The ArcaBook is divided into three processes:

• Display Order Process
• Working Order Process
• Smart Order Routing Process

1. Display Order Process — Market orders or marketable limit orders are instantly matched with the book orders that represent the best price in the market. Non-marketable limit orders are posted to the book. Limit orders have the highest priority in the book, followed by working orders, then tracking orders.
2. Working Order Process — Working orders that cannot be matched against the ArcaBook are then eligible for matching with non-displayed NYSE Arca interest — such as the non-displayed portions of reserve orders and discretionary orders.
3. Smart Order Routing — If the best price isn’t available on NYSE Arca, the order can be automatically routed to another market center using our smart order routing algorithm.

The ArcaBook operates on an open basis. Orders at all price levels in the Display Order Process of the ArcaBook will be displayed to all users on an anonymous basis unless they are designated as attributed quotes. In addition, the same information will be made available to other interested parties. The best-ranked displayed order(s) to buy and sell in the ArcaBook and the corresponding aggregate size of such orders associated with such prices will be collected and made available to quotation vendors.

Short Sale Processing
On a Listed Short Sales if the order is marketable and would not create a downtick the order is executed at the bid. If the order is marketable and would create a downtick, then the sell short order is displayed at the closest price that would not create a downtick and awaits an incoming bid at that price. As the consolidated last sale is updated with new executions, the system continuously recalculates the short sale opportunity and re-prices the short sale as needed.

Orders in NASDAQ stocks are not subject to the bid test as long as the order is matched in the ArcaBook. Short sales that are routed outside the ArcaBook will be subject to the short sale rules of the away market. Limit orders will be matched internally down to the limit price of the order and potentially outside the National Best Bid (NBB) if routing the order to an away market would not satisfy the away market short sale rule. In a down bid market when the NBB quote is from an away market with a bid test, market orders will be posted to the ArcaBook at the NBB until they are eligible to trade at the NBB or better.

S: Symbols that are dually listed on NASDAQ and NYSE Arca will not be subject to the bid test when executing short sales. These stocks will be processed subject to the short sale rules for OTC stocks and therefore are not subject to the bid test as long as the order is matched in the ArcaBook. Click here to see the list of dually listed stocks.