchange (‘‘MEMX’’) Rules 

11.6(a) (defining the Cancel Back instruction, which 

a User may attach to an order to instruct that such 

order be cancelled if it cannot be posted to the 

MEMX Book at its limit price) and 11.6(l)(2) 

(defining the Post Only instruction; an order with 

such instruction functions similarly to the ALO 

Order and may be designated to be cancelled by the 

User); Cboe BZX Exchange, Inc. (‘‘BZX’’) Rules 

11.9(c)(6) and 11.9(g)(d) (defining the BZX Post 

Only Order, which functions similarly to the ALO 

Order and may be designated to be cancelled at the 

User’s instruction); Cboe BYX Exchange, Inc. 

(‘‘BYX’’) Rule 11.9(c)(6) and 11.9(g)(d) (defining the 

BYX Post Only Order, which functions similarly to 

the ALO Order and may be designated to be 

cancelled at the User’s instruction); Nasdaq Stock 

Exchange LLC (‘‘Nasdaq’’) Rule 4702(b)(4)(A) 

(defining the Post-Only Order, which functions 

similarly to the ALO Order and may be designated 

to be cancelled back to the Participant at the 

Participant’s election). 

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–EMERALD–2022–23, and 

should be submitted on or before 

August 9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.55

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–15307 Filed 7–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95269; File No. SR– 

NYSEAMER–2022–27] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify Rule 7.31E 

July 13, 2022. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on July 6, 

2022, NYSE American LLC (‘‘NYSE 

American’’ 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 self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Rule 7.31E to (1) permit certain nonroutable order types to be designated to 

cancel if they would be displayed at a 

price other than their limit price; (2) 

allow ALO Orders to be designated as 

non-displayed; (3) permit ALO Orders 

to be entered in any size; (4) modify the 

operation of the Non-Display Remove 

Modifier and eliminate its use with 

MPL–ALO Orders; and (5) make MPL 

Orders eligible to trade at their limit 

price and eliminate the ‘‘No Midpoint 

Execution’’ Modifier. The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 7.31E to (1) permit certain nonroutable order types to be designated to 

cancel if they would be displayed at a 

price other than their limit price; (2) 

allow ALO Orders to be designated as 

non-displayed; (3) permit ALO Orders 

to be entered in any size; (4) modify the 

handling of orders designated with the 

Non-Display Remove Modifier and 

eliminate the use of the Non-Display 

Remove Modifier for MPL–ALO Orders; 

and (5) allow MPL Orders to trade at 

either the midpoint or their limit price 

and eliminate the ‘‘No Midpoint 

Execution’’ Modifier. 

Designation To Cancel 

The Exchange proposes to modify 

Rules 7.31E(e)(1), 7.31E(e)(2), and 

7.31E(e)(3)(D) to permit Non-Routable 

Limit Orders, displayed ALO Orders,4

and Day ISO ALO Orders to be 

designated to cancel if they would be 

displayed at a price other than their 

limit price for any reason. 

As proposed, Non-Routable Limit 

Orders, displayed ALO Orders, and Day 

ISO ALO Orders would be eligible to be 

designated to cancel at the ATP Holder’s 

instruction, thereby providing ATP 

Holders with increased flexibility with 

respect to order handling and the ability 

to have greater determinism regarding 

order processing when such orders 

would be repriced to display at a price 

other than their limit price. The 

Exchange notes that this designation 

would be optional, and if not designated 

to cancel, Non-Routable Limit Orders, 

displayed ALO Orders, and Day ISO 

ALO Orders would continue to function 

as set forth in current Exchange rules 

(except as proposed in this filing with 

respect to the function of the NonDisplay Remove Modifier and odd lots). 

The Exchange further notes that 

providing ATP Holders with the ability 

to designate orders to cancel if they 

would be repriced is not novel, and 

other cash equity exchanges currently 

offer their members a similar option.5

To effect this change, the Exchange 

proposes the following modifications to 

Rules 7.31E(e)(1), 7.31E(e)(2), and 

7.31E(e)(3)(D): 

• Rule 7.31E(e)(1)—Non-Routable Limit 

Orders 

As defined in Rule 7.31E(e)(1), a NonRoutable Limit Order is a Limit Order 

that does not route. Currently, a NonRoutable Limit Order to buy (sell) will 

trade with orders to sell (buy) on the 

Exchange Book that are priced at or 

below (above) the PBO (PBB) and will 

be repriced based on updates to the 

Away Market PBO (PBB) as set forth in 

current Rules 7.31E(e)(1)(A)(i) through 

(iv). 

The Exchange proposes to delete the 

current text of Rule 7.31E(e)(1)(A) and 

add new text to provide that a NonRoutable Limit Order would not be 

displayed at a price that would lock or 

cross the PBO (PBB) of an Away Market, 

and such order to buy (sell) would trade 

with orders on the Exchange Book that 

are priced equal to or below (above) the 

PBO (PBB) of an Away Market. These 


jspears on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 43073 

6As noted above, the Exchange also proposes in 

this filing to permit ALO Orders to be designated 

as non-displayed and to permit ALO Orders to be 

entered in odd lots, and discussion of the proposed 

modification of Rule 7.31E(e)(2) to effect those 

changes appears in the ‘‘Non-Displayed ALO’’ and 

‘‘ALO Odd Lots’’ sections below. 

proposed changes would merely 

rephrase and clarify the existing 

behavior of a Non-Routable Limit Order 

as already set forth in Rule 

7.31E(e)(1)(A), without substantive 

changes. 

The Exchange further proposes to 

modify Rule 7.31E(e)(1)(A)(i) to delete 

the current text and add new text 

providing for the option to designate a 

Non-Routable Limit Order to be 

cancelled, as described above. 

The Exchange also proposes to modify 

Rule 7.31E(e)(1)(A)(ii) and add new 

subparagraphs thereunder to describe 

how any untraded quantity of a NonRoutable Limit Order would be 

processed if not designated to cancel. 

New subparagraph (a) would contain 

the rule text previously set forth in Rule 

7.31E(e)(1)(A)(i), without substantive 

changes, and provide that, if the limit 

price of a Non-Routable Limit Order to 

buy (sell) locks or crosses the PBO (PBB) 

of an Away Market, it would have a 

working price equal to the PBO (PBB) of 

the Away Market and a display price 

one MPV below (above) the PBO (PBB) 

of the Away Market. Proposed new 

subparagraph (b) would contain rule 

text currently set forth in Rule 

7.31E(e)(1)(A)(ii) describing how a NonRoutable Limit Order would be 

processed when the PBO (PBB) of an 

Away Market reprices higher (lower), 

without substantive changes. Finally, 

the Exchange proposes to renumber 

current Rules 7.31E(e)(1)(A)(iii) and (iv) 

as Rules 7.31E(e)(1)(A)(ii)(c) and (d), 

respectively, with no changes to the rule 

text. 

• Rule 7.31E(e)(2)—ALO Orders 

Rule 7.31E(e)(2) and the 

subparagraphs thereunder define the 

ALO Order, which is a Non-Routable 

Limit Order that will trade with contraside interest if its limit price crosses the 

working price of any displayed or nondisplayed orders to sell (buy) on the 

Exchange Book priced equal to or below 

(above) the PBO (PBB) of an Away 

Market. In other words, an ALO Order 

will not remove liquidity from the 

Exchange Book unless it receives price 

improvement. Accordingly, the 

Exchange proposes to modify Rule 

7.31E(e)(2) to simplify the definition of 

an ALO Order, without any substantive 

changes, and state that ALO Orders are 

Non-Routable Limit Orders that would 

not remove liquidity from the Exchange 

Book unless they receive price 

improvement. The Exchange also 

proposes to add new text to Rule 

7.31E(e)(2) 6 to effect the change 

described above, permitting an ALO 

Order to be designated to cancel if it 

would be displayed at a price other than 

its limit price for any reason. 

The Exchange next proposes to 

reorganize Rules 7.31E(e)(2)(A) through 

(C) to describe the operation of the ALO 

Order in a more logical flow, but 

without any substantive changes to the 

operation of the order type. Specifically, 

the Exchange proposes to reorganize 

Rules 7.31E(e)(2)(A) through (C) to first 

describe when an ALO Order would 

trade, then describe how any untraded 

quantity of an ALO Order not 

designated to cancel would be 

processed, and then describe the 

handling of any untraded quantity of an 

ALO Order that locks non-displayed 

interest. 

First, the Exchange proposes to delete 

the current text of Rule 7.31E(e)(2)(A), 

which states only that an ALO Order 

will be assigned a working price and 

display price pursuant to Rule 

7.31E(e)(2)(B) and is thus redundant of 

the substantive rule text in Rule 

7.31E(e)(2)(B) and its subparagraphs. 

The Exchange proposes to add new rule 

text in Rule 7.31E(e)(2)(A) providing 

that an Aggressing ALO Order to buy 

(sell) would trade if its limit price 

crosses the working price of any 

displayed or non-displayed orders to 

sell (buy) on the Exchange Book priced 

equal to or below (above) the PBO (PBB) 

of an Away Market, in which case, the 

ALO Order would trade as the liquidity 

taker with such orders. The Exchange 

notes that this change is not intended to 

propose any modification to the current 

operation of the ALO Order and merely 

restates text that currently appears in 

Rule 7.31E(e)(2)(B)(ii), describing when 

an ALO Order may trade, with no 

substantive changes. The Exchange 

believes that this proposed 

reorganization would improve the 

clarity of Rule 7.31E(e)(2) by describing 

how an ALO Order would trade before 

progressing on to describe how any 

untraded quantity of an ALO Order 

would be handled if it is not designated 

to cancel upon repricing. 

The Exchange next proposes to delete 

the current text of Rule 7.31E(e)(2)(B) 

and reorganize Rule 7.31E(e)(2)(B) and 

the subparagraphs thereunder. Rule 

7.31E(e)(2)(B) and the subparagraphs 

that follow would, as proposed, specify 

how untraded quantities of an ALO 

Order would be processed if such order 

has not been designated to cancel. To 

effect this change, the Exchange 

proposes that Rule 7.31E(e)(2)(B) would 

now provide that, if an ALO Order is 

not designated to cancel, any untraded 

quantity of such order would trade as 

described in subparagraphs (i) and (ii). 

In subparagraph (i), the Exchange 

proposes to delete the existing rule text 

and modify subparagraph (i) to provide 

that, if the limit price of an ALO Order 

locks the display price of any order to 

sell (buy) ranked Priority 2—Display 

Orders on the Exchange Book, it would 

have a working price and display price 

(if it has been designated to display) one 

MPV below (above) the price of the 

displayed order on the Exchange Book. 

The Exchange notes that the content of 

Rule 7.31E(e)(2)(B)(i) would be 

incorporated into Rule 7.31E(e)(2)(B)(ii) 

(as proposed below) and that this 

proposed change merely moves rule text 

from where it is currently located in 

Rule 7.31E(e)(2)(B)(iii) and does not 

reflect any proposed change to the 

operation of the ALO Order when the 

limit price of any untraded quantity of 

such order locks displayed interest on 

the Exchange Book. 

The Exchange next proposes to delete 

the current text of Rule 7.31E(e)(2)(B)(ii) 

and replace it with text that would 

provide that, if the limit price of an ALO 

Order locks or crosses the PBO (PBB) of 

an Away Market, it would have a 

working price equal to the PBO (PBB) of 

the Away Market and a display price (if 

designated to display) one MPV below 

(above) the PBO (PBB) of the Away 

Market. The Exchange notes that 

proposed Rule 7.31E(e)(2)(B)(ii) 

rephrases text currently set forth in 

Rules 7.31E(e)(2)(B)(i) and (iv) and is 

not intended to propose any change to 

the operation of the ALO Order when 

the limit price of any untraded quantity 

of such order locks or crosses the PBBO 

of an Away Market. The Exchange also 

notes that the current text of Rule 

7.31E(e)(2)(B)(ii) was, as described 

above, incorporated into revised Rule 

7.31E(e)(2)(A). 

The Exchange further proposes to 

delete current Rules 7.31E(e)(2)(B)(iii) 

and (iv) (including subparagraph (a) 

under Rule 7.31E(e)(2)(B)(iv)), as the 

content of such Rules has been covered 

by the proposed Rules described above 

and would be incorporated into 

proposed Rule 7.31E(e)(2)(C) (as 

discussed below), without changes to 

the current operation of the ALO Order. 

Specifically, Rule 7.31E(e)(2)(B)(iii) has 

been incorporated into proposed Rule 

7.31E(e)(2)(B)(i), the content of Rule 

7.31E(e)(2)(B)(iv) would be clarified by 

proposed Rules 7.31E(e)(2)(B)(ii) and 

7.31E(e)(2)(C), and the content of Rule 

7.31E(e)(2)(B)(iv)(a) would be covered 

by proposed Rule 7.31E(e)(2)(B)(i). The 


jspears on DSKJM1Z7X2PROD with NOTICES
43074 Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 

7 In addition, to effect the proposed change to 

permit ALO Orders to be designated as nondisplayed, the Exchange proposes an additional 

revision to Rule 7.31E(e)(2)(E)(ii) discussed below 

in the ‘‘Non-Displayed ALO’’ section. 

8Changes to Rule 7.31E(d)(3)(F) to effect the 

proposed modification of the Non-Display Remove 

Modifier’s operation with respect to MPL–ALO 

Orders are discussed further in the ‘‘Non-Display 

Remove Modifier’’ section below. 

9The Exchange notes that its proposed changes 

to provide for a non-displayed ALO Order, to 

permit ALO Orders to be entered in odd lots, and 

to modify the operation of the Non-Display Remove 

Modifier are discussed below. 

Exchange also proposes to delete 

subparagraph (b) under 

7.31E(e)(2)(B)(iv), which currently 

describes how ALO Orders would 

interact with resting Non-Displayed 

Limit Orders and Non-Routable Limit 

Orders designated with the NonDisplayed Remove Modifier, as 

repetitive of rule text in Rule 

7.31E(d)(2)(B) with respect to NonDisplayed Limit Orders and in Rule 

7.31E(e)(1)(C) with respect to NonRoutable Limit Orders. 

Proposed Rule 7.31E(e)(2)(C) would 

next provide that if any untraded 

quantity of an ALO Order to buy (sell), 

whether designated to cancel or not, 

locks non-displayed interest on the 

Exchange Book, it would have a 

working price and display price (if 

designated to display) equal to its limit 

price. The Exchange notes that this rule 

text reflects the current behavior of ALO 

Orders when their limit price locks nondisplayed interest on the Exchange 

Book, which would not change based on 

whether an ALO Order has been 

designated to cancel, as proposed. 

The Exchange next proposes to 

rename current Rule 7.31E(e)(2)(B)(v) as 

Rule 7.31E(e)(2)(D) and current Rule 

7.31E(e)(2)(C) as Rule 7.31E(e)(2)(E). 

The Exchange also proposes changes to 

subparagraphs (i) and (ii) of proposed 

Rule 7.31E(e)(2)(E). In subparagraphs (i) 

and (ii), the Exchange proposes to add 

clarity to its Rules by specifying that the 

reference to the PBO (PBB) is of an 

Away Market and proposes to update 

the paragraph references to reflect the 

reorganization of the Rule as described 

above. Specifically, the Exchange 

proposes to update subparagraph (i) to 

refer to paragraphs (e)(2)(A) (which now 

describes when an Aggressing ALO 

Order is eligible to trade), (e)(2)(B)(i)— 

(ii) (which now describe the processing 

of any untraded quantity of an ALO 

Order that is not designated to cancel), 

and (e)(2)(C) of the Rule (which now 

describes the processing of any 

untraded quantity of an ALO Order that 

locks non-displayed interest). The 

Exchange further proposes to update 

subparagraph (ii) to refer to paragraphs 

(e)(1)(A)(ii)(c) and (d) of the Rule, which 

simply updates the paragraph references 

consistent with the changes described 

above to renumber paragraphs 

(e)(1)(A)(iii) and (iv) as paragraphs 

(e)(1)(A)(ii)(c) and (d).7

The Exchange also proposes to 

rename current Rule 7.31E(e)(2)(D) as 

Rule 7.31E(e)(2)(F) and modify new 

Rule 7.31E(e)(2)(F) to provide that an 

ALO Order would not trigger a contraside MPL Order that is resting at the 

midpoint to trade, except as specified in 

Rule 7.31E(d)(3)(F). Rule 7.31E(d)(3)(F), 

in relevant part and as modified in this 

filing, would provide that an MPL Order 

designated with the Non-Display 

Remove Modifier would trade as the 

liquidity-taking order with an 

Aggressing ALO Order or MPL–ALO 

Order that has a working price equal to 

the working price of the MPL Order.8

Finally, the Exchange proposes to add 

new Rule 7.31E(e)(2)(G), which would 

provide that the ALO designation would 

be ignored for ALO Orders that 

participate in an Auction. This rule text 

would be similar to the text that 

currently appears in Rule 7.31E(e)(2)(A), 

without substantive changes. 

The Exchange notes that the proposed 

changes described above are intended 

only to implement the addition of the 

option to designate an ALO Order to 

cancel and, in connection with such 

proposal, to improve the clarity and 

organization of Rule 7.31E(e)(2). The 

proposed changes set forth above 

otherwise reflect how an ALO Order 

currently behaves and are not intended 

to propose any other changes to the 

operation of the order type.9

• Rule 7.31E(e)(3)(D)—Day ISO ALO 

Orders 

Rule 7.31E(e)(3) provides that an 

Intermarket Sweep Order (‘‘ISO’’) is a 

Limit Order that does not route and 

meets the requirements of Rule 

600(b)(30) of Regulation NMS. Rule 

7.31E(e)(3)(C) provides that an ISO 

designated Day (‘‘Day ISO’’), if 

marketable on arrival, will be 

immediately traded with contra-side 

interest in the Exchange Book up to its 

full size and limit price, and that any 

untraded quantity of a Day ISO will be 

displayed at its limit price and may lock 

or cross a protected quotation that was 

displayed at the time of arrival of the 

Day ISO. Rule 7.31E(e)(3)(D) provides 

that a Day ISO ALO is a Day ISO that 

has been designated with an ALO 

Modifier and, on arrival, may trade 

through or lock or cross a protected 

quotation that was displayed at the time 

of arrival of the Day ISO ALO. 

In order to effect the change described 

above to permit a Day ISO ALO Order 

to be designated to cancel if it would be 

displayed at a price other than its limit 

price for any reason, the Exchange 

proposes to modify and reorganize Rule 

7.31E(e)(3)(D) and the paragraphs 

thereunder similar to its proposal with 

respect to Rule 7.31E(e)(2) for ALO 

Orders. As in proposed Rule 7.31E(e)(2), 

the Exchange proposes to reorganize 

Rule 7.31E(e)(3)(D) to describe when a 

Day ISO ALO Order would trade, how 

any untraded quantity of a Day ISO ALO 

Order not designated to cancel would be 

processed, and the handling of any 

untraded quantity of a Day ISO ALO 

Order that locks non-displayed interest, 

in that logical order. 

First, the Exchange proposes to 

modify Rule 7.31E(e)(3)(D) to add text 

providing that a Day ISO ALO can be 

designated to cancel. The Exchange 

does not propose any changes to the 

first sentence of current Rule 

7.31E(e)(3)(D)(i), which describes when 

a Day ISO ALO Order may trade, but 

proposes to combine the second 

sentence of current Rule 

7.31E(e)(3)(D)(i) with Rule 

7.31E(e)(3)(D)(ii). Rule 7.31E(e)(3)(D)(ii) 

would now specify that, if not 

designated to cancel, any untraded 

quantity of a Day ISO ALO Order to buy 

(sell) would be assigned a working price 

and display price one MPV below 

(above) the price of the displayed order 

on the Exchange Book when the limit 

price of the Day ISO ALO Order locks 

the display price of a displayed order on 

the Exchange Book. 

The Exchange next proposes to delete 

the current text of Rule 

7.31E(e)(3)(D)(iii) and the subparagraphs 

thereunder and add new rule text 

specifying that any untraded quantity of 

a Day ISO ALO Order that locks nondisplayed interest on the Exchange Book 

would have a working price and display 

price equal to its limit price. The 

Exchange notes that this proposed 

change merely rephrases current Rule 

7.31E(e)(3)(D)(iii) and eliminates 

redundant rule text (thereby simplifying 

Exchange rules) and is not intended to 

change the meaning or operation of such 

rules. The Exchange notes that current 

Rule 7.31E(e)(3)(D)(iii)(a) would be 

covered by Rule 7.31E(e)(3)(D)(ii), as 

proposed, and that it proposes to delete 

Rule 7.31E(e)(3)(D)(iii)(b) because, like 

Rule 7.31E(e)(2)(B)(iv), it is redundant 

of rule text describing the behavior of 

the Non-Displayed Remove Modifier in 

Rule 7.31E(d)(2)(B) with respect to NonDisplayed Limit Orders and in Rule 

7.31E(e)(1)(C) with respect to NonRoutable Limit Orders. 

Finally, the Exchange proposes to 

make clarifying changes to Rule 

7.31E(e)(3)(D)(iv). First, the Exchange 


jspears on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 43075 

10The Exchange notes that it also proposes a 

modification to Rule 7.31E(e)(3)(D) in connection 

with its proposal to permit Day ISO ALO Orders to 

be entered in odd lots, which is described below in 

the ‘‘ALO Odd Lots’’ section. 

11See, e.g., MEMX Rules 11.8(b)(3) and (7) 

(providing that a Limit Order may be non-displayed 

and designated with a Post Only instruction). The 

Exchange also notes that BZX Rule 11.9(g)(1)(D) and 

BYX Rule 11.9(g)(1)(D) refer to ‘‘display-eligible’’ 

BZX Post Only Orders and BYX Post Only Orders, 

respectively, suggesting that such orders could also 

be designated as non-displayed. 

12See, e.g., MEMX Rules 11.8(b)(2) and (7) 

(providing that a Limit Order may be of odd lot size 

and designated with the Post Only instruction). The 

Exchange also notes that the rules of Nasdaq, BZX, 

and BYX do not appear to prohibit entry of their 

order types analogous to the ALO Order in odd lots. 

13See Rules 7.31E(d)(2)(B); 7.31E(e)(1)(C); 

7.31E(d)(3)(F). 

proposes to replace ‘‘After being 

displayed’’ with ‘‘Once resting on the 

Exchange Book’’ to align the rule text 

with existing rule text in current Rule 

7.31E(e)(2)(C), which similarly describes 

how ALO Orders would be processed 

once resting on the Exchange Book. The 

Exchange further proposes to clarify that 

the PBO (PBB) referenced in this 

subparagraph is of an Away Market. The 

Exchange also proposes to update the 

reference to paragraphs (e)(2)(C)(i) and 

(ii) of Rule 7.31E to paragraphs 

(e)(2)(E)(i) and (ii) to reflect the 

proposed reorganization of Rule 

7.31E(e)(2) as described above. 

The Exchange notes that the proposed 

changes described above are not 

intended to impact the operation of the 

Day ISO ALO Order other than to 

implement the new optional designation 

to cancel and, in connection with that 

proposed change, to improve the clarity 

and organization of Rule 

7.31E(e)(3)(D).10 The proposed changes 

set forth above otherwise reflect how a 

Day ISO ALO Order currently behaves 

and are not intended to propose any 

other changes to the operation of the 

order type. 

Non-Displayed ALO Order 

As noted above, the Exchange 

proposes to permit ALO Orders to be 

designated as non-displayed, and to 

effect this change, proposes to modify 

Rule 7.31E(e)(2) to add text specifying 

that ALO Orders may be designated as 

non-displayed orders. The Exchange 

proposes that a non-displayed ALO 

Order would function in the same way 

as an ALO Order currently behaves 

except that it would not have a display 

price (and thus would not be eligible to 

be designated to cancel, as such 

proposed option is described above) and 

would be repriced when crossed by the 

PBO (PBB) of an Away Market. 

The Exchange also proposes to add 

text to Rule 7.31E(e)(2)(E)(ii) (as 

renumbered above) to provide that, if 

the PBO (PBB) of an Away Market 

reprices lower (higher) than the working 

price of a non-displayed ALO Order to 

buy (sell), the non-displayed ALO Order 

would have a working price equal to the 

PBO (PBB) of the Away Market. This 

proposed rule text would indicate, as 

noted above, a difference in behavior 

between a non-displayed ALO Order, as 

proposed, and a displayed ALO Order. 

The Exchange believes that permitting 

an ALO Order to be non-displayed 

would provide ATP Holders with 

greater flexibility with respect to the 

operation of an existing order type and 

would provide ATP Holders with the 

option to designate ALO Orders to be 

non-displayed in accordance with their 

desired trading strategy. 

The Exchange notes that displayed 

ALO Orders would continue to be 

available for use by ATP Holders, and 

designating an ALO Order to be nondisplayed would be at the ATP Holder’s 

option. The Exchange also believes that 

other cash equity exchanges similarly 

permit order types analogous to the 

ALO Order to be non-displayed and that 

this proposed change thus does not raise 

any novel issues.11

ALO Odd Lots 

Currently, Rules 7.31E(e)(2) and 

7.31E(e)(3)(D) provide that ALO Orders 

and Day ISO ALO Orders, respectively, 

must be entered with a minimum of one 

displayed round lot. The Exchange 

proposes to permit ALO Orders and Day 

ISO ALO Orders to be entered in any 

size, and thus proposes to delete the 

round lot requirement from Rules 

7.31E(e)(2) and 7.31E(e)(3)(D). The 

Exchange believes that requiring ALO 

Orders and Day ISO ALO Orders to be 

entered in round lots is unnecessary, 

particularly since the Exchange already 

permits odd-lot residual quantities for 

ALO Orders and Day ISO ALO Orders. 

The Exchange also believes that 

permitting ALO Orders and Day ISO 

ALO Orders to be entered in odd lots 

could increase liquidity and enhance 

opportunities for order execution on the 

Exchange. The Exchange notes that 

permitting odd-lot order quantities, 

including for ALO Orders, is not novel 

on the Exchange or other cash equity 

exchanges and thus believes that this 

proposed change would align the 

Exchange’s treatment of ALO Orders 

and Day ISO ALO Orders with features 

available on other cash equity 

exchanges.12

Non-Display Remove Modifier 

The Exchange proposes to modify the 

handling of orders designated with the 

Non-Display Remove Modifier (‘‘NDR 

Modifier’’). Currently, Exchange rules 

provide that Non-Displayed Limit 

Orders, Non-Routable Limit Orders 

(when not displayed), MPL Orders, and 

MPL–ALO Orders are eligible to be 

designated with the NDR Modifier.13

When so designated, Non-Displayed 

Limit Orders and Non-Routable Limit 

Orders would trade as the liquiditytaking order with an incoming ALO 

Order with a working price equal to the 

working price of such order. MPL 

Orders and MPL–ALO Orders 

designated with the NDR Modifier will, 

on arrival, trade with resting MPL 

Orders at the midpoint of the PBBO and 

be the liquidity taker; a resting MPL 

Order or MPL–ALO Order with the NDR 

Modifier will be the liquidity taker 

when trading with arriving MPL Orders 

and MPL–ALO Orders that do not 

include the NDR Modifier. 

The Exchange proposes to modify the 

operation of the NDR Modifier to 

provide that any resting order with the 

NDR Modifier would remove liquidity 

when it is locked by any ALO Order. 

The Exchange believes that this 

proposed change would expand the 

circumstances under which an order 

with the NDR Modifier would be 

eligible to trade, thereby increasing 

opportunities for order execution to the 

benefit of all market participants. NonDisplayed Limit Orders, Non-Routable 

Limit Orders (when not displayed), and 

MPL Orders would continue to be 

eligible to be designated with the NDR 

Modifier, but the Exchange proposes to 

provide that MPL–ALO Orders may no 

longer be designated with the NDR 

Modifier. The Exchange proposes to 

eliminate use of the NDR Modifier with 

MPL–ALO Orders because designating 

such order with an NDR Modifier is 

inconsistent with the purpose of the 

order type (as an MPL–ALO Order is not 

intended to remove liquidity at the 

midpoint). Moreover, because ATP 

Holders have not used the NDR 

Modifier with MPL–ALO Orders, the 

Exchange believes that eliminating this 

order type-modifier combination will 

simplify its Rules. 

To effect the proposed modification to 

the operation of the NDR Modifier, the 

Exchange proposes the following 

changes: 

• The Exchange proposes to modify 

Rule 7.31E(d)(2)(B) to provide that, 

when a Non-Displayed Limit Order is 

designated with the NDR Modifier, it 

would trade as the liquidity-taking order 

with an Aggressing ALO Order or MPL– 

ALO Order when the working price of 

such order locks the working price of 

the Non-Displayed Limit Order. 


jspears on DSKJM1Z7X2PROD with NOTICES
43076 Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 

14See, e.g., BYX Rule 11.9(c)(12) (providing for 

the Non-Displayed Swap or ‘‘NDS’’ Order, which is 

an instruction on an order resting on the BYX book 

that, when locked by an incoming BYX Post Only 

Order that does not remove liquidity, causes such 

order to be converted to an executable order that 

removes liquidity against such incoming order); 

BZX Rule 11.9(c)(12) (providing for the NonDisplayed Swap or ‘‘NDS’’ Order, which is an 

instruction on an order resting on the BZX book 

that, when locked by an incoming BZX Post Only 

Order that does not remove liquidity, causes such 

order to be converted to an executable order that 

removes liquidity against such incoming order). 

15See, e.g., MEMX Rule 11.6(h)(2) (providing that 

a Pegged Order with a Midpoint Peg instruction 

may execute at its limit price or better when its 

limit price is less aggressive than the midpoint of 

the NBBO); Cboe EDGA Exchange, Inc. Rule 11.8(d) 

(describing the MidPoint Peg Order, which is a nondisplayed Market Order or Limit Order with an 

instruction to execute at the midpoint of the NBBO, 

but that may execute at its limit price or better 

when its limit price is less aggressive than the 

midpoint of the NBBO); Cboe EDGX Exchange, Inc. 

Rule 11.8(d) (same); Nasdaq Rule 4702(b)(5)(A) 

(describing the Midpoint Peg Post-Only Order, 

which will be priced at the midpoint between the 

NBBO or at its limit price when the midpoint is 

higher than (lower than) the limit price of such 

order). 

16The proposed changes to Rule 7.31E(d)(3)(E)(i) 

relating to the operation of the NDR Modifier are 

described above in the ‘‘Non-Display Remove 

Modifier’’ section. 

• The Exchange proposes to modify 

Rule 7.31E(d)(3)(F) to delete the 

reference to MPL–ALO Orders, as it 

proposes that such orders may no longer 

be designated with the NDR Modifier. 

The Exchange also proposes to modify 

Rule 7.31E(d)(3)(F) to provide that an 

MPL Order designated with the NDR 

Modifier would trade as the liquiditytaking order with an Aggressing ALO 

Order or MPL–ALO Order that has a 

working price equal to the working 

price of the MPL Order. 

• The Exchange proposes to modify 

Rule 7.31E(e)(1)(C) to provide that, 

when a Non-Routable Limit Order is 

designated with the NDR Modifier and 

has a working price (but not display 

price) equal to the working price of an 

Aggressing ALO Order or MPL–ALO 

Order, the Non-Routable Limit Order 

would trade as the liquidity taker 

against the ALO Order or MPL–ALO 

Order. 

• The Exchange also proposes to add 

new subparagraph (d)(3)(E)(iii) to Rule 

7.31E to provide that an MPL–ALO 

Order may not be designated with a 

NDR Modifier. 

The Exchange believes that the 

operation of the NDR Modifier, as 

proposed, would not be novel and that 

the modifier would function similarly to 

modifiers offered by other cash equity 

exchanges.14

MPL Orders 

A Mid-Point Liquidity Order or MPL 

Order is currently defined in Rule 

7.31E(d)(3) as a non-displayed, nonroutable Limit Order with a working 

price of the midpoint of the PBBO. The 

Exchange proposes to modify the 

definition of an MPL Order to provide 

that an MPL Order to buy (sell) would 

have a working price of the lower 

(higher) of the midpoint of the PBBO or 

its limit price. In other words, the 

Exchange proposes that an MPL Order 

would be eligible to trade at the less 

aggressive of the midpoint of the PBBO 

or its limit price. The Exchange believes 

that permitting MPL Orders to trade at 

the less aggressive of the midpoint of 

the PBBO or their limit price would 

provide ATP Holders with increased 

opportunities for order execution, 

thereby enhancing market quality for all 

market participants. The Exchange notes 

that permitting MPL Orders to trade at 

the less aggressive of the midpoint of 

the PBBO or at their limit price is not 

novel and that comparable order types 

on other cash equity exchanges 

currently behave in this manner.15

To effect this change, the Exchange 

proposes to modify the following 

portions of Rule 7.31E(d)(3): 

• Rule 7.31E(d)(3) currently provides 

that an MPL Order has a working price 

of the midpoint of the PBBO. The 

Exchange proposes to modify this Rule 

to provide that an MPL Order to buy 

(sell) would have a working price at the 

lower (higher) of the midpoint of the 

PBBO or its limit price. 

• Rule 7.31E(d)(3)(A) currently 

provides that an MPL Order to buy (sell) 

is eligible to trade only if the midpoint 

of the PBBO is at or below (above) the 

limit price of the MPL Order. The 

Exchange proposes to modify this Rule 

to provide that an MPL Order would be 

eligible to trade at the working price of 

the order (which, as described above, 

would be defined to be the less 

aggressive of the midpoint of the PBBO 

or the limit price of the MPL Order). 

• Rule 7.31E(d)(3)(C) currently 

provides that an Aggressing MPL Order 

to buy (sell) will trade with resting 

orders to sell (buy) with a working price 

at or below (above) the midpoint of the 

PBBO at the working price of the resting 

orders. The Exchange proposes to 

modify this Rule to provide that an 

Aggressing MPL Order would trade with 

a resting order, at the working price of 

such order, when the resting order has 

a working price at or below (above) the 

working price of the MPL Order. Rule 

7.31E(d)(3)(C) also currently states that 

resting MPL Orders to buy (sell) will 

trade at the midpoint of the PBBO 

against all Aggressing Orders to sell 

(buy) priced at or below (above) the 

midpoint of the PBBO. The Exchange 

proposes to instead provide that resting 

MPL Orders would trade against 

Aggressing Orders priced at or below 

(above) the working price of the MPL 

Order, consistent with the proposed 

changes described above to permit MPL 

Orders to trade at the less aggressive of 

the midpoint of the PBBO or their limit 

price. 

• Rule 7.31E(d)(3)(E) currently 

provides that an MPL–ALO Order is an 

MPL Order that has been designated 

with an ALO Modifier. The Exchange 

proposes to revise subparagraphs (i) and 

(ii) thereunder to make changes 

consistent with those described above 

with respect to MPL Orders. 

Specifically, the Exchange proposes to 

modify Rule 7.31E(d)(3)(E)(i) to be 

similar to Rule 7.31E(d)(3)(C) but with 

modified phrasing specific to the 

behavior of MPL–ALO Orders. 

Accordingly, Rule 7.31E(d)(3)(E)(i), as 

proposed, would provide that an 

Aggressing MPL–ALO Order to buy 

(sell) would trade with a resting order, 

at the working price of such order, when 

the resting order has a working price 

below (above) the less aggressive of the 

midpoint of the PBBO or the limit price 

of the MPL–ALO Order. In addition, to 

reflect the operation of the ALO 

Modifier, the Exchange further proposes 

to modify Rule 7.31E(d)(3)(E)(i) to 

specify that an MPL–ALO Order would 

not trade with resting orders priced 

equal to the less aggressive of the 

midpoint of the PBBO or the limit price 

of the MPL–ALO Order.16 The Exchange 

believes that these proposed changes 

would provide additional clarity with 

respect to the particular behavior of 

MPL–ALO Orders, as such orders 

(unlike MPL Orders) would not take 

liquidity at the less aggressive of the 

midpoint of the PBBO or their limit 

price. 

In addition, because the Exchange 

proposes to allow MPL Orders— 

including MPL–ALO Orders—to trade at 

the less aggressive of the midpoint of 

the PBBO or their limit price, the 

Exchange proposes to modify Rule 

7.31E(d)(3)(E)(ii) to replace the reference 

to the ‘‘midpoint’’ with the ‘‘working 

price of the MPL–ALO Order’’ 

(consistent with the revised definition 

of MPL Order proposed above). 

To effect the proposed change to 

eliminate the ‘‘No Midpoint Execution’’ 

Modifier, the Exchange proposes to 

modify Rule 7.31E(d)(3)(C) to delete text 

providing that an incoming Limit Order 

may be designated with a ‘‘No Midpoint 

Execution’’ Modifier and that orders so 

designated would not trade with resting 


jspears on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 43077 

17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(5). 

19See note 5, supra. 

20See note 11, supra. 

MPL Orders and may trade through 

MPL Orders. 

The Exchange believes that the 

elimination of the ‘‘No Midpoint 

Execution’’ Modifier would simplify 

order processing on the Exchange and, 

in conjunction with the proposed 

changes to MPL Orders described above, 

encourage the use of MPL Orders and 

provide increased opportunities for 

order execution. 

Finally, the Exchange proposes a 

modification to Rule 7.11E, which sets 

forth rules pertaining to the Limit UpLimit Down (‘‘LULD’’) Plan. The 

proposed change would modify the 

handling of MPL Orders relative to the 

Upper and Lower Price Bands, 

consistent with the proposed changes 

described above with respect to the 

behavior of MPL Orders. Specifically, 

the Exchange proposes to modify Rule 

7.11E(a)(5), which describes the 

repricing or cancellation of orders to 

buy (sell) that are priced or could be 

traded above (below) the Upper (Lower) 

Price Band. Rule 7.11E(a)(5)(F) currently 

provides that, if the midpoint of the 

PBBO is above (below) the Upper 

(Lower) Price Band, an MPL Order will 

not be repriced or rejected and will not 

be eligible to trade unless the ATP 

Holder enters an instruction to cancel or 

reject such MPL Order. 

The Exchange proposes to delete the 

text of Rule 7.11E(a)(5)(F) and designate 

the Rule as Reserved. The Exchange 

believes Rule 7.11E(a)(5)(F) is no longer 

necessary because MPL Orders, as 

proposed, would be permitted to reprice 

and trade relative to LULD Price Bands. 

The Exchange believes that this change 

is consistent with the proposed change 

to permit MPL Orders to trade at prices 

other than the midpoint of the PBBO 

and would similarly increase execution 

opportunities for MPL Orders within the 

bounds of the LULD Price Bands in 

effect. The Exchange notes that MPL 

Orders would behave in the same way 

as other Limit Orders with respect to 

LULD Price Bands and would thus be 

processed as set forth in current Rule 

7.11E(a)(5)(B). 

Reserve Orders 

Rule 7.31E(d)(1) provides for Reserve 

Orders, which are Limit or Inside Limit 

Orders with a quantity of the size 

displayed and with a reserve quantity 

that is not displayed. Rule 

7.31E(d)(1)(C) provides that a Reserve 

Order must be designated Day and may 

only be combined with a Non-Routable 

Limit Order. 

The Exchange proposes to modify 

Rule 7.31E(d)(1)(C) to clarify that a 

Reserve Order may not be designated as 

an ALO Order. Rule 7.31E(d)(1)(C) 

currently provides that a Reserve Order 

may be combined with a Non-Routable 

Limit Order. However, although an ALO 

Order is a Non-Routable Limit Order, 

the Exchange currently does not permit 

Reserve Orders to be designated as ALO 

Orders and thus proposes a clarifying 

change to Rule 7.31E(d)(1)(C) to specify 

accordingly. The Exchange notes that 

this change is intended only to clarify 

and reflect current behavior and does 

not propose any changes to the current 

operation of Reserve Orders or ALO 

Orders. 

* * * * * 

Because of the technology changes 

associated with this proposed rule 

change, the Exchange will announce the 

implementation date by Trader Update, 

which, subject to effectiveness of this 

proposed rule change, will be in the 

third quarter of 2022. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Act,17 in general, and furthers the 

objectives of Section 6(b)(5),18 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 

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. 

With respect to the proposed changes 

to permit Non-Routable Limit Orders, 

displayed ALO Orders, and Day ISO 

ALO Orders to be designated to cancel, 

the Exchange believes that the proposed 

changes would remove impediments to, 

and perfect the mechanism of, a free and 

open market and a national market 

system because it would offer ATP 

Holders the option to cancel such orders 

when they would be displayed at a price 

other than their limit price. The 

Exchange believes that providing ATP 

Holders with this option would afford 

them increased flexibility with respect 

to order handling for existing order 

types, as well as the ability to have 

greater determinism regarding order 

processing in times when such orders 

would be repriced to display at a price 

other than their limit price. The 

Exchange notes that this designation 

would be optional for ATP Holders, and 

if not designated to cancel, NonRoutable Limit Orders, displayed ALO 

Orders, and Day ISO ALO Orders would 

continue to function as set forth in 

current Exchange rules (except as 

otherwise proposed in this filing). The 

Exchange also notes that providing ATP 

Holders with the option to designate 

orders to cancel if they would be 

repriced is not novel, and would align 

the Exchange’s rules with those of other 

cash equity exchanges that currently 

offer their members similar 

functionality.19 The Exchange also 

believes that the proposed changes 

described above to reorganize and 

rephrase rule text that describes the 

current operation of Non-Routable Limit 

Orders, displayed ALO Orders, and Day 

ISO ALO Orders are designed 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 because they do not 

propose any functional changes other 

than to add the option to cancel instead 

of repricing and would improve the 

clarity of Exchange rules governing such 

orders in connection with the proposed 

addition of the option to designate such 

orders to cancel. 

With respect to the proposed change 

to permit ALO Orders to be designated 

as non-displayed, the Exchange believes 

that the proposed change would remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and 

protect investors and the public interest 

because it would offer ATP Holders 

greater flexibility with respect to the 

entry of ALO Orders and could offer 

ATP Holders increased opportunities for 

order execution. The Exchange believes 

that permitting an ALO Order to be nondisplayed would simply provide ATP 

Holders with increased options with 

respect to an existing order type, and 

ATP Holders are free to designate ALO 

Orders to be non-displayed or to 

continue using displayed ALO Orders as 

provided under current Exchange rules. 

The Exchange further believes that 

permitting ALO Orders to be designated 

as non-displayed is not novel and that 

this proposed change would remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system by 

aligning Exchange rules with the rules 

of other cash equity exchanges.20

With respect to the proposed change 

to permit ALO Orders and Day ISO ALO 

Orders to be entered in any size, the 

Exchange also believes that the 

proposed change would promote just 

and equitable principles of trade, 

remove impediments to, and perfect the 


jspears on DSKJM1Z7X2PROD with NOTICES
43078 Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 

21See note 12, supra. 

22See note 14, supra. 

23See note 15, supra. 

24See notes 5, 11, 12, 14, 15, supra. 

25 15 U.S.C. 78s(b)(3)(A)(iii). 

26 17 CFR 240.19b–4(f)(6). 

27 15 U.S.C. 78s(b)(3)(A)(iii). 

28 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has complied with this requirement. 

29 15 U.S.C. 78s(b)(2)(B). 

mechanism of, a free and open market 

and a national market system, and 

protect investors and the public interest. 

Specifically, the Exchange believes that 

the proposed change would provide 

ATP Holders with the flexibility and 

optionality to enter ALO Orders and 

Day ISO ALO Orders in odd-lot sized 

orders, which could increase liquidity 

and enhance opportunities for order 

execution on the Exchange, to the 

benefit of all market participants. The 

Exchange also believes that the 

proposed change would align Exchange 

rules with the treatment of post-only 

orders on other cash equity exchanges, 

thereby removing impediments to, and 

perfecting the mechanism of, a free and 

open market and a national market 

system.21

The Exchange also believes that the 

proposed change to modify the 

operation of the NDR Modifier would 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and 

protect investors and the public interest. 

Specifically, the Exchange believes that 

this proposed change, which would 

provide that any resting order with the 

NDR Modifier would remove liquidity 

when it is locked by any ALO Order, 

would expand the circumstances under 

which an order with the NDR Modifier 

would be eligible to trade, thereby 

increasing opportunities for order 

execution to the benefit of all market 

participants. The Exchange also believes 

that eliminating the use of the NDR 

Modifier with MPL–ALO Orders would 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system because 

the order type-modifier combination is 

inconsistent with the purpose of an 

MPL–ALO Order (and has not been used 

by ATP Holders), and the elimination of 

the NDR Modifier in this context would 

simplify the Exchange’s rules. The 

Exchange further believes that the 

operation of the NDR Modifier, as 

modified, would not be novel and that 

the proposed change would promote 

just and equitable principles of trade 

and remove impediments to, and perfect 

the mechanism of, a free and open 

market and a national market system 

because the NDR Modifier would 

function similarly to analogous 

modifiers offered by other cash equity 

exchanges.22

The Exchange also believes that the 

proposed changes to make an MPL 

Order eligible to trade at the less 

aggressive of the midpoint of the PBBO 

or its limit price and to permit an MPL 

Order to reprice and trade relative to 

LULD Price Bands would promote just 

and equitable principles of trade and 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system because 

MPL Orders could have more 

opportunities to trade with contra-side 

interest, thereby providing ATP Holders 

with increased opportunities for order 

execution and enhancing market quality 

for all market participants. The 

Exchange also believes that this 

proposed change would remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system because 

permitting MPL Orders to trade at the 

less aggressive of the midpoint of the 

PBBO or at their limit price is not novel 

and that comparable order types on 

other cash equity exchanges currently 

behave in this manner.23 The Exchange 

further believes that the proposed 

change to eliminate the ‘‘No Midpoint 

Execution’’ Modifier would remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system because 

the proposed change, along with the 

proposed changes to MPL Orders, could 

result in greater opportunities for order 

execution, thereby enhancing market 

quality on the Exchange. 

Finally, the Exchange believes that its 

proposed change to specify that Reserve 

Orders may not be designated as an 

ALO Order would remove impediments 

to, and perfect the mechanism of, a free 

and open market and a national market 

system and protect investors and the 

public interest because it is not 

intended to effect any functional change 

but would instead add clarity to 

Exchange rules regarding the current 

behavior of Reserve Orders. 

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. As noted 

above, the Exchange believes the 

proposed rule changes would generally 

align order handling on the Exchange 

with behavior on other cash equity 

exchanges 24 and thus would promote 

competition among exchanges by 

offering ATP Holders similar 

functionality and order handling 

options available on other cash equity 

exchanges. The Exchange also believes 

that, to the extent the proposed changes 

would increase opportunities for order 

execution, the proposed change would 

promote competition by making the 

Exchange a more attractive venue for 

order flow and enhancing market 

quality for all market participants. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 25 and Rule 

19b–4(f)(6) thereunder.26 Because the 

proposed rule change does not: (i) 

significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 27 and Rule 19b–4(f)(6)(iii) 

thereunder.28

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 29 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 


jspears on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 43079 

30 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3 The Exchange notes it used to permit a TPH 

organization to determine whether to have MarketMaker continuous quoting obligations apply on an 

individual or collective basis. See Securities 

Exchange Act Release No. 82974 (March 30, 2018), 

83 FR 14685 (April 5, 2018) (SR–CBOE–2018–021). 

The Exchange eliminated this flexibility and began 

applying the current interpretation as of October 

2019. See Securities Exchange Act Release No. 

87024 (September 19, 2019), 84 FR 50545 

(September 25, 2019) (SR–CBOE–2019–059). 

However, the language permitting this flexibility 

inadvertently remained in Rules 5.54(a)(1)(C), 

5.55(a)(1)(B), and 5.56(a)(2) with respect to the 

continuous quoting obligations of Designated 

Primary Market-Makers (‘‘DPMs’’), Lead MarketMakers (‘‘LMMs’’), and Preferred Market-Makers 

(‘‘PMMs’’), respectively. The proposed rule change 

deletes these outdated provisions and re-numbers 

or re-letters, as applicable, the subparagraphs as 

applicable. While the proposed rule change will 

permit a TPH organization to have continuous 

quoting obligations apply below the firm level, it 

will not permit application of continuous quoting 

obligations at the individual level, as was the case 

pursuant to the prior rule. Instead, the proposed 

rule change will permit a TPH organization to have 

continuous quoting obligations apply at the firm 

level or business unit level (if sufficient information 

barriers are in place). 

4 Cboe Options Rules currently contemplate that 

TPHs may have separate Market-Maker aggregation 

units. See, e.g., Rule 5.89(b)(1). Various other rules 

(for example contemplate TPH organizations having 

separate business units and require information 

barriers in the form of appropriate policies and 

procedures that reflect the TPH’s business to 

establish those separate business units. See, e.g., 

Rules 5.89 (risk-weighted assets transactions); 8.10 

(prevention of the misuse of material, nonpublic 

information); and 8.30, Interpretations and Policies 

.03 (position limits). 

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– 

NYSEAMER–2022–27 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–NYSEAMER–2022–27. 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–NYSEAMER–2022–27 and 

should be submitted on or before 

August 9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–15303 Filed 7–18–22; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95271; File No. SR–CBOE– 

2022–037] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Certain of Its 

Rules Related to Market-Makers 

July 13, 2022. 

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 July 5, 

2022, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) 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 

Cboe Exchange, Inc. (‘‘Cboe Options’’ 

or the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) a proposed rule 

change to amend certain of its Rules 

related to Market-Makers. The text of 

the proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

certain of its Rules related to MarketMakers. Specifically, the Exchange 

proposes to amend its Rules to permit 

a Trading Permit Holder (‘‘TPH’’) 

organization to register separate marketmaker aggregation units as separate 

Market-Makers, each of which would be 

subject to Market-Maker obligations on 

an individual basis. Currently, Cboe 

interprets the term ‘‘Market-Maker’’ to 

apply at a firm level, including with 

respect to obligations.3 However, the 

Exchange understands TPH 

organizations have Market-Maker units 

that are completely separate from each 

other for operational and profit/loss 

purposes, with appropriate information 

barriers between units.4 Because of this 

operational separation, such 

organizations may prefer to have those 

units be treated as individual MarketMakers under the Exchange’s Rules 

consistent with those organizations’ 

internal operations. 

The proposed rule change amends 

certain Rules to provide TPH 

organizations with this flexibility: 


jspears on DSKJM1Z7X2PROD with NOTICES