ATS-N/UA 0000310607-20-000018 LIVE 0000310607 XXXXXXXX 013-00104 false false Instinet Crossing Changes have been made to Part II, Item 2(a) and 6(a) to include Instinet Germany GmbH as an affiliate of the Broker-Dealer Operator (1) permitted to enter or direct the entry of orders and trading interest into the ATS; and (2) which may receive technology support services from ILLC Technology Personnel. The changes herein apply to the Broker Dealer Operator and all Subscribers. Y INSTINET, LLC 008-23669 000007897 Financial Industry Regulatory Authority 01/14/1980 XIST www.instinet.com/us-vwap-cross&www.instinet.com/market-close-cross-us CoreSite Realty Corporation 2 Emerson Lane Secaucus 07094 US-NJ Rackspace U.S., Inc. 125 Belmont Drive Somerset 08873 US-NJ false false The ATS is owned and operated by Instinet, LLC ("ILLC" or the "Firm"), a broker-dealer registered with the Securities and Exchange Commission. The Firm's brokerage business takes place on a single trading desk. The component groups of ILLC's trading desk are: (1) Execution Trading; (2) Electronic Sales Trading; (3) International Sales Trading; (4) Program Sales Trading; (5) Cash and Hybrid Sales Trading; (6) Latency Sensitive Electronic Trading; (7) Event Driven Trading; and (8) Derivatives and Broker Dealer Execution. Component groups of the ILLC trading desk may submit trading interest to the ATS as agent or principal, although the desk primarily acts in an agency capacity. The ILLC trading specialist groups utilize the INCA MPID and, except as otherwise noted herein, trade on an agency basis. Y N N Instinet Incorporated ("Instinet") operates through locally registered brokerage entities worldwide. "Instinet-branded" affiliates outside of the United States (collectively, the "Instinet BD Affiliates") send their clients' orders in U.S. symbols to ILLC for execution. Orders sent by the Instinet BD Affiliates to ILLC may be routed to, and receive executions in the ATS. ILLC utilizes the INCA MPID. The Instinet BD Affiliates do not have their own MPIDs. ILLC and the following Instinet BD Affiliates primarily act on an agency basis but may act as principal or riskless principal to correct bona fide errors, to fulfill non-standard settlement requests, to provide ADR services, to effect foreign exchange transactions, and in other situations that do not involve substantial proprietary trading or investment risk: (i) Instinet Australia PTY Limited (Australian entity engaged in broker-dealer activities); (ii) Instinet Canada Limited (Canadian entity engaged in broker-dealer activities); (iii) Instinet Europe Limited (United Kingdom entity engaged in broker-dealer activities); (iv) Instinet Pacific Limited (Hong Kong entity engaged in broker-dealer activities); (v) Instinet Singapore Services Private Limited (Singapore entity engaged in broker-dealer activities); and (vi) Instinet Germany GmbH (German entity engaged in broker-dealer activities). Nomura Securities International, Inc. ("NSI") is a U.S. broker-dealer and client of ILLC. NSI places orders with ILLC that may be routed to the ATS for execution. NSI acts in a principal and agency capacity and its MPID is NMRA. Additional affiliates within the Nomura financial services group (the "Nomura Group Affiliates") may place orders with NSI or another entity that has a client relationship with ILLC. Such orders may be routed to ILLC for further handling and may subsequently be routed to, and receive executions in, the ATS. The following Nomura Group Affiliates engage in the listed financial services activities and do not have MPIDs, unless otherwise noted: (1) Nomura Global Alpha (U.S. entity engaged in investment advisory activities); (2) Nomura Financial Investment (Korea) CO., LTD. (Republic of China entity engaged in investment advisory and broker-dealer activities); (3) Nomura Saudi Arabia (Saudi Arabian entity engaged in investment advisory and broker-dealer activities); (4) Nomura Financial Advisory and Securities (India) Private Limited (Indian entity engaged in broker-dealer activities); (5) Nomura Securities Malaysia SDN. BHD. (Malaysian entity engaged in investment advisory and broker-dealer activities); (6) Nomura Global Financial Products, Inc. (U.S. entity engaged in broker-dealer activities, MPID: NGFP); (7) Nomura Derivative Products, Inc. (U.S. entity engaged in broker-dealer activities, MPID: NDPI); (8) Nomura Investment Banking (Middle East) E.C. (Bahrain entity engaged in investment advisory and broker-dealer activities); (9) Nomura Italia Sim P.A. (Italian entity engaged in investment advisory and broker-dealer activities); (10) Nomura Nederland N.V. (Dutch entity engaged in investment advisory and broker-dealer activities); (11) Nomura Bank (Deutschland) GMBH (German entity engaged in investment advisory and broker-dealer activities); (12) Nomura Bank (Switzerland) LTD. (Swiss entity engaged in investment advisory and broker-dealer activities); (13) Nomura Code Securities Limited (United Kingdom entity engaged in investment advisory and broker-dealer activities); (14) Nomura International PLC (United Kingdom entity engaged in investment advisory and broker-dealer activities); (15) Nomura Australia Limited (Australian (NSW) entity engaged in investment advisory and broker-dealer activities); (16) Banque Nomura France (French entity engaged in investment advisory and broker-dealer activities); (17) P.T. Nomura Indonesia (Indonesian entity engaged in investment advisory and broker-dealer activities); (18) Nomura Singapore Limited (Singapore entity engaged in investment advisory and broker-dealer activities); (19) Nomura Securities Singapore PTE., LTD (Singapore entity engaged in investment advisory and broker-dealer activities); (20) Nomura Securities CO., LTD (Japanese entity engaged in investment advisory and broker-dealer activities); (21) Nomura International (Hong Kong) LTD. (Hong Kong entity engaged in investment advisory and broker-dealer activities); (22) Nomura Securities (Hong Kong) Limited (Hong Kong entity engaged in investment advisory and broker-dealer activities); (23) Joinvest Securities CO., LTD. (Japanese entity engaged in investment advisory and broker-dealer activities); (24) Capital Nomura Securities Public Company Limited (Thailand entity engaged in investment advisory and broker-dealer activities); (25) Nomura Asset Management CO., LTD. (Japanese entity engaged in investment advisory activities); (26) Nomura Securities (Bermuda) LTD. (Cayman Islands entity engaged in broker-dealer activities); (27) Nomura Corporate Research and Asset Management INC. (U.S. entity engaged in investment advisory activities); and (28) Long Drive Management Trust (U.S. entity engaged in investment advisory activities). Nomura Holdings holds a non-controlling 41% economic interest in American Century Investments (U.S. entity engaged in investment advisory activities). Y N N N N N For purposes of this Form ATS-N, Subscribers to the ATS will, where necessary, be termed Direct or Indirect Subscribers. Direct Subscribers are ILLC clients that have been approved to direct their orders to the ATS via FIX (i.e., Subscribers who have elected not to utilize the electronic trading products offered by ILLC to route their orders or trading interest to the ATS) as discussed in Part III, Item 5(a) of this form. Indirect Subscribers are ILLC clients that have been approved to use one or more of the Instinet order and execution management systems ("Instinet OMSs"), the Instinet Execution Experts suite of algorithms ("Experts), or the Instinet Smart Order Router ("SOR"), all of which may route Indirect Subscriber orders to the ATS based on routing determinations made by the relevant product. Indirect Subscriber orders handled by the Experts, the SOR, or an ILLC trader may be routed to the ATS depending on marketability and the Indirect Subscriber's order handling instructions. Direct and Indirect Subscribers are collectively referred to as "Subscribers." Clients may be both Direct and Indirect Subscribers, depending on the method in which the Subscriber utilized to access the ATS. The use of the Experts and SOR services to enter orders into the ATS is discussed in Part III, Item 5(a). Additionally, ILLC offers its clients order routing and execution support services through the component groups of ILLC's trading desk listed in Part II, Item 1. The Experts, SOR, Instinet OMSs, and the Front End are referred to herein as the "Instinet Trading Products." ILLC offers these products and services to all Subscribers. Use of these products and services is governed by ILLC's client agreement (the "Client Agreement"), which contains no specific terms and conditions for routing orders into the ATS. Similarly, the terms and conditions of the Client Agreement do not differ dependent on whether the Subscriber is a Direct or Indirect Subscriber. Orders entering the ATS by any of the products or services listed above will be prioritized, matched, and executed in accordance with the ATS' standard matching and execution logic. ILLC offers Indirect Subscribers the ability to enter orders into the ATS by utilizing one or more of the following Instinet Trading Products: SMART ORDER ROUTER: The SOR is a customizable tool that explores liquidity in various market centers. Clients may elect to utilize the standard SOR configuration to access various market centers (ILLC determines the venues and the order in which client order flow is routed). Clients may also elect to customize the SOR in which case the client may choose the specific venue(s) to which their order flow is routed (to the extent permitted by regulatory requirements) as well as select the sequence in which their order flow is routed to each venue. The SOR will include the ATS as a potential venue, provided the client has not elected to limit its strategy to exclude the ATS. Subscribers may also customize the SOR to access only the ATS. Users of the SOR must be on-boarded as ILLC clients with access to the SOR. Use of the SOR is governed by the Client Agreement, which contains no specific terms and conditions for routing orders into the ATS. Orders routed to the ATS by the SOR will be prioritized, matched, and executed in accordance with the ATS' standard prioritization, matching and execution logic. EXPERTS: The Experts suite of algorithms includes a number of strategies designed to achieve a client's selected trading strategy. Orders routed via the Experts algorithms may include the ATS as a possible destination. Clients may customize the operation of the Experts algorithms, including limiting the venues accessed (to the extent permitted by regulatory requirements).Trading interest sent to the ATS by an Experts algorithm is subject to the ATS' standard prioritization, matching and execution logic. Unless a client has elected otherwise, trading interest entered into to the ATS by an Experts algorithm is treated as representing ILLC's trading interest (i.e., broker-dealer agency trading interest) and not the trading interest of the underlying Subscriber. Users of the Experts must be on-boarded as ILLC clients with access to the Experts. Use of the Experts is governed by the Client Agreement, which contains no specific terms and conditions for routing orders into the ATS. Orders entering the ATS through any of the Experts strategies will be prioritized, matched, and executed in accordance with the ATS' standard prioritization, matching and execution logic. OMS/EMS: ILLC offers the following proprietary order/execution management systems: (1) Newport; (2) Trading Portal; and (3) Tradespeed (collectively, the "Instinet OMSs"). The Instinet OMSs allow users to access the ATS in the following ways: (i) by directing trading interest to the ATS via FIX, (ii) by utilizing an Experts algorithm (to the extent offered by the Instinet OMS and permissioned to access the ATS,) and (iii) by otherwise submitting a non-directed order to ILLC for further handling by trading desk personnel or by entering the order in the SOR. Each Instinet OMS allows users to limit accessible trading venues. In the event an order, or a portion of an order, reaches the ATS via an Instinet OMS, the order is subject to the standard prioritization, matching and execution procedures described herein. Users of an Instinet OMS must be on-boarded as ILLC clients with access to an Instinet OMS. Use of the Instinet OMSs is governed by the Client Agreement, which contains no specific terms and conditions for the management of orders ultimately routed to the ATS, and do not differ based on which OMS is utilized. FRONT END: ILLC owns and operates a front end system (the "Front End"). The Front End is a separate, stand-alone system specific to the BlockCross ATS that includes certain algorithmic and order routing functionality. The Front End allows users to seek contra-side interest for their trading interest outside of the BlockCross ATS while simultaneously allowing for matching and execution within the BlockCross ATS. Only orders entered into the Front End for possible matching and execution within the BlockCross ATS are eligible to access the Front End's algorithmic and order routing functionality. Orders routed from the Front End may include an Instinet ATS other than the BlockCross as a routing destination. The means by which the order reached the ATS (e.g. Experts, SOR, OMS, FIX) does not affect the order's priority, matching, or execution. Y N BACKGROUND AND SCOPE: Subscribers' confidential trading information includes Subscriber order and execution information and excludes post-execution transaction information of the type made public under reporting rules or regulations, or of an aggregated nature (e.g., aggregated and anonymous order and execution statistics aged at least one day (T+1) from the date of execution) to be Subscriber confidential information. Instinet is an indirect wholly-owned subsidiary of Nomura Holdings Inc. ("NHI"). ILLC is a wholly-owned direct subsidiary of Instinet Holdings Incorporated ("IHI"). ILLC's affiliate, Instinet Group, LLC ("IGLLC"), is also a direct, wholly owned subsidiary of IHI. IHI is a wholly-owned direct subsidiary of Instinet Incorporated ("Instinet"). Certain personnel that provide services to the ATS are employed by IHI, IGLLC, or ILLC and certain compliance functions are outsourced to NHI ("Shared Employees"). Instinet does not have any employees who are solely responsible for the ATS. Listed below are the Shared Employees that service the ATS, ILLC, or an ILLC affiliate and have access to Subscriber confidential trading information. TECHNOLOGY PERSONNEL: Employees that provide information technology ("IT") support, IT development and strategy, tech management, and regulatory reporting services to the ATS (collectively "Technology Personnel"), also provide similar services to (i) ILLC's other business lines and (ii) some other subsidiaries of Instinet, including locally registered brokers Instinet Canada Limited, Instinet Canada Cross Limited, Instinet Europe Limited, Instinet Pacific Limited, Instinet Australia Limited, Instinet Germany GmbH, and Instinet Singapore Limited. For ILLC and the Instinet BD Affiliates, Technology Personnel are responsible for the operation, development, monitoring, and testing of various technology systems. For the ATS, certain groups of Technology Personnel are responsible for the operation, development, monitoring, and testing of the ATS's coding, network infrastructure, and software applications. In connection with the performance of their duties, Technology Personnel may access real-time and post-trade Subscriber order and execution information, including orders that were submitted to the ATS but were subsequently cancelled or did not otherwise receive an execution in the ATS. Separately, some Technology Personnel with direct physical access to ILLC servers and databases have the ability to access log files containing Subscriber order and execution information. Technology Personnel are employed by either ILLC, IHI, or IGLLC. OPERATIONS AND COMPLIANCE PERSONNEL: Employees that provide customer support, finance, clearing and middle office support and compliance supervision to the ATS (collectively "Operations Personnel") also provide services to ILLC's other business lines and, as needed, certain Instinet BD Affiliates. Customer support personnel are responsible for addressing client inquiries related to connectivity to the ATS and client trading activity and can access real-time and post-trade Subscriber order and execution information in connection with executing their duties. Clearing, middle office support, and Finance are responsible for the clearance, settlement, and billing of transactions and can access post-trade Subscriber order and execution information, including orders that were submitted to the ATS but were subsequently cancelled or did not otherwise receive an execution in the ATS, in connection with executing their duties. Compliance personnel have a range of responsibilities including, but not limited to, responding to regulatory inquiries or performing internal audits of ILLC or its affiliates, including the ATS. Generally, compliance personnel may access post-trade Subscriber order and execution information, including orders that were submitted to the ATS but were subsequently cancelled or did not otherwise receive an execution in the ATS, in connection with executing their duties but may, when appropriate, be permissioned to access real-time Subscriber order and execution information. Operations Personnel are employed by either ILLC, IHI, or IGLLC. ELECTRONIC TRADING PRODUCTS PERSONNEL: Employees that provide product development, customer support, and product sales support for the Instinet Trading Products (collectively "ETP Personnel") may also provide support to the ATS. Many ILLC clients access the ATS via an Instinet Trading Product. Accordingly, ETP Personnel may provide customer support to Indirect Subscribers as a result of the customer's use of an Instinet Trading Product as a means of access to the ATS. For ILLC, ETP Personnel are responsible for the development, testing, and sales and technology support of the Instinet Trading Products as well as other components of the Instinet systems. For the ATS, ETP Personnel are responsible for the development, testing, and monitoring of the Instinet Trading Products' interaction with the ATS and for compiling data and analytics in response to requests from Subscribers. ETP Personnel may access real-time and post-trade Subscriber order and execution information, including orders that were submitted to the ATS but were subsequently cancelled or did not otherwise receive an execution in the ATS, to support the development, testing, and monitoring of the Instinet Trading Products and to respond to Subscriber requests for data or analytics. ETP Personnel are employed by either ILLC, IHI, or IGLLC. U.S. LIQUIDITY VENUES TEAM: Employees that provide product strategy, customer support, and sales support for the Instinet ATSs (collectively "Liquidity Venues Personnel") also provide support for other ILLC businesses. For the ATS, Liquidity Venues Personnel provide customer support to Direct Subscribers. For ILLC, Liquidity Venues Personnel develop reports for use by internal groups in monitoring, developing, and enhancing ILLC's products and services. Liquidity Venues Personnel may access real-time and post-trade Subscriber order and execution information, including orders that were submitted to the ATS but were subsequently cancelled or did not otherwise receive an execution in the ATS, to support each Subscriber's use of the ATS and compile data and analytics in response to requests from Direct Subscribers. SALES AND TRADING PERSONNEL: Trading desk personnel within the component groups identified in Part II, Item 1(a) (collectively, "Sales and Trading Personnel") are responsible for providing order routing and execution support to clients including addressing Subscriber inquiries regarding their orders routed to the ATS or other market centers. Sales and Trading Personnel may access real-time and post-trade Subscriber order and execution information, including orders that were submitted to the ATS but were subsequently cancelled or did not otherwise receive an execution in the ATS, in connection with executing their duties. Sales and Trading Personnel are permissioned for access to such information based on client coverage. The information that may be viewed includes the destination market center for a given order (e.g., the ATS) and whether a previously routed order was executed or cancelled. Sales and Trading Personnel are employed by ILLC. Pursuant to an Assignment of Intellectual Property between ILLC and IHI, IHI licenses to ILLC intellectual property employed by ILLC in connection with the operation of the ATS. Specifically, IHI licenses the ATS matching engine (see Part III Item 11), the functionality used to input and utilize market data (See Part III Item 23), and the systems and infrastructure providing connectivity to the ATS (See Part III Item 6). In addition, IHI develops and licenses certain algorithmic trading products to ILLC (See Part III Item 5). Employees of IHI and IGLLC provide services to the ATS as detailed in Part II Item 6(a) above and Part II Item 7(d) below. ILLC utilizes Broadridge Financial Solutions, Inc. systems and services for the purposes of recordkeeping, clearance and trade settlement processing. ILLC utilizes FIS for securities lending and WORM storage. CoreSite Realty Corporation hosts ILLC's primary data center in Secaucus, NJ. Rackspace U.S., hosts ILLC's secondary data center in Somerset, NJ. As stated in response to Part II Item 6(a), the Instinet BD Affiliates are wholly owned subsidiaries of IHI and are affiliates of ILLC. The Instinet BD Affiliates may, on behalf of their clients, send orders for execution in U.S. markets to ILLC's trading desks, SOR, and algorithmic trading strategies, many of which include the ATS as a destination. Y BACKGROUND AND SCOPE: ILLC's system comprises an integrated Core Messaging System with numerous applications providing, reading, and consuming data messages from the Core Messaging System. The ATS system (e.g., matching engine and associated applications) and ILLC's systems used to support its agency broker-dealer business run on the Core Messaging System. ILLC maintains policies and procedures designed to safeguard the confidential trading information of Subscribers as well as virtual barriers to prevent unauthorized access to such information. ILLC's Core Messaging System is the conduit through which all firm-wide order information is processed (e.g., ATS and agency broker-dealer order and execution information). All orders routed to the ATS pass through the Core Messaging System. This information is processed by data messages which are readable only by the applications on the Core Messaging System that have been designed and permissioned by ILLC to do so. Each application subscribes to different message types and is permissioned to subscribe only to the message types necessary for its designated function. For example, the Instinet Trading Products (Experts, SOR, and OMS/EMS) are subscribed to utilize messages regarding the orders routed by the relevant product, including where orders were routed and/or executed, which may include the ATS or any other market center. The Instinet Trading Products may not access data messages related to other ILLC functions, including data messages related to the ATS generally, Direct Subscriber orders, ATS order priority, or counterparty information. EMPLOYEES WITH ACCESS TO SUBSCRIBER CONFIDENTIAL TRADING INFORMATION: Instinet does not have any employees solely responsible for the ATS. The employees described in response to Part II, Item 6(a) have access to Subscriber confidential trading information. These employees are prohibited from sharing any Subscriber confidential trading information with persons not expressly permissioned to receive such information under Instinet policy, as described in Part II, Item 7(a) of this form. SYSTEMS WITH ACCESS TO DIRECT SUBSCRIBER CONFIDENTIAL TRADING INFORMATION: ILLC data messages are periodically written to a database for storage and retention (the "Core Database"). This information includes both Direct and Indirect Subscriber order and execution information, as well as other ILLC data. Instinet maintains a Core Web Graphical User Interface ("Core Web GUI"), which allows a user to query the Core Database for the purposes of monitoring, reporting, and testing the Instinet systems and applications, including the ATS. Access to the full Core Database via the Core Web GUI is limited to personnel supporting the operations of the Core Messaging System and related databases and compliance supervisory personnel. Employees responsible for operating the Core Messaging System include Operations and Technology Personnel and ETP Personnel whose responsibilities include the operation of the ATS. Members of the Liquidity Venues Team are permissioned to access Subscriber order and execution information. ATS data, including Direct and Indirect Subscriber order and execution information, is a subset of the data retained on the Core Web Database. ILLC personnel whose responsibilities include the operations of the ATS and related systems or its compliance with applicable rules, may be permissioned to access Subscriber order and execution information via the Core Web GUI. Other ILLC personnel may be permissioned for access to the Core Web GUI, but will be prevented from accessing Subscriber confidential trading information. ILLC reviews and permissions employees for access to the Core Web GUI in accordance with the policies and procedures outlined in Part II, Item 7(a) (ii) below. Physical access to Instinet's servers and databases is limited to employees responsible for operating the system and is generally further limited to employees performing necessary IT functions. Instinet servers and databases are housed in locked rooms requiring keycard access. Entry and exit is monitored via video surveillance. ILLC reviews and permissions employees for physical access to Instinet's servers and databases in accordance with the policies and procedures outlined in Part II, Item 7(a) (ii) below. SYSTEMS WITH ACCESS TO INDIRECT SUBSCRIBER CONFIDENTIAL TRADING INFORMATION: The Newport OMS and Instinet Execution Experts can transmit Subscribers' confidential trading information to the extent orders are managed by the Newport OMS or routed through an Experts strategy. Data related to Indirect Subscriber orders managed by the Newport OMS or routed through an Experts strategy is accessible through certain GUIs that can disseminate information regarding the destination market center for a given order (e.g., the ATS) and whether a previously routed order was executed or cancelled. Through the Newport OMS, Technology and ETP Personnel who support the Experts strategies or the OMS utilized may access real-time and post-trade Indirect Subscriber order and execution information routed or managed through the relevant strategy or OMS (Direct Subscriber order and execution information will not pass through an Instinet OMS or the Experts). Sales and Trading Personnel may also be permissioned, based on client coverage, to access real-time and post-trade order and execution via the Newport OMS. Note, certain members of the Electronic Sales Trading component group of the ILLC trading desk are considered client coverage for all clients utilizing the Experts algorithms. Note, the information available to such support or trading personnel is provided by systems supporting the relevant strategy or OMS and does not include information regarding an order's priority or status in the ATS or another market center. Information regarding ATS orders and executions that do not relate to the relevant strategy or were not managed by the OMS is not transmitted by these systems. SUBSCRIBER CONFIDENTIAL TRADING INFORMATION SAFEGUARDS: ILLC requires permissioned logins to access Instinet Systems. Additionally, Instinet's global cyber security efforts, including measures to detect and prevent unauthorized access to Instinet systems, apply to ILLC and its affiliates, including the operation of the ATS. Relevant Principals and Supervisors must approve employee access to Instinet systems, including the ATS and the applications with the ability to access Subscriber confidential trading information outlined above. SEPARATION: ILLC has implemented virtual information barriers to separate ATS data from other ILLC data and, in turn, separate personnel and systems with access to Subscriber confidential trading information from those not permitted to access such information. ACCESS TO DIRECT SUBSCRIBER INFORMATION: Employees seeking to access the systems that may transmit or disseminate Direct Subscriber information (see above section titled Systems with Access to Direct Subscriber Confidential Trading Information) must receive approval from the ATS Operations Principal. In reviewing such requests, the ATS Operations Principal considers factors including the employee's current role and whether the employee performs a function related to the operations of the ATS and related systems or its compliance with applicable rules that requires access to Direct Subscriber information. An employee's request for access may be denied if, based on the ATS Operations Principal's review: (1) the employee's stated job function does not relate to the operations of the ATS and related systems or its compliance with applicable rules, (2) the employee has requested a type of permissioning (see below) that is too broad for the employee's stated job function, or (3) the employee can perform their stated duties without such access. If an employee changes roles, the ATS Operations Principal will adjust the employee's access to appropriately reflect the employee's new role. Based on this review, the ATS Operations Principal or delegate may revoke, suspend, or modify access. Decisions to approve access are subject to a periodic review pursuant to ILLC's Regulation ATS written supervisory procedures ("WSPs") described below. On a monthly basis, the ATS Operations Principal or delegate conducts a review to confirm the appropriateness of user access to Subscriber confidential trading information, including verification that users whose roles have changed and/or, employees who have been inactive, transferred or terminated have their permissioned access modified accordingly. Based on this review, the ATS Operations Principal or delegate may revoke, suspend, or modify access. ACCESS TO INDIRECT SUBSCRIBER INFORMATION: Employees seeking to access the systems that may transmit or disseminate Indirect Subscriber information (see above section entitled Systems with Access to Indirect Subscriber Confidential Trading Information) may be permissioned to do so on an as needed basis. PERSONAL TRADING RESTRICTIONS: Instinet Incorporated maintains an Employee Investment Policy (the "EIP") which covers employees of all U.S. subsidiaries, and includes employees supporting the ATS. The EIP is designed to encourage long-term investments and prohibits employees from engaging in day-trading activities. Instinet prohibits all employees, including those with access to Subscriber confidential trading information, from trading based on non-public, or other confidential information. The EIP requires employees to maintain EIP covered accounts at specified brokers that have agreed to provide Instinet daily trading information for employee personal accounts. EIP covered securities are subject to a 15-day holding period. Prior to entering any trades in a personal account covered by the EIP, employees must enter a trade approval request via the Personal Trading Control Center ("PTCC") tool and receive an approval from both their supervisor and PTCC group. The PTCC tool requires the employee to certify that the employee: (1) is not in possession of any material non-public information concerning the security or commodity the employee proposes to buy or sell; (2) does not know of a pending customer trade nor of a pending research report in the security or commodity; (3) is not engaging in personal trading activity that violates Instinet's policies and procedures, including the Code of Ethics, or any duties owed to Instinet or its clients; (4) has reviewed Instinet's restricted list and the proposed transaction is not on the restricted list; (5) has confirmed that the proposed transaction meets the holding period requirement; (6) agrees that the proposed transaction must be effected on the same day on which approval is given; and (7) has confirmed that the proposed transaction(s) does not involve the purchase of an initial public offering (IPO) or any other type of new equity issue. In approving or denying such a request, supervisors may review the employee's trades for any unusual activity, possible front-running customer trades or research, or conflicts with any of Instinet's businesses. In addition, supervisors consider whether transactions are appropriate, given the employee's economic status and investment experience and whether the transactions are of such a frequency that they may distract the employee from his or her responsibilities at Instinet. Separately, the Compliance Department reviews personal trades daily and consults with managers if irregularities are identified. Generally, if an approval for an employee trade is given, it remains in force for the trading day in which it was received. Once an employee receives written confirmation approving a covered transaction, the employee may enter a trade in that symbol. Employee supervisors review each employee's trading activity on a post trade basis and check for irregularities and potential red flags. In the event any irregularities or red flags are discovered, supervisors are to escalate the matter to Instinet management and the ILLC Chief Compliance Officer. Instinet, in its discretion, may take any action against an employee found to have violated the EIP, up to and including termination. CONFIDENTIAL INFORMATION AND INSIDER TRADING: Instinet Incorporated maintains a policy regarding confidential information and insider trading which covers employees of all U.S. subsidiaries, including employees supporting the ATS. Employees must not disclose any confidential information to anyone who is not authorized by Instinet to receive it pursuant to these policies and may not use such information, other than in the course of their employment and in connection with the performance of the duties for which access to such information has been granted. Accordingly, employees may not use confidential information to: (1) trade securities for their own accounts, accounts in which they have a direct or indirect beneficial interest, or accounts over which they can exercise control; or (2) advise relatives, friends, or other persons about possible securities transactions. Nor may employees authorize anyone else to disclose or use confidential information in a manner that would violate these prohibitions. WRITTEN PROCEDURES: ILLC's Regulation ATS WSPs provide specific guidelines for the initial review and approval process, as well as the ongoing evaluation of, employee access to ATS data. Prior to granting any employee access to Instinet's systems, including the ATS and the applications with the ability to access Subscriber confidential trading information must review and document each employee's level and type of access requested, the role and responsibilities of the employee, and the purpose for which access was requested. On a monthly basis, employee access is reviewed to determine whether their level of access to Instinet's systems, including the ATS and the applications with the ability to access Subscriber confidential trading information remains appropriate. The ATS Supervisor must document each review and the changes made, if any, to employee access. Periodically, the Internal Audit group reviews the ATS operations generally. Such reviews typically include testing the ATS WSPs, assessing the ATS Supervisor's review of employee access, and confirming that each review has been properly documented. ILLC considers all Subscribers to the ATS to have consented to the disclosure of their confidential trading information as described in Part II, Items 6(a) and 7(a) above and in the following ways. MARKETING: ILLC may include, in marketing materials or client presentations, aggregated and anonymous analysis related to order and execution statistics derived from orders and executions in the ATS. Subscribers do not have the ability to opt out of the use of their related order and execution information for ILLC marketing purposes. CLIENT COVERAGE: ILLC may permission the systems and personnel described in Part II, Items 6(a) and 7(a) to access Subscriber (both Direct and Indirect Subscribers) confidential trading information. Subscribers may request to limit such disclosure, with respect to Sales and Trading Personnel, in accordance with the procedure described in response to Part II, Item 6(c) below. ILLC reserves the right, in its sole discretion, to honor such requests and will review each request on a case-by-case basis. Typically, ILLC will honor such requests by adjusting a client's coverage model to reflect the client's requested opt out. THIRD PARTIES: ILLC does not disseminate Subscriber confidential trading information to third parties, other than those listed in Part II, Item 6(b), except where required by applicable law. Subscribers may request that ILLC share their confidential trading information with third parties at their discretion. Subscribers may request to withdraw their consent to the information described above by contacting their sales representative in writing via email or instant message. Subscribers making such requests will receive written notification regarding their request to opt-out as soon as practicable. ILLC conducts periodic reviews of opt out requests to ensure that such requests have been implemented. The persons described in response to Part II, Item 6(a) and (b) have access to Subscriber confidential trading information. The type of information that such persons can access along with the reasons for such access is described in response to Part II, Item 6(a) and (b). Investment Companies Issuers Brokers NMS Stock ATSs Asset Managers Principal Trading Firms Hedge Funds Market Makers Banks Dealers N Only clients of ILLC with accounts approved for trading may be Subscribers of the ATS. Prior to establishing a trading account for a prospective client, ILLC will require (1) the client's name, address and other identifying information, as well as the name of any adviser/agent authorized to trade for the account; (2) the citizenship (or place of incorporation) of the client; (3) a Taxpayer Identification Number or equivalent; (4) the type of client, e.g., registered investment adviser, registered broker-dealer, etc.; (4) the names of the persons designated by the client for trading authorization; (5) clearing instructions, including, where applicable, the identity of the client's prime broker or custodian (ILLC does not custody customer securities); and (6) a completed account application, client agreement and supplementary documentation, as appropriate. ILLC does not admit natural persons as Subscribers to the ATS. Prospective clients must also pass ILLC's AML/KYC/CIP risk assessments, as well as any credit assessments. ILLC reserves the right to prevent or otherwise limit a prospective Subscriber from accessing the ATS if they fail to meet the requirements to become a client, in ILLC's sole discretion. ILLC may prevent or otherwise limit any client's access to the ATS. Factors that may be considered in preventing or otherwise limiting a client from accessing the ATS include, but are not limited to, reputational risk to Instinet, failure to make timely and proper settlement of transactions, regulatory actions or findings suggesting inappropriate activity, or a failure to satisfactorily respond to an information request. For purposes of access to the ATS, Subscribers are not required to enter into any specific clearing arrangement. Y Y ILLC may prevent or otherwise limit any Subscriber's access to the ATS if they fail to meet the requirements to become a client or ILLC decides to terminate its relationship with the client based on factors related to the client's activity within the ATS or otherwise. As set forth in the Client Agreement, ILLC may, at any time, without cause or notice, (i) suspend or terminate all or part of the ATS or other Instinet services or a client's access thereto, (ii) change the nature, composition or availability of all or a portion of the Instinet services or (iii) change any limits or restrictions on the trading or other activities a client may conduct through the Instinet services. If a client's passwords or other access methods ("Access Methods") are lost, stolen or compromised, ILLC will cancel or suspend the access methods upon receipt of notice from the client. ILLC may terminate, revoke, suspend, modify or change any or all of a client's Access Methods at any time, without prior notice, in its sole and exclusive discretion. ILLC may, in its sole and absolute discretion, reject any order that exceeds established limits, appears to be entered in error, or is otherwise unacceptable. ILLC may also terminate its relationship with a client, and by extension, prevent or otherwise limit a Subscriber's access to the ATS based on factors including, but not limited to, reputational risk to Instinet, failure to make timely and proper settlement of transactions, regulatory actions or findings suggesting inappropriate activity, or a failure to satisfactorily respond to an information request. For instance, ILLC has terminated client access to ILLC's services due to client failure to adequately address compliance questions relating to the client's trading activity. As noted above, ILLC may, in its sole discretion, exclude a Subscriber from the ATS, or suspend or withdraw access in whole or in part. Any suspension of ILLC, in its capacity as a Subscriber to the ATS, is likely to be temporary, and to arise from a technical issue or another event that presents a risk to the ATS system or another Instinet service. Subscribers may submit orders to ILLC between 7:30 a.m. and 8:35 a.m. for the 8:35 a.m. VWAP Cross, between 8:36 a.m. and 8:50 a.m. for the 8:50 a.m. VWAP Cross and between 8:51 and 9:15 a.m. for the 9:15 a.m. VWAP Cross (all times are Eastern Time). Orders may be submitted to the Last Hour VWAP Cross from 9:30 a.m. until the official Last Hour VWAP Start Time. Subscribers may submit orders for the MOC Crosses at any time between 7:30 a.m. and the relevant crossing session's crossing time. Y ILLC utilizes the FIX 4.0 and FIX 4.2 protocol for global electronic trading and is FIX compliant with the standard messaging format of the FIX 4.0 and FIX 4.2 protocol version. A Subscriber may connect to the ATS via cross connection when the Subscriber's system is located, or the Subscriber maintains a point of presence, in the same data center used for the ATS matching engine. As noted below, ILLC does not offer cross connections to Subscribers. In the event a Subscriber establishes a cross connection with the ATS, the Subscriber provides, installs and maintains the hardware used for connection. The ATS does not charge a fee for cross connects. Orders entered into the ATS via a FIX connection do not pass through the Experts or SOR to access the ATS. Y ILLC clients may choose to send directed orders to the ATS via a FIX connection, or indirectly via the Instinet SOR, a specific Experts strategy, or via an Instinet OMS/EMS system. The Instinet router or strategy chosen will determine where individual orders are routed, including to external market centers and ATSs, which may include any Instinet ATS. Once an order reaches the ATS, the means by which the order reached the ATS (e.g. Experts, SOR, OMS, FIX) does not affect the order's priority, matching, or execution. In addition, clients of ILLC may submit orders to ILLC for further handling or routing (See Part II, Item 5), whether via ILLC's trade desk personnel, Instinet Trading Products or otherwise, and ILLC may route such orders to the ATS. Subscribers and the Trading Desks use the same methods to access the ATS. Y N N N The ATS consists of three crossing facilities: the VWAP Crosses, the Last Hour VWAP Cross and the MOC Crosses (collectively, "Instinet Crossing Services"). The Instinet Crossing Services are all point-in-time crosses. The Instinet Crossing Services accept both "buy" and "sell" orders. All Subscribers may submit orders to sell "long" or "short," but only broker-dealer Subscribers may submit orders marked "short sale exempt." ORDER INSTRUCTIONS (GENERALLY): The VWAP Crosses and the Last Hour VWAP Cross only accept VWAP orders (i.e., Subscribers send orders to the VWAP Crosses without a set limit price which, upon receiving a match for a given order, will receive an indicative fill priced at the midpoint of the symbol's NBBO). The MOC Cross only accepts market-on-close orders. The Instinet Crossing Services only accept orders with a time-in-force instruction of "day." Up to each matching time, Subscribers may modify, cancel, replace or remove their orders from the Instinet Crossing Services at their discretion. Subscribers may indicate a minimum acceptable quantity ("MinQty") associated with an order entered into the Instinet Crossing Services. A MinQty condition must be entered in one or more round lots (a multiple of 100 shares). A MinQty value is not required to be satisfied on a single order from a single counterparty basis; Instinet Crossing will aggregate multiple orders to satisfy the MinQty requirement for orders entered into a VWAP Cross. VWAP Crosses: Orders entered into the VWAP Crosses are matched on a pro rata basis. Subscribers may elect to receive preliminary reports after each VWAP Cross indicating the number of shares that matched in the VWAP Cross. Subscribers may elect that unmatched order interest (including where an order received a partial execution) remain eligible for that day's subsequent VWAP Cross(es). Subscribers may make such election on an order-by-order basis or may elect that all orders remain eligible for that day's subsequent VWAP Cross(es). Unmatched orders will otherwise be cancelled back if not matched in a particular VWAP Cross. After the close of the primary trading session in the relevant U.S. market, the volume-weighted average price is calculated and Subscribers receive a report indicating the price at which their orders have been executed. ILLC calculates the execution price of VWAP Cross transactions on the basis of the trading that takes place in the security during regular trading hours on the same day that the match occurs, including opening auctions and closing auctions (See discussion in this Part III, Item 7 under the heading VWAP Calculation for additional). Subscribers may indicate either a "Buy Cash Constraint" or a "Sell Cash Constraint" (together, the "Cash Constraints") associated with an order or group of orders entered into a VWAP Cross. A "Buy Cash Constraint" indicates the maximum net notional value that the Subscriber is willing to purchase across an order or group of orders. A "Sell Cash Constraint," indicates the maximum net notional value that the Subscriber is willing to sell across an order or group of orders. Where a Cash Constraint would be exceeded the ATS will execute the Subscriber's orders on the relevant side of the market on a pro rata basis based on each order's absolute notional value. The Cash Constraint applied at the time of the match is based on the previous night's closing price. Last Hour VWAP Cross: The Last Hour VWAP Cross consists of a single crossing session that occurs at or near 3:00 p.m., Eastern Time (the "Last Hour VWAP Start Time"). Orders entered into the Last Hour VWAP Cross are matched on a pro rata basis. Subscribers may elect to receive a preliminary report indicating the number of shares that matched in the Last Hour VWAP Cross. Following the Last Hour VWAP Cross, unmatched order interest is cancelled back to the Subscriber or SOR, as applicable. ILLC calculates the execution price of transactions in the Last Hour VWAP Cross based on the trading that takes place in the security from the Last Hour VWAP Start Time to the close of regular trading hours (e.g., 4:00 pm ET), including any closing auctions. Subscribers receive a report after the market close indicating the price at which their orders have been executed (See discussion in this Part III, Item 7 under the heading VWAP Calculation for additional). Subscribers may indicate either a Buy Cash Constraint or a Sell Cash Constraint associated with an order or group of orders entered into a Last Hour VWAP Cross. Where a Cash Constraint would be exceeded the ATS will execute the Subscriber's orders on the relevant side of the market on a pro rata basis based on each order's absolute notional value. The Cash Constraint applied at the time of the match is based on the midpoint of the NBBO at the Last Hour VWAP Start Time. MOC Crosses: The MOC Crosses match buy and sell orders marked "market on-close." The MOC Crosses consist of three different crossing sessions: a cross for securities where the primary listing exchange is the NASDAQ Stock Market ("NASDAQ Cross"), a cross for securities where the primary listing exchange is the NYSE Arca ("Arca Cross"), and a cross for securities where the primary listing exchange is the New York Stock Exchange ("NYSE Cross"). The MOC Cross system will first attempt to match orders entered by the same Subscriber into a MOC Cross (i.e. Subscriber priority), with any open order being matched on a pro rata size basis against any other Subscriber with an open order in the MOC Cross. Unmatched interest following the MOC Crosses is cancelled back to the Subscriber or SOR, as applicable. Subscribers may elect to receive preliminary execution reports indicating the number of shares that have matched on a security-by-security basis or for all orders submitted to the MOC Cross. The execution price of all orders matched in a MOC Cross is the security's closing auction price on the security's primary listing exchange or, where a closing auction doesn't occur, the last closing price disseminated by the primary listing exchange, if any. VWAP CALCULATION: ILLC calculates the execution prices of VWAP Cross (all intraday VWAP Crosses and the Last Hour VWAP Cross) transactions by using price, quantity, and sale condition data from trades disseminated by the SIP (i.e., the Consolidated Tape System ("CTS") for Tape A and B securities and the Unlisted Trading Privileges ("UTP") Plan for Tape C securities). Sale condition data is used to determine whether a transaction is eligible or ineligible for inclusion in Instinet's VWAP price calculations. Price and quantity information are used to calculate the ultimate VWAP Cross execution prices. SIP trades with the following sale conditions are excluded from the calaculation: Average Price Trade; Cash Trade (same day settlement); Market Center Official Close; Next Day Trade (next day settlement); Market Center Official Open; Seller's Option (irregular settlement); Extended Hours Trade; Extended Hours Sold (out of sequence); Contingent Trade; Derivatively Priced; Qualified Contingent Trade; and Corrected Consolidated Close Price as per Listing Market (collectively "Sale Conditions"). Odd lot trades are eligible for inclusion in ILLC's VWAP price calculations absent one of the above listed Sale Conditions. For each security receiving an indicative fill in a VWAP Cross, ILLC calculates the VWAP Cross execution price in the following manner: the notional values (price*quantity) of each eligible transaction for a security are added to determine the security's total notional value executed during the trading day ("TNV"). The share quantities of each eligible transaction are added to determine the security's total shares traded ("TST"). The execution price for each security receiving an indicative fill in a VWAP Cross is equal to the security's TNV divided by the security's TST. Trading halts or pauses do not impact the calculation of the VWAP Cross execution prices. ROUTABILITY: Orders are not routed out of Instinet Crossing. Only broker-dealer Subscribers may submit orders as short-sell exempt. Instinet Crossing will accept orders of any size; however, for the VWAP Crosses, orders must be greater than or equal to one round lot to be eligible to cross. The MOC Cross will accept and cross orders of any size, subject to the maximum allowable order size stated below. Instinet Crossing will reject any order for greater than 2,147,483,647 shares, or that otherwise exceeds pre-set financial and regulatory risk management controls. Y There are no special requirements or handling procedures for odd-lot orders entered into the MOC Cross. Odd-lot orders are ineligible to cross in the VWAP Crosses or the Last Hour VWAP Cross; however, in the event an odd lot remains following a partial execution of a round lot order, the remaining odd lot is eligible to cross. Odd-lot VWAP Cross and Last Hour VWAP Cross orders will only cross with other odd-lot orders. Neither round-lot nor mixed-lot orders will cross with odd-lot orders in the VWAP Cross or Last Hour VWAP Cross. Y There are no special requirements or handling procedures for MOC Cross mixed-lot orders. Mixed-lot VWAP Cross orders will only cross with other mixed-lot orders. Neither round-lot nor odd-lot orders will cross with mixed-lot orders. Y N The Instinet Crossing Services are all point-in-time crosses. As further discussed below, the Instinet Crossing Services accept orders from their designated start times until the time of the relevant crossing session. The Instinet Crossing Services match and execute orders on a pro rata basis. Generally, if a security is subject to a trading halt or other suspension, the Instinet Crossing Services will continue to accept orders for a given crossing session until the crossing session's designated start time. Stoppages that occur after a preliminary match (i.e., after a cross has occurred), but prior to close of trading, do not impact any preliminary matches (that is, preliminary matches will not be cancelled). VWAP Crosses: If a security is halted at the scheduled crossing time of a VWAP Cross, no cross will occur. Open orders will be cancelled back or remain eligible for that day's subsequent VWAP Cross(es), depending on Subscriber instruction. Last Hour VWAP Cross: If a security is halted at the scheduled Last Hour VWAP Start Time (e.g., 3:00 pm ET), the security's Last Hour VWAP Start Time will be postponed up until 4:00 pm ET. In the event a security remains halted at 4:00 pm ET no Last Hour VWAP Cross for that security will occur. Trading halts or pauses do not impact the calculation of the VWAP Cross execution prices. MOC Crosses: Subscribers may submit orders for the MOC Crosses at any time between 7:30 a.m. and the relevant crossing session's crossing time. If the primary listing exchange does not effect a closing cross for a security due to a trading halt or other stoppage in that security, the MOC Cross for that security will be cancelled unless the primary listing exchange disseminates a last closing price, in which case the execution price for that security will be the disseminated last closing price. Y The Instinet Crossing Services are point-in-time crosses. As further discussed below, the Instinet Crossing Services accept orders from the relevant Instinet Crossing Service's designated start time until the time of the relevant crossing session. The Instinet Crossing Services match and execute orders on a pro rata basis. Generally, if a security is subject to a trading halt or other suspension the Instinet Crossing Services will continue to accept orders for a given crossing session until the crossing session's designated start time. Stoppages that occur after a preliminary match (i.e., after a cross has occurred), but prior to close of trading, do not impact any preliminary matches (that is, preliminary matches will not be cancelled). VWAP Crosses: If a security is halted at the scheduled crossing time of a VWAP Cross, no cross will occur and open orders will either be cancelled back or remain eligible for that day's subsequent VWAP Cross(es), depending on Subscriber instruction. Last Hour VWAP Cross: If a security is halted at the scheduled Last Hour VWAP Start Time (e.g., 3:00 pm ET), the security's Last Hour VWAP Start Time will be postponed up until 4:00 pm ET. In the event a security remains halted at 4:00 pm ET no Last Hour VWAP Cross for that security will occur. MOC Crosses: Subscribers may submit orders for the MOC Crosses at any time between 7:30 a.m. and the relevant crossing session's crossing time. If the primary listing exchange does not effect a closing cross for a security due to a trading halt or other stoppage in that security, the MOC Cross for that security will be cancelled unless the primary listing exchange disseminates a last closing price, in which case the execution price for that security will be the disseminated last closing price. Y N Instinet Crossing Services consist of three crossing facilities: the VWAP Crosses, the Last Hour VWAP Cross and the MOC Crosses. The Instinet Crossing Services are all point-in-time crosses. All NMS Stocks are eligible for trading on the Instinet Crossing Services. Instinet Crossing Services are non-price discovery trading services. The VWAP Crosses and Last Hour VWAP Crosses only accept VWAP orders (i.e., Subscribers send orders to the VWAP Crosses without a set limit price which, upon receiving a match for a given order, will receive an indicative fill priced at the midpoint of the symbol's NBBO). The MOC Crosses only accept market-on-close orders. The Instinet Crossing Services only accept orders with a time-in-force instruction of "day." VWAP Crosses: The VWAP Crosses consist of three whole-day VWAP crossing sessions that match buy and sell orders entered by Subscribers prior to the opening of the regular trading session in U.S. markets. These VWAP Crosses occur at or near 8:35 a.m., 8:50 a.m. and 9:15 a.m., Eastern Time. Order imbalance information for the VWAP Crosses is not disseminated. Orders entered into the VWAP Crosses are matched on a pro rata basis. Subscribers may elect to receive preliminary execution reports after each VWAP Cross, indicating the number of shares that have matched in the VWAP Cross. Subscribers may elect that unmatched order interest remain eligible for that day's subsequent VWAP Cross(es). Subscribers may make such election on an order-by-order basis or may elect that all orders remain eligible for that day's subsequent VWAP Cross(es). Upon receiving a match for a given order, Subscribers will receive an indicative fill priced at the midpoint of the symbol's NBBO. After the close of the primary trading session in the relevant U.S. market, the volume-weighted average price is calculated and Subscribers receive a report indicating the price at which their orders have been executed. ILLC calculates the VWAP price on the basis of the trading that takes place in the security during regular trading hours on the same day that the match occurs, including opening auctions and closing auctions (See Part III, Item 7 above and Part III, Item 11(c) below for additional detail regarding VWAP Calculation). Subscribers may indicate either a Buy Cash Constraint or a Sell Cash Constraint associated with an order or group of orders entered into a VWAP Cross, based on the midpoint of the prior day's closing price. (See also part III, Item 7) Last Hour VWAP Cross: The Last Hour VWAP Cross consists of a single crossing session that occurs at or near 3:00 p.m., Eastern Time (the "Last Hour VWAP Start Time"). Subscribers may indicate either a Buy Cash Constraint or a Sell Cash Constraint associated with an order or group of orders entered into a Last Hour VWAP Cross, based on the midpoint of the NBBO at the Last Hour VWAP Start Time. Orders entered into the Last Hour VWAP Cross are matched on a pro rata basis. Subscribers may elect to receive a preliminary execution report after the Last Hour VWAP Cross, indicating the number of shares that have executed in the match. ILLC calculates the execution price based on the trading that takes place in the security from the Last Hour VWAP Start Time to the market close as per regular trading hours, including any closing auctions. Subscribers receive a report after the market close indicating the price at which their orders have been executed. ILLC calculates the VWAP price on the basis of the trading that takes place in the security during regular trading hours on the same day that the match occurs, including opening auctions and closing auctions (See Part III, Item 7 above and Part III, Item 11(c) below for additional detail regarding VWAP Calculation). MOC Crosses: The MOC Crosses consist of three different crossing sessions: a cross for each security where the primary listing exchange is the NASDAQ Stock Market ("NASDAQ Cross"), a cross for all securities where the primary listing exchange is the NYSE Arca ("Arca Cross"), and a cross for securities where the primary listing exchange is the New York Stock Exchange ("NYSE Cross"). The NASDAQ Cross occurs at or near 3:53:00 p.m. (at or near 12:53:00 p.m. for trading days when the market close is scheduled for 1 p.m.). The Arca Cross occurs at or near 3:48:00 p.m. (at or near 12:48:00 p.m. for trading days when the market close is scheduled for 1 p.m.). The NYSE Cross occurs at or near 3:43:00 p.m. (at or near 12:43:00 p.m. for trading days when the market close is scheduled for 1 p.m.). Order imbalance information is not disseminated. The MOC Crosses do not accept Sell Short orders. Orders entered into the MOC Crosses are matched on a pro rata basis. Unmatched interest will either be cancelled back to the Subscriber or SOR, as applicable. Subscribers may elect to receive preliminary execution reports indicating the number of shares that have matched on a security-by-security basis or for all orders submitted to the MOC Cross. The execution price of all orders matched in a MOC Cross is the security's closing auction price on the security's primary listing exchange or, where a closing auction doesn't occur, the last closing price disseminated by the primary listing exchange, if any. Generally, if a security is subject to a trading halt or other suspension the Instinet Crossing Services will continue to accept orders for a given crossing session until the crossing session's designated start time. Stoppages that occur after a preliminary match (i.e., after a cross has occurred), but prior to close of trading, do not impact any preliminary matches (that is, preliminary matches will not be cancelled). VWAP Crosses: If a security is halted at the scheduled crossing time of a VWAP Cross, no cross will occur and open orders will either be cancelled back or remain eligible for that day's subsequent VWAP Cross(es), depending on Subscriber instruction. Last Hour VWAP Cross: If a security is halted at the scheduled Last Hour VWAP Start Time (e.g., 3:00 pm ET), the security's Last Hour VWAP Start Time will be postponed up until 4:00 pm ET. In the event a security remains halted at 4:00 pm ET no Last Hour VWAP Cross for that security will occur. MOC Crosses: Subscribers may submit orders for the MOC Crosses at any time between 7:30 a.m. and the relevant crossing session's crossing time. If the primary listing exchange does not effect a closing cross for a security due to a trading halt or other stoppage in that security, the MOC Cross for that security will be cancelled unless the primary listing exchange disseminates a last closing price, in which case the execution price for that security will be the disseminated last closing price. Y ORDER INTERACTION: The Instinet Crossing Services are all point-in-time crosses that match orders based on the pricing and priority rules outlined in Part III, Items 7(a) and 11(a). Orders entered into the VWAP Crosses are matched on a pro rata basis. The MOC Cross system will first attempt to match orders entered by the same Subscriber into a MOC Cross (i.e. Subscriber priority), with any open order being matched on a pro rata size basis against any other Subscriber with an open order in the MOC Cross. For the VWAP Crosses, upon receiving a match for a given order, Subscribers will receive an indicative fill priced at the midpoint of the symbol's NBBO. After the close of the primary trading session in the relevant U.S. market, ILLC calculates the volume-weighted average price and Subscribers receive a report indicating the price at which their orders have been executed (See discussion in this same Item entitled VWAP Calculation below). The execution price of all orders matched in a MOC Cross is the security's closing auction price on the security's primary listing exchange or, where a closing auction doesn't occur, the last closing price disseminated by the primary listing exchange. The Instinet Crossing Services do not permit the execution of orders when the NBBO is locked or crossed. PRICE IMPROVEMENT/PROTECTION: There is no mechanism for price improvement or price protection for orders executed in the Instinet Crossing Services. VWAP CALCULATION: ILLC calculates the execution prices of VWAP Cross (all intraday VWAP Crosses and the Last Hour VWAP Cross) transactions by using price, quantity, and sale condition data from trades disseminated by the SIP (i.e., the Consolidated Tape System ("CTS") for Tape A and B securities and the Unlisted Trading Privileges ("UTP") Plan for Tape C securities). Sale condition data is used to determine whether a transaction is eligible or ineligible for inclusion in Instinet's VWAP price calculations. Price and quantity information are used to calculate the ultimate VWAP Cross execution prices. SIP trades with the following sale conditions are excluded: Average Price Trade; Cash Trade (same day settlement); Market Center Official Close; Next Day Trade (next day settlement); Market Center Official Open; Seller's Option (irregular settlement); Extended Hours Trade; Extended Hours Sold (out of sequence); Contingent Trade; Derivatively Priced; Qualified Contingent Trade; and Corrected Consolidated Close Price as per Listing Market (collectively "Sale Conditions"). Odd lot trades are eligible for inclusion in ILLC's VWAP price calculations absent one of the above listed Sale Conditions. For each security receiving an indicative fill in a VWAP Cross, ILLC calculates the VWAP Cross execution price in the following manner: the notional values (price*quantity) of each eligible transaction for a security are added to determine the security's total notional value executed during the trading day ("TNV"). The share quantities of each eligible transaction are added to determine the security's total shares traded ("TST"). The execution price for each security receiving an indicative fill in a VWAP Cross is equal to the security's TNV divided by the security's TST. Trading halts or pauses do not impact the calculation of the VWAP Cross execution prices. SHORT SALES: The Instinet Crossing Services are designed to operate in compliance with the requirements of Reg. SHO when accepting or executing orders. Accordingly, once a circuit breaker has been triggered, the Rule 201 price test restriction will apply to short sale orders in that security for the remainder of the day and the following day, unless an exemption applies. The VWAP Crosses accept orders marked "short exempt" from broker-dealer Subscribers. The MOC Crosses do not accept Sell Short orders EXECUTION ERRORS: For bona fide errors (as defined in FINRA Rule 6191) and other general errors made by ILLC or a client, ILLC handles execution errors occurring within the ATS in accordance with the Firm's internal policies and procedures (the "Error Procedures"). The Error Procedures require that a relevant Principal or delegate be notified of any error occurring within the ATS. For general errors (e.g., technology, administrative) ILLC will determine the best course of action, including cancelling both sides of the erroneous trade, based on internal policy and, on a case-by-case basis, the facts and circumstances of each error. ILLC handles executions at clearly erroneous prices in accordance with the applicable rules of the SRO, including FINRA Rule 11891. Following a determination of erroneous trading by one or more SROs, ILLC will cancel any contemporaneous erroneous trade executed in the ATS. Only broker-dealer Subscribers may submit orders as short-sell exempt. N N N Subscribers to Instinet Crossing may specify whether their orders are eligible to self-cross. For the VWAP Crosses and the Last Hour VWAP Cross, Instinet Crossing, by default, allows orders submitted by the same Subscriber to cross, in which case their orders may either self-cross or cross with others in the pool. Subscribers may also select a preference to self-cross, in which case Instinet Crossing will prioritize orders submitted by the same Subscriber to the VWAP Crosses or the Last Hour VWAP Cross for crossing. For the MOC Crosses, Instinet Crossing, by default, will prioritize orders submitted by the same Subscriber for crossing. Depending on a number of factors, this can lower the cost of execution for the Subscriber. Subscribers may, however, opt-out of this functionality, in which case Instinet Crossing will prevent orders submitted by the same Subscriber to the MOC Crosses from crossing. Y N N N N Y N Instinet charges Subscribers accessing Instinet Crossing directly on a per share basis. Instinet does not charge Instinet Crossing Subscribers access fees (e.g. monthly access fees, hookup fees, port fees, or connection fees). Fees charged for executions within Instinet Crossing are not standardized. A client who is a Subscriber to Instinet Crossing may access the VWAP Crosses and/or the Last Hour VWAP Cross and will pay a per share fee for executions within the stated range regardless of the number of specific crosses utilized. For Direct Subscriber order flow to the VWAP Crosses, Subscribers are charged fees in the range of $0.00015 - $0.0050 per share. The fee associated with the VWAP Crosses may vary within the ranges above based on the Direct Subscriber's trading volume or the level of service required by each client, and whether the Subscriber has elected to utilize the self-crossing feature of the VWAP Crosses (the fees associated with a self-cross are individually negotiated and may vary based on the client's clearing type and is offered as a lower cost option to other market centers). For Direct Subscriber order flow to the MOC Cross, Subscribers are charged a commission in the range of $0.0001 - $0.0010 per share. The fee associated with the MOC Cross may vary within the ranges above based on the Direct Subscriber's trading volume, Subscriber clearing type, and the level of service required by each client. Each client's category (broker-dealer or institutional) is not considered in each such clients commission rates. Fees charged for Indirect Subscriber order flow (orders and trading interest routed by an Instinet Trading Product or by submitting their order flow to an Instinet Trading Desk) are not standardized and are individually negotiated. Instinet generally operates under two pricing models, All-In and Cost Plus. Clients utilizing the All-In pricing model pay an agreed upon per-share commission regardless of destination. Under this pricing model, the cost of execution is included in the client's negotiated commission rate ($0.0020 - $0.0050 per share per share). Clients utilizing the Cost Plus model would pay the cost of execution plus commission (e.g. client would pay $0.0020 - $0.0050 per share for executions in Instinet Crossing plus that client's individually negotiated commission). The variables that impact pricing include the expected trading volume of the client and the level of service required by each client, including, but not limited to, Subscriber clearing type, whether a client will utilize ILLC execution services, research services, analytics tools, Instinet Experts, or OMS/EMS systems. Additionally, the level of custom modifications to each product requested by the client may impact pricing. Each client's category (broker-dealer or institutional) is not considered in each such clients commission rates. ILLC does not offer rebates or discounted fees for trading in Instinet Crossing. Instinet Crossing may suspend matching for technology, compliance, or risk related reasons. Matching can be paused where new orders will continue to be accepted and prioritized as they would during normal trading yet without any matching taking place. Instinet Crossing also has the ability to reject all new orders should situations dictate. Generally, if a security is subject to a trading halt or other suspension the Instinet Crossing Services will continue to accept orders for a given crossing session until the crossing session's designated start time. Stoppages that occur after a preliminary match (i.e., after a cross has occurred), but prior to close of trading, do not impact any preliminary matches (that is, preliminary matches will not be cancelled). VWAP Crosses: If a security is halted at the scheduled crossing time of a VWAP Cross, no cross will occur and open orders will be cancelled back or remain eligible for that day's subsequent VWAP Cross(es), depending on subscriber instruction. Last Hour VWAP Cross: If a security is halted at the scheduled Last Hour VWAP Start Time (e.g., 3:00 pm ET), the security's Last Hour VWAP Start Time will be postponed up until 4:00 pm ET. In the event a security remains halted at 4:00 pm ET no Last Hour VWAP Cross for that security will occur. Trading halts or pauses do not impact the calculation of the VWAP Cross execution prices. MOC Crosses: Subscribers may submit orders for the MOC Crosses at any time between 7:30 a.m. and the relevant crossing session's crossing time. If the primary listing exchange does not effect a closing cross for a security due to a trading halt or other stoppage in that security, the MOC Cross for that security will be cancelled unless the primary listing exchange disseminates a last closing price, in which case the execution price for that security will be the disseminated last closing price. ILLC trading desk personnel provide clients notice of a suspension or stoppage in trading on an as needed basis. Clients may request that notice of a suspension or stoppage of trading be provided. Instinet Crossing may suspend trading for individual NMS stocks with a symbology update. The ATS Principal monitors whether, during at least four of the last six months, it had with respect to NMS stocks (i) 5% or more in any single NMS stock, and 0.25% or more in all NMS stocks, of the average daily dollar volume reported by an effective transaction reporting plan, or (ii) 1% or more, in all NMS stocks, of the average daily dollar volume reported. If the ATS had 0.25% or more of the average daily dollar volume reported by an effective transaction reporting plan in all NMS stocks, and an individual security has breached the 5% or more in any single NMS stock in three out of six months, the symbol will be set to "route only" mode. The "route only" mode will prevent the Instinet Trading products from routing the symbol to the ATS. Orders in such a symbol routed to the ATS directly via FIX or via third-party algorithms, smart routers, or otherwise will be rejected. When the 1% threshold for all NMS stocks is breached for the first, second, and third time in a six month span, ILLC may take a range of action, in its sole discretion. Clients may request that ILLC provide notice of a suspension or stoppage of trading. Those clients who have requested such notice will be notified as soon as practicable. Clients who have not requested notice of a suspension or stoppage of trading may be provided notice on an as needed basis. ILLC reports equities transactions executed in Instinet Crossing to the FINRA/NASDAQ Trade Reporting Facility (TRF) located in Carteret. Y ILLC is a self-clearing broker and a member of the National Securities Clearing Corporation ("NSCC") and the Depository Trust Company ("DTC"). ILLC becomes a counterparty to each side of any transaction executed on the ATS. ILLC does not custody funds or securities for Subscribers and settles all transactions effected on the ATS with the Subscriber or the Subscriber's custodian, prime broker or other settlement agent, in accordance with settlement instructions provided by the Subscriber to ILLC. For Subscribers settling via the facilities of the NSCC, ILLC submits each transaction to the NSCC for clearance (either for trade matching with the NSCC member contra or on a locked-in basis, such as through a Qualified Special Representative arrangement), with the legal obligation for settlement of the transaction transferring from ILLC to NSCC once NSCC has novated the submitted transaction and final settlement through the facilities of the DTC. For Subscribers settling via the facilities of the DTC, ILLC submits transaction information to OMGEO or DTC for affirmation prior to final settlement via the facilities of the DTC. ILLC utilizes certain Broadridge Financial Solutions, Inc. systems and services for the purposes of recordkeeping, clearance and trade settlement processing. ILLC will designate a small portion of transactions executed for settlement on the Paxos Settlement Service ("PSS"), a platform operated by Paxos Trust Company, LLC ("Paxos"), a New York State limited purpose trust company and DTC participant. Paxos received a no-action letter from staff at the SEC's Division of Trading and Markets (the "No-Action Letter") indicating that the staff would not pursue a referral to the enforcement division against Paxos under Section 17A(b)(1) of the Securities Exchange Act of 1934 if Paxos fails to register with the Commission as a clearing agency in connection with its operation of the PSS. Paxos uses a proprietary blockchain-based cryptographic ledger that records changes in ownership of securities and cash resulting from settlement of securities transactions between participants on the platform. The PSS facilitates settlement on a simultaneous DvP basis, and therefore, at the time an executed trade is submitted to the PSS, the counterparties must be existing PSS participants who have designated Paxos as the settlement location for that trade. In the initial phase, ILLC will settle a limited number of symbols against a small number of (up to six (6)) broker-dealer Subscribers who are also Paxos participants. As Paxos onboards additional participants to the PSS, ILLC will work with Paxos and the PSS participants who are also broker-dealer Subscribers to confirm the selection of securities which have been deemed eligible for inclusion in the pilot phase in accordance with the No-Action Letter (each, an "Active Security"), and the date that ILLC will begin routing executions in those symbols to Paxos for settlement. ILLC will systematically identify the executions involving (i) a Subscriber who is a PSS participant and (ii) an Active Security, and submit such executions to Paxos for settlement in accordance with the operating procedures of the PSS. This will not affect standard settlement procedures for Subscribers who are not PSS participants. ILLC is under no obligation to submit trades to the PSS for settlement and may, in its sole discretion, elect to cease the submission of trades of an Active Security or of a specific PSS participant to the PSS at any time and for any reason. In the event of such an election by ILLC, trades of the relevant security will clear and settle in accordance with the Subscriber's default settlement instructions. ILLC will provide notice to any impacted Subscriber, but may, where necessary, elect to cease submission to the PSS prior to notifying the Subscriber of the change. As stated above, ILLC is a counterparty to all transactions on the ATS by acting as agent and executing broker for Subscribers on both the buy and sell sides of a transaction. When a Subscriber that is a PSS participant receives an execution in the ATS on one of the selected symbols, that Subscriber's side of the trade will be submitted to Paxos for settlement. The contra side of that execution (if not also a PSS participant) will be handled in accordance with ILLC's ordinary settlement procedures. At predetermined intervals on each trading day, Paxos will monitor the volume of executions routed to PSS for settlement to ensure compliance with the volume limits set forth in the operating procedures of the PSS and the No-Action Letter. Paxos will utilize the following limits as daily targets for the share volume submitted to the PSS (the "Volume Limits"): (1) less than 100,000 shares per security, per counterparty pair; and (2) aggregate shares per security across all counterparty pairs of less than 1% of the total average daily trading volume of the respective security. At each interval, Paxos will determine whether the Volume Limits have been reached and assess the risk of each Volume Limit being exceeded before the market close. In the event Paxos determines that an Active Security has met, or is at risk of exceeding, the Volume Limits, Paxos may, in its sole discretion, elect to stop the submission of trades in an Active Security. Following such an election, the relevant security will be ineligible for settlement on the PSS for three (3) business days, during which Paxos will determine, based on the relevant security's trading behavior, if the security can be reinstated for settlement on the PSS. Paxos will promptly notify ILLC in the event that ILLC needs to stop the submission of trades of an Active Security intraday. Paxos will also notify ILLC in the event that a Paxos participant is no longer a PSS participant. As a result of any such notification from Paxos, ILLC personnel will remove the relevant security and/or PSS participant from the ATS component responsible for the systematic identification of executions for submission to Paxos. Following such removal, ILLC personnel will notify Paxos of its completion. Executions involving a security or Subscriber which Paxos has removed from PSS eligibility will clear and settle in accordance with the Subscriber's default settlement instructions until such time as Paxos notifies ILLC that the relevant security and/or PSS participant may resume submission to the PSS. The relationship between Paxos and ILLC described above does not impact the application of ILLC's rules and procedures discussed elsewhere on this Form ATS-N. As stated above, certain transactions where the Subscriber is a Paxos participant will be settled via the PSS. Instinet Crossing is Non Real Time, and uses end of day reference data to price trades from the Securities Information Processor feed (SIP). The SIP data feeds are combined by an ILLC market data consolidator that sits outside of the ATS and calculates a consolidated NBBO based on the SIP. ILLC computes the VWAP values based on trades received from the SIP feeds (Tape A, B & C) and determines their VWAP-eligibility based on the trade condition codes provided by the SIP. VWAP CALCULATION: ILLC calculates the execution prices of VWAP Cross (all intraday VWAP Crosses and the Last Hour VWAP Cross) transactions by using price, quantity, and sale condition data from trades disseminated by the SIP (i.e., the Consolidated Tape System ("CTS") for Tape A and B securities and the Unlisted Trading Privileges ("UTP") Plan for Tape C securities). Sale condition data is used to determine whether a transaction is eligible or ineligible for inclusion in Instinet's VWAP price calculations. Price and quantity information are used to calculate the ultimate VWAP Cross execution prices. SIP trades with the following sale conditions are excluded: Average Price Trade; Cash Trade (same day settlement); Market Center Official Close; Next Day Trade (next day settlement); Market Center Official Open; Seller's Option (irregular settlement); Extended Hours Trade; Extended Hours Sold (out of sequence); Contingent Trade; Derivatively Priced; Qualified Contingent Trade; and Corrected Consolidated Close Price as per Listing Market (collectively "Sale Conditions"). Odd lot trades are eligible for inclusion in ILLC's VWAP price calculations absent one of the above listed Sale Conditions. For each security receiving an indicative fill in a VWAP Cross, ILLC calculates the VWAP Cross execution price in the following manner: the notional values (price*quantity) of each eligible transaction for a security are added to determine the security's total notional value executed during the trading day ("TNV"). The share quantities of each eligible transaction are added to determine the security's total shares traded ("TST"). The execution price for each security receiving an indicative fill in a VWAP Cross is equal to the security's TNV divided by the security's TST. Trading halts or pauses do not impact the calculation of the VWAP Cross execution prices. The ATS is designed to operate in compliance with all applicable rules and regulations (e.g., Reg NMS, Reg SHO, etc.). The ATS can also use market data from the SIP to interpret any condition disseminated by the marketplace (e.g. Limit Up/Limit Down bands). Y N N true true