RULES OF THE CHICAGO STOCK EXCHANGE, INC. (Updated through January 8, 2018)

Transcription

1 RULES OF THE CHICAGO STOCK EXCHANGE, INC. (Updated through January 8, 2018)

2 Table of Contents ARTICLE 1. Definitions and General Information Rule 1. Definitions Rule 2. Order Types, Modifiers, and Related Terms Rule 3. Time Rule 4. Exchange Use of the Securities Information Processors ARTICLE 2. Committees Rule 1. Appointment and Approval Rule 2. Executive Committee Rule 3. Finance Committee Rule 4. Regulatory Oversight Committee Rule 5. Committee on Exchange Procedure Rule 6. Reserved Rule 7. Judiciary Committee Rule 8. Compensation Committee Rule 9. Audit Committee Rule 10. Participant Advisory Committee Rule 11. Nominating and Governance Committee Rule 12. Committee Quorum ARTICLE 3. Participants and Participant Firms Rule 1. Qualifications Rule 2. Rights and Privileges of Participants Rule 3. Application Procedure Rule 4. Filing Requirements/Parties Bound by Rules of Exchange Rule 5. Exchange Not Bound by Partnership Agreement or Corporate Documents Rule 6. Subordination of Claims Rule 7. Conducting Business as Partnership Rule 8. Limitation on Interests in Other Organizations Rule 9. Notice of Death or Retirement of Partner Rule 10. Affiliation with Suspended Participants Rules of the Chicago Stock Exchange, Inc. Page 2

3 Rule 11. Transfer of Equity Securities of a Participant Firm Rule 12. Reporting of Loans Rule 13. Designation of Addresses Rule 14. "Voting Designee" of Participant Firm Rule 15. Transfers of Trading Permits Rule 16. Termination of Trading Permit by Participant Rule 17. Limitations on Exchange Personnel Rule 18. Suits Against Officers, Directors and Staff Rule 19. Limitation of Liability Rule 20. No Affiliation between Exchange and any Participant Rule 21. Mandatory Participation Testing of Backup Systems ARTICLE 4. Exchange Systems and Services Rule 1. Book Feed Rule 2. CHX Connect ARTICLE 5. Access To The Exchange Rule 1. Access to Exchange Systems Rule 2. Required Payment of Fees Rule 3. Non-Participant Access to the Exchange Rule 4. Denial of Access ARTICLE 6. Registration, Supervision and Training Rule 1. Notification of Wire Connection or Office Sharing Arrangements Rule 2. Registration and Approval of Participant Personnel Rule 3. Training and Examination of Registrants Rule 4. Employment of Representatives Rule 5. Supervision of Representatives and Branch and Resident Offices Rule 6. Employment of Clerks Rule 7. Providing Information Rule 8. Disciplinary Actions by Other Organizations Rule 9. Provision of Information to the Exchange Rule 10. Fingerprinting Rule 11. Continuing Education for Registered Persons Rules of the Chicago Stock Exchange, Inc. Page 3

4 Rule 12. Anti-Money Laundering Compliance Program ARTICLE 7. Financial Responsibility and Reporting Requirements Rule 1. Prerequisite for Clearing Transactions Rule 2. Liquid Net Worth of Individual Applicant Rule 3. Net Capital and Aggregate Indebtedness Rule 3A. Joint Back Office Participants Rule 4. Financial and Operational Reports Rule 5. "Doing Business with the Public" Rule 6. Fidelity Bonds Rule 7. Filing Requirements on Change of Examining Authority Rule 8. Operational Capability Rule 9. Short Positions Rule 10. Guarantee Letters Rule 11. Fixing and Paying Fees and Charges Rule 12. Failure to Pay Debts Rule 13. Fees and Charges of Participants in Military Service Rule 14. Business Continuity Plans and Emergency Contact Information ARTICLE 8. Business Conduct Rule 1. Adherence to All Rules and Bylaws Rule 2. Acts Detrimental to Interest or Welfare of Exchange Rule 3. Fraudulent Acts Rule 4. Prohibition of Misstatements Rule 5. Attempt to Hide Prior Misdealings Rule 6. Prohibited Accounts Rule 7. Officers and Employees of Exchange and Other Industry Participants Rule 8. Pledged Securities Rule 9. Mailing Communications to Non-Participant Customer Rule 10. Customer Dealings Account Transfers Rule 11. Customer Dealings Suitability Rule 12. Interest in Customer Accounts Rule 13. Advertising, Promotion and Telemarketing Rules of the Chicago Stock Exchange, Inc. Page 4

5 Rule 14. Proxies Rule 15. Commissions Rule 16. Conduct on Exchange Premises and Conduct Involving Participants or Exchange Employees Rule 17. Customer Disclosures ARTICLE 9. General Trading Rules Rule 1. Application Rule 2. Just and Equitable Trade Principles Rule 3. Permitted Contra Parties Rule 4. Securities Dealt In Rule 5. Transactions in Rights to Subscribe Rule 6. Orders, "When Issued," "When Distributed" Rule 7. Transactions "Ex-dividend" and "Ex-warrants" Rule 8. Contracts Due on Certain Business Days Rule 9. Fictitious Transactions Rule 10. Prearranged Trades Rule 11. Price Manipulation Rule 12. Manipulative Operations Rule 13. Reporting Transactions Rule 14. Reporting Riskless Principal Transactions Rule 15. Breaking Up Orders Rule 16. Transactions for or with Unapproved Customers Rule 17. Prohibition Against Trading Ahead of Customer Orders Rule 18. Taking or Supplying Securities to Fill Customer's Order Rule 19. Excessive Purchases or Sales Personal Interest Rule 20. Joint Accounts Rule 21. Discretion of Employees Prohibited Rule 22. Dealing in Stocks on Put, Call, Straddle or Option Rule 23. Short Sales Rule 24. Transactions Off the Exchange ARTICLE 10. Margins Rules of the Chicago Stock Exchange, Inc. Page 5

6 Rule 1. Meeting Margin Calls by Liquidation Prohibited Rule 2. Record of Margin Calls and Receipt of Margin Rule 3. Initial Margin Rule ARTICLE 11. Participant Books and Records Rule 1. Furnishing of Records Rule 2. Maintenance of Books and Records Rule 3. Records of Orders and Executions by Certain Participants Rule 4. Participant Communications ARTICLE 12. Disciplinary Matters and Trial Proceedings Rule 1. Investigation and Charges Rule 2. Summary Procedure Rule 3. Admission of Charges by Respondent Rule 4. Hearing Procedure Rule 5. Review Rule 6. Effective Date of Judgment Rule 7. Disciplinary Jurisdiction Rule 8. Minor Rule Violations Rule 9. Reserved Rule 10. Pending Proceedings ARTICLE 13. Suspension Reinstatement Rule 1. Automatic Suspension Rule 2. Emergency Suspension Rule 3. Failure to Obtain Reinstatement Rule 4. Procedure for Reinstatement Rule 5. Termination of Rights by Suspension ARTICLE 14. Arbitration Rule 1. Arbitration of Participant Controversies Rule 2. Arbitration Rules ARTICLE 15. Hearings and Reviews Rule 1. Applicability Rule 2. Submission of Requests for Hearing Rules of the Chicago Stock Exchange, Inc. Page 6

7 Rule 3. Hearing Panel Rule 4. Extensions of Time Rule 5. Submission of Supporting Materials Rule 6. Notice of Hearing Rule 7. Conduct of Hearing Rule 8. Decision Rule 9. Appeal from Executive Committee decision ARTICLE 16. Market Makers Rule 1. Registration of Market Makers Rule 2. Assignment of Securities to Market Makers Rule 3. Obligations of Market Maker Authorized Traders ( MMATs ) Rule 4. Obligations of Market Makers Rule 5. Limitation on Dealings of Market Makers Rule 6. Reporting of Position Information by Market Makers ARTICLE 17. Institutional Brokers Rule 1. Registration and Appointment Rule 2. Registration Procedures Rule 3. Responsibilities Rule 4. Voluntary De-Registration Rule 5. Brokerplex Rule 6. Non-Institutional Broker Unit; Information Barriers ARTICLE 18. Auctions Rule 1. Sub-second Non-displayed Auction Process ( SNAP ) Rule 1A. Initiating SNAP ARTICLE 19. Operation of the CHX Routing Services Rule 1. CHX Routing Services Rule 2. Routing Brokers Rule 3. Routing Events ARTICLE 20. Operation of the CHX Matching System Rule 1. Trading Sessions Rule 2. Trading Halts Due to Extraordinary Market Volatility Rules of the Chicago Stock Exchange, Inc. Page 7

8 Rule 2A. Limit Up-Limit Down Plan and Trading Pauses in Individual Securities Due to Extraordinary Market Volatility Rule 3. Firm Orders Rule 4. Eligible Orders Rule 5. Prevention of Trade-Throughs Rule 6. Locked and Crossed Markets Rule 7. Reserved Rule 8. Operation of the Matching System Rule 9. Cancellation or Adjustment of Bona Fide Error Trades Rule 9A. Error Correction Transactions Rule 10. Handling of Clearly Erroneous Transactions Rule 11. Cancellation or Adjustment of Stock Leg Trades Rule 12. Order Cancellation/Release by the Exchange Rule 13. Compliance with Regulation NMS Plan to Implement a Tick Size Pilot ARTICLE 21. Clearance and Settlement Rule 1. Trade Recording with a Qualified Clearing Agency Rule 2. Book-Entry Settlement Requirements Rule 3. Exchange Contracts Extended or Postponed Rule 4. Acting as Agent for Participants Rule 5. Anonymous Trade Reporting and Clearing Rule 6. Submission of Clearing Information for Transaction Executed Off-Exchange ARTICLE 22. Listed Securities Rule 1. General Provisions Regarding Listing Rule 2. Admittance to Listing Rule 3. Suspension of Securities Rule 4. Removal of Securities Rule 5. Unlisted Trading Privileges Rule 6. Unlisted Trading Privileges Rule 7. Securities "When-Issued" and "When-Distributed" Rule 8. Tier I Listing Requirements for Common Stock Rule 9. Tier I Listing Requirements for Preferred Stock Rules of the Chicago Stock Exchange, Inc. Page 8

9 Rule 10. Tier I Listing Requirements for Bonds and Debentures Rule 11. Tier I Listing Requirements for Stock Warrants Rule 12. Tier I Listing Requirements for Contingent Value Rights ("CVRs") Rule 13. Tier I Listing Requirements for Other Securities Rule 14. Tier I Maintenance Requirements for Common Stock Rule 15. Tier I Maintenance Requirements for Preferred Stock Rule 16. Tier I Maintenance Requirements for Bonds and Debentures Rule 17. Tier I Maintenance Requirements for Stock Warrants and Contingent Value Rights Rule 17A. Maintenance Standards Applicable to All Tier I Issues Rule 18. Tier II Listing Requirements Rule 19. Corporate Governance Rule 20. Tier I Voting Rights Rule 21. Tier II Corporate Governance, Disclosure, and Miscellaneous Requirements Rule 22. Tier II Maintenance Standards Rule 23. Public Disclosure Requirements for Tier I and Tier II Issues Rule 24. Investment Company Units Rule 25. Portfolio Depositary Receipts Rule 26. Equity-Linked Debt Securities Rule 27. Trust Issued Receipts ARTICLE 23. Consolidated Audit Trail Rule 1. Consolidated Audit Trail Definitions Rule 2. Consolidated Audit Trail - Clock Synchronization Rule 3. Consolidated Audit Trail Industry Member Data Reporting Rule 4. Consolidated Audit Trail Customer Information Reporting Rule 5. Consolidated Audit Trail Industry Member Information Reporting Rule 6. Consolidated Audit Trail - Time Stamps Rule 7. Consolidated Audit Trail Clock Synchronization Rule Violation Rule 8. Consolidated Audit Trail Connectivity and Data Transmission Rule 9. Consolidated Audit Trail Development and Testing Rule 10. Consolidated Audit Trail - Recordkeeping Rules of the Chicago Stock Exchange, Inc. Page 9

10 Rule 11. Consolidated Audit Trail Timely, Accurate and Complete Data Rule 12. Consolidated Audit Trail Compliance Dates Rule 13. Consolidated Audit Trail Fee Dispute Resolution APPENDIX A. Immediately Effective Rule Change Not Yet Operative (SR-CHX ) APPENDIX B. Stayed Rule Change Not Yet Operative ( ) Rules of the Chicago Stock Exchange, Inc. Page 10

11 ARTICLE 1. Definitions and General Information Rule 1. Definitions Changes to Article 1, Rule 1 are effective, but not yet operative. Please see Appendix A below for more information. Whenever and wherever used in these Rules, unless the context requires otherwise, the following terms shall have the respective meanings ascribed to them below: (a) "Act" or "Exchange Act" means the Securities Exchange Act of 1934, as amended. (b) "Affiliated person" shall include: (1) any person directly or indirectly controlling, controlled by or under common control with a Participant, whether by contractual arrangement or otherwise, provided that the right to exercise investment discretion with respect to an account, without more, shall not constitute control; (2) any principal officer, stockholder or partner of such Participant or any person in whose account such person has a direct or material indirect beneficial interest; and (3) any investment company of which such Participant, or any person controlling, controlled by or under common control with such Participant is an investment adviser within the meaning of the Investment Company Act of Transactions effected by any Participant with or for a nonaffiliated person pursuant to any agreement whereby two or more Participants (or a Participant and one or more members of another national securities exchange) are to effect transactions on this or other Exchanges with or for affiliated persons of each other shall be deemed to be transactions with or for an affiliated person. (c) "Amex" means the American Stock Exchange. (d) "Associated Person" has the meaning set forth in Section 3(a)(21) of the Exchange Act. (e) "BBO" means the best bid and/or offer displayed in the Exchange's Matching System. (f) "Board" means the Board of Directors of Chicago Stock Exchange, Inc. Rules of the Chicago Stock Exchange, Inc. Page 11

12 (g) "CHX" means the Chicago Stock Exchange, Inc. See "Exchange" definition, below. (h) "CHX Holdings" means CHX Holdings, Inc., of which CHX is a wholly-owned subsidiary. (i) "Commission" means the Securities and Exchange Commission. (j) "Control" means the power, directly or indirectly, to direct the management or policies of a person, whether through ownership of securities, by contract, or otherwise. A person shall be presumed to control another person if such person: (1) is a director, general partner or officer exercising executive responsibility (or having similar status or functions); (2) directly or indirectly has the right to vote 25% or more of a class of a voting security or has the power to sell or direct the sale of 25% or more of a class of voting securities; (3) is entitled to receive 25% or more of the net profits; or (4) in the case of a partnership, has the right to receive upon dissolution, or has contributed, 25% or more of the capital of the partnership. (k) "Exchange" means the Chicago Stock Exchange, Inc., a Delaware corporation as described in its Certificate of Incorporation and Bylaws, and a national securities exchange as that term is defined by Section 6 of the Exchange Act. The Exchange may also be referred to in these Rules as the "CHX." (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (m) "Good Standing" shall refer to (a) a Participant that continues to satisfy all conditions for issuance of a Trading Permit (including financial condition); (b) a Participant that has not deregistered, resigned, been suspended, expelled or declared legally incompetent or been in the process of liquidation for more than one year; or (c) an individual whose associated Participant Firm is in good standing. (n) "Institutional Broker" means a member of the Exchange who is registered as an Institutional Broker pursuant to the provisions of Article 17 and has satisfied all Exchange requirements to operate as an Institutional Broker on the Exchange. Rules of the Chicago Stock Exchange, Inc. Page 12

13 (o) "NBBO" means the size and price associated with the best protected bid and best protected offer that are calculated and disseminated in an NMS security during regular trading hours. (p) "Nasdaq"" means the Nasdaq Stock Exchange, Inc. (q) "NYSE" means the New York Stock Exchange. (r) "Parent Firm" means a corporation or partnership which beneficially owns, directly or indirectly, equity securities representing 20% or more of the voting power in the election of directors of a Participant Firm, or such lesser percentage of such voting power as constitutes in the circumstances effective control of the Participant Firm. (s) "Participant" means, except as otherwise described in these Rules, any Participant Firm that holds a valid Trading Permit and any person associated with a Participant Firm who is registered with the Exchange under Articles 16 and 17 as a Market Maker Authorized Trader or Institutional Broker Representative, respectively. A Participant shall be considered a "member" of the Exchange for purposes of the Exchange Act. If a Participant is not a natural person, the Participant may also be referred to as a "Participant Firm," but unless the context requires otherwise, the term Participant shall refer to an individual Participant and/or a Participant Firm. Unless the context otherwise requires, reference in these Rules to a Participant partnership or corporation shall include similar types of organizations (including without limitation limited liability companies); reference to a partner, officer or director shall include similar types of individuals (including without limitation a managing member of a limited liability company); and reference to a partnership agreement or corporate organizational document shall include similar types of organizational documents (including without limitation an operating agreement of a limited liability company). For purposes of these Rules, the principal officers of a Participant shall include the chief executive officer, president, executive vice president, treasurer, secretary or any other person performing a similar function for an incorporated or unincorporated organization. A principal stockholder of a Participant is any person, actively engaged in the business of the Participant and beneficially owning, directly or indirectly, more than 5% of the outstanding voting securities of a Participant, or 5% of the Participant's net worth, or a 5% interest in the Participant's net profits. A principal partner means a general or limited partner having an interest representing 5% of the voting power, or 5% of the net worth, or a 5% participation in the net profits, of a member firm. Rules of the Chicago Stock Exchange, Inc. Page 13

14 For purposes of the Federal Election Campaign Act, 2 U.S.C. Section 431, a Participant which is a corporation shall not be deemed to be the Participant, but the Voting Designee thereof shall be. (t) "Person" means an individual person or a corporation, partnership, limited liability entity or any other type of business organization. (u) "Primary market" means, unless otherwise designated by the Exchange, the initial listing market for a security. (v) "Reg NMS" means Regulation NMS (17 CFR , et seq.), as amended, and any exemptive, no-action or other relief granted from the requirements of these provisions from time to time. The "Trading Phase Date" for Rule 611 of Reg NMS means March 5, (w) "Regulation SHO" means Regulation SHO (17 CFR et seq.), as amended, and any exemptive, no-action or other relief granted from the requirements of that provision from time to time. (x) "Rules" means the rules of the Exchange that have been adopted by the Exchange's Board of Directors and that have either been approved by the Commission or have become effective pursuant to Section 19(b)(3) of the Act. (y) "Securities Act" means the Securities Act of 1933, as amended. (z) "Trading Facilities" means all of the Exchange's facilities for the trading of equity securities, including any and all electronic or automated order routing, execution and reporting systems provided by the Exchange. (aa) "Trading Permit" means a permit issued by the Exchange, granting the holder a revocable license to execute approved securities transactions through the Exchange's Trading Facilities, or to have those transactions executed on its behalf. (bb) Early Session means the trading session occurring from 6:00 a.m. CT and 8:30 a.m. CT. (cc) Late Trading Session means the trading session occurring from 3:00 p.m. CT to 3:15 p.m. CT. Rules of the Chicago Stock Exchange, Inc. Page 14

15 (dd) Late Crossing Session means the trading session occurring from 3:15 p.m. CT to 4:00 p.m. CT. (ee) "Clearing Participant" means a Participant which has been admitted to membership in a Qualified Clearing Agency pursuant to the provisions of the Rules of the Qualified Clearing Agency. (ff) "Qualified Clearing Agency" means a clearing agency as defined in Section 3(a)(23) of the Exchange Act which is registered with the Commission pursuant to the provisions of Section 17A(b)(2) of the Exchange Act or has obtained from the Commission an exemption from registration granted specifically to allow the clearing agency to provide confirmation and affirmation services. (gg) An Institutional Broker Representative ( IBR ) is an individual person affiliated with an Institutional Broker who is authorized to accept orders, enter bids and offers and execute transactions on behalf of an Institutional Broker and who has registered with the Exchange as an IBR as provided in Article 6. (hh) Customer shall not include a broker or dealer registered with the Commission. (ii) Bona Fide Error means: (1) the inaccurate conveyance or execution of any term of an order, including, but not limited to, price, number of shares or other unit of trading; identification of the security; identification of the account for which securities are purchased or sold; lost or otherwise misplaced order tickets; or the execution of an order on the wrong side of a market; (2) the unauthorized or unintended purchase, sale, or allocation of securities, or the failure to follow specific client instructions; (3) the incorrect entry of data into relevant systems, including reliance on incorrect cash positions, withdrawals, or securities positions reflected in an account; or (4) a delay, outage, or failure of a communication system used to transmit market data prices or to facilitate the delivery or execution of an order. (jj) Stock-Option : a combination order where at least one component is a cross order for a stated number of units of an underlying or related security coupled with the purchase Rules of the Chicago Stock Exchange, Inc. Page 15

16 or sale of options contract(s) on the opposite side of the market representing at least the same number of units as the underlying or related security portion of the order. (kk) Stock-Future": a combination order where at least one component is a cross order for a stated number of units of an underlying or a related security coupled with the purchase or sale of futures contract(s) on the opposite side of the market representing at least the same number of units of the underlying or related security portion of the order. (ll) Trading Account : means an account under a Trading Permit, identified by a unique CHX account symbol, from which orders are sent to the Exchange s Trading Facilities. A Participant Trading Permit holder may establish more than one Trading Account per Trading Permit. (mm) MTP Trading Group : means a group of one or more Trading Accounts that have been aggregated at the request of all Participant Trading Permit holders that control all Trading Accounts within the proposed group for the purpose of enabling Match Trade Prevention ( MTP ) functionality, pursuant to Article 1, Rule 2(b)(3)(F)(i). A Trading Account may not be assigned to more than one MTP Trading Group. Any Exchange - approved changes to the composition of an MTP Trading Group shall be effective no earlier than the trading day following the request. (nn) Trading Center : is defined as that term is defined under Rule 600(b)(78) under Regulation NMS. (oo) Routable Order : means any incoming limit order, as defined under Article 1, Rule 2(a)(1), of any size, not marked by any order modifiers or related terms listed under Article 1, Rule 2 that prohibit the routing of the order to another Trading Center; provided, however, that during a SNAP Cycle, participating SNAP Eligible Orders are always Routable Orders. (pp) Working Price : means the most aggressive price at which a resting limit order, as defined under Article 1, Rule 2(a)(1), can execute within the Matching System, in compliance with CHX Rules and relevant securities laws and regulations, including Rule 611 of Regulation NMS and Rule 201 of Regulation SHO. (qq) Open Trading State : means the period of time during the regular trading session when orders are eligible for automatic execution. (rr) SNAP Price : means a single price at which the greatest number of shares may be executed during a SNAP Cycle, as described under Article 18, Rule 1(b), without Rules of the Chicago Stock Exchange, Inc. Page 16

17 trading-through any more aggressively priced orders on either side of the market, in compliance with all CHX Rules and relevant securities laws and regulations, including Regulation NMS and Rule 201 of Regulation SHO, and any applicable exemptive relief therefrom; provided the following: (1) Where two or more price points are identified above, the SNAP Price shall be the price closest to the last reported sale in the security from the same trading day that was not permitted to trade-through the National Best Bid and Offer ( NBBO ) at the time the last sale was executed ( eligible same day last sale ). Where two or more price points are equally close to the eligible same day last sale price, the SNAP Price shall be the eligible same day last sale price. (2) If an eligible same day last sale cannot be ascertained, pursuant to paragraph (rr)(1) above, the SNAP Price shall be the price closest to the NBBO midpoint. Where two or more price points are equally close to the NBBO midpoint, the SNAP Price shall be the NBBO midpoint. (ss) SNAP Eligible Order : means a limit order, as defined under Article 1, Rule 2(a)(1), not marked by, or handled as, any one of the following modifiers: (1) Cancel On SNAP. (2) Fill Or Kill. (3) Immediate Or Cancel. (4) Start SNAP, except where the limit order marked Start SNAP is handled as SNAP AOO One And Done, pursuant to Article 1, Rule 2(h)(1)(C). Certain modifiers attached to SNAP Eligible Orders shall be deactivated during a SNAP Cycle, pursuant to Article 18, Rule 1(b)(2)(D). (tt) Market Maker : means a Participant that is registered as a Market Maker pursuant to Article 16, Rule 1. (uu) Market Maker Authorized Trader or MMAT : means an individual trader authorized to enter bids and offers and execute transactions on behalf of a Market Maker. An MMAT must be registered with the Exchange pursuant to Article 6 and Article 16, Rule 3. Rules of the Chicago Stock Exchange, Inc. Page 17

18 Amended February 9, 2005; September 13, 2006; September 25, 2006; September 29, 2006; February 2, 2007; April 5, 2007; October 17, 2007; December 21, 2007, September 1, 2009, April 14, 2010 (SR-CHX ), Oct. 24, 2011 (SR-CHX ), Mar. 1, 2012 (SR-CHX ), Corrected erroneous reference in Section (u) on May 23, 2012; Amended September 24, 2013 (SR-CHX ); October 31, 2013 (SR-CHX ); November 12, 2013 (SR-CHX ); November 20, 2013 (SR-CHX ); May 22, 2014 (SR-CHX ); June 10, 2014 (SR-CHX ); September 8, 2014 (SR-CHX ); October 31, 2014 (SR-CHX ); March 30, 2016 (SR-CHX ); May 13, 2016 (SR-CHX ); July 1, 2016 (SR-CHX ). Rule 2. Order Types, Modifiers, and Related Terms Changes to Article 1, Rule 2 are effective, but not yet operative. Please see Appendix B below for more information. Unless otherwise specifically defined elsewhere in the CHX Rules, the following terms shall have the respective meanings ascribed to them, for purposes of all CHX Rules. Order modifiers listed under Article 18, Rule 1(b)(2)(D) shall not be active for a security that is subject to a SNAP Cycle, as described under Article 18, Rule 1. (a) General Order Types. The following general order types shall be accepted by the Matching System, subject to the requirements of Article 20, Rule 4. (1) "Limit order" (also known as "limited price order"): an order to buy or sell a specific amount of a security at a specified price or better if obtainable once the order has been submitted to the market. All limit orders, except for limit orders marked Price-Penetrating ISO, as defined under paragraph (b)(1)(e), BBO ISO, as defined under paragraph (b)(1)(a), and ISO, as defined under paragraph (b)(3)(b), shall be deemed to have been received Day, as defined under paragraph (d)(1), if an order duration modifier is not specified, pursuant to paragraph (d). All limit orders are fully displayable, unless marked Do Not Display, as defined under paragraph (c)(2), or Reserve Size, as defined under paragraph (c)(3). (2) "Cross order": an order to buy and sell the same security at a specific price. A cross order may only execute within the Matching System if it is priced better than the Working Price, as defined under Article 1, Rule 1(pp), of all resting orders on the CHX Book. A cross order may represent interest of one or more Participants Rules of the Chicago Stock Exchange, Inc. Page 18

19 of the Exchange, but may only be executed in an increment permitted by Article 20, Rule 4(a)(7)(b). A cross order may be subject to special handling, pursuant to paragraph (g) below. All cross orders shall be deemed to have been received Immediate Or Cancel, as defined under paragraph (d)(4), which cannot be overridden by an order sender; provided the following: (A) All cross orders received during a SNAP Cycle, as described under Article 18, Rule 1(b), shall be placed in the FIFO Queue, pursuant to Article 18, Rule 1(b)(2)(C), for later processing. (3) "Market order": an order to buy or sell a specific amount of a security at the best price available once the order is presented in the market. A market order may only be executed during the Regular Trading Session, either in whole or in part, at or better than the Exchange's BBO (including any Reserve Size or other undisplayed orders at or better than that price). Market orders shall not be accepted until (i) the primary market in a security has opened trading in that security or (ii) two senior officers of the Exchange have determined that it is appropriate for the Exchange to accept IOC market orders. For purposes of this rule, another exchange will be considered to have opened for trading in a security when the first trade in that security that is at least a round lot occurs in that market on or after 8:30 a.m. Central Standard Time. All market orders must be marked Immediate Or Cancel, as defined under paragraph (d)(4). A market order that is not marked Immediate Or Cancel shall be rejected by the Matching System. (b) Order Execution Modifiers. One or more order execution modifiers may be applied to a general order type, subject to the requirements of Article 20, Rule 4, so long as the modifier is compatible with the general order type and other applicable order modifiers/terms. (1) Limit Orders Only. The following order execution modifiers may be attributed to limit orders only. (A) "BBO Intermarket Sweep" or "BBO ISO": a limit order modifier that shall be handled as an ISO, as defined under paragraph (b)(3)(b). Rules of the Chicago Stock Exchange, Inc. Page 19

20 (B) "Cancel On Halt": a limit order modifier that requires an order to be automatically cancelled by the Matching System if a trading halt, pause or suspension is declared in that security by the Exchange. All limit orders, except for SNAP AOOs, as defined under paragraph (h)(3), shall be deemed to have been received Cancel On Halt, which cannot be overridden by an order sender. (C) CHX Only : a limit order modifier that requires an order to be ranked and executed on the Exchange pursuant to Article 20, Rule 8, without routing away to another Trading Center and is eligible for the CHX Only Price Sliding Processes, detailed below. An order sender may not opt out of the CHX Only Price Sliding Processes if the order is marked CHX Only. An order sender can enter instructions to have all limit orders default to CHX Only. A limit order marked CHX Only shall be deemed to have been received Do Not Route, as defined under paragraph (b)(3)(a), which cannot be overridden by the order sender. The CHX Only Price Sliding Processes utilized by the Matching System include both Regulation NMS Price Sliding ( NMS Price Sliding ) and Short Sale Price Sliding. All CHX Only orders that are eligible for the CHX Only Price Sliding Processes may be subject to either NMS Price Sliding or Short Sale Price Sliding. CHX Only orders shall also be eligible for Limit Up-Limit Down Price Sliding ( LULD Price Sliding ), pursuant to Article 20, Rule 2A(b)(2). (i) NMS Price Sliding. (a) Initial NMS Price Sliding. A CHX Only order that, at the time of entry, would lock or cross a Protected Quotation of an external market in violation of Rule 610(d) of Regulation NMS; is priced at or through a contra-side Protected Quotation of an external market and is for an Odd Lot; or is priced through a contra-side Protected Quotation of an external market and is marked Do Not Display, as defined under Article 1, Rule 2(c)(2), will be executable at the locking price in the Matching System and, if not marked Do Not Display, will be displayed or displayable by the Matching System Rules of the Chicago Stock Exchange, Inc. Page 20

21 at one minimum price variation below the current National Best Offer ( NBO ) (for bids) or at one minimum price variation above the current National Best Bid ( NBB ) (for offers) ( Permitted Display Price ). CHX Only orders subject to NMS Price Sliding will retain their original limit prices irrespective of the prices at which such orders are executable or displayed. If the NBB (NBO) is priced below (above) the Lower (Upper) Price Band, an incoming CHX Only sell (buy) order that, at the time of entry, is priced below (above) the Lower (Upper) Price Band, shall be executable and, if not marked Do Not Display, displayed or displayable at the Lower (Upper) Price Band, pursuant to Article 20, Rule 2A(b)(2)(A)(i). (b) Multiple NMS Price Sliding. Following the initial ranking and display of an order subject to NMS Price Sliding, the order will be continuously price slid until the order is executed, cancelled or its original limit price is reached. A CHX Only order subject to NMS Price Sliding will only be price slid to the extent it achieves a more aggressive price, based upon changes to the prevailing National Best Bid and Offer ( NBBO ); provided however that an order may be price slid to a less aggressive price, subject to subparagraphs (3) to (6) below. (1) In the event the NBBO changes such that a CHX Only order subject to NMS Price Sliding could be executable at a higher trading increment (for buy orders) or lower trading increment (for sell orders), without crossing a Protected Quotation of an external market, the order will be executable at the current locking price. If, however, the NBB (NBO) moves to a price below (above) the Lower (Upper) Price Band, the executable price of the CHX Only sell (buy) order shall be price slid to the Lower (Upper) Price Band, pursuant to Article 20, Rule 2A(b)(2)(A)(ii). (2) Re-display. In the event that the NBBO changes such that a CHX Only order subject to NMS Price Sliding could be re-displayed or re-displayable at a higher trading Rules of the Chicago Stock Exchange, Inc. Page 21

22 increment (for buy orders) or lower trading increment (for sell orders), without locking or crossing a Protected Quotation of an external market, the order will be re-displayed at the current Permitted Display Price. If, however, the NBB (NBO) moves to a price below (above) the Lower (Upper) Price Band, the resting CHX Only order shall be re-displayed at the Lower (Upper) Price Band, pursuant to Article 20, Rule 2A(b)(2)(A)(ii). (3) External Protected Quotation Locks Displayed or Displayable Price. In the event that the Protected Quotation of an external market locks the displayed or displayable price of a resting price slid order and the Matching System receives a marketable contra-side order, the Matching System will price slide the executable price of the resting price slid order to the displayed or displayable price. Such event will not result in a change in priority for the resting price slid order at its displayed price. (4) External Protected Quotation Crosses Displayed Price. In the event that the Protected Quotation of an external market crosses the displayed price of a resting price slid order, the Matching System shall price slide and display the resting order based on the first uncrossed NBBO calculated pursuant to paragraph.01(d) of Article 20, Rule 5, if necessary. In the event the first uncrossed NBBO is locked, the resting order shall be subject to subparagraph (3). In the event the first uncrossed NBBO is not locked, the resting order shall be subject to subparagraphs (1) and (2). (5) CHX Only orders marked Do Not Display. In the event that a Protected Offer (Bid) of an external market crosses a resting CHX Only bid (offer) marked Do Not Display, the resting bid (offer) marked Do Not Display shall be price slid to lock the Protected Offer (Bid) of the external market. Rules of the Chicago Stock Exchange, Inc. Page 22

23 (6) CHX Only orders marked Reserve Size. A resting CHX Only order marked Reserve Size shall be price slid to a less aggressive price if a refreshed display of the order would lock or cross a Protected Quotation of an external market and shall receive execution priority pursuant to Article 20, Rule 8(b)(4). (ii) Short Sale Price Sliding. A limit order marked Sell Short, as defined under Article 1, Rule 2(b)(3)(D), must comply with the requirements of Article 20, Rule 8(d)(4). If the Sell Short order is marked CHX Only, the order shall be price slid as follows: (a) Initial Short Sale Price Sliding. A CHX Only Sell Short order that, at the time of entry, could not be executed or displayed in compliance with Rule 201 of Regulation SHO will be repriced (and displayed, if applicable) by the Matching System at one minimum price variation above the current NBB ( Permitted Price ). CHX Only orders subject to Short Sale Price Sliding will retain their original limit prices, notwithstanding price sliding. If the Permitted Price is priced below the Lower Price Band, an incoming CHX Only Sell Short order that, at the time of entry, is priced below the Lower Price Band, shall be repriced (and displayed, if applicable) at the Lower Price Band, pursuant to Article 20, Rule 2A(b)(2)(A)(i). (b) Multiple Short Sale Price Sliding. To reflect declines in the NBB, the Matching System will continue to reprice (and redisplay, if applicable) a CHX Only Sell Short order to the greater of the Permitted Price or the Lower Price Band, until the order is executed, cancelled or its original limit price is reached, pursuant to Article 20, Rule 2A(b)(2)(A)(ii). To reflect increases in the NBB, the Matching System will continue to reprice an undisplayed CHX Only Sell Short order to the greater of the Permitted Price or the Lower Price Band, until the order is executed, cancelled or its original limit price is reached, pursuant to Article 20, Rule 2A(b)(2)(A)(ii). Rules of the Chicago Stock Exchange, Inc. Page 23

24 (c) Priority over NMS Price Sliding. When a short sale price test restriction under Rule 201 of Regulation SHO is in effect for a particular security, Short Sale Price Sliding will take priority over NMS Price Sliding, with respect to CHX Only sell short orders in that security that are subject to Short Sale Price Sliding. (d) Exemptions. (1) As detailed under Article 20, Rule 8(d)(4), when a short sale price test restriction under Rule 201 of Regulation SHO is in effect, the Matching System may execute a CHX Only Sell Short order at a price below the Permitted Price if, at the time of initial display of the CHX Only Sell Short order, the order was at a price above the then current NBB. Notwithstanding this exemption, a CHX Only Sell Short order may never execute (or be displayed, if applicable) at a price below the Lower Price Band. (2) CHX Only orders marked Short Exempt shall not be subject to Short Sale Price Sliding. (iii) Lock-Only Price Sliding. An order sender may enter an instruction to only use the CHX Only Price Sliding Processes if the display of the CHX Only order at the time of order entry would lock the NBBO. If such an instruction is given and the display of an order would cross the NBBO at the time of entry, the order will be rejected from the Matching System. (iv) Original Time Priority Retained. CHX Only orders subject to the Price Sliding Processes will retain their time priority versus other orders based upon the time those orders were initially received by the Matching System; provided, however, that the displayed portion of a Reserve Size CHX Only order that is refreshed shall have time priority based on the time the displayed order was refreshed. (D) Post Only : a limit order modifier that requires an order to be posted on the Exchange and not routed away to another trading center. Rules of the Chicago Stock Exchange, Inc. Page 24

25 A limit order marked Post Only shall be deemed to have been received Do Not Route, as defined under paragraph (b)(3)(a), which cannot be overridden by the order sender. A Post Only order will be immediately cancelled under the following circumstances: (i) book; or The Post Only order would remove liquidity from the CHX (ii) At the time of order entry, the Post Only order would lock or cross a Protected Quotation of an external market; provided, however, that if the Post Only order is marked CHX Only and is eligible for the CHX Only Price Sliding Processes, pursuant to Article 1, Rule 2(b)(1)(C), the Post Only order that would lock or cross a Protected Quotation of an external market shall be subject to the CHX Only Price Sliding Processes or Limit Up-Limit Down Price Sliding, pursuant to Article 20, Rule 2A(b), whichever is applicable, and shall not be immediately cancelled. (E) "Price-Penetrating ISO": a limit order modifier that shall be handled as an ISO, as defined under paragraph (b)(3)(b). (2) Cross Orders Only. The following order execution modifiers may be attributed to cross orders only: (A) "Benchmark": a cross order modifier, submitted by an Institutional Broker, to buy and sell the same security at a specific price, which meets the requirements of Rule 611(b)(7). A Benchmark order may execute at any price, without regard to the protected National Best Bid and Offer ( NBBO ) and may represent interest of one or more Participants of the Exchange. A Benchmark order may only be executed in an increment permitted by Article 20, Rule 4(a)(7)(b). (B) (C) Reserved Reserved (D) "Midpoint Cross": a cross order modifier with an instruction to execute it at the midpoint between the NBBO. If the NBBO is locked at the time a Midpoint Cross is received, the Midpoint Cross will execute at the locked NBBO. If the NBBO is crossed at the time a Midpoint Cross is received, the Midpoint Cross Rules of the Chicago Stock Exchange, Inc. Page 25

26 will be automatically cancelled. A Midpoint Cross order may only be executed in an increment permitted by Article 20, Rule 4(a)(7)(b). (E) "Qualified Contingent Trade" or QCT : a cross order modifier, which may only be utilized by an Institutional Broker, for a cross order that is part of a transaction consisting of two or more component orders, executed as agent or principal, where: (i) at least one component order is in an NMS stock; (ii) all components are effected with a product or price contingency that either has been agreed to by the respective counterparties or arranged for by a broker-dealer as principal or agent; (iii) the execution of one component is contingent upon the execution of all other components at or near the same time; (iv) the specific relationship between the component orders (e.g., the spread between the prices of the component orders) is determined at the time the contingent order is placed; (v) the component orders bear a derivative relationship to one another, represent different classes of shares of the same issuer, or involve the securities of participants in mergers or with intentions to merge that have been announced or since cancelled; and (vi) the Exempted NMS Stock Transaction is fully hedged (without regard to any prior existing position) as a result of the other component of the contingent trade. For purposes of this definition, (i) "NMS stock" means any security or class of securities, other than an option, for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan; and (ii) "Exempted NMS Stock Transaction" means any trade-through caused by the execution of an order involving one or more NMS stocks that are components of a Qualified Contingent Trade. Rules of the Chicago Stock Exchange, Inc. Page 26

27 (3) Applicable to Multiple Order Types (A) "Do Not Route": a limit or market order modifier that requires an order to only be executed or ranked within the Exchange's Matching System and not be routed to another market. (B) "Intermarket Sweep" or "ISO": a limit or cross order modifier that marks an order as required by SEC Rule 600(b)(30). The Exchange relies on the marking of an order as an ISO when handling such an order, and thus, it is the entering Participant s responsibility, not the Exchange s responsibility, to comply with the requirements of Regulation NMS and Article 20, Rule 6(c)(3) relating to ISOs. Any new incoming order marked ISO will not be rejected or cancelled if it would lock, cross, or trade-through a Protected Quotation of an away market. ISOs shall be deemed to have been received Do Not Route, as defined under paragraph (b)(3)(a), which cannot be overridden by the order sender. (i) ISO limit. A new incoming limit order marked ISO ( ISO limit ) may be executed at one or multiple price levels in the Matching System without regard to Protected Quotations at away markets consistent with Regulation NMS. All ISO limits shall be deemed to have been received IOC, unless an ISO limit is marked with another Time-In-Force. (ii) ISO cross. A cross order marked ISO ( ISO cross ) may execute at its crossing price as soon as it is received by the Matching System without regard to Protected Quotations at away markets consistent with Regulation NMS. An ISO cross that could not be immediately executed within the Matching System upon receipt shall be immediately cancelled. (C) "Not Held": an instruction specified by the customer, which permits an Exchange Participant to use her judgment in determining the price of execution and/or the time to execute the order. This instruction may only be applied to orders sent to an Exchange Participant and any order received by the Matching System marked Not Held shall be rejected. (D) "Sell Short": marks any order to sell a security "short" under Rule 200(g) of Regulation SHO. Rules of the Chicago Stock Exchange, Inc. Page 27

28 (E) Short Exempt : marks any order to sell a security that is exempt from the short sale price test restriction under Rule 201 of Regulation SHO. (F) Match Trade Prevention ( MTP ) Modifier (i) Enabling/Disabling MTP. The MTP modifier shall only be available for an order that originated from a Trading Account, as defined under Article 1, Rule 1(ll), that has been assigned to an MTP Trading Group, as defined under Article 1, Rule 1(mm). An order that originated from a Trading Account that is not part of an MTP Trading Group shall not be subject to MTP and any attached MTP modifiers shall be ignored. Any Exchange-approved changes to the applicability of MTP to a Trading Account shall be effective no earlier than the trading day following the request. (ii) Triggering MTP. An MTP modifier is comprised of a compulsory MTP Action, listed under subparagraph (iii), and an optional MTP sublevel designation. The MTP modifier on the incoming order shall control the interaction between the contra-side orders. An incoming limit or market order marked by an MTP modifier without an MTP sublevel designation will be prevented from executing against a resting opposite side order from the same MTP Trading Group. If the incoming order is marked by an MTP modifier with an MTP sublevel designation, the order will only be prevented from executing against a resting opposite side order from the same MTP Trading Group if the resting order is marked by the same MTP sublevel designation. MTP shall only be applicable to marketable contra-side orders that are both principal orders or are both agency orders. (iii) MTP Actions. An MTP Trading Group must be assigned a default MTP Action. The following MTP Actions may be applied to any incoming limit or market orders at the MTP Trading Group level as a default or at the individual order level ad hoc: (a) MTP Cancel Incoming ( N ): An incoming limit or market order marked N will not execute against opposite side resting interest originating from the same MTP Trading Group or MTP sublevel, if applicable. Only the incoming order will be cancelled pursuant to MTP. Rules of the Chicago Stock Exchange, Inc. Page 28