[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28699-28701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13170]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83445; File No. SR-GEMX-2018-20]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Increase Certain
Route-Out Fees Set Forth in Section II.A of the Schedule of Fees
June 14, 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 June 1, 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. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to increase certain route-out fees set forth
in Section II.A of the Schedule of Fees.
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 purpose of the proposed rule change is to increase certain
route-out fees set forth in Section II.A of the Schedule of Fees.
Today, the Exchange charges Non-Priority Customers (i.e., Market
Maker,\3\ Non-Nasdaq GEMX Market Maker,\4\ Firm Proprietary \5\/Broker-
Dealer,\6\ and Professional Customer \7\) route-out fees of $0.95 per
contract for orders in Non-Penny Symbols that are routed to away
exchanges in connection with the Options Order Protection and Locked/
Crossed Market Plan (the ``Plan''). The Exchange now proposes to
increase this fee to $1.09 per contract for all Non-Priority Customer
orders in Non-Penny Symbols that are routed to away
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exchanges in connection with the Plan. The Exchange believes that the
proposed increase will help offset the costs associated with routing
orders through the Plan, such as paying the transaction fees for such
executions at other exchanges.
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\3\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Rule
100(a)(30).
\4\ A ``Non-Nasdaq GEMX Market Maker'' is a market maker as
defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended, registered in the same options class on another options
exchange.
\5\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\6\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
\7\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\9\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among members and issuers and other persons using any facility,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that proposed increase in the Non-Priority
Customer route-out fees from $0.95 to $1.09 per contract for orders in
Non-Penny Symbols is reasonable because it is designed to help recoup
costs associated with routing orders to away exchanges in connection
with the Plan, such as paying the transaction fees for such executions
at other exchanges. Furthermore, the Exchange notes that the proposed
fees remain competitive with the fees of other options exchanges which,
in addition to a fixed routing fee, assess the actual transaction
fees.\10\
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\10\ For example, CBOE C2 Exchange, Inc. (``C2'') charges $1.63
per routed contract for non-public customer, non-C2 market-maker
orders in non-penny classes. See C2 Fees Schedule, Section 1.A
(Transaction Fees) and Section 2 (Linkage Routing).
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The Exchange believes that proposed increase in the Non-Priority
Customer route-out fees is an equitable allocation and is not unfairly
discriminatory because the Exchange will apply the same fee to all
similarly situated members. The Exchange believes it is equitable and
not unfairly discriminatory to increase the route-out fees for all
market participants other than Priority Customers \11\ because the
Exchange seeks to encourage Priority Customer order flow and the
liquidity that such order flow brings to the marketplace, which in turn
benefits all market participants.
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\11\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in Nasdaq GEMX Rule
100(a)(37A).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In particular, the proposed
increase to the route-out fees will apply equally to all Non-Priority
Customer orders that are routed to away exchanges in connection with
the Plan, and will help offset costs associated with routing orders via
the Plan. Furthermore as noted above, the Exchange believes that its
proposed fees remain competitive with another options exchange.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive, or rebate
opportunities available at other venues to be more favorable. In such
an environment, the Exchange must continually adjust its fees to remain
competitive with other exchanges and with alternative trading systems
that have been exempted from compliance with the statutory standards
applicable to exchanges. Because competitors are free to modify their
own fees in response, and because market participants may readily
adjust their order routing practices, the Exchange believes that the
degree to which fee changes in this market may impose any burden on
competition is extremely limited. In sum, if the changes proposed
herein are unattractive to market participants, it is likely that the
Exchange will lose market share as a result. Accordingly, the Exchange
does not believe that the proposed changes will impair the ability of
members or competing order execution venues to maintain their
competitive standing in the financial markets.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\12\ and Rule 19b-4(f)(2) \13\ thereunder.
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 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.
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
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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-2018-20 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-2018-20. 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-2018-20 and
[[Page 28701]]
should be submitted on or before July 11, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13170 Filed 6-19-18; 8:45 am]
BILLING CODE 8011-01-P