[Federal Register Volume 80, Number 144 (Tuesday, July 28, 2015)]
[Notices]
[Pages 45021-45049]
[FR Doc No: 2015-18277]

Vol. 80

Tuesday,

No. 144

July 28, 2015

Part II

Securities and Exchange Commission

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Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of
Proposed Rule Change Adopting New Equity Trading Rules Relating to
Orders and Modifiers and the Retail Liquidity Program To Reflect the
Implementation of Pillar, the Exchange's New Trading Technology
Platform; Notice

Federal Register / Vol. 80 , No. 144 / Tuesday, July 28, 2015 /
Notices

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75497; File No. SR-NYSEARCA-2015-56]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Adopting New Equity Trading Rules Relating to
Orders and Modifiers and the Retail Liquidity Program To Reflect the
Implementation of Pillar, the Exchange's New Trading Technology
Platform

July 21, 2015.
    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 7, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt new equity trading rules relating to
Orders and Modifiers and the Retail Liquidity Program to reflect the
implementation of Pillar, the Exchange's new trading technology
platform. The text of the proposed rule change is available on the
Exchange's Web site 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
    On April 30, 2015, the Exchange filed its first rule filing
relating to the implementation of Pillar, which is an integrated
trading technology platform designed to use a single specification for
connecting to the equities and options markets operated by NYSE Arca
and its affiliates, New York Stock Exchange LLC (``NYSE'') and NYSE MKT
LLC (``NYSE MKT'').\4\ The Pillar I Filing proposed to adopt new rules
relating to Trading Sessions, Order Ranking and Display, and Order
Execution.
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    \4\ See Securities Exchange Act Release No. 74951 (May 13,
2015), 80 FR 28721 (May 19, 2015) (SR-NYSEArca-2015-38) (Notice)
(``Pillar I Filing''). In the Pillar I Filing, the Exchange
described its proposed implementation of Pillar, including that it
would be submitting more than one rule filing to support the
anticipated phased migration to Pillar.
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    This is the second filing to support Pillar implementation and is
intended to be read together with the Pillar I Filing. Specifically, as
described in the Pillar I Filing, new rules to govern trading on Pillar
would have the same numbering as current rules, but with the modifier
``P'' appended to the rule number. For example, Rule 7.31, governing
Orders and Modifiers, would remain unchanged and continue to apply to
any trading in symbols on the current trading platform. Proposed Rule
7.31P would govern Orders and Modifiers for trading in symbols migrated
to the Pillar platform. In addition, the proposed new rules to support
Pillar in this filing would use the terms that were proposed in the
Pillar I Filing, e.g., working price, display price, and priority
categories.\5\
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    \5\ Capitalized terms not proposed to be defined in this filing
are the defined terms set forth in the Pillar I Filing or in
Exchange rules.
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    In this filing, the Exchange proposes to adopt new Pillar rules
relating to:
     Orders and Modifiers (NYSE Arca Equities Rule 7.31P
(``Rule 7.31P'')); and
     Retail Liquidity Program (NYSE Arca Equities Rule 7.44P
(``Rule 7.44P''))
Proposed New Rule 7.31P--Orders and Modifiers
    Rule 7.31 governs orders and modifiers.\6\ As set forth in Rule
7.31, which was recently amended by the 2015 Order Type Filing, the
Exchange's offering of order types and modifiers are grouped in the
following categories:
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    \6\ The Exchange has recently amended its rules related to order
functionality on the current trading platform. See Securities
Exchange Act Release Nos. 71331 (Jan. 16, 2014), 79 FR 3907 (Jan.
23, 2014) (SR-NYSEArca-2013-92) (Approval order for filing that
updated rules relating to order types and modifiers) (``2013 Review
Filing''); 72942 (Aug. 28, 2014), 79 FR 52784 (Sept. 4, 2014) (SR-
NYSEArca-2014-75) (Approval order for filing that eliminated
specified order types, modifiers, and related references) (``2014
Deletion Filing''); and 74796 (April 23, 2015), 80 FR 12537 (March
9, 2015) (SR-NYSEArca-2015-08) (Approval order for filing to clarify
Exchange rules governing order types) (``2015 Order Type Filing'').
The Exchange filed the 2015 Order Type Filing to respond to a
request by the SEC's Division of Trading and Markets that equity
exchanges conduct a comprehensive review of their order types and
how they operate in practice, and as part of that review, consider
appropriate rule changes to help clarify the nature of order types
and to eliminate specified order types. See Letter from James Burns,
Deputy Director, Division of Trading and Markets, Securities and
Exchange Commission, to Jeffrey C. Sprecher, Chief Executive
Officer, Intercontinental Exchange, Inc., dated June 20, 2014. See
also Mary Jo White, Chair, Securities and Exchange Commission,
Speech at the Sandler, O'Neill & Partners, L.P. Global Exchange and
Brokerage Conference (June 5, 2014) (available at www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
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     Primary Order Types (Rule 7.31(a));
     Time in Force Modifiers (Rule 7.31(b));
     Auction-Only Orders (Rule 7.31(c));
     Working Orders (7.31(d));
     Orders with Instructions not to Route (7.31(e));
     Orders with Specific Routing Instructions (7.31(f));
     Additional Order Instructions and Modifiers (7.31(g)); and
     Q Orders (7.31(h)).
Overview of New Rule 7.31P
    The Exchange proposes new Rule 7.31P to reflect orders and
modifiers in Pillar and would structure new Rule 7.31P in a manner
similar to Rule 7.31. Because Pillar would be a new trading platform,
the Exchange proposes a new rule set to describe how orders and
modifiers in Pillar would be priced, ranked, traded, and/or routed,
using the terminology that was proposed in the Pillar I Filing, such as
the terms ``Away Market,'' ``working price,'' ``display price,''
``limit price,'' and the priority categories, as defined in proposed
Rule 7.36P in the Pillar I Filing. Accordingly, all orders and
modifiers will have new rule text in Rule 7.31P as compared to Rule
7.31. Proposed Rule 7.31P would have the following general non-
substantive differences from current Rule 7.31:
     Renaming the category of orders currently described as
``Working Orders'' as ``Orders with a Conditional or Non-Displayed
Price and/or Size,'' which would reflect the proposed new terms set
forth in the Pillar I Filing;
     Moving Tracking Orders from the category ``Orders with
Instructions not to Route'' to the category ``Orders with

a Conditional or Non-Displayed Price and/or Size'';
     Creating new, stand-alone categories for Cross Orders and
Pegged Orders;
     Using the terms ``quantity'' instead of ``portion,''
``will'' instead of ``shall,'' and ``trade'' instead of ``execute'';
and
     Stylistic differences to eliminate use of terms such
``contra-side'' or ``better than'' with respect to NBBO or PBBO and
instead referring to an order to buy (sell) and then, as appropriate
for defining how an order type operates, referring to the contra-side
order with which it is trading or being priced off of with more
specificity, e.g., PBO (PBB) or PBB (PBO).\7\
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    \7\ Rule 1.1(dd) defines the terms NBBO and PBBO. See also
Securities Exchange Act Release No. 75289 (June 24, 2015) (SR-
NYSEArca-2015-54) (``2015 Definition Filing'') (Notice of Filing to
amend Rule 1.1 governing definitions, including adding definitions
for NBB, NBO, PBB, and PBO).
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    The Exchange proposes a number of substantive differences to the
orders and modifiers that would be available in Pillar as compared to
what is available on the current trading platform. The following
provides a high-level summary of proposed substantive differences to
orders and modifiers in Pillar, which are discussed in greater detail
below:
     Market Orders: To reduce the potential for clearly
erroneous executions,\8\ Market Order Trading Collars would prevent
Market Orders from executing at the Trading Collar, which are based on
the clearly erroneous execution numerical guidelines, and not just
through the Trading Collar as under the current trading rules;
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    \8\ See Rule 7.10(c)(1) (specifying numerical guidelines for
determining when an execution is clearly erroneous).
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     Limit Orders: Resting Limit Orders that would lock or
cross a protected quotation if they become the BBO \9\ would be re-
priced;
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    \9\ The term ``BBO'' is defined in Rule 1.1(h) to mean the best
bid or offer on the NYSE Arca Marketplace. See also 2015 Definition
Filing, supra note 7 (defining the terms ``BB'' to mean Exchange
best bid and ``BO'' to mean Exchange best offer).
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     Limit Order designated IOC: A Limit Order designated with
an immediate-or-cancel (``IOC'') modifier that is not eligible to route
may be designated with an optional minimum trade size (``MTS'');
     Auction-Only Orders: MOO and LOO Orders would be eligible
to participate in trading halt auctions and the Exchange would accept
Auction-Only Orders in non-auction eligible symbols;
     Reserve Orders: The displayed portion of Reserve Orders
would be replenished following any execution that reduces the display
quantity below the size designated to be displayed, at which point the
replenished quantity would receive a new working time;
     Passive Liquidity Orders: Passive Liquidity Orders would
be renamed ``Limit Non-Displayed Orders,'' would no longer be ranked
behind other non-displayed orders, and an optional Non-Display Remove
Modifier would be available for this order type;
     MPL Orders: Mid-point Passive Liquidity Orders would be
renamed ``Mid-point Liquidity Orders'' (``MPL Order''). On arrival, MPL
Orders (and MPL-ALO Orders) would be eligible to trade with resting
non-displayed interest that provides price improvement over the
midpoint of the PBBO. As under current rules, an MPL Order may be
designated with an MTS, but in Pillar, the MTS would have to be a
minimum of a round lot instead of one share. In addition, an MPL with
an MTS would be rejected if, on arrival, the MTS is larger than the
size of the order and would be cancelled at any point the MTS is larger
than the residual size of the order;
     Tracking Orders: Tracking Orders would peg to the PBBO
instead of the NBBO and Self-Trade Prevention (``STP'') Modifiers for
Tracking Orders would no longer be ignored;
     PNP Orders: PNP Orders would no longer be offered;
     PNP Blind Orders: PNP Blind Orders would be renamed ``Arca
Only Orders'' and an optional Non-Display Remove Modifier would be
available for this order type;
     ALO Orders: The current form of Adding Liquidity Only
(``ALO'') Orders, which are based on PNP Orders and are rejected on
arrival if marketable, would no longer be offered. ALO Orders in Pillar
would no longer be rejected on arrival if marketable and instead would
be re-priced both on arrival and after updates to the PBBO. In
addition, an ALO Order would trade with resting contra-side non-
displayed orders that would provide price improvement;
     Intermarket Sweep Order: Intermarket Sweep Orders
(``ISO'') designated Day and IOC would be renamed ``Day ISO'' and ``IOC
ISO,'' respectively, and ALO modifier functionality available for Day
ISOs would be based on the proposed ALO Order in Pillar;
     Primary Only Orders: Primary Only Orders designated for
the Core Trading Session would be accepted and routed directly to the
primary listing market on arrival and the Exchange would not validate
whether the primary listing market would be accepting such orders.
Primary Only Orders that are designated Day may be designated as a
Reserve Order;
     Cross Orders: The Exchange would offer a new Limit IOC
Routable Cross Order, which would be eligible to trade with displayed
interest on the NYSE Arca Book and Away Markets before trading at its
cross price;
     Pegged Orders: Pegged Orders would peg to the PBBO instead
of the NBBO, would require a limit price, and would be accepted during
a Short Sale Period, as defined in Rule 7.16(f). Market Pegged Orders
would no longer be displayed and an offset value would no longer be
required, and Primary Pegged Orders could not include an offset value.
In addition, in Pillar, Pegged Orders would not be assigned a working
price if the PBBO is locked or crossed: and
     Q Orders: Auto Q Orders would be eliminated.
    The Exchange is not proposing at this time to offer the following
orders and modifiers in Pillar, and therefore they would not be
included in proposed Rule 7.31P: Open Modifiers (Rule 7.31(b)(2)(A)
(Good Til Cancelled (``GTC'') Modifier) and (B) (Good Till Date
(``GTD'') Modifier); Fill-or-Kill (``FOK'') Modifier (Rule 7.31(b)(4));
Discretionary Orders (Rule 7.31(d)(1)); PNP Order (Rule 7.31(e)(f));
and the Auto Q Order (Rule 7.31(h)(2)). Because the Exchange is not
proposing to offer Open Modifiers in Pillar, the Exchange is also not
proposing to include the Do Not Reduce Modifier (Rule 7.31(g)(3)) and
Do Not Increase Modifier (Rule 7.31(g)(4)) in proposed Rule 7.31P.
Primary Order Types (Proposed Rule 7.31P(a))
    Proposed Rule 7.31P(a) would set forth the Exchange's primary order
types in Pillar. As with Rule 7.31(a), proposed Rule 7.31P(a)(1) would
provide for Market Orders, proposed Rule 7.31P(a)(2) would provide for
Limit Orders, and proposed Rule 7.31P(a)(3) would provide for Inside
Limit Orders.
    Market Orders: Current Rule 7.31(a)(1) defines a Market Order as an
order to buy or sell a stated amount of a security that is to be
executed at the NBBO when the order reaches the Corporation. The rule
further provides that Market Orders shall not trade through the NBBO or
Protected Quotations and shall be rejected if there is no contra-side
bid or offer.
    Current Rule 7.31(a)(1)(A)-(C) sets forth Trading Collars for
Market Orders. Rule 7.31(a)(1)(A) provides that during Core Trading
Hours, including the Market Order Auction, a Market Order

to buy (sell) will not execute or route to another market center at a
price above (below) the Trading Collar and that Trading Collars do not
apply to Limit Orders. Rule 7.31(a)(1)(B) sets forth how Trading
Collars are calculated, which are based on a specified percentage away
from the last consolidated sale price and the specified percentage is
equal to the corresponding ``numerical guideline'' percentage in Rule
7.10(c)(1) (Clearly Erroneous Executions) for the Core Trading Session.
Rule 7.31(a)(1)(C) sets forth how Market Orders are handled if a
Trading Collar is triggered. Specifically, the Exchange holds a Market
Order that would execute outside of the Trading Collar until additional
opportunities consistent with the Trading Collar become available or a
new Trading Collar is calculated. The rule further provides that
multiple Market Orders that become restricted by the Trading Collar are
ranked in time priority and they are not displayed.
    Proposed Rule 7.31P would define Market Orders in Pillar with one
substantive difference relating to how Trading Collars function,
described in greater detail below. The Exchange is not proposing any
other substantive differences with respect to how Market Orders operate
in Pillar. However, because of the additional terminology available in
Pillar and because ranking and execution requirements in Pillar would
be set forth in proposed Rules 7.36P and 7.37P, the Exchange proposes
new rule text to describe Market Orders.
    As proposed, Rule 7.31P(a)(1) would provide that a Market Order is
an unpriced order to buy or sell a stated amount of a security that is
to be traded at the best price obtainable without trading through the
NBBO. As further proposed, a Market Order would be required to be
designated Day and would be rejected on arrival, or cancelled if
resting, if there is no contra-side NBBO. This proposed rule text
describes the same functionality as is described in current Rule
7.31(a)(1).\10\
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    \10\ Rule 7.31(b)(3) defines the IOC Modifier as being available
only for Limit Orders, and therefore currently, Market Orders cannot
be designated with an IOC Modifier and therefore must be designated
Day.
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    The Exchange is not proposing to include in Rule 7.31P(a)(1) the
rule text in Rule 7.31(a)(1) that a Market Order would not trade
through the NBBO or Protected Quotations because this general order
execution requirement is proposed to be set forth in Rule 7.37P(a)(2)
and (a)(4).\11\ The Exchange believes that consolidating these general
requirements in a single rule would promote transparency and make the
Exchange's rules easier to navigate.
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    \11\ See Pillar I Filing, supra note 4.
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    The Exchange proposes to further provide in new Rule 7.31P(a)(1)
that unexecuted Market Orders would be ranked Priority 1--Market
Orders. This text reflects current functionality because, if an
unexecuted Market Order is held at a Trading Collar or the NBBO, it is
available to trade against incoming contra-side orders. In such case,
resting Market Orders have priority over other orders at that price.
Because the Exchange proposes this priority category in the Pillar I
Filing in new Rule 7.36P,\12\ the Exchange proposes to include this
terminology in new Rule 7.31P.
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    \12\ See id. See also Rule 7.16(f)(viii) (providing that Market
Orders have priority over all other order types).
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    The Exchange proposes to add text in Rule 7.31P(a)(1)(A) to use
Pillar terminology to describe how a Market Order would be priced,
traded, or routed consistent with the requirement not to trade through
the NBBO. As proposed, on arrival, a Market Order to buy (sell) would
be assigned a working price of the NBO (NBB) and would trade with all
sell (buy) orders on the NYSE Arca Book \13\ priced at or below (above)
the NBO (NBB) before routing to the NBO (NBB) on an Away Market. \14\
As further proposed, the quantity of a Market Order to buy (sell) not
traded or routed would remain undisplayed on the NYSE Arca Book at a
working price of the NBO (NBB) and would be eligible to trade with
incoming sell (buy) orders at that price. When the updated NBO (NBB) is
displayed, the Market Order to buy (sell) would be assigned a new
working price of the updated NBO (NBB) and would trade with all sell
(buy) orders on the NYSE Arca Book priced at or below (above) the
updated NBO (NBB) before routing to the updated NBO (NBB) on an Away
Market. Such assessment would continue at each new contra-side NBBO
until the order is filled or a Trading Collar is reached. The rule
would further provide that if the NBBO becomes locked or crossed while
the order is held undisplayed, the Market Order to buy (sell) would be
assigned a working price of the NBB (NBO).
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    \13\ As defined in proposed Rule 1.1(aP), in Pillar, the term
``NYSE Arca Book'' would mean the NYSE Arca Marketplace's electronic
file of orders, which contains all orders entered on the NYSE Arca
Marketplace. See Pillar I Filing, supra note 4. Rule 1.1(e) defines
the term ``NYSE Arca Marketplace'' to mean the electronic securities
communications and trading facility designated by the Board of
Directors through which orders of Users are consolidated for
execution and/or display.
    \14\ As defined in proposed Rule 1.1(ffP), in Pillar, the term
``Away Market'' would mean any exchange, alternative trading system
(``ATS'') or other broker-dealer (1) with which the NYSE Arca
Marketplace maintains an electronic linkage and (2) which provides
instantaneous responses to orders routed from the NYSE Arca
Marketplace. See Pillar I Filing, supra note 4.
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    Proposed new Rule 7.31P(a)(1)(B)(i)-(ii) would set forth Trading
Collars in Pillar. The proposed rule text includes both non-substantive
and substantive differences from Rule 7.31(a)(1). The proposed
substantive difference relates the price at which a Market Order would
not trade or route. Currently, a Market Order to buy (sell) will not
trade or route at a price above (below) the Trading Collar. As proposed
in new Rule 7.31P(a)(1)(B), a Market Order to buy (sell) would not
trade or route to an Away Market at a price at or above (below) the
Trading Collar. The Exchange believes that preventing orders from
executing at the Trading Collar would promote a fair and orderly market
by further reducing the potential for executions that could be clearly
erroneous.\15\ Specifically, because an execution that occurs at the
numerical guideline percentage away from the reference price is
considered a clearly erroneous execution pursuant to Rule 7.10, the
proposed difference to the Trading Collar functionality would prevent a
Market Order from executing at the Trading Collar, which is based on
the same numerical guideline.
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    \15\ See Rule 7.10(c)(1).
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    The Exchange proposes non-substantive differences for Rule
7.31P(a)(1)(B)(i)-(ii) to streamline the rule text that is currently
set forth in Rule 7.31(a)(1)(B) and (C). The proposed rule would not
include text in Rule 7.31(a)(1)(A) that specifies that Trading Collars
are available during the Market Order Auction. The current rule text is
necessary because the Market Order Auction does not occur during the
Core Trading Session. However, as proposed in the Pillar I Filing, the
Core Open Auction would occur on the Pillar trading platform during the
Core Trading Session.\16\ Accordingly, it is unnecessary in rules
applicable to trading on Pillar that Trading Collars would be
applicable during an auction that occurs during the Core Trading
Session.
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    \16\ See proposed Rule 7.34P(a)(2) (Core Open Auction occurs
during Core Trading Session), in Pillar I Filing, supra note 4.
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    Proposed Rule 7.31P(a)(1)(B)(i) would set forth the ``Calculation
of a Trading Collar'' functionality that is currently in Rule
7.31(a)(1)(B), with non-substantive differences to update the cross
reference to proposed Rule 7.31P and to add that when the consolidated
last sale price is either increased or decreased by the specified
percentage, it would be

truncated to the MPV in the security.\17\ Accordingly, the proposed
rule would provide that the Trading Collar would be based on a price
that is a specified percentage away from the consolidated last sale
price and it would be continuously updated based on market activity.
The specified percentage would be equal to the corresponding
``numerical guideline'' percentage set forth in Rule 7.10P(c)(1)
(Clearly Erroneous Executions) for the Core Trading Session. The upper
boundary of the Trading Collar would be the consolidated last sale
price increased by the specified percentage truncated to the MPV for
the security, and the lower boundary would be the consolidated last
sale price decreased by the specified percentage truncated to the MPV
for the security. A halt, suspension, or pause in trading would zero
out the Trading Collar values, and the Trading Collar would be
recalculated with the first consolidated last sale after trading
resumes. If there is no consolidated last sale price on the same
trading day, the Exchange would use the last Official Closing Price for
the security.\18\
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    \17\ The term ``MPV'' is defined in Rule 7.6 as the minimum
price variation for quoting and entry of orders in securities traded
on the NYSE Arca Marketplace.
    \18\ The Exchange will be proposing to define the term
``Official Closing Price'' for use in Pillar in a separate rule
filing.
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    Proposed Rule 7.31P(a)(1)(B)(ii) would provide for the same
functionality as in current Rule 7.31P(a)(1)(C)(i) with a substantive
difference to reflect the proposal that Market Orders would not trade
or route at the Trading Collar price, and non-substantive differences
to use new Pillar terminology. As proposed, the rule would provide that
if a Trading Collar is triggered, the unexecuted quantity of a Market
Order to buy (sell) would be held undisplayed and assigned a working
price one MPV below (above) the Trading Collar. Currently, Market
Orders are held undisplayed at the Trading Collar. To reflect the
proposed new functionality, Market Orders would be assigned a working
price one MPV inside the Trading Collar. Proposed Rule
7.31P(a)(1)(B)(ii) would further provide that the Market Order to buy
(sell) would be available to trade with incoming orders to sell (buy)
at that working price but would not trade with interest on the NYSE
Arca Book or route until (i) additional opportunities to trade
consistent with the Trading Collar restriction become available, either
on the Corporation \19\ or an Away Market, or (ii) a new Trading Collar
is calculated and the remaining quantity of the order(s) is then able
to trade or route at prices consistent with the new Trading Collar and
NBBO.
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    \19\ The term ``Corporation'' is defined in Rule 1.1(k) to mean
NYSE Arca Equities, Inc., as described in the NYSE Arca Equities,
Inc.'s Certificate of Incorporation and Bylaws.
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    The Exchange does not propose to include the following rule text
from current Rule 7.31(a)(1)(C)(ii) in new Rule 7.31P:
     The statement that multiple Market Orders that become
restricted by the Trading Collar will be ranked in time priority
because such priority is now set forth in proposed new Rule 7.36P(e)(1)
and (f), which define the Priority 1--Market Orders category and that
within each priority category, orders would be ranked based on time
priority.\20\
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    \20\ See Pillar I Filing, supra note 4.
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     The text that provides that a Market Order that becomes
restricted by the Trading Collar will not be displayed because this
functionality would now be set forth in the first sentence of proposed
Rule 7.31P(a)(1)(B)(ii), described above.
    Limit Orders: Current Rule 7.31(a)(2) defines a Limit Order as an
order to buy or sell a stated amount of a security at a specified price
or better and a ``marketable'' Limit Order is a Limit Order to buy
(sell) at or above (below) the contra-side PBBO for the security. Rule
7.31(a)(2)(A) further provides that a Limit Order will not trade-
through, lock or cross a Protected Quotation, except as provided in
Rule 7.37(g)(1). Rule 7.31(a)(2)(B) sets forth Limit Order Price
Protection, which provides that a Limit Order will be rejected if it is
priced a specified percentage away from the contra-side NBB or NBO. The
specified percentage is equal to the corresponding ``numerical
guideline'' percentage set forth in paragraph (c)(1) of Rule 7.10 for
the Core Trading Session and Limit Order Price Protection is not
applied to Limit Orders entered before the Core Trading Hours that are
designated for the Core Trading Session or the Market Order Auction.
    Proposed Rule 7.31P(a)(2) would define Limit Orders in Pillar and
would have one substantive difference from Rule 7.31(a)(2) relating to
the price at which resting Limit Orders would be displayed if they were
to become a BBO that would lock or cross the PBBO. Because of the
additional terminology proposed to be available in the rules applicable
to the Pillar trading platform, including new definitions and ranking
and execution requirements set forth in proposed Rules 7.36P and 7.37P,
the Exchange proposes new rule text to describe Limit Orders.
    The Exchange proposes to define Limit Orders in proposed Rule
7.31P(a)(2) as an order to buy or sell a stated amount of a security at
a specified price or better, which is the same as the first sentence of
current Rule 7.31(a)(2). The Exchange does not propose to include the
second sentence of current Rule 7.31(a)(2) in proposed Rule 7.31P(a)(2)
because defining how a Limit Order is marketable is duplicative of the
definition of ``Marketable'' in Rule 1.1.\21\
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    \21\ The Exchange recently amended Rule 1.1(g) to define the
term ``Marketable'' to mean, for a Limit Order, and order that can
be immediately executed or routed. See 2015 Definition Filing, supra
note 7.
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    To reflect Pillar terminology, proposed Rule 7.31P(a)(2) would
provide that unless otherwise specified, the working price and the
display price of a Limit Order would equal the limit price of the
order, it would be eligible to be routed, and it would be ranked
Priority 2--Display Orders. Additional order types in Pillar would be
based on a Limit Order, in that they are orders with a specified price,
but as described in greater detail below, these additional order types
may not be displayed, may have a display price that differs from its
working price, or may not route.
    The Exchange is not proposing to include in new Rule 7.31P(a)(2)
the text in current Rule 7.31(a)(2)(A) because the requirement that a
Limit Order not trade through, lock or cross a protected quotation
would be set forth in proposed Rules 7.37P(a)(2), (a)(3), and
(e)(2).\22\ Instead, the Exchange proposes to add new Rule
7.31P(a)(2)(A) to use Pillar terminology to describe how a Limit Order
would be priced, traded, or routed consistent with the requirement not
to trade through the PBBO. As proposed, a marketable Limit Order to buy
(sell) would trade with all sell (buy) orders on the NYSE Arca Book
priced at or below (above) the PBO (PBO) before routing to the PBO
(PBB) and may route to prices higher (lower) than the PBO (PBB) only
after trading with sell (buy) orders on the NYSE Arca Book at each
price point. Once no longer marketable, the Limit Order would be ranked
and displayed on the NYSE Arca Book. The Exchange believes that
proposed Rule 7.31P(a)(2)(A) would promote transparency regarding how
Limit Orders would be priced, traded or routed on the Pillar trading
platform.
---------------------------------------------------------------------------

    \22\ See Pillar I Filing, supra note 4.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(a)(2)(B) would set forth Limit Order Price
Protection, and is based on Rule 7.31(a)(2)(B). As proposed, a Limit
Order to buy (sell) would be rejected if it is priced at or above
(below) the specified percentage away from the NBO (NBB). Proposed Rule
7.31P(a)(2)(B) would further

provide that the specified percentage is equal to the corresponding
``numerical guideline'' percentage set forth in Rule 7.10P(c)(1)
(Clearly Erroneous Executions) for the Core Trading Session. This
language is based on current rule text with non-substantive differences
regarding the cross-reference to Rule 7.10P. Proposed Rule
7.31P(a)(2)(B) would next provide that Limit Order Price Protection
would not be applied to an incoming Limit Order to buy (sell) if there
is no NBO (NBB), which is the same as current rule text, with a non-
substantive difference not to use the term ``contra-side NBBO.''
    The last two sentences of proposed Rule 7.31P(a)(2)(B) would
provide that Limit Order Price Protection would be applied when an
order is eligible to trade and that a Limit Order entered before the
Core Trading Session that is designated for the Core Trading Session
only would become subject to the Limit Order Price Protection after the
Core Open Auction. This proposed rule text is based on the last
sentence of Rule 7.31(a)(2)(B), but with differences to incorporate the
proposed changes to Rule 7.34P in the Pillar I Filing that the Core
Open Auction would occur during the Core Trading Session. The Exchange
believes that the proposed rule text would promote transparency of when
the Limit Order Price Protection would be applicable to an incoming
Limit Order on the Pillar trading platform. For example, a Limit Order
designated for the Late Trading Session only that is entered during the
Core Trading Session would not be subject to Limit Order Price
Protection on arrival, but would be subject to the price test once the
order becomes eligible to trade.
    The Exchange proposes to add new Rule 7.31P(a)(2)(C) to provide for
new functionality in Pillar that would re-price resting Limit Orders in
order to prevent those orders from becoming a BBO that would lock or
cross the PBBO. As proposed, if the current BB (BO) is locked or
crossed by an Away Market PBO (PBB), then the current BB (BO) is
cancelled, executed, or routed and the next best-priced resting Limit
Order(s) to buy (sell) on the NYSE Arca Book that would become the new
BB (BO) would have a display price that would lock or cross the PBO
(PBB), such Limit Order(s) to buy (sell) would be assigned a display
price one MPV below (above) the PBO (PBB) and a working price equal to
the PBO (PBB). For example, assume the Exchange BB is 10.00 and there
is a resting, displayed Limit Order to buy at 9.99. Next, an Away
Market displays a PBO priced at 9.99, which crosses the Exchange's
10.00 BB, and the Exchange bid of 10.00 is cancelled. In this scenario,
under proposed Pillar rules, the Limit Order to buy priced at 9.99
would be displayed at 9.98, but would have a working price and be
eligible to trade at 9.99.\23\ By displaying such Limit Order(s) to buy
(sell) one MPV below (above) the PBO (PBB), such orders would not be
displayed at a price that would lock or cross the PBBO. In addition, by
assigning a working price equal to the PBO (PBB), such orders would
remain available for an execution on the Exchange closer to their limit
price, and priced so that they would not cause a trade-through of the
PBBO.
---------------------------------------------------------------------------

    \23\ This functionality represents a change from current rules.
Currently, in this example, because the Away Market crossed the
Exchange's BB, the Exchange would then display the 9.99 Limit Order
to buy as its new BB. Although in this scenario, the Away Market was
the initiator of a quote that crossed the Exchange's BB, when the
9.99 bid becomes the Exchange BB, it would lock the PBO.
---------------------------------------------------------------------------

    If a resting Limit Order is re-priced as described above, it would
be re-priced again in one of two circumstances. First, if a Day ISO to
buy (sell) arrives before the PBO (PBB) is updated, such re-priced
resting Limit Order(s) to buy (sell) would be re-priced again to the
lower (higher) of the display price of the Day ISO or the original
price of the Limit Order(s). As discussed in greater detail below, a
Day ISO represents current functionality, set forth in Rule 7.31(e)(3),
of a PNP Order designated ISO, which may lock or cross a Manual or
Protected Quotation. In the example above, if while the PBO is at 9.99,
the Exchange receives a Day ISO to buy priced at 9.99, the Exchange
would display that Day ISO and assign a new display price of 9.99 to
the Limit Order that was previously displayed at 9.98.
    The second circumstance when a resting Limit Order that was re-
priced would be re-priced again would be when the PBBO moves such that
the original limit price of the order would no longer lock or cross the
PBBO. Accordingly, the proposed rule would provide that when the PBO
(PBB) is updated, the Limit Order(s) to buy (sell) would be re-priced
consistent with the original terms of the order. In the example above,
once the PBO changes to 10.00 or higher, the Limit Order to buy priced
at 9.99 would be displayed at 9.99, which is its limit price.
    Inside Limit Orders: Current Rule 7.31(a)(3) defines an Inside
Limit Order as a Limit Order, which, if routed away pursuant to Rule
7.37(d), will be routed to the contra-side NBBO. Any unfilled portion
of the order will not be routed to the next best price level until all
quotes at the current contra-side NBBO are exhausted. Once each contra-
side NBBO is exhausted, Exchange systems will display the order at the
contra-side NBBO price and wait until the updated NBBO is displayed. If
the contra-side NBBO is within the limit price of the Inside Limit
Order, the Exchange will route to that single price point and continue
such assessment at each new contra-side NBBO until the order is filled
or no longer marketable. If the order is no longer marketable it will
be ranked in the NYSE Arca Book pursuant to Rule 7.36.
    Current Rule 7.31(a)(3)(A) provides that an Inside Limit Order is
``marketable'' when it is priced to buy (sell) at or above (below) the
NBBO for the security.
    Current Rule 7.31(a)(3)(B) provides that an Inside Limit Order
designated as a Primary Until 9:45 Order or a Primary After 3:55 Order
will follow the order processing of an Inside Limit Order only when the
order is on the NYSE Arca Book. Current Rule 7.31(a)(3)(C) provides
that an Inside Limit Order will not trade through the NBBO or Protected
Quotations. Finally, current Rule 7.31(a)(3)(D) provides that an Inside
Limit Order may not be designated as a Discretionary Order or as IOC,
but may be designated as NOW.\24\
---------------------------------------------------------------------------

    \24\ Pursuant to current Rule 7.31(b)(5), a NOW Modifier refers
to a Limit Order that is to be executed in whole or in part on the
Corporation, and the portion not so executed shall be routed
pursuant to Rule 7.37(d).
---------------------------------------------------------------------------

    The Exchange is not proposing any functional differences to Inside
Limit Orders in Pillar. However, the Exchange is proposing non-
substantive differences for the rule text defining Inside Limit Orders
in order to use Pillar terminology to describe how Inside Limit Orders
would be priced, traded, and routed on the Pillar trading platform.
    Proposed Rule 7.31P(a)(3) would define an Inside Limit Order as a
Limit Order that is to be traded at the best price obtainable without
trading through the NBBO. Because an Inside Limit Order functions
similarly to a Market Order in that it is priced based on the NBBO and
not the PBBO, the Exchange proposes to use terminology similar to the
proposed rule text for Market Orders to describe how Inside Limit
Orders would be priced, traded or routed on the Pillar trading platform
consistent with the requirement not to trade through the NBBO.
    Proposed Rule 7.31P(a)(3)(A) would provide that on arrival, a
marketable Inside Limit Order to buy (sell) would be assigned a working
price of the NBO (NBB) and would trade with all sell (buy) orders on
the NYSE Arca Book priced at or below (above) the NBO (NBB) before
routing to the NBO (NBB)

on an Away Market. Once the NBO (NBB) is exhausted, the Inside Limit
Order to buy (sell) would be displayed at its working price and be
eligible to trade with incoming sell (buy) orders at that price. When
the updated NBO (NBB) is displayed, the Inside Limit Order to buy
(sell) would be assigned a new working price of the updated NBO (NBB)
and would trade with all sell (buy) orders on the NYSE Arca Book priced
at or below the updated NBO (NBB) before routing to the updated NBO
(NBB) on an Away Market. Such assessment would continue at each new NBO
(NBB) until the order is filled, no longer marketable, or the limit
price is reached. Once the order is no longer marketable, it would be
ranked and displayed on the NYSE Arca Book.
    The Exchange is not proposing to keep the text from Rule
7.31(a)(3)(A) in proposed new Rule 7.31P(a)(3). As discussed above, the
Exchange proposes to define the term marketable just once in the Pillar
rules, in Rule 1.1, as amended. Similarly, the Exchange is not
proposing to keep the text from Rule 7.31(a)(3)(C) in proposed new Rule
7.31P(a)(3) because the requirement that an Inside Limit Order not
trade through the NBBO or protected quotations is set forth in proposed
Rules 7.37P(a)(2) and (4) \25\ and proposed Rule 7.31P(a)(3)(A) would
provide the specificity of how an Inside Limit Order would not trade
through the NBBO.
---------------------------------------------------------------------------

    \25\ See Pillar I Filing, supra note 4.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(a)(3)(B) would provide that an Inside Limit
Order designated as a Primary Until 9:45 Order or a Primary Until 3:55
Order would follow the order processing of an Inside Limit Order only
when the order is on the NYSE Arca Book. This rule text is based on
Rule 7.31(a)(3)(B) without any differences.
    Proposed Rule 7.31P(a)(3)(C) would provide that an Inside Limit
Order may not be designated as a Limit IOC Order but may be designated
as a Limit Routable IOC Order. This rule text is based on current Rule
7.31(a)(3)(D), but with non-substantive differences to use the proposed
Pillar definitions, described in more detail below, to replace the term
IOC with ``Limit IOC Order,'' and ``NOW Modifier'' with ``Limit
Routable IOC Order.'' Finally, as noted above, because the Exchange is
not proposing to offer Discretionary Order functionality in Pillar, the
Exchange is not proposing to include references to Discretionary Orders
in proposed Rule 7.31P(a)(3)(C).
    In order to use Pillar terminology to describe how orders are
priced, traded, or routed on the Pillar trading platform, proposed Rule
7.31P(a)(3)(C) would provide that an Inside Limit Order to buy (sell)
designated as a Limit Routable IOC Order would trade with sell (buy)
orders on the NYSE Arca Book priced at or below (above) the NBO (NBB)
and the quantity not traded would be routed to the NBO (NBB). To
reflect that the remaining quantity of the order would be cancelled
after that first route, the proposed rule would further provide that
any unfilled quantity not traded on the NYSE Arca Marketplace or an
Away Market would be cancelled. The Exchange believes that the proposed
rule text would promote transparency in Exchange rules regarding how
Inside Limit Orders designated as a Limit Routable IOC Order would
function on the Pillar trading platform.
Time in Force Modifiers (Proposed Rule 7.31P(b))
    Proposed Rule 7.31P(b) would set forth the Exchange's Time in Force
Modifiers available in Pillar. As with Rule 7.31(b), the time-in-force
modifiers would include the Day and IOC Modifiers. As noted above, at
this time, the Exchange is not proposing to offer Open Modifiers (GTD
or GTD) or the FOK Modifier in Pillar, and therefore these modifiers
are included in proposed Rule 7.31P(b).
Day Modifier: Current Rule 7.31(b)(1) provides that any order to buy or
sell designated with a Day Modifier, if not executed, will expire at
the end of the day on which it was entered and a Day Modifier cannot be
combined with any other Time in Force Modifier.
    Proposed Rule 7.31P(b)(1) would provide that any order to buy or
sell designated Day, if not traded, would expire at the end of the
designated session on the day on which it was entered. This proposed
text is based on current Rule 7.31(b)(1) but uses Pillar terminology
and stylistic terms to reflect when the order would expire.\26\ The
proposed rule would further provide that a Day Order cannot be combined
with any other Time in Force Modifier, which is based on the second
sentence of current Rule 7.31(b)(1) without any differences.
---------------------------------------------------------------------------

    \26\ See also Pillar I Filing, supra note 4 at proposed Rule
7.34P(b)(2) and (3) regarding for which trading sessions a Day
modifier would be deemed designated.
---------------------------------------------------------------------------

    IOC Modifier: Current Rule 7.31(b)(3) provides that a Limit Order
designated with an IOC Modifier is to be executed in whole or in part
as soon as such order is received, and the portion not so executed is
to be treated as cancelled. The rule further provides that an order
designated with an IOC Modifier does not route and the IOC Modifier
will override any posting or routing instructions of orders that
include the IOC Modifier. Current Rule 7.31(b)(5) provides that a Limit
Order designated with a NOW Modifier is to be executed in whole or in
part on the Corporation, and the portion not so executed shall be
routed pursuant to Rule 7.37(d) and that any portion not immediately
executed by the NOW Recipient shall be cancelled. If an order
designated NOW is not marketable when it is submitted to the
Corporation, it shall be cancelled. An order designated NOW, if routed
away pursuant to Rule 7.37(d), will be routed to all available
quotations in the routing determination, including Protected
Quotations, and the NOW Modifier will override any posting or routing
instructions of orders that include the NOW Modifier.
    The Exchange proposes to describe its IOC modifiers in proposed
Rule 7.31P(b)(2). As proposed, the Exchange would offer two forms of
IOC modifiers on the Pillar trading platform, a Limit IOC Order, which
is based on the current IOC modifier functionality and would not route,
and a Limit Routable IOC Order, which is based on the current NOW
Modifier and would be eligible to route.\27\ In Pillar, the Exchange
proposes one substantive difference to provide for an MTS for a Limit
IOC Order.
---------------------------------------------------------------------------

    \27\ On the Pillar trading platform, the Exchange would use the
term ``Away Market'' instead of the term ``NOW Recipient.'' See
Pillar I Filing, supra note 4 at proposed Rule 1.1(ffP). Because the
current NOW modifier functions as an Limit Order with an IOC
modifier that is eligible to route, on Pillar, the Exchange proposes
to rename this as a Limit IOC Routable Order.
---------------------------------------------------------------------------

    As proposed, new Rule 7.31P(b)(2) would describe the general
requirements of an IOC Modifier on the Pillar trading platform and
would provide that a Limit Order designated IOC is to be traded in
whole or in part as soon as such order is received, and the quantity
not so traded is cancelled. Proposed Rule 7.31P(b)(2) would further
provide that the IOC Modifier would override any posting or routing
instructions of orders that include the IOC Modifier. This text is
based on current Rule 7.31(b)(3) with non-substantive differences to
use to term ``traded'' instead of ``executed,'' ``quantity'' instead of
``portion,'' and not use the term ``Modifier'' in the first sentence of
the rule text. Proposed Rule 7.31(b)(2) would further provide that a
Limit Order designated IOC would not be eligible to participate in any
auctions

and, if it arrives during auction processing, it would be
cancelled.\28\
---------------------------------------------------------------------------

    \28\ See also proposed Rule 7.34P(c)(1)(B) and (C), in Pillar I
Filing, supra note 4.
---------------------------------------------------------------------------

    Proposed Rule 7.31(b)(2)(A) would set forth the definition for a
Limit IOC Order, which would be a Limit Order to be traded in whole or
in part as soon as such order is received without routing, and the
quantity not so traded would be cancelled. This proposed rule is based
on Rule 7.31(b)(3).
    The Exchange proposes to add new functionality in Pillar so that a
Limit IOC Order to buy (sell) may be designated with an MTS. A Limit
IOC Order to buy (sell) designated with an MTS would trade against sell
(buy) orders in the NYSE Arca Book that in the aggregate, meet its MTS.
A Limit IOC Order with an MTS that cannot be immediately traded at its
minimum size would be cancelled in its entirety. This proposed
functionality is based on existing NYSE Rule 13 governing Immediate or
Cancel (``IOC'') Orders, which describe an IOC-MTS Order.\29\ The
proposed MTS functionality on the Exchange would operate similarly to
the IOC-MTS Order on the NYSE because it would require the minimum size
to be met on arrival or be cancelled. It would differ from the NYSE
IOC-MTS Order because on the Exchange, the MTS instruction would not be
available for a Limit Routable IOC Order or an IOC ISO, which is
described in more detail below.
---------------------------------------------------------------------------

    \29\ See NYSE Rule 13.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(b)(2)(B) would describe the Limit Routable IOC
Order, which as noted above, is intended to replace the rule text
describing the NOW Modifier, with non-substantive differences. As
proposed, a Limit Routable IOC Order would be a Limit Order to be
traded in whole or in part as soon as the order is received, and the
quantity not so traded would be routed to Away Market(s). Any quantity
not immediately traded either on the NYSE Arca Marketplace or an Away
Market would be cancelled. The rule would further provide that a Limit
Routable IOC Order may not be designated with an MTS, which is current
functionality for the NOW Modifier.
    The Exchange believes proposed Rule 7.31(b)(2) would promote
transparency regarding how the IOC Modifiers would function on the
Pillar trading platform by defining the two available IOC modifiers--
one that routes and one that does not--using Pillar terminology.
Auction-Only Orders (Proposed Rule 7.31P(c))
    Proposed Rule 7.31P(c) would set forth the Exchange's Auction-Only
Orders available in Pillar. Current Rule 7.31(c) defines an Auction-
Only Order as a Limit or Market Order that is to be executed within an
Auction, and if not executed in the auction in which it participates,
the balance of the order is cancelled.
    Current Rule 7.31(c)(1) defines a Limit-on-Open Order (``LOO
Order'') as a Limit Order that is to be executed only during the Market
Order Auction. Current Rule 7.31(c)(2) defines a Market-on-Open (``MOO
Order'') as a Market Order that is to be executed only during the
Market Order Auction. Current Rule 7.31(c)(3) defines a Limit-on-Close
Order (``LOC Order'') as a Limit Order that is to be executed only
during the Closing Auction. Current Rule 7.31(c)(4) defines a Market-
on-Close (``MOC Order'') as a Market Order that is to be executed only
during the Closing Auction.
    Proposed Rule 7.31P(c) would define Auction-Only Orders in Pillar,
with the following substantive differences from Rule 7.31(c):
     The Exchange would accept Auction-Only Orders in
securities that are not eligible for an auction on the Exchange.
Currently, the Exchange accepts Auction-Only Orders in securities that
are not eligible for an auction on the Exchange only if such orders
include a Primary Only Order instruction. As proposed, the Exchange
would accept such orders and route them to the primary listing market
without the Primary Only Order instruction.
     MOO and LOO Orders would be eligible to participate in a
Trading Halt Auction.\30\
---------------------------------------------------------------------------

    \30\ A Trading Halt Auction is currently defined in Rule 7.35 as
an auction following a halt in a security. See Rule 7.35(f).
---------------------------------------------------------------------------

    To reflect that the Exchange would accept Auction-Only Orders in
securities not eligible for an auction on the Exchange, proposed Rule
7.31P(c) would provide that an Auction-Only Order is a Limit or Market
Order that is to be traded only within an auction pursuant to Rule
7.35P or routed pursuant to Rule 7.34P.\31\ Because Auction-Only Orders
in securities that are not eligible for an auction would be routed, the
Exchange would not include in proposed Rule 7.31P(c) the current rule
text that states that Auction-Only Orders are not routed to other
exchanges.
---------------------------------------------------------------------------

    \31\ As set forth in the Pillar I Filing, the Exchange proposes
that if it receives an Auction-Only Order in a security that is not
eligible for an auction, it would route that order directly to the
primary listing market. If the primary listing market does not
accept such order, the Exchange would cancel the order. See Pillar I
Filing, supra note 4 at proposed Rules 7.34P(c)(1)(D), (2)(B), and
(3)(B).
---------------------------------------------------------------------------

    Proposed Rule 7.31P(c) would further provide that any quantity of
an Auction-Only Order that is not traded in the designated auction
would be cancelled. This rule text is based on current rule text, with
non-substantive differences to use the terms ``quantity'' and
``traded'' instead of ``balance of order'' and ``executed. The Exchange
would not include in proposed Rule 7.31P(c) the current rule text that
it would reject Auction-Only Orders if a security is suspended pursuant
to Rule 7.35(g). The Exchange will be submitting a separate rule filing
to adopt proposed Rule 7.35P to govern auctions in Pillar, and will
address in that rule how the Exchange would handle orders if an auction
were suspended.
    Proposed Rule 7.31P(c)(1)-(4) would set forth LOO, MOO, LOC and MOC
Orders in Pillar and are based on current Rule 7.31(c)(1)-(4) with non-
substantive differences to use the terms ``traded'' instead of
``executed'' and ``Core Open Auction'' instead of ``Market Order
Auction.'' The Exchange is not proposing any substantive differences
for the operation of LOO, MOO, LOC or MOC Orders with respect to the
Core Open Auction or Closing Auction.
    The Exchange proposes substantive differences for how LOO and MOO
Orders would function in Pillar. Currently, the Exchange does not
accept LOO or MOO Orders for Trading Halt Auctions. In Pillar, the
Exchange would accept LOO and MOO Orders for Trading Halt Auctions.
Accordingly, proposed Rules 7.31P(c)(1) and (c)(2) would provide that
LOO and MOO Orders are orders that are to be traded only during the
Core Open Auction or a Trading Halt Auction. As further proposed, LOO
and MOO Orders intended for a Trading Halt Auction would be accepted
only during a trading halt.\32\ Because Limit Orders are eligible to
trade in all trading sessions, proposed Rule 7.31P(c)(1) would provide
that, LOO Orders intended for a Trading Halt Auction would be accepted
only during trading halts, which may occur in any trading session.
Because Market Orders

are only eligible to trade in the Core Trading Session, proposed Rule
7.31P(c)(2) would provide that, MOO Orders intended for a Trading Halt
Auction would be accepted only during trading halts that occur during
the Core Trading Session.
---------------------------------------------------------------------------

    \32\ As proposed in Rule 7.34P(c)(2)(B), for MOO and LOO Orders
in securities that are not eligible for an auction, the Exchange
would not validate whether the primary listing market is accepting
such orders and would route them on arrival. If the primary listing
market does not accept such orders, e.g., if they are not in a
trading halt, the Exchange would cancel such orders. See Pillar I
Filing, supra note 4.
---------------------------------------------------------------------------

Orders With a Conditional or Undisplayed Price and/or Size
    Proposed Rule 7.31P(d) would set forth the Exchange's orders that
would include a conditional instruction or an undisplayed size and/or
price. Proposed Rule 7.31P(d) is similar to current Rule 7.31(d) with
both non-substantive and substantive differences. As noted above,
because the Exchange will not be using the term ``Working Order'' in
Pillar, the Exchange proposes to describe this category as orders with
a conditional or undisplayed price and/or size, which is descriptive of
the type of orders that would be included in this category.
    Current Rule 7.31(d) provides for five types of Working Orders:
     Discretionary Order (Rule 7.31(d)(1));
     Reserve Order (Rule 7.31(d)(2));
     Passive Liquidity Order (Rule 7.31(d)(3));
     Mid-Point Passive Liquidity Order (Rule 7.31(d)(4)); and
     MPL Order immediate-or-cancel (Rule 7.31(d)(5)).
    As discussed above, the Exchange is not proposing to offer
Discretionary Orders in Pillar and therefore proposed Rule 7.31P(d)
would not include Discretionary Orders. In addition, the Exchange
proposes to include Tracking Orders in proposed Rule 7.31P(d) because a
Tracking Order is a conditional order with an undisplayed price and
size.
    Reserve Orders: The functionality of Reserve Orders is under the
following current rules:
     Current Rule 7.31(d)(2) defines a Reserve Order as a Limit
Order with a portion of the size displayed and with a reserve portion
of the size (``reserve size'') that is not displayed on the
Corporation. The rule further provides that the display quantity of a
Reserve Order must be in round lots, a Reserve Order cannot be combined
with an order type that could never be displayed on the Corporation,
may not be designated IOC, and a Reserve Order shall not lock, cross,
or trade-through a Protected Quotation.
     Rule 7.36(a)(1)(B) further provides that if the displayed
portion of a Reserve Order is decremented such that 99 shares or fewer
are displayed, the displayed portion of the Reserve Order shall be
refreshed for (i) the displayed amount; or (ii) the entire reserve
amount, if the remaining reserve amount is smaller than the displayed
amount. Rule 7.36(a)(2)(A) provides that the reserve portion of Reserve
Orders are ranked on the specified limit price and the time of original
order entry and after the displayed portion of a Reserve Order is
refreshed from the reserve portion, the reserve portion remains ranked
based on the original time of order entry, while the displayed portion
is sent to the Display Order process with a new time-stamp.
     Finally, current Rule 7.37(a)(1) provides that the size of
an incoming Reserve Order includes the displayed and reserve size and
the size of the portion of the Reserve Order resident in the Display
Order Process is equal to its displayed size.
    For Pillar, the Exchange proposes to consolidate the description of
Reserve Orders into proposed Rule 7.31P(d)(1), with both substantive
and non-substantive differences from current rules. The proposed
substantive difference in Pillar would be that the non-display quantity
of a Reserve Order would replenish the display quantity any time an
execution of the displayed interest reduces the display. This proposed
change is not novel and is based on how Minimum Display Reserve Orders
function on NYSE.\33\
---------------------------------------------------------------------------

    \33\ See paragraph (c) of NYSE Rule 13 governing Reserve Order
Types.
---------------------------------------------------------------------------

    As proposed, Rule 7.31P(d)(1) would provide that a Reserve Order is
a Limit or Inside Limit Order with a quantity of the size displayed and
with a reserve quantity of the size (``reserve interest'') that would
not be displayed, which is based on the first sentence of current Rule
7.31(d)(2). A Reserve Order in Rule 7.31(d)(1) is defined only as a
Limit Order. However, because an Inside Limit Order is a Limit Order,
and a Reserve Order can currently be combined with an Inside Limit
Order, the definition of a Reserve Order in proposed Rule 7.31P(d)(1),
includes Inside Limit Orders, is not substantively different from
current Exchange rules. In addition, to reflect proposed Pillar
terminology set forth in proposed Rule 7.36P and to replace text
currently set forth in Rules 7.36 and 7.37, the Exchange proposes to
provide that the displayed quantity of a Reserve Order would be ranked
Priority 2--Display Orders and the reserve interest would be ranked
Priority 3--Non-Display Orders. These proposed ranking priorities are
the same as under current Exchange rules. Proposed Rule 7.31P(d)(1)
would further provide that both the display quantity and the reserve
interest of an arriving marketable Reserve Order would be eligible to
trade with resting interest in the NYSE Arca Book or route to Away
Markets, which is current functionality set forth in Rule 7.37(a)(1),
which provides that the size of an incoming Reserve Order includes the
displayed and reserve size.
    Consistent with Rule 7.31(d)(2), proposed Rule 7.31P(d)(1)(A) would
provide that on entry, the display quantity of a Reserve order must be
entered in round lots. In addition, this paragraph would also set forth
the new functionality in Pillar that the displayed portion of a Reserve
Order would be replenished following any execution. Further, the
Exchange proposes to include in proposed Rule 7.31P(d)(1)(A) that the
Exchange would display the full size of the Reserve Order when the
unfilled quantity is less than the minimum display size for the order.
This functionality does not represent a change from current rules,
which is reflected in current Rule 7.36(a)(1)(B)(ii), but with non-
substantive differences to reflect proposed Pillar terminology.
    Proposed Rule 7.31P(d)(1)(B) would provide that each time a Reserve
Order is replenished from reserve interest, a new working time would be
assigned to the replenished quantity of the Reserve Order, while the
reserve interest would retain the working time of original order entry.
This proposed rule text reflects that same functionality set forth in
current Rule 7.36(a)(1)(B) and (a)(2)(A), that each time reserve
interest replenishes a Reserve Order, it receives a new time, while the
reserve portion remains ranked based on the original order entry time.
The proposed new rule text would use the new Pillar ``working time''
terminology proposed Rule 7.36P.
    Proposed Rule 7.31P(d)(1)(C) would provide that a Reserve Order
must be designated Day and may be combined with the following orders
only: Arca Only Order, Primary Pegged Order, or Q Order. Because Limit
Orders, Inside Limit Orders, Arca Only Orders, Primary Pegged Orders,
and Q Orders are all orders that are displayed, this proposed rule text
is based on current rule text in Rule 7.31(d)(1)(2) that provides that
a Reserve Order cannot be combined with an order type that could never
be displayed on the Corporation.\34\ The Exchange proposes

to identify the specific order types that may be combined with a
Reserve Order in proposed Rule 7.31P(d)(1) to consolidate in a single
location all orders that are eligible to be designated as a Reserve
Order. In addition, the Exchange proposes to state that a Reserve Order
must be designated Day, rather than stating, as in Rule 7.31(d)(2),
that a Reserve Order may not be designated IOC.
---------------------------------------------------------------------------

    \34\ See also current Rules 7.31(e)(3) (only a PNP Blind Order
combined with ALO may not be designated as a Reserve Order); (g)(1)
(Pegged Orders may be designated as a Reserve Order); and (h)(3)
(specifying a Reserve Q Order). As discussed below, in Pillar, the
Exchange proposes a substantive difference that Market Pegged Orders
would not be displayed. Because such orders would not be displayed
in Pillar, they would not be eligible to be designated as a Reserve
Order.
---------------------------------------------------------------------------

    Finally, unlike Rule 7.31(d)(2), the Exchange does not propose to
include text in new Rule 7.31P(d) that a Reserve Order would not lock,
cross, or trade-through a Protected Quotation. As noted above, for
trading on the Pillar platform, proposed Rule 7.37P(a) would set forth
the general requirements that orders not lock, cross, or trade-through
Protected Quotations. Further, Reserve Orders would be Limit Orders or
Inside Limit Orders and proposed Rules 7.31P(a)(2) and (a)(3) would set
forth how Limit Orders and Inside Limit Orders, respectively, would be
priced or routed to avoid locking, crossing or trading through the
PBBO.
    Limit Non-Displayed Order: Current Rule 7.31(d)(3) defines a
Passive Liquidity Order as an Inside Limit Order to buy or sell a
stated amount of a security at a specified, undisplayed price. Passive
Liquidity Orders will not route and will be executed in the Working
Order Process after all other Working Orders except undisplayed
discretionary order interest. The rule further provides that Passive
Liquidity Orders with a price superior to that of displayed orders will
have price priority and will execute ahead of inferior priced displayed
orders in the Display Order Process and a Passive Liquidity Order
designated IOC shall be rejected. Rule 7.37(a)(1) further provides that
Passive Liquidity Orders with a price superior to that of displayed
orders will have price priority and will execute ahead of inferior
priced displayed orders in the Display Order Process.
    As noted above, the Exchange proposes that for trading on Pillar,
the Passive Liquidity Order would be renamed a Limit Non-Displayed
Order. Proposed Rule 7.31P(d)(2) would define a Limit Non-Displayed
Order as a Limit Order that would not be displayed and would not route,
which is current functionality set forth in current Rule 7.31(d)(3). As
described in the 2015 Order Type Filing, the reference to Inside Limit
Order in Rule 7.31(d)(3) refers to the identifier associated with
entering Passive Liquidity Orders. The description of how Passive
Liquidity Orders operate is in Rule 7.31(d)(3).\35\ In Pillar, the
Exchange would require for Limit Non-Displayed Orders the identifier
associated with a Limit Order. However, as with the Passive Liquidity
Order, proposed Rule 7.31P(d)(2) would describe how Limit Non-Displayed
Orders would operate in Pillar. Accordingly, the Exchange proposes to
define a Limit Non-Displayed Order in proposed Rule 7.31P(d)(2) as a
Limit Order rather than defining it as an Inside Limit Order, as in
current Rule 7.31(d)(3), which would not result in any differences in
how this order type would function in Pillar.
---------------------------------------------------------------------------

    \35\ See 2015 Order Type Filing, supra note 6; see also
Securities Exchange Act Release No. 74415 (March 3, 2015), 80 FR
12537, 12539 (March 9, 2015) (SR-NYSEArca-2015-08) (Notice of Filing
of 2015 Order Type Filing).
---------------------------------------------------------------------------

    Proposed Rule 7.31P(d)(2) would further provide that a Limit Non-
Displayed Order must be designated Day, would be valid for any trading
session, and would not participate in any auctions. This proposed rule
text is based on rule text in current Rule 7.31(d)(3) that provides
that a Passive Liquidity Order designated IOC shall be rejected, rule
text in current Rule 7.34(d)(1)(F) that provides that Limited Priced
Orders are eligible for execution in the Opening Session, and rule text
in current Rule 7.34(d)(3)(A) that orders eligible for the Working
Order Process are eligible for execution in the Late Trading Session.
    The Exchange proposes two substantive differences for how Limit
Non-Displayed Orders would function in Pillar.
     First, Limit Non-Displayed Orders would be ranked together
with all other orders in the same priority category, and would not be
ranked behind other non-displayed interest. To reflect this proposed
substantive difference, proposed Rule 7.31P(d)(2) would provide that a
Limit Non-Displayed Order would be ranked Priority 3--Non-Display
Orders, which would mean that such orders would be ranked together with
all other interest in that priority category.\36\
---------------------------------------------------------------------------

    \36\ The Exchange does not propose to include in proposed Rule
7.31P(d)(2) the text in current Rule 7.31(d)(3) that a superior-
priced Passive Liquidity Order would trade ahead of an inferior-
priced display order because this priority rule would be set forth
in proposed Rule 7.36P. Specifically, as set forth in more detail in
the Pillar I Filing, supra note 4, proposed Rule 7.36P(c) would
provide that all non-marketable orders are ranked according to
price-time priority, which means that an order with a superior price
would always be ranked ahead of an order with an inferior price,
regardless of the order's priority category.
---------------------------------------------------------------------------

     Second, the Exchange would make available optional
functionality for a Limit Non-Displayed Order to be designated with a
Non-Display Remove Modifier, which would provide that an order so
designated would trade with an incoming ALO Order. To reflect this
proposed substantive difference, proposed Rule 7.31P(d)(2)(B) would
provide that a Limit Non-Displayed Order may be designated with an
optional Non-Display Remove Modifier and, if so designated, a Limit
Non-Displayed Order to buy (sell) would trade as the liquidity-taking
order with an incoming ALO Order to sell (buy) that has a working price
equal to the working price of the Limit Non-Displayed Order. The
Exchange proposes to add this functionality in Pillar to allow an ETP
Holder that enters a Limit Non-Displayed Order the option to trade with
an incoming ALO Order and to correlate to the proposed new
functionality for ALO Orders, discussed in more detail below, which
would provide that ALO Orders would not be rejected on arrival if
marketable.\37\
---------------------------------------------------------------------------

    \37\ As discussed below in connection with the proposed ALO
Order, if a Limit Non-Displayed Order is not designated with a Non-
Display Remove Modifier, an ALO Order to buy (sell) may be assigned
a working price that is the same as the working price of a Limit
Non-Displayed Order to sell (buy), and both orders would remain on
the NYSE Arca Book at the same price, but not trade with each other.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to use Pillar terminology in
proposed Rule 7.31P(d)(2)(A) to describe how Limit Non-Displayed Orders
would be priced so that they would not trade at prices that would trade
through the PBBO, as provided for in proposed Rule 7.37P(c)(2).\38\
Similar to the proposed Pillar rule text for Market Orders, Limit
Orders, and Inside Limit Orders, described above, proposed Rule
7.31P(d)(2)(A) would use Pillar terminology and would provide that the
working price of a Limit-Non-Displayed Order would be adjusted both on
arrival and when resting on the NYSE Arca Book based on the limit price
of the order. As proposed, if the limit price of a Limit Non-Display
Order to buy (sell) is at or below (above) the PBO (PBB), it would have
a working price equal to the limit price. If the limit price of a Limit
Non-Displayed Order to buy (sell) is above (below) the PBO (PBB), it
will have a working price equal to the PBO (PBB).
---------------------------------------------------------------------------

    \38\ See Pillar I Filing, supra note 4. Current Rule 7.37(c)
provides that the price of an order must be equal to or better than
the PBBO for a Limit Order and if an order is not executable within
that parameter, it may be routed away. Because Passive Liquidity
Orders are not routable, they are priced so that they would not
trade through the PBBO.
---------------------------------------------------------------------------

    Mid-Point Liquidity Order: Current Rule 7.31(d)(4) defines a Mid-
Point Passive Liquidity Order (``MPL Order'') as a Limit Order priced
at the midpoint

of the PBBO and not displayed and an order designated as an MPL Order
will not route or trade-through a Protected Quotation. The rule further
provides that an MPL Order shall have a minimum order entry size of one
share and MPL Orders entered without a limit price or with an FOK
modifier shall be rejected. Current Rule 7.31(d)(4)(A)--(E) set forth
additional requirements for MPL Orders, including a minimum executable
size for MPL Orders, eligibility of an MPL Order to trade in a locked
or crossed market, ranking and session eligibility of MPL Orders, the
``No Midpoint Execution'' modifier for Limit Orders, and the MPL-ALO
Order. Current Rule 7.31(d)(5) provides separately for an MPL-IOC
Order.
    Proposed Rule 7.31P(d)(3) would define Mid-Point Liquidity
(``MPL'') Orders in Pillar. The Exchange proposes a number of non-
substantive differences for MPL Orders, including renaming the order
type as a ``Mid-Point Liquidity Order'' (but still using the short-hand
of ``MPL Order''). This difference in names would reflect that the
Exchange would not use the term ``Passive Liquidity Order'' in Pillar.
The Exchange proposes additional non-substantive difference to set
forth all functionality relating to MPL Orders, including MPL-IOC and
MPL-ALO Orders, in proposed Rule 7.31P(d)(3), and to use proposed
Pillar terminology.
    The Exchange also proposes the following substantive differences
for MPL Orders in Pillar:
     An arriving MPL Order could receive price improvement from
resting orders in the NYSE Arca Book priced better than the midpoint of
the PBBO;
     The optional MTS would be required to be of a minimum of
one round lot and if an MPL Order with an optional MTS is traded in
part or reduced in size and the remaining quantity of the order is less
than the MTS, the order would cancel; and
     MPL-ALO Orders on arrival will trade with interest priced
better than the midpoint of the PBBO.
    Proposed Rule 7.31P(d)(3) would provide that an MPL Order is a
Limit Order that is not displayed and does not route, with a working
price at the midpoint of the PBBO. This proposed rule text is
consistent with current Rules 7.31(d)(4), but uses Pillar terminology
to describe at what price an MPL Order would be eligible to trade.
Specifically, current Rule 7.31(d)(4) defines an MPL Order as a Limit
Order priced at the midpoint of the PBBO and not displayed, and an
order designated as an MPL Order does not route.
    Proposed Rule 7.31P(d)(3) would further provide that an MPL Order
would be ranked Priority 3--Non-Display Orders. This priority is the
same as under current Rule 7.36, which ranks Working Orders behind
orders in the Display Order Process, but uses proposed Pillar
terminology to specify how an MPL Order would be ranked. In addition,
proposed Rule 7.31P(d)(3) would provide that MPL Orders would be valid
for any session and would not participate in any auctions, which is the
same as in current Rule 7.31(d)(4)(C).
    Proposed Rule 7.31P(d)(3)(A) would provide that an MPL Order to buy
(sell) must be designated with a limit price in the MPV for the
security and would be eligible to trade only if the midpoint of PBBO is
at or below (above) the limit price of the order. This does not
represent a change from the way MPL Orders currently operate and is
consistent with the rule text in the first sentence of current Rule
7.31(d)(4)(C) that provides that an MPL Order is ranked for execution
so long as the midpoint is within the limit range of the order, and
rule text in current Rule 7.31(d)(3) that requires that an MPL Order be
entered with a limit price.\39\
---------------------------------------------------------------------------

    \39\ The requirement for a limit price is also set forth in the
proposed Rule 7.31P(d)(3) requirement that an MPL Order be a Limit
Order, which includes the requirement for a limit price.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(d)(3)(B) would provide that if there is no PBB,
PBO, or the PBBO is locked or crossed, both an arriving and resting MPL
Order would wait for a PBBO that is not locked or crossed before being
eligible to trade. This represents current functionality and is based
on rule text in current Rule 7.31(d)(4)(B) that provides that if the
market is locked or crossed, the MPL Order will wait for the market to
unlock or uncross before becoming eligible to trade again, and rule
text in current Rule 7.31(d)(3) that provides that an MPL Order is
priced at the midpoint of the PBBO. Proposed Rule 7.31P(d)(3)(B) would
include that an MPL Order would not be eligible to trade when there is
no PBB or PBO because if there is only a one-sided PBBO, there would be
no midpoint and it would not be possible to trade an MPL Order at a
midpoint price.
    In addition, proposed Rule 7.31P(d)(3)(B) would provide that if a
resting MPL Order(s) to buy (sell) trades with an MPL Order(s) to sell
(buy) after there is an unlocked or uncrossed PBBO, the MPL Order with
the later working time would be the liquidity-removing order. Because
the Exchange's fees vary based on whether an order is liquidity
providing or liquidity removing, the Exchange believes it is important
to specify which MPL Order following the unlocking or uncrossing of the
PBBO would be the liquidity-taking order.
    Proposed Rule 7.31P(d)(3)(C) would describe how MPL Orders would
trade both on arrival and when resting. Unlike current Rule
7.31(d)(4)(C), which provides that MPL Orders always execute at the
midpoint and do not receive price improvement, the Exchange proposes a
substantive difference in Pillar to provide price improvement for
arriving MPL Orders. As proposed, Rule 7.31P(d)(3)(C) would provide
that on arrival, an MPL Order to buy (sell) that is eligible to trade
(i.e., the midpoint of the PBBO is within the limit price of the order,
see proposed Rule 7.31P(d)(3)(A)) would trade with resting orders to
sell (buy) with a working price at or below (above) the midpoint of the
PBBO. This functionality would be new in Pillar and differs from
current Rule 7.31(d)(4)(C) requirement that MPL Orders do not receive
price improvement, but is similar to order functionality available on
another exchange.\40\ As under current Rule 7.31(d)(4)(C), pursuant to
proposed Rule 7.31P(d)(3)(C), resting MPL Orders to buy (sell) would
trade at the midpoint of the PBBO against all incoming orders to sell
(buy) priced at or below (above) the midpoint of the PBBO.
---------------------------------------------------------------------------

    \40\ See, e.g., EDGA Exchange, Inc. (``EDGA'') Rule 11.8(d)
(defining a MidPoint Peg Order, which can trade at prices other than
the midpoint of the NBBO); NASDAQ Stock Market LLC (``Nasdaq'') Rule
4702(b)(5)(A) (defining a Midpoint Peg Post-Only Order, which can
trade at prices other than the midpoint of the NBBO).
---------------------------------------------------------------------------

    The last sentence of proposed Rule 7.31P(d)(3)(C) would provide
that an incoming Limit Order may be designated with a ``No Midpoint
Execution'' modifier, in which case the incoming Limit Order would not
trade with resting MPL Orders and may trade through such MPL Orders.
This proposed rule reflects the same functionality as in current Rule
7.31(d)(4)(D),\41\ with non-substantive differences to describe that
such Limit Orders could trade through resting MPL Orders.
---------------------------------------------------------------------------

    \41\ Current Rule 7.31(d)(4)(D) provides that Users may mark
incoming Limit Orders with a ``No Midpoint Execution'' modifier and
so marked, those Limit Orders will ignore MPL Orders and trade
against the rest of the book in the ordinary course.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(d)(3)(D) would set forth how MPL Orders with an
optional MTS would function in Pillar. The new proposed rule would
provide that an MPL Order may be designated with an MTS of a minimum of
one round lot and would be rejected on arrival if the MTS is larger
than the size of the MPL Order. The proposed

minimum of one round lot is a substantive difference from current Rule
7.31(d)(4)(A), which provides that an MPL Order may have an MTS of only
one share.
    In addition, the last sentence of proposed Rule 7.31P(d)(3)(D) to
provide that if an MPL Order with an MTS is traded in part or reduced
in size and the remaining quantity of the order is less than the MTS,
the MPL Order would be cancelled. This would be a substantive
difference from current Rule 7.31(d)(4)(A), which provides that should
the leaves quantity become less than the minimum size, the minimum size
restriction will no longer be enforced on executions. The Exchange is
proposing that the Pillar rule be different in this regard because it
would more closely align the function of an MPL Order with an MTS with
the User's instruction that the trades be executed only in a minimum
trade size.
    The remaining text in proposed Rule 7.31P(d)(3)(D) is not
substantively different from Rule 7.31(d)(4)(A). Proposed Rue
7.31P(d)(3)(D) would provide that on arrival, an MPL Order to buy
(sell) with an MTS would trade with sell (buy) orders in the NYSE Arca
Book that in the aggregate, meets its MTS. If the sell (buy) orders do
not meet the MTS, the MPL Order to buy (sell) would not trade on
arrival and would be ranked in the NYSE Arca Book. The proposed rule
would further provide that once resting, an MPL Order to buy (sell)
with an MTS would trade with an order to sell (buy) that meets the MTS
and is priced at or below (above) the midpoint of the PBBO. If an order
does not meet an MPL Order's MTS, the order would not trade with and
may trade through such MPL Order. This proposed Pillar rule text is
based on current Rule 7.31(d)(4)(A), but with non-substantive
differences to use MTS terminology rather than ``minimum executable
size'' and to describe how orders with an MTS interact with contra-side
orders with more specificity.
    Proposed Rule 7.31P(d)(3)(E) would provide that an MPL Order could
be designated IOC (``MPL-IOC Order''), which is based on current rule
7.31(d)(5). As proposed, subject to IOC instructions, an MPL-IOC Order
would follow the same trading and priority rules as an MPL Order,
except that an MPL-IOC Order would be rejected if (i) the order entry
size is less than one round lot, or (ii) there is no PBBO or the PBBO
is locked or crossed. The proposed rule is the same as current Rule
7.31(d)(5) with the following non-substantive differences: To
streamline the rule text; replace the term ``execution'' with
``trading''; and add that an MPL-IOC Order would be rejected both if
the PBBO is locked or crossed and if there is no PBBO, which represents
current functionality set forth in current Rule 7.31(d)(5) that an MPL-
IOC order is priced at the midpoint of the PBBO. The Exchange proposes
to further add that an MPL-IOC Order cannot be designated ALO or with a
Non-Display Remove Modifier, which is based on current functionality
set forth in Rule 7.31(d)(5) that an MPL-IOC Order cancels if it does
not trade on arrival, and therefore the ALO or Non-Display Remove
Modifier would be inconsistent with the IOC instruction.
    Proposed Rule 7.31P(d)(3)(F) would provide that an MPL Order may be
designated with an ALO Modifier (``MPL-ALO Order'') and is based on
current Rule 7.31(c)(4)(E), which provides for MPL-ALO Orders on the
current trading platform. As discussed in greater detail below, in
Pillar, the Exchange is proposing substantive differences for how Limit
Orders designated ALO would operate, including that if marketable on
arrival against resting contra-side non-displayed orders, they would
trade with such orders if the resting order would provide price
improvement over the limit price of the ALO Order. The Exchange
proposes that MPL-ALO Orders in Pillar would similarly, on arrival,
trade with resting orders that provide price improvement over the
midpoint of the PBBO. Thus, as proposed, an MPL-ALO Order to buy (sell)
would trade with resting orders to sell (buy) with a working price
below (above) the midpoint of the PBBO, but would not trade with
resting orders to sell (buy) priced at the midpoint of the PBBO. The
Exchange believes that providing a trading opportunity on arrival for
an MPL-ALO Order that provides price improvement over the midpoint of
the PBBO would be consistent with the terms of the order because the
trade(s) would be at prices better than the midpoint of the PBBO and
the order would not take liquidity priced at the midpoint of the PBBO.
Proposed Rule 7.31P(d)(3)(F) would further provide that a resting MPL-
ALO Order to buy (sell) would trade with an arriving order to sell
(buy) that is eligible to trade at the midpoint of the PBBO.
    Proposed Rule 7.31P(d)(3)(G) would provide that MPL Orders
designated Day and MPL-ALO Orders may be designated with a Non-Display
Remove Modifier, which is based on current functionality set forth in
current Rule 7.31(e)(1)(C), but naming this functionality in Pillar as
a ``Non-Display Remove Modifier.'' As proposed, on arrival, an MPL
Order or MPL-ALO Order to buy (sell) with a Non-Display Remove Modifier
would trade with resting non-displayed MPL Orders to sell (buy) priced
at the midpoint of the PBBO and be the liquidity taker, regardless of
whether the resting order to sell (buy) also has a Non-Display Remove
Modifier. As further proposed, a resting MPL Order or MPL-ALO Order
with a Non-Display Remove Modifier would be the liquidity taker when
trading with arriving MPL Orders, including MPL-ALO Orders, that do not
include a Non-Display Remove Modifier. This proposed functionality is
based on rule text in current Rule 7.31(e)(1)(C), which provides that a
User can specify that an MPL Order or MPL-ALO Order may execute against
an arriving marketable MPL-ALO Order, and as further described in the
rule filing to adopt the current rule text.\42\
---------------------------------------------------------------------------

    \42\ See Securities Exchange Act Release No. 67652 (Aug. 14,
2012), 77 FR 50189 (Aug. 20, 2012) (SR-NYSEArca-2012-83) (Notice of
filing of proposed rule change to provide that an arriving
marketable MPL-ALO Order may be designated to interact with a
resting MPL or MPL-ALO Order. An arriving MPL-ALO Order is the
liquidity-providing order unless it has been designated to interact
with resting MPL Orders, in which case the arriving MPL-ALO Order is
the liquidity-taking order).
---------------------------------------------------------------------------

    Tracking Order: Current Rule 7.31(e)(6) defines a Tracking Order
and sets forth how it is executed. Additional functionality relating to
the Tracking Order Process is in current Rule 7.37(c).
    In Pillar, the Exchange proposes to consolidate all functionality
associated with Tracking Orders in proposed Rule 7.31P(d)(4). The
Exchange proposes two substantive differences to functionality of
Tracking Orders:
     Tracking Orders would be priced based on the PBBO instead
of the NBBO; and
     STP Modifiers would be available for Tracking Orders.
    To reflect the consolidation of two different rules, together with
use of new Pillar terminology, the Exchange proposes all new rule text
to describe Tracking Orders. Except for the two substantive
differences, the proposed rule describes the same functionality as in
current Rule 7.31(e)(6) and 7.37(c).
    Proposed Rule 7.31P(d)(4) would define a Tracking Order as an order
to buy (sell) with a limit price that is not displayed, does not route,
must be entered in round lots and designated Day, and would trade only
with an order to sell (buy) that is eligible to route. This proposed
rule text describes the same functionality as the first sentence of
current Rule 7.31(e)(6), using Pillar terminology and specifying that
Tracking Orders do not route, which is consistent with how they trade

in the Tracking Order Process pursuant to current Rule 7.37(c). The
proposed definition would not use the term ``Limit Order,'' and the
requirement for a Tracking Order to include a limit price would not
mean that it would operate the same as a Limit Order, but rather, would
function as provided for in proposed Rule 7.31P(d)(4).
    Proposed Rule 7.1P(d)(4) would further provide that the working
price of a Tracking Order to buy (sell) would be the PBB (PBO),
provided that such price is at or below (above) the limit price of the
Tracking Order. The proposed rule describes the same functionality as
the rule text in current Rule 7.31(e)(6) that ``[a] Tracking Order will
execute at the same price as the same-side NBBO provided that such
price shall not trade-through a Protected Quotation or the price of the
Tracking Order,'' except that the Exchange is proposing a substantive
difference that Tracking Orders would trade at prices based on the
PBBO. Because Tracking Orders would trade based on the PBBO, proposed
Rule 7.31P(d)(4) would provide that a Tracking Order would not be
eligible to trade if the PBBO is locked or crossed. The Exchange
proposes not to include in proposed Rule 7.31P(d)(4) the text in
current Rule 7.31(e)(6) that a Tracking Order would not trade-through a
Protected Quotation, because this requirement would be set forth in
proposed Rule 7.37P(a)(3).\43\ Finally, proposed Rule 7.31P(d)(4) would
provide that a Tracking Order may trade in odd lot or mixed lot
quantities, which is consistent with Rule 7.38, which provides that
Tracking Orders may not be entered in odd lots, but does not prohibit a
Tracking Order from trading in odd lot or mixed lot quantities.
---------------------------------------------------------------------------

    \43\ See Pillar I Filing, supra note 4.
---------------------------------------------------------------------------

    As discussed in the Pillar I Filing, the Exchange proposes to
eliminate the term ``Tracking Order Process'' in Pillar, and proposed
new Rule 7.36P would describe the priority categories for orders on the
Exchange.\44\ As proposed in Rule 7.31P(d)(4), Tracking Orders would be
subject to Priority 4--Tracking Orders and would have priority only
after other priority categories are exhausted at each price level.
---------------------------------------------------------------------------

    \44\ Id.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(d)(4)(A) would further provide that a Tracking
Order to buy (sell) would not trade on arrival and would be triggered
to trade by an order to sell (buy) that (i) has exhausted all other
interest eligible to trade at the Exchange, (ii) has a remaining
quantity equal to or less than the size of a resting Tracking Order,
and (iii) would otherwise route to an Away Market. The rule would
further provide that a Tracking Order would trade with the entire
unexecuted quantity of the contra-side order, not just the quantity
being routed. The proposed rule text describes the same functionality
as in current Rule 7.31(e)(6), which provides that a Tracking Order is
eligible for execution in the Tracking Order Process against a contra-
side order that is eligible to route pursuant to Rule 7.37(d) and is
equal to or less than the size of a resting Tracking Order, and as in
current Rule 7.37(c), which provides that if an order that is eligible
to route to an away market has not been executed in its entirety
pursuant to paragraphs (a) and (b) of Rule 7.37, the NYSE Arca Market
Place shall match and execute any remaining part of such order in the
Tracking Order Process in price/time priority.
    Proposed Rule 7.31P(d)(4)(B) would provide that each time a
Tracking Order is traded in part, any remaining quantity of the
Tracking Order would be assigned a new working time and that a Tracking
Order with a later working time would trade ahead of a Tracking Order
with an earlier working time that does not meet the size requirement of
an incoming order. This describes the same functionality as in current
Rule 7.31(e)(6), which provides that a Tracking Order is assigned a new
time priority upon each reposting, but uses Pillar terminology, and in
particular the term ``working time,'' to describe when a Tracking Order
would have priority.
    Proposed Rule 7.31P(d)(4)(C) would provide that a Tracking Order
may be designated with an MTS of one round lot or more, which is
consistent with the requirement in the first sentence of current Rule
7.31(e)(6) that Tracking Orders must be entered in round lots, i.e.,
because the size of a Tracking Order cannot be less than a round lot,
the MTS would need to be at least the size of the Tracking Order, which
is in round lots. The proposed rule would further provide that if an
incoming order cannot meet the MTS, a Tracking Order with a later
working time could trade ahead of the Trading Order designated with the
MTS with an earlier working time. The rule would further provide that
if a Tracking Order with an MTS is traded in part or reduced in size
and the remaining quantity is less than the MTS, the Tracking Order
would be cancelled. This rule text describes the same functionality as
set forth in the second and third sentences of current Rule 7.31(e)(6),
which provide that an ETP Holder may specify a minimum executable size
for a Tracking Order and if a Tracking Order with a minimum size
requirement is executed but not exhausted and the remaining portion of
the order is less than the minimum size requirement, the Tracking Order
shall be cancelled, but with non-substantive differences to use Pillar
terminology, including the term ``MTS'' instead of ``minimum executable
size.''
    Finally, in Pillar, the Exchange would no longer ignore STP
Modifiers for Tracking Orders. Accordingly, the Exchange is not
proposing to include in proposed Rule 7.31P(d)(4) the rule text in
current Rule 7.31(e)(6) that STP Modifiers are ignored for Tracking
Orders. Because Tracking Orders would not have different treatment that
other orders with respect to STP Modifiers, the Exchange would not
mention STP Modifiers in proposed Rule 7.31P(d)(4).
Orders With Instructions Not to Route (Proposed Rule 7.31P(e)
    Proposed Rule 7.31P(e) would set forth orders with instructions not
to route and is based in part on the orders specified in current Rule
7.31(e). Current Rule 7.31(e) includes the following orders:
     Adding Liquidity Only (``ALO'') Order (Rule 7.31(e)(1));
     ISO (Rule 7.31(e)(2));
     PNP Order (Post No Preference) (Rule 7.31(e)(3));
     PNP Blind (Rule 7.31(e)(4));
     Cross Order (Rule 7.31(e)(5)); and
     Tracking Order (Rule 7.31(e)(6)).
    As discussed above, the Exchange proposes that Cross Orders and
Tracking Orders would be set forth elsewhere in proposed Rule
7.31P.\45\ In addition, the Exchange is not proposing to offer a PNP
Order in Pillar. The Exchange proposes that Rule 7.31P(e) would
include:
---------------------------------------------------------------------------

    \45\ See proposed Rules 7.31P(d)(4) (Tracking Orders) and
7.31P(g) (Cross Orders).
---------------------------------------------------------------------------

     Arca Only Order, which are what PNP Blind Orders would be
renamed;
     ALO Orders; and
     ISO Orders.
    In Pillar, the Exchange proposes a substantive difference that ALO
Orders would not reject if marketable on arrival and instead would re-
price and/or trade, depending on the contra-side interest.\46\ The
Exchange also proposes to provide for a Non-Display Remove Modifier for
Arca Only Orders so that they may trade with an incoming ALO Order and
to conform ALO functionality available for ISOs that are designated Day
to operate consistent with the proposed ALO Order functionality in
Pillar.
---------------------------------------------------------------------------

    \46\ ALO Orders in Pillar would be based in part on current PNP
Blind Orders designated ALO (``PNPB-ALO'') functionality set forth
in current Rule 7.31(e)(4), which do not reject on arrival if they
would trade through an Away Market PBBO.
---------------------------------------------------------------------------

    Arca Only Order: Current Rule 7.31(e)(4) defines a PNP Blind Order
as

a PNP Order that re-prices if it would create a violation of Rule
610(d) of Regulation NMS by locking or crossing the protected quotation
of an external market or would cause a violation of Rule 611 of
Regulation NMS.
    Proposed Rule 7.31P(e)(1) would set forth Arca Only Orders in
Pillar, which would function the same as PNP Blind Orders. Proposed
Rule 7.31P(e)(1) would use Pillar terminology to describe how such
orders would be priced and ranked. The Exchange also proposes a
substantive difference for Arca Only Orders that would allow such
orders to be designated with a Non-Display Remove Modifier.
    Proposed Rule 7.31P(e)(1) would define an Arca Only Order as a
Limit Order that does not route. Because the only primary order type
for an Arca Only Order is a Limit Order, an Inside Limit Order cannot
also be an Arca Only Order.\47\
---------------------------------------------------------------------------

    \47\ As described in proposed Rule 7.31P(a)(2) and (a)(3), an
Inside Limit Order differs from a Limit Order because it is priced
based on the NBBO, and therefore routes differently than a Limit
Order. Because an Arca Only Order would not route, the differing
routing treatment applicable to Inside Limit Orders would not be
operative for Arca Only Orders.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(1)(A) would provide that an Arca Only Order
to buy (sell) that, at the time of entry and after trading with any
sell (buy) orders in the NYSE Arca Book priced at or below (above) the
PBO (PBB), would create a violation of Rule 610(d) of Regulation NMS
\48\ by locking or crossing the protected quotation of an Away Market
or would cause a violation of Rule 611 of Regulation NMS,\49\ would be
re-priced. This rule text is based on current Rule 7.31(e)(4) with non-
substantive differences to provide more specificity that an Arca Only
Order would trade with contra-side orders on the NYSE Arca Book before
being evaluated for re-pricing.
---------------------------------------------------------------------------

    \48\ 17 CFR 242.610(d).
    \49\ 17 CFR 242.611.
---------------------------------------------------------------------------

    The Exchange also proposes to describe how an Arca Only Order would
be re-priced by using Pillar terminology to specify the working price
and display price of an Arca Only Order and refer to an Away Market PBO
or PBB. The Exchange believes that the proposed non-substantive
differences would make the rule easier to navigate of when the working
price and/or display price of an Arca Only Order would change.
     Proposed Rule 7.31P(e)(1)(A)(i) would provide that on
arrival and after trading with orders in the NYSE Arca Book priced
below (above) the PBO (PBB), an Arca Only Order to buy (sell) would
have a working price of the PBO (PBB) of an Away Market and a display
price one MPV below (above) the PBO (PBB). The proposed assignment of a
working price and display price in Pillar is how a PNP Blind Order is
priced when it is first posted to the NYSE Arca Book, as described in
current Rule 7.31(e)(4).
     Proposed Rule 7.31P(e)(1)(A)(ii) would provide that if the
PBO (PBB) of an Away Market re-prices higher (lower), an Arca Only
Order to buy (sell) would be assigned a new working price of the
updated PBO (PBB) and a new display price of one MPV below (above) that
updated PBO (PBB). This proposed re-pricing is how a PNP Blind order is
re-priced if the PBO (PBB) moves higher (lower), as described in the
first sentence of current Rule 7.31(e)(4)(A).
     Proposed Rule 7.31P(e)(1)(A)(iii) would provide that if
the PBO (PBB) of an Away Market re-prices to be equal to or lower
(higher) than the Arca Only Order's last display price, an Arca Only
Order to buy (sell)'s display price would not change, but the working
price would be adjusted to be equal to its display price. This re-
pricing is currently how a PNP Blind order is re-priced if the PBO
(PBB) moves to be equal to or lower (higher) than the last display
price of a PNP Blind order to buy (sell), as set forth in the second
sentence of current Rule 7.31(e)(4)(A), but using Pillar terminology to
distinguish between the working and display price of the order.
     Proposed Rule 7.31P(e)(1)(A)(iv) would provide that if an
Arca Only Order's limit price no longer locks or crosses the PBO (PBB)
of an Away Market, an Arca Only Order to buy (sell) would be assigned a
working price and display price equal to its limit price and would not
be assigned a new working price or display price based on changes to
the PBO (PBB). This proposed re-pricing is how a PNP Blind order is re-
priced when it no longer locks or crosses the PBBO, as described in the
third sentence of current Rule 7.31(e)(4)(A), but using Pillar
terminology.
    Rule 7.31(e)(4) provides that a PNP Blind order will retain its
original limit price irrespective of the prices at which such order is
priced and displayed. The Exchange does not propose to include this
language in proposed Rule 7.31P(e)(1) because it is proposing to define
the working price and display price as terms separate from the limit
price,\50\ and as proposed, only the working price and display price of
an Arca Only Order would be adjusted. In addition, the last sentence of
current Rule 7.31(e)(4) provides that a PNPB-ALO is not cancelled if it
is marketable against the PBBO and may not be designated as a Reserve
Order. This text would not be included in proposed Rule 7.31P(e)(1)
because in Pillar, functionality relating to ALO Orders for Arca Only
Orders will be set forth in proposed Rule 7.31P(e)(2) and which orders
may be combined with a Reserve Order would be set forth in proposed
Rule 7.31P(d)(1)(C).\51\
---------------------------------------------------------------------------

    \50\ See Pillar I Filing, supra note 4 at proposed Rule
7.36P(a).
    \51\ Consistent with current Rule 7.31(e)(4), an ALO Order in
Pillar would not be allowed to be designated as a Reserve Order.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(1)(B) would provide that an Arca Only Order
with a working price different from the display price would be ranked
Priority 3-Non-Display Orders and an Arca Only Order with a working
price equal to the display price would be ranked Priority 2-Display
Orders. This proposed rule text uses Pillar terminology to describe the
priority ranking of Arca Only Orders and is the same priority described
in current Rule 7.31(e)(4)(B). Rule 7.31(e)(4)(B) provides that PNP
Blind orders are governed by the Exchange's Display Order Process set
forth in Rule 7.36 and that marketable contra orders will execute first
against PNP Blind orders, only at superior prices, then the rest of the
book. In addition, all PNP Blind orders that are re-priced and re-
displayed will retain their priority as compared to other PNP Blind
orders based upon the time such orders were initially received by the
Exchange, regardless of the price of the order. Under Pillar rules,
because a Priority 3--Non-Display Order that is better priced than a
Priority 2--Display Order would have priority pursuant to proposed Rule
7.36P(c)-(e), the Exchange would not repeat this priority requirement
in proposed Rule 7.31P(e)(1)(B). Similarly, because Arca Only Orders
would be subject to the Exchange's proposed general requirement set
forth in proposed Rule 7.36P(f)(2) that an order is assigned a new
working time any time the working price of an order changes, the
Exchange would not repeat this requirement in proposed Rule
7.31P(e)(1)(B).
    Proposed Rule 7.31P(e)(1)(C) would provide that an Arca Only Order
may be designated with an optional Non-Display Remove Modifier. This
proposal would be new functionality available in Pillar to provide that
a resting Arca Only Order that has an undisplayed working price could
trade with an incoming ALO Order, and in such case, the resting Arca
Only Order would be considered the liquidity-taking order and the ALO
Order would be able to

meet its terms to be the liquidity-providing order. Accordingly, as
proposed, if designated with a Non-Display Remove Modifier, an Arca
Only Order to buy (sell) with a working price, but not display price,
equal to the working price of an ALO Order to sell (buy) would trade as
the liquidity taker against such ALO Order.
    ALO Order: Current Rule 7.31(e)(1) defines an ALO Order as a Limit
Order that is accepted and placed on the NYSE Arca book only where the
order adds liquidity to the NYSE Arca Book and an ALO Order will be
rejected on arrival if it would lock or cross the market or is
marketable, except as provided for in section (e)(1)(C) of the Rule,
which states that an MPL-ALO Order may be designated to trade with
another MPL-ALO Order.
    Proposed Rule 7.31P(e)(2) would define ALO Orders in Pillar. The
Exchange does not propose in Rule 7.31P(e)(2) that an ALO Order would
be rejected on arrival if it is marketable or if it would lock or cross
the market. Rather, the Exchange proposes a substantive difference in
Pillar, such that an ALO Order would re-price rather than trade with
displayed liquidity or route to a protected quotation. The Exchange
proposes a further substantive difference in Pillar to provide that an
ALO Order could either trade with non-displayed orders or be displayed
at a price that would lock contra-side non-displayed orders on the NYSE
Arca Book.
    Proposed Rule 7.31P(e)(2) would define an ALO Order as an Arca Only
Order that, except as specified in proposed Rule 7.31P(e)(2)(C), would
not remove liquidity from the NYSE Arca Book.\52\ By proposing to
define an ALO Order as an Arca Only Order in Pillar, all of the
requirements of an Arca Only Order would be applicable to an ALO Order,
including that an ALO Order would not route, which is consistent with
how ALO Orders currently function as set forth in the second and third
sentences of current Rule 7.31(e)(1). The proposed requirement that an
ALO Order be an Arca Only Order is also consistent with the current
requirement in Rule 7.31(e)(1) that an ALO Order be either a PNP Order,
PNP Blind order, or MPL Order. In Pillar, because the Exchange would
not be offering PNP Orders and functionality relating to MPL Orders
designated ALO would be set forth in proposed Rule 7.31P(d)(3), having
ALO Orders based on Arca Only Orders is consistent with the current
functionality that requires an ALO Order to be a PNP Blind order.
---------------------------------------------------------------------------

    \52\ The ALO Order in Pillar is based in part on the current
PNPB-ALO order described in the last sentence of Rule 7.31(e)(4).
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(2) would further provide that upon entry, an
ALO Order must have a minimum of one displayed round lot. This
represents a new requirement for ALO Orders in Pillar and is based on
how ALO Orders operate on the NYSE.\53\ Because an ALO Order is an
order that is intended to be displayed, the Exchange believes that the
round lot minimum requirement would promote the display of an ALO
Order.
---------------------------------------------------------------------------

    \53\ See paragraph (a) governing ALO Orders in NYSE Rule 13
(``Upon entry, limit orders designated ALO must have a minimum of
one displayable round lot.'')
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(2)(A) would specify that ALO Orders may
participate in auctions, but the ALO designation would be ignored and
that an ALO Order that has not traded in an auction would be assigned a
working price and display price, described below. In the current
trading platform, an ALO Order that has been accepted and placed on the
NYSE Arca Book pursuant to Rule 7.31(e)(1) is eligible to participate
in an auction. Because in Pillar, the Exchange proposes a substantive
difference to re-price ALO Orders, the Exchange proposes to add rule
text regarding how ALO Orders would be re-priced following an auction.
The proposed rule text is based on how ALO Orders operate on the
NYSE.\54\
---------------------------------------------------------------------------

    \54\ See paragraph (a) governing ALO Orders in NYSE Rule 13
(``Limit orders designated ALO may participate in the open or close,
but the ALO designation shall be ignored'').
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(2)(B)(i)-(iv) would specify how an ALO Order
to buy (sell) would be re-priced if, at the time of entry, it would be
marketable against the BO (BB) or would lock or cross a protected
quotation in violation of Rule 610(d) of Regulation NMS.\55\
---------------------------------------------------------------------------

    \55\ 17 CFR 242.610(d). The proposed re-pricing functionality
for an ALO Order in Pillar is similar to how orders operate on other
exchanges. See, e.g., paragraph (b) governing ALO Orders in NYSE
Rule 13; Nasdaq Rule 4702(b)(4)(A) (defining a ``Post-Only Order'').
---------------------------------------------------------------------------

     Proposed Rule 7.31P(e)(2)(B)(i) would provide that if the
BO (BB) is higher (lower) than the PBO (PBB), an ALO Order to buy
(sell) would have a working price of the PBO (PBB) and a display price
one MPV below (above) the PBO (PBB). As proposed, for an ALO Order to
buy, if the BO is higher than the PBO, the order would be priced the
same as a straight Arca Only Order, because such order would not be
marketable against the BO or route to the PBO. The proposed re-pricing
would assure that the ALO Order would not lock the PBO.
     Proposed Rule 7.31P(e)(2)(B)(ii) would provide that if the
BO (BB) is equal to the PBO (PBB), an ALO Order to buy (sell) would
have a working price and a display price one MPV below (above) the PBO
(PBB). This proposed rule text reflects that an ALO Order could not
trade at the contra-side BBO, nor would the Exchange assign a working
price to an ALO Order that would lock the Exchange's BBO.
     Proposed Rule 7.31P(e)(2)(B)(iii) would provide that if
the PBO (PBB) re-prices higher (lower), an ALO Order to buy (sell)
would be assigned a new working price and display price consistent with
proposed Rule 7.31P(e)(2)(B)(i) and (ii). Accordingly, as the PBO
moves, the re-pricing of the ALO Order would function the same as it
would on arrival. Accordingly, each time the PBBO moves, the Exchange
would evaluate both the BBO and the PBBO to determine which working and
display price should be assigned to the ALO Order.
     Proposed Rule 7.31P(e)(2)(B)(iv) would provide that if the
PBO (PBB) re-prices lower (higher) to be equal to or lower (higher)
than the ALO Order's last display price or if its limit price no longer
locks or crosses the PBO (PBB), an ALO Order to buy (sell) would be
priced pursuant to proposed Rule 7.31P(e)(1)(A)(iii) and (iv).
Accordingly, as proposed, an ALO Order would follow the re-pricing
instructions of a straight Arca Only Order if the PBBO moves into the
price of the order or if it is displayed at its limit price. As such,
the ALO Order would not re-price but would remain at its displayed
price.
    Proposed Rule 7.31P(e)(2)(C) would provide how an ALO Order to buy
(sell) would either trade with or lock orders priced below (above) the
BO (BB), which, for purposes of this section of the Rule would be
referred to as ``non-displayed order(s).'' \56\ This proposed
functionality would be a substantive difference from how an ALO Order
functions on the current trading platform, which, as provided for in
Rule 7.31(e)(1)(C), will be rejected where, at the time of entry, it
would interact with un-displayed orders on NYSE Arca.
---------------------------------------------------------------------------

    \56\ By defining ``non-displayed order(s)'' as any interest
priced inferior to the BBO, it would include Limit Non-Displayed
Orders, Arca Only Orders with a non-displayed working price, ALO
Orders with a non-displayed working price, and odd-lot orders. As
proposed in Rule 7.31P(e)(2)(D), ALO Orders would not trigger an MPL
Order to trade, and therefore MPL Orders would not be considered a
``non-displayed order'' for purposes of this definition.
---------------------------------------------------------------------------

     Proposed Rule 7.31P(e)(2)(C)(i) would provide that if the
limit price of an ALO Order to buy (sell) is higher (lower) than the
working price of resting

non-displayed order(s) to sell (buy), it would trade as the liquidity
taker with such order(s). This proposed functionality would provide
price improvement to an incoming ALO Order and is consistent with how
other markets currently function.\57\
---------------------------------------------------------------------------

    \57\ See, e.g., BATS Exchange, Inc. (``BATS'') Rule 11.9(c)(6)
(BATS Post Only Order will remove contra-side liquidity from the
BATS Book if the value of such execution when removing liquidity
equals or exceeds the value of such execution if the order instead
posted the BATS book and subsequently provided liquidity, including
the applicable fees charged or rebates provided); see also Nasdaq
Rule 4702(b)(5)(A) (Post-Only Orders will trade on arrival if
economically beneficial).
---------------------------------------------------------------------------

     Proposed Rule 7.31P(e)(2)(C)(ii) would provide that if the
limit price of an ALO Order to buy (sell) is equal to the working price
of resting non-displayed order(s) to sell (buy), it would post to the
NYSE Arca Book and would not trade with such order(s), unless such
order(s) is a Limit Non-Displayed Order or Arca Only Order to sell
(buy) that has been designated with a Non-Display Remove Modifier. As
described above, the ALO Order would be considered the liquidity-
providing order when trading with an order designated with a Non-
Display Remove Modifier.\58\ Accordingly, subject to this exception, if
the non-displayed order(s) would not provide price improvement over the
limit price of the ALO Order, i.e., they are at the same price, the ALO
Order would not trade with such interest and instead would be displayed
at that price. This proposed functionality would be new for Pillar and
is similar to how other markets operate.\59\
---------------------------------------------------------------------------

    \58\ ETP Holders that elect to use the optional Non-Display
Remove Modifier would be the liquidity-taking order if trading with
an ALO Order.
    \59\ Id.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(2)(D) would provide that an ALO Order would
not trigger a contra-side MPL Order to trade. This functionality is the
same as current Rule 7.31(e)(1)(C), which provides that an ALO Order
will ignore MPL Orders.\60\ The Exchange proposes to revise how to
reflect this functionality in proposed Rule 7.31P(e)(2)(D) and the
proposed language is based on paragraph (d) governing ALO Orders in
NYSE Rule 13.
---------------------------------------------------------------------------

    \60\ Current Rule 7.31(e)(1)(C) further specifies how MPL or
MPL-ALO Orders may interact. As described above, the Exchange
proposes to set forth in proposed Rule 7.31P(d)(3)(G) how MPL and
MPL-ALO Orders would interact if designated with a Non-Display
Remove Modifier, and does not propose to repeat this text in the
definition of an ALO Order.
---------------------------------------------------------------------------

    ISO: Rules 7.31(e)(2) and (e)(4), together with Rules 7.37(e)(3)(C)
and (g)(1), set forth how ISOs function on the current trading
platform.
    Proposed Rule 7.31P(e)(3) would define ISOs in Pillar. The Exchange
proposes non-substantive differences to the rule text to define
separately an ``IOC ISO'' and a ``Day ISO,'' each of which are existing
order types. The proposed structure of the rule is based on NYSE Rule
13 governing ISOs.
    As proposed, Rule 7.31P(e)(3) would define an ISO as a Limit Order
that does not route and meets the requirements of Rule 600(b)(3) of
Regulation NMS.\61\ This definition is the same as current Rule
7.31(e)(2). Proposed Rule 7.31P(e)(3)(A) would further provide that an
ISO may trade through a protected bid or offer, and would not be
rejected or cancelled if it would lock, cross, or be marketable against
an Away Market provided that it meets the requirements specified in
proposed Rule 7.31P(e)(3)(A)(i) and (ii). This rule text reflects the
same functionality as in current Rules 7.31(e)(2) and 7.37(g)(1).
---------------------------------------------------------------------------

    \61\ 17 CFR 242.600(b)(3).
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(3)(A)(i)-(ii) would specify additional
requirements related to ISOs that are based on the Regulation NMS
definition of an ISO \62\ and requirements specified in current Rules
7.37(e)(3)(C) and (g)(1). As proposed, an ISO would need to be
identified as an ISO in the manner prescribed by the Exchange and,
simultaneously with the routing of an ISO to the Exchange, the ETP
Holder routes one or more additional Limit Orders, as necessary, to
trade against the full displayed size of any protected bids (for sell
orders) or protected offers (for buy orders) on Away Markets and these
additional routed orders must be identified as ISO.\63\
---------------------------------------------------------------------------

    \62\ Id.
    \63\ This proposed rule text is based on paragraphs (a)(i) and
(ii) governing ISOs in NYSE Rule 13, which is also based on the
Regulation NMS definition of an ISO. The Exchange proposes a non-
substantive difference from the NYSE rule to specify in proposed
Rule 7.31P(e)(3)(A)(ii) that an ETP Holder is responsible for
routing the additional Limit Orders as ISO, as it is the
responsibility of the entering firm and not the Exchange to route
those additional ISOs. In addition, the Exchange will not include in
proposed Rule 7.31P(e)(3) the current rule text from Rule 7.31(e)(2)
that provides ``any inbound order received over NMS Linkage will
constitute an ISO'' because ``NMS Linkage'' is an obsolete
reference.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(3)(B) would set forth IOC ISOs in Pillar,
which would not function any differently in Pillar than they do on the
current trading platform.\64\ As proposed, an IOC ISO would be traded
with contra-side interest in the NYSE Arca Book up to its full size and
limit price and the quantity not so traded would be immediately and
automatically cancelled. The Exchange proposes in Pillar to separately
provide for IOC ISOs in proposed Rule 7.31P(e)(3) to distinguish this
functionality from a Day ISO. Because the Exchange proposes to add MTS
functionality for Limit IOC Orders, the Exchange proposes to specify in
proposed Rule 7.31P(e)(3)(C) that an IOC ISO may not be designated with
an MTS.
---------------------------------------------------------------------------

    \64\ As provided for in Commentary .01 to Rule 7.31, Users may
combine order types and modifiers, and IOC ISO functionality is
currently available by combining an ISO pursuant to Rule 7.31(e)(2)
with the IOC modifier set forth in Rule 7.31(b)(3). See also
Securities Exchange Act Release No. 54549 (Sept. 29, 2006), 71 FR
59179, 59181 (Oct. 6, 2006) (SR-NYSEArca-2006-59) (``2006 Arca
Filing'') (Order approving adoption of ISOs, including an ISO that
may be marked IOC).
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(3)(C) would set forth Day ISOs in Pillar.
Current Rule 7.31(e)(3) provides for ISO functionality within the
definition of a PNP Order. As set forth in the second sentence of this
rule, a PNP Order marked as an ISO may lock and cross and trade-through
Manual and Protected Quotations, but only if the User has complied with
Rule 7.37(e)(3)(C).\65\ Accordingly, a PNP ISO currently functions as
an ISO with a Day modifier.\66\ The Exchange proposes in Pillar to
refer to such orders as Day ISOs and to set forth the functionality for
Day ISOs together with other ISO functionality in proposed Rule
7.31P(e)(3). As proposed in Pillar, a Day ISO, if marketable on
arrival, would be immediately traded with contra-side interest in the
NYSE Arca Book up to its full size and limit price. Any untraded
quantity of a Day ISO would 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.\67\ Consistent with current Rule 7.37(e)(3)(C),
a Day ISO would be eligible to lock or cross a protected quotation only
on arrival.
---------------------------------------------------------------------------

    \65\ Rule 7.37(e)(3)(C) provides for an exception to locking or
crossing a protected quotation when the ETP Holder simultaneously
routes an ISO to execute against the full size of any locked or
crossed Protected Quotation, and therefore is an exception that is
available only on arrival, when the other ISOs are simultaneously
routed to Protected Quotations.
    \66\ See 2006 Arca Filing, supra note 64 at 59180 (describing
ISO PNP Orders, which post to the NYSE Arca book and may lock or
cross protected quotations).
    \67\ The proposed rule text is based on paragraph (c) governing
ISOs in NYSE Rule 13.
---------------------------------------------------------------------------

    Proposed Rule 7.31P(e)(3)(D) would set forth the ALO modifier
functionality for Day ISOs in Pillar, which would be defined as a ``Day
ISO ALO.'' As provided for in Commentary .01 to Rule 7.31, a PNP ISO
may be combined with an ALO Order, and if so designated, pursuant to
Commentary .02 to Rule 7.31, such order would reject on arrival if
marketable against orders on the

NYSE Arca Book. If not rejected, such order would function as a Day
ISO.\68\
---------------------------------------------------------------------------

    \68\ Commentary .02 to Rule 7.31 provides that if two order
types are combined that include instructions both for operation on
arrival (e.g., ALO Order) and for how the order operates while
resting on the Exchange's book (e.g., PNP ISO), the instructions
governing functionality while incoming will be operative upon
arrival and functionality governing how the order operates while
resting on the Exchange's book will govern any remaining balance of
the order that is not executed upon arrival.