[Federal Register Volume 88, Number 43 (Monday, March 6, 2023)]
[Notices]
[Pages 13820-13824]
[FR Doc No: 2023-04452]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. IC22-17-000]

Commission Information Collection Activities (FERC-549); Comment
Request; Extension

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of information collection and request for comments.

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SUMMARY: In compliance with the requirements of the Paperwork Reduction
Act of 1995, the Federal Energy Regulatory Commission (Commission or
FERC) is soliciting public comment on the currently approved
information collection, FERC-549 (NGPA Section 311 Transactions, NGA
Blanket Certificate Transactions, and Market-Based Rates for Storage)
which will be submitted to the Office of Management and Budget (OMB)
for a review of the information collection requirements.

DATES: Comments on the collection of information are due April 5, 2023.

ADDRESSES: Send written comments on FERC-549 to OMB through
www.reginfo.gov/public/do/PRAMain, Attention: Federal Energy Regulatory
Commission Desk Officer. Please

identify the OMB control number (1902-0086) in the subject line. Your
comments should be sent within 30 days of publication of this notice in
the Federal Register.
    Please submit copies of your comments (identified by Docket No.
IC22-17-000) to the Commission as noted below. Electronic filing
through https://www.ferc.gov is preferred.
     Electronic Filing: Documents must be filed in acceptable
native applications and print-to-PDF, but not in scanned or picture
format.
     For those unable to file electronically, comments may be
filed by USPS mail or by hand (including courier) delivery.
    [cir] Mail via U.S. Postal Service Only: Addressed to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street NE, Washington, DC 20426.
    [cir] Hand (Including Courier) Delivery: Deliver to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
    Instructions: OMB submissions must be formatted and filed in
accordance with submission guidelines at www.reginfo.gov/public/do/PRAMain; Using the search function under the ``Currently Under Review
field,'' select Federal Energy Regulatory Commission; click ``submit''
and select ``comment'' to the right of the subject collection.
    FERC submissions must be formatted and filed in accordance with
submission guidelines at: https://www.ferc.gov. For user assistance,
contact FERC Online Support by email at [email protected], or
by phone at:<PHONE_NUMBER> (toll-free).
    Docket: Users interested in receiving automatic notification of
activity in this docket or in viewing/downloading comments and
issuances in this docket may do so at https://www.ferc.gov.

FOR FURTHER INFORMATION CONTACT: Ellen Brown may be reached by email at
[email protected] and telephone at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:
    Title: NGPA Section 311 Transactions and NGA Blanket Certificate
Transactions.
    OMB Control No.: 1902-0086.
    Type of Request: Three-year extension of the FERC-549 information
collection requirements with a revision to account for the differences
between filings seeking initial approval and those disclosing a change
in circumstances.
    Abstract: FERC-549 is required to implement portions of the
following statutory provisions: (1) Section 311 of the Natural Gas
Policy Act (NGPA) (15 U.S.C. 3371); (2) Section 4(f) of the Natural Gas
Act (NGA) (15 U.S.C. 717c(f)); and (3) Section 7 of the NGA (15 U.S.C.
717f). The reporting requirements for implementing these provisions are
contained in 18 CFR part 284.

Transportation by Interstate Pipelines for Intrastate Pipelines and
Local Distribution Companies

    Under section 311(a)(1) of the NGPA and 18 CFR 284.101 and 284.102,
any interstate pipeline may transport natural gas without prior
Commission approval ``on behalf of'' an intrastate pipeline or a local
distribution company (LDC). The regulation at 18 CFR 284.102(d)
provides that the transportation is not ``on behalf of'' an intrastate
pipeline or an LDC unless one of three conditions is met:
    (1) The interstate pipeline or LDC has physical custody of and
transports the natural gas at some point;
    (2) The intrastate pipeline or LDC holds title to the natural gas
at some point, which may occur prior to, during, or after the time that
the gas is being transported by the interstate pipeline, for a purpose
related to its status and functions as a local distribution company; or
    (3) The gas is delivered at some point to a customer that either is
located in an LDC's service area or is physically able to receive
direct deliveries of gas from an intrastate pipeline, and the LDC or
intrastate pipeline certifies that it is on its behalf that the
interstate pipeline is providing transportation service.
    The certification requirement in the third condition described at
18 CFR 284.102(d)(3) is included in the burden table (below) as part of
the information collection activity labeled ``Transportation by
Pipelines.'' Before commencing service as described in paragraph
(d)(3), the interstate pipeline that is providing the transportation
must receive certification from the pertinent LDC or intrastate
pipeline consisting of a letter from the intrastate pipeline or LDC
authorizing the interstate pipeline to ship gas on its behalf, and
sufficient information to verify that the service qualifies under 18
CFR 284.102.
    For firm service and for release transactions, the regulation at 18
CFR 284.13(b)(1) requires the interstate pipeline to post with respect
to each contract, or revision of a contract for service, the following
information no later than the first nomination under a transaction:
    (i) The full legal name of the shipper, and identification number,
of the shipper receiving service under the contract, and the full legal
name, and identification number, of the releasing shipper if a capacity
release is involved or an indication that the pipeline is the seller of
transportation capacity;
    (ii) The contract number for the shipper receiving service under
the contract, and, in addition, for released transactions, the contract
number of the releasing shipper's contract;
    (iii) The rate charged under each contract;
    (iv) The maximum rate, and for capacity release transactions not
subject to a maximum rate, the maximum rate that would be applicable to
a comparable sale of pipeline services;
    (v) The duration of the contract;
    (vi) The receipt and delivery points and the zones or segments
covered by the contract, including the location name and code adopted
by the pipeline in conformance with 18 CFR 284.13(f) for each point,
zone or segment;
    (vii) The contract quantity or the volumetric quantity under a
volumetric release;
    (viii) Special terms and conditions applicable to a capacity
release transaction, including all aspects in which the contract
deviates from the pipeline's tariff, and special details pertaining to
a pipeline transportation contract, including whether the contract is a
negotiated rate contract, conditions applicable to a discounted
transportation contract, and all aspects in which the contract deviates
from the pipeline's tariff.
    (ix) Whether there is an affiliate relationship between the
pipeline and the shipper or between the releasing and replacement
shipper.
    (x) Whether a capacity release is a release to an asset manager as
defined in 18 CFR 284.8(h)(3) and the asset manager's obligation to
deliver gas to, or purchase gas from, the releasing shipper.
    (xi) Whether a capacity release is a release to a marketer
participating in a state-regulated retail access program as defined in
18 CFR 284(h)(4).
    For interruptible service, the regulation at 18 CFR 284.13(b)(2)
requires the interstate pipeline to post on a daily basis no later than
the first nomination for service under an interruptible agreement, the
following information:
    (i) The full legal name, and identification number, of the shipper
receiving service;
    (ii) The rate charged;
    (iii) The maximum rate;
    (iv) The receipt and delivery points between which the shipper is
entitled to transport gas at the rate charged, including the location
name and code adopted by the pipeline in conformance

with 18 CFR 284.13(f) for each point, zone, or segment;
    (v) The quantity of gas the shipper is entitled to transport;
    (vi) Special details pertaining to the agreement, including
conditions applicable to a discounted transportation contract and all
aspects in which the agreement deviates from the pipeline's tariff.
    (vii) Whether the shipper is affiliated with the pipeline.

Transportation by Intrastate Pipelines for Interstate Pipelines or LDCs
Served by an Interstate Pipeline

    Under section 311(a)(2) of the NGPA and 18 CFR 284.122 and 284.123,
any intrastate pipeline may, without prior Commission approval,
transport natural gas on behalf of any interstate pipeline or any LDC
served by an interstate pipeline. No rate charged for such
transportation may exceed a fair and equitable rate. The filing
requirements described below are included in the burden table (below)
as part of the information collection activity labeled ``Transportation
by Pipelines.''
    The regulation at 18 CFR 284.123(b) provides that intrastate gas
pipeline companies must file for Commission approval of rates for
services performed in the interstate transportation of gas. An
intrastate gas pipeline company may elect to use rates contained in one
of its then effective transportation rate schedules on file with an
appropriate state regulatory agency for intrastate service comparable
to the interstate service or file proposed rates and supporting
information showing the rates are cost based and are fair and
equitable. It is the Commission policy that each pipeline must file at
least every five years to ensure its rates are fair and equitable.
Depending on the business process used, either 60 or 150 days after the
application is filed, the rate is deemed to be fair and equitable
unless the Commission either extends the time for action, institutes a
proceeding or issues an order providing for rates it deems to be fair
and equitable.
    The regulation at 18 CFR 284.123(e) requires that within 30 days of
commencement of new service any intrastate pipeline engaging in the
transportation of gas in interstate commerce must file a statement that
includes the interstate rates and a description of how the pipeline
will engage in the transportation services, including operating
conditions. If an intrastate gas pipeline company changes its
operations or rates it must amend the statement on file with the
Commission. Such amendment is to be filed not later than 30 days after
commencement of the change in operations or change in rate election.

Initial Approval of Market-Based Rates for Storage

    Section 4(f) of the NGA authorizes the Commission to permit natural
gas storage service providers to charge market-based rates for storage,
subject to conditions and requirements set forth in the statute. The
Commission implements this authority under 18 CFR 284.501 through
284.505. An applicant may apply for market-based rates by filing a
request for a market-power determination that complies with the
following:
    (a) The applicant must set forth its specific request and
adequately demonstrate that it lacks market power in the market to be
served, and must include an executive summary of its statement of
position and a statement of material facts in addition to its complete
statement of position. The statement of material facts must include
citation to the supporting statements, exhibits, affidavits, and
prepared testimony.
    The regulation at 18 CFR 284.503 requires that an application to
charge market-based rate for storage services must include: (1) A
description of the geographic markets for storage services in which the
applicant seeks to establish that it lacks significant market power;
(2) The product market or markets for which the applicant seeks to
establish that it lacks significant market power; (3) A description of
the applicant's own facilities and services, and those of all parent,
subsidiary, or affiliated companies, in the relevant markets; (4) A
description of available alternatives in competition with the applicant
in the relevant markets and other competition constraining the
applicant's rates in those markets; (5) A description of potential
competition in the relevant markets; (6) A general system map and maps
by geographic markets; (7) The calculation of the market concentration
of the relevant markets using the Herfindahl-Hirschman Index; (8) A
description of any other factors that bear on the issue of whether the
applicant lacks significant market power in the relevant markets; (9)
The proposed testimony in support of the application and will serve as
the applicant's case-in-chief, if the Commission sets the application
for hearing.

Market Based-Rates--Notice of Change in Circumstances

    The Commission's regulations at 18 CFR 284.504 (b) provide that a
storage service provider granted the authority to charge market-based
rates is required to notify the Commission within 10 days of acquiring
knowledge of significant change occurring in its market power status.
The notification should include a detailed description of the new
facilities/services and their relationship to the storage service
provider. Significant changes include: (1) The storage provider
expanding its storage capacity beyond the amount authorized; (2) The
storage provider acquiring transportation facilities or additional
storage capacity; (3) An affiliate providing storage or transportation
services in the same market area; and (4) The storage provider or an
affiliate acquiring an interest in or is acquired by an interstate
pipeline.

Record Retention

    The Commission's regulations at 18 CFR 284.288(b) and 284.403(b),
respectively, impose a record retention requirement contained in a Code
of Conduct applicable to: (1) interstate pipelines that provide
unbundled natural gas sales service,\1\ and (2) persons who are not
interstate pipelines and whose sales of natural gas are authorized by
the ``automatic'' blanket marketing certificate granted by operation of
18 CFR 284.402.\2\ Any entity fitting one of those descriptions must
retain, for a period of five years, all data and information upon which
it billed the prices it charged for natural gas it sold pursuant to its
market based sales certificate or the prices it reported for use in
price indices.
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    \1\ As defined at 18 CFR 284.282(c), unbundled sales service is
gas sales service that is sold separately from transportation
service.
    \2\ The regulation at section 284.402(a) provides that any
person who is not an interstate pipeline is granted a blanket
certificate of public convenience and necessity, pursuant to section
7 of the NGA, that authorizes the certificate holder to make sales
for resale of natural gas at negotiated rates in interstate
commerce. Section 2(1) of the NGA (15 U.S.C. 717a(1)) defines a
``person'' to include an individual or corporation.
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    FERC uses these records to monitor the jurisdictional
transportation activities and unbundled sales activities of interstate
natural gas pipelines and blanket marketing certificate holders.
    The record retention period of five years is necessary due to the
importance of records related to any investigation of possible
wrongdoing and related to assuring compliance with the codes of conduct
and the integrity of the market. The requirement is necessary to ensure
consistency with 18 CFR 1c.1 (``Prohibition of Natural Gas Market
Manipulation'') and the generally applicable five-year statute of
limitations where the Commission seeks civil penalties for violations
of the anti-manipulation rules or other rules,

regulations, or orders to which the price data may be relevant.
    Failure to have this information available would mean the
Commission would have difficulty performing its regulatory functions to
monitor and evaluate transactions and operations of interstate
pipelines and blanket marketing certificate holders. The Code of
Conduct Record Retention burden \3\ associated with the FERC-549
includes both labor \4\ and storage costs. The labor costs are shown in
Table 1, below. The storage costs are shown below in Table 2.
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    \3\ 18 CFR 284.288(b) and 18 CFR 284.403(b).
    \4\ The $35.83 hourly cost figure comes from the average cost
(wages plus benefits) of a file clerk (Occupation Code 43-4071) as
posted on the BLS website (http://www.bls.gov/oes/current/naics2_22.htm).
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    Type of Respondents: Jurisdictional interstate and intrastate
natural gas pipelines.
    Estimate of Annual Burden: \5\ The Commission estimates the annual
burden and labor costs for the information collection as shown in the
following table.
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    \5\ The Commission defines burden as the total time, effort, or
financial resources expended by persons to generate, maintain,
retain, or disclose or provide information to or for a federal
agency. For further explanation of what is included in the
information collection burden, refer to 5 CFR 1320.3.

                              Table 1--FERC-549: Estimated Labor Costs for NGPA Section 311 Transactions, NGA Blanket Certificate Transaction, and Record Retention
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                                                      Annual  number
                                          Number of    of  responses      Total number  of      Average burden  hrs. & cost  ($)    Total annual  burden hours  & total
                                         respondents        per              responses                  \6\ per response                     annual cost  ($)            Cost per respondent ($)
                                                        respondent
                                                 (A)             (B)                      (C)  (D)...............................  (E).................................                      (F)
                                         ...........  ..............    (Column A x Column B)  ..................................  (Column C x Column D)...............    (Column E / Column A)
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Transportation by Pipelines............           43               2                       86  50 hrs.; $4,550...................  4,300 hrs.; $391,300................                   $9,100
MBR--Initial Approval..................            1               1                        1  350 hrs.; $31,850.................  350 hrs.; $31,850...................                   31,850
MBR--Change in Circumstances \7\.......            5               1                        5  75 hrs.; $6,825...................  375 hrs.; $6,825....................                    1,365
Record Retention.......................          299               1                      299  1 hr.; $38.71.....................  299 hrs.; $11,574.29................                    38.71
                                        --------------------------------------------------------------------------------------------------------------------------------------------------------
    Totals.............................          348  ..............                      391  ..................................  5,324 hrs.; $441,549................  .......................
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    Storage Cost: \8\ In addition to the labor costs for record
retention, non-labor costs of record retention and storage are
estimated as follows:
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    \6\ For the information collection activities labeled
``Transportation by Pipelines,'' ``MBR--Initial Approval,'' and
``MBR--Change in Circumstances,'' Commission staff estimates that
respondents' hourly labor cost is approximated by the Commission's
average hourly cost (for wages and benefits) for 2022, or $91.00 per
hour.
    For the information collection activity labeled ``Record
Retention,'' Commission staff estimates that respondents' hourly
labor cost is $38.71 (for wages and benefits), based on $27.24 (the
mean hourly wage for an information and record clerk, Occupation
Code 43-4000 for Utilities as posted at http://www.bls.gov/oes/current/naics2_22.htm), plus $11.47 (the average hourly cost for
benefits for private industry, as posted at https://www.bls.gov/news.release/pdf/ecec.pdf.
    \7\ This new row was added to account for the differences
between initial MBR filings and filings pertaining to a change in
circumstances.
    \8\ Each of the 299 entities is assumed to have both paper and
electronic record retention. Internal analysis assumes 50 percent
paper storage and 50 percent electronic storage.
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     Paper storage costs (using an estimate of 12.5 cubic feet
x $6.46 per cubic foot): $80.75 per respondent annually. Total annual
paper storage cost to industry ($80.75 x 299 respondents): $24,144.25.
This estimate assumes that a respondent stores 12.5 cubic feet of
paper. We expect that this estimate should trend downward over time as
more companies move away from paper storage and rely more heavily on
electronic storage.
     Electronic storage costs: $3.18 per respondent annually.
Total annual electronic storage cost to industry ($3.18 x 299
respondents): $950.82. This calculation estimates storage of
approximately 200 MB per year with a cost of $3.18 per respondent.

                             Table 2--Storage Costs Associated With Record Retention
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                                                    Total number  of       Cost per         Total annual cost
                                                       responses           response             (rounded)
                                                                 (A)                (B)                      (C)
                                                   .................  .................    (Column A x Column B)
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Paper Storage....................................                299             $80.75                  $24,144
Electronic Storage...............................                299               3.18                      951
                                                  --------------------------------------------------------------
    Total Storage Burden.........................  .................  .................                   25,095
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    Comments are invited on: (1) whether the collection of information
is necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden and
cost of the collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility and clarity of the information collection; and (4) ways to
minimize the burden of the collection of information on those who are
to respond, including the use of automated collection techniques or
other forms of information technology.

    Dated: February 27, 2023.
Kimberly D. Bose,
Secretary.
[FR Doc. 2023-04452 Filed 3-3-23; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 60 (Wednesday, March 31, 2021)]
[Notices]
[Pages 16806-16812]
[FR Doc No: 2021-06561]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91407; File No. SR-MRX-2021-01]

Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Various
Rules in Options 3

March 25, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 12, 2021, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I, II, and III, below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 purpose of the proposed rule change is to amend various rules
in Options 3.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend various rules
in Options 3. The proposed changes consist of conforming existing rules
to current System technology, amending rule text to add greater detail
on how certain Exchange functionality operate today. Furthermore, the
proposed changes are intended to harmonize the Exchange's rules where
appropriate with the rules of the Exchange's affiliated options
markets, including by using consistent language to describe identical
functionality.\3\ As such, no System changes to existing functionality
are being made pursuant to this proposal. Rather, this proposal is
designed to reduce any potential investor confusion as to the features
and applicability of certain functionality presently available on the
Exchange. These changes are described in detail below, and include
amending Exchange rules governing: (1) The Block Order Mechanism
(``Block''),\4\ (2) the Facilitation Mechanism (``Facilitation''),\5\
(3) the Solicited Order Mechanism (``Solicitation''),\6\ (4) the Price
Improvement Mechanism (``PIM''),\7\ (5) Trade Value Allowance
(``TVA''),\8\ and (6) Anti-Internalization.\9\
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    \3\ The Exchange's affiliate, Nasdaq ISE, LLC (``ISE'') recently
filed a substantially similar rule change as part of this exercise.
See Securities Exchange Act Release No. 91223 (February 26, 2021)
(SR-ISE-2021-01).
    \4\ See Options 3, Section 11(a).
    \5\ See Options 3, Section 11(b).
    \6\ See Options 3, Section 11(d).
    \7\ See Options 3, Section 13.
    \8\ See Supplementary Material .03 to Options 3, Section 14.
    \9\ See Options 3, Section 15(a)(3)(A).
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Universal Changes
    In September 2019, the Exchange amended its regular allocation rule
in Options 7, Section 10 (Priority of Quotes and Orders) to make non-
substantive changes, among other changes, to replace references to
Professional interest with non-Priority Customer interest.\10\ The
Exchange now proposes to make similar changes to replace all instances
of ``Professional'' interest with ``non-Priority Customer'' interest
throughout its auction allocation rules in Options 3, Section 11 and
Section 13 to align with the changes made in SR-MRX-2019-17.\11\ While
the term ``Professional Orders'' is defined within Options 1, Section
1(a)(38) as an order that is for the account of a person or entity that
is not a Priority Customer, the Exchange believes that using the term
``non-Priority Customer'' is more clear in describing the types of
market participant to which the allocation applies, and also reduces
confusion regarding any reference to Professional Orders or
Professional Customer orders.
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    \10\ See Securities Exchange Act Release No. 86949 (September
12, 2019), 84 FR 49151 (September 18, 2019) (SR-MRX-2019-17).
    \11\ Specifically in Options 3, Section 11, the Exchange will
amend current subsections (a)(2)(ii), (b)(3)(i)-(iii) (renumbered to
(b)(4)(i)-(iii) under this proposal), (c)(7)(A)-(C), (d)(2)(iii)
(renumbered to (d)(3)(iii) under this proposal), and (e)(4)(D). In
Options 3, Section 13, the Exchange will amend current subsections
(d)(1)-(3) and (e)(5)(i)-(iii).
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    In addition, the Exchange proposes to make universal changes in its
Facilitation and Solicitation rules \12\ to clearly delineate between
orders and

Responses \13\ of the same capacity. For example, where the existing
rule text currently states ``Priority Customer bids (offers),'' the
Exchange proposes instead to state ``Priority Customer Orders and
Priority Customer Responses to buy (sell).'' The Exchange notes that
this is merely a non-substantive change as auction orders and Responses
of the same capacity do not get treated differently for allocation
purposes today. The rules for complex Facilitation and Solicitation
already distinguish between orders and Responses, so the Exchange is
simply amending those complex rules to clearly state how, for example,
Priority Customer Complex Orders and Priority Customer Responses get
allocated today \14\ With the proposed changes, the Exchange seeks to
include a similar level of detail within its simple and complex
Facilitation and Solicitation rules in order to bring transparency
around how allocation takes place in those auction mechanisms today.
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    \12\ Specifically in Options 3, Section 11, subsections
(b)(3)(i)-(iii) (renumbered to (b)(4)(i)-(iii)), and (d)(2)(i) and
(iii) (renumbered to (d)(3)(i) and (iii)) will be updated.
    \13\ A ``Response'' is an electronic message that is sent by
Members in response to a broadcast message. See Options 3, Section
11.
    \14\ See Options 3, Section 11(c)(7) and (e)(4).
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Block Order Mechanism
    The Exchange proposes minor changes to the current descriptions of
the Block execution and allocation process in Options 3, Section 11(a).
As discussed below, the proposed Block changes are non-substantive in
nature, and are intended to harmonize with the Block rule on its
affiliated market, BX Options (``BX'') in order to ensure rule
consistency between the Exchange and its affiliate offering identical
functionality.
    First, the Exchange proposes to add ``up to the size of the block
order'' at the end of subsection (a)(2)(i). As amended, the rule will
provide that bids (offers) on the Exchange at the time the block order
is time the block order is executed that are priced higher (lower) than
the block execution price, as well as Responses that are priced higher
(lower) than the block execution price, will be executed in full at the
block execution price up to the size of the block order. The Exchange
is making this non-substantive change to align with BX's Block
rule,\15\ which will ensure rule consistency for identical
functionality across affiliated markets. The language states that
better priced interest gets executed in full only if there is
sufficient size to execute against such interest, which is how block
orders are executed and priced on the Exchange and BX today.
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    \15\ See BX Options 3, Section 11(a)(2)(A).
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    Second, the Exchange proposes a non-substantive change in the first
sentence of subsection (a)(2)(ii) to replace ``first and in time
priority'' with ``first in price time priority.'' As amended, the rule
will provide that at the block execution price, Priority Customer
Orders and Priority Customer Responses will be executed first in price
time priority. This is not a change to the current Block allocation
methodology, but rather a non-substantive change for better
readability, and to align with BX's Block rule \16\ in order to ensure
rule consistency for identical functionality across affiliated markets.
Block orders will continue to trade at a single execution price that
allows the maximum number of contracts of the block order to be
executed against both the Responses entered to trade against the order
and unrelated interest on the Exchange's order book.
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    \16\ See BX Options 3, Section 11(a)(2)(B).
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Example 1
Block order is entered to buy 50 contracts @1.50

    The following Responses are received:

Priority Customer Response 1 to sell 40 contracts @1.40
Priority Customer Response 2 to sell 10 contracts @1.40
Priority Customer Response 3 to sell 10 contracts @1.39

    The block execution price would be $1.40 (i.e., the price at which
the maximum number of contracts could be executed) and would be
executed as follows:
Block order trades 10 with Priority Customer Response 3 @1.40
Block order trades 40 with Priority Customer Response 1 @1.40

    As shown above, Priority Customer Response 3 would be executed in
full since it is priced better than the block execution price and there
is sufficient size to execute Response 3 against the block order, while
Priority Customer Responses 1 and 2, which are priced at the block
execution price, would participate in price time priority--i.e., the
remaining 40 contracts would go to Response 1, which was received
before Response 2.
Facilitation Mechanism
    The Exchange proposes a number of changes to its Facilitation rule,
none of which will change the current operation of this technology
offering. Many of the proposed changes are intended to align the simple
Facilitation rule in Options 3, Section 11(b) with the complex
Facilitation rule in Options 3, Section 11(c) where relevant. In May
2019, the Exchange received SEC approval to adopt complex order
functionality, which included complex auction mechanisms like complex
Facilitation.\17\ As adopted, the complex auction rules contain a more
robust description of the operation and applicability of this
functionality compared to the existing simple auction rules.
Accordingly, the Exchange seeks to make aligning changes and update its
simple auction mechanism rules to similarly provide the level of detail
that now exists in its complex auction mechanism rules. The Exchange
also proposes to more accurately describe how orders will be allocated
in Facilitation's ``auto-match'' functionality.
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release No. 85935 (May 24,
2019), 84 FR 25332 (May 31, 2019) (SR-MRX-2019-08) (``Complex Order
Filing''). As discussed later in this filing, the Complex Order
Filing also adopted complex Solicitation and PIM, and the Exchange
is proposing to align the simple Solicitation and PIM rules with the
complex rules where possible.
---------------------------------------------------------------------------

    In Options 3, Section 11(b), the Exchange proposes to add new
subsection (b)(1),\18\ which will provide that Orders must be entered
into the Facilitation Mechanism at a price that is (A) equal to or
better than the NBBO on the same side of the market as the agency order
unless there is a Priority Customer order on the same side Exchange
best bid or offer, in which case the order must be entered at an
improved price; and (B) equal to or better than the ABBO \19\ on the
opposite side. Orders that do not meet these requirements are not
eligible for the Facilitation Mechanism and will be rejected. The
Exchange is not proposing any other changes to the current entry
requirements for Facilitation. The new subsection (b)(1) would simply
provide additional detail about simple Facilitation's existing entry
checks, and align to the level of detail currently within the complex
Facilitation rule regarding entry checks.\20\
---------------------------------------------------------------------------

    \18\ As a result, current subsections (b)(1)-(3) will be
renumbered as (b)(2)-(4). The Exchange will also renumber current
subsection (b)(3)(iv) as subsection (b)(5).
    \19\ The term ``Away Best Bid or Offer'' or ``ABBO'' means the
displayed National Best Bid or Offer not including the Exchange's
Best Bid or Offer. See Options 1, Section 1(a)(4).
    \20\ See Options 3, Section 11(c)(1) and (c)(2). Complex
Facilitation refers to the Exchange's best bid or offer instead of
the NBBO or ABBO. There is no NBBO for complex orders as complex
orders may be executed without consideration of any prices that
might be available on other exchanges trading the same options
contracts. See Options 3, Section 14(d). Additionally, executions of
legs of complex orders are exceptions to the prohibition on trade-
throughs. See ISE Options 5, Section 2(b)(7) (incorporated by
reference into the Exchange's Rulebook).

---------------------------------------------------------------------------

Example 2
    Assume the following market:

Exchange BBO: 1 x 2 (also NBBO)
CBOE: 0.75. x 2.25 (next best exchange quote)
Facilitation order is entered to buy 50 contracts @2.05

    No Responses are received.
    The Facilitation order executes with resting 50 lot quote @2. In
this instance, the Facilitation order is able to begin crossed with the
contra side Exchange BBO because in execution, the resting 50 lot quote
@2 is able to provide price improvement to the facilitation order.
    In renumbered subsection (b)(3), the Exchange proposes to replace
the words ``must not exceed'' with ``will only be considered up to'' in
order to align with identical language in the complex Facilitation
rule.\21\ This change more accurately describes that the System will
cap Responses to the size of the auction for purposes of allocation
methodology.
---------------------------------------------------------------------------

    \21\ See Options 3, Section 11(c)(6).
---------------------------------------------------------------------------

    In renumbered subsections (b)(4)(ii) and (b)(4)(iii), the Exchange
proposes to amend the rule to provide that the facilitating Member will
be allocated up to forty percent (40%) (or such lower percentage
requested by the Member) of the original size of the facilitation
order. If the Member requests a lower allocation percentage, the
contra-side order would receive an allocation consistent with the
percentage requested by the Member. Regardless of the Member's request,
the contra-side order would still be responsible for executing up to
the full size of the agency order if there is not enough interest to
execute the agency order at a particular price. Similar language
indicating that the Member may request a lower allocation percentage
than 40% is currently included in the complex Facilitation rule, which
operate in the same way as the simple Facilitation in this manner.\22\
For greater consistency between its simple and complex Facilitation
rules, the Exchange also proposes to make aligning, non-substantive
changes in the complex Facilitation rule to provide that the Member
will ``be allocated up to'' forty percent. The current complex
Facilitation language provides that the Member will ``execute at least
forty percent'' or that the Member will ``be allocated at least forty
percent.'' \23\ The non-substantive language proposed for complex
Facilitation will therefore serve to harmonize the complex rule with
the amended simple rule.
---------------------------------------------------------------------------

    \22\ See Options 3, Section 11(c)(7)(B) and (C). Other options
exchanges such as BX provide similar functionality that allows
members using an auction mechanism to configure allocation priority.
See, e.g., BX Options 3, Section 13, which provides a similar
feature for the BX Options Price Improvement Auction (``PRISM'')
called ``Surrender.'' ISE also recently amended its Facilitation
rule in ISE Options 3, Section 11(b), which governs identical
functionality on ISE as the Exchange's Facilitation Mechanism, to
make the same change as proposed herein. See supra note 3.
    \23\ Id.
---------------------------------------------------------------------------

    The Exchange also proposes to more accurately describe
Facilitation's auto-match functionality, which provides an enhanced
price improvement opportunity for the agency order by permitting the
contra-side order to further participate in the cross by auto-matching
the price and size of competing interest providing price improvement
from other market participants. The Exchange adopted Facilitation (and
its auto-match functionality) as part of its application to be
registered as a national securities exchange.\24\ In approving
Facilitation, the Commission noted that it was largely based on similar
functionality offered by ISE.\25\ The rule currently provides that upon
entry of an order into the Facilitation Mechanism, the facilitating
Electronic Access Member can elect to automatically match the price and
size of orders, quotes and responses received during the exposure
period up to a specified limit price or without specifying a limit
price. In this case, the facilitating Electronic Access Member will be
allocated its full size at each price point, or at each price point
within its limit price is a limit is specified, until a price point is
reached where the balance of the order can be fully executed.\26\ The
Exchange proposes to state that if a Member elects to auto-match, the
facilitating Electronic Access Member will be allocated the aggregate
size of all competing quotes, orders, and Responses (instead of ``its
full size'') at each price point, or at each price point up to the
specified limit price (instead of ``within its limit price'') if a
limit is specified, until a price point is reached where the balance of
the order can be fully executed. The Exchange believes that the
modified language more accurately explains how the functionality works
today, and better aligns with how this feature is described in the
Auto-Match Filing.\27\ For greater consistency within its Rulebook, the
Exchange will also make the same changes in the complex Facilitation
auto-match rule in Options 3, Section 11(c)(7)(C).
---------------------------------------------------------------------------

    \24\ See Securities Exchange Act Release No. 76998 (January 29,
2016), 81 FR 6066 (February 4, 2016) (File No. 10-221).
    \25\ ISE adopted its auto-match functionality in 2010. See
Securities Exchange Act Release No. 62644 (August 4, 2010), 75 FR
48395 (August 10, 2010) (SR-ISE-2010-61) (``Auto-Match Filing''). As
discussed later in this filing, the Auto-Match Filing also
introduced the auto-match feature on ISE's PIM, which is
functionally identical to the Exchange's PIM. As such, the Exchange
is proposing to make similar changes in PIM's auto-match rule as
proposed for Facilitation's auto-match rule.
    \26\ See Options 3, Section 11(b)(3)(iii) (renumbered to Section
11(b)(4)(iii) under this proposal).
    \27\ The Auto-Match Filing describes the auto-match feature as
allowing the initiating member to submit a contra-side order that
will automatically match the price and size set forth by the
competing interest from other market participants (i.e., auction
responses, quotes, and orders) at any price level during the auction
or up to a specified limit price if a limit is specified.
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to add at the end of Supplementary
Material .01 to Options 3, Section 11 that any solicited contra orders
entered by Members into the Facilitation Mechanism to trade against
Agency Orders may not be for the account of an Exchange Market Maker
that is assigned to the options class.\28\ This language was included
in the approval order to SR-ISE-2006-78 to allow solicited transactions
in ISE's Facilitation Mechanism. As discussed above, the Exchange's
Facilitation Mechanism is functionally identical to ISE's Facilitation
Mechanism. As such, the Exchange seeks to import the same prohibition
into the Exchange's rule text for greater transparency.
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 55557 (March 29,
2007), 72 FR 16838 (April 5, 2007) (SR-ISE-2006-78) (Order Granting
Approval of Proposed Rule Change Relating to Facilitation
Mechanism).
---------------------------------------------------------------------------

Solicited Order Mechanism
    The Exchange proposes the below changes to its Solicitation rule,
none of which will change the current operation of this technology
offering.
    In Options 3, Section 11(d), the Exchange proposes to add new
subsection (d)(1),\29\ which will provide that orders must be must be
entered into the Solicited Order Mechanism at a price that is equal to
or better than the NBBO on both sides of the market; provided that, if
there is a Priority Customer order on the Exchange best bid or offer,
the order must be entered at an improved price. Orders that do not meet
these requirements are not eligible for the Solicited Order Mechanism
and will be rejected. The Exchange is not proposing any other changes
to the current entry requirements for Solicitation. The new subsection
(d)(1) would simply provide additional detail about simple
Solicitation's existing entry checks, and align to the level of

detail currently within the complex Solicitation rule regarding entry
checks.\30\
---------------------------------------------------------------------------

    \29\ As a result, current paragraphs (d)(1)-(3) will be
renumbered accordingly. The Exchange will also renumber current
paragraph (d)(2)(iv) as paragraph (d)(4).
    \30\ See Options 3, Section 11(e)(1). Complex Solicitation
refers to the Exchange's best bid or offer instead of the NBBO. As
noted above, there is no NBBO for complex orders, and executions of
legs of complex orders are exceptions to the prohibition of trade-
throughs. See supra note 20.
---------------------------------------------------------------------------

Example 3
    Assume the following market:

Exchange BBO: 1 x 2 (also NBBO)
CBOE: 0.75. x 2.25 (next best exchange quote)
Solicitation order is entered to buy 500 contracts @2.05

    The Solicitation order is rejected upon entry for being crossed
with the NBBO on the contra side. In contrast to Example 2 above for
Facilitation, the Solicitation order in this instance is not able to
begin crossed with the contra side Exchange BBO because of the all-or-
none contingency of the Solicitation order.\31\
---------------------------------------------------------------------------

    \31\ See Options 3, Section 11(d) (requiring that each
Solicitation order be designated as all-or-none).
---------------------------------------------------------------------------

Price Improvement Mechanism
    The Exchange proposes a number of changes to the PIM rule, none of
which will change the current operation of this technology offering. As
noted above, many of these modifications are similar to the changes
proposed for Facilitation.
    The Exchange proposes in Options 3, Section 13(b)(2) to delete
``national best bid or offer'' as NBBO is already defined in subsection
(b)(1) above. The Exchange proposes in subsection (c)(2) to provide
that responses in the PIM (i.e., ``Improvement Orders'') will only be
considered up to the size of the Agency Order. The proposed amendment
will specify that the System will cap the size of the Improvement
Orders to the auction size for purposes of the allocation methodology.
This is similar to the change proposed above for simple Facilitation,
and also aligns to identical language in the complex PIM rule.\32\ The
Exchange also proposes in subsection (c)(3) to amend the internal
numbering from (1) and (2) to (i) and (ii) for greater numbering
consistency within the PIM rule.
---------------------------------------------------------------------------

    \32\ See Options 3, Section 13(e)(4)(i).
---------------------------------------------------------------------------

    In subsection (d)(3), which describes how allocation and execution
takes place in simple PIM, the Exchange proposes that the Counter-Side
Order will be allocated the greater of one contract or 40% (or such
lower percentage requested by the Member) of the initial size of the
Agency Order. Similar to Facilitation as discussed above, the System
currently permits Members entering orders into PIM to elect to receive
a percentage allocation that is less than 40%, although the current
rule is silent in this regard. If the Member requests a lower
allocation percentage, the Counter-Side Order would receive an
allocation consistent with the percentage requested by the Member.
Regardless of the Member's request, the Counter-Side Order would still
be responsible for executing up to the full size of the agency order if
there is not enough interest to execute the agency order at a
particular price. Complex PIM, which shares the same allocation feature
as simple PIM, already has this concept within the rule, so the
proposed changes will align the simple PIM rule with the complex PIM
rule.\33\
---------------------------------------------------------------------------

    \33\ See Options 3, Section 13(e)(5)(iii). As noted above, BX
has a similar feature called Surrender for its PRISM auction. See
supra note 22.
---------------------------------------------------------------------------

    The Exchange also proposes to more accurately describe PIM's auto-
match functionality in a similar manner as Facilitation's auto-match
functionality, as discussed above. In this instance, the Exchange
proposes to amend the third sentence of subsection (d)(3) to provide:
``If a Member elects to auto-match, the Counter-Side Order will be
allocated the aggregate size of all competing quotes, orders, and
Responses at each price point up to the specified limit price if a
limit is specified, until a price point is reached where the balance of
the order can be fully executed.'' Similar to the proposed amendments
to simple Facilitation's auto-match, the Exchange believes that the
proposed language for simple PIM's auto-match more clearly explains how
the functionality works today, and better aligns with how this feature
is described in the Auto-Match Filing. For greater consistency within
its Rulebook, the Exchange will also make the same changes in the
complex PIM auto-match rule in Options 3, Section 13(e)(5)(iii).
    The Exchange further proposes technical amendments in subsection
(d)(3) to replace all instances of ``Counter-Side order'' as ``Counter-
Side Order'' to use the correct terminology. Lastly, the Exchange
proposes to provide in Supplementary Material .04 to Options 3, Section
13 that PIMs will not queue or overlap in any manner, except as
described in Options 3, Section 11(f) and (g). Sections 11(f) and (g)
set forth the governing provisions for concurrent complex auctions and
concurrent complex and simple auctions. The proposed changes to add in
the cross-cites to Sections 11(f) and (g) will make clear that two
simple or two complex PIM auctions are not permitted to run
concurrently, but that a simple PIM auction may run concurrently with a
complex PIM auction.
Trade Value Allowance
    The Exchange proposes a non-substantive change to amend the TVA
rule in Supplementary Material .03 to Options 3, Section 14 to add a
cross-cite to the complex PIM rule in Options 3, Section 13, which was
inadvertently omitted when the Exchange relocated the complex auctions
rules in a prior filing.\34\ In SR-MRX-2019-15, the original cross-cite
within the TVA rule was updated from Supplementary Material .08 to Rule
722 to Rule 716 (now Options 3, Section 11). Supplementary Material .08
to Rule 722 set forth the complex auction mechanism rules, namely
complex Facilitation, Solicitation, and PIM. SR-MRX-2019-15 relocated
complex Facilitation and Solicitation to Rule 716 (now Options 3,
Section 11), but moved complex PIM to Rule 723 (now Options 3, Section
13). As such, the original cross-cite in the TVA rule should have been
updated to include complex PIM in Rule 723 but was inadvertently
omitted.
---------------------------------------------------------------------------

    \34\ See Securities Exchange Release No. 86424 (July 22, 2019),
84 FR 36134 (July 26, 2019) (SR-MRX-2019-15).
---------------------------------------------------------------------------

    TVA is a functionality that allows complex orders to trade outside
of their expected notional trade amount by a specified amount. The
amount of TVA permitted may be determined by the Member, or a default
value determined by the Exchange and announced to Members.\35\ The TVA
rule currently provides, however, that any amount of TVA is permitted
in auction mechanisms pursuant to Options 3, Section 11 when auction
orders do not trade solely with their contra-side order. The Exchange
now proposes to add a cross-cite to Options 3, Section 13 to specify
that TVA also applies to complex PIM auctions in this manner. The
Exchange will also provide that TVA applies to ``complex'' mechanisms
in the cited rules. These changes will align the rule text to how TVA
is presently implemented in the System. The Exchange notes that its
complex auction mechanisms provide an opportunity for market
participants to respond with better-priced interest that could execute
against an Agency Order. As such, the Exchange believes that it is
appropriate to ensure that paired orders entered into complex
Facilitation, Solicitation and PIM that are broken up due to better-
priced interest are actually

executed against such better-priced interest, and are not restricted
from trading due to TVA settings of one or more Members.
---------------------------------------------------------------------------

    \35\ See Supplementary Material .03 to Options 3, Section 14.
---------------------------------------------------------------------------

Anti-Internalization
    The Exchange proposes to amend its anti-internalization (``AIQ'')
rule in Options 3, Section 15(a)(3)(A). Specifically, the Exchange
proposes to add that AIQ does not apply during the opening process or
reopening process following a trading halt pursuant to Options 3,
Section 8 to provide more specificity on how this functionality
currently operates. The Exchange notes that the same procedures used
during the opening process are used to reopen an option series after a
trading halt, and therefore proposes to specify that AIQ will not apply
during an Opening Process (i.e., the opening and halt reopening
process) in addition to an auction, as currently within the Rule. AIQ
is unnecessary during an Opening Process due to the high level of
control that Market Makers exercise over their quotes during this
process. The proposed changes will align the Exchange's AIQ rule with
BX's AIQ rule, which sets forth materially identical functionality.\36\
---------------------------------------------------------------------------

    \36\ See BX Options 3, Section 15(c)(1).
---------------------------------------------------------------------------

Technical Amendments
    The Exchange proposes two technical changes in the Supplementary
Material to Options 3, Section 11. First, the Exchange proposes in
Supplementary Material .03 to update an incorrect cross-cite from
Options 3, Section 22(d) to Section 22(b), which limits principal
transactions. Second, the Exchange proposes in Supplementary Material
.05 to update the reference to ``Block Mechanism'' to ``Block Order
Mechanism'' to use the correct terminology.
    Lastly, the Exchange proposes some harmonizing changes throughout
its Rulebook to align with the rule numbering and titles with that of
its affiliates. Specifically, the Exchange proposes to add a new
Options 4B and reserve it in the Rulebook in order to harmonize its
Options Rule numbering with that of its affiliates, Nasdaq GEMX, LLC
and Nasdaq PHLX LLC. The Exchange also proposes to retitle General 4
(currently titled ``Regulation'') to ``Registration Requirements'' to
harmonize its General Rule titles with that of its affiliates The
Nasdaq Stock Market LLC and Nasdaq BX, Inc.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\37\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\38\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78f(b).
    \38\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal is consistent with the
protection of investors and public interest as all of the proposed
changes will increase transparency around how various existing Exchange
mechanisms work today. As such, no System changes to existing
functionality are being made pursuant to this proposal. Rather, this
proposal is designed to reduce any potential investor confusion as to
the features and applicability of certain functionality presently
available on the Exchange.
    Furthermore, the proposed changes seek to provide greater
harmonization between the rules of the Exchange and its affiliates,\39\
and between the Exchange's own simple and complex auction rules.\40\
The Exchange believes that these harmonizing changes would result in
greater uniformity, and ultimately less burdensome and more efficient
regulatory compliance by market participants. As such, the proposed
rule change would foster cooperation and coordination with persons
engaged in facilitating transactions in securities and would remove
impediments to and perfect the mechanism of a free and open market and
a national market system. The Exchange also believes that more
consistent rules will increase the understanding of the Exchange's
operations for Members that are also members on the Exchange's
affiliates, thereby contributing to the protection of investors and the
public interest.
---------------------------------------------------------------------------

    \39\ See supra note 3.
    \40\ As noted above, the Exchange seeks to add granularity to
its simple auction rules to align with the level of detail that
currently exists within its complex auction rules. See supra note
17.
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposed universal
changes to replace all instances of Professional interest with non-
Priority Customer interest throughout the Exchange's auction allocation
rules will add greater consistency within the Exchange's rules. As
discussed above, the Exchange previously made the same modifications
within its standard allocation rule in Options 7, Section 10, so the
proposed changes will promote more consistent terminology in the rules
and make them easier for market participants to navigate and
comprehend. The Exchange also believes that using the term ``non-
Priority Customer'' reduces any potential confusion regarding any
reference to Professional Orders or Professional Customer orders. In
addition, the Exchange believes that clearly delineating between orders
and Reponses of the same capacity in the Facilitation and Solicitation
rules will bring clarity and transparency around how allocation takes
place in those auction mechanisms. The complex Facilitation and
Solicitation rules currently differentiate between orders and
Responses,\41\ so the Exchange is aligning the simple rule to the level
of granularity already found in the complex rule while also specifying
the capacity of such order or Response within the simple and complex
rules. As noted above, the Exchange is not changing the current
allocation methodology, and auction orders and Responses of the same
capacity do not get treated differently for allocation purposes today.
---------------------------------------------------------------------------

    \41\ See supra note 14.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to the Block rule
are consistent with the protection of investors and the public interest
as the modifications will more accurately reflect the handling of
auctions in Block, specifically as it relates to execution and
allocation. The proposed changes will specify that better priced
interest entered into Block gets executed in full only if there is
sufficient size to execute against such interest, and that Priority
Customer interest gets executed first in price time priority. This
specificity will be helpful to market participants utilizing Block and
provide greater certainty as to how their Block orders will be executed
and allocated. The Exchange also believes that the proposed changes
will continue to ensure a fair and orderly market by maintaining and
protecting the priority of Priority Customer orders, while still
affording the opportunity for all market participants to seek liquidity
and potential price improvement during each Block auction commenced on
the Exchange. As noted above, the Exchange is not proposing any changes
to the current execution or allocation methodology but believes that
the changes will promote consistency with the rulebook of its
affiliated exchange BX, which offers identical functionality.\42\
---------------------------------------------------------------------------

    \42\ See supra notes 15-16, and accompanying text.
---------------------------------------------------------------------------

    Similarly, the Exchange believes that specifying the entry checks
for simple Facilitation and Solicitation is consistent with the
protection of

investors and the public interest by providing greater consistency to
the level of granularity currently within the complex Facilitation and
Solicitation entry checks.\43\ The Exchange is not amending the current
entry checks for simple Facilitation and Solicitation; rather, the
proposed changes are simply intended to add a more robust description
of current System behavior in the Exchange's rules. The Exchange also
believes it is appropriate to require that the Facilitation order be
entered at an improved price if there is a Priority Customer order on
the same side Exchange best bid or offer as the agency order. The
Exchange believes this will ensure a fair and orderly market by
maintaining priority of orders and quotes and protecting Priority
Customer orders, while still affording the opportunity to seek
liquidity and for potential price improvement during each Facilitation
auction commenced on the Exchange. For the same reasons, the Exchange
believes that it is appropriate to require that the Solicitation order
be entered at an improved price if there is a Priority Customer order
on the Exchange best bid or offer.
---------------------------------------------------------------------------

    \43\ See supra notes 20 and 30, and accompanying text.
---------------------------------------------------------------------------

    The proposed changes to replace ``must not exceed'' with ``will
only be considered up to'' in the simple Facilitation and PIM rules are
intended to more accurately describe that the System will cap the size
of Responses to the size of the agency order for purposes of
allocation. The Exchange is not amending current System behavior;
rather, the modifications will more clearly articulate the handling of
Responses by the System. In addition, the proposed changes will serve
to harmonize the simple and complex auction rules, thereby resulting in
greater uniformity and ultimately less burdensome and more efficient
regulatory compliance by market participants.\44\
---------------------------------------------------------------------------

    \44\ See supra notes 21 and 32.
---------------------------------------------------------------------------

    The Exchange believes that its proposal to specify in the simple
Facilitation and PIM rules that an initiating Member may elect to
receive a percentage allocation lower than 40% is consistent with the
Act. This feature provides an initiating Member that submits an order
into Facilitation or PIM with the flexibility to configure its
allocation percentage up to the full 40% entitlement. The Exchange
notes that regardless of the Member's instruction, the contra-side
order would still be responsible for executing up to the full size of
the agency order if there is not enough interest to execute the agency
order at a particular price. The Exchange continues to believe that the
40% allocation entitlement is consistent with the statutory standards
for competition and free and open markets by promoting price
competition within Facilitation and PIM as Members would still have a
reasonable opportunity to compete for a significant percentage of the
incoming order. The Exchange also notes that the configurable 40%
allocation entitlement for simple Facilitation and PIM is consistent
with the configurable allocation entitlements in place on complex
Facilitation and PIM as well as on its affiliated exchanges.\45\
Accordingly, the Exchange believes that the proposed changes will
promote consistency across the rulebooks of exchanges offering
identical functionality and within its own Rulebook as well.
---------------------------------------------------------------------------

    \45\ See supra notes 22 and 33.
---------------------------------------------------------------------------

    With respect to the proposed changes to the Facilitation and PIM
auto-match feature, the Exchange is amending the current rule text so
that it more accurately explains how the Exchange will allocate an
order designated for auto-match today. As discussed above, the Exchange
is not making any substantive changes to the allocation procedure
itself; rather the proposed changes are intended to better align how
this feature is described in the Auto-Match Filing.\46\ Similarly, the
Exchange believes that the proposed change in Supplementary Material
.01 to Options 3, Section 11 to add the provision that any solicited
contra orders entered by Members into the Facilitation Mechanism to
trade against Agency Orders may not be for the account of an Exchange
Market Maker that is assigned to the options class will better align
the rule text with SR-ISE-2006-78. As discussed above, this restriction
was included in the approval order to the rule filing that allowed
solicited transactions in ISE's Facilitation Mechanism, which is
identical to the Exchange's Facilitation Mechanism, so the Exchange
will import that language into the rule text for greater
transparency.\47\
---------------------------------------------------------------------------

    \46\ See supra note 27.
    \47\ See supra note 28.
---------------------------------------------------------------------------

    The proposed change in Supplementary Material .04 to Options 3,
Section 13 to provide that PIMs will not queue or overlap in any
manner, except as described in Options 3, Section 11(f) and (g) will
make clear that two simple or complex PIM auctions are not permitted to
run concurrently, but that a simple PIM auction may run concurrently
with a complex PIM auction. The Exchange believes that this change will
reduce any potential confusion around how simultaneous PIM auctions are
processed by the System.
    The Exchange believes that the proposed change to the TVA rule is a
non-substantive change to say that any amount of TVA is permitted in
complex PIM (in addition to all of the other complex auction mechanisms
in Options 3, Section 11). This is a corrective change as the cross-
cite to complex PIM within the TVA rule was inadvertently dropped in a
prior filing that relocated the complex auction rules.\48\ As noted
above, the Exchange's complex auction mechanisms provide an opportunity
for market participants to respond with better-priced interest that
could execute against an Agency Order. Accordingly, the Exchange
believes that it is appropriate to ensure that paired orders entered
into complex Facilitation, Solicitation and PIM that are broken up due
to better-priced interest are actually executed against such better-
priced interest, and are not restricted from trading due to TVA
settings of one or more Members.
---------------------------------------------------------------------------

    \48\ See supra note 34.
---------------------------------------------------------------------------

    The Exchange believes its proposal to provide that AIQ will not
apply during an Opening Process (i.e., the opening process or halt
reopening process) will more accurately state how this functionality
currently operates. AIQ prevents Market Makers from trading against
their own quotes and orders. While the Exchange believes that this
protection is useful for Market Makers to manage their trading during
regular market hours, applying AIQ is unnecessary during an Opening
Process due to the high level of control that Market Makers already
exercise over their quotes during this process. Furthermore, the
proposed AIQ changes will promote consistency with the rulebook of its
affiliated exchange BX, which offers identical functionality.\49\
---------------------------------------------------------------------------

    \49\ See supra note 36.
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    The Exchange further believes that the technical changes it is
proposing throughout Options 3 are non-substantive changes intended to
enhance the accuracy of the Exchange's Rulebook, which will alleviate
potential confusion as to the applicability of its rules. As discussed
above, these changes consist of updating cross-cites and using correct
terminology. Lastly, the Exchange believes that the harmonizing changes
to add a new Options 4B in its Rulebook and to retitle General 4, each
as discussed above, will serve to further harmonize its Rule numbering
and titling with that of its affiliates, thereby promoting efficiency
and conformity of

its processes with those of its affiliated exchanges.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. As indicated above, no System
changes to existing functionality are being made pursuant to this
proposal; rather, this proposal is designed to reduce any potential
investor confusion as to the features and applicability of certain
functionality presently available on the Exchange. Therefore, the
proposed changes are designed to enhance clarity and consistency in the
Exchange's Rulebook.
    Furthermore, many of the proposed changes seek to provide greater
harmonization between the rules of the Exchange and its affiliates, and
therefore promotes fair competition among the options exchanges. In
particular, the proposed changes discussed above for Block and AIQ are
based on BX rules governing identical functionality.\50\ The Exchange
notes that it operates in a highly competitive market in which market
participants can readily direct order flow to competing venues who
offer similar functionality. The Exchange believes that the proposed
rule change will enhance competition among the various markets for
auction execution, potentially resulting in more active trading in
auction mechanisms across all options exchanges.
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    \50\ See BX Options 3, Section 11(a) (Block) and Section
15(c)(1) (AIQ).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \51\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\52\
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    \51\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \52\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-MRX-2021-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-MRX-2021-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MRX-2021-01, and should be submitted on
or before April 21, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
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    \53\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06561 Filed 3-30-21; 8:45 am]
BILLING CODE 8011-01-P