[Federal Register Volume 86, Number 129 (Friday, July 9, 2021)]
[Notices]
[Pages 36440-36476]
[FR Doc No: 2021-14391]

Vol. 86

Friday,

No. 129

July 9, 2021

Part III

Securities and Exchange Commission

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Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of
Proposed Rule Change for New Rules 6.1P-O, 6.37AP-O, 6.40P-O, 6.41P-O,
6.62P-O, 6.64P-O, 6.76P-O, and 6.76AP-O and Amendments to Rules 1.1,
6.1-O, 6.1A-O, 6.37-O, 6.65A-O and 6.96-O; Notice

Federal Register / Vol. 86 , No. 129 / Friday, July 9, 2021 /
Notices

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92304; File No. SR-NYSEArca-2021-47]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change for New Rules 6.1P-O, 6.37AP-O, 6.40P-O, 6.41P-
O, 6.62P-O, 6.64P-O, 6.76P-O, and 6.76AP-O and Amendments to Rules 1.1,
6.1-O, 6.1A-O, 6.37-O, 6.65A-O and 6.96-O

June 30, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 21, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes new Rules 6.1P-O (Applicability), 6.37AP-O
(Market Maker Quotations), 6.40P-O (Pre-Trade and Activity-Based Risk
Controls), 6.41P-O (Price Reasonability Checks--Orders and Quotes),
6.62P-O (Orders and Modifiers), 6.64P-O (Auction Process), 6.76P-O
(Order Ranking and Display), and 6.76AP-O (Order Execution and Routing)
and proposes amendments to Rules 1.1 (Definitions), 6.1-O
(Applicability, Definitions and References), 6.1A-O (Definitions and
References--OX), 6.37-O (Obligations of Market Makers), 6.65A-O (Limit-
Up and Limit-Down During Extraordinary Market Volatility), and 6.96-O
(Operation of Routing Broker) to reflect the implementation of the
Exchange's Pillar trading technology on its options market. The
proposed change is available on the Exchange's website at www.nyse.com,
at the principal office of the Exchange, and at the Commission's Public
Reference Room.

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

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

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

1. Purpose
Background
    The Exchange plans to transition its options trading platform to
its Pillar technology platform. The Exchange's and its national
securities exchange affiliates' \4\ (together with the Exchange, the
``NYSE Exchanges'') cash equity markets are currently operating on
Pillar. For this transition, the Exchange proposes to use the same
Pillar technology already in operation for its cash equity market. In
doing so, the Exchange will be able to offer not only common
specifications for connecting to both of its cash equity and equity
options markets, but also common trading functions.
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    \4\ The Exchange's national securities exchange affiliates are
the New York Stock Exchange LLC (``NYSE''), NYSE American LLC
(``NYSE American''), NYSE National, Inc. (``NYSE National''), and
NYSE Chicago, Inc. (``NYSE Chicago'').
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    The Exchange plans to roll out the new technology platform over a
period of time based on a range of symbols, anticipated for the fourth
quarter of 2021. With this transition, certain rules would continue to
be applicable to symbols trading on the current trading platform--the
OX system,\5\ but would not be applicable to symbols that have
transitioned to trading on Pillar.
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    \5\ ``OX'' refers to the Exchange's current electronic order
delivery, execution, and reporting system for designated option
issues through which orders and quotes of Users are consolidated for
execution and/or display. See Rule 6.1A-O(13). ``OX Book'' refers to
the OX's electronic file of orders and quotes, which contain all of
the orders in each of the Display Order and Working Order processes
and all of the Market Makers' quotes in the Display Order Process.
See Rule 6.1A-O(14). With the transition to Pillar, the Exchange
would no longer use the terms ``OX'' or ``OX Book'' and rules using
those terms would not be applicable to trading on Pillar. Once the
transition is complete, the Exchange will file a subsequent proposed
rule change to delete references to OX and OX Book from the
rulebook.
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    Instead, the Exchange proposes new rules to reflect how options
would trade on the Exchange once Pillar is implemented. These proposed
rule changes will (1) use Pillar terminology that is based on Exchange
Rule 7-E Pillar terminology governing cash equity trading; (2) provide
for common functionality on both its options and cash equity markets;
and (3) introduce new functionality.
    The Exchange notes that certain of the proposed new Pillar rules
concern functionality not currently available on the OX system and that
would be unique to how option contracts trade, and therefore would be
new rules with no parallel version for the Exchange's cash equity
market.
Proposed Use of ``P'' Modifier
    As proposed, new rules governing options trading on Pillar would
have the same numbering as current rules that address the same
functionality, but with the modifier ``P'' appended to the rule number.
For example, Rule 6.76-O, governing Order Ranking and Display--OX,
would remain unchanged and continue to apply to any trading in symbols
on the OX system. Proposed Rule 6.76P-O would govern Order Ranking and
Display for trading in options symbols migrated to the Pillar platform.
All other current rules that have not had a version added with a ``P''
modifier will be applicable to how trading functions on both the OX
system and Pillar. Once all options symbols have migrated to the Pillar
platform, the Exchange will file a separate rule proposal to delete
rules that are no longer operative because they apply only to trading
on the OX system.
    To reflect how the ``P'' modifier would operate, the Exchange
proposes to add rule text immediately following the title ``Rule 6-O
Options Trading,'' and before ``Rules Principally Applicable to Trading
of Option Contracts'' that would provide that rules with a ``P''
modifier would be operative for symbols that are trading on the Pillar
trading platform. As further proposed, if a symbol is trading on the
Pillar trading platform, a rule with the same number as a rule with a
``P'' modifier would no longer be operative for that symbol and the
Exchange would announce by Trader Update \6\ when symbols are trading
on the Pillar trading platform.\7\
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    \6\ Trader Updates are available here: https://www.nyse.com/trader-update/history. Anyone can subscribe to email updates of
Trader Updates, available here: https://www.nyse.com/subscriptions.
    \7\ The Exchange used the same description when it transitioned
its cash equity platform to Pillar. See Securities Exchange Act
Release Nos. 75494 (July 20, 2015), 80 FR 44170 (July 24, 2015) (SR-
NYSEArca-2015-38) (Approval Order) and 74951 (May 13, 2015), 80 FR
28721 (May 19, 2015) (Notice).

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    The Exchange believes that adding this explanation regarding the
``P'' modifier in Exchange rules would provide transparency regarding
which rules and definitions would be operative during the symbol
migration to Pillar.
Summary of Proposed Rule Changes
    In this filing, the Exchange proposes the following new Pillar
rules: Rules 6.1P-O (Applicability), 6.37AP-O (Market Maker
Quotations), 6.40P-O (Pre-Trade and Activity-Based Risk Controls),
6.41P-O (Price Reasonability Checks--Orders and Quotes), 6.62P-O
(Orders and Modifiers), 6.64P-O (Auction Process), 6.76P-O (Order
Ranking and Display), and 6.76AP-O (Order Execution and Routing). The
Exchange also proposes to amend Rules 1.1 (Definitions), 6.1-O
(Applicability, Definitions and References), and 6.1A-O (Definitions
and References--OX) to reflect definitions that would be applicable for
options trading on Pillar and make conforming amendments to Rules 6.37-
O (Obligations of Market Makers), 6.65A-O (Limit-Up and Limit-Down
During Extraordinary Market Volatility), and 6.96-O (Operation of
Routing Broker). These proposed rules would set forth the foundation of
the Exchange's options trading model on Pillar and would use existing
Pillar terminology currently in effect for the Exchange's cash equity
platform.
    Because certain proposed rules have definitions and functions that
carry forward to other proposed rules, the Exchange proposes to
describe the new rules in the following order (rather than by rule
number order): Definitions, applicability, ranking and display,
execution and routing, orders and modifiers, market maker quotations,
pre-trade and activity-based risk controls, price reasonability checks,
and auctions.
    To promote clarity and transparency, the Exchange further proposes
to add a preamble to the following current rules specifying that they
would not be applicable to trading on Pillar: Rule 6.1-O
(Applicability, Definitions and References), 6.1A-O (Definitions and
References--OX), Rule 6.37A-O (Market Maker Quotations), 6.40-O (Risk
Limitation Mechanism), 6.60-O (Price Protection--Orders), 6.61-O (Price
Protections--Quotes), 6.62-O (Certain Types of Orders Defined), 6.64-O
(OX Opening Process), 6.76-O (Order Ranking and Display--OX), 6.76A-O
(Order Execution--OX), 6.88-O (Directed Orders), and 6.90-O (Qualified
Contingent Crosses).
    As discussed in greater detail below, the Exchange is not proposing
fundamentally different functionality applicable to options trading on
Pillar than on the OX system. However, with Pillar, the Exchange would
introduce new terminology, and as applicable, new or updated
functionality that would be available for options trading on the Pillar
platform.
    The Exchange notes that new rules relating to electronic complex
trading on Pillar will be addressed in separate proposed rule change.
Proposed Rule Changes
Rule 1.1--Definitions
    Rule 1.1 sets forth definitions that are applicable to both the
Exchange's cash equity and options markets. Rule 6.1-O(b) sets forth
definitions that are applicable to the trading of option contracts on
the Exchange. Rule 6.1A-O sets forth definitions that are applicable to
trading on the Exchange's current OX system. In connection with the
transition of options trading to Pillar, the Exchange proposes to copy
the definitions currently set forth in Rules 6.1-O and 6.1A-O into to
Rule 1.1, with changes as described below. This proposed rule change
would streamline the Exchange's rules by consolidating definitions that
would be applicable for trading on Pillar into Rule 1.1. Once the
transition to Pillar is complete, the Exchange will file a subsequent
proposed rule change to delete current Rules 6.1-O and 6.1A-O.
    In connection with adding definitions to Rule 1.1, the Exchange
proposes to delete the sub-paragraph numbering currently set forth in
Rule 1.1. The Exchange does not believe that the sub-paragraph
numbering is necessary because the definitions are organized in
alphabetical order and would continue to be organized in alphabetical
order. In addition, removing the sub-paragraph numbering would make any
future amendments to Rule 1.1 easier to process as any new definitions
would simply be added in alphabetical order.
    Certain definitions in Rule 1.1 currently specify that they are
only for ``equities'' trading. With the proposed consolidation of
definitions, some of those definitions will become applicable to both
options and cash equity trading, and others will continue to be
applicable only to cash equity trading. With the proposed
consolidation, the Exchange proposes to remove existing language
limiting those definitions to ``equities'' traded on the Exchange if
the definition would be equally applicable to options trading. In
addition, to the extent that a proposed definition would continue to be
applicable only to cash equity trading, the Exchange proposes to make a
global change to update references to ``equities'' traded on the
Exchange to ``cash equity securities'' traded on the Exchange. The
Exchange believes these proposed modifications would add clarity and
consistency to Exchange rules.
    The Exchange proposes the following amendments to Rule 1.1.
    First, definitions set forth in Rule 6.1-O(b) would be added to
Rule 1.1 in alphabetical order without any substantive differences.\8\
To promote clarity, if the definition that is being copied is not
specifically about options trading, the Exchange proposes to add an
introductory clause to the definition to specify that the term is for
options traded on the Exchange. The Exchange does not propose to copy
the definition of ``Quote with Size,'' which is currently defined in
Rule 6.1-O(b)(33), to Rule 1.1 because that term would not be used in
the Pillar rules, and does not propose to copy the definition of
``Short Term Options Series,'' because it is duplicative of Commentary
.07 to Rule 6.4-O. In addition, the Exchange is not including the
definition of ``Foreign Broker/Dealer,'' which is currently defined in
Rule 6.1-O(b)(31), in Rule 1.1, as this term is not used anywhere else
in Exchange rules.\9\ The Exchange also proposes the following
clarifying, non-substantive changes to definitions that are being
copied from Rule 6.1-O(b) to Rule 1.1:
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    \8\ Rule 6.1-O(b) has definitions for: Options Clearing
Corporation, Rules of the Options Clearing Corporation, Clearing
Member, Participating Exchange, Option Contract, Exchange Option
Transaction and Exchange Transaction, Type of Option, Call, Put,
Class of Options, Series of Options, Option Issue, Underlying Stock
or Underlying Security, Exercise Price, Aggregate Exercise Price,
Expiration Month, Expiration Date, Long Position, Short Position,
Opening Purchase Transaction, Opening Writing Transaction, Closing
Sale Transaction, Closing Purchase Transaction, Covered, Uncovered,
Outstanding, Primary Market, Options Trading, Customer, Trading
Crowd, Foreign Broker/Dealer, Exchange-Traded Fund Share, Quote with
Size, Trading Official, Non-OTP Firm or Non-OTP Holder Market Maker,
Firm, Consolidated Book, Crowd Participants, Electronic Order
Capture System, Short Term Option Series, and Quarterly Options
Series.
    \9\ The Exchange is not proposing to delete the definitions of
either ``Quote with Size'' or ``Foreign Broker/Dealer'' at this time
as such terms would be deleted in the subsequent filing to delete
Rule 6.1-O.
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     The Exchange proposes to provide that the term ``class of
options'' or ``class'' would mean all series of options, both puts and
calls, overlying the same underlying security.
     The Exchange proposes to streamline the definitions of
``Closing

Purchase Transaction,'' Closing Sale Transaction,'' ``Opening Purchase
Transaction,'' and ``Opening Writing Transaction'' without any
substantive differences.
     The Exchange proposes to revise the definition of
``Electronic Order Capture System'' to eliminate reference to the
Commission's order Instituting Public Administrative Proceedings
Pursuant to Section 19(h)(1) of the Securities Exchange Act of 1934,
Making Findings and Imposing Remedial Sanctions, which was the initial
authority for the Exchange to specify requirements relating to the
Electronic Order Capture System. The Exchange will continue to include
requirements for the Electronic Order Capture System in its rules and
does not believe it is necessary to continue to cite to the original
authority for this requirement in Exchange rules.
     The Exchange proposes to streamline the definition of
``Expiration Date'' to eliminate now obsolete language limiting the
definition to options expiring before, on, or after February 15, 2015.
In addition, the Exchange does not propose to include the following
text in the Rule 1.1 definition of ``Expiration Date'':
``Notwithstanding the foregoing, in the case of certain long-term
options expiring on or after February 1, 2015 that the Options Clearing
Corporation has designated as grandfathered, the term ``expiration
date'' shall mean the Saturday immediately following the third Friday
of the expiration month.'' This rule text is now obsolete as the
Exchange does not have any series trading on the Exchange with such
Saturday expiration dates.
     The Exchange proposes to add to the definition of ``option
contract'' that option contracts would include within the definition of
``security'' or ``securities'' as such terms are used in the Bylaws and
Rules of the Exchange. This proposed text is copied from the last
sentence of current Rule 6.1-O(a). As described below, proposed Rule
6.1P-O would not include this text.
     The Exchange proposes to amend the definition of ``option
issue'' to mean the security underlying a class of options.
     The Exchange proposes to streamline the definition of
``outstanding'' without any substantive differences.
     The Exchange proposes to use the term ``underlying
security'' rather than referring separately to an ``underlying stock or
Exchange-Traded Fund Share,'' as an Exchange-Traded Fund Share is a
security as that term is defined in Rule 1.1 (and is also an NMS
stock).
    Second, definitions set forth in Rule 6.1A-O(a) would be moved and
added to Rule 1.1 in alphabetical order without any substantive
differences.\10\ Because certain of these definitions are already set
forth in Rule 1.1 for cash equity trading, the Exchange proposes to
amend those existing definitions to specify that they would be
applicable to options trading, and if applicable, set forth differences
for options trading, as described in more detail below. The Exchange
does not propose to move the definition of ``Directed Order Market
Maker'' to Rule 1.1 because in Pillar, the Exchange would no longer
support Directed Order Market Makers. In addition, the Exchange does
not propose to move the definitions of ``Complex BBO'' or ``Complex
NBBO'' to Rule 1.1, and instead will be proposing to define those terms
in a separate proposed rule change relating to electronic complex
trading. As noted above, the terms ``OX'' and ``OX Book'' will not be
used in Pillar rules.
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    \10\ Rule 6.1A-O(a) has definitions for: Authorized Trader, BBO,
Complex BBO, Core Trading Hours, Customer, Professional Customer,
Lead Market Maker, Market Center, Marketable, Market Maker, Market
Maker Authorized Trader, Minimum Price Variation, NBBO, Complex
NBBO, NOW Recipient, OX, OX Book, Routing Broker, Sponsored
Participant, Sponsoring OTP Firm, Sponsorship Provisions, User,
Directed Order Market Maker, and Order Flow Provider.
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    Finally, in addition to definitions that are being moved without
any substantive changes, the Exchange proposes the following specific
changes to Rule 1.1 definitions: \11\
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    \11\ The Exchange also proposes a non-substantive amendment to
the definition of ``Exchange'' to add a period at the end of the
sentence.
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     Approved Person: The Exchange proposes a non-substantive
amendment to change the word ``a'' to ``an'' before ``OTP Firm.''
     Authorized Trader: The Exchange proposes to amend the Rule
1.1 definition of ``Authorized Trader'' to remove the limitation to
equities trading so that it is applicable to both cash equity
securities and options traded on the Exchange, and to add that it can
mean a person who may submit orders to the Exchange's Trading
Facilities on behalf of his or her OTP Holder. These proposed
amendments combine the definition of Authorized Trader currently set
forth in Rule 6.1A-O(a)(1) with the existing Rule 1.1 definition of
Authorized Trader without any substantive differences.
     Away Market: The Exchange proposes to amend the Rule 1.1
definition of ``Away Market'' to add how that term would be used for
options trading on the Exchange. As proposed, the new text would
provide: ``[w]ith respect to options traded on the Exchange, the term
``Away Market'' means any Trading Center (1) with which the Exchange
maintains an electronic linkage, and (2) that provides instantaneous
responses to orders routed from the Exchange.'' This proposed
definition is based on the Rule 6.1A-O(a)(12) definition of ``NOW
Recipient'' with only a non-substantive difference to use the Pillar
term of ``Away Market'' instead of the term ``NOW Recipient.'' The
Exchange does not include in this definition reference to designating
and publishing to its website certain Away Markets because such markets
are by definition those with which the Exchange maintains electronic
linkage (i.e., pursuant to the Options Order Protection and Locked/
Crossed Market Plan).
     BBO: The Exchange proposes to amend the Rule 1.1
definition of ``BBO'' to add how that term would be used for options
trading on the Exchange. As proposed, with respect to options traded on
the Exchange, BBO would mean the best displayed bid or best displayed
offer on the Exchange. This definition is based on the Rule 6.1A-
O(a)(2)(a) definition of BBO without any substantive differences.
     Consolidated Book: The term ``Consolidated Book'' is
currently defined in Rule 6.1-O(b)(37) and the term ``OX Book'' is
currently defined in Rule 6.1A-O(a)(14). For Pillar, the Exchange
proposes to define the term ``Consolidated Book'' based on both of
those existing definitions and would provide that for options traded on
the Exchange, the term ``Consolidated Book'' would mean the Exchange's
electronic book of orders and quotes and that all orders and quotes
that are entered into the Consolidated Book would be ranked and
maintained in accordance with the rules of priority, as provided for in
proposed Rule 6.76P-O. This proposed definition is also similar to the
existing Rule 1.1 definition of ``NYSE Arca Book,'' which would be
amended to specify that the definition would only be for cash equity
securities traded on the Exchange.
     Core Trading Hours: The definition of Core Trading Hours
would be applicable to both cash equity securities and options trading
on the Exchange. Because options trading may extend past 4:00 p.m., the
Exchange proposes to amend the Rule 1.1 to provide that for options
traded on the Exchange, transactions may be effected on the Exchange
for an equity options class until close of trading of the primary
market for the securities underlying an options class. This proposed
text is

based on current Rule 6.1A-O(a)(3) without substantive changes.\12\
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    \12\ The Exchange does not propose to include text regarding
trading that continues 15 minutes after the regular time set for the
normal close of trading in the primary markets with respect to index
options classes, as this is already addressed in Rule 5.20-O(a)
(Trading Sessions).
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     Customer and Professional Customer: The Exchange proposes
to amend Rule 1.1 to add the definitions of ``Customer'' and
``Professional Customer.'' The proposed definitions are based on the
definitions of Customer and Professional Customer set forth in Rule
6.1A-O(a)(4) and (4A) with non-substantive differences only to specify
that these definitions would be applicable for options traded on the
Exchange, eliminate redundant headers, and re-number the sub-
paragraphs. The Exchange also proposes to include a cross-reference to
the definition of a broker or dealer as defined Sections 3(a)(4) and
3(a)(5) of the Exchange Act and rules thereunder.\13\ The Exchange
believes that this specificity adds clarity and transparency to the
proposed definition.
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    \13\ The Exchange does not propose to carry over the definition
of ``Customer'' that is set forth in Rule 6.1-O(b)(29) as
unnecessary.
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     Lead Market Maker: The Exchange proposes to amend the Rule
1.1 definition of ``Lead Market Maker'' to add how that term would be
used for options trading. As proposed, the new text would provide that
for options traded on the Exchange, the term ``Lead Market Maker'' or
``LMM'' would ``mean a person that has been deemed qualified by the
Exchange for the purpose of making transactions on the Exchange in
accordance with Rule 6.82-O. Each LMM must be registered with the
Exchange as a Market Maker. Any OTP Holder or OTP Firm registered as a
Market Maker with the Exchange is eligible to be qualified as an LMM.''
This proposed definition is based on the Rule 6.1A-O(a)(5) definition
of Lead Market Maker without any differences.
     Marketable: The Exchange proposes to amend the Rule 1.1
definition of ``Marketable'' to extend it to address options traded on
the Exchange. The current description of the term ``Marketable'' for
purposes of Market Orders is the same in both Rules 1.1 and 6.1A-
O(a)(7). With respect to Limit Orders, in Rule 1.1, the term
``Marketable'' currently means an order that can be immediately
executed or routed. The current Rule 6.1A-O(a)(7) definition of the
term ``Marketable'' for Limit Orders means when the price of the order
matches or crosses the NBBO on the other side of the market. The
current Rule 1.1 definition relating to Limit Orders means
substantively the same thing as the Rule 6.1A-O(a)(7) description for
Limit Orders, and the Exchange proposes using the existing Rule 1.1
definition of the term ``Marketable'' for both cash equity and options
trading of Limit Orders. The Exchange also proposes a non-substantive
amendment to add a comma after the phrase, ``the term ``Marketable''
means'' and before ``for a Limit Order.''
     Market Maker: The Exchange proposes to amend the Rule 1.1
definition of ``Market Maker'' to add how that term would be used for
options trading. As proposed, the new text would provide that for
options traded on the Exchange, the term ``Market Maker'' would refer
``to an OTP Holder or OTP Firm that acts as a Market Maker pursuant to
Rule 6.32-O.'' This proposed definition is based on the Rule 6.1A-
O(a)(8) definition of Market Maker without any differences. The
Exchange also proposes to include in the definition of Market Maker
that for purposes of the NYSE Arca rules, the term Market Maker
includes Lead Market Makers, unless the context otherwise indicates.
This proposed text is based on Rule 6.1-O(c), References, without
substantive differences. The Exchange believes this proposed change
would streamline and clarify this definition.
     Market Maker Authorized Trader: The Exchange proposes to
amend the Rule 1.1 definition of ``Market Maker Authorized Trader'' to
add how that term would be used for options trading. As proposed, the
new text would provide that for options traded on the Exchange, the
term ``Market Maker Authorized Trader'' or ``MMAT'' would ``mean an
authorized trader who performs market making activities pursuant to
Rule 6-O on behalf of an OTP Firm or OTP Holder registered as a Market
Maker.'' This proposed definition is based on the Rule 6.1A-O(a)(9)
definition of Market Maker Authorized Trader without any differences.
     Market Participant Identifier (``MPID''): The Exchange
proposes to add a new definition to Rule 1.1 for ``Market Participant
Identifier (`MPID').'' This term is currently used in Rules 7.19-E and
7.31-E(i)(2). Because this term would also be used for options trading,
the Exchange believes that defining this term in Rule 1.1 would promote
clarity and transparency. The proposed definition would provide that
``Market Participant Identifier'' or ``MPID'' refers to the
identification number(s) assigned to the orders and quotes of a single
ETP Holder, OTP Holder, or OTP Firm for the execution and clearing of
trades on the Exchange by that permit holder. The definition would
further provide that an ETP Holder, OTP Holder, or OTP Firm may obtain
multiple MPIDs and each such MPID may be associated with one or more
sub-identifiers of that MPID.
     Minimum Price Variation or MPV: The Exchange proposes to
amend Rule 1.1 to add the definition of ``Minimum Price Variation'' or
``MPV'' for both cash equity securities and options that are traded on
the Exchange. The Exchange proposes that the term ``Minimum Price
Variation'' or ``MPV'' means the minimum price variations established
by the Exchange. The Exchange further proposes that the MPV for quoting
cash equity securities traded on the Exchange are set forth in Rule
7.6-E. The Exchange further proposes that the MPV for quoting and
trading options traded on the Exchange are set forth in Rule 6.72-O(a).
The proposed definition as it relates to options trading is based on
the Rule 6.1A-O(a)(10) definition of MPV.
     NBBO: The Exchange proposes to amend the Rule 1.1
definition of ``NBBO, Best Protected Bid, Best Protected Offer,
Protected Best Bid and Offer (PBBO)'' to add how the term NBBO would be
used for options trading. The Exchange proposes that: ``[w]ith respect
to options traded on the Exchange, the term ``NBBO'' means the national
best bid or offer. The terms ``NBB'' means the national best bid and
``NBO'' means the national best offer. This proposed definition is
based on the Rule 6.1A-O(a)(11)(a) definition of NBBO without any
differences. In addition, unless otherwise specified, for options
trading, the Exchange may adjust its calculation of the NBBO based on
information about orders it sends to Away Markets, execution reports
received from those Away Markets, and certain orders received by the
Exchange. This proposed text reflects how the Exchange currently
calculates the NBBO for options trading and is based on how the PBBO is
calculated on the Exchange's cash equity market, as described in Rule
7.37-E(d)(2).\14\ The Exchange proposes that it would adjust its
calculation of the NBBO for options traded on the Exchange in the same
manner that the Exchange calculates the PBBO for cash equity securities
traded on the Exchange. The Exchange further notes that there are
limited circumstances when the Exchange would not adjust its
calculation of the

NBBO, and would determine the NBBO for options in the same way that the
Exchange determines the NBBO for cash equity securities traded on the
Exchange. As described in detail below, the Exchange will specify in
its rules when it would be not be using an adjusted NBBO for purposes
of a specific rule.
    The Exchange further proposes that the term ``Away Market NBBO''
would refer to a calculation of the NBBO that excludes the Exchange's
BBO.
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 91564 (April 14,
2021), 86 FR 20541 (April 20, 2021) (SR-NYSEArca-2021-21) (Notice of
filing and immediate effectiveness of proposed rule change to
specify when the Exchange may adjust its calculation of the PBBO).
---------------------------------------------------------------------------

     NYSE Arca Book: The Exchange proposes to amend the Rule
1.1 definition of ``NYSE Arca Book'' to specify that this term is
applicable only for cash equity securities traded on the Exchange. As
noted above, the Exchange uses the term ``Consolidated Book'' for
options traded on the Exchange.
     NYSE Arca Marketplace: The Exchange proposes to amend the
Rule 1.1 definition of ``NYSE Arca Marketplace'' to specify that this
term is applicable only for cash equity securities traded on the
Exchange.
     Order Flow Provider or OFP: The Exchange proposes to add
the definition of ``Order Flow Provider or OFP'' to Rule 1.1 to mean
``any OTP Holder that submits, as agent, orders to the Exchange.'' This
proposed definition is based on the Rule 6.1A-O(a)(21) definition of
``Order Flow Provider'' without any differences.
     Trading Center: The Exchange proposes to amend the Rule
1.1 definition of ``Trading Center'' to add how this term would be used
for options trading. As proposed: ``[w]ith respect to options traded on
the Exchange, for purposes of Rule 6-O, the term ``Trading Center''
means a national securities exchange that has qualified for
participation in the Options Clearing Corporation pursuant to the
provisions of the rules of the Options Clearing Corporation.'' This
proposed definition is based on the Rule 6.1A-O(a)(6) definition of
``Market Center'' with a non-substantive difference to use the term
``Trading Center'' instead of ``Market Center.''
     User: The Exchange proposes to amend the Rule 1.1
definition of ``User'' to add how this term would be used for options
trading. As proposed: ``[w]ith respect to options traded on the
Exchange, the term `User' shall mean any OTP Holder or OTP Firm who is
authorized to obtain access to the Exchange pursuant to Rule 6.2A-O.''
This proposed definition is based on the Rule 6.1A-O(a)(19) definition
of User with non-substantive differences to use Pillar terminology.
     User Agreement: The Exchange proposes a non-substantive
amendment to the Rule 1.1 definition of ``User Agreement'' to replace
the term ``NYSE Arca, L.L.C'' with the term the ``Exchange.''
    In addition to proposed amendments to Rule 1.1, the Exchange
proposes to amend Rule 6.96-O to add the definition of ``Routing
Broker,'' which is currently defined in Rule 6.1A-O(a)(15). For options
trading on Pillar, the Exchange proposes to define the term in Rule
6.96-O (Operation of a Routing Broker) to mean ``the broker-dealer
affiliate of NYSE Arca, Inc. and any other non-affiliate that provides
services for routing orders submitted to the Exchange to other Trading
Facilities for execution whenever such routing is required by NYSE Arca
Rules and federal securities laws.'' \15\ The proposed rule text is
based on the current definition in Rule 6.1A-O(a)(15), with non-
substantive amendments to use Pillar terminology.
---------------------------------------------------------------------------

    \15\ The Exchange also proposes non-substantive amendments to
Rule 6.96-O to renumber current paragraphs (a), (b), and (c), as
paragraphs (b), (c), and (d).
---------------------------------------------------------------------------

    In connection with the proposed amendments to Rule 1.1, the
Exchange proposes to add the following preamble to Rule 6.1A-O: ``This
Rule will not be applicable to trading on Pillar.'' This proposed
preamble is designed to promote clarity and transparency in Exchange
rules that Rule 6.1A-O would not be applicable to trading on Pillar.
Proposed Rule 6.1P-O: Applicability
    Current Rule 6.1-O sets forth the applicability, definitions, and
references in connection with options trading. As noted above, the
definitions in Rule 6.1-O(b) and reference to LMMs being included in
the definition of Market Maker will be copied to proposed Rule 1.1 for
purposes of trading on Pillar.
    The Exchange proposes new Rule 6.1P-O to include only those
portions of Rule 6.1-O relating to applicability of Exchange Rules that
would continue to be applicable after the transition to Pillar.
Proposed Rule 6.1P-O(a) would be based on current Rule 6.1-O(a) with
differences that would streamline the proposed rule and reduce
duplication of terms defined in Rule 1.1. Proposed Rule 6.1P-O(b) would
be based in part on Rule 6.1-O(e) regarding the ``Applicability of
Other Exchange Rules,'' with changes to eliminate obsolete and
duplicative text and to clarify the proposed rule to provide that
unless stated otherwise, Exchange Rules would be applicable to
transactions on the Exchange in option contracts.
    In connection with proposed Rule 6.1P-O, the Exchange proposes to
add the following preamble to Rule 6.1-O: ``This Rule will not be
applicable to trading on Pillar.'' This proposed preamble is designed
to promote clarity and transparency in Exchange rules that Rule 6.1-O
would not be applicable to trading on Pillar.
Proposed Rule 6.76P-O: Order Ranking and Display
    Rule 6.76-O governs order ranking and display for the current
Exchange options trading system. Proposed Rule 6.76P-O would address
order ranking and display for options trading under Pillar.
    With the transition to Pillar, the Exchange does not propose any
substantive differences to how orders would be ranked and displayed on
the Exchange. However, the Exchange proposes to eliminate the
terminology relating to the ``Display Order Process'' and ``Working
Order Process'' and instead use Pillar terminology based on Rule 7.36-
E, which governs order ranking and display on the Exchange's cash
equity market. The Exchange proposes a difference between proposed
Pillar options rules and the existing cash equity Pillar rules to
reflect that, in addition to entering orders, Market Makers enter
quotes on the options trading platform. Accordingly, when the cash
equity rules refer to ``orders,'' the proposed options Pillar rules
would refer to both ``orders and quotes.''
    As discussed in detail below, the Exchange believes that the
proposed new rule text provides transparency with respect to how the
Exchange's price-time priority model would operate through the use of
new terminology applicable to all orders and quotes on the Pillar
trading platform.
    Proposed Rule 6.76P-O(a) would set forth definitions for purposes
of all of Rule 6-O Options Trading on the Pillar trading platform,
including proposed Rule 6.76AP-O (Order Execution and Routing),
described below. The proposed definitions are based on Rule 7.36-E(a)
definitions for purposes of Rule 7-E cash equity trading, with
differences, as noted above, to reference ``orders and quotes''
throughout proposed Rule 6.76P-O. The Exchange believes that these
proposed definitions would provide transparency regarding how the
Exchange would operate its options platform on Pillar, and serve as the
foundation for how orders and modifiers would be described for options
trading on Pillar, as discussed in more detail below.
     Proposed Rule 6.76P-O(a)(1) would define the term
``display price'' to mean the price at which an order or quote ranked
Priority 2--Display Orders or

Market Order is displayed, which may be different from the limit price
or working price of the order. This proposed definition is based on
Rule 7.36-E(a)(1). The Exchange proposes a non-substantive difference
to refer to ``order or quote ranked Priority 2--Display Orders,''
versus referring to ``Limit Order,'' as set forth in Rule 7.36-E(a)(1).
The term ``Priority 2--Display Orders'' is described in more detail
below. The Exchange also proposes a second difference compared to the
Exchange's cash equity rules to include Market Orders as interest that
may have a display price (for example, as described below and
consistent with current functionality, a Market Order could be
displayed at its Trading Collar).
     Proposed Rule 6.76P-O(a)(2) would define the term ``limit
price'' to mean the highest (lowest) specified price at which a Limit
Order or quote to buy (sell) is eligible to trade. The limit price is
designated by the User. As noted in the proposed definitions of display
price and working price, the limit price designated by the User may
differ from the price at which the order would be displayed or eligible
to trade. This proposed definition is based on Rule 7.36-E(a)(2)
without any substantive differences. The Exchange proposes one non-
substantive difference to refer to the specified price of a ``Limit
Order or quote,'' versus referring to ``Limit Order,'' as set forth in
Rule 7.36-E(a)(2).
     Proposed Rule 6.76P-O(a)(3) would define the term
``working price'' to mean the price at which an order or quote is
eligible to trade at any given time, which may be different from the
limit price or display price of an order. This proposed definition is
based on Rule 7.36-E(a)(3) without any substantive differences. The
Exchange proposes one non-substantive difference to refer to ``order or
quote'' for purposes of determining ranking priority. The Exchange
believes that the term ``working price'' would provide clarity
regarding the price at which an order may be executed at any given
time. Specifically, the Exchange believes that use of the term
``working'' denotes that this is a price that is subject to change,
depending on the circumstances. The Exchange will be using this term in
connection with orders and modifiers, as described in more detail
below.
     Proposed Rule 6.76P-O(a)(4) would define the term
``working time'' to mean the effective time sequence assigned to an
order or quote for purposes of determining its priority ranking. The
Exchange proposes to use the term ``working time'' in its rules for
trading on the Pillar trading platform instead of terms such as ``time
sequence'' or ``time priority,'' which are used in rules governing
trading on the Exchange's current system. The Exchange believes that
use of the term ``working'' denotes that this is a time assigned to an
order for purposes of ranking and is subject to change, depending on
circumstances. This proposed definition is based on Rule 7.36-E(a)(4)
without any substantive differences. The Exchange proposes one non-
substantive difference to refer to an ``order or quote,'' versus
referring solely to ``an order,'' as set forth in Rule 7.36-E(a)(4).
     Proposed Rule 6.76P-O(a)(5) would define an ``Aggressing
Order'' or ``Aggressing Quote'' to mean a buy (sell) order or quote
that is or becomes marketable against sell (buy) interest on the
Consolidated Book. The proposed terms would therefore refer to orders
or quotes that are marketable against other orders or quotes on the
Consolidated Book, such as incoming orders or quotes as well as orders
that have returned unexecuted after routing. These terms would also be
applicable to resting orders or quotes that become marketable due to
one or more events. For the most part, resting orders or quotes will
have already traded with contra-side interest against which they are
marketable. To maximize the potential for orders or quotes to trade,
the Exchange continually evaluates whether resting interest may become
marketable. Events that could trigger a resting order to become
marketable include updates to the working price of such order or quote,
updates to the NBBO, changes to other interest resting on the
Consolidated Book, or processing of inbound messages. To address such
circumstances, the Exchange proposes to include in proposed Rule 6.76P-
O(a)(5) that a resting order or quote may become an Aggressing Order or
Aggressing Quote if its working price changes, if the NBBO is updated,
because of changes to other orders or quotes on the Consolidated Book,
or when processing inbound messages.
    The proposed definition of an ``Aggressing Order'' is based on Rule
7.36-E(a)(5) without any substantive differences. The proposed rule
includes non-substantive differences to account for options trading,
such as including the defined term ``Aggressing Quote''; referring to
an ``order or quote'' versus ``an order''; referring to the
Consolidated Book rather than NYSE Arca Book; and referring to the NBBO
instead of the PBBO, which is not a term used in options trading. The
Exchange believes that these proposed definitions would promote
transparency in Exchange rules by providing detail regarding
circumstances when a resting order or quote may become marketable, and
thus would be an Aggressing Order or Aggressing Quote.
    Proposed Rule 6.76P-O(b) would govern the display of non-marketable
Limit Orders and quotes. The proposed Pillar functionality would
operate as described in current preamble of Rule 6.76-O and the Display
Order Process set forth in Rule 6.76-O(a)(1), without any substantive
differences, but will not use the terms ``Display Order Process,''
``Working Order Process,'' or ``OX,'' because the Exchange is not
proposing to use that terminology in Pillar. Throughout proposed
paragraph (b) of Rule 6.76P-O, the Exchange proposes to use the term
``will'' in instead of ``shall.'' As proposed, the Exchange would
display ``all non-marketable Limit Orders or quotes ranked Priority 2--
Display Orders unless the order or modifier instruction specifies that
all or a portion of the order is not to be displayed,'' which rule text
is substantially identical to the first sentence of the preamble to
current Rule 6.76-O except that Pillar ranking terminology would be
used.
    Rule 6.76P-O(b)(1), which is substantially identical to current
Rule 6.76-O(b), would provide that except as otherwise permitted in
proposed new Rule 6.76AP-O (discussed below), all non-marketable
displayed interest would be displayed on an anonymous basis.
    Proposed Rule 6.76P-O(b)(2) is substantially identical to the
second sentence of the preamble to current Rule 6.76-O, and would
provide that the Exchange would disseminate current consolidated
quotations/last sale information, and such other market information as
may be made available from time to time pursuant to agreement between
the Exchange and other Market Centers, consistent with the OPRA Plan.
    Finally, proposed Rule 6.76P-O(b)(3) would provide that if ``an
Away Market locks or crosses the Exchange BBO, the Exchange will not
change the display price of any Limit Orders or quotes ranked Priority
2--Display Orders and any such orders will be eligible to be displayed
as the Exchange's BBO.'' This proposed concept, which is based on Rule
7.36-E(b)(4) (but omits the cash equity-related information regarding
regulatory halts), ensures that resting displayed interest that did not
cause a locked or crossed market condition can stand their ground and
maintain priority at the price at which they were originally displayed.
This provision is consistent with the treatment of displayed orders on
the Exchange's cash

equity market as described in Rule 7.36-E(b)(4).
    Proposed Rule 6.76P-O(c) would describe the Exchange's general
process for ranking orders and quotes and would be comparable to Rule
6.76-O(a), without any substantive differences. As proposed, Rule
6.76P-O(c) would provide that all non-marketable orders and quotes
would be ranked and maintained in the Consolidated Book according to
price-time priority in the following manner: (1) Price; (2) priority
category; (3) time; and (4) ranking restrictions applicable to an
order/quote or modifier condition. Accordingly, orders and quotes would
be first ranked by price. Next, at each price level, orders and quotes
would be assigned a priority category. Orders and quotes in each
priority category would be required to be exhausted before moving to
the next priority category. Within each priority category, orders and
quotes would be ranked by time. These general requirements for ranking
are applicable to all orders and quotes, unless an order or quote or
modifier has a specified exception to this ranking methodology, as
described in more detail below. The Exchange is proposing this ranking
description instead of using the concepts of a Display Order Process
and Working Order Process in Rule 6.76-O. However, substantively there
would be no difference in how the Exchange would rank orders and quotes
on the Pillar trading platform from how it ranks orders and quotes in
the current trading system. For example, a non-displayed order would
always be ranked after a displayed order at the same price, even if the
non-displayed order has an earlier working time. In addition, this
proposed rule is based on Rule 7.36-E(c).
    Proposed Rule 6.76P-O(d) would describe how orders and quotes would
be ranked based on price. Specifically, as proposed, all orders and
quotes would be ranked based on the working price of an order or quote.
Orders and quotes to buy would be ranked from highest working price to
lowest working price and orders and quotes to sell would be ranked from
lowest working price to highest working price. The rule would further
provide that if the working price of an order or quote changes, the
price priority of an order or quote would change. This price priority
is current functionality, but the new rule would use Pillar terminology
based on Rule 7.36-E(d).
    Proposed Rule 6.76P-O(e) would describe the proposed priority
categories for ranking purposes. As proposed, at each price, all orders
and quotes would be assigned a priority category. If, at a price, there
are no orders or quotes in a priority category, the next category would
have first priority. The Exchange does not propose to include in Rule
6.76P-O, which sets forth the general rule regarding ranking, specifics
about how one or more order or quote types may be ranked and displayed.
Instead, as described in more detail below, the Exchange will address
separately in new Rule 6.62P-O governing orders and modifiers which
priority category correlates to different order types and modifiers.
Accordingly, details regarding which proposed priority categories would
be assigned to the display and reserve portions of Reserve Orders,
which is currently addressed in Rule 6.76-O(a)(1)(B) and (a)(2)(A),
will be addressed in proposed Rule 6.62P-O and therefore would not be
included in proposed Rule 6.76P-O.
    The proposed changes are also based on the priority categories for
cash equity trading as set forth in Rule 7.36-E(e)(1)-(3), except for
the options-specific reference to ``orders and quotes'' rather than
just orders as relates to interest ranked Priority 2 and 3.
    The proposed priority categories would be:
     Proposed Rule 6.76P-O(e)(1) would specify ``Priority 1--
Market Orders,'' which provides that unexecuted Market Orders would
have priority over all other same-side orders with the same working
price. As described in greater detail below, a Market Order subject to
a Trading Collar would be displayed on the Consolidated Book. In such
circumstances, the displayed Market Order would have priority over all
other resting orders at that price.
     Proposed Rule 6.76P-O(e)(2) would specify ``Priority 2--
Display Orders.'' This proposed priority category would replace the
``Display Order Process.'' As proposed, non-marketable Limit Orders or
quotes with a displayed working price would have second priority. For
an order or quote that has a display price that differs from the
working price of the order or quote, the order or quote would be ranked
Priority 3--Non-Display Orders at the working price. This priority
category is based on how Priority 2--Display Orders function on the
Exchange's cash equity market, as described in Rule 7.36-E(e)(2).
     Proposed Rule 6.76P-O(e)(3) would specify ``Priority 3--
Non-Display Orders.'' This priority category would be used in Pillar
rules instead of reference to the ``Working Order Process.'' As
proposed, non-marketable Limit Orders or quotes for which the working
price is not displayed, including the reserve interest of Reserve
Orders, would have third priority. This priority category is based on
how Priority 3--Non-Display Orders function on the Exchange's cash
equity market, as described in Rule 7.36-E(e)(3).
    Proposed Rule 6.76P-O(f) would set forth that at each price level
within each priority category, orders and quotes would be ranked based
on time priority. The proposed changes are based on Pillar terminology
in Rule 7.36-E(f)(1) and (3), except for the non-substantive reference
to ``orders and quotes'' rather than just orders.
     Proposed Rule 6.76P-O(f)(1) would provide that an order or
quote is assigned a working time when it is first added to the
Consolidated Book based on the time such order or quote is received by
the Exchange. This proposed process of assigning a working time to
orders is current functionality and is substantively the same as
current references to the ``time of original order entry'' found in
several places in Rule 6.76-O. This proposed rule uses Pillar
terminology based on Rule 7.36-E(f)(1) without any substantive
differences. To provide transparency in Exchange rules, the Exchange
further proposes to include in proposed Rule 6.76P-O(f) how the working
time would be determined for orders that are routed. As proposed:
    [cir] Proposed Rule 6.76P-O(f)(1)(A) would specify that an order
that is fully routed to an Away Market on arrival, per proposed Rule
6.76AP-O(b)(1), would not be assigned a working time unless and until
any unexecuted portion of the order returns to the Consolidated Book.
The Exchange notes that this is the current process for assigning a
working time to an order and uses Pillar terminology based on Rule
7.36-E(f)(1)(A) without any substantive differences.
    [cir] Proposed Rule 6.76P-O(f)(1)(B) would specify that for an
order that, on arrival, is partially routed to an Away Market, the
portion that is not routed would be assigned a working time. If any
unexecuted portion of the order returns to the Consolidated Book and
joins any remaining resting portion of the original order, the returned
portion of the order would be assigned the same working time as the
resting portion of the order. If the resting portion of the original
order has already executed and any unexecuted portion of the order
returns to the Consolidated Book, the returned portion of the order
would be assigned a new working time. This process for assigning a
working time to partially routed orders is the same as currently used
by the Exchange and uses Pillar terminology based on Rule 7.36-
E(f)(1)(B) without any substantive differences.

     Proposed Rule 6.76P-O(f)(2) would provide that an order or
quote would be assigned a new working time if: (A) The display price of
an order or quote changes, even if the working price does not change,
or (B) the working price of an order or quote changes, unless the
working price is adjusted to be the same as the display price of an
order or quote. This proposed text uses Pillar terminology based in
part on Rule 7.36-E(f)(2), which provides that an order is assigned a
new working time any time the working price of an order changes. The
Exchange is proposing to provide greater specificity when the working
time of an order would change as compared to current Rule 7.36-E(f).
     Proposed Rule 6.76P-O(f)(3) would provide that an order or
quote would be assigned a new working time if the size of an order or
quote increases and that an order or quote retains its working time if
the size of the order or quote is decreased. This process for assigning
a new working time when the size of an order changes is the same as
currently used by the Exchange and uses Pillar terminology based on
Rule 7.36-E(f)(3) without any substantive differences.
    Proposed Rule 6.76P-O(g) would specify that the Exchange would
apply ranking restrictions applicable to specified order or modifier
instructions. These order and modifier instructions would be identified
in proposed new Rule 6.62P-O, described below. Proposed Rule 6.76P-O(g)
uses Pillar terminology based on Rule 7.36-E(g), without any
substantive differences. Current Rule 6.76-O(a)(2)(C)-(E) discuss
ranking of certain order types with contingencies, but the Exchange
proposes that for Pillar, ranking details regarding orders with
contingencies would be described in proposed Rule 6.62P-O.
    Finally, proposed Rule 6.76P-O(h) would be applicable to ``Orders
Executed Manually'' and would contain the same text as set forth in
Rule 6.76-O(d) without any substantive differences except for the non-
substantive change of capitalizing the defined term Trading Crowd (per
proposed Rule 1.1), removing the superfluous clause ``in addition,''
and updating the cross-reference to reflect the new Pillar rule.\16\
---------------------------------------------------------------------------

    \16\ See proposed Rule 6.76P-O(h)(1) (removing ``in addition'')
(B) (regarding ``Trading Crowd'') and (D) (updating the cross-
reference to new subparagraph (B) in connection with the Section
11(a)(1)(G) of the Exchange Act and Rule 11a1-1(T) thereunder (``G
exemption rule'')).
---------------------------------------------------------------------------

    In connection with proposed Rule 6.76P-O, the Exchange proposes to
add the following preamble to Rule 6.76-O: ``This Rule will not be
applicable to trading on Pillar.'' This proposed preamble is designed
to promote clarity and transparency in Exchange rules that Rule 6.76-O
would not be applicable to trading on Pillar.
Proposed Rule 6.76AP-O: Order Execution and Routing
    Current Rule 6.76A-O, titled ``Order Execution--OX,'' governs order
execution and routing at the Exchange. The Exchange proposes that Rule
6.76AP-O would set forth the order execution and routing rules for
options trading on Pillar. The Exchange proposes that the title for new
Rule 6.76AP-O would be ``Order Execution and Routing'' instead of
``Order Execution--OX'' because the Exchange does not propose to use
the term ``OX'' in connection with Pillar. The Exchange believes that
because proposed Rule 6.76AP-O, like Rule 6.76A-O, would specify the
Exchange's routing procedures, referencing to ``Routing'' in the rule's
title would provide additional transparency in Exchange rules regarding
what topics would be covered in new Rule 6.76AP-O. This proposed rule
is based on Rule 7.37-E, which describes the order execution and
routing rules for cash equity securities trading on the Pillar
platform.
    Proposed Rule 6.76AP-O(a) and its subparagraphs would set forth the
Exchange's order execution process and would cover the same subject as
the preamble to Rule 6.76A-O. However, the proposed rule would use
Pillar terminology of ``Aggressing Order'' and ``Aggressing Quote''--
rather than refer to an ``incoming marketable bid or offer.'' As
proposed, an Aggressing Order or Aggressing Quote would be matched for
execution against contra-side orders or quotes in the Consolidated Book
according to the price-time priority ranking of the resting interest,
subject to specified parameters.
    Proposed Rule 6.76AP-O(a)(1) would set forth the LMM Guarantee,
which is substantively the same as the current LMM Guarantee, as
described in Rule 6.76A-O(a)(1). The Exchange proposes a substantive
difference because on Pillar, the Exchange would no longer support
Directed Order Market Makers or Directed Orders. Accordingly, rule text
relating to Directed Order Market Makers or Directed Orders will not be
included in proposed Rule 6.76AP-O.\17\
---------------------------------------------------------------------------

    \17\ The Exchange proposes to add a preamble to Rule 6.88-O
(Directed Orders) to provide that the Rule would not be applicable
to trading on Pillar.
---------------------------------------------------------------------------

    Proposed Rule 6.76AP-O(a)(1) would provide that an LMM would be
entitled to an allocation guarantee when the execution price is equal
to the NBB (NBO) and there is no displayed Customer interest in time
priority at the NBBO in the Consolidated Book. In such cases, the
Aggressing Order or Aggressing Quote would be matched against the quote
of the LMM for an amount equal to 40% of the Aggressing Order or
Aggressing Quote, up to the size of the LMM's quote (the ``LMM
Guarantee''). With respect to how the LMM Guarantee would function on
Pillar, the Exchange does not propose any substantive differences from
current Rule 6.76A-O(a)(1).
    Proposed Rule 6.76AP-O(a)(1)(A) proposes new functionality under
Pillar and provides that if an LMM has more than one quote at a price,
the LMM Guarantee would be applied among such quotes in time priority,
provided there is no displayed Customer interest with time priority at
each quote.
    Proposed Rule 6.76AP-O(a)(1)(B), which is substantively identical
to current Rule 6.76A-O(a)(1)(B), would provide that if an LMM is
entitled to an LMM Guarantee (pursuant to proposed paragraph (a)(1))
and the Aggressing Order or Aggressing Quote had an original size of
five (5) contracts or fewer, then such order or quote would be matched
against the quote of the LMM for an amount equal to 100%, up to the
size of the LMM's quote. The Exchange also proposes to add Commentary
.01 to the proposed rule (which is substantively identical to
Commentary .02 of current Rule 6.76A-O) to make clear that on a
quarterly basis, the Exchange would evaluate what percentage of the
volume executed on the Exchange comprised of orders for five (5)
contracts or fewer that was allocated to LMMs and would reduce the size
of the orders included in this provision if such percentage is over
40%.\18\
---------------------------------------------------------------------------

    \18\ See proposed Rule 6.76AP-O, Commentary .01, which will not
include cross-reference that appears in the current rule Commentary
.02 to Rule 6.76A-O.
---------------------------------------------------------------------------

    Proposed Rule 6.76AP-O(a)(1)(C) would specify that if the result of
applying the LMM Guarantee is a fractional allocation of contracts, the
LMM Guarantee would be rounded down to the nearest contract and if the
result of applying the LMM Guarantee results in less than one contract,
the LMM Guarantee would be equal to one contract. The Exchange believes
that including this additional detail in the proposed rule would add
transparency to Exchange rules.
    Finally, the Exchange proposes Rule 6.76AP-O(a)(1)(D), which would
provide that after applying any LMM Guarantee, the Aggressing Order or

Aggressing Quote would be allocated pursuant to proposed paragraph (a)
of this Rule, i.e., that such orders or quotes would be matched for
execution against contra-side interest resting in the Consolidated Book
according to price-time priority. This proposed text is substantively
identical to Rule 6.76A-O(a)(1)(C) and uses Pillar terminology.
    Consistent with the Exchange's proposed approach to new Rule 6.76P-
O, proposed Rule 6.76AP-O would not include references to specific
order types and instead would state the Exchange's general order
execution methodology. Any exceptions to such general requirements
would be set forth in connection with specific order or modifier
definitions in proposed Rule 6.62P-O, described below.
    Proposed Rule 6.76AP-O(b) would set forth the Exchange's routing
process and is intended to address the same subject as Rule 6.76A-O(c),
which is currently referred to as ``Step 3'' in order processing,
without any substantive differences.
    Proposed Rule 6.76AP-O(b) would provide that, absent an instruction
not to route, the Exchange would route marketable orders to Away
Market(s) after such orders are matched for execution with any contra-
side interest in the Consolidated Book in accordance with proposed
paragraph (a) of this Rule regarding Order Execution. Proposed Rule
6.76AP-O(b) also uses Pillar terminology based on current Rule 7.37-
E(b), which governs the Exchange's routing process on the Exchange's
cash equity platform.
    The proposed rule would then set forth additional details regarding
routing:
     Proposed Rule 6.76AP-O(b)(1) would provide that an order
that cannot meet the pricing parameters of proposed Rule 6.76AP-O(a)
may be routed to Away Market(s) before being matched for execution
against contra-side interest in the Consolidated Book. The Exchange
believes that this proposed rule text provides transparency that an
order may be routed before being matched for execution, for example, to
prevent locking or crossing or trading through the NBBO. This rule uses
Pillar terminology based on Rule 7.37-E(b)(1), with no substantive
differences.
     Proposed Rule 6.76AP-O(b)(2) would provide that an order
with an instruction not to route would be processed as provided for in
proposed Rule 6.62P-O. As described in greater detail below, the
Exchange proposes to describe how orders and quotes with an instruction
not to route would be processed in proposed Rule 6.62P-O(e).
     Proposed Rule 6.76AP-O(b)(3) would provide that any order
or portion thereof that has been routed would not be eligible to trade
on the Consolidated Book, unless all or a portion of the order returns
unexecuted. This routing methodology is current functionality and
covers that same subject as current Rule 6.76A-O(c)(2) with no
substantive differences and is based in part on Pillar terminology used
in Rule 7.37-E(b)(6). In contrast to Rule 6.76A-O(c)(2), however, the
Exchange proposes that Rule 6.76AP-O(b)(3) would focus on the fact that
once routed, an order would not be eligible to trade on the
Consolidated Book, rather than stating the obvious that it would be
subject to the routing destination's trading rules once routed. In
addition, because, as discussed above, the working time assigned to
orders that are routed is being proposed to be addressed in new Rule
6.76P-O(f)(1)(A) and (B), the Exchange believes it would be unnecessary
to restate this information in new Rule 6.76AP-O.
     Proposed Rule 6.76AP-O(b)(4) would provide that requests
to cancel an order that has been routed in whole or part would not be
processed unless and until all or a portion of the order returns
unexecuted. This proposed rule is based on Pillar terminology used in
Rule 7.37-E(b)(7)(A) without any substantive differences.
     Finally, proposed Rule 6.76AP-O(c) would provide that
after trading with eligible contra-side interest on the Consolidated
Book and/or returning unexecuted after routing to Away Market(s), any
unexecuted non-marketable portion of an order would be ranked
consistent with new Rule 6.76P-O. This rule represents current
functionality and is based on Rule 6.76A-O generally and paragraph
(c)(2)(C) as it pertains to orders that were routed away without any
substantive differences. This proposed rule is also based on Pillar
terminology used in Rule 7.37-E(c) without any substantive differences.
    The Exchange believes that the specific routing methodologies for
an order type or modifier should be included with how the order type is
defined, which will be in proposed Rule 6.62P-O. Accordingly, the
Exchange does not believe it needs to specify in proposed Rule 6.76AP-O
whether an order is eligible to route, and if so, whether there are any
specific routing instructions applicable to the order and therefore
will not be carrying over such specifics that are currently included in
Rule 6.76A-O.
    In connection with proposed Rule 6.76AP-O, the Exchange proposes to
add the following preamble to Rule 6.76A-O: ``This Rule will not be
applicable to trading on Pillar.'' This proposed preamble is designed
to promote clarity and transparency in Exchange rules that Rule 6.76A-O
would not be applicable to trading on Pillar.
Proposed Rule 6.62P-O: Orders and Modifiers
    Current Rule 6.62-O (Certain Types of Orders Defined) defines the
order types that are currently available for options trading both on
the OX system and for open outcry trading on the Exchange. The Exchange
proposes that new Rule 6.62P-O would set forth the order types and
modifiers that would be available for options trading both on Pillar
(i.e., electronic order entry) and in open outcry trading. The Exchange
proposes to specify that Rule 6.62-O would not be applicable to trading
on Pillar.
    Because certain order types and modifiers that would be available
for options trading on Pillar are based on, or similar to, order types
and modifiers available on the Exchange's cash equity market, the
Exchange proposes to structure proposed Rule 6.62P-O based on Rule
7.31-E and use similar terminology. The Exchange also proposes to title
proposed Rule 6.62P-O as ``Orders and Modifiers,'' which is the title
of Rule 7.31-E.
    Primary Order Types. Proposed Rule 6.62P-O(a) would specify the
Exchange's primary order types, which would be Market Orders and Limit
Orders, and is based on Rule 7.31-E(a), which sets forth the Exchange's
cash equity primary order types. Similar to Rule 7.31-E(a), proposed
Rule 6.62P-O(a) would also set forth the Exchange's proposed Limit
Order Price Protection functionality and Trading Collars.
    Market Orders. Proposed Rule 6.62P-O(a)(1) would define a Market
Order as an unpriced order message to buy or sell a stated number of
option contracts at the best price obtainable, subject to the Trading
Collar assigned to the order, and would further specify that unexecuted
Market Orders may be designated Day or GTC, which represents current
functionality,\19\ and

that unexecuted Market Orders would be ranked Priority 1--Market
Orders. This proposed rule text uses Pillar terminology similar to Rule
7.31-E(a)(1), but with differences to reflect options trading.
---------------------------------------------------------------------------

    \19\ The ability for a Market Order to be designated Day or GTC
is based on current Rules 6.62-O(m) (describing a ``Day Order'') and
6.62-O(n) (describing a ``Good-til-Cancelled Order'' or ``GTC
Order'') and Commentary .01 to Rule 6.62-O, which requires all
orders to be either ``day,'' ``immediate or cancel,'' or ``good `til
cancelled.'' As described in more detail below, on Pillar, the time-
in-force designation, e.g., Day or GTC, would be a modifier that can
be added to an order type and will not be described in the rules as
a separate order type. Similar to Rule 7.31-E, the Exchange will
specify which time-in-force designations are available for each
order type.
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(a)(1) would further provide that for purposes
of processing Market Orders, the Exchange would not use an adjusted
NBBO.\20\ On the Exchange's cash equity market, the Exchange does not
use an adjusted NBBO when processing Market Orders. The Exchange
proposes to similarly not use an adjusted NBBO when processing Market
Orders on its options market.
---------------------------------------------------------------------------

    \20\ See discussion supra, regarding the proposed Rule 1.1
definition of ``NBBO.''
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(a)(1)(A) would provide that a Market Order
that arrives during continuous trading would be rejected, or that was
routed, returns unexecuted, and has no resting quantity to join would
be cancelled if it fails the validations specified in proposed Rule
6.62P-O(a)(1)(A)(i)--(iv). This proposed rule is based in part on Rule
6.62-O(a), which specifies circumstances when a Market Order will be
rejected during Core Trading Hours, with differences to use Pillar
terminology and to modify the circumstances when a Market Order would
be rejected. As proposed, a Market Order would be rejected (or
cancelled if routed first) if:\21\
---------------------------------------------------------------------------

    \21\ The Exchange will also reject a Market Order if it is
entered when the underlying NMS stock is either in a Limit State or
a Straddle State, which is current functionality. See Rule 6.65A-
O(a)(1). The Exchange proposes a non-substantive amendment to Rule
6.65A-O(a)(1) to add a cross reference to proposed Rule 6.62P-
O(a)(1). The Exchange also proposes to amend the second sentence of
Rule 6.65A-O(a)(1) to remove references to trading collars, and
instead specify that the Exchange would cancel any resting Market
Orders if the underlying NMS stock enters a Limit State or a
Straddle State and would notify OTP Holders of the reason for such
cancellation. This proposed change would describe both how Market
Orders function today on the OX system and how they would be
processed on Pillar.
---------------------------------------------------------------------------

     There is no NBO (proposed Rule 6.62P-O(a)(1)(A)(i)).
     There is no NBB and the NBO is higher than $0.50 (for sell
Market Orders only). The Exchange further proposes that if there is no
NBB and the NBO is $0.50 or below, a Market Order to sell would not be
rejected and would have a working price and display price one MPV above
zero and would not be subject to a Trading Collar (proposed Rule 6.62P-
O(a)(1)(A)(ii)). The proposed rule would further provide that a Market
Order to sell would be cancelled if it was assigned a Trading Collar,
routed, and when it returns unexecuted, it has no resting portion to
join and there is no NBB, regardless of the price of the NBO.
Accordingly, in this scenario, if there were no NBB and an NBO that is
$0.50 or below, the returned, unexecuted Market Order would be
cancelled rather than displayed at one MPV above zero.
     There are no contra-side Market Maker quotes on the
Exchange or contra-side Away Market NBBO, provided that a Market Order
to sell would be accepted as provided for in proposed Rule 6.62P-
O(a)(1)(A)(ii) (proposed Rule 6.62P-O(a)(1)(A)(iii)).
     The NBBO is not locked or crossed and the spread is equal
to or greater than a minimum amount based on the midpoint of the NBBO
(proposed Rule 6.62P-O(a)(1)(A)(iv)). The proposed ``wide-spread''
parameter is based in part on Rule 6.87-O(b)(3) with two differences.
First, the first bucket would include $2.00, instead of capping at
$1.99, and second, the wide-spread calculation would be based off of
the midpoint of the NBBO, rather than off of the bid price, as follows:

------------------------------------------------------------------------
                                                              Spread
                The midpoint of the NBBO                     parameter
------------------------------------------------------------------------
$0.00 to $2.00..........................................           $0.75
Above $2.00 to and including $5.00......................            1.25
Above $5.00 to and including $10.00.....................            1.50
Above $10.00 to and including $20.00....................            2.50
Above $20.00 to and including $50.00....................            3.00
Above $50.00 to and including $100.00...................            4.50
Above $100.00...........................................            6.00
------------------------------------------------------------------------

    Proposed Rule 6.62P-O(a)(1)(B) would provide that an Aggressing
Market Order to buy (sell) would trade with all orders or quotes to
sell (buy) on the Consolidated Book priced at or below (above) the
Trading Collar before routing to Away Market(s) at each price. Proposed
Rule 6.62P-O(a)(1)(B) would further provide that after trading or
routing, or both, a Market Order would be displayed at the Trading
Collar, subject to proposed Rule 6.62P-O(a)(1)(C), which is consistent
with current functionality that Market Orders would be displayed at a
trading collar, per Rule 6.60-O(a)(5).
    Proposed Rule 6.62P-O(a)(1)(C) would provide that a Market Order
would be cancelled before being displayed if there are no remaining
contra-side Market Maker quotes on the Exchange or contra-side Away
Market NBBO. Proposed Rule 6.62P-O(a)(1)(D) would provide that a Market
Order would be cancelled after being displayed at its Trading Collar if
there ceases to be a contra-side NBBO. These proposed cancellation
events are based on a subset of the scenarios of when a Market Order
would have been rejected on arrival, and the Exchange believes it is
appropriate to cancel a Market Order either before it is displayed, or
after it is displayed, in these circumstances in order to prevent the
potential for such order to be displayed when there is no real market
in a series.
    Finally, proposed Rule 6.62P-O(a)(1)(E) would provide that a
resting, displayed Market Order that is locked or crossed by an Away
Market would be routed to that Away Market. Because Market Orders are
intended to obtain the best price obtainable, the Exchange proposes to
route displayed Market Orders if they are locked or crossed by an Away
Market.\22\
---------------------------------------------------------------------------

    \22\ As described above for proposed Rule 6.76P-O(b)(3),
displayed interest other than displayed Market Orders would stand
their ground if locked or crossed by an Away Market. The Exchange
would provide an option for Limit Orders to instead be routed, see
discussion infra, regarding proposed Rule 6.62P-O(i)(1) and the
proposed Proactive if Locked/Crossed Modifier.
---------------------------------------------------------------------------

    Limit Orders. Proposed Rule 6.62P-O(a)(2) would define a Limit
Order as an order message to buy or sell a stated number of option
contracts at a specified price or better, subject to Limit Order Price
Protection and the Trading Collar assigned to the order, and that a
Limit Order may be designated Day, IOC, or GTC. In addition, unless
otherwise specified, the working price and the display price of a Limit
Order would be equal to the limit price of the order, it is eligible to
be routed, and it would be ranked Priority 2--Display Orders. This
proposed rule text uses Pillar terminology that is based in part on
Rule 7.31-E(a)(2). The ability for a Limit Order to be designated Day,
IOC, or GTC is based on current Rules 6.62-O(m) and 6.62-O(n). In
addition, marketable limit orders are currently subject to trading
collars.
    Proposed Rule 6.62P-O(a)(2)(A) would provide that a marketable
Limit Order to buy (sell) received by the Exchange would trade with all
orders and quotes to sell (buy) on the Consolidated Book priced at or
below (above) the NBO (NBB) before routing to an Away Market NBO (NBB)
and may route to prices higher (lower) than the NBO (NBB) only after
trading with orders and quotes to sell (buy) on the Consolidated Book
at each price point, and once no longer marketable, the Limit Order
would be ranked and displayed on the Consolidated Book. This proposed
rule text is based on Rule 7.31-E(a)(2)(A), with non-substantive
differences to use terminology specific to options trading.
    Limit Order Price Protection. The Exchange proposes to describe its

proposed Limit Order Price Protection functionality in proposed Rule
6.62P-O(a)(3). On the OX system, the concept of ``Limit Order Price
Protection'' for orders is set forth in Rule 6.60-O(b) and is called
the ``Limit Order Filter.'' For quotes, price protection filters are
described in Rule 6.61-O. The proposed ``Limit Order Price Protection''
on Pillar would be applicable to both Limit Orders and quotes and would
work similarly to how the current price protection mechanisms function
on the OX system in that a Limit Order or quote would be rejected if it
is priced a specified percentage away from the contra-side NBB or NBO.
However, on Pillar, the Exchange proposes to use new thresholds and
reference prices that would be applicable to both orders and quotes.
    Proposed Rule 6.62P-O(a)(3)(A) would provide that each trading day,
a Limit Order or quote to buy (sell) would be rejected or cancelled (if
resting) if it is priced at a ``Specified Threshold,'' described below,
above (below) the Reference Price, rounded down to the nearest price
within the MPV for the Series (``Limit Order Price Protection''). In
other words, a Limit Order designated GTC would be re-evaluated for
Limit Order Price Protection on each day that it is eligible to trade
and would be cancelled if the limit price is through the Specified
Threshold. In addition, the rounding feature is based on how Limit
Order Price Protection is calculated on the Exchange's cash equity
market if it is not within the MPV for the security, as described in
the last sentence of Rule 7.31-E(a)(2)(B). The proposed rule would
further provide that Cross Orders and Limit-on-Open (``LOO'') Orders
(described below) would not be subject to Limit Order Price Protection
and that Limit Order Price Protection would not be applied to a Limit
Order or quote if there is no Reference Price.
     Proposed Rule 6.62P-O(a)(3)(A)(i) would provide that a
Limit Order or quote that arrives when a series is open would be
evaluated for Limit Order Price Protection on arrival.
     Proposed Rule 6.62P-O(a)(3)(A)(ii) would provide that a
Limit Order or quote received during a pre-open state would be
evaluated for Limit Order Price Protection after an Auction
concludes.\23\
---------------------------------------------------------------------------

    \23\ See discussion infra, regarding proposed Rule 6.64P-O(a)
and proposed definitions for the terms ``Auction,'' ``Auction
Price,'' ``Auction Collar,'' ``pre-open state,'' and ``Trading Halt
Auction.''
---------------------------------------------------------------------------

     Proposed Rule 6.62P-O(a)(3)(A)(iii) would provide that a
Limit Order or quote that was resting on the Consolidated Book before a
trading halt would be evaluated for Limit Order Price Protection again
after the Trading Halt Auction concludes.
    Proposed Rule 6.62P-O(a)(3)(B) would specify that the Reference
Price for calculating Limit Order Price Protection for an order or
quote to buy (sell) would be the NBO (NBB), provided that, immediately
following an Auction, the Reference Price would be the Auction Price,
or if none, the upper (lower) Auction Collar price, or, if none, the
NBO (NBB). The Exchange believes that adjusting the Reference Price for
Limit Order Price Protection immediately following an Auction would
ensure that the most up-to-date price would be used to assess whether
to cancel a Limit Order that was received during a pre-open state or
would be reevaluated after a Trading Halt Auction. The Exchange further
proposes that for purposes of calculating Limit Order Price Protection,
the Exchange would not use an adjusted NBBO, which is based on how
Limit Order Price Protection currently functions on the Exchange's cash
equity market, as described in Rule 7.31-E(a)(2)(B).\24\
---------------------------------------------------------------------------

    \24\ References to the NBBO, NBB, and NBO in Rule 7.31-E refer
to using a determination of the national best bid and offer that has
not been adjusted.
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(a)(3)(C) would specify the Specified
Threshold and would provide that unless determined otherwise by the
Exchange and announced to OTP Holders and OTP Firms by Trader Update,
the Specified Threshold applicable to Limit Order Price Protection
would be:

------------------------------------------------------------------------
                                                             Specified
                     Reference price                         threshold
------------------------------------------------------------------------
$0.00 to $1.00..........................................           $0.30
$1.01 to $10.00.........................................             50%
$10.01 to $20.00........................................             40%
$20.01 to $50.00........................................             30%
$50.01 to $100.00.......................................             20%
$100.01 and higher......................................             10%
------------------------------------------------------------------------

    The Exchange believes that the proposed thresholds are more
granular than those currently specified in Rules 6.60-O(b) (for orders)
and 6.61-O(a)(1)(A) and (B) (for quotes) and therefore determining
whether to reject a Limit Order or quote will be more tailored to the
applicable Reference Price. In addition, consistent with Rules 6.60-
O(b) and 6.61-O(a)(1), the Exchange proposes that these thresholds
could change, subject to announcing the changes by Trader Update.
Providing flexibility in Exchange rules regarding how the Specified
Thresholds would be set is consistent with the rules of other options
exchanges.\25\
---------------------------------------------------------------------------

    \25\ See, e.g., CBOE Exchange, Inc. (``Cboe'') Rule 5.34(a)(4)
(describing the ``Drill-Through Protection'' and that Cboe
``determines the buffer amount on a class and premium basis''); and
the Nasdaq Stock Market LLC (``Nasdaq'') Options 3, Section
15(a)(1)(B) (specifying that ``Order Price Protection'' can be a
configurable dollar amount specified by Nasdaq and announced via an
Options Trader Alert).
---------------------------------------------------------------------------

    Trading Collar. Trading Collars on the OX system are currently
described in Rule 6.60-O(a). Under the current rules, incoming Market
Orders and marketable Limit Orders are limited in having an immediate
execution if they would trade at a price greater than one ``Trading
Collar.'' A collared order is displayed at that price and then can be
repriced to new collars as the NBBO updates. On Pillar, the Exchange
proposes new Trading Collar functionality.
    Unlike current functionality, which permits a collared order to be
repriced, as proposed, a Market Order or Limit Order would be assigned
a single Trading Collar that would be applicable to that order until it
is fully executed or cancelled. The new proposed Trading Collar would
function as a ceiling (for buy orders) or floor (for sell orders) of
the price at which such order could be traded, displayed, or routed.
The Exchange further proposes that when an order is working at its
assigned Trading Collar, it would cancel if not executed within a
specified time period.
    Proposed Rule 6.62P-O(a)(4) would provide that a Market Order or
Limit Order to buy (sell) would not trade or route to an Away Market at
a price above (below) the Trading Collar assigned to that order. As
further proposed, Auction-Only Orders, Limit Orders designated IOC or
FOK, Cross Orders, ISOs, and Market Maker quotes would not be subject
to Trading Collars, which is consistent with current functionality.\26\
In addition, Trading Collars would not be applicable during Auctions.
---------------------------------------------------------------------------

    \26\ See Rule 6.60-O(a)(3) (``Trade Collar Protection does not
apply to quotes, IOC Orders, AON Orders, FOK Orders, and NOW
Orders.'').
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(a)(4)(A) would provide that a Trading Collar
assigned to an order would be calculated once per trading day and would
not be updated. Accordingly, an order designated GTC would receive a
new Trading Collar each day, but that Trading Collar would not be
updated intraday. The rule would further provide that a Market Order or
Limit Order that is received during continuous trading would be
assigned a Trading Collar before being processed for either trading,
repricing, or routing

and that an order that is routed on arrival and returned unexecuted
would use the Trading Collar assigned upon arrival. In addition, a
Market Order or Limit Order received during a pre-open state would be
assigned a Trading Collar after an Auction concludes.
    Proposed Rule 6.62P-O(a)(4)(B) would provide that the Reference
Price for calculating the Trading Collar for an order to buy (sell)
would be the NBO (NBB). The proposed rule would further provide that
for Auction-eligible orders to buy (sell) that were received during a
pre-open state and are assigned a Trading Collar after the Auction
concludes, the Reference Price would be the Auction Price or, if none,
the upper (lower) Auction Collar price or, if none, the NBO (NBB). For
purposes of calculating a Trading Collar, the Exchange would not use an
adjusted NBBO. Proposed Rule 6.62P-O(a)(4)(B)(i) would further provide
that a Trading Collar would not be assigned to a Limit Order if there
is no Reference Price at the time of calculation. And proposed Rule
6.62P-O(a)(4)(B)(ii) would provide that after an Auction, if a Market
Order has not already been assigned a Trading Collar and there is no
Reference Price, the order would be cancelled.
    Proposed Rule 6.62P-O(a)(4)(C) would describe how the Trading
Collar would be calculated and would provide that the Trading Collar
for an order to buy (sell) would be a specified amount above (below)
the Reference Price, as follows: (1) For orders with a Reference Price
of $1.00 or lower, $0.25; or (2) for orders with a Reference Price
above $1.00, the lower of $2.50 or 25%. Proposed Rule 6.62P-
O(a)(4)(C)(i) would further provide that if the calculation of a
Trading Collar would not be in the MPV for the series, it would be
rounded down to the nearest price within the applicable MPV (this
proposed functionality is based on how Trading Collars are calculated
on the Exchange's cash equity market, as described in Rule 7.31-
E(a)(1)(B)). Proposed Rule 6.62P-O(a)(4)(C)(ii) would further provide
that for orders to sell, if subtracting the Trading Collar from the
Reference Price would result in a negative number, the Trading Collar
for Limit Orders would be the limit price and the Trading Collar for
Market Orders would be one MPV above zero.
    Proposed Rule 6.62P-O(a)(4)(D) would describe how the Trading
Collar would be applied and would provide that if an order to buy
(sell) would trade or route above (below) the Trading Collar or would
have its working price repriced to a Trading Collar that is below
(above) its limit price, the order would be added to the Consolidated
Book at the Trading Collar for 500 milliseconds and if not traded
within that period, would be cancelled. In addition, once the 500-
millisecond timer begins for an order, the order would be cancelled at
the end of the timer even if it repriced or has been routed to an Away
Market during that period, in which case any portion of the order that
is returned unexecuted would be cancelled.
    The Exchange believes that the proposed Trading Collar
functionality is designed to provide a similar type of order protection
as is currently available (as described in Rule 6.60-O(a)) because it
would limit the price at which a marketable order could be traded,
routed, or displayed. The Exchange believes that the proposed
differences are designed to simplify the functionality by applying a
static ceiling price (for buy orders) or floor price (for sell orders)
at which such order could be traded or routed that would be determined
at the time of entry, and would be applicable to the order until it is
traded or cancelled. The Exchange believes that the proposed
functionality would provide greater determinism to an OTP Holder or OTP
Firm of the Trading Collar that would be applicable to a Market Order
or Limit Order and when such order may be cancelled if it reaches its
Trading Collar.
    Time in Force Modifiers. Proposed Rule 6.62P-O(b) would set forth
the time-in-force modifiers that would be available for options trading
on Pillar and is based on Rule 7.31-E(b). The Exchange proposes to
offer the same time-in-force modifiers that are currently available for
options trading on the Exchange and use Pillar terminology to describe
the functionality. As noted above, the Exchange proposes to describe
the Time in Force Modifiers in proposed Rule 6.62P-O(b), and then
specify for each order type which Time in Force Modifiers would be
available for such orders or quotes.
    Day Modifier. Proposed Rule 6.62P-O(b)(1) would provide that any
order or quote to buy or sell designated Day, if not traded, would
expire at the end of the trading day on which it was entered and that a
Day Modifier cannot be combined with any other Time in Force Modifier.
This proposed rule text is based on Rule 7.31-E(b)(1) with one
difference to reference ``quotes'' in addition to orders. This proposed
functionality would operate no differently than how a ``Day Order,'' as
described in Rule 6.62-O(m), currently functions.
    Immediate-or-Cancel (``IOC'') Modifier. Proposed Rule 6.62P-O(b)(2)
would provide that a Limit Order may be designated IOC or Routable IOC,
as described in proposed Rules 6.62P-O(b)(2)(A) and (B) and that a
Limit Order designated IOC would not be eligible to participate in any
Auctions. This proposed rule text is based on the first and third
sentences of Rule 7.31-E(b)(2) without any differences and is also
based on current functionality. The Exchange proposes to use Pillar
terminology based on Rule 7.31-E(b)(2) to describe this functionality.
    Proposed Rule 6.62P-O(b)(2)(A) would define a ``Limit IOC Order''
as a Limit Order designated IOC that would be traded in whole or in
part on the Exchange as soon as such order is received, and the
unexecuted quantity would be cancelled and that a Limit IOC Order does
not route. This proposed rule text is based on Rule 7.31-E(b)(2)(A)
without any substantive differences. The proposed Pillar Limit IOC
Order would function the same as an ``Immediate-or-Cancel Order (IOC
Order),'' as currently described in Rule 6.62-O(k), without any
differences.
    Proposed Rule 6.62P-O(b)(2)(B) would define a ``Limit Routable IOC
Order'' as a Limit Order designated Routable IOC that would be traded
in whole or in part on the Exchange as soon as such order is received,
and the unexecuted quantity routed to Away Market(s) and that any
quantity not immediately traded either on the Exchange or an Away
Market would be cancelled. This proposed rule text is based on Rule
7.31-E(b)(2)(B) without any substantive differences. The proposed
Pillar Limit Routable IOC Order is also based on the ``NOW Order,'' as
currently described in Rule 6.62-O(o) and uses Pillar terminology.
    Fill-or-Kill (``FOK'') Modifier. Proposed Rule 6.62P-O(b)(3) would
provide that a Limit Order designated FOK would be traded in whole on
the Exchange as soon as such order is received, and if not so traded is
to be cancelled and that a Limit Order designated FOK does not route
and does not participate in any Auctions. The Exchange does not offer
the FOK Modifier on its cash equity market, and this proposed rule uses
Pillar terminology to offer the same functionality that is currently
described in Rule 6.62-O(l) as the ``Fill-or-Kill Order (FOK Order)''
without any substantive differences.
    Good-`Til-Cancelled (``GTC'') Modifier. Proposed Rule 6.62P-O(b)(4)
would provide that a Limit or Market Order designated GTC remains in
force until the order is filled, cancelled, the

MPV in the series changes overnight, the option contract expires, or a
corporate action results in an adjustment to the terms of the option
contract. The Exchange does not offer the GTC Modifier on its cash
equity market, and this proposed rule uses Pillar terminology to offer
the same functionality that is currently described in Rule 6.62-O(n) as
the ``Good-Till-Cancelled (GTC Order)'' without any substantive
differences.
    Auction-Only Orders. Proposed Rule 6.62P-O(c) would define an
``Auction-Only Order'' as a Limit Order or Market Order that is to be
traded only in an Auction pursuant to Rule 6.64P-O,\27\ which is text
based on Rule 7.31-E(c). The proposed rule would further provide that
an Auction-Only Order would not be accepted when a series is opened for
trading and any portion of an Auction-Only Order that is not traded in
a Core Open Auction or Trading Halt Auction would be cancelled. This
represents current functionality and is based in part on the last
sentence of Rule 7.31-E(c)(1), the last sentence of Rule 7.31-E(c)(2),
and the last sentence of Rule 6.62-O(r), which defines an ``Opening
Only Order.''
---------------------------------------------------------------------------

    \27\ See discussion infra, regarding proposed Rule 6.64P and
definitions relating to Auctions.
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(c)(1) would define a ``Limit-on-Open Order
(`LOO Order')'' as a Limit Order that is to be traded only in an
Auction. This proposed rule uses Pillar terminology based on Rule 7.31-
E(c)(1) to describe functionality that would be no different from
current functionality, as described in Rule 6.62-O(r).
    Proposed Rule 6.62P-O(c)(2) would define a ``Market-on-Open Order
(`MOO Order')'' as a Market Order that is to be traded only in an
Auction. This proposed rule uses Pillar terminology based on Rule 7.31-
E(c)(2) to describe functionality that would be no different from
current functionality, as described in Rule 6.62-O(r).
    Proposed Rule 6.62P-O(c)(3) would define an ``Imbalance Offset
Order (`IO Order').'' The Exchange currently offers an IO Order for
participation in Trading Halt Auctions on its cash equity market but
does not offer this order type for options trading on the OX system.
For cash equity trading, the IO Order is a conditional order type that
is eligible to participate in a Trading Halt Auction only if it would
offset the imbalance. For options trading on Pillar, the Exchange
proposes to offer the IO Order for both Core Open Auctions and Trading
Halt Auctions.
    As proposed, the IO Order would function no differently than how an
IO Order currently functions on the Exchange's cash equity market.
Accordingly, proposed Rule 6.62P-O(c)(3) would define an IO Order as a
Limit Order that is to be traded only in an Auction, which is based in
part on Rule 7.31-E(c)(5).
     Proposed Rule 6.62P-O(c)(3)(A) would provide that an IO
Order would participate in an Auction only if: (1) There is an
Imbalance in the series on the opposite side of the market from the IO
Order after taking into account all other orders and quotes eligible to
trade at the Indicative Match Price; and (2) the limit price of the IO
Order to buy (sell) would be at or above (below) the Indicative Match
Price. This proposed text is based on Rule 7.31-E(c)(5)(B) without any
substantive differences.
     Proposed Rule 6.62P-O(c)(3)(B) would provide that the
working price of an IO Order to buy (sell) would be adjusted to be
equal to the Indicative Match Price, provided that the working price of
an IO Order would not be higher (lower) than its limit price. This
proposed text is based on Rule 7.31-E(c)(5)(C) without any differences.
    Orders with a Conditional or Undisplayed Price and/or Size.
Proposed Rule 6.62P-O(d) would set forth the orders with a conditional
or undisplayed price and/or size that would be available for options
trading on Pillar. On Pillar, the Exchange proposes to offer the same
type of orders that are available in the OX system and that are
currently described in Rule 6.62-O(d) as a ``Contingency Order or
Working Order,'' with changes as described below.
    Reserve Order. Reserve Orders are currently defined in Rule 6.62-
O(d)(3). The Exchange proposes that for options traded on Pillar,
Reserve Orders would function similarly to how Reserve Orders function
on its cash equity market, as described in Rule 7.31-E(d)(1).
Accordingly, the Exchange proposes that proposed Rule 6.62P-O(d)(1),
which would define Reserve Orders for options trading on Pillar, would
be based on Rule 7.31-E(d)(1), with differences only to reflect
differences in options and cash equity trading. For example, options
trading does not have a concept of ``round lot'' or ``odd lot''
trading, and therefore the proposed options trading version of the Rule
would not include description of behavior that correlates to such
functionality.
    Proposed Rule 6.62P-O(d)(1) would define a Reserve Order as a Limit
Order with a quantity of the size displayed and with a reserve quantity
of the size (``reserve interest'') that is not displayed and that the
displayed quantity of a Reserve Order is ranked Priority 2--Display
Orders and the reserve interest is ranked Priority 3--Non-Display
Orders. This proposed rule text is based on Rule 7.31-E(d)(1) without
any differences. Proposed Rule 6.62P-O(d)(1) would further provide that
both the display quantity and the reserve interest of an arriving
marketable Reserve Order would be eligible to trade with resting
interest in the Consolidated Book or route to Away Markets, unless
designated as a Non-Routable Limit Order, which is based on the third
sentence of Rule 7.31-E(d)(1) with a non-substantive difference to add
reference to Non-Routable Limit Order.
    Proposed Rule 6.62P-O(d)(1) would further provide that the working
price of the reserve interest of a resting Reserve Order to buy (sell)
would be adjusted in the same manner as a Non-Displayed Limit Order, as
provided for in paragraph (d)(2)(A) of this Rule, provided that it
would never be priced higher (lower) than the working price of the
display quantity of the Reserve Order. This proposed rule text is based
on the last sentence of Rule 7.31-E(d)(1) with one difference to
reference that the reserve interest could never have a working price
that is more aggressive than the working price of the display quantity
of the Reserve Order, which would be new functionality on Pillar
designed to ensure that the reserve interest of a Reserve Order to buy
(sell) would never trade at a price higher (lower) than the working
price of the display quantity of the Reserve Order.\28\
---------------------------------------------------------------------------

    \28\ For example, as described in more detail below, the
proposed Non-Routable Limit Order would be eligible to be repriced
only once after it is resting in the Consolidated Book (see proposed
Rule 6.62P-O(e)(1)). If the display quantity of a Non-Routable Limit
Order that is combined with a Reserve Orders has already been
repriced and is no longer eligible to be repriced, and the Away
Market NBBO adjusts, the reserve quantity would not adjust to a
price that would be more aggressive than the working price of the
display quantity of the order.
---------------------------------------------------------------------------

     Proposed Rule 6.62P-O(d)(1)(A) would provide that the
displayed portion of a Reserve Order would be replenished when the
display quantity is decremented to zero and that the replenish quantity
would be the minimum display size of the order or the remaining
quantity of the reserve interest if it is less than the minimum display
quantity. This proposed rule text is based on Rule 7.31-E(d)(1)(A) with
differences to reflect that options are not traded in ``round lots'' or
``odd lots.'' Accordingly, the Exchange would not replenish a Reserve
Order on the options trading platform until the display portion is
fully decremented.
     Proposed Rule 6.62P-O(d)(1)(B) would provide that each
time the

display quantity of a Reserve Order is replenished from reserve
interest, a new working time would be assigned to the replenished
quantity. This proposed rule text is based in part on Rule 7.31-
E(d)(1)(B) with differences to reflect that for options traded on
Pillar, there would never be more than one display quantity of a
Reserve Order, and therefore the Exchange would not have different
``child'' display quantities of a Reserve Order with different working
times, as could occur for a Reserve Order on the Exchange's cash equity
trading platform.
     Proposed Rule 6.62P-O(d)(1)(C) would provide that a
Reserve Order may be designated as a Non-Routable Limit Order and if so
designated, the reserve interest that replenishes the display quantity
would be assigned a display price and working price consistent with the
instructions for the order. This proposed rule text is based on Rule
7.31-E(d)(1)(B)(ii) without any substantive differences.
     Proposed Rule 6.62P-O(d)(1)(D) would provide that a
routable Reserve Order would be evaluated for routing both on arrival
and each time the display quantity is replenished. Proposed Rule 6.62P-
O(d)(1)(D)(i) would provide that if routing is required, the Exchange
would route from reserve interest before publishing the display
quantity. And proposed Rule 6.62P-O(d)(1)(D)(ii) would provide that any
quantity of a Reserve Order that is returned unexecuted would join the
working time of the reserve interest and that if there is no reserve
interest to join, the returned quantity would be assigned a new working
time. This proposed rule text is based on Rule 7.31-E(d)(1)(D) and
subparagraphs (i) and (ii) with differences to reflect that there is no
concept of round lots or multiple child display orders for options
trading.
     Proposed Rule 6.62P-O(d)(1)(E) would provide that a
request to reduce the size of a Reserve Order would cancel the reserve
interest before cancelling the display quantity. This proposed rule
text is based on Rule 7.31-E(d)(1)(E) with differences only to reflect
that there would not be more than one child display order for options
trading of Reserve Orders on Pillar.
     Proposed Rule 6.62P-O(d)(1)(F) would provide that a
Reserve Order may be designated Day or GTC, but it may not be
designated as an ALO Order. This proposed rule text is based in part on
Rule 7.31-E(d)(1)(C), with differences to reflect that the GTC Modifier
would be available for Reserve Orders trading on the Pillar options
trading platform and that Primary Pegged Orders would not be available
for options traded on Pillar.
    Non-Displayed Limit Order. The Exchange proposes to offer the Non-
Displayed Limit Order for options trading on Pillar, which would be new
for options trading and is based on the existing Non-Displayed Limit
Order as described in Rule 7.31-E(d)(2).\29\ Proposed Rule 6.62P-
O(d)(2) would define a Non-Displayed Limit Order as a Limit Order that
is not displayed, does not route, and is ranked Priority 3--Non-Display
Orders; and that a Non-Displayed Limit Order may be designated Day or
GTC and would not participate in any Auctions. This proposed rule text
is based on Rule 7.31-E(d)(2) with differences to reflect that the GTC
Time-in-Force Modifier is available for options trading on Pillar.
---------------------------------------------------------------------------

    \29\ The Exchange notes that a Non-Displayed Limit Order would
function similarly to a PNP Blind Order that locks or crosses the
contra-side NBBO. In such case, a PNP Blind Order would not be
displayed, as described in Rule 6.62-O(u) (``if the PNP Blind Order
would lock or cross the NBBO, the price and size of the order will
not be disseminated'').
---------------------------------------------------------------------------

     Proposed Rule 6.62P-O(d)(2)(A) would provide that the
working price of a Non-Displayed Limit Order would be assigned on
arrival and adjusted when resting on the Consolidated Book and that the
working price of a Non-Displayed Limit Order to buy (sell) would be the
lower (higher) of the limit price or the NBO (NBB). This proposed rule
text is based on Rule 7.31-E(d)(2)(A) with non-substantive differences
to reference the Consolidated Book instead of the NYSE Arca Book and to
streamline the rule text without any substantive differences.
     Proposed Rule 6.62P-O(d)(2)(B) would provide that a Non-
Displayed Limit Order may be designated with a Non-Display Remove
Modifier and if so designated, a resting Non-Displayed Limit Order to
buy (sell) with a working price equal to the working price of an ALO
Order or Day ISO ALO to sell (buy) would trade as the liquidity taker
against such order. This functionality would be new for options trading
and is based on the Non-Display Remove Modifier functionality available
on the cash equity market as described in Rule 7.31-E(d)(2)(B), without
any substantive differences.
    All-or-None (``AON'') Order. AON Orders are currently defined in
Rule 6.62-O(d)(4). AON Orders are not available on the Exchange's cash
equity market, and for options trading on Pillar, would function
similarly to how AON Orders currently function because such orders
would only execute if they can be satisfied in their entirety. However,
unlike the OX system, where AON Orders are not integrated in the
Consolidated Book, on Pillar, the Exchange proposes that AON Orders
would be ranked in the Consolidated Book and function as conditional
orders that would trade only if their condition could be met, similar
to how orders with a Minimum Trade Size (``MTS'') Modifier function on
Pillar on the Exchange's cash equity market. Because of the new
functionality that would be available for AON Orders on Pillar, the
Exchange proposes to use Pillar terminology to describe this order
type.
    Proposed Rule 6.62P-O(d)(3) would provide that an AON Order is a
Limit Order that is to be traded in whole on the Exchange at the same
time or not at all, which represents current functionality as described
in the first sentence of Rule 6.62-O(d)(4). Proposed Rule 6.62P-O(d)(3)
would further provide that an AON Order that does not trade on arrival
would be ranked Priority 3--Non-Display Orders and that an AON Order
may be designated Day or GTC, does not route, and would not participate
in any Auctions. This proposed rule text uses Pillar terminology to
describe the proposed new functionality that such orders would be
ranked on the Consolidated Book.
     Proposed Rule 6.62P-O(d)(3)(A) would provide that the
working price of an AON Order would be assigned on arrival and adjusted
when resting on the Consolidated Book and that the working price of an
AON Order to buy (sell) would be the lower (higher) of the limit price
or NBO (NBB). Because an AON Order is non-displayed, the Exchange
proposes that its working price should be adjusted in the same manner
as the proposed Non-Displayed Limit Order.
     Proposed Rule 6.62P-O(d)(3)(B) would provide that an
Aggressing AON Order to buy (sell) would trade with sell (buy) orders
and quotes that in the aggregate can satisfy the AON Order in its
entirety. This proposed rule text is new and promotes clarity in
Exchange rules that an Aggressing AON Order (whether on arrival or as a
resting order that becomes an Aggressing Order) would be eligible to
trade with more than one contra-side order or quote, provided that
multiple orders and quotes in the aggregate would satisfy the AON Order
in its entirety.
     Proposed Rule 6.62P-O(d)(3)(C) would provide that a
resting AON Order to buy (sell) would trade with an Aggressing Order or
Aggressing Quote to sell (buy) that individually can satisfy the whole
AON Order. This is proposed new functionality, because currently, an
AON Order can trade only against resting interest in the Consolidated
Book. The Exchange believes this

proposed change would provide an AON Order with additional execution
opportunities.
     Proposed Rule 6.62P-O(d)(3)(C)(i) would provide that if an
Aggressing Order or Aggressing Quote to sell (buy) does not satisfy the
resting AON Order to buy (sell), that Aggressing Order or Aggressing
Quote would not trade with and may trade through such AON Order.
Proposed Rule 6.62P-O(d)(3)(C)(ii) would further provide that if a
resting non-displayed order to sell (buy) does not satisfy the quantity
of a same-priced resting AON Order to buy (sell), a subsequently
arriving order or quote to sell (buy) that satisfies the AON Order
would trade before such resting non-displayed order or quote to sell
(buy) at that price. Both of these proposed rules are consistent with
current Rule 6.62-O(d)(4), which provides that an AON Order does not
have ``standing in any Order Process in the Consolidated Book,'' i.e.,
a resting AON Order can be ignored if its condition is not met. This
proposed rule text is also based on how the MTS Modifier functions on
the cash equity market, as described in Rule 7.31-E(i)(3)(E)(i) and
(ii).
     Proposed Rule 6.62P-O(d)(3)(D) would provide that a
resting AON Order to buy (sell) would not be eligible to trade against
an Aggressing Order or Aggressing Quote to sell (buy): (i) At a price
equal to or above (below) any orders or quotes to sell (buy) that are
displayed at a price equal to or below (above) the working price of
such AON Order; or (ii) at a price above (below) any orders or quotes
to sell (buy) that are not displayed and that have a working price
below (above) the working price of such AON Order. This proposed rule
text is new functionality for AON Orders that is designed to protect
the priority of resting orders and quotes and is based on how the MTS
Modifier functions on the cash equity market, as described in Rule
7.31-E(i)(3)(C) and its subparagraphs (i) and (ii).
     Proposed Rule 6.62P-O(d)(3)(E) would provide that if a
resting AON Order to buy (sell) becomes an Aggressing Order it would
trade as provided in paragraph (d)(3)(B) of this Rule; however, other
resting orders or quotes to buy (sell) ranked Priority 3--Non-Display
Orders that become Aggressing Orders or Aggressing Quotes at the same
time as the resting AON Order would be processed before the AON Order.
This is proposed new functionality and is designed to promote clarity
in Exchange rules that if multiple orders ranked Priority 3--Non-
Display Orders, including AON and non-AON Orders, become Aggressing
Orders or Aggressing Quotes at the same time, the AON Order would not
be eligible trade until the other orders ranked Priority 3- Non-Display
Orders have been processed, even if they have later working times. The
Exchange believes that it would be consistent with the conditional
nature of AON Orders for other same-side non-displayed orders to have a
trading opportunity before the AON Order.
     Proposed Rule 6.62P-O(d)(3)(F) would provide that an AON
Order may be designated with a Non-Display Remove Modifier and if so
designated, a resting AON Order to buy (sell) that can trade with an
ALO Order or Day ISO ALO Order to sell (buy) would trade as the
liquidity-taking order. This proposed functionality would be new for
options trading and is based on the Non-Display Remove Modifier
available on the cash equity market, as described in Rules 7.31-
E(d)(2)(B) and 7.31-E(e)(1)(C).
    Stop Order. Stop Orders are currently defined in Rule 6.62-O(d)(1).
The Exchange proposes to use Pillar terminology to describe Stop Orders
in proposed Rule 6.62P-O(d)(4). Proposed Rule 6.62P-O(d)(4) would
provide that a Stop Order is an order to buy (sell) a particular option
contract that becomes a Market Order (or is ``elected'') when the
Exchange BB (BO) or the most recent consolidated last sale price
reported after the order was placed in the Consolidated Book (the
``Consolidated Last Sale'') (either, the ``trigger'') is equal to or
higher (lower) than the specified ``stop'' price. Because a Stop Order
becomes a Market Order when it is elected, the Exchange proposes that
when it is elected, it would be cancelled if it does not meet the
validations specified in proposed Rule 6.62P-O(a)(1)(A) and if not
cancelled, it would be assigned a Trading Collar.
    Proposed Rule 6.62P-O(d)(4)(A) would provide that a Stop Order
would be assigned a working time when it is received but would not be
ranked or displayed in the Consolidated Book until it is elected and
that once converted to a Market Order, the order would be assigned a
new working time and be ranked Priority 1- Market Orders. The original
working time assigned to a Stop Order would be used to rank multiple
Stop Orders elected at the same time.
    Proposed Rule 6.62P-O(d)(4)(B) would specify additional events that
are designed to limit when a Stop Order may be elected so that a Market
Order does not trade during a period of pricing uncertainty:
     Proposed Rule 6.62P-O(d)(4)(B)(i) would provide that if
not elected on arrival, a Stop Order that is resting would not be
eligible to be elected based on a Consolidated Last Sale unless the
Consolidated Last Sale is equal to or in between the NBBO. This
proposed rule text provides additional transparency of when a resting
Stop Order would be eligible to be elected.
     Proposed Rule 6.62P-O(d)(4)(B)(ii) would provide that a
Stop Order would not be elected if the NBBO is crossed.
     Proposed Rule 6.62P-O(d)(4)(B)(iii) would provide that
after a Limit State or Straddle State is lifted, the trigger to elect a
Stop Order would be either the Consolidated Last Sale received after
such state was lifted or the Exchange BB (BO).\30\
---------------------------------------------------------------------------

    \30\ Rule 6.65A(a)(2) currently provides that the Exchange will
not elect Stop Orders when the underlying NMS stock is either in a
Limit State or a Straddle State, which would continue to be
applicable on Pillar. The Exchange proposes a non-substantive
amendment to Rule 6.65A(a)(2) to add a cross-reference to proposed
Rule 6.62P-O(d)(4).
---------------------------------------------------------------------------

    Stop Limit Order. Stop Limit Orders are currently defined in Rule
6.62-O(d)(2). The Exchange proposes to use Pillar terminology to
describe Stop Limit Orders in proposed Rule 6.62P-O(d)(5). Proposed
Rule 6.62P-O(d)(5) would provide that a Stop Limit Order is an order to
buy (sell) a particular option contract that becomes a Limit Order (or
is ``elected'') when the Exchange BB (BO) or the Consolidated Last Sale
(either, the ``trigger'') is equal to or higher (lower) than the
specified ``stop'' price.\31\ As further proposed, a Stop Limit Order
to buy (sell) would be rejected if the stop price is higher (lower)
than its limit price. Because a Stop Limit Order becomes a Limit Order
when it is elected, the Exchange proposes that when it is elected, it
would be cancelled if it fails Limit Order Price Protection or a Price
Reasonability Check and if not cancelled, it would be assigned a
Trading Collar.\32\
---------------------------------------------------------------------------

    \31\ The term ``Consolidated Last Sale'' is defined in proposed
Rule 6.62P-O(d)(4).
    \32\ See discussion infra, regarding proposed Rule 6.41P-O and
Price Reasonability Checks.
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(d)(5)(A) would provide that a Stop Limit
Order would be assigned a working time when it is received but would
not be ranked or displayed in the Consolidated Book until it is elected
and that once converted to a Limit Order, the order would be assigned a
new working time and be ranked Priority 2--Display Orders.
    Proposed Rule 6.62P-O(d)(5)(B) would specify additional events that
are designed to limit when a Stop Limit Order may be elected so that a
Limit

Order would not have a possibility of trading or being added to the
Consolidated Book during a period of pricing uncertainty.
     Proposed Rule 6.62P-O(d)(5)(B)(i) would provide that if
not elected on arrival, a Stop Limit Order that is resting would not be
eligible to be elected based on a Consolidated Last Sale unless the
Consolidated Last Sale is equal to or in between the NBBO.
     Proposed Rule 6.62P-O(d)(5)(B)(ii) would provide that a
Stop Limit Order would not be elected if the NBBO is crossed.
    Orders with Instructions Not to Route. Currently, the Exchange
defines non-routable orders in Rule 6.62-O as a PNP Order (which
includes a Repricing PNP Order or RPNP) (current Rule 6.62-O(p)), a
Liquidity Adding Order (``ALO'') (which includes a Repricing ALO
(``RALO'') (current Rule 6.62-O(t)); a PNP-Blind Order (current Rule
6.62-O(u)); and a PNP-Light Order (Rule 6.62-O(v)). The Exchange also
defines the PNP Plus Order (current Rule 6.62-O(y)), which is available
for Electronic Complex Orders, and Intermarket Sweep Orders (current
Rule 6.62-O(aa)).
    The Exchange separately defines non-routable quotes in Rule 6.37A-O
as a Market Maker--Light Only Quotation (``MMLO'') (current Rule 6.37A-
O(a)(3)(A)); a Market Maker--Add Liquidity Only Quotation (``MMALO'')
(current Rule 6.37A-O(a)(3)(B)); and a Market Maker--Repricing
Quotation (``MMRP'') (current Rule 6.37A-O(a)(3)(C)).
    On Pillar, the Exchange proposes to streamline the non-routable
order types and quotes that would be available for options trading, use
terminology that is similar to how non-routable orders are described
for cash equity trading as described in Rule 7.31-E(e), and describe
the functionality that would be applicable to both orders and quotes in
proposed Rule 6.62P-O(e). As described in greater detail below,
proposed Rule 6.37AP-O governing Market Maker Quotations would no
longer define how quotations would function. Instead, that rule would
specify that Market Maker quotes must be designated as either a Non-
Routable Limit Order or ALO Order. On Pillar, the Exchange would no
longer offer functionality based on the PNP-Blind Order, PNP-Light
Order, or MMLO.
    Non-Routable Limit Order. Proposed Rule 6.62P-O(e)(1) would define
the Non-Routable Limit Order. This proposed order type incorporates
functionality currently available in both the existing PNP and RPNP
order types, as defined in Rule 6.62-O, and the existing MMRP quotation
type, as defined in Rule 6.37A-O(a)(3)(C), and uses Pillar terminology.
    Proposed Rule 6.62P-O(e)(1) would provide that a Non-Routable Limit
Order is a Limit Order or quote that does not route and may be
designated Day or GTC and would further provide that a Non-Routable
Limit Order with a working price different from the display price would
be ranked Priority 3-Non-Display Orders and a Non-Routable Limit Order
with a working price equal to the display price would be ranked
Priority 2-Display Orders. This proposed rule uses Pillar terminology
similar to how a Non-Routable Limit Order is described for the
Exchange's cash equity market in Rules 7.31-E(e)(1) and 7.31-
E(e)(1)(B).
    Proposed Rule 6.62P-O(e)(1)(A) would provide that a Non-Routable
Limit Order would not be displayed at a price that would lock or cross
an Away Market NBBO and that a Non-Routable Limit Order to buy (sell)
would trade with orders or quotes to sell (buy) in the Consolidated
Book priced at or below (above) the Away Market NBO (NBB).
    Proposed Rule 6.62P-O(e)(1)(A)(i) would provide that a Non-Routable
Limit Order can be designated to be cancelled if it would be displayed
at a price other than its limit price. The proposed option to cancel a
Non-Routable Limit Order is based on how a PNP Order currently
functions. The Exchange proposes a substantive difference that if an
OTP Holder or OTP Firm opts to cancel instead of reprice a Non-Routable
Limit Order, such order would be cancelled if it could not be displayed
at its limit price, which could be because the order would be repriced
to display at a price that would not lock or cross an Away Market NBBO
or because it would be repriced due to Trading Collars.\33\
---------------------------------------------------------------------------

    \33\ Because Trading Collars would be applicable to Non-Routable
Limit Orders, the Exchange does not propose to cancel an incoming
Non-Routable Limit Order if its price is more than a configurable
number of MPVs outside its initial display price, which is how an
RPNP currently functions, and therefore would not include
functionality based on Rule 6.62-O(p)(1)(B) in the proposed Pillar
rules.
---------------------------------------------------------------------------

    Proposed Rule 6.62P-O(e)(1)(A)(ii) would provide that if not
designated to cancel, if the limit price of a Non-Routable Limit Order
to buy (sell) would lock or cross an Away Market NBO (NBB), it would be
repriced to have a working price equal to the Away Market NBO (NBB) and
a display price one MPV below (above) that NBO (NBB). Accordingly, the
proposed Non-Routable Limit Order, if not designated to cancel, would
reprice in the same manner as an RPNP order or MMRP quotation.
    The Exchange proposes new functionality for the Non-Routable Limit
Order as compared to either the RPNP Order or the Non-Routable Limit
Order on the Exchange's cash equity market. Specifically, proposed Rule
6.62P-O(e)(1)(B) would provide that the display price of a resting Non-
Routable Limit Order to buy (sell) that has been repriced would be
repriced higher (lower) only one additional time.\34\ If after that
repricing, the display price could be repriced higher (lower) again,
the order can be designated to either remain at its last working price
and display price or be cancelled, provided that a resting Non-Routable
Limit Order that is a quote cannot be designated to be cancelled.\35\
---------------------------------------------------------------------------

    \34\ For example, on arrival, a Non-Routable Limit Order to buy
(sell) with a limit price higher (lower) than the NBO (NBB), would
have a display price one MPV below (above) the NBO (NBB) and a