to define as a ``Delayed Opening'' (see proposed Rule 7.35A(a)(4)(A)).
This proposed rule text is based on the last sentence of the first
paragraph of Rule 123D(b), which refers to delayed openings, and Rule
15(b)(1), which references 10:00 a.m. as a time by when an opening
should occur before a pre-opening indication would be required, and
thus constitutes a delayed opening.
    [cir] If it is anticipated that the opening or reopening price
would be at a significant disparity from the Consolidated Last Sale
Price for such security (see proposed Rule 7.35A(a)(4)(B)). This
proposed rule text is based on the fifth paragraph of Rule 123D(b) with
the substantive difference described above that the DMM should use the
Consolidated Last Sale Price rather than the prior close price (for
openings) or last price on the Exchange (for reopenings).
    [cir] If there is a significant imbalance (see proposed Rule
7.35A(a)(4)(C)). This proposed rule text is based on the fifth
paragraph of Rule 123D(b).
    [cir] In unusual situations (see proposed Rule 7.35A(a)(4)(D)).
This proposed rule text is based on the last sentence of the first
paragraph of Rule 123D(b).
     Proposed Rule 7.35A(a)(5) would provide that in
determining when to open or reopen a security in circumstances
described in Rule 7.35A(a)(4), a DMM should make every effort to
balance timeliness with the opportunity for customer reaction and
participation. The rule would further provide that when the DMM and
Floor Official agree that all participants have had a reasonable
opportunity to participate, the DMM should open or reopen the security.
In addition, the rule would provide that the DMM has ultimate
responsibility for opening or reopening a security and while a Floor
Official's approval may be a mitigating factor, it would not exonerate
the DMM if performance has been deemed unsatisfactory. This proposed
rule text is based on the last paragraph of Rule 123D(b) and the last
sentence of the third paragraph of Rule 123D(b). The Exchange proposes
non-substantive differences to use Pillar terminology and streamline
the rule text.
    Proposed Rule 7.35A(a)(5) and subparagraphs (A)-(E) would further
provide that in unusual market situations, the DMM should consider the
following areas as indicative of poor DMM performance: (A) An opening
or reopening price change that is not in proportion to the size of an
imbalance; (B) absence of a pre-opening indication before a large
Auction Price change; (C) inadequate support after a large Auction
Price change, i.e., lack of sufficient continuity and depth in the
aftermarket; (D) absence of trading without good cause or Floor
Official approval (or an unjustified or unreasonably delayed opening or
halt in trading); and (E) not obtaining appropriate Floor Official
approval for opening delays. This proposed rule text is based on the
fourth paragraph of Rule 123D(b) and related subparagraphs, with non-
substantive differences to use Pillar terminology and streamline the
rule text. In addition, the Exchange does not propose retaining text
relating to obtaining appropriate Floor Official approvals for trading
halts and wide price variations, as the Exchange no longer requires
Floor Official approval for such scenarios.
    Opening Without a Trade. Proposed Rule 7.35A(b) would provide that
if there is no interest to conduct a Core Open Auction (for openings)
or Trading Halt Auction (for reopenings), a DMM may open or reopen a
registered security with a quote. This proposed rule text is based on
Rule 123D(a)(1)(A), with non-substantive differences to use Pillar
terminology.
    Currently, there are circumstances when a security may not open on
either a trade or a quote. This can occur when there is a new listing
on the Exchange that does not have public pricing information or
trading interest, such as the listing of a security on a when-issued
basis. In such circumstances, under current rules, a DMM will publish a
pre-opening indication if such security is not opened by 10:00 a.m.,
i.e., a Delayed Opening, but such pre-opening indication may be wide
because there is no buy and sell interest in the security entered on
the Exchange. Rather, that pre-opening indication would represent the
DMM's best understanding of the anticipated price of such security
based on publicly-available information, such as research reports
relating to that security. If that pre-opening indication does not
attract additional trading interest that can either trade or tighten
the spread of the pre-opening indication, the DMM will not open the
security.
    The Exchange proposes to provide more transparency regarding this
process in the Pillar Auction Rules. As proposed, Rule 7.35A(b)(1)
would provide that if a security has not previously traded on the
Exchange, a DMM is not obligated to open such security if there is no
bid or offer or if the best bid and offer is wider than the pre-opening
indication. The Exchange believes that this proposed rule text would
provide clarity as to why a new listed security may not open on the
Exchange.
    DMM Opening Process. Proposed Rule 7.35A(c) would provide that a
DMM may effectuate a Core Open or Trading Halt Auction manually or
electronically (and if electronic, subject to Rule 104(b)(ii)). This
proposed rule text is based on the first sentence of Rule 123D(a)(1)(B)
with a non-substantive difference to use Pillar terminology to
reference reopenings as well.
    Proposed Rule 7.35A(c)(1) would provide that except under the
conditions of Rules 7.35A(c)(2) and (c)(3), a DMM may not effect a Core
Open or Trading Halt Auction under the conditions specified in
subparagraphs (A)-(H) of Rule 7.35A. This proposed rule text is based
on the second sentence of Rule 123D(a)(1)(B) with non-substantive
differences to use Pillar terminology. The Exchange believes that
adding each of the following circumstances of when the DMM may not
effect an opening or reopening electronically will promote transparency
regarding the circumstances of when a DMM must open a security
manually:
     If a pre-opening indication has been published for the
Core Open Auction (see proposed Rule 7.35A(c)(1)(A)). This proposed
rule text is new for the Pillar Auction Rules and represents current
functionality. Currently, if the DMM publishes a pre-opening indication
in a security, that security must be opened manually by the DMM.
     If a DMM has begun the process to open a security
manually, including by manually entering DMM Auction Liquidity (see
proposed Rule 7.35A(c)(1)(B)). This proposed rule text is based in part
on Rule 123D(a)(1)(B), which provides that Exchange systems will not
permit a DMM to open a security electronically if a DMM has manually
entered Floor interest, which for purposes of that rule, includes
manually entering DMM Interest. As described above, the DMM uses a
graphical user interface to manage the opening process. From that user
interface, the DMM can publish a pre-opening indication or enter DMM
Auction Liquidity. The Exchange believes that if a DMM is in the
process of using such graphical user interface, including to manually
enter DMM

Auction Liquidity or to publish a pre-opening indication, that DMM is
taking an action to indicate that the opening or reopening process will
be effectuated manually. Accordingly, if a DMM engages in such process,
the Exchange will not permit the DMM to open or reopen the security
electronically.
     If it is an IPO Auction or Direct Listing Auction (see
proposed Rule 7.35A(c)(1)(C)). This proposed rule text is new for the
Pillar Auction Rules and represents current functionality. Currently,
DMMs effectuate both IPO Auctions and Direct Listing Auctions, which
generally take place after 9:30 a.m., manually.
     If the security is in a suspended or halt condition at the
beginning of Core Trading Hours (see proposed Rule 7.35A(c)(1)(D)).
Because openings effectuated electronically take place at the beginning
of Core Trading Hours, if a security is not eligible to be opened at
such time because it is suspended or halted, such security would need
to be opened by the DMM manually.
     If it is a reopening following a regulatory halt issued
under Section 2 of the Listed Company Manual (see proposed Rule
7.35A(c)(1)(E)). The Exchange believes that allowing a DMM to reopen a
security electronically following either a trading pause or a market-
wide circuit breaker trading halt would promote the fair and orderly
reopening of such security. This proposal is consistent with Rule
15(e)(6)(B), which provides that the DMM may open a security following
a trading pause outside of the published indication. By contrast, the
Exchange believes that if a security is the subject of a regulatory
halt issued under Section 2 of the Listed Company Manual, e.g., news
pending, such reopening warrants the attention of the DMM assigned to
that security, and therefore the reopening should be effectuated
manually.
     If there is no Consolidated Last Sale Price (see proposed
Rule 7.35A(c)(1)(F)). As described below, the Exchange proposes to use
the Consolidated Last Sale Price as the Imbalance Reference Price for
the Core Open and Trading Halt Auctions. The Exchange believes that if
there is no Consolidated Last Sale Price in a security, the Exchange
would not have sufficient information to provide to a DMM for opening a
security electronically. Accordingly, the Exchange proposes that in
such scenario, the DMM must open the security manually.
     If the Core Open or Trading Halt Auction Price would be
more than 4% away from the Consolidated Last Sale Price (see proposed
Rule 7.35A(c)(1)(G)). This proposed rule text is based on Rule
123D(a)(1)(B)(i)(a) and (b), with the substantive difference, described
above, that the Exchange would use the Consolidated Last Sale Price as
the reference price for this calculation rather than the Official
Closing Price (for openings) or last price on the Exchange (for
reopenings). As noted above, the Exchange believes that using the
Consolidated Last Sale Price, as defined in proposed Rule
7.35(a)(11)(1), would likely reflect a more recent valuation in a
security with which to measure whether the opening or reopening would
be at a price disparity. The Exchange proposes to use the same
percentage parameter as under the current rule.
     If the paired volume for the Core Open or Trading Halt
Auction would be more than (i) 1,500 round lots for securities with an
average opening volume of 1,000 round lots or fewer in the previous
calendar quarter or (ii) 5,000 round lots for securities with an
average opening volume of over 1,000 round lots in the previous
calendar quarter (see proposed Rule 7.35A(c)(1)(H) and subparagraphs
(i) and (ii)). This proposed rule text is based on Rule
123D(a)(1)(B)(i)(c) with a non-substantive difference to use the term
``paired volume'' instead of ``matched volume'' and use Pillar
terminology. The Exchange also proposes a difference to reflect volumes
in round lots rather than in number of shares. For securities that
trade with a round lot of 100 shares, the proposed rule would be
unchanged from the current rule, which expresses the volume
requirements in terms of 150,000 shares, 100,000 shares, and 500,000
shares, respectively. The Exchange believes, however, that if a
security trades in a round lot less than 100 shares, expressing the
volume in number of shares would result in higher relative requirements
for such securities to be opened manually. The Exchange believes that
describing volume requirements in round lots would better reflect the
level of volumes of securities with lower-sized round lot units that
would warrant an opening to be effected manually.
    Proposed Rule 7.35A(c)(2) would provide that if as of 9:00 a.m.,
the E-mini S&P 500 Futures are +/- 2% from the prior day's closing
price of the E-mini S&P 500 Futures, or if the Exchange determines that
it is necessary or appropriate for the maintenance of a fair and
orderly market, a DMM may effect an opening or reopening electronically
if the Auction Price would be up to 8% away from Consolidated Last Sale
Price, without any volume limitations. This proposed rule text is based
on Rule 123D(a)(1)(B)(ii) with non-substantive differences to use
Pillar terminology. The Exchange proposes a similar substantive
difference, as described above, to use the Consolidated Last Sale Price
as the reference price for determining the percentage parameter.
Otherwise, this rule text is unchanged from the Current Auction Rules.
    Proposed Rule 7.35A(c)(3) would provide that when reopening a
security following a trading pause under Rule 7.11 or a market-wide
halt under Rule 7.12, if a pre-opening indication has been published in
a security under paragraph (b) of this Rule, a DMM may not reopen such
security electronically if the reopening transaction would be at a
price outside of the last-published pre-opening indication. This
proposed rule text is based on Rule 123D(a)(1)(B)(iii) with non-
substantive differences to cross-reference Pillar rules and use Pillar
terminology. Otherwise, this rule text is unchanged from Current
Auction Rules.
    Pre-Opening Indications. Proposed Rule 7.35A(d) and its
subparagraphs are based on Rule 15(a)-(f) relating to pre-opening
indications. Except for two substantive differences described below,
the Exchange does not propose any differences from the Current Auction
Rules of when a pre-opening indication would be required.
    Proposed Rule 7.35A(d) would provide that a pre-opening indication
would include the security and the price range within which the Auction
Price is anticipated to occur and that a pre-opening indication would
be published via the securities information processor and proprietary
data feeds. This proposed rule text is based on Rule 15(a) with a non-
substantive difference to use the term ``Auction Price'' instead of
``opening price.''
    Proposed Rule 7.35A(d)(1) would specify the conditions for
publishing a pre-opening indication and is based on Rule 15(b).
     Proposed Rule 7.35A(d)(1)(A) would provide that a DMM
would publish a pre-opening indication, as described in paragraph
(d)(4) of this Rule, before a security opens or reopens if (i) the Core
Open or Trading Halt Auction Price is anticipated to be a change of
more than the ``Applicable Price Range,'' as specified in proposed Rule
7.35A(d)(3), from a specified ``Indication Reference Price,'' as
specified in proposed Rule 7.35A(d)(2), or (ii) it is a Delayed
Opening. This proposed rule text is based on Rule 15(b)(1) with non-
substantive differences to use Pillar terminology,

including reference to a Core Open or Trading Halt Auction Price, use
of the new defined term ``Delayed Opening,'' and use of the term
``Indication Reference Price'' instead of ``Reference Price.'' The
Exchange also proposes to reference reopens in addition to opens.\69\
---------------------------------------------------------------------------

    \69\ Supplementary Material .10 to Rule 15 provides that unless
otherwise specified in Rule 15, references to an opening transaction
include a reopening transaction following a trading halt or pause in
a security. Rather than include that commentary in Rule 7.35A, the
Exchange proposes that proposed rule text based on Rule 15 would be
modified to reflect when such rule would be applicable to a
reopening transaction.
---------------------------------------------------------------------------

     Proposed Rule 7.35A(d)(1)(B) would provide that when
making the determination of what the Auction Price will be, the DMM
will take into consideration all interest eligible to participate in
the Core Open or Trading Halt Auction, including electronically-entered
orders, and DMM Interest. This proposed rule text is based on Rule
15(b)(2) with non-substantive differences to use Pillar terminology. On
Pillar, the Exchange will not publish a pre-opening indication if the
DMM is unable to do so because of systems or a technical issue.
Accordingly, the Exchange does not propose to include in the Pillar
Auction Rules rule text based on Rule 15(b)(3), which provides that if
a DMM is unable to publish a pre-opening indication for one or more
securities due to a systems or technical issue, the Exchange may
publish a pre-opening indication for that security(ies).
    Proposed Rule 7.35A(d)(2) would address Indication Reference
Prices, and is based on Rule 15(c), which refers to ``Reference
Price.'' In the Pillar Auction Rules, the Exchange proposes to use the
term ``Indication Reference Price'' in connection with pre-opening
indications to distinguish it from the use of the term ``Imbalance
Reference Price,'' described above.\70\
---------------------------------------------------------------------------

    \70\ The Indication Reference Price is not a publicly
disseminated value, but rather a reference price used by the DMM to
determine whether to publish a pre-opening indication. The actual
pre-opening indication price range is based on the buy and sell
orders in the Exchange Book, not on the Indication Reference Price.
---------------------------------------------------------------------------

    Proposed Rule 7.35A(d)(2)(A) would provide that the Indication
Reference Price for a security, other than an American Depository
Receipt (``ADR''), would be:
     The security's last Official Closing Price on the
Exchange, adjusted as applicable based on the publicly disclosed terms
of a corporate action (see proposed Rule 7.35A(d)(2)(A)(i)). This
proposed rule text is based on Rule 15(c)(1)(A) without any
differences.\71\
---------------------------------------------------------------------------

    \71\ The Exchange recently amended Rule 15(c)(1). See Securities
Exchange Act Release No. 84755 (December 7, 2018), 83 FR 64168
(December 13, 2018) (SR-NYSE-2018-60) (Notice of filing and
immediate effectiveness of proposed rule change).
---------------------------------------------------------------------------

     The security's offering price in the case of an IPO (see
proposed Rule 7.35A(d)(2)(A)(ii)). This proposed rule text is based on
Rule 15(c)(1)(B) with non-substantive difference to use the defined
term of IPO.
     The security's last reported sale price on the securities
market from which the security is being transferred to the Exchange, on
the security's first day of trading on the Exchange (``transferred
security'') (see proposed Rule 7.35A(d)(2)(A)(iii)). This proposed rule
text is based on Rule 15(c)(1)(C) without any differences.
     For a security that is a Direct Listing that has had
recent sustained trading in a Private Placement Market prior to
listing, the most recent transaction price in that market or, if none,
a price determined by the Exchange in consultation with a financial
advisor to the issuer of such security (see proposed Rule
7.35A(d)(2)(A)(iv)). This proposed rule text is based on Rule
15(c)(1)(D) with non-substantive difference to use Pillar terminology,
including the proposed defined term ``Direct Listing.''
    Proposed Rule 7.35A(d)(2)(B) would provide that the Indication
Reference Price for an ADR would be:
     The closing price of the security underlying the ADR in
the primary foreign market for such security when the trading day of
the primary foreign market concludes after trading on the Exchange for
the previous day has ended (see proposed Rule 7.35A(d)(2)(B)(i)). This
proposed rule text is based on Rule 15(c)(2)(A) without any
differences.
     Based on parity with the last sale price of the security
underlying the ADR in the primary foreign market for such security when
the trading day of the primary foreign market is open for trading at
the time of the opening on the Exchange (see proposed Rule
7.35A(d)(2)(B)(ii)). This proposed rule text is based on Rule
15(c)(2)(B) without any differences.
    Proposed Rule 7.35A(d)(2)(C) would provide that the Indication
Reference Price for reopening a security following a halt would be the
Exchange Last Sale Price. This proposed rule text is based on Rule
15(c)(2)(C) with a difference to use the Pillar term ``Exchange Last
Sale Price'' rather than the term ``last reported sale price on the
Exchange.'' In most circumstances, use of the term ``Exchange Last Sale
Price'' would be the same as under the current rule's use of the term
``last reported sale price.'' Where there could be divergence if the
Official Closing Price is based on the last consolidated last-sale
eligible price in a security, as proposed to be defined in Rule 1.1,
described above. For the reasons discussed above of why the Exchange
believes that this is an appropriate price to use for the Official
Closing Price if there is no closing auction, the Exchange similarly
believes that such price would be appropriate for using as the
Indication Reference Price.
    Proposed Rule 7.35A(d)(3) would concern the Applicable Price Range,
and is based on Rule 15(d) without any differences. Proposed Rule
7.35A(d)(3)(A) would provide that except under the conditions set forth
in proposed Rule 7.35A(d)(3)(B), the Applicable Price Range for
determining whether to publish a pre-opening indication would be 5% for
securities with an Indication Reference Price over $3.00 and $0.15 for
securities with an Indication Reference Price equal to or lower than
$3.00. This proposed rule text is based on Rule 15(d)(1) with non-
substantive differences to use Pillar terminology and to update the
rule cross references.
    Proposed Rule 7.35A(d)(3)(B) would provide that if as of 9:00 a.m.,
the E-mini S&P 500 Futures are +/- 2% from the prior day's closing
price of the E-mini S&P 500 Futures, when reopening trading following a
market-wide trading halt under Rule 7.12, or if the Exchange determines
that it is necessary or appropriate for the maintenance of a fair and
order market, the Applicable Price Range for determining whether to
publish a pre-opening indication would be 10% for securities with an
Indication Reference Price over $3.00 and $0.30 for securities with an
Indication Reference Price equal to or lower than $3.00. This proposed
rule text is based on Rule 15(d)(2) with non-substantive differences to
use Pillar terminology and update the rule cross-reference.\72\
---------------------------------------------------------------------------

    \72\ As discussed below, the Exchange proposes to amend Rule
7.12 to include rule text based on Rule 80B.
---------------------------------------------------------------------------

    Proposed Rule 7.35A(d)(4) would specify the procedures for
publishing a pre-opening indication and that the DMM would use the
procedures specified in subparagraphs (A)-(G) of that rule when
publishing a pre-opening indication. This proposed rule text is based
on Rule 15(e) without any differences.
     Proposed Rule 7.35A(d)(4)(A) would provide that
publication of a pre-opening indication would require the supervision
and approval of a Floor Governor. This proposed rule text is based on
Rule 15(e)(1) without any differences.

     Proposed Rule 7.35A(d)(4)(B) would provide that a pre-
opening indication must be updated if the Core Open or Trading Halt
Auction Price would be outside of a published pre-opening indication.
This proposed rule text is based on Rule 15(e)(2) with a non-
substantive difference to use Pillar terminology.
     Proposed Rule 7.35A(d)(4)(C) would provide that if the
pre-opening indication is a spread wider than $1.00, the DMM should
undertake best efforts to publish an updated pre-opening indication of
$1.00 or less before opening or reopening the security, as may be
appropriate for the specific security. This proposed rule text is based
on Rule 15(e)(3) with a non-substantive difference to reference
reopenings in addition to openings.
     Proposed Rule 7.35A(d)(4)(D) would provide that after
publishing a pre-opening indication, the DMM must wait for the
following minimum specified periods before opening a security. This
proposed rule text is based on Rule 15(e)(4) without any differences.
    [cir] Proposed Rule 7.35A(d)(4)(D)(i) would provide that when using
the Applicable Price Range specified in Rule 7.35A(d)(3)(A), a minimum
of three minutes must elapse between publication of the first
indication and a security's opening or reopening. If more than one
indication has been published, a security may be opened or reopened one
minute after the last published indication provided that at least three
minutes have elapsed from the dissemination of the first indication.
However, the DMM may open or reopen a security less than the required
minimum times after the publication of a pre-opening indication if the
Auction Price would be at a price within the Applicable Price Range.
This proposed rule text is based on Rule 15(e)(4)(A) with non-
substantive differences to update the rule cross reference, to include
references to reopenings, and to use Pillar terminology.
    [cir] Proposed Rule 7.35A(d)(4)(D)(ii) would provide that when
using the Applicable Price Range specified in Rule 7.35A(d)(3)(B), a
minimum of one minute must elapse between publication of the first
indication and a security's opening or reopening. If more than one
indication has been published, a security may be opened or reopened
without waiting any additional time. This proposed rule text is based
on Rule 15(e)(4)(B) with non-substantive differences to update the rule
cross reference and to include references to reopenings.
     Proposed Rule 7.35A(d)(4)(E) would provide that if trading
is halted for a non-regulatory order imbalance, a pre-opening
indication must be published as soon as practicable after the security
is halted. This proposed rule text is based on Rule 15(e)(5) without
any differences.
     Proposed Rule 7.35A(d)(4)(F) and subparagraphs (i)-(iii)
would provide that when reopening a security following a trading pause
under Rule 7.11: (i) A pre-opening indication may be published without
prior Floor Governor approval; (ii) a pre-opening indication does not
need to be updated before reopening the security, and the security may
be reopened outside of any prior indication; and (iii) the reopening is
not subject to the minimum waiting time requirements in Rule
7.35A(d)(4)(D). This proposed rule text is based on Rule 15(e)(6) and
subparagraphs (A)-(C) with a non-substantive difference to update the
rule cross references.
     Proposed Rule 7.35A(d)(4)(G) would provide that except as
provided in proposed Rule 7.35A(d)(4)(F)(ii), if a pre-opening
indication has been published, the Exchange would not permit the DMM to
open or reopen the security outside of the last-published pre-opening
indication range. This proposed rule text would be new for the Pillar
Auction Rules and reflects that Exchange systems will enforce the
requirement for a DMM to open or reopen a security within the price
range of a pre-opening indication, except when reopening following a
trading pause.
    As discussed below, the Exchange proposes to set forth the process
for temporary rule suspensions in paragraph (j) to proposed Rule 7.35A.
Accordingly, the Exchange does not propose to include rule text based
on Rule 15(f) in paragraph (d) in Rule 7.35A.
    Auction Imbalance Information. Proposed Rule 7.35A(e) would specify
Auction Imbalance Information for the Core Open and Trading Halt
Auctions. Proposed Rule 7.35A(e)(1) would specify the time of
publication of such Auction Imbalance Information as follows:
     Proposed Rule 7.35A(e)(1)(A) would provide that for the
Core Open Auction, unless a security is halted, the Exchange would
begin disseminating Auction Imbalance Information at 8:00 a.m. This
proposed rule text is new and the Exchange proposes a substantive
difference in the Pillar Auction Rules to begin disseminating Auction
Imbalance Information at 8:00 a.m. rather than at 8:30 a.m., as
specified in current Rule 15(g)(3)(A). The format of this rule text is
based in part on NYSE Arca Rule 7.35-E(c)(1) and NYSE American Rule
7.35E(c)(1).
     Proposed Rule 7.35A(e)(1)(B) would provide that for a
Trading Halt Auction, the Exchange would begin disseminating Auction
Imbalance Information at the beginning of a halt or pause. This
proposed rule text represents current functionality and is based in
part on Rule 80C(b), which provides that the Exchange will begin
disseminating Order Imbalance Information after a Trading Pause has
commenced. The format of this rule text is based in part on NYSE Arca
Rule 7.35-E(e)(1) and NYSE American Rule 7.35E(e)(1).
     Proposed Rule 7.35A(e)(1)(C) would provide that if a
security is in a halt condition before or at the beginning of Core
Trading Hours, the Exchange would disseminate Auction Imbalance
Information for a Trading Halt Auction. This proposed rule text would
be new for the Pillar Auction Rules and is based on NYSE Arca Rule
7.35-E(c)(1) and NYSE American Rule 7.35E(c)(1).
     Proposed Rule 7.35A(e)(1)(D) would provide that the
Exchange would not disseminate Auction Imbalance Information for the
Core Open Auction or Trading Halt Auction if there is no Consolidated
Last Sale Price. This proposed rule text would be new for the Pillar
Auction Rules. Because, as described below, the Exchange would use the
Consolidated Last Sale Price as the basis for determining the Imbalance
Reference Price, if there is no Consolidated Last Sale Price, there
would not be any information for the Exchange to determine Auction
Imbalance Information.
    Proposed Rule 7.35A(e)(2) would specify the content of Auction
Imbalance Information. As proposed, for the Core Open and Trading Halt
Auctions, the Exchange would disseminate Total Imbalance, Side of Total
Imbalance, Paired Quantity, and Continuous Book Clearing Price.
    Proposed Rule 7.35A(e)(3) would specify how the Imbalance Reference
Price would be determined. As proposed, the Imbalance Reference Price
for the Auction Imbalance Information would be the Consolidated Last
Sale Price unless a pre-opening indication has been published. This
proposed rule text would be new for Pillar Auction Rules and represents
the proposed substantive difference that the Exchange would use the
Consolidated Last Sale Price rather than last reported sale price on
the Exchange, as provided for in Rule 15(g)(2)(B), for determining the
Imbalance Reference Price for the Core

Open and Trading Halt Auctions. The Exchange believes that use of the
Consolidated Last Sale Price rather than the last reported sale price
on the Exchange would allow for a more recent price in a security to be
used as the Imbalance Reference Price, thereby representing a more
recent valuation of such security.
    With the exception of using the Consolidated Last Sale Price rather
than the last reported sale price on the Exchange, if a pre-opening
indication has been published, the Exchange proposes to use the same
method for determining the Imbalance Reference Price as under the
Current Auction Rules. However, the Exchange proposes to use Pillar
terminology to provide that in such case, the Imbalance Reference Price
would be:
     The pre-opening indication bid price if the Consolidated
Last Sale Price is lower than the bid price of the pre-opening
indication (see proposed Rule 7.35A(e)(3)(A)). This is based in part on
Rule 15(g)(2)(B)(i), which provides that if the bid price of the pre-
opening indication of interest is higher than the last reported sale
price for the security on the Exchange, the pre-opening indication bid
price will serve as the reference price.
     The pre-opening indication offer price if the Consolidated
Last Sale Price is higher than the offer price of the pre-opening
indication (see proposed Rule 7.35A(e)(3)(B)). This is based in part on
Rule 15(g)(2)(B)(ii), which provides that if the offer price of the
pre-opening indication of interest is lower than the last reported sale
price for the security on the Exchange, the pre-opening indication
offer price will serve as the reference price.
     The Consolidated Last Sale Price if it is at or between
the pre-opening indication bid and offer price (see proposed Rule
7.35A(e)(3)(C)). This is based in part on Rule 15(g)(2)(B)(iii), which
provides that if the last reported sale price on the Exchange falls
within the bid and offer of the pre-opening indication of interest for
a security, the last sale price shall serve as the reference price.
Because the term Consolidated Last Sale Price would incorporate how
that price would be derived for a transferred security, the Exchange
does not propose to include rule text based on Rule 15(g)(2)(B)(iv) in
the Pillar Auction Rules.
    Auction Imbalance Freeze. Proposed Rule 7.35A(f) would provide that
there is no Auction Imbalance Freeze for a Core Open Auction or Trading
Halt Auction and no restrictions on entry or cancellation of Auction-
Only Orders before a Core Open Auction or Trading Halt Auction. This
proposed rule text would be new for the Pillar Auction Rules and is
based on current functionality as there are no restrictions on order
entry or cancellation before the opening or reopening of trading under
the Current Auction Rules. The Exchange believes that including this
rule text in the Pillar Auction Rules would provide clarity and
transparency to Exchange rules, particularly when comparing how
auctions function on the Exchange as compared to NYSE Arca and NYSE
American, which function differently.
    Determining an Auction Price. Proposed Rule 7.35A(g) would provide
that the DMM would be responsible for determining the Auction Price for
a Core Open Auction or a Trading Halt Auction. This proposed rule text
would be new for the Pillar Auction rules and is based on current
functionality that as part of the DMM's role in facilitating auctions,
the DMM determines the Auction Price based on buy and sell orders
represented in the Exchange Book. The Exchange believes that including
this detail in Exchange rules provides clarity and transparency to the
Exchange's auction process.
    The rule would further provide that if there is an Imbalance of any
size, the DMM must select an Auction Price at which all better-priced
orders on the Side of the Imbalance can be satisfied. This proposed
rule text is based in part on Rule 115A(a)(1), which specifies that
market interest is guaranteed to participate in the opening or
reopening transaction.\73\ Otherwise, this proposed rule text would be
new for the Pillar Auction Rules, and is designed to promote clarity
and transparency in Exchange rules relating to the Exchange's auction
process.
---------------------------------------------------------------------------

    \73\ Under Rule 115A(a)(1)(A), market interest is defined as (i)
Market and MOO Orders, (ii) limit interest to buy (sell) that is
priced higher (lower) than the opening or reopening price (which
includes G Orders), and (iii) Floor broker interest entered manually
by the DMM. The first two of these categories are described above in
the definition of better-priced orders. The Exchange proposes that
the DMM would not manually enter Floor broker interest for the Core
Open or Trading Halt Auction; Floor brokers must represent their
interest electronically.
---------------------------------------------------------------------------

    Proposed Rule 7.35A(g)(1) would further provide that when
facilitating the opening on the first day of trading of a Direct
Listing that has not had recent sustained history of trading in a
Private Placement prior to listing, the DMM will consult with a
financial advisor to the issuer of such security in order to effect a
fair and orderly opening of such security. This proposed rule text is
from the last sentence of Rule 104(a)(2) with a non-substantive
difference to use the defined term of ``Direct Listing.'' The Exchange
proposes to move this rule text from Rule 104 to proposed Rule
7.35A(g)(1) because the responsibility described in the current rule
relates to how an Auction Price is determined for a Direct Listing
Auction, and the Exchange believes that including this text in proposed
Rule 7.35A would consolidate requirements relating to the Exchange's
auction process, thereby making the rules easier to navigate.\74\
---------------------------------------------------------------------------

    \74\ The Exchange proposes a related rule change to delete the
last sentence of Rule 104(a)(2).
---------------------------------------------------------------------------

    Auction Allocation. Proposed Rule 7.35A(h) would specify how orders
would be allocated in an Auction. As proposed, once an Auction Price
has been determined, orders would be allocated in a Core Open Auction
or Trading Halt Auction as follows:
     Better-priced orders, including Yielding Orders and the
reserve interest of Reserve Orders, entered by the Book Participant or
a Floor Broker Participant would be guaranteed to participate in the
Auction at the Auction Price (see proposed Rule 7.35A(h)(1)). The
Exchange proposes to use Pillar terminology in proposed Rule
7.35A(h)(1) to describe the same functionality as set forth in Rule
115A(a)(1) and Rule 115A(a)(1)(A), which provides that market interest
is guaranteed to participate in the opening or reopening transaction.
Under Rule 115A(a)(1), market interest includes the same types of
orders defined in proposed Rules 7.35(a)(5)(A) and 7.35A(h)(1) as being
guaranteed to participate in a Core Open or Trading Halt Auction,
including G Orders priced better than the opening or reopening
price.\75\
---------------------------------------------------------------------------

    \75\ Id. See also Securities Exchange Act Release No. 67686
(August 17, 2012), 77 FR 51596 (August 24, 2012) (SR-NYSE-2012-19)
(Order approving changes to Rules 115A and 123C to provide that
better-priced G Orders are guaranteed to participate in the opening,
reopening, or closing transaction) (``G Orders in Auctions
Filing'').
---------------------------------------------------------------------------

     At-priced orders and DMM Interest of any price would not
be guaranteed to participate in the Auction (see proposed Rule
7.35A(h)(2)). The Exchange proposes to use Pillar terminology in
proposed Rule 7.35A(h)(2) to describe the same functionality as set
forth in Rules 115A(a)(1) and (a)(1)(B)-(C), including that DMM
Interest is not guaranteed to participate in such Auctions. Proposed
Rule 7.35A(h)(2) would further provide how at-priced orders would be
allocated in an Auction as follows:
    [cir] First, orders ranked Priority 2--Display Orders, Opening D
Orders, and LOO Orders would be allocated on

parity by Participant pursuant to Rule 7.37(b)(2)-(7) (see proposed
Rule 7.35A(h)(2)(A)). By cross-referencing Rule 7.37(b)(2)-(7), this
proposed rule text makes clear that the allocation process for the Core
Open Auction and Trading Halt Auction would follow the established
Pillar parity allocation process.\76\ The Exchange believes that if at-
priced Opening D Orders or LOO Orders are participating in the Core
Open or Trading Halt Auction at the Auction Price, such orders should
be allocated together with displayed orders, which is how such orders
are allocated under the Current Auction Rules. In addition, by cross
referencing Rules 7.37(b)(5), (6), and (7), the proposed Rule provides
specificity that allocations to each Participant, including the DMM,
would be allocated consistent with those rules. The Exchange proposes
to make a related amendment to Rule 7.37(b)(2) to specify that the
Exchange would create a separate allocation wheel for each Auction.
Because there are orders that can participate in an Auction but are not
eligible to participate in continuous trading, e.g., Auction-Only
Orders and certain DMM Interest, the Exchange believes that creating a
separate allocation wheel for an Auction would ensure that where
Participants are positioned on the Auction allocation wheel would be
based on all interest that would be eligible to participate in the
Auction. The creation of that allocation wheel and how all such
Participants would be positioned on that wheel would be determined
pursuant to current Rule 7.37(b)(A)-(F).
---------------------------------------------------------------------------

    \76\ See Securities Exchange Act Release No. 82945 (March 26,
2018), 83 FR 13553, 13560-13561 (March 29, 2018) (SR-NYSE-2018-36)
(Approval Order and discussion of how the Rule 7.37 Pillar parity
allocation process differs from the current Rule 72 parity
allocation process).
---------------------------------------------------------------------------

    [cir] Next, orders ranked Priority 3--Non-Display Orders would be
allocated on parity by Participant pursuant to Rule 7.37(b)(2)-(7) (see
proposed Rule 7.35A(h)(2)(B)). This proposed rule text would be
applicable to the reserve interest of Reserve Orders, which are the
only orders ranked Priority 3--Non-Display Orders eligible to
participate in an Auction. By cross-referencing Rule 7.37(b)(2)-(7),
this proposed rule text makes clear that the allocation process for the
Core Open Auction and Trading Halt Auction will follow the established
Pillar parity allocation process.
    [cir] Next, the display quantity of orders ranked Priority 4--
Yielding Orders would be allocated on time (see proposed Rule
7.35A(h)(2)(C)). This proposed allocation is consistent with the
Exchange's proposal regarding how displayed Yielding Orders would be
allocated on Pillar under Rule 7.37(b)(1)(G).
    [cir] Next, the non-display quantity of orders ranked Priority 4--
Yielding Orders would be allocated on time (see proposed Rule
7.35A(h)(2)(D)). This proposed allocation is consistent with the
Exchange's proposal regarding how non-displayed Yielding Orders would
be allocated on Pillar under Rule 7.37(b)(1)(H).
     Proposed Rule 7.35A(h)(3) would address the DMM
Participant Allocation of at-priced orders in the Core Open and Trading
Halt Auction. The Exchange proposes that the manner by which DMMs would
participate in an Auction would differ from how they participate in
allocations during continuous trading, described above. As proposed:
    [cir] At-priced DMM Orders would be placed on the allocation wheel
for an Auction based on the time of entry and any other orders or
interest from such DMM would join that position on the allocation wheel
(see proposed Rule 7.35A(h)(3)(A)). In such case, the DMM Order with
the earliest entry time would establish that DMM Participant's position
on the allocation wheel, consistent with Rule 7.37(b)(2)(B).\77\
However, if the only DMM Interest available to participate in an
Auction would be DMM Auction Liquidity or better-priced DMM Orders or
both, such DMM Interest would be placed last on the allocation wheel.
The Exchange proposes that in these scenarios, the DMM Interest would
go last on the allocation wheel because such orders would either be
repriced for the Auction (in the case of a better-priced DMM Order,
which would be considered an at-priced order for the Auction
Allocation) or entered right before the Auction (in the case of DMM
Auction Liquidity). Because such DMM Interest is intended to be
offsetting interest for an Auction, the Exchange does not believe that
such DMM Interest should have time priority in how they are included in
an allocation wheel over other orders that are eligible to participate
in an Auction. This proposed functionality would be new on Pillar and
is designed so that DMMs, who have the ability to enter buy and sell
interest last in an Auction, would not receive any time priority for
such interest.
---------------------------------------------------------------------------

    \77\ Rule 7.37(b)(2)(B) provides that additional Participants
are added to an allocation wheel based on time of entry of the first
order entered by a Participant.
---------------------------------------------------------------------------

    [cir] A parity allocation to the DMM Participant would be allocated
in price-time priority (see proposed Rule 7.35A(h)(3)(B)). As discussed
above, a parity allocation to the DMM Participant would be based on the
working time. However, in an Auction Allocation, DMM Interest may have
more than one limit price, and the Exchange proposes that the parity
allocation to the DMM Participant would be allocated among such DMM
Interest in price-time priority, even though they all would participate
in the Auction at a single price.
    [cir] Both at-priced DMM Orders that do not receive an allocation
and that lock other unexecuted orders and buy and sell better-priced
DMM Orders would be cancelled after the Auction Processing Period
concludes (see proposed Rule 7.35A(h)(3)(C)). As noted above, DMM
Auction Liquidity that does not participate in an Auction cancels after
the Auction. To provide for continuity in the market after the Auction,
the Exchange also proposes to cancel DMM Orders with a limit price that
either lock the Auction Price, i.e., did not participate in the parity
allocation, or are priced through the Auction Price, i.e., a buy (sell)
DMM Order priced higher (lower) than the Auction Price. The Exchange
believes that cancelling such DMM Interest would ensure that there will
not be orders that transition to continuous trading that lock or cross
other orders in the Exchange Book.
    SIP Modifier. Proposed Rule 7.35A(i) would provide that the Core
Open Auction would be designated with a modifier to identify the
opening quote, and if there is an opening trade, a modifier to identify
the opening trade. The rule would further provide that the Trading Halt
Auction would be designated with a modifier to identify it as a
reopening trade. These SIP modifiers are consistent with how the
Exchange functions under the Current Auction Rules and would be new
rule text for the Pillar Auction Rules that is based on NYSE Arca Rule
7.35-E(c)(5) and (e)(11) and NYSE American Rule 7.35E(c)(5) and
(e)(11).
    Temporary Rule Suspensions. Current Rule 15(f) provides that the
Exchange can temporarily suspend the requirement of pre-opening
indications and current Rule 123D(c) provides that the Exchange can
temporarily suspend DMM automated opening limitations or Floor Official
approval requirements. In the Pillar Auction Rules, the Exchange
proposes to consolidate these existing temporary suspension
requirements in proposed Rule 7.35A(j).
    Proposed Rule 7.35A(j)(1) would provide that if the CEO of the
Exchange, or his or her designee, determines that a Floor-wide event is
likely to have an impact on the ability of DMMs to

arrange for a fair and orderly Core Open or Trading Halt Auction at the
Exchange and that, absent relief, the operation of the Exchange is
likely to be impaired, the CEO of the Exchange, or his or her
designees, may temporarily suspend the rules specified in proposed
subparagraphs (A) and (B) of that Rule. This proposed rule text is
based on Rule 15(f)(1) and Rule 123D(c)(1) with non-substantive
differences to use Pillar terminology.\78\
---------------------------------------------------------------------------

    \78\ Rule 123D(c)(1) currently provides that the temporary
relief is available for a reopening following a market-wide circuit
breaker. In harmonizing this rule text with current Rule 15(f)(1),
the Exchange proposes that under the Pillar Auction Rules, the
temporary rule suspension would be available for any scenario where
a Floor-wide event would impact the fair and orderly reopening of
securities, which include reopenings after a market-wide circuit
breaker, plus other potential market-wide events.
---------------------------------------------------------------------------

    Proposed Rule 7.35A(j)(1)(A) would specify the first set of rules
that could be suspended. As proposed, under the circumstances described
above, the Exchange could suspend the prohibition on a DMM opening a
security electronically if the Core Open or Trading Halt Auction Price
would be more than the price or volume parameters specified in proposed
Rule 7.35A(c)(1)(G) and (H) of this Rule. This proposed rule text is
based on Rule 123D(c)(1)(A) with non-substantive differences to use
Pillar terminology and update the cross references.\79\
---------------------------------------------------------------------------

    \79\ The Exchange does not propose to include in the Pillar
Auction Rules a temporary suspension as described in Rule
123D(c)(1)(B) because the Exchange no longer requires Floor Official
approval before a security can be halted.
---------------------------------------------------------------------------

    Proposed Rule 7.35A(j)(1)(B) would specify the second set of rules
that could be suspended. As proposed, under the circumstances described
above, the Exchange could suspend the requirement to publish pre-
opening indications in a security under proposed Rule 7.35A(d) of this
Rule prior to opening or reopening a security following a market-wide
trading halt. This proposed rule text is based on Rule 15(f)(1) with
non-substantive differences to update the cross reference.
    Proposed Rule 7.35A(j)(2) would provide that when determining
whether to temporarily suspend the specified paragraphs of this Rule,
the CEO of the Exchange would:
     Consider the facts and circumstances that are likely to
have Floor-wide impact for a particular trading session, including
volatility in the previous day's trading session, trading in foreign
markets before the open, substantial activity in the futures market
before the open, the volume of pre-opening indications of interest,
evidence of pre-opening significant order imbalances across the market,
government announcements, news and corporate events, and such other
market conditions that could impact Floor-wide trading conditions (see
proposed Rule 7.35A(j)(2)(A)). This proposed rule text is based on Rule
15(f)(2)(A) and Rule 123D(c)(2)(A) without any substantive differences.
     Notify the Chief Regulatory Officer of the Exchange (see
proposed Rule 7.35A(j)(2)(B)). This proposed rule text is based on Rule
15(f)(2)(B) and Rule 123D(c)(2)(B) without any substantive differences.
     Inform the Securities and Exchange Commission staff as
promptly as practicable of the temporary suspension (see proposed Rule
7.35A(j)(2)(C)). This proposed rule text is based on Rule 15(f)(2)(C)
and Rule 123D(c)(2)(C) without any substantive differences.
    Proposed Rule 7.35A(j)(3) would provide that a temporary suspension
under this Rule would be in effect for the trading day on which it was
declared only. This proposed rule text is based on Rule 15(f)(3)
without any differences.
    Proposed Rule 7.35A(j)(4) would provide that notwithstanding a
temporary suspension of the requirement to publish pre-opening
indications in a security under this Rule, a DMM may publish a pre-
opening indication for one or more securities. This proposed rule text
is based on Rule 15(f)(4) with a difference not to reference that the
Exchange would publish a pre-opening indication. This proposed
difference is based on the difference under the Pillar Auction Rules,
described above, that the Exchange would not publish a pre-opening
indication if a DMM is unable to do so.
Proposed Rule 7.35B (DMM-Facilitated Closing Auctions)
    Proposed Rule 7.35B would set forth the process for DMM-facilitated
Closing Auctions. As described in greater detail below, to promote
consistency and transparency in the Pillar Auction Rules, if the
functionality described in proposed Rule 7.35B is the same as the
functionality described in proposed Rule 7.35A, the Exchange proposes
to use the same subparagraph numbering for the two rules. For example,
Auction Imbalance Information for the Opening and Trading Halt Auctions
will be described in proposed Rule 7.35A(e) and the Auction Imbalance
Information for the Closing Auction will be described in proposed Rule
7.35B(e). The Exchange believes that keeping these two rules as
parallel as feasible would promote clarity, consistency, and
transparency in Exchange rules.
    DMM and Floor Broker Responsibilities. Proposed Rule 7.35B(a) would
set forth both the DMM and Floor broker responsibilities for the
closing of securities. Similar to the DMM and Floor broker
responsibilities as described in proposed Rule 7.35A(a) above, DMMs and
Floor brokers also have Floor-based roles in connection with the
Closing Auction and the Exchange proposes to specify these requirements
in proposed Rule 7.35B(a).
    Proposed Rule 7.35B(a) would provide that it is the responsibility
of each DMM to ensure that registered securities close as soon after
the end of Core Trading Hours as possible, while at the same time not
unduly hasty, particularly when at a price disparity from the Exchange
Last Sale Price. This proposed rule would be new for the Pillar Auction
Rules and reflects current DMM responsibilities, as specified in Rule
104(a)(3), but with greater detail about how the DMM should facilitate
the close of trading.
    The proposed rule text is based in part on the Rule 123D(a)(1) text
relating to the opening of trading, which is proposed to be included in
proposed Rule 7.35A(a) for the Pillar Auction Rules. The Exchange
believes that because the DMM responsibilities for the Closing Auction
are similar to the DMM responsibilities for the Core Open and Trading
Halt Auctions, the Closing Auction Rule should have parallel rule text.
A proposed difference for the Closing Auction version would be that the
DMM should look at price disparity from the Exchange Last Sale Price
when determining when to close the security. The proposed rule also
makes clear the current functionality that the Closing Auction would
occur after the end of Core Trading Hours, but that the DMM has a
responsibility to ensure that registered securities close as soon after
the end of Core Trading Hours as possible, but that it does not need to
be unduly hasty if there is a price disparity.
    Proposed Rule 7.35B(a)(1) would specify how Floor Broker Interest
would be entered for the Closing Auction. The functionality described
in this proposed rule would be new for the Exchange. Currently, if a
Floor broker orally represents a bid or offer at the point of sale
before the close of trading, for such interest to be included in the
closing transaction, the DMM must manually enter the details of the
order on behalf of the Floor broker, including the security, side,
size, limit price or if it is at market, and Floor broker badge number.
The Exchange believes that in

today's trading environment, this process introduces risk to the
closing process because the DMM is responsible for both manually
entering orders on behalf of potentially multiple Floor brokers in
multiple securities and also facilitating the closing process for
multiple securities. To reduce the burden on the DMM, the Exchange
proposes that on Pillar, the Floor broker would be responsible for
electronically entering interest that has been properly represented
orally by the end of Core Trading Hours. While the DMM would still be
responsible for validating such Floor broker-entered interest, the
burden on the DMM would be minimized, which the Exchange believes would
lead to a more efficient closing process.
    As proposed, Floor Broker Interest would be eligible to participate
in the Closing Auction provided that the Floor broker has
electronically entered such interest before the Auction Processing
Period for the Closing Auction begins. Proposed Rule 7.35B(a)(1)(A)
would provide that for such interest to be eligible to participate in
the Closing Auction, a Floor broker must:
     First, by the end of, but not after, Core Trading Hours,
orally represent Floor Broker Interest at the point of sale, including
symbol, side, size, and limit price (see proposed Rule
7.35B(a)(1)(A)(i)). This proposed rule text specifies the details of an
order that a Floor broker must represent at the point of sale by the
end of Core Trading Hours, e.g., not after 4:00 p.m. This rule text
proposes a substantive difference from how Floor brokers can currently
represent orders at the close because such orders would be required to
include a limit price. Today, a Floor broker can represent an order at
the close ``at market,'' which would not be supported on Pillar.
     Then, electronically enter such interest after the end of
Core Trading Hours, and such electronic entry of Floor Broker Interest
would not be subject to Limit Order Price Protection (see proposed Rule
7.35B(a)(1)(A)(ii)). This proposed text would be new functionality for
the Pillar Auction Rules and represents the proposed new method to
electronically enter orally-represented Floor Broker Interest into
Exchange systems for participation in the Closing Auction. To
distinguish this interest from orders entered by a Floor broker during
Core Trading Hours, the Exchange proposes that such interest could be
entered only after the end of Core Trading Hours. In addition, because
such interest would be eligible to participate in the Closing Auction
only, the Exchange proposes that it would not be subject to Limit Order
Price Protection, as described in Rule 7.31(a)(2)(B).
    Proposed Rule 7.35B(a)(1)(B) would provide that before Floor Broker
Interest would be ranked for the Closing Auction, it must be
electronically accepted by the DMM and that once accepted, Floor Broker
Interest would be processed as an order ranked Priority 2--Display
Orders from a Floor Broker Participant for purposes of inclusion in
Closing Auction Imbalance Information and ranking and allocation in the
Closing Auction. This proposed rule text would be new functionality for
the Pillar Auction Rules and represents the more limited role that DMMs
would have in processing Floor Broker Interest. The Exchange proposes
that the DMM's electronic acceptance would serve to validate that the
Floor broker had represented the Floor Broker Interest consistent with
proposed Rule 7.35B(a)(1)(A).
    In addition, as described above, the Exchange proposes to continue
disseminating Closing Auction Imbalance Information until the Auction
begins. Pursuant to proposed Rule 7.35B(a)(1)(B), Floor Broker Interest
would be included in such Closing Auction Imbalance Information after
it has been accepted by the DMM. Because such Floor Broker Interest
must include a limit price, the Exchange proposes to process it as an
order ranked Priority 2--Display Orders for purposes of Auction
Imbalance Information.
    In addition to the new functionality of including this interest in
the Closing Auction Imbalance Information after 4:00 p.m., this
proposed rule would represent new functionality of how Floor Broker
Interest would be allocated in an Auction. Pursuant to Rule
123C(7)(a)(iii), Floor broker interest entered manually by the DMM is
considered ``has-to-go'' interest and is currently guaranteed to
participate in the closing transaction. In Pillar, the Exchange
proposes a difference that Floor Broker Interest would be ranked as
Priority 2--Display Orders. Whether such Floor Broker Interest would be
guaranteed to participate in the Closing Auction would be based on its
limit price, which is consistent with how other orders ranked Priority
2--Display Orders would be processed in the Closing Auction.\80\
---------------------------------------------------------------------------

    \80\ See discussion infra regarding proposed Rule 7.35B(h).
---------------------------------------------------------------------------

    Proposed Rule 7.35B(a)(1)(C) would provide that, after the end of
Core Trading Hours, electronically-entered Floor Broker Interest could
not be reduced in size or replaced, provided that, subject to Floor
Official approval, a DMM can accept a full cancellation of
electronically-entered Floor Broker Interest to correct a Legitimate
Error. This proposed rule text would be new for the Pillar Auction
Rules and represents current functionality that a Floor broker cannot
change the terms of an order after the close of Core Trading Hours. The
Exchange believes, however, that if there is a Legitimate Error with
the electronically-entered order, the Floor broker should be able to
cancel such order, but not replace it with a new order.\81\
---------------------------------------------------------------------------

    \81\ For example, if a Floor broker orally represents Floor
Broker Interest to buy with a limit price of 10.02, but
electronically enters it with a limit price of 100.2, the Floor
broker should be able to fully cancel that order, but not replace
it.
---------------------------------------------------------------------------

    Proposed Rule 7.35B(a)(2) would address DMM Interest and would
provide that a DMM may enter or cancel DMM Interest after the end of
Core Trading Hours in order to supply liquidity as needed to meet the
DMM's obligation to facilitate the Closing Auction in a fair and
orderly manner. This proposed rule text would be new for the Pillar
Auction Rules and is based on the current Rule 104(a)(3) obligation for
a DMM to supply liquidity as needed to facilitate the close of trading
on the Exchange. Currently, the DMM can meet that obligation by
entering or cancelling their own interest after 4:00 p.m. This proposed
rule text would specify this functionality in the Pillar Auction Rules.
Similar to Floor Broker Interest for the Closing Auction, the Exchange
proposes that the entry of DMM Interest after the end of Core Trading
Hours would not be subject to Limit Order Price Protection.
    Closing Without a Trade. Proposed Rule 7.35B(b) would provide that
if there is no interest to conduct a Closing Auction, a DMM may close a
registered security without a trade and that in such case, the Official
Closing Price for the security would be determined as provided for in
Rule 1.1. As noted above, if there is no interest to conduct a closing
transaction, the DMM is not required to conduct a closing transaction
or publish a new quote. However, even if there is no closing
transaction, there would be an Official Closing Price disseminated for
such security. This proposed rule text would be new for the Pillar
Auction Rules and is designed to promote clarity and transparency
regarding the Closing Auction process in Exchange rules.
    DMM Closing Process. Proposed Rule 7.35B(c) would provide that the
DMM may effectuate a Closing Auction manually or electronically (see
Rule 104(b)(ii)). This proposed rule text is

based on Supplementary Material .10 to Rule 123C, which provides that
closings may be effectuated manually or electronically (see Rule
104(b)). The Exchange proposes non-substantive differences to use
Pillar terminology that mirrors proposed Rule 7.35A(c) relating to the
DMM Opening Process.
    Supplementary Material to Rule 123C further provides that Exchange
systems will not permit a DMM to close a security electronically if a
DMM has manually-entered Floor interest. The Exchange believes that
specifying the following circumstances when a DMM would not be
permitted to effect a Closing Auction electronically to the Pillar
Auction Rules will promote transparency regarding the circumstances of
when a DMM must close a security manually:
     The DMM has begun the process to close a security
manually, including by manually entering DMM Auction Liquidity (see
proposed Rule 7.35B(c)(1)(A)). This proposed rule text is based in part
on the second sentence of Supplementary Material .10 to Rule 123C,
which provides that Exchange systems will not permit a DMM to close a
security electronically if a DMM has manually-entered Floor interest,
which includes manual DMM interest. The proposed rule text is also
consistent with proposed Rule 7.35A(c)(1)(B), described above.
Specifically, the DMM uses a graphical user interface to manage the
closing process. From that template, the DMM can validate Floor Broker
Interest or enter DMM Auction Liquidity. The Exchange believes that if
a DMM is in the process of using such graphical user interface,
including to manually enter DMM Auction Liquidity, the DMM is taking an
action to indicate that the closing process will be effectuated
manually. Accordingly, if a DMM engages in such process, the Exchange
would not permit the DMM to close the security electronically.
     Floor Broker Interest for the Closing Auction that has
been electronically entered or requested to be cancelled has not yet
been accepted by the DMM (see proposed Rule 7.35B(c)(1)(B)). This
proposed rule text would be new for Pillar Auction Rules and is related
to the proposed new functionality relating to Floor Broker Interest for
the Closing Auction pursuant to proposed Rule 7.35B(a)(1). The Exchange
proposes that if a DMM has accepted all Floor Broker Interest that has
been entered, the DMM can effectuate the closing electronically.
However, if a Floor broker has entered Floor Broker Interest or
requested to cancel such interest, but the DMM has not yet accepted the
instruction, the Exchange would not permit the DMM to effectuate the
closing electronically.
     It is the first day of trading of a security that is the
subject of an IPO or a Direct Listing and the security never opened
(see proposed Rule 7.35B(c)(1)(C)). This proposed rule text would be
new for Pillar Auction Rules and would specify how the DMM should
process a security that is the subject of an IPO or a Direct Listing
and never opened. In such case, the Exchange does not believe that the
closing should be effectuated electronically.\82\
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    \82\ Because the Exchange accepts Auction-Only Orders intended
for the Closing Auction beginning at 6:30 a.m., it is possible for a
security to never open, and yet have interest that is eligible for a
Closing Auction and that could trade. The Exchange does not believe
that the DMM should electronically effect such a closing. Rather, in
such rare circumstances, the Exchange believes that the DMM should
manage such closing process manually.
---------------------------------------------------------------------------

     The security is suspended or halted at the end of Core
Trading Hours (see proposed Rule 7.35B(c)(1)(D)). This proposed rule
text would be new for Pillar Auction Rules and is based on current
functionality. The Exchange believes that if a security is halted or
suspended at the end of Core Trading Hours, a DMM should not be
permitted to effectuate a closing electronically because such security
may still be suspended or halted when the DMM attempts to conduct such
closing electronically. If the suspension or halt state is lifted
shortly after 4:00 p.m., the Exchange believes that if there is
interest to conduct a Closing Auction, the DMM should facilitate that
closing process manually.
     There is no Exchange Last Sale Price (see proposed Rule
7.35B(c)(1)(E)). This proposed rule text would be new for Pillar
Auction Rules and is based on current functionality. As described
below, the Exchange proposes to use the Exchange Last Sale Price as the
Imbalance Reference Price for the Closing Auction. The Exchange
believes that if there is no Exchange Last Sale Price in a security,
the Exchange would not have sufficient information to provide to a DMM
for closing a security electronically. Accordingly, the Exchange
proposes that in such scenario, the DMM must close the security
manually.
     A temporary suspension under proposed Rule 7.35B(j)(2)(A)
of this Rule has been invoked (see proposed Rule 7.35B(c)(1)(F)). This
proposed rule text would be new for the Pillar Auction Rules and
reflects that if Rule 7.34(a)(2)(B) has been suspended pursuant to
proposed Rule 7.35B(j)(2)(A) to permit the solicitation and entry of
orders after the end of Core Trading Hours because of extreme order
imbalances at or near the close, the Exchange believes that such
closing should be effectuated manually.
     The Closing Auction Price would be more than a designated
percentage away from the Exchange Last Sale Price (see proposed Rule
7.35B(c)(1)(G)). This proposed rule text would be new for the Pillar
Auction Rules and represents current functionality of when the DMM is
not permitted to effectuate a closing electronically. Similar to how
current Rule 123D(a)(1)(B)(i)(a) and (b) function for the open, today,
the Exchange does not permit the DMM to effectuate a closing
electronically if the DMM were to close a security a designated
percentage away from the last sale price on the Exchange. In the Pillar
Auction Rules, the Exchange proposes to specify this limitation.
    As proposed, the Exchange would use the Exchange Last Sale Price as
the reference price for determining whether the Closing Auction Price
would be at a price disparity requiring a manual closing process. The
Exchange further proposes that if the Exchange Last Sale Price were
$25.00 and below, the designated percentage would be 5%, if the
Exchange Last Sale Price were $25.01 to $50.00, the designated
percentage would be 4%, and if the Exchange Last Sale Price were above
$50.00, the designated percentage would be 2%. These are the current
designated percentages that the Exchange uses to determine whether to
permit a DMM to effectuate a closing electronically. The Exchange
believes that if a Closing Auction Price were to be outside these
proposed designated percentages, the closing process should be effected
manually.
     The paired volume for the Closing Auction would be more
than 1,000 round lots for such security (see proposed Rule
7.35B(c)(1)(H)). This proposed rule text would be new for the Pillar
Auction Rules and represents current functionality of when the DMM is
not permitted to effectuate a closing electronically. Similar to
current Rule 123D(a)(1)(B)(i)(c) and proposed Rule 7.35A(c)(1)(H) for
the opens and reopens, the Exchange proposes that the close should not
be effectuated electronically if the volume would exceed specified
parameters. Today, the Exchange does not permit a closing transaction
if it would be over 100,000 shares in size. In the Pillar Auction
Rules, the Exchange proposes to specify this requirement in round lots.
    Closing Imbalance. Proposed Rule 7.35B(d) would specify the
requirements relating to Closing

Imbalances, and is based on Rules 123C(1)(b), (1)(d), (4) and (5).
    Proposed Rule 7.35B(d) would specify that a Closing Imbalance
publication would include the Imbalance and the Side of the Imbalance.
This proposed rule text is based in part on Rule 123C(4), which
describes how the buy or sell side imbalance is determined. The
proposed rule would also provide that the Imbalance Reference Price for
a Closing Imbalance would be the Exchange Last Sale Price. This
proposed rule text is based in part on Rule 123C(4)(a)(i) and (ii),
which specifies that the last sale in a security, as reported to the
Consolidated Tape, would be the reference price. The Exchange proposes
a substantive difference on Pillar to use the Exchange Last Sale Price,
as defined in proposed Rule 7.35(a)(11)(B) above. As noted above, and
as described below, the Exchange proposes to use the Exchange Last Sale
Price for any scenario relating to the Closing Auction that would need
a reference price, including as the reference price for determining
price disparity to permit a DMM to close a security electronically or
as the Imbalance Reference Price for Auction Imbalance Information. The
Exchange believes it would promote consistency in Exchange rules to use
the same price for all of these purposes.
    As a corollary, the Exchange proposes that it would not disseminate
a Closing Imbalance if there is no Exchange Last Sale Price. This would
be new rule text for the Pillar Auction Rules and reflects that if
there is no sale information for a security, the Exchange would not be
able to calculate an imbalance, and therefore would not be able to
assess whether to publish a Closing Imbalance. Finally, proposed Rule
7.35B(d) would provide that a Closing Imbalance would be disseminated
to the securities information processor and that a Regulatory Closing
Imbalance would also be disseminated to proprietary data feeds. This
proposed rule text represents current functionality and is based in
part on Rules 123C(5)(a) and (b), which provides that both the
Mandatory MOC/LOC Imbalance Publication and Informational Imbalance
Publication are published on the Consolidated Tape. This proposed rule
text is also based in part on Rule 123C(6)(a)(vi), which references the
Mandatory MOC/LOC Imbalance Publication as part of the Order Imbalance
Information.
    Proposed Rule 7.35B(d)(1) would specify the requirements for
publication of a Regulatory Closing Imbalance. As proposed, at the
Closing Auction Imbalance Freeze Time (as defined above in proposed
Rule 7.35(a)(7)), if the Closing Imbalance is 500 round lots or more,
the Exchange would disseminate a Regulatory Closing Imbalance. This
proposed rule text is based on Rule 123C(1)(d)(i) and the first
sentence of Rule 123C(5)(a) with non-substantive difference to use
Pillar terminology and a substantive difference to use round lots
rather than the current rule, which requires the imbalance amount to be
50,000 shares. The Exchange believes that using round lots would better
reflect the significance of the imbalance, particularly for securities
with a round-lot size under 100 shares.
    Proposed Rule 7.35B(d)(1)(A) would provide that if, at the Closing
Auction Imbalance Freeze Time, the Closing Imbalance is less than 500
round lots, but is otherwise significant in relation to the average
daily trading volume in the security, a DMM may disseminate a
Regulatory Closing Imbalance only with prior Floor Official approval.
This proposed rule text is based on the second sentence of Rule
123C(5)(a) with non-substantive differences to use Pillar terminology
and a substantive difference to use round lots rather than refer to the
imbalance size in shares.
    Proposed Rule 7.35B(d)(1)(B) would provide that a Regulatory
Closing Imbalance would be a one-time publication that should not be
updated. This proposed rule text is based on Rule 123C(5)(A), which
states that the Regulatory Closing Imbalance is published as soon as
practicable after 3:50 p.m. This proposed rule text distinguishes the
Regulatory Closing Imbalance from the Auction Imbalance Information,
which would be updated every second.
    Proposed Rule 7.35B(d)(1)(C) would provide that a Regulatory
Closing Imbalance would be disseminated at the Closing Auction
Imbalance Freeze Time regardless of whether the security has not opened
or is halted or paused at that time. This proposed rule text is based
in part on Rule 123C(5)(c) with non-substantive differences to use
Pillar terminology. The Exchange also proposes a substantive difference
because under Current Auction Rules, when a trading halt in a security
is in effect at 3:50 p.m. but is lifted prior to the close of trading
in the security, a Mandatory MOC/LOC Imbalance Publication should be
published as close to the resumption of trading as practicable. By
contrast, under the Pillar Auction Rules, the Exchange proposes to
publish a Regulatory Closing Imbalance at the Closing Auction Imbalance
Freeze Time regardless of whether a security has not opened or is
halted or paused at that time.
    Proposed Rule 7.35B(d)(2) would specify the requirements for
publication of a Manual Closing Imbalance. As proposed, beginning one
hour before the scheduled end of Core Trading Hours up to the Closing
Auction Imbalance Freeze Time, a DMM may disseminate a Manual Closing
Imbalance only with prior Floor Official approval and only a DMM can
update a Manual Closing Imbalance publication. This proposed rule text
is based in part on current Rule 123C(1)(b) that an Informational
Imbalance Publication can only be between 3:00 p.m. and 3:50 p.m., and
on Rule 123C(5)(b), which provides that an Informational Imbalance
Publication may be published between 3:00 and 3:50 p.m. with the prior
approval of a Floor Official, with non-substantive differences to use
Pillar terminology.\83\
---------------------------------------------------------------------------

    \83\ Rule 123C(5)(b) also refers to a qualified ICE employee as
defined in NYSE Rule 46.10. Rule 46(b)(v) provides that qualified
ICE employees may be designated as a Floor Governor, and pursuant to
Rule 46(b)(ii), a Floor Governor is also deemed to be a Floor
Official. Accordingly, the Exchange believes that separately
referencing qualified ICE employees would be redundant of simply
referring to Floor Officials and therefore does not propose to
reference qualified ICE employees as defined in NYSE Rule 46.10 in
proposed Rule 7.35B(d)(2).
---------------------------------------------------------------------------

    Proposed Rule 7.35B(d)(2)(A) would provide that if a DMM
disseminates a Manual Closing Imbalance before the Closing Auction
Imbalance Freeze Time, such publication must be updated at the Closing
Auction Imbalance Freeze Time with either: (i) A Regulatory Closing
Imbalance, if the conditions specified in proposed Rule 7.35B(d)(1) are
met; or (ii) a ``No Imbalance'' publication if the conditions specified
in proposed Rule 7.35B(d)(1) are not met. This proposed rule text is
based on Rule 123C(5)(b)(i) and (ii) with non-substantive differences
to use Pillar terminology.
    Auction Imbalance Information. Proposed Rule 7.35B(e) would specify
Auction Imbalance Information for the Closing Auction. Proposed Rule
7.35B(e)(1) would specify the time of publication of such Auction
Imbalance Information as follows:
     Proposed Rule 7.35B(e)(1)(A) would provide that for the
Closing Auction, the Exchange would begin disseminating Auction
Imbalance Information at the Closing Auction Imbalance Freeze Time even
if such security is in a halt condition or has not yet opened. This
proposed rule text is based in part on Rule 123C(1)(f), which defines
the time when the Exchange begins publishing Order Imbalance
Information, and Rule 123C(6)(a) with non-substantive differences to
use Pillar terminology.
     Proposed Rule 7.35B(e)(1)(B) would provide that beginning
two hours before the end of Core Trading Hours up to the

Closing Auction Imbalance Freeze Time, the Exchange would make
available Total Imbalance, Side of Total Imbalance, Paired Quantity,
Unpaired Quantity, Side of Unpaired Quantity, and if published, Manual
Closing Imbalance, to Floor brokers for any security (i) in which a
Floor broker has entered an order or (ii) as specifically requested by
a Floor broker and that this Auction Imbalance Information would be
provided in a manner that does not permit electronic redistribution.
The rule would further provide that beginning at the Closing Auction
Imbalance Freeze Time, all Closing Auction Imbalance Information would
be made available to Floor brokers. This proposed rule text is based on
Rule 123C(6)(b) with non-substantive differences to use Pillar
terminology.
     Proposed Rule 7.35B(e)(1)(C) would provide that the
Exchange would not disseminate Auction Imbalance Information for the
Closing Auction if there is no Exchange Last Sale Price. This proposed
rule text would be new for the Pillar Auction Rules based on current
functionality. Because, as described below, the Exchange would use the
Exchange Last Sale Price as the basis for determining the Imbalance
Reference Price, if there is no Exchange Last Sale Price, there would
not be any information for the Exchange to determine Auction Imbalance
Information.
    Proposed Rule 7.35B(e)(2) would specify the content of Auction
Imbalance Information. As proposed, the Closing Auction Imbalance
Information would include Total Imbalance, Side of Total Imbalance,
Paired Quantity, Unpaired Quantity, Side of Unpaired Quantity,
Continuous Book Clearing Price, Closing Interest Only Clearing Price,
and Regulatory Closing Imbalance. This proposed rule text is based on
Rule 123C(6)(a)(i), which describes the Order Imbalance Information
disseminated under the Current Auction Rules, with non-substantive
differences to use Pillar terminology. In addition, as described above,
including Unpaired Quantity and Side of Unpaired Quantity would be new
information included under the Pillar Auction Rules.
    Proposed Rule 7.35A(e)(3) would specify how the Imbalance Reference
Price for the Closing Auction would be determined. As proposed, the
Imbalance Reference Price for the Auction Imbalance Information would
be:
     The BB if the Exchange Last Sale Price is lower than the
BB (see proposed Rule 7.35B(e)(3)(A)).
     The BO if the Exchange Last Sale Price is higher than the
BO (see proposed Rule 7.35B(e)(3)(B)).
     The Exchange Last Sale Price if it is at or between the
BBO or if the security was halted or not opened by the Closing Auction
Imbalance Freeze Time (see proposed Rule 7.35B(e)(3)(C)).\84\
---------------------------------------------------------------------------

    \84\ The terms BB, BO, and BBO are defined in Rule 1.1 to mean
the best bid on the Exchange, the best offer on the Exchange, and
the best bid or offer on the Exchange, respectively.
---------------------------------------------------------------------------

    This proposed rule text is based on Rule 123C(6)(a)(iii) and
subparagraphs (A)-(C) with non-substantive differences to use Pillar
terminology and a substantive difference to use Exchange Last Sale
Price rather than the last sale price of such security on the Exchange.
If a security has traded that day on the Exchange, use of the term
``Exchange Last Sale Price'' would have the same meaning as the current
rule. However, if there were no trades that day in a security on the
Exchange and the prior day's Official Closing Price were based on a
consolidated last-sale eligible trade from another exchange, then use
of the term Exchange Last Sale Price would have a substantive
difference from use of the term ``last sale price'' under current Rule
123C(6)(a)(iii). The Exchange believes that in such scenario, the term
Exchange Last Sale Price may have a more recent valuation than use of
the term last sale price on the Exchange.
    Auction Imbalance Freeze. Proposed Rule 7.35B(f) would provide that
the Auction Imbalance Freeze for the Closing Auction would begin at the
Closing Auction Imbalance Freeze Time. This proposed rule text is based
on Rules 123C(2), (3), (4), (5) and (6), which each reference the 3:50
p.m. time as the beginning of order entry and cancellation restrictions
and when the Exchange will begin disseminating information about the
close. The Exchange proposes non-substantive differences to use Pillar
terminology.
    Proposed Rule 7.35B(f) would further provide that order entry and
cancellation would be processed during the Closing Auction Imbalance
Freeze as follows:
     Entry of MOC and LOC Orders (proposed Rule 7.35B(f)(1)).
    [cir] Proposed Rule 7.35B(f)(1)(A) would provide that if a
Regulatory Closing Imbalance has not been published, the Exchange would
reject all MOC and LOC Orders. This proposed rule text is based on Rule
123C(2)(b)(ii) with non-substantive differences to use Pillar
terminology.
    [cir] Proposed Rule 7.35B(f)(1)(B) would provide that if a
Regulatory Closing Imbalance has been published, the Exchange would
accept MOC and LOC Orders opposite to the Side of the Regulatory
Closing Imbalance and would reject MOC and LOC Orders on the Side of
the Imbalance. This proposed rule text is based on Rule 123C(2)(b)(i)
with non-substantive differences to use Pillar terminology.\85\
---------------------------------------------------------------------------

    \85\ The Exchange does not propose rule text in the Pillar
Auction Rules based on Rule 123C(2)(a), which describes MOC and LOC
Order entry before 3:50 p.m., or 123C(2)(b)(3), which describes CO
Order entry after 3:50 p.m. Under the Pillar Auction Rules, the
Exchange proposes to describe only when order entry is restricted.
The Exchange also does not propose rule text based on Rule
123C(2)(c), which describes order entry in the event of a Trading
Halt. As described above, the Exchange would disseminate a
Regulatory Closing Imbalance at the Closing Auction Imbalance Freeze
Time even if a security were halted or paused at that time.
Accordingly, order entry of MOC and LOC Orders during such period
would need to comply with proposed Rule 7.35B(f)(1)(A) and (B)
regardless of whether a security is halted or paused.
---------------------------------------------------------------------------

     Cancellation of MOC, LOC, and Closing IO Orders (see
proposed Rule 7.35B(f)(2)).
    [cir] Proposed Rule 7.35B(f)(2)(A) would provide that from the
beginning of the Auction Imbalance Freeze Time until two minutes before
the scheduled end of Core Trading Hours, MOC, LOC, and Closing IO
Orders may be cancelled or reduced in size only to correct a Legitimate
Error. This proposed rule text is based on Rule 123C(3)(b) with non-
substantive differences to use Pillar terminology.\86\
---------------------------------------------------------------------------

    \86\ The Exchange does not propose rule text based on Rule
123C(3)(a), which provides that MOC, LOC and CO orders may be
cancelled or reduced in size for any reason up to 3:50 p.m. Under
the Pillar Auction Rules, the Exchange proposes to describe only
when order cancellation would be restricted.
---------------------------------------------------------------------------

    [cir] Proposed Rule 7.35B(f)(2)(B) would provide that except as
provided for in proposed Rule 7.35B(j)(2)(B) of this Rule, a request to
cancel, cancel and replace, or reduce in size a MOC, LOC, or Closing IO
Order entered two minutes or less before the scheduled end of Core
Trading Hours would be rejected. This proposed rule text is based on
Rule 123C(3)(c) with non-substantive differences to use Pillar
terminology and update the rule cross-references.
     Proposed Rule 7.35B(f)(3) would provide that beginning 10
seconds before the scheduled close of trading, a request to enter a
Closing D Order or D Order in any security or cancel, cancel and
replace, or modify a Closing D Order or D Order in an Auction-Eligible
Security would be rejected. The proposed rule text relating to
restrictions on the entry of Closing D Orders or D Orders in any
security is based in part on the operation of d-Quotes for Exchange-
listed securities

described in the second sentence of current Rule 70.25(a)(ii), which
prohibits the entry of d-Quotes 10 seconds or less before the close of
trading, and Rule 7.31(d)(4)(G), relating to D Orders entered in any
security 10 seconds or less before the scheduled close of trading.
Because the Exchange would accept a Closing D Order in a UTP Security,
even though such order would be routed to the primary market, as
proposed, such orders would also be rejected if entered 10 seconds or
less before the scheduled close of trading. Because restrictions on
entry of D Orders in any security in the last 10 seconds of trading
would be addressed in proposed Rule 7.35B(f)(3), the Exchange proposes
to delete Rule 7.31(d)(4)(G) as duplicative.
    The Exchange's proposal to also reject requests to cancel, cancel
and replace, or modify Closing D Orders or D Orders during this same
period would be new functionality on Pillar. Because this is new
functionality, it would be applicable only to Closing D Orders or D
Orders in Auction-Eligible Securities. The Exchange does not propose
the same restriction for Closing D Orders or D Orders in UTP Securities
because such orders are routed to the applicable primary listing market
as either a MOC or LOC Order, and would be processed by the primary
listing market under its applicable rules.
     Proposed Rule 7.35B(f)(4) would provide that all other
order instructions would be accepted, subject to the terms of such
orders. This proposed rule text is based in part on NYSE Arca Rule
7.35-E(d)(2)(C) and NYSE American Rule 7.35E(d)(2)(C) and reflects the
Pillar terminology to specify only restrictions on entry and
cancellation of orders.
    Determining an Auction Price. Proposed Rule 7.35B(g) would provide
that the DMM would be responsible for determining the Auction Price for
a Closing Auction under this Rule. This proposed rule text would be new
for the Pillar Auction rules and is based on current functionality that
as part of the DMM's role in facilitating auctions, the DMM determines
the Auction Price based on buy and sell orders represented in the
Exchange Book. The Exchange believes that including this detail in
Exchange rules provides clarity and transparency to the Exchange's
auction process.
    The rule would further provide that if there is an Imbalance of any
size, the DMM must select an Auction Price at which all better-priced
orders on the Side of the Imbalance can be satisfied. This proposed
rule text is based in part on Rule 123C(8)(a)(i)(A), which specifies
that Market Orders and Limit Orders better priced than the closing
price trading against the imbalance amount are guaranteed to
participate in the closing transaction.\87\ Otherwise, this proposed
rule text would be new for the Pillar Auction Rules, and is designed to
promote clarity and transparency in Exchange rules relating to the
Exchange's auction process.
---------------------------------------------------------------------------

    \87\ In the Pillar Auction Rules, a Market Order that is held
unexecuted pursuant to Rule 7.31(a)(1)(A) would be considered
better-priced interest when it is included for allocation in an
Auction.
---------------------------------------------------------------------------

    Auction Allocation. Proposed Rule 7.35B(h) would specify how orders
would be allocated in an Auction. As proposed, once an Auction Price
has been determined, orders would be allocated in a Closing Auction as
follows:
     Better-priced orders, including Yielding Orders and the
reserve interest of Reserve Orders, entered by the Book Participant or
a Floor Broker Participant would be guaranteed to participate in the
Closing Auction at the Auction Price (see proposed Rule 7.35B(h)(1)).
The Exchange proposes to use Pillar terminology in proposed Rule
7.35B(h)(1) to describe the same functionality as set forth in Rule
123C(7), which specifies the orders that must be executed in whole or
in part in the closing transaction, i.e., are better-priced orders,
including G Orders.\88\
---------------------------------------------------------------------------

    \88\ See G Orders in Auctions Filing, supra note 73.
---------------------------------------------------------------------------

     At-priced orders and DMM Interest of any price would not
be guaranteed to participate in the Closing Auction (see proposed Rule
7.35B(h)(2)). The Exchange proposes to use Pillar terminology in
proposed Rule 7.35B(h)(2) to describe the functionality as set forth in
Rule 123C(7)(b), including that DMM Interest is not guaranteed to
participate in such Auctions. Proposed Rule 7.35B(h)(2) would further
provide how at-priced orders would be allocated in an Auction as
follows:
    [cir] First, orders ranked Priority 2--Display Orders and Closing D
Orders would be allocated on parity by Participant pursuant to Rule
7.37(b)(2)-(7) (see proposed Rule 7.35B(h)(2)(A)). By cross-referencing
Rule 7.37(b)(2)-(7), this proposed rule text makes clear that the
allocation process for the Closing Auction would follow the established
Pillar parity allocation process. The Exchange believes that if at-
priced Closing D Orders are participating in the Closing Auction at the
Auction Price, such orders should be allocated together with displayed
orders. In addition, by cross referencing Rules 7.37(b)(5), (6), and
(7), the proposed Rule provides specificity that allocations to each
Participant, including DMMs, would be allocated consistent with those
rules.
    [cir] Next, orders ranked Priority 3--Non-Display Orders would be
allocated on parity by Participant pursuant to Rule 7.37(b)(2)-(7) (see
proposed Rule 7.35B(h)(2)(B)). This proposed rule text would be
applicable to the reserve interest of Reserve Orders, which are the
only orders ranked Priority 3--Non-Display Orders eligible to
participate in an Auction. By cross-referencing Rule 7.37(b)(2)-(7),
this proposed rule text makes clear that the allocation process for the
Closing Auction would follow the established Pillar parity allocation
process.
    [cir] Next, LOC Orders would be allocated on time (see proposed
Rule 7.35B(h)(2)(C)). This proposed allocation would be new under the
Pillar Auction Rules. Unlike LOO Orders, which are disseminated via
proprietary data feeds at their limit price when there is no continuous
trading before the Core Open or Trading Halt Auction, LOC Orders are
not displayed at their limit price and are included in Auction
Imbalance Information for the Closing Auction in the aggregate only for
purposes of determining the size of the applicable Imbalance. The
Exchange does not include LOC Orders in the proprietary data feeds at
their limit price because they are not eligible to participate in
continuous trading. Because they are not displayed, the Exchange does
not believe that they should be ranked together with orders ranked
Priority 2--Display Orders. The Exchange further believes that orders
ranked Priority 3--Non-Displayed Orders should have priority over LOC
Orders because such orders were eligible to trade before the Closing
Auction, and therefore were at risk of trading before the Auction.
    [cir] Next, Closing IO Orders opposite to the Side of the Unpaired
Quantity would be allocated on time (see proposed Rule 7.35B(h)(2)(D)).
This proposed rule text is based on Rule 13(c)(1), which describes how
CO Orders are allocated. The Exchange proposes non-substantive
differences to use Pillar terminology to describe the same
functionality. Proposed Rule 7.35B(h)(2)(D)(i) would further provide
that Closing IO Orders would not participate in the Closing Auction if
there is no Unpaired Quantity at the Auction Price. This proposed rule
text is similarly based on Rule 13(c)(1), but with non-substantive
differences to use Pillar terminology.
    [cir] Next, the display quantity of orders ranked Priority 4--
Yielding Orders and Closing D Orders with a Yielding Modifier would be
allocated on time

(see proposed Rule 7.35B(h)(2)(E)). This proposed allocation is
consistent with the Exchange's proposal regarding how displayed
Yielding Orders would be allocated on Pillar under Rule 7.37(b)(1)(G).
This proposed allocation ranking is also consistent with how orders are
allocated pursuant to Rule 123C.\89\
---------------------------------------------------------------------------

    \89\ See Securities Exchange Act Release No. 71246 (January 7,
2014), 79 FR 2231 (January 13, 2014) (SR-NYSE-2013-84) (Notice of
filing and immediate effectiveness of proposed rule change to
provide that at-priced G Orders yield to CO Orders at the close).
---------------------------------------------------------------------------

    [cir] Next, the non-display quantity of orders ranked Priority 4--
Yielding Orders would be allocated on time (see proposed Rule
7.35B(h)(2)(F)). This proposed allocation is consistent with the
Exchange's proposal regarding how non-displayed Yielding Orders would
be allocated on Pillar under Rule 7.37(b)(1)(H).
     Proposed Rule 7.35B(h)(3) would address the DMM
Participant Allocation of at-priced orders in the Closing Auction,
which would be all of the DMM Participant's orders, regardless of limit
price. The Exchange proposes that the manner by which DMMs would
participate in an Auction would differ from how they participate in
allocations during continuous trading, described above. As proposed:
    [cir] At-priced DMM Orders would be placed on the allocation wheel
for the Closing Auction based on the time of entry and any other orders
or interest from such DMM would join that position on the allocation
wheel (see proposed Rule 7.35B(h)(3)(A)). In such case, the DMM Order
with the earliest entry time would establish that DMM Participant's
position on the allocation wheel, consistent with Rule
7.37(b)(2)(B).\90\ However, if the only DMM Interest available to
participate in a Closing Auction would be DMM Auction Liquidity or
better-priced DMM Orders or both, such DMM Interest would be placed
last on the allocation wheel. Similar to proposed Rule 7.35A(h)(3)(A)
regarding allocation of DMM Interest in the Core Open or Trading Halt
Auction, the Exchange proposes that in these scenarios, the DMM
Interest would go last on the allocation wheel because such orders
would either be repriced for the Auction (in the case of a better-
priced DMM Order, which would be considered an at-priced order for the
Auction Allocation) or entered right before the Auction (in the case of
DMM Auction Liquidity). Because such DMM Interest is intended to be
offsetting interest for an Auction, the Exchange does not believe that
such DMM Interest should have time priority in how they are included in
an allocation wheel over other orders that are eligible to participate
in an Auction. This proposed functionality would be new on Pillar and
is designed so that DMMs, who have the ability to enter buy and sell
interest last in an Auction, would not receive any time priority for
such interest.
---------------------------------------------------------------------------

    \90\ Rule 7.37(b)(2)(B) provides that additional Participants
are added to an allocation wheel based on time of entry of the first
order entered by a Participant.
---------------------------------------------------------------------------

    [cir] A parity allocation to the DMM Participant would be allocated
in price-time priority (see proposed Rule 7.35B(h)(3)(B)). As discussed
above, a parity allocation to the DMM Participant would be based on the
working time. However, in an Auction Allocation, DMM Interest may have
more than one limit price, and the Exchange proposes that the parity
allocation to the DMM Participant would be allocated among such DMM
Interest in price-time priority, even though they all would participate
in the Auction at a single price.
    SIP Modifier. Proposed Rule 7.35B(i) would provide that the Closing
Auction would be designated with a modifier to identify it as a Closing
Auction Trade and that the Exchange would report an Official Closing
Price, as defined in Rule 1.1, for all Auction-Eligible Securities that
trade on the Exchange, provided that an Official Closing Price would
not be reported for a security if there was no Exchange Last Sale Price
in such security on a trading day. These SIP modifiers are consistent
with how the Exchange functions under the Current Auction Rules and
would be new rule text for the Pillar Auction Rules that is based on
NYSE Arca Rule 7.35-E(d)(4) and NYSE American Rule 7.35E(d)(4).
    Temporary Rule Suspensions. Current Rule 123C(9) provides that in
order to address extreme order imbalances at or near the close, the
Exchange can temporarily suspend either the hours of the Exchange or
the prohibition on cancelling or reducing in size MOC, LOC, or CO
Orders after 3:58 p.m. In the Pillar Auction Rules, the Exchange
proposes to move these two temporary rule suspension requirements to
proposed Rule 7.35B(j). The Exchange also proposes a new temporary rule
suspension for the close that is based on the current Rule 123D(c)
temporary rule suspension for the open or reopen.
    Proposed Rule 7.35B(j)(1) would set forth the temporary suspension
of DMM automated closing limitations, which would be new under the
Pillar Auction Rules. As described above, pursuant to proposed Rule
7.35B(c)(1)(G), the Exchange proposes to specify designated percentages
for when a DMM may not close a security electronically. Because this
proposed rule text is based in part on Rule 123D(a), the Exchange
similarly proposes a temporary suspension of these automated
limitations for the close similar to the temporary suspension of
automated limitations for the open or reopen as set forth in Rule
123D(c).
    Proposed Rule 7.35B(j)(1)(A) would provide that if the CEO of the
Exchange, or his or her designee, determines that a Floor-wide event is
likely to have an impact on the ability of DMMs to arrange for a fair
and orderly Closing Auction and that, absent relief, the operation of
the Exchange is likely to be impaired, the CEO of the Exchange may
temporarily suspend the prohibition on a DMM closing a security
electronically if the Closing Auction Price would be more than the
price or volume parameters specified in proposed Rule 7.35B(c)(1)(F)
and (G). This proposed rule text is based on Rule 123D(c)(1)(A) with
modifications to apply it to the Closing Auction.
    Proposed Rule 7.35B(j)(1)(B) would provide that in determining
whether to temporarily suspend proposed Rule 7.35B(c)(1)(F) or (G), the
CEO of the Exchange would:
     Consider the facts and circumstances that are likely to
have Floor-wide impact for a particular trading session, including
volatility in the day's trading session, trading in foreign markets,
substantial activity in the futures market, evidence of pre-closing
significant order imbalances across the market, government
announcements, news and corporate events, and such other market
conditions that could impact Floor-wide trading conditions (see
proposed Rule 7.35B(j)(1)(B)(i)). This proposed rule text is based on
Rule 123D(c)(2)(A) with modifications to apply it to the Closing
Auction.
     Notify the Chief Regulatory Officer of the Exchange (see
proposed Rule 7.35B(j)(1)(B)(ii)). This proposed rule text is based on
Rule 123D(c)(2)(B) with modifications to apply it to the Closing
Auction.
     Inform the Securities and Exchange Commission staff as
promptly as practicable of the temporary suspension (see proposed Rule
7.35B(j)(1)(B)(iii)). This proposed rule text is based on Rule
123D(c)(2)(C) with modifications to apply it to the Closing Auction.
    Proposed Rule 7.35B(j)(1)(C) would provide that a temporary
suspension under this Rule will be in effect for the trading day on
which it was declared only. This proposed rule text is based

on Rule 123D(c)(3) with modifications to apply it to the Closing
Auction.
    Proposed Rule 7.35B(j)(2) would set forth in the Pillar Auction
Rules the temporary suspensions currently available under Rule
123C(9)(a), with non-substantive differences to use Pillar terminology.
As proposed, to avoid closing price dislocation that may result from an
order entered into Exchange systems or represented to a DMM orally at
or near the end of Core Trading Hours, the Exchange may temporarily
suspend one of two rules.
    First, pursuant to proposed Rule 7.35B(j)(2)(A), the Exchange may
temporarily suspend the requirement to enter all order instructions by
the end of Core Trading Hours (Rule 7.34(a)(2)(B)) \91\ to permit the
solicitation and entry of orders into Exchange systems. This proposed
rule text is based on Rule 123C(9)(a)(1) as follows:
---------------------------------------------------------------------------

    \91\ See discussion infra regarding proposed Rule 7.34(a)(2)(B),
which is based on Rule 52. Currently, Rule 123C(9)(a)(1) permits a
temporary suspension of the hours of operation, as described in Rule
52. The Exchange believes that proposed Rule 7.35B(j)(2)(A) achieves
the same result using Pillar terminology to describe the temporary
rule suspension.
---------------------------------------------------------------------------

     Such orders would be solicited solely to offset any
Imbalance in a security that may exist as of the scheduled end of Core
Trading Hours (see proposed Rule 7.35B(j)(2)(A)(i)). This proposed rule
text is based on Rule 123C(9)(a)(1)(i) with non-substantive differences
to use Pillar terminology. Specifically, Rule 123C(9)(a)(1)(i) refers
to offsetting ``any imbalance'' in a security. Because, as described
above, the term ``Imbalance'' for the Closing Auction refers to the
imbalance of Auction-Only Orders, to ensure that the Imbalance used for
entry of orders during this proposed temporary suspension would reflect
all orders eligible to trade in the Closing Auction, the Exchange
proposes to specify that for purposes of proposed Rule 7.35B(j)(2)(A),
the Imbalance would include all interest eligible to participate in the
Closing Auction. This proposed rule text makes clear that if this
temporary rule suspension were triggered, the Imbalance included in the
Auction Imbalance Information, which would continue to be calculated
until the Closing Auction begins, would begin to include all orders
eligible to trade in the Closing Auction.
     The Exchange would disseminate a notice via its
proprietary data feed and such other methods of communication, as
determined by the Exchange, that notifies both on-Floor and off-Floor
participants that the Exchange would be accepting offsetting orders
after the end of Core Trading Hours up to an order acceptance cut-off
time designated by the Exchange (the ``Solicitation Period'') (see
proposed Rule 7.35B(j)(2)(A)(ii)). This proposed rule text is based on
Rule 123C(9)(a)(1)(ii) with a substantive difference to specify that
the solicitation would be disseminated both on the Exchange's
proprietary data feed, which would be new under Pillar Auction Rules,
and such other methods of communication. For example, the Exchange
currently notifies member organizations of such solicitations via
Trader Update. The Exchange proposes to continue using Trader Updates
and believes that also including this information in its proprietary
data feed will enable automated systems of Exchange member
organizations to be able to respond on a more timely basis to such
solicitation requests. The Exchange also proposes non-substantive
differences to use Pillar terminology, including a new defined term of
``Solicitation Period.'' The proposed rule would further provide that
such notification would include, at a minimum: (A) The security symbol;
(B) the Total Imbalance; (C) the Side of the Total Imbalance; and (D)
the Exchange Last Sale Price. This proposed rule text is also based on
Rule 123C(9)(a)(1)(ii) and uses Pillar terminology to describe the
information that would be included in the solicitation request.
     If the Side of the Imbalance is buy (sell), during the
Solicitation Period, the Exchange will accept only sell (buy) Limit
Orders and Floor Broker Interest with a limit price equal to or higher
(lower) than the Exchange Last Sale Price. Such orders would not be
subject to the Limit Order Price Check and would not be routed to an
Away Market (see proposed Rule 7.35B(j)(2)(A)(iii)). This proposed rule
text is based on Rule 123C(9)(a)(1)(iii) with non-substantive
differences to use Pillar terminology. The Exchange proposes new
functionality under the Pillar Auction Rules. First, because Limit
Orders are subject to Limit Order Price Protection, the Exchange
proposes to specify that Limit Orders entered in response to a
Solicitation Request would not be subject to such price check. Because
such orders are by their terms, restricted in the limit price
applicable to such orders, the Exchange does not believe that Limit
Order Price Protection would be necessary for such orders.
    Second, the Exchange proposes to systemically enforce these order
entry requirements. Currently, while Rule 123C(9)(a)(1)(iii) requires
only specified interest to be entered, Exchange systems do not enforce
this requirement. Under the Pillar Auction Rules, the Exchange proposes
to enforce these requirements by rejecting orders outside of these
specified parameters. To specify this new functionality, proposed Rule
7.35B(j)(2)(A)(iii) would further provide that the Exchange would
reject all other orders and requests to cancel any orders, regardless
of the time of entry of the original order. For example, if an order
was represented before the end of Core Trading Hours, the Exchange
would not accept a cancellation of such previously-entered order during
the Solicitation Period. Finally, because Auction Imbalance Information
would continue to be published up to the beginning of the Auction
Processing Period for the Closing Auction, the Exchange further
proposes to provide that orders entered during the Solicitation Period
would be included in the calculation of the Continuous Book Clearing
Price.
     The DMM would close the security the earlier of the order
acceptance cut-off time or if the Imbalance is paired off at or
reasonably contiguous to the Exchange Last Sale Price (see proposed
Rule 7.35B(j)(2)(A)(iv)). This proposed rule would further provide that
for purposes of proposed Rule 7.35B(j)(2)(A), a price reasonably
contiguous to the Exchange Last Sale Price is within cents of the
Exchange Last Sale Price and would be a price point that during a
regular closing auction would not be considered a dislocating closing
price as compared to the Exchange Last Sale Price and that all
offsetting interest solicited pursuant to proposed Rule 7.35B(j)(2)(A)
would be executed consistent with proposed Rule 7.35B(h). This proposed
rule text is based on Rule 123C(9)(a)(1)(iv) with non-substantive
differences to use Pillar terminology and update the rule cross
references.
     Finally, if the Exchange solicits orders after the close
of Core Trading Hours pursuant to proposed Rule 7.35B(j)(2)(A), the
Total Imbalance information that would be disseminated pursuant to
proposed Rule 7.35B(e) would begin including all orders eligible to
participate in the Closing Auction. This proposed rule text would be
new for the Pillar Auction Rules and reflects that not only would the
Imbalance be calculated based on all orders eligible to participate in
the Closing Auction, but the Total Imbalance published during this
period would also be based on all orders eligible to participate in the
Closing Auction.
    Second, pursuant to proposed Rule 7.35B(j)(2)(B), the Exchange may
temporarily suspend the prohibition on

canceling an MOC or LOC Order after two minutes before the scheduled
end of Core Trading Hours (proposed Rule 7.35B(f)(2)(B)). This proposed
rule text is based on Rule 123C(9)(a)(2) with one substantive
difference that in Pillar, the Exchange would not support being able to
reduce the size of a MOC or LOC Order if this temporary suspension were
invoked. Instead, as proposed, if this temporary suspension were
invoked, the Exchange would be able to fully cancel a MOC or LOC Order
only. Based on the Current Auction Rules, the Exchange proposes certain
qualifications for such temporary suspension, provided that:
     The cancellation is necessary to correct a Legitimate
Error (see proposed Rule 7.35B(j)(2)(B)(i)). This proposed rule text is
based on Rule 123C(9)(2)(A) with non-substantive differences to use
Pillar terminology.
     Execution of such an MOC or LOC Order would cause
significant price dislocation at the close (see proposed Rule
7.35B(j)(2)(B)(ii)). This proposed rule text is based on Rule
123C(9)(2)(B) with non-substantive differences to use Pillar
terminology.
    Proposed Rule 7.35B(j)(3) would provide that only the DMM assigned
to a particular security may request a temporary suspension under
proposed Rule 7.35B(j)(2) and that a determination to declare such a
temporary suspension may be made after the scheduled end of Core
Trading Hours and would be made on a security-by-security basis. This
proposed rule text is based on Rule 123C(9)(b) with non-substantive
differences to use Pillar terminology. Proposed Rule 7.35B(j)(3) would
further provide that such determination, as well as any entry or
cancellation of orders or closing of a security under proposed Rule
7.35B(j)(2) must be supervised and approved by an Executive Floor
Governor and supervised by an Exchange Officer and that factors that
may be considered when making such a determination include, but would
not be limited to, when the order(s) that impacted the Imbalance were
entered into Exchange systems or orally represented to the DMM, the
impact of such order(s) on the closing price of the security, the
volatility of the security during the trading session, and the ability
of the DMM to commit capital to dampen the price dislocation. This
proposed rule text is also based on Rule 123C(9)(b) with non-
substantive differences to use Pillar terminology.\92\
---------------------------------------------------------------------------

    \92\ The Exchange also proposes a non-substantive difference to
reference only the term ``Exchange Floor Governor,'' and not
reference qualified ICE employees, as such text is redundant. See
discussion supra note 81. In addition, because the Exchange no
longer has Rule 48, the Exchange proposes to simply reference an
Exchange Officer, which is a term used in other Exchange rules, such
as Rule 7.10.
---------------------------------------------------------------------------

    Finally, proposed Rule 7.35B(j)(4) would provide that a temporary
suspension under proposed Rule 7.35B(j)(2) would be in effect only for
the particular security for which such suspension has been granted and
for that trading day. This proposed rule text is based on Rule
123C(9)(c) with non-substantive differences to update the rule cross
references.
Proposed Rule 7.35C (Exchange-Facilitated Auctions)
    As discussed above, DMMs have an obligation to facilitate Auctions
and therefore both the Current Auction Rules and proposed Pillar
Auction Rules, described above, contemplate that the DMM will
facilitate Auctions. The Current Auction Rules also provide for how the
Exchange would facilitate an Auction if a DMM cannot facilitate the
opening or closing of trading. In such circumstances, Rule 123D(a)(2)-
(6) sets forth how the Exchange would facilitate the opening or
reopening of securities and Supplementary Material .10 to Rule 123C
sets forth how the Exchange would facilitate the closing of
securities.\93\
---------------------------------------------------------------------------

    \93\ See Securities Exchange Act Release No. 76290 (October 28,
2015), 80 FR 67822 (November 3, 2015) (SR-NYSE-2015-49) (Notice of
filing and immediate effectiveness of proposed rule change to Rule
123D) and Securities Exchange Act Release No. 74006 (January 6,
2015), 80 FR 1567 (January, 12, 2015) (SR-NYSE-2014-73) (Notice of
filing and immediate effectiveness of proposed rule change to Rule
123C). The Exchange has never facilitated either an opening or
closing of any security on the Exchange.
---------------------------------------------------------------------------

    When Exchange-listed securities transition to Pillar, the Exchange
proposes that new Rule 7.35C (Exchange-Facilitated Auctions) would
describe how the Exchange would facilitate an Auction in one or more
securities if the DMM cannot. Similar to how the Current Auction Rules
function, because the Exchange would not supply any liquidity when
facilitating an Auction, under proposed Rule 7.35C, the Exchange would
not open, reopen, or close a security at a price outside of defined
numerical parameters. In addition, similar to the Current Auction
Rules, orders that would have otherwise participated in an Auction
under Rule 7.35A, but which may not participate in an Exchange-
facilitated Auction because of such numerical parameters, will be
cancelled.
    While the basic premise of how Exchange-facilitated Auctions on
Pillar would not change, with the availability of Pillar technology,
the Exchange proposes enhancements to this process that are based on
how NYSE Arca and NYSE American operate electronic auctions, including
using an Indicative Match Price to determine how to price the Auction
and use of Auction Collars.
    Proposed Rule 7.35C(a) would provide that if a DMM cannot
facilitate an Auction for one or more securities in which the DMM is
registered under proposed Rules 7.35A or 7.35B, the Exchange would
conduct the Auction for such security or securities electronically as
provided for in proposed Rule 7.35C. This proposed rule text is based
in part on the first sentence of Rule 123D(a)(2) and the first sentence
of the second paragraph of Supplementary Material .10 to Rule 123C. The
Exchange proposes non-substantive differences to use Pillar technology
and cross reference Pillar Auction Rules.
    Proposed Rule 7.35C(a)(1) would provide that if the Exchange
facilitates an Auction, DMM Interest would not be eligible to
participate in such Auction and previously-entered DMM Interest would
be cancelled. This proposed rule text is based in part on the second
sentence of Rule 123D(a)(2) and the second sentence of the second
paragraph of Supplementary Material .10 to Rule 123, which each provide
that ``[m]anually-entered Floor interest will not participate in any
[opening/closing] effectuated electronically by the Exchange and if
previously entered, will be ignored.'' The Exchange proposes non-
substantive differences to use Pillar terminology. The Exchange also
proposes a substantive difference that all DMM Interest would be
cancelled--not just DMM Interest entered on the Trading Floor by a DMM.
In addition, to reflect the new Floor Broker Interest functionality,
described above in proposed Rule 7.35B(a)(1), proposed Rule 7.35C(a)(2)
would provide that Floor Broker Interest that has been electronically
accepted by the DMM and that has not been cancelled as provided for in
Rule 7.35B(a)(1)(C) (i.e., the DMM has not accepted such cancellation),
would be eligible to participate in an Exchange-facilitated Closing
Auction. However, if the DMM has not accepted such interest, and
therefore that interest has not yet been validated, or if the DMM has
accepted a cancellation request, it would not be eligible to
participate in an Exchange-facilitated Closing Auction.
    Proposed Rule 7.35C(a)(3) would provide that a security subject to
an Exchange-facilitated Core Open Auction, IPO Auction, Direct Listing
Auction, or Trading Halt Auction may open or reopen with a trade or a
quote.

This proposed rule text is based in part on Rule 123D(a)(3) and (a)(4),
which describe how an opening or reopening can be on a trade or a
quote.
    Proposed Rule 7.35C(b) would set forth definitions that would be
used for purposes of proposed Rule 7.35C only. Proposed Rule
7.35C(b)(1) would define the term ``Auction Reference Price,'' which is
a term defined in NYSE Arca Rule 7.35-E(a)(8)(A) and NYSE American Rule
7.35E(a)(8)(A). As described below, the Auction Reference Price would
be used by the Exchange, and is used by NYSE Arca and NYSE American,
for purposes of calculating the Indicative Match Price and Auction
Collars.
    The Exchange proposes a difference from NYSE Arca and NYSE American
because the Auction Reference Price that would be used for a particular
Auction would be based on the Imbalance Reference Price, described
above, for such Auctions. As proposed, the Auction Reference Price for
the Core Open Auction would be the Imbalance Reference Price as
determined under proposed Rule 7.35A(e)(3), described above. And,
except as provided for in proposed Rule 7.35C(e)(1), described below,
the Auction Reference Price for a Trading Halt Auction would also be
the Imbalance Reference Price as determined under proposed Rule
7.35A(e)(3), described above. The proposed Auction Reference Price for
the Closing Auction would be the Imbalance Reference Price as
determined under proposed Rule 7.35B(e)(3).
    Finally, because the Exchange proposes to have functionality
available to facilitate an IPO or Direct Listing Auction, the Exchange
proposes that the Auction Reference Price for such Auctions would be a
price determined under proposed Rule 1.1(s)(1)(F). Pursuant to that
rule, the Exchange determines the Official Closing Price for a security
that is a new listing and does not have any consolidated last-sale
eligible trades on its first trading day based on a derived last sale
associated with the price of such security before it begins trading on
the Exchange. As noted above, pursuant to Rule 123C(1)(e)(i)(C), the
Exchange already determines the Official Closing Price in this manner
for new listings. As proposed, this price would be used as the Auction
Reference Price if the Exchange were to facilitate an IPO or Direct
Listing Auction.
    Proposed Rule 7.35C(b)(2) would define the term ``Indicative Match
Price'' to mean the best price at which the maximum volume of shares,
including the non-displayed quantity of Reserve Orders, would be
tradable in the applicable Auction, subject to the Auction Collars.
This proposed definition is based on NYSE Arca Rule 7.35-E(a)(8) and
NYSE American Rule 7.35E(a)(8) without any differences. With the
exception of which Auction Reference Price would be used by the
Exchange when it facilitates an Auction, the manner by which the
Exchange would determine the Indicative Match Price would be based on
NYSE Arca and NYSE American rules without any differences, as follows:
     Proposed Rule 7.35C(b)(2)(A) would provide that if there
are two or more prices at which the maximum volume of shares would be
tradable, the Indicative Match Price would be the price closest to the
Auction Reference Price, provided that the Indicative Match Price would
not be lower (higher) than the price of an order to buy (sell) ranked
Priority 2--Display Orders that was eligible to participate in the
applicable Auction. This proposed rule is based on NYSE Arca Rule 7.35-
E(a)(8)(A) and NYSE American Rule 7.35E(a)(8)(A) without any
differences.
     Proposed Rule 7.35C(b)(2)(B) would provide that if there
are two prices at which the maximum volume of shares would be tradable
and both prices are equidistant to the Auction Reference Price, the
Indicative Match Price would be the Auction Reference Price. This
proposed rule is based on NYSE Arca Rule 7.35-E(a)(8)(B) and NYSE
American Rule 7.35E(a)(8)(B) without any differences.
     Proposed Rule 7.35C(b)(2)(C) would provide that if the
Paired Quantity for an auction consists of buy and sell Market Orders
only, the Indicative Match Price would be the Auction Reference Price.
This proposed rule is based on NYSE Arca Rule 7.35-E(a)(8)(C) and NYSE
American Rule 7.35E(a)(8)(C) with a difference that the Auction
Reference Price would be used for all Auctions, whereas the NYSE Arca
and NYSE American rules use a different reference price for the Closing
Auction.
     Proposed Rule 7.35C(b)(2)(D) would provide that if the
Indicative Match Price is not in the MPV for the security, it would be
rounded to the nearest price at the applicable MPV. This proposed rule
text is based on NYSE American Rule 7.35E(a)(8)(F) with a non-
substantive difference not to include rule text referring to an
Indicative Match Price based on the midpoint of the ``Auction NBBO,''
as this is a feature that the Exchange does not propose to include in
Rule 7.35C.\94\
---------------------------------------------------------------------------

    \94\ The Exchange does not propose rule text based on NYSE Arca
Rule 7.35-E(a)(8)(D) and (E) and NYSE American Rule 7.35E(a)(8)(D)
and (E) because those rules describe how those exchanges determine
an Indicative Match Price that would be included in their
proprietary data feeds if there is no ``matched volume.'' Because,
as described below, the Exchange would not be changing the Auction
Imbalance Information when the Exchange facilitates an Auction, and
such information does not include a field for Indicative Match
Price, and because the Exchange cannot facilitate an Auction if
there is no paired volume, the Exchange's proposed rules do not need
to describe how an Indicative Match Price is determined if there is
no paired volume.
---------------------------------------------------------------------------

    Proposed Rule 7.35C(b)(3) would define the term ``Auction Collar''
to mean the price collar thresholds for the Indicative Match Price for
an Auction. This proposed rule text is based on NYSE Arca Rule 7.35-
E(a)(10) and NYSE American Rule 7.35E(a)(10) without any substantive
differences. The Exchange further proposes that there would be no
Auction Collars for an IPO Auction or Direct Listing Auction. This
proposed rule text is based in part on NYSE Arca Rule 7.35-E(f)(2) and
NYSE American Rule 7.35E(f)(2), which provide than an IPO Auction on
those exchanges would not be subject to Auction Collars. Because the
Exchange proposes to process Direct Listing Auctions similarly to an
IPO Auction, the Exchange proposes that if it facilitates a Direct
Listing Auction, it would similarly not be subject to Auction Collars.
    Proposed Rule 7.35C(b)(3)(A) would provide that except as provided
for in proposed Rule 7.35C(e)(2), described below, the upper (lower)
boundary of the Auction Collar would be the Auction Reference Price
increased (decreased) by either a specified amount or specified
percentage, as applicable, rounded to the nearest MPV, provided that
the lowest Auction Collar would be one MPV above $0.00. This proposed
method of calculating the Auction Collar is identical to how NYSE Arca
and NYSE American calculate an Auction Collar.\95\
---------------------------------------------------------------------------

    \95\ See NYSE Arca Rule 7.35-E(a)(10)(A) (third sentence) and
NYSE American Rule 7.35E(a)(10)(A) (third sentence).
---------------------------------------------------------------------------

     Proposed Rule 7.35C(b)(3)(A)(i) would provide that the
Auction Collar for the Core Open Auction and the Closing Auction would
be based on a price that is the greater of $0.15 or 10% away from the
Auction Reference Price for the applicable Auction. This proposed
Auction Collar is based in part on NYSE American Rule 7.35E(a)(10)(A),
which also uses an Auction Collar for its Core Open Auction and Closing
Auction that is

$0.50 or 10% away from the Auction Reference Price. The Exchange
proposes a substantive difference to use $0.15 as the breakpoint rather