Rule 7.35A. DMM-Facilitated Core Open and Trading Halt Auctions

(a) DMM and Floor Broker Responsibilities. It is the responsibility of each DMM to ensure that registered securities open as close to the beginning of Core Trading Hours as possible or reopen at the end of the halt or pause, while at the same time not unduly hasty, particularly when at a price disparity from the Consolidated Last Sale Price.

Openings and reopenings should reflect the professional assessment of market conditions at the time, and appropriate consideration of the balance of supply and demand as reflected by orders in the Exchange Book.
To the best of their ability, DMMs should provide timely and impartial information at the point of sale on the Trading Floor at all phases of the opening or reopening process. DMM units are responsible for ensuring that adequate personnel are available to assist in the fair and orderly opening or reopening of all securities registered with that DMM unit.
Floor brokers should make every effort to ascertain their customers’ interest as early as possible and to inform the DMM so that such interest can be factored into the opening or reopening process. Floor brokers should communicate to their customers the problems caused by delaying their interest until the last minute. Floor brokers should not expect to be able to delay the opening or reopening to accommodate customer reactions to changing prices. Once a relatively narrow range of opening or reopening possibilities is available, brokers and their customers should have sufficient information to electronically enter an order with a firm limit price.
Trading Officials participate in the opening and reopening process to provide an impartial professional assessment of unusual situations, as well as to provide guidance with respect to pricing when a significant disparity in supply and demand exists. DMMs should consult with a Trading Official under the following circumstances:
1. if a security will be opened more than 30 minutes after the scheduled beginning of Core Trading Hours (a “Delayed Opening”);
2. if it is anticipated that the opening or reopening price will be at a significant disparity from the Consolidated Last Sale Price for such security;
3. if there is a significant imbalance; and
4. in unusual situations.
In determining when to open or reopen a security in circumstances described under paragraph (a)(4) of this Rule, a DMM should make every effort to balance timeliness with the opportunity for customer reaction and participation. When the DMM and Trading Official agree that all participants have had a reasonable opportunity to participate, the DMM should open or reopen the security. The DMM has ultimate responsibility for opening or reopening a security and while a Trading Official’s approval may be a mitigating factor, it will not exonerate the DMM if performance has been deemed not satisfactory. In unusual market situations, the DMM should consider the following as indicative of poor DMM performance:
1. an opening or reopening price change that is not in proportion to the size of an imbalance;
2. absence of a pre-opening indication before a large Auction Price change;
3. inadequate support after a large Auction Price change, i.e., lack of sufficient continuity and depth in the aftermarket;
4. absence of trading without good cause or Trading Official approval (or an unjustified or unreasonably delayed opening or halt in trading); and
5. not obtaining appropriate Trading Official approvals for opening delays.

(b) Opening Without a Trade. If there is no interest to conduct a Core Open Auction (for openings) or a Trading Halt Auction (for reopenings), a DMM may open or reopen a registered security with a quote.

If a security has not previously traded on the Exchange, a DMM is not obligated to open such security if there is no bid or offer or if the best bid and best offer is wider than the pre-opening indication.

(c) DMM Opening Process. The DMM may effectuate a Core Open or Trading Halt Auction manually or electronically (see Rule 104(b)(ii)).

Except under the conditions set forth in paragraphs (c)(2) and (3) of this Rule, a DMM may not effect a Core Open or Trading Halt Auction electronically if:
1. a pre-opening indication has been published for the Core Open Auction;
2. the DMM has begun the process to open a security manually, including by manually entering DMM Auction Liquidity;
3. it is an IPO Auction or Direct Listing Auction;
4. the security is in a suspended or halt condition at the beginning of Core Trading Hours;
5. it is a reopening following a regulatory halt issued under Section 2 of the Listed Company Manual;
6. there is no Consolidated Last Sale Price;
7. the Core Open Auction Price will be more than 10% away from the Consolidated Last Sale Price; or
8. the Trading Halt Auction Price will be more than 5% away from the Consolidated Last Sale Price.
When reopening a security following a trading pause under Rule 7.11 or a marketwide halt under Rule 7.12, if a pre-opening indication has been published in a security under paragraph (b) of this Rule, a DMM may not reopen such security electronically if the reopening transaction will be at a price outside of the lastpublished pre-opening indication.

(d) Pre-Opening Indications. A pre-opening indication will include the security and the price range within which the Auction Price is anticipated to occur. A pre-opening indication will be published via the securities information processor and proprietary data feeds.

Conditions for publishing a pre-opening indication:
1. A DMM will publish a pre-opening indication, as described in paragraph (d)(4) of this Rule, before a security opens or reopens if:
  1. the Core Open or Trading Halt Auction Price is anticipated to be a change of more than the "Applicable Price Range," as specified in paragraph (d)(3) of this Rule, from a specified "Indication Reference Price," as specified in paragraph (d)(2) of this Rule; or
  2. it is a Delayed Opening.
2. When making the determination of what the Auction Price will be, the DMM will take into consideration all interest eligible to participate in the Core Open or Trading Halt Auction, including electronically-entered orders and DMM Interest.
Indication Reference Price.
1. The Indication Reference Price for a security, other than an American Depositary Receipt ("ADR"), will be:
  1. the security's last Official Closing Price on the Exchange, adjusted as applicable based on the publicly disclosed terms of a corporate action;
  2. the security's offering price in the case of an IPO;
  3. the security's last reported sale price on the securities market from which the security is being transferred to the Exchange, on the security's first day of trading on the Exchange ("transferred security");
  4. for a security that is a Selling Shareholder Direct Floor Listing that has had recent sustained trading in a Private Placement Market prior to listing, the most recent transaction price in that market or, if none, a price determined by the Exchange in consultation with a financial advisor to the issuer of such security; or
  5. for a security that is a Primary Direct Floor Listing, the lowest price of the Primary Direct Floor Listing Auction Price Range.
2. The Indication Reference Price for an ADR will be:
  1. the closing price of the security underlying the ADR in the primary foreign market for such security when the trading day of the primary foreign market concludes after trading on the Exchange for the previous day has ended; or
  2. based on parity with the last sale price of the security underlying the ADR in the primary foreign market for such security when the trading day of the primary foreign market is open for trading at the time of the opening on the Exchange.
3. The Indication Reference Price for reopening a security following a halt will be the Exchange Last Sale Price.
Applicable Price Range:
1. The Applicable Price Range for determining whether to publish a pre-opening indication for a Core Open Auction will be 10% for securities with an Indication Reference Price over $3.00 and $0.30 for securities with an Indication Reference Price equal to or lower than $3.00.
2. The Applicable Price Range for determining whether to publish a pre-opening indication for a Trading Halt Auction will be 5% for securities with an Indication Reference Price over $3.00 and $0.15 for securities with an Indication Reference Price equal to or lower than $3.00.
Procedures for publishing a pre-opening indication: The DMM will use the following procedures when publishing a pre-opening indication.
1. Publication of a pre-opening indication requires the supervision and approval of a Trading Official.
2. A pre-opening indication must be updated if the Core Open or Trading Halt Auction Price would be outside of a published pre-opening indication.
3. If the pre-opening indication is a spread wider than $1.00, the DMM should undertake best efforts to publish an updated pre-opening indication of $1.00 or less before opening or reopening the security, as may be appropriate for the specific security.
4. After publishing a pre-opening indication, the DMM must wait for the following minimum specified periods before opening a security:
  1. When using the Applicable Price Range specified in paragraph (d)(3)(A) of this Rule, a minimum of three minutes must elapse between publication of the first indication and a security's opening or reopening. If more than one indication has been published, a security may be opened or reopened one minute after the last published indication provided that at least three minutes have elapsed from the dissemination of the first indication. However, the DMM may open or reopen a security less than the required minimum times after the publication of a pre-opening indication if the Auction Price would be at a price within the Applicable Price Range.
  2. When using the Applicable Price Range specified in paragraph (d)(3)(B) of this Rule, a minimum of one minute must elapse between publication of the first indication and a security's opening or reopening. If more than one indication has been published, a security may be opened or reopened without waiting any additional time.
5. If trading is halted for a non-regulatory order imbalance, a pre-opening indication must be published as soon as practicable after the security is halted.
6. When reopening a security following a trading pause under Rule 7.11:
  1. a pre-opening indication may be published without prior Trading Official approval;
  2. a pre-opening indication does not need to be updated before reopening the security, and the security may be reopened outside of any prior indication; and
  3. the reopening is not subject to the minimum waiting time requirements in paragraph (d)(4)(D) of this Rule.
7. Except as provided in paragraph (d)(4)(F)(ii) of this Rule, if a pre-opening indication has been published, the Exchange will not permit the DMM to open or reopen the security outside of the last-published pre-opening indication range.

(e) Auction Imbalance Information.

Time of Publication.
1. For the Core Open Auction, unless a security is halted, the Exchange will begin disseminating Auction Imbalance Information at 8:00 a.m.
2. For a Trading Halt Auction, the Exchange will begin disseminating Auction Imbalance Information at the beginning of a halt or pause.
3. If a security is in a halt condition before or at the beginning of Core Trading Hours, the Exchange will disseminate Auction Imbalance Information for a Trading Halt Auction.
4. The Exchange will not disseminate Auction Imbalance Information for the Core Open Auction or Trading Halt Auction if there is no Consolidated Last Sale Price.
Content. For the Core Open and Trading Halt Auctions, the Exchange disseminates Total Imbalance, Side of Total Imbalance, Paired Quantity, and Continuous Book Clearing Price.
Imbalance Reference Price. The Imbalance Reference Price for the Auction Imbalance Information will be the Consolidated Last Sale Price unless a pre-opening indication has been published, in which case the Imbalance Reference Price will be:
1. the pre-opening indication bid price if the Consolidated Last Sale Price is lower than the bid price of the pre-opening indication;
2. the pre-opening indication offer price if the Consolidated Last Sale Price is higher than the offer price of the pre-opening indication; or
3. the Consolidated Last Sale Price if it is at or between the pre-opening indication bid and offer price.

(f) Auction Imbalance Freeze. There is no Auction Imbalance Freeze for a Core Open Auction or Trading Halt Auction and no restrictions on entry or cancellation of Auction- Only Orders before a Core Open Auction or Trading Halt Auction.

(g) Determining an Auction Price. The DMM is responsible for determining the Auction Price for a Core Open Auction or Trading Halt Auction. If there is an Imbalance of any size, the DMM must select an Auction Price at which all better-priced orders on the Side of the Imbalance can be satisfied.

In order to effect a fair and orderly opening on the first day of trading of a security having its initial listing on the Exchange or for a follow-on offering, a DMM may consult with an underwriter or financial advisor for the issuer of such security provided that, when facilitating the opening on the first day of trading of a Selling Shareholder Direct Floor Listing that has not had recent sustained history of trading in a Private Placement Market prior to listing, the DMM will consult with a financial advisor to the issuer of such security. Any such consultations will be conducted by an underwriter or financial advisor relaying information to the DMM via either a Floor broker or Exchange staff.
The DMM will not conduct a Direct Listing Auction for a Primary Direct Floor Listing if:
1. the Auction Price would be below the lowest price or above the highest price of the Primary Direct Floor Listing Auction Price Range; or
2. there is insufficient buy interest to satisfy both the IDO Order and all better-priced sell orders in full.

(h) Auction Allocation. Once an Auction Price has been determined, orders will be allocated in a Core Open Auction or Trading Halt Auction as follows:

Better-priced orders, including Yielding Orders and the reserve interest of Reserve Orders, entered by the Book Participant or a Floor Broker Participant are guaranteed to participate in the Auction at the Auction Price.
At-priced orders and DMM Interest of any price are not guaranteed to participate in the Auction and will be allocated in the following order:
1. First, orders ranked Priority 2- Display Orders, Opening D Orders, and LOO Orders will be allocated on parity by Participant pursuant to Rule 7.37(b)(2) - (7).
2. Next, orders ranked Priority 3 - Non-Display Orders will be allocated on parity by Participant pursuant to Rule 7.37(b)(2) - (7).
3. Next, the display quantity of orders ranked Priority 4 - Yielding Orders will be allocated on time.
4. Next, the non-display quantity of order ranked Priority 4 - Yielding Orders will be allocated on time.
DMM Participant Allocation.
1. At-priced DMM Orders will be placed on the allocation wheel for an Auction based on the time of entry and any other orders or interest from such DMM will join that position on the allocation wheel. If the only DMM Interest available to participate in an Auction is DMM Auction Liquidity or better-priced DMM Orders or both, such DMM Interest will be placed last on the allocation wheel.
2. A parity allocation to the DMM Participant will be allocated in price-time priority.
3. Both at-priced DMM Orders that do not receive an allocation and that lock other unexecuted orders and buy and sell better-priced DMM Orders will be cancelled after the Auction Processing Period concludes.
An IDO Order is guaranteed to participate in the Direct Listing Auction at the Auction Price. If the limit price of the IDO Order is equal to the Auction Price, the IDO Order has priority at that price.

(i) The Core Open Auction will be designated with a modifier to identify it as an opening quote, and if the security opens on a trade, a modifier to identify the opening trade. The Trading Halt Auction will be designated with a modifier to identify it as a reopening trade.

(j) Temporary Rule Suspensions.

If the CEO of the Exchange, or his or her designee, determines that a Floor-wide event is likely to have an impact on the ability of DMMs to arrange for a fair and orderly Core Open or Trading Halt Auction and that, absent relief, the operation of the Exchange is likely to be impaired, the CEO of the Exchange, or his or her designees, may temporarily suspend:
1. the prohibition on a DMM opening a security electronically if the Core Open or Trading Halt Auction Price will be more than the price parameters specified in paragraphs (c)(1)(G) and (H) of this Rule; or
2. the requirement to publish pre-opening indications in a security under paragraph (d) of this Rule prior to opening or reopening a security following a market-wide trading halt.
In determining whether to temporarily suspend the specified paragraphs of this Rule, the CEO of the Exchange will:
1. consider the facts and circumstances that are likely to have Floor-wide impact for a particular trading session, including volatility in the previous day's trading session, trading in foreign markets before the open, substantial activity in the futures market before the open, the volume of pre-opening indications of interest, evidence of pre-opening significant order imbalances across the market, government announcements, news and corporate events, and such other market conditions that could impact Floor-wide trading conditions;
2. notify the Chief Regulatory Officer of the Exchange; and
3. inform the Securities and Exchange Commission staff as promptly as practicable of the temporary suspension.
A temporary suspension under this Rule will be in effect for the trading day on which it was declared only.
Notwithstanding a temporary suspension of the requirement to publish pre-opening indications in a security under this Rule, a DMM may publish a pre-opening indication for one or more securities.

Commentary:

.01 For a temporary period that begins March 23, 2020, when the Trading Floor facilities have been closed pursuant to Rule 7.1(c)(3), and ends on the earlier of a full reopening of the Trading Floor facilities to DMMs or after the Exchange closes on July 31, 2022, the requirement to publish a pre-opening indication pursuant to paragraph (d) of this Rule before either a Core Open or Trading Halt Auction is suspended.

.02 For a temporary period that begins on March 26, 2020 and ends on the earlier of a full reopening of the Trading Floor facilities to DMMs or after the Exchange closes on December 31, 2022, the Exchange will permit a DMM limited entry to the Trading Floor to effect an IPO Auction manually.

.03 For a temporary period that begins on April 2, 2020 and ends on the earlier of a full reopening of the Trading Floor facilities to DMMs or after the Exchange closes on December 31, 2022, the Exchange will permit a DMM limited entry to the Trading Floor to effect manually a Core Open Auction in connection with a listed company’s post-IPO public offering.

.04 For a temporary period that begins on April 17, 2020 and ends on the earlier of a full reopening of the Trading Floor facilities to DMMs or after the Exchange closes on December 31, 2022, the Exchange will provide a DMM remote access to Floor-based systems for the sole purpose of effecting a manual (1) IPO Auction, or (2) Core Open Auction in connection with a listed company’s post-IPO public offering.

.05 For a temporary period that begins on May 26, 2020 and ends on the earlier of a full reopening of the Trading Floor facilities to DMMs or after the Exchange closes on December 31, 2022, the Exchange will (1) permit a DMM limited entry to the Trading Floor or (2) provide a DMM remote access to Floor-based systems, for the purpose of effecting a manual Trading Halt Auction for reopening a security following a regulatory halt issued under Section 2 of the Listed Company Manual.

.07 For a temporary period that begins on December 28, 2020 and ends on the earlier of a full reopening of the Trading Floor facilities to DMMs or after the Exchange closes on December 31, 2022, the Exchange will (1) permit a DMM limited entry to the Trading Floor or (2) provide a DMM remote access to Floor-based systems, for the purpose of effecting a manual Core Open Auction in connection with a corporate action that may result in a significant price discovery event or a manual Direct Listing Auction.

.10 In connection with a Selling Shareholder Direct Floor Listing, the financial advisor to the issuer of the security being listed (“financial advisor”) and the DMM assigned to such security are reminded that any consultation that the financial advisor provides to the Exchange as required by paragraph (d)(2)(A)(iv) of this Rule and any consultation between the DMM and financial advisor as required by paragraph (g)(1) of this Rule are to be conducted in a manner that is consistent with the federal securities laws, including Regulation M and other anti-manipulation requirements.

Adopted: May 29, 2019 (NYSE-2019-05).

Amended: March 20, 2020 (NYSE-2020-22); March 26, 2020 (NYSE-2020-23); April 2, 2020 (NYSE-2020-28); April 21, 2020 (NYSE-2020-35); April 22, 2020 (NYSE-2020-37); May 15, 2020 (NYSE-2020-45); May 22, 2020 (NYSE-2020-47); May 26, 2020 (NYSE-2020-48); June 17, 2020 (NYSE-2020-52); June 30, 2020 (NYSE-2020-56); July 30, 2020 (NYSE-2020-63); August 26, 2020 (NYSE-2019-67); September 25, 2020 (NYSE-2020-78); December 23, 2020 (NYSE-2020-106); December 29, 2020 (NYSE-2020-109); May 5, 2021 (NYSE-2021-29); June 16, 2021 (NYSE-2020-105); July 12, 2021 (NYSE-2020-93); July 23, 2021 (NYSE-2020-95); August 30, 2021 (NYSE-2021-46); December 14, 2021 (NYSE-2021-71); April 1, 2022 (NYSE-2022-18); July 19, 2022 (NYSE-2022-29).

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