(a) The following terms, when used in these Rules, shall have the meanings specified in
this Rule, unless the context indicates otherwise. Any term defined in the Limited
Liability Company Agreement (the "LLC Agreement") or the By-Laws of Nasdaq MRX, LLC (the
"By-Laws") and not otherwise defined in this Rule shall have the meaning assigned in the
LLC Agreement or the By-Laws.
(1) An "account number"
shall mean a number assigned to a Member. Members may have more than one account number.
(2) The term "aggregate
exercise price" means the exercise price of an options contract multiplied by
the number of units of the underlying security covered by the options contract.
(3) The term "American-style
option" means an options contract that, subject to the provisions of Options 6B
(relating to the cutoff time for exercise instructions) and to the Rules of the Clearing
Corporation, can be exercised on any business day prior to its expiration date and on
its expiration date.
(4) The term "Away Best Bid
or Offer" or "ABBO" means the displayed National Best Bid or Offer not
including the Exchange's Best Bid or Offer.
(5) A "badge" shall mean
an account number, which may contain letters and/or numbers, assigned to Market Makers.
A Market Maker account may be associated with multiple badges.
(6) The term "bid" means
a quote or limit order to buy one or more options contracts.
(7) The term "call" means
an options contract under which the holder of the option has the right, in accordance
with the terms of the option, to purchase from the Clearing Corporation the number of
shares of the underlying security covered by the options contract.
(8) The term "class of
options" means all options contracts covering the same underlying security.
(9) The term "closing
purchase transaction" means an Exchange Transaction that will reduce or
eliminate a short position in an options contract.
(10) The term "closing
writing transaction" means an Exchange Transaction that will reduce or eliminate
a long position in an options contract.
(11) The term "CMM
Rights" means the non-transferable rights held by a Competitive Market Maker.
(12) The term “conforming ratio” is where the ratio between the sizes of the options components of a Complex Order is equal to or greater than one-to-three (.333) and less than or equal to three-to-one (3.00). For example, a one-to-two (.5) ratio, a two-to-three (.667) ratio, or a two-to-one (2.00) ratio is a conforming ratio, whereas a one-to-four (.25) ratio or a four-to-one (4.0) ratio is not; where one component of the Complex Order is the underlying security, the ratio between any options component and the underlying security component must be less than or equal to eight contracts to 100 shares of the underlying security. Only a Complex Order with a conforming ratio is accepted into the Exchange.
(13) The term "Competitive
Market Maker" means a Member that is approved to exercise trading privileges
associated with CMM Rights.
(14) The term "covered short
position" means (i) the obligation of a writer of a call option is secured by a
"specific deposit" or an "escrow deposit" meeting the conditions of Options 3, Section
3(f) or (h), respectively, of the Rules of the Clearing Corporation, or the writer holds
in the same account as the short position, on a share-for-share basis, a long position
either in the underlying security or in an options contract of the same type and class
of options where the exercise price of the options contract in such long position is
equal to or less than the exercise price of the options contract in such short position;
and (ii) the writer of a put option holds in the same account as the short position, on
a share-for-share basis, a long position in an options contract of the same type and
class of options where the exercise price of the options contract in such long position
is equal to or greater than the exercise price of the options contract in such short
position.
(15) The term
"discretion" means the authority of a broker or dealer to determine for a
customer the type of option, the class or series of options, the number of contracts, or
whether options are to be bought or sold.
(16) The term "EAM
Rights" means the non-transferable rights held by an Electronic Access Member.
(17) The term "European-style
option" means an options contract that, subject to the provisions of Options 6B
(relating to the cutoff time for exercise instructions) and to the Rules of the Clearing
Corporation, can be exercised only on its expiration date.
(18) The term "Exchange
Rights" means the PMM Rights, CMM Rights and EAM Rights collectively.
(19) The term "exercise
price" means the specified price per unit at which the underlying security may
be purchased or sold upon the exercise of an options contract.
(20) The term
"in-the-money" shall mean the following: for call options, all strike prices at
or below the offer in the underlying security on the primary listing market; for put
options, all strike prices at or above the bid in the underlying security on the primary
listing market. This definition shall only apply for purposes of Market Maker quoting
obligations in Options 3, Section 8 and Options 2, Section 4.
(21) The term "long
position" means a person's interest as the holder of one or more options
contracts.
(22) The term "Market
Makers" refers to "Competitive Market Makers" and "Primary Market Makers"
collectively.
(23) The term "Market Maker
Rights" refers to PMM Rights and CMM Rights collectively.
(24) A "mnemonic" shall
mean an acronym comprised of letters and/or numbers assigned to Electronic Access
Members. An Electronic Access Member account may be associated with multiple mnemonics.
(25) The term
"Non-Customer" means a person or entity that is a broker or dealer in securities.
(26) The term "Non-Customer
Order" means an order for the account of a Non-Customer.
(27) The term "offer"
means a quote or limit order to sell one or more options contracts.
(28) The term "opening
purchase transaction" means an Exchange Transaction that will create or increase
a long position in an options contract.
(29) The term "opening
writing transaction" means an Exchange Transaction that will create or increase
a short position in an options contract.
(30) The term
"out-of-the-money" shall mean the following: for call options, all strike prices
above the offer in the underlying security on the primary listing market; for put
options, all strike prices below the bid in the underlying security on the primary
listing market. This definition shall only apply for purposes of Market Maker quoting
obligations in Options 3, Section 8 and Options 2, Section 4.
(31) The term "options
contract" means a put or a call issued, or subject to issuance by the Clearing
Corporation pursuant to the Rules of the Clearing Corporation.
(32) The term "OPRA"
means the Options Price Reporting Authority.
(33) The term "order"
means a commitment to buy or sell securities, the permitted types of which are set forth
in Options 3, Section 7.
(34) The term
"outstanding" means an options contract which has been issued by the Clearing
Corporation and has neither been the subject of a closing writing transaction nor has
reached its expiration date.
(35) The term "PMM
Rights" means the non-transferable rights held by a Primary Market Maker.
(36) The term "Primary Market
Maker" means a Member that is approved to exercise trading privileges associated
with PMM Rights.
(37) The term "Priority
Customer" means a person or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390 orders in listed options per day on
average during a calendar month for its own beneficial account(s).
(38) The term "Priority
Customer Order" means an order for the account of a Priority Customer.
(39) The term "Professional
Order" means an order that is for the account of a person or entity that is not
a Priority Customer.
(i) Calculation of Professional
Orders. With respect to computing the number of orders in listed options per day on
average during a calendar month for its own beneficial account(s), the following shall
apply:
(a) Each order is counted toward
the number of orders, regardless of the options exchange to which the order was routed
in determining Professional Orders.
(b) A cancel and replace order
which replaces a prior order shall be counted as a second order, or multiple new orders
in the case of Complex Order comprising 9 options legs or more, including "single-strike
algorithms" which track the Best Bid and Offer ("BBO") or National Best Bid and Offer
("NBBO"). A cancel message is not an order.
(c) Complex Orders consisting of
8 legs or fewer will be counted as a single order, and respecting Complex Orders of 9
options legs or more, each leg will count as a separate order. Stock orders shall not
count toward the number of legs.
(d) An order that converts into
multiple subordinate orders to achieve an execution strategy shall be counted as one
order per side and series, even if the order is routed away. An order that cancels and
replaces the resulting subordinate order and results in multiple sides/series shall be
counted as a new order per side and series. An order that cancels and replaces the
subordinate order on the same side and series will count as one order. For purposes of
counting customer orders, if one customer order on the same side and series is
subsequently broken-up by a broker into multiple orders for purposes of execution or
routed away, this order will count as one order.
(40) The term "Professional
Customer" means a non-broker/dealer participant who enters at least 390 orders
per day on average during a calendar month for its own beneficial account(s).
(41) The term "proprietary
trading" for purposes of Rule
1210 means trading done by a Member having the characteristics:
(A) The Member is not required
by Section 15(b)(8) of the Exchange Act to become a FINRA Member but is a member of
another registered securities exchange not registered solely under Section 6(g) of the
Exchange Act;
(B) All funds used or proposed
to be used by the Member are the trading Member's own capital, traded through the
Member's own accounts;
(C) The Member does not, and
will not, have customers; and
(D) All persons registered on
behalf of the ember acting or to be acting in the capacity of a trader must be owners
of, employees of, or contractors to the Member.
(42) The term "Public
Customer" means a person or entity that is not a broker or dealer in securities.
(43) The term "Public
Customer Order" means an order for the account of a Public Customer.
(44) The term "put" means
an options contract under which the holder of the option has the right, in accordance
with the terms and provisions of the option, to sell to the Clearing Corporation the
number of shares of the underlying security covered by the options contract.
(45) The term "Quarterly
Options Series" means a series in an options class that is approved for listing
and trading on the Exchange in which the series is opened for trading on any business
day and that expires at the close of business on the last business day of a calendar
quarter.
(46) The term "quote" or
"quotation" means a bid or offer entered by a Market Maker that updates the
Market Maker's previous bid or offer, if any.
(47) The term "series of
options" means all options contracts of the same class having the same exercise
price and expiration date.
(48) The term "short
position" means a person's interest as the writer of one or more options
contracts.
(49) The term "Short Term
Option Series" means a series in an option class that is approved for listing
and trading on the Exchange in which the series is opened for trading on any Monday,
Tuesday, Wednesday, Thursday, or Friday that is a business day and that expires on the
Monday, Tuesday, Wednesday, Thursday, or Friday of the following business week that is a business day, or,
in the case of a series that is listed on a Friday and expires on a Monday, is listed
one business week and one business day prior to that expiration. If a Tuesday,
Wednesday, Thursday or Friday is not a business day, the series may be opened (or shall
expire) on the first business day immediately prior to that Tuesday, Wednesday, Thursday
or Friday. For a series listed pursuant to this section for Monday expiration, if a
Monday is not a business day, the series shall expire on the first business day
immediately following that Monday.
(50) The term "System"
means the electronic system operated by the Exchange that receives and disseminates
quotes, executes orders and reports transactions.
(51) The term "type of
option" means the classification of an options contract as either a put or a
call.
(52) The term "uncovered"
means a short position in an options contract that is not covered.
(53) The term "Voluntary
Professional" means any Public Customer that elects, in writing, to be treated
in the same manner as a broker or dealer in securities for purposes of Options 3,
Sections 10, 11, 13, as well as the Exchange's Pricing Schedule.
Adopted July 8, 2019 (SR-MRX-2019-15); amended Dec. 9, 2019 (SR-MRX-2019-25); amended Nov. 18, 2022 (SR-MRX-2022-25); amended Sep. 4, 2025 (SR-MRX-2025-19), operative Oct. 4, 2025.