Federal Register / Vol. 86, No. 110 / Thursday, June 10, 2021 / Notices 30995 

1See Docket No. RM2018–3, Order Adopting 

Final Rules Relating to Non-Public Information, 

June 27, 2018, Attachment A at 19–22 (Order No. 

4679). 

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

2 17 CFR 240.19b–4. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Docketed Proceeding(s) 

I. Introduction 

The Commission gives notice that the 

Postal Service filed request(s) for the 

Commission to consider matters related 

to negotiated service agreement(s). The 

request(s) may propose the addition or 

removal of a negotiated service 

agreement from the market dominant or 

the competitive product list, or the 

modification of an existing product 

currently appearing on the market 

dominant or the competitive product 

list. 

Section II identifies the docket 

number(s) associated with each Postal 

Service request, the title of each Postal 

Service request, the request’s acceptance 

date, and the authority cited by the 

Postal Service for each request. For each 

request, the Commission appoints an 

officer of the Commission to represent 

the interests of the general public in the 

proceeding, pursuant to 39 U.S.C. 505 

(Public Representative). Section II also 

establishes comment deadline(s) 

pertaining to each request. 

The public portions of the Postal 

Service’s request(s) can be accessed via 

the Commission’s website (http://

www.prc.gov). Non-public portions of 

the Postal Service’s request(s), if any, 

can be accessed through compliance 

with the requirements of 39 CFR 

3011.301.1

The Commission invites comments on 

whether the Postal Service’s request(s) 

in the captioned docket(s) are consistent 

with the policies of title 39. For 

request(s) that the Postal Service states 

concern market dominant product(s), 

applicable statutory and regulatory 

requirements include 39 U.S.C. 3622, 39 

U.S.C. 3642, 39 CFR part 3030, and 39 

CFR part 3040, subpart B. For request(s) 

that the Postal Service states concern 

competitive product(s), applicable 

statutory and regulatory requirements 

include 39 U.S.C. 3632, 39 U.S.C. 3633, 

39 U.S.C. 3642, 39 CFR part 3035, and 

39 CFR part 3040, subpart B. Comment 

deadline(s) for each request appear in 

section II. 

II. Docketed Proceeding(s) 

1. Docket No(s).: MC2021–98 and 

CP2021–101; Filing Title: USPS Request 

to Add Priority Mail Contract 705 to 

Competitive Product List and Notice of 

Filing Materials Under Seal; Filing 

Acceptance Date: June 4, 2021; Filing 

Authority: 39 U.S.C. 3642, 39 CFR 

3040.130 through 3040.135, and 39 CFR 

3035.105; Public Representative: 

Kenneth R. Moeller; Comments Due: 

June 14, 2021. 

This Notice will be published in the 

Federal Register. 

Erica A. Barker, 

Secretary. 

[FR Doc. 2021–12151 Filed 6–9–21; 8:45 am] 

BILLING CODE 7710–FW–P 

POSTAL SERVICE 

Board of Governors; Sunshine Act 

Meeting 

DATES AND TIMES: Wednesday, June 16, 

2021, at 9:00 a.m. 

PLACE: Washington, DC, at U.S. Postal 

Service Headquarters, 475 L’Enfant 

Plaza SW, in the Benjamin Franklin 

Room. 

STATUS: Wednesday, June 16, 2021, at 

9:00 a.m. 

MATTERS TO BE CONSIDERED: 

Wednesday, June 16, 2021, at 9:00 a.m. 

(Closed) 

1. Strategic Issues. 

2. Financial and Operational Matters. 

3. Compensation and Personnel 

Matters. 

4. Administrative Items. 

CONTACT PERSON FOR MORE INFORMATION: 

Michael J. Elston, Secretary of the 

Board, U.S. Postal Service, 475 L’Enfant 

Plaza SW, Washington, DC 20260–1000. 

Telephone: (202) 268–4800. 

Katherine Sigler, 

Assistant Secretary. 

[FR Doc. 2021–12281 Filed 6–8–21; 11:15 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92107; File No. SR–Phlx– 

2021–32] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Various Phlx 

Rules 

June 4, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on May 24, 

2021, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Phlx Rules at Options 1, Section 1, 

Applicability, Definitions and 

References; Options 2, Section 4, 

Obligations of Market Makers; Options 

2, Section 12, Registration and 

Functions of Options Lead Market 

Makers; Options 3, Section 7, Types of 

Orders and Order and Quote Protocols; 

Options 3, Section 15, Simple Order 

Risk Protections; and Options 3, Section 

16, Complex Order Risk Protections. 

The Exchange also proposes to add a 

new Equity 3A, which will be reserved, 

to the Rulebook Shell. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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


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30996 Federal Register / Vol. 86, No. 110 / Thursday, June 10, 2021 / Notices 

3See Securities Exchange Act Release No. 51126 

(February 9, 2005), 70 FR 6915 (February 9, 2005) 

(SR–Phlx–2004–90) (Order Approving Proposed 

Rule Change by the Philadelphia Stock Exchange, 

Inc., Relating to Remote Streaming Quote Traders). 

4See Securities Exchange Act 88213 (February 

14, 2020), 85 FR 9859 (February 20, 2020) (SR– 

Phlx–2020–03)(Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Relocate 

Rules From Its Current Rulebook Into Its New 

Rulebook Shell) (‘‘Rulebook Relocation’’). 

5The Exchange recently filed to add Size 

Limitation to BX and The Nasdaq Stock Market 

LLC. See Securities Exchange Act Release Nos. 

91838 (May 11, 2021), 86 FR 26750 (May 17, 2021) 

(SR–BX–2021–020) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

BX Rules at Options 3, Section 7, Types of Orders 

and Order and Quote Protocols, and Options 3, 

Section 15, Risk Protections); and 91841 (May 11, 

2021), 86 FR 26753 (May 17, 2021) (SR–NASDAQ– 

2021–030) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

the Nasdaq Options Market LLC Rules at Options 

3, Section 7, Types of Orders and Order and Quote 

Protocols, and Options 3, Section 15, Risk 

Protections). 

6See Options 3, Section 7(c)(2). The Exchange 

also notes that IOC orders entered with a TIF of IOC 

are not eligible for routing. 

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 

Phlx Rules at Options 1, Section 1, 

Applicability, Definitions and 

References; Options 2, Section 4, 

Obligations of Market Makers; Options 

2, Section 12, Registration and 

Functions of Options Lead Market 

Makers; Options 3, Section 7, Types of 

Orders and Order and Quote Protocols; 

Options 3, Section 15, Simple Order 

Risk Protections; and Options 3, Section 

16, Complex Order Risk Protections. 

The Exchange also proposes to add and 

reserve a new Equity 3A to the Rulebook 

Shell. Each change is described below. 

Options 2, Section 4 

The Exchange proposes to amend 

Options 2, Section 4, Obligations of 

Market Makers. First, the Exchange 

proposes some technical amendments. 

The Exchange proposes to amend 

Options 2, Section 4(b) and 4(b)(1) to 

change the term ‘‘an’’ to ‘‘a’’. The 

Exchange also proposes to capitalize the 

term ‘‘market maker’’ within Options 2, 

Section 4(b)(4). Finally, the Exchange 

proposes to amend the term ‘‘is’’ to 

‘‘are’’ within Options 2, Section 4(c). 

These corrections are non-substantive 

and intended to make the rule text 

clearer. 

Second, the Exchange proposes to 

amend the current rule text within 

Options 2, Section 4(b)(5) which states, 

An RSQT electing to engage in 

Exchange options transactions is 

designated as a Lead Market Maker on 

the Exchange for all purposes under the 

Exchange Act and the rules and 

regulations thereunder with respect to 

options transactions initiated and 

effected by him in his capacity as a 

Market Maker. 

The Exchange proposes to amend the 

rule to replace the term ‘‘RSQT’’ with 

the broader term ‘‘Market Maker’’ and 

replace the term ‘‘Lead Market Maker’’ 

with the term ‘‘specialist.’’ Phlx filed a 

rule change 3 to amend certain rules, the 

rule text previously at Commentary .01 

of Rule 1014, which is now located at 

Options 2, Section 4(b)(5) stated, 

An ROT electing to engage in 

Exchange Options transactions is 

designated as a specialist on the 

Exchange for all purposes under the 

Securities Exchange Act of 1934 and the 

rules and regulations thereunder with 

respect to options transactions initiated 

and effected by him on the floor in his 

capacity as an ROT. For purposes of this 

commentary, the term ‘‘transactions 

initiated and effected on the floor’’ shall 

not include transactions initiated by an 

ROT off the floor, but which are 

considered ‘‘on-floor’’ pursuant to 

Commentaries .07 and .08 of Rule 1014. 

Similarly, an RSQT electing to engage in 

Exchange Options transactions is 

designated as a specialist on the 

Exchange for all purposes under the 

Securities Exchange Act of 1934 and the 

rules and regulations thereunder with 

respect to options transactions initiated 

and effected by him in his capacity as 

an ROT. 

At this time, the Exchange proposes to 

revert the rule text back to a part of 

original language and state, ‘‘A Market 

Maker electing to engage in Exchange 

Options transactions is designated as a 

specialist on the Exchange for all 

purposes under the Securities Exchange 

Act of 1934 and the rules and 

regulations thereunder with respect to 

options transactions initiated and 

effected by him on the floor in his 

capacity as an Market Maker.’’ Pursuant 

to Options 1, Section 1(b)(28), the term 

’’ Market Maker’’ means a Streaming 

Quote Trader (‘‘SQT’’) or a Remote 

Streaming Quote Trader (‘‘RSQT’’) who 

enters quotations for his own account 

electronically into the System. An RSQT 

is only one type of Market Maker, the 

other is an SQT. In 2020, the Exchange 

amended the term ‘‘ROT’’ to ‘‘Market 

Maker.’’ 4 The original term ‘‘ROT’’ 

included both SQTs and RSQTs and 

therefore the broader term ‘‘Market 

Maker’’ should replace ‘‘RSQT.’’ While 

the Rulebook Relocation amended the 

term ‘‘specialist’’ to ’’ Lead Market 

Maker,’’ the Exchange notes that the 

term ‘‘specialist’’ within prior Rule 

1014, which is now Options 2, Section 

4(b)(5), did not refer to a Phlx 

participant also known as a ‘‘specialist,’’ 

rather the term referred to an individual 

that engages in market making pursuant 

to the Act. The Exchange proposes to 

replace the term ‘‘Lead Market Maker’’ 

with the term ‘‘specialist’’ which shall 

mean, for purposes of this rule, an 

individual that engages in market 

making. The term ‘‘specialist’’ is broader 

than the term ‘‘Lead Market Maker.’’ 

This proposal reverts back to language 

previously used and should capture the 

universe of market makers the rule was 

originally intended to capture. 

Options 3, Section 15 and Options 3, 

Section 16 

The Exchange proposes to add 

provisions within Options 3, Section 15 

at paragraph (b)(2), related to Simple 

Order Risk Protections, and Options 3, 

Section 16 at paragraph (e), related to 

Complex Order Risk Protections, to 

describe a current limitation that exists 

within its rules today as to the number 

of contracts an incoming order or quote 

may specify. Specifically, for simple 

orders, the maximum number of 

contracts, which shall not be less than 

10,000 contracts, is established by the 

Exchange from time-to-time. For 

Complex Orders, the maximum number 

of contracts (or shares), which shall not 

be less than 10,000 contracts (or 100,000 

shares), is established by the Exchange 

from time-to-time. Orders or quotes that 

exceed the maximum number of 

contracts/shares are rejected. This 

System limitation is the same on all 

Nasdaq affiliated exchanges.5 Today, 

Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq 

GEMX, LLC (‘‘GEMX’’) and Nasdaq 

MRX, LLC (‘‘MRX’’) describe this 

limitation within their rules at Options 

3, Section 15(a)(2)(B). ISE and MRX also 

describe the Size Limitation within 

Options 3, Section 16(c)(2). Phlx 

proposes to similarly describe this 

limitation in its rules. 

Options 3, Section 7 

The Exchange also proposes to amend 

Options 3, Section 7(c)(2), Types of 

Orders and Order and Quote Protocols, 

which describes Immediate-or-Cancel 

Orders or ‘‘IOC’’ Orders. Today, the 

Exchange describes an IOC order as a 

Market Order or Limit Order to be 

executed in whole or in part upon 

receipt. Any portion not so executed is 

cancelled.6 Options 3, Section 7(c)(2)(B) 

provides that IOC orders may be entered 


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Federal Register / Vol. 86, No. 110 / Thursday, June 10, 2021 / Notices 30997 

7 ‘‘Financial Information eXchange’’ or ‘‘FIX’’ is 

an interface that allows members and their 

Sponsored Customers to connect, send, and receive 

messages related to orders and auction orders and 

responses to and from the Exchange. Features 

include the following: (1) Execution messages; (2) 

order messages; and (3) risk protection triggers and 

cancel notifications. See Options 3, Section 

7(a)(i)(A). 

8 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an 

interface that allows Lead Market Makers, RSQTs, 

SQTs to connect, send, and receive messages 

related to quotes, Immediate-or-Cancel Orders, and 

auction responses into and from the Exchange. 

Features include the following: (1) Options symbol 

directory messages (e.g underlying and complex 

instruments); (2) system event messages (e.g., start 

of trading hours messages and start of opening); (3) 

trading action messages (e.g., halts and resumes); (4) 

execution messages; (5) quote messages; (6) 

Immediate-or-Cancel Order messages; (7) risk 

protection triggers and purge notifications; (8) 

opening imbalance messages; (9) auction 

notifications; and (10) auction responses. The SQF 

Purge Interface only receives and notifies of purge 

requests from the Lead Market Maker, SQT or 

RSQT. Lead Market Makers, SQTs and RSQTs may 

only enter interest into SQF in their assigned 

options series. 

9The Exchange notes that Lead Market Makers 

are also Market Makers for purposes of the Options 

3, Section 7 discussion. 

10Lead Market Makers have quoting obligations 

during the Opening Process as specified in Options 

3, Section 8 and Market Makers and Lead Market 

Makers have intra-day quoting obligations as 

specified in Options 2, Section 5. 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 

13See supra note 4. 

through FIX 7 or SQF,8 provided that an 

IOC order entered by a Market Maker 9

through SQF is not subject to the Order 

Price Protection or the Market Order 

Spread Protection in Options 3, Section 

15(a)(1) and (a)(2), respectively. With 

the proposed addition of the Size 

Limitation to proposed new Options 3, 

Section 15(b)(2) and Options 3, Section 

16(e), the Exchange also proposes to 

note that Size Limitation does not apply 

to IOC orders entered through SQF. 

Today, orders that are entered as IOC 

by a Market Maker through SQF are 

subject to the protections in Options 3, 

Section 15, except for Order Price 

Protection and Market Order Spread 

Protection. The Exchange proposes to 

add Size Limitation to the list of 

protections that are available for IOC 

orders entered through FIX, but not 

SQF. In addition, the Exchange 

proposes to note within Options 3, 

Section 7(c)(2), that, ‘‘IOC orders may be 

entered through FIX or SQF, provided 

that an IOC order entered by a Market 

Maker through SQF is not subject to the 

Order Price Protection, the Market 

Order Spread Protection, or the Size 

Limitation in Options 3, Section 

15(a)(1), (a)(2) and (b)(2), respectively, 

or Size Limitation within Options 3, 

Section 16(e).’’ The addition of this rule 

text will bring greater clarity to the 

order type. 

The Exchange notes that while only 

orders are entered into FIX, SQF is a 

quote protocol that also permits Market 

Makers to enter IOC orders that do not 

rest on the order book. The Exchange 

has not elected to utilize Size Limitation 

on SQF as it did for FIX because Market 

Makers only utilize SQF to enter IOC 

orders and Market Makers are 

professional traders with their own risk 

settings. FIX, on the other hand, is 

utilized by all market participants who 

may not have their own risk settings, 

unlike Market Makers. 

Market Makers utilize IOC orders to 

trade out of accumulated positions and 

manage their risk when providing 

liquidity on the Exchange. Proper risk 

management, including using these IOC 

orders to offload risk, is vital for Market 

Makers, and allows them to maintain 

tight markets and meet their quoting 

and other obligations to the market. 

Market Makers handle a large amount of 

risk when quoting and in addition to the 

risk protections required by the 

Exchange. Market Makers utilize their 

own risk management parameters when 

entering orders, minimizing the 

likelihood of a Market Maker’s 

erroneous order from being entered. The 

Exchange believes that Market Makers, 

unlike other market participants, have 

the ability to manage their risk when 

submitting IOC orders through SQF and 

should be permitted to elect this method 

of order entry to obtain efficiency and 

speed of order entry, particularly in 

light of the continuous quoting 

obligations the Exchange imposes on 

these participants. 

The Exchange believes that allowing 

Market Makers to submit IOC orders 

through their preferred protocol 

increases their efficiency in submitting 

such orders and thereby allows them to 

maintain quality markets to the benefit 

of all market participants that trade on 

the Exchange. Further, unlike other 

market participants, Market Makers 

provide liquidity to the market place 

and have obligations.10 Thus, the 

Exchange opted to not offer Size 

Limitation for IOC orders entered 

through SQF because Market Makers 

have more sophisticated infrastructures 

than other market participants and are 

able to manage their risk. 

Similarly, the Exchange also proposes 

to amend Options 3, Section 7(c)(3) 

which describes an Opening Only or 

‘‘OPG’’ order. Today, an OPG order can 

only be executed in the Opening Process 

pursuant to Options 3, Section 8. The 

rule currently states that this order type 

is not subject to any protections listed 

in Options 3, Section 15 describing risk 

protections. With the proposed addition 

of Size Limitation to proposed new 

Options 3, Section 15(b)(2) and Options 

3, Section 16(e), the Exchange proposes 

to note within Options 3, Section 7(c)(3) 

that OPG orders are subject to Size 

Limitation. OPG orders are entered 

during the Opening Process ‘‘Financial 

Information eXchange’’ or ‘‘FIX’’. Also, 

any participant may enter an OPG order 

and be subject to Size Limitation 

protections. 

Non-Substantive Amendments 

The Exchange proposes to amend the 

Rulebook shell to add a new Equity 3A 

and reserve that section. Equity 3A will 

be utilized by the Nasdaq BX, Inc. 

(‘‘BX’’) Rulebook and the Exchange 

proposes to reserve that section in this 

Rulebook to demonstrate the section 

does not exist for the Exchange’s equity 

market. 

The Exchange proposes to make 

minor technical amendments to Options 

1, Section 1(b)(27) which describes a 

Lead Market Maker. The Exchange 

proposes to change an ‘‘an’’ to ‘‘the’’ and 

capitalize the term ‘‘Trading Floor.’’ 

The Exchange proposes to amend 

Options 2, Section 12(a)(1), Registration 

and Functions of Options Lead Market 

Makers, to add a parenthetical and 

space that were missing. 

Finally, the Exchange proposes to 

amend the description of a Specialized 

Quote Feed within Options 3, Section 

7(a)(i)(B) to make plural the word 

‘‘request’’ and also add an ‘‘.,’’ after an 

e.g to conform the punctuation in the 

paragraph. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,11 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,12

in particular, in that it is designed to 

promote just and equitable principles of 

trade and to protect investors and the 

public interest. 

Options 2, Section 4 

The Exchange’s proposal to amend 

Options 2, Section 4(b)(5) is consistent 

with the Act because the paragraph will 

read as intended. In the Rulebook 

Relocation, the Exchange amended the 

term ‘‘ROT’’ to ‘‘Market Maker.’’ 13

Pursuant to Options 1, Section 1(b)(28), 

the term ‘‘Market Maker’’ means an SQT 

or an RSQT who enters quotations for 

his own account electronically into the 

System. An RSQT is only one type of 

Market Maker, the other is an SQT. The 

original term ‘‘ROT’’ included both 

SQTs and RSQTs and therefore the 

Exchange proposes to revert back to the 

broader term ‘‘Market Maker.’’ While 


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30998 Federal Register / Vol. 86, No. 110 / Thursday, June 10, 2021 / Notices 

14See supra note 5. 15See Options 3, Section 7(c)(2). 

16See supra note 10. 

17 15 U.S.C. 78s(b)(1). 

the Rulebook Relocation amended the 

term ‘‘specialist’’ to ‘‘Lead Market 

Maker,’’ the Exchange notes that the 

term ‘‘specialist’’ within prior Rule 

1014, which is now Options 2, Section 

4(b)(5), did not refer to a Phlx 

participant also known as a ‘‘specialist,’’ 

rather the term referred to an individual 

that engages in market making pursuant 

to the Act. The Exchange proposes to 

replace the term ‘‘Lead Market Maker’’ 

with the term ‘‘specialist’’ which shall 

mean, for purposes of this rule, an 

individual that engages in market 

making. The term ‘‘specialist’’ is broader 

than the term ‘‘Lead Market Maker.’’ 

This proposal reverts back to language 

previously used and should capture the 

universe of market makers the rule was 

originally intended to capture. 

The remainder of the proposed 

amendments to Options 2, Section 4 are 

non-substantive technical amendments 

that are intended to bring greater clarity 

to the Exchange’s Rules. 

Options 3, Section 15 and Options 3, 

Section 16 

The Exchange’s proposal to add 

provisions within Options 3, Section 15 

at paragraph (b)(2), related to Simple 

Order Risk Protections, and Options 3, 

Section 16 at paragraph (e), related to 

Complex Order Risk Protections, to 

describe a current limitation that exists 

within its rules today as to the number 

of contracts an incoming order or quote 

may specify is consistent with the Act. 

The proposal is intended to describe a 

current limitation that exists today as to 

the number of contracts an incoming 

order or quote may specify. Specifically, 

for simple orders, the maximum number 

of contracts, which shall not be less 

than 10,000 contracts, is established by 

the Exchange from time-to-time. For 

Complex Orders, the maximum number 

of contracts (or shares), which shall not 

be less than 10,000 contracts (or 100,000 

shares), is established by the Exchange 

from time-to-time. Orders or quotes that 

exceed the maximum number of 

contracts/shares are rejected. This 

System limitation is the same on all 

Nasdaq affiliated exchanges.14 Today, 

ISE, GEMX and MRX describe this 

limitation within its rules at Options 3, 

Section 15(a)(2)(B) and ISE and MRX 

describe the limitation in Options 3, 

Section 16(c)(2). Phlx proposes to 

similarly describe this limitation in its 

rules. 

Options 3, Section 7 

The Exchange’s proposal to amend 

Options 3, Section 7(c)(2) with respect 

to IOC orders is consistent with the Act. 

Today, the Exchange describes an IOC 

order as a Market Order or Limit Order 

to be executed in whole or in part upon 

receipt. Any portion not so executed is 

cancelled.15 Options 3, Section 

7(c)(2)(B) provides that IOC orders may 

be entered through FIX or SQF, 

provided that an IOC order entered by 

a Market Maker through SQF is not 

subject to the Order Price Protection or 

the Market Order Spread Protection in 

Options 3, Section 15(a)(1) and (a)(2) 

respectively. With the proposed 

additions of the Size Limitation within 

Options 3, Section 15(b)(2) and Options 

3, Section 16(e), the Exchange also 

proposes to note that Size Limitation 

does not apply to IOC orders entered 

through SQF. The Exchange notes these 

exceptions within this rule to make 

clear that this information is available to 

market participants within the 

description of IOC. 

The Exchange notes that while only 

orders are entered into FIX, SQF is a 

quote protocol that also permits Market 

Makers to enter IOC orders that do not 

rest on the order book. The Exchange 

has not elected to utilize Size Limitation 

on SQF as it did for FIX because Market 

Makers only utilize SQF to enter IOC 

orders and Market Makers are 

professional traders with their own risk 

settings. FIX, on the other hand, is 

utilized by all market participants who 

unlike Market Makers may not have 

their own risk settings. Market Makers 

utilize IOC orders to trade out of 

accumulated positions and manage their 

risk when providing liquidity on the 

Exchange. Proper risk management, 

including using these IOC orders to 

offload risk, is vital for Market Makers, 

and allows them to maintain tight 

markets and meet their quoting and 

other obligations to the market. Market 

Makers handle a large amount of risk 

when quoting and in addition to the risk 

protections required by the Exchange. 

Market Makers utilize their own risk 

management parameters when entering 

orders, minimizing the likelihood of a 

Market Maker’s erroneous order from 

being entered. The Exchange believes 

that Market Makers, unlike other market 

participants, have the ability to manage 

their risk when submitting IOC orders 

through SQF and should be permitted to 

elect this method of order entry to 

obtain efficiency and speed of order 

entry, particularly in light of the 

continuous quoting obligations the 

Exchange imposes on these participants. 

The Exchange believes that allowing 

Market Makers to submit IOC orders 

through their preferred protocol 

increases their efficiency in submitting 

such orders and thereby allows them to 

maintain quality markets to the benefit 

of all market participants that trade on 

the Exchange. Further, unlike other 

market participants, Market Makers 

provide liquidity to the market place 

and have obligations.16 The Exchange 

believes not offering Size Limitation for 

IOC orders entered through SQF is 

consistent with the Act because Market 

Makers have more sophisticated 

infrastructures than other market 

participants and are able to manage 

their risk. 

The Exchange’s proposal to amend 

OPG orders within Options 3, Section 

7(c)(3) to make clear that Size 

Limitation applies to OPG orders is 

consistent with the Act as this rule text 

will clarify the existing language and 

make clear that Size Limitation is 

applicable to the order type. OPG orders 

are entered during the Opening Process 

utilizing FIX. Any participant may enter 

an OPG order. The Exchange’s proposal 

to amend Options 3, Section 7(c)(3) to 

make clear that Size Limitation applies 

to OPG orders is consistent with the Act 

as this rule text will clarify the existing 

language and make clear that Size 

Limitation is applicable to this order 

type. 

Non-Substantive Amendments 

The Exchange’s proposal to add a new 

Equity 3A and reserve that section, and 

amend Options 1, Section 1(b)(27), 

Options 2, Section 12 and Options 3, 

Section 7(a)(i)(B) to make technical 

changes, are consistent with the Act as 

these changes will add clarity to the 

Exchange’s rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Options 2, Section 4 

The Exchange’s proposal to amend 

Options 2, Section 4(b)(5) does not 

impose an undue burden on 

competition because the paragraph will 

read as intended. The Exchange’s 

proposal will make clear that all 

participants engaged in market making 

activities are specialists pursuant to the 

Act.17

The remainder of the proposed 

amendments to Options 2, Section 4 are 

non-substantive technical amendments. 


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Federal Register / Vol. 86, No. 110 / Thursday, June 10, 2021 / Notices 30999 

18See supra note 5. 

19See supra note 10. 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

22See supra note 5. 

23For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 24 17 CFR 200.30–3(a)(12). 

Options 3, Section 15 and Options 3, 

Section 16 

The Exchange’s proposal to add 

provisions within Options 3, Section 15 

at paragraph (b)(2), related to Simple 

Order Risk Protections, and Options 3, 

Section 16 at paragraph (e), related to 

Complex Order Risk Protections, to 

describe a current limitation that exists 

within its rules today as to the number 

of contracts an incoming order or quote 

may specify does not impose an undue 

burden on competition. The proposal is 

intended to describe a current limitation 

that exists today as to the number of 

contracts an incoming order or quote 

may specify. This System limitation is 

the same on all Nasdaq affiliated 

exchanges.18 Today, ISE, GEMX and 

MRX describe this limitation within its 

rules at Options 3, Section 15(a)(2)(B) 

and ISE and MRX describe this 

limitation within Options 3, Section 

16(c)(2). Phlx proposes to similarly 

describe this limitation in its rules. 

Options 3, Section 7 

The Exchange’s proposal to amend 

Options 3, Section 7(c)(2) with respect 

to IOC orders does not impose an undue 

burden on competition. With the 

proposed additions of the Size 

Limitation within Options 3, Section 

15(b)(2) and Options 3, Section 16(e), 

the Exchange also proposes to note that 

Size Limitation does not apply to IOC 

orders entered through SQF. Unlike 

other market participants, Market 

Makers provide liquidity to the market 

place and have obligations.19

The Exchange’s proposal to amend 

Options 3, Section 7(c)(3) to make clear 

that Size Limitation applies to OPG 

orders does not impose an undue 

burden on competition as this rule text 

will clarify the existing language and 

make clear that Size Limitation is 

applicable to this order type. OPG 

orders are entered during the Opening 

Process utilizing FIX. 

Non-Substantive Amendments 

The Exchange’s proposal to add a new 

Equity 3A and reserve that section, and 

amend Options 1, Section 1(b)(27), 

Options 2, Section 12 and Options 3, 

Section 7(a)(i)(B) to make technical 

changes, do not impose an undue 

burden on competition as these changes 

will add clarity to the Exchange’s rules. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 20 and Rule 19b– 

4(f)(6) thereunder.21

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission notes that other 

exchanges have substantively similar 

rules regarding size limitation for 

certain incoming orders or quotes.22 The 

Exchange’s proposal will also revert a 

rule unintentionally modified to its 

original intention. Finally, the nonsubstantive amendments should clarify 

the Exchange’s rules. Thus, the 

Commission believes waiver of the 30- 

day operative delay is consistent with 

the protection of investors and the 

public interest. The Commission 

therefore waives the 30-day operative 

delay and designates this proposal 

operative upon filing.23

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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– 

PHLX–2021–32 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–PHLX–2021–32. 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–PHLX–2021–32 and should 

be submitted on or before July 1, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12120 Filed 6–9–21; 8:45 am] 

BILLING CODE 8011–01–P 


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