Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 4, Rule 3301B Regarding Reserve Orders, 13950-13952 [2021-05026]
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Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 17 and Rule 19b–4(f)(6) 18
thereunder because the proposal does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) by its
terms, become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate if consistent with the
protection of investors and the public
interest.19
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 20 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 21
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange states that waiver
of the 30-day operative delay would
immediately eliminate rules and
references that account for services the
Exchange planned to discontinue on
March 1, 2021, thereby avoiding
potential investor confusion during the
operative delay period. Based on the
foregoing, the Commission believes the
waiver of the operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposal operative upon
filing.22
17 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
19 In addition, Rule 19b–4(f)(6)(iii) requires the
Exchange to give the Commission written notice of
the Exchange’s intent to file the proposed rule
change, along with a brief description and text of
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
20 17 CFR 240.19b–4(f)(6).
21 17 CFR 240.19b–4(f)(6)(iii).
22 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.23
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2021–018 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2021–018. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2021–018 and
should be submitted on or before April
1, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–05030 Filed 3–10–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91263; File No. SR–Phlx–
2021–11]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Equity 4, Rule
3301B Regarding Reserve Orders
March 5, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
23, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Equity 4, Rule 3301B, as described
further below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
23 15
PO 00000
U.S.C. 78s(b)(3)(C).
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Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend
Equity 4, Rule 3301B(h), which
describes Orders with ‘‘Reserve Size,’’ to
clarify its existing practice relating to
replenishments of such Orders. As set
forth in Equity 4, Rule 3301B(h),
‘‘Reserve Size’’ is an Order Attribute
that permits a Participant to stipulate
that an Order Type that is Displayed
may have its displayed size replenished
from additional non-displayed size.3
The Exchange established the Reserve
Orders with the intention that it would
always act as a provider of liquidity
upon replenishment. Indeed, this is
what participants have come to expect
from the operation of Reserve Orders.
However, a rule filing 4 introduced a
rare circumstance where a Reserve
Order, upon replenishment of its
Displayed Order component,
theoretically could become a liquidity
remover under the existing Exchange
Rules.
An example of the rare theoretical
circumstance is as follows. Order 1 is a
Price to Comply Order to buy at $10.00
resting on the Exchange book with 100
shares displayed and 3,000 shares in
reserve (for a total order size of 3,100
shares). Order 2 is an Order to sell 100
shares at $10.00, which executes against
the 100 displayed shares from Order 1
upon entry. Order 3 is a Post Only order
to sell 1,000 shares at $10.00 that is
entered and posts to the Book before
Order 1 has been replenished.
Following the rules of the Post Only
Order Type, Order 3 does not execute
against the non-displayed interest
resting at $10.00, but instead posts at
the locking price. Therefore, upon
replenishment, the new 100 shares of
Order 1 would lock Order 3 at $10.00.
As directed by the rule governing Price
to Comply Orders,5 Order 1 would
3 An Order with Reserve Size may be referred to
as a ‘‘Reserve Order.’’
4 See Securities Exchange Act Release No. 34–
88583 (April 7, 2020), 85 FR 20533 (April 13, 2020)
(SR–PHLX–2020–015).
5 Pursuant to Equity 4, Rule 3301A(b)(1)(A), a
‘‘Price to Comply Order’’ is an Order Type designed
to comply with Rule 610(d) under Regulation NMS
by avoiding the display of quotations that lock or
cross any Protected Quotation in a System Security
during Market Hours. The Price to Comply Order
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execute against Order 3 at $10.00 as a
liquidity taker.
The Exchange did not account for this
scenario when drafting its rules. In fact,
the Exchange does not presently handle
this scenario as described above.
Instead, upon replenishment, the
Exchange reprices the new displayed
Price to Comply Order such that it does
not execute against Order 3 as a
liquidity taker.
However, the Exchange now proposes
to eliminate any unintended
inconsistency as to how it handles this
scenario and make clear in its Rules that
a Reserve Order is an adder of liquidity
after posting on the Exchange Book in
all circumstances. Specifically, the
Exchange proposes to amend the Rule to
state that if the new Displayed Order
would lock an Order that posted to the
Exchange Book before replenishment
can occur, the Displayed Order will post
at the locking price if the resting Order
is Non-Display or will be repriced,
ranked, and displayed at one minimum
price increment lower (higher) than the
locking price if the resting order to sell
(buy) is Displayed.6 7
Again, in the above example, the
proposed rule will prevent Order 1 from
becoming a liquidity remover because
upon replenishment, the new Displayed
Order will not attempt to execute
against Order 3, but instead it will post
to the Exchange Book and display at a
price of $9.99, while the remaining
2,900 non-display shares in reserve will
remain posted at $10.00.
By posting new Displayed Orders
without attempting to execute, the
Displayed Order will avoid removing
liquidity upon replenishment.8
is also designed to provide potential price
improvement. When a Price to Comply Order is
entered, the Price to Comply Order will be executed
against previously posted Orders on the Exchange
Book that are priced equal to or better than the price
of the Price to Comply Order, up to the full amount
of such previously posted Orders, unless such
executions would trade through a Protected
Quotation.
6 The Exchange notes that a Reserve Order that
does not execute fully upon initial order entry will
behave in the same manner as described in this
Proposal if the Displayed portion of the Reserve
Order would lock a resting Order upon entry.
7 If a Displayed Order posts to the Exchange Book
and locks a resting Non-Displayed Order with the
Trade Now attribute enabled, then consistent with
the definition of Trade Now, as set forth in Equity
4, Rule 3301B(l), the Trade Now functionality
would apply and the Non-Displayed Order would
be able to execute against the locking Displayed
Order as a liquidity taker. If a locked Non-Displayed
Order does not have the Trade Now attribute
enabled, then new incoming orders will be eligible
to execute against the Displayed Order.
8 The Exchange proposes to correct a nonsubstantive typographical error in the existing rule
text by removing the word ‘‘the’’ from the following
sentence: ‘‘For example, if a Price to Comply Order
with Reserve Size . . . and the 150 shares . . . .’’
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13951
The Exchange notes that the
Commission has approved a similar rule
change that its sister exchange, the
Nasdaq Stock Market, LLC (‘‘Nasdaq’’),
submitted late last year.9 The
Exchange’s proposal will harmonize the
Exchange’s Reserve Order Attribute rule
with that of Nasdaq.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Section 6(b)(5) of the Act,11
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest.
The proposed rule change is
consistent with the Act because it will
help ensure that the Exchange’s Rule
governing Reserve Orders will be
consistent with the original intention of
the Exchange and the expectation of
participants that such Orders, after
posting on the Exchange Book, will
always be liquidity providers and not
liquidity takers. It would also ensure
that the Exchange’s Order Types operate
the same way during a race condition as
they do during normal conditions. The
proposal would eliminate any ambiguity
under the existing rules as to whether a
Reserve Order would take liquidity
when a locking order posts to the
Exchange book prior to the Reserve
Order completing its replenishment (or
prior to the Displayed portion of a
Reserve Order posting to the Exchange
Book for the first time). Thus, the
proposal would ensure that the
Exchange’s Rules are transparent and
clear about how the System processes
Reserve Orders.
Finally, the proposal is consistent
with the Act because it would correct a
non-substantive typographical error in
the Rule text, which will improve its
readability and clarity, to the benefit of
the public and investors.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. Again,
Exchange intends for the proposed rule
change to only eliminate an
inconsistency as to how it handles a rare
9 See Securities Exchange Act Release No. 34–
91109 (February 11, 2021), 86 FR 10141 (February
18, 2021) (SR–NASDAQ–2020–090).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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13952
Federal Register / Vol. 86, No. 46 / Thursday, March 11, 2021 / Notices
circumstance that causes the System to
process Reserve Orders in an
unintended manner. The Exchange does
not anticipate this proposal will have
any impact on competition whatsoever.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 14 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 15
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay. Waiver of
the operative delay would allow the
Exchange to immediately amend its
Reserve Order rule to account for
scenarios that may occur today and
harmonize its Reserve Order rule with
that of Nasdaq.16 The Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the operative delay and
designates the proposed rule change
operative upon filing.17
At any time within 60 days of the
filing of the proposed rule change, the
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
16 See supra note 9.
17 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
Phlx–2021–11 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2021–11. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–Phlx–2021–11 and should
be submitted on or before April 1, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–05026 Filed 3–10–21; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #16889 and #16890;
North Carolina Disaster Number NC–00124]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of North Carolina
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of North Carolina (FEMA–
4588–DR), dated 03/03/2021.
Incident: Tropical Storm Eta.
Incident Period: 11/12/2020 through
11/15/2020.
DATES: Issued on 03/03/2021.
Physical Loan Application Deadline
Date: 05/03/2021.
Economic Injury (EIDL) Loan
Application Deadline Date: 12/03/2021.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
03/03/2021, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Alexander,
Alleghany, Ashe, Beaufort, Burke,
Caldwell, Davidson, Davie, Duplin,
SUMMARY:
18 17
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CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 86, Number 46 (Thursday, March 11, 2021)]
[Notices]
[Pages 13950-13952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05026]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91263; File No. SR-Phlx-2021-11]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Equity 4,
Rule 3301B Regarding Reserve Orders
March 5, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 23, 2021, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Equity 4, Rule 3301B, as described
further below.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these
[[Page 13951]]
statements may be examined at the places specified in Item IV below.
The Exchange has prepared summaries, set forth in sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Equity 4, Rule 3301B(h), which
describes Orders with ``Reserve Size,'' to clarify its existing
practice relating to replenishments of such Orders. As set forth in
Equity 4, Rule 3301B(h), ``Reserve Size'' is an Order Attribute that
permits a Participant to stipulate that an Order Type that is Displayed
may have its displayed size replenished from additional non-displayed
size.\3\
---------------------------------------------------------------------------
\3\ An Order with Reserve Size may be referred to as a ``Reserve
Order.''
---------------------------------------------------------------------------
The Exchange established the Reserve Orders with the intention that
it would always act as a provider of liquidity upon replenishment.
Indeed, this is what participants have come to expect from the
operation of Reserve Orders.
However, a rule filing \4\ introduced a rare circumstance where a
Reserve Order, upon replenishment of its Displayed Order component,
theoretically could become a liquidity remover under the existing
Exchange Rules.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 34-88583 (April 7,
2020), 85 FR 20533 (April 13, 2020) (SR-PHLX-2020-015).
---------------------------------------------------------------------------
An example of the rare theoretical circumstance is as follows.
Order 1 is a Price to Comply Order to buy at $10.00 resting on the
Exchange book with 100 shares displayed and 3,000 shares in reserve
(for a total order size of 3,100 shares). Order 2 is an Order to sell
100 shares at $10.00, which executes against the 100 displayed shares
from Order 1 upon entry. Order 3 is a Post Only order to sell 1,000
shares at $10.00 that is entered and posts to the Book before Order 1
has been replenished. Following the rules of the Post Only Order Type,
Order 3 does not execute against the non-displayed interest resting at
$10.00, but instead posts at the locking price. Therefore, upon
replenishment, the new 100 shares of Order 1 would lock Order 3 at
$10.00. As directed by the rule governing Price to Comply Orders,\5\
Order 1 would execute against Order 3 at $10.00 as a liquidity taker.
---------------------------------------------------------------------------
\5\ Pursuant to Equity 4, Rule 3301A(b)(1)(A), a ``Price to
Comply Order'' is an Order Type designed to comply with Rule 610(d)
under Regulation NMS by avoiding the display of quotations that lock
or cross any Protected Quotation in a System Security during Market
Hours. The Price to Comply Order is also designed to provide
potential price improvement. When a Price to Comply Order is
entered, the Price to Comply Order will be executed against
previously posted Orders on the Exchange Book that are priced equal
to or better than the price of the Price to Comply Order, up to the
full amount of such previously posted Orders, unless such executions
would trade through a Protected Quotation.
---------------------------------------------------------------------------
The Exchange did not account for this scenario when drafting its
rules. In fact, the Exchange does not presently handle this scenario as
described above. Instead, upon replenishment, the Exchange reprices the
new displayed Price to Comply Order such that it does not execute
against Order 3 as a liquidity taker.
However, the Exchange now proposes to eliminate any unintended
inconsistency as to how it handles this scenario and make clear in its
Rules that a Reserve Order is an adder of liquidity after posting on
the Exchange Book in all circumstances. Specifically, the Exchange
proposes to amend the Rule to state that if the new Displayed Order
would lock an Order that posted to the Exchange Book before
replenishment can occur, the Displayed Order will post at the locking
price if the resting Order is Non-Display or will be repriced, ranked,
and displayed at one minimum price increment lower (higher) than the
locking price if the resting order to sell (buy) is
Displayed.6 7
---------------------------------------------------------------------------
\6\ The Exchange notes that a Reserve Order that does not
execute fully upon initial order entry will behave in the same
manner as described in this Proposal if the Displayed portion of the
Reserve Order would lock a resting Order upon entry.
\7\ If a Displayed Order posts to the Exchange Book and locks a
resting Non-Displayed Order with the Trade Now attribute enabled,
then consistent with the definition of Trade Now, as set forth in
Equity 4, Rule 3301B(l), the Trade Now functionality would apply and
the Non-Displayed Order would be able to execute against the locking
Displayed Order as a liquidity taker. If a locked Non-Displayed
Order does not have the Trade Now attribute enabled, then new
incoming orders will be eligible to execute against the Displayed
Order.
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Again, in the above example, the proposed rule will prevent Order 1
from becoming a liquidity remover because upon replenishment, the new
Displayed Order will not attempt to execute against Order 3, but
instead it will post to the Exchange Book and display at a price of
$9.99, while the remaining 2,900 non-display shares in reserve will
remain posted at $10.00.
By posting new Displayed Orders without attempting to execute, the
Displayed Order will avoid removing liquidity upon replenishment.\8\
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\8\ The Exchange proposes to correct a non-substantive
typographical error in the existing rule text by removing the word
``the'' from the following sentence: ``For example, if a Price to
Comply Order with Reserve Size . . . and the 150 shares . . . .''
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The Exchange notes that the Commission has approved a similar rule
change that its sister exchange, the Nasdaq Stock Market, LLC
(``Nasdaq''), submitted late last year.\9\ The Exchange's proposal will
harmonize the Exchange's Reserve Order Attribute rule with that of
Nasdaq.
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\9\ See Securities Exchange Act Release No. 34-91109 (February
11, 2021), 86 FR 10141 (February 18, 2021) (SR-NASDAQ-2020-090).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\11\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The proposed rule change is consistent with the Act because it will
help ensure that the Exchange's Rule governing Reserve Orders will be
consistent with the original intention of the Exchange and the
expectation of participants that such Orders, after posting on the
Exchange Book, will always be liquidity providers and not liquidity
takers. It would also ensure that the Exchange's Order Types operate
the same way during a race condition as they do during normal
conditions. The proposal would eliminate any ambiguity under the
existing rules as to whether a Reserve Order would take liquidity when
a locking order posts to the Exchange book prior to the Reserve Order
completing its replenishment (or prior to the Displayed portion of a
Reserve Order posting to the Exchange Book for the first time). Thus,
the proposal would ensure that the Exchange's Rules are transparent and
clear about how the System processes Reserve Orders.
Finally, the proposal is consistent with the Act because it would
correct a non-substantive typographical error in the Rule text, which
will improve its readability and clarity, to the benefit of the public
and investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Again, Exchange intends for the
proposed rule change to only eliminate an inconsistency as to how it
handles a rare
[[Page 13952]]
circumstance that causes the System to process Reserve Orders in an
unintended manner. The Exchange does not anticipate this proposal will
have any impact on competition whatsoever.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \14\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay.
Waiver of the operative delay would allow the Exchange to immediately
amend its Reserve Order rule to account for scenarios that may occur
today and harmonize its Reserve Order rule with that of Nasdaq.\16\ The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\17\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See supra note 9.
\17\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2021-11 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2021-11. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-Phlx-2021-11 and should be submitted on
or before April 1, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05026 Filed 3-10-21; 8:45 am]
BILLING CODE 8011-01-P
