[Federal Register Volume 83, Number 111 (Friday, June 8, 2018)]
[Notices]
[Pages 26728-26731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12317]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83365; File No. SR-GEMX-2018-17]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Memorialize 
Order and Execution Information Into GEMX Rule 718

June 4, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 23, 2018, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Regulatory Organization's Statement of the Terms of Substance of the 
Proposed Rule Change

    The Exchange proposes to memorialize its order and execution 
information into GEMX Rule 718, entitled ``Data Feeds.''
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqgemx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to add order and execution information into 
GEMX

[[Page 26729]]

Rule 718, entitled ``Data Feeds.'' The Exchange proposes to rename this 
rule ``Data Feeds and Trade Information.'' The Exchange also proposes 
to amend Rule 100 to add definitions.
GEMX Rule 718(a)
    The Exchange proposes to amend the Nasdaq GEMX Top Quote Feed. The 
Exchange stated in that description that this feed calculates and 
disseminates GEMX's best bid and offer position, with aggregated size 
(including total size in aggregate, for Public Customer \3\ size in the 
aggregate and Priority Customer \4\ size in the aggregate), based on 
displayable order and quote interest in the System. The Exchange 
proposes to amend this rule text to instead provide, ``this feed 
calculates and disseminates GEMX's best bid and offer position, with 
aggregated size (including total size in aggregate, for Professional 
Order \5\ size in the aggregate and Priority Customer Order size in the 
aggregate), based on displayable order and quote interest in the 
System.'' The Exchange intended to specify that Professional Orders and 
Priority Customer Orders are segregated and aggregated. The Public 
Customer definition is too broad because it includes a portion of 
Priority Customer, which was already specified within the description. 
The Exchange proposes to remove Public Customer and replace it with 
Professional Order to be more specific and amend Priority Customer to 
Priority Customer Order to reference the types of orders that are 
aggregated to conform the rule text.
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    \3\ The term ``Public Customer'' means a person or entity that 
is not a broker or dealer in securities. See Rule 100(a)(44).
    \4\ 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). See 100(a)(41A). 
The term ``Priority Customer Order'' means an order for the account 
of a Priority Customer. See Rule 100(a)(43A).
    \5\ The term ``Professional Order'' means an order that is for 
the account of a person or entity that is not a Priority Customer. 
See Rule 100(a)(43C).
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GEMX Rule 718(b)
    The Exchange proposes to add its order and execution information 
into GEMX Rule 718, entitled ``Data Feeds.'' The Exchange proposes to 
rename this rule ``Data Feeds and Trade Information.'' The Exchange 
also proposes to amend Rule 100 to add definitions.
    The Exchange proposes to adopt a new GEMX Rule 718(b) and 
memorialize the following order and execution information which was 
discussed in other rule filings by the Exchange: (i) Clearing Trade 
Information or ``CTI''; and (ii) FIX DROP.\6\ The Exchange is also 
adding a description for TradeInfo. The TradeInfo user interface is 
being offered today on GEMX at no cost.
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    \6\ See Securities Exchange Act Release No. 81136 (July 13, 
2017), 82 FR 33168 (July 19, 2017) (SR-GEMX-2017-29) (``Prior 
Filing'').
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    The Exchange notes that while CTI and FIX Drop information are 
accessible through a port, TradeInfo is an interface. The Exchange 
notes this distinction to make clear the manner of delivery for each of 
these information types.
CTI
    The Exchange stated in its Prior Filing that ``CTI is a real-time 
clearing trade message that is sent to a Member after an execution has 
occurred and contains trade details. The message containing the trade 
details is also simultaneously sent to The Options Clearing 
Corporation. The information includes, among other things, the 
following: (i) The Clearing Member Trade Agreement or ``CMTA'' or The 
Options Clearing Corporation or ``OCC'' number; (ii) Exchange badge or 
house number; (iii) the Exchange internal firm identifier; and (iv) an 
indicator which will distinguish electronic and non-electronically 
delivered orders; (v) liquidity indicators and transaction type for 
billing purposes; (vi) capacity.'' \7\
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    \7\ Id.
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    The Exchange is proposing to amend the CTI description and 
memorialize it within GEMX Rule 718(b)(1). The Exchange proposes to 
eliminate the sentence which states, ``The message containing the trade 
details is also simultaneously sent to The Options Clearing 
Corporation.'' The Exchange's System sends clearing information to OCC 
for each transaction. This sentence does not add information that is 
useful or relevant and therefore the Exchange proposes to remove it. 
The Exchange also proposes to delete the words ``an indicator which 
will distinguish electronic and non-electronically delivered orders.'' 
The only method on GEMX to deliver an order is electronically.
    The Exchange is also adopting definitions for ``account number,'' 
\8\ ``badge,'' \9\ and ``mnemonic'' \10\ to be utilized within the CTI 
definition and uniformly throughout the Rulebook. The Exchange proposes 
to renumber Rule 100 to accommodate the new definitions. The Exchange 
is reserving 2 numbers for future use of other definitions. The 
Exchange proposes to replace the phrase in Rule 718(b)(1) subsection 
(ii) from previously filed Exchange badge or house number to proposed 
definitions for badge or mnemonic. The Exchange proposes to replace the 
phrase in Rule 718(b)(1) subsection (iii) from Exchange internal firm 
identifier to proposed definition for account number. The Exchange 
proposes to expand on Rule 718(b)(1) subsection (iv) by replacing the 
phrase ``an indicator which will distinguish electronic and non-
electronically delivered orders'' with ``information which identifies 
the transaction type (e.g. auction type) for billing purposes.'' 
Finally, the Exchange Further, the Exchange is adding an ``and'' before 
``(v) capacity'' and changing the wording to ``market participant 
capacity.'' The Exchange has renumbered the CTI sections to account for 
the language that was removed from the description. Finally, the 
Exchange is adding an ``and'' before Rule 718(b)(1) subsection (v) 
``capacity'' and changing the wording to ``market participant 
capacity.'' The Exchange is expressing more specifically the type of 
data contained in CTI.
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    \8\ An ``account number'' shall mean a number assigned to a 
Member. Members may have more than one account number. See proposed 
Rule 100(a)(1).
    \9\ A ``badge'' shall mean an account number with a letter 
suffix assigned to Market Makers. A Market Maker account may be 
associated with multiple badges. See proposed Rule 100(a)(5).
    \10\ 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. See 
proposed Rule 100(a)(34).
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FIX DROP
    The Exchange stated in its Prior Filing that ``FIX DROP provides 
real-time order and execution update is a message that is sent to a 
Member after an order been received/modified or an execution has 
occurred and contains trade details. The information includes, among 
other things, the following: (1) Executions; (2) cancellations; (3) 
modifications to an existing order; and (4) busts or post-trade 
corrections.'' \11\
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    \11\ Id.
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    The Exchange proposes to memorialize FIX DROP within GEMX Rule 
718(b)(3). The Exchange notes that at the end of the first sentence of 
the description it is adding ``specific to that Member'' to make clear 
that FIX DROP only provides a Member its specific trade information. 
Also, an ``and'' is included before new (iv) as the numbers have been 
changed to roman numerals.
TradeInfo
    The Exchange proposes to establish its TradeInfo offering at GEMX 
Rule 718(b)(2). TradeInfo, a user interface, permits a Member to: (i) 
Search all orders submitted in a particular security

[[Page 26730]]

or all orders of a particular type, regardless of their status (open, 
canceled, executed, etc.); (ii) view orders and executions; and (iii) 
download orders and executions for recordkeeping purposes. TradeInfo 
users may also cancel open orders at the order, port or firm mnemonic 
level through TradeInfo. TradeInfo is offered today to Members on GEMX 
at no cost.
    The Exchange considers it appropriate to establish and memorialize 
the order and execution information available on GEMX within a rule so 
that Members may understand the trade information which is available on 
the Exchange as it pertains to a firm's trading information. This data 
is available to all Members and is specific to a Member's transactions 
on GEMX.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism for a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest, by providing greater transparency as to the order and 
execution information offered on GEMX. Each proposal is described in 
more detail below.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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GEMX Rule 718(a)
    The Exchange's proposal to amend the Nasdaq GEMX Top Quote Feed to 
specify that Professional Orders and Priority Customer Orders are 
segregated and aggregated is consistent with the protection of 
investors and the public interest because the Exchange is correcting 
the categories of orders, which are segregated and aggregated. The 
Public Customer definition is too broad because it includes a portion 
of Priority Customer, which was already specified within the 
description. The Exchange proposes to remove Public Customer and 
replace it with Professional Order to be more specific and amend 
Priority Customer to Priority Customer Order to reference the types of 
orders that are aggregated to conform the rule text. The Exchange 
believes that this amendment will bring more transparency to the 
information within the feed.
GEMX Rule 718(b)
    The Exchange believes that memorializing CTI and FIX DROP within a 
rule will provide Members with transparency as to the order and 
information offerings available on GEMX specific to their trading on 
GEMX. The Exchange's proposal to establish TradeInfo is consistent with 
the Act because the Exchange is detailing the contents of this offering 
as well as providing transparency as to the availability of TradeInfo. 
The Exchange believes that offering Members TradeInfo, which allows 
Members to view executions as well as other capabilities with respect 
to order management, enhances the ability of a Member to manage its 
orders. The Exchange believes that providing Members with tools to 
manage orders is consistent with the Act and serves to protect 
investors and the public interest. Further, the Exchange believes that 
this proposal is consistent with the Act because TradeInfo provides 
information regarding information available to market participants, 
specifically with respect to trades they execute on GEMX. The 
information is available to all Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intra-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange's 
proposal does not impose an undue burden on competition, rather the 
Exchange is seeking to provide greater transparency within its rules 
with respect to the Nasdaq GEMX Top Quote Feed as well as order and 
execution information offered on GEMX. The information is available to 
all Members. Specifically, TradeInfo is available to any Member that 
requests this service. The TradeInfo product will provide a Member 
information regarding that Member's executions.
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    \14\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become effective and operative immediately upon filing. 
The Exchange states that waiver of the operative delay will allow the 
Exchange to correct the Nasdaq GEMX Top Quote Feed and update its rules 
immediately regarding order and execution information offered on GEMX. 
The Exchange further states that it believes the waiver will further 
the protection of investors and the public interest because it will 
provide greater transparency as to the Nasdaq GEMX Top Quote Feed as 
well as trade detail available to market participants. Further, the 
Exchange states that memorializing TradeInfo will provide Members with 
greater information concerning a Member's executions on GEMX and make 
its availability transparent. The Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposed rule 
change as operative upon filing.\19\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such

[[Page 26731]]

action is: (i) Necessary or appropriate in the public interest; (ii) 
for the protection of investors; or (iii) otherwise in furtherance of 
the purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-GEMX-2018-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-GEMX-2018-17. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-GEMX-2018-17 and should be submitted on 
or before June 29, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12317 Filed 6-7-18; 8:45 am]
 BILLING CODE 8011-01-P