[Federal Register Volume 83, Number 249 (Monday, December 31, 2018)]
[Notices]
[Pages 67792-67794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28390]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84934; File No. SR-GEMX-2018-43]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend General 8

December 21, 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 December 19, 2018, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III, 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 delete the Exchange's existing rules on 
colocation, connectivity, and direct connectivity (the ``Existing 
Connectivity Rules''), under General 8, and incorporate by reference 
into General 8 The Nasdaq Stock Market LLC's (``Nasdaq's'') rules on 
colocation, connectivity, and direct connectivity, which are located in 
General 8 of the Nasdaq rulebook shell structure.\3\
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    \3\ Recently, the six exchanges affiliated with Nasdaq, Inc. 
(The Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, 
Nasdaq ISE, LLC, Nasdaq GEMX, LLC, and Nasdaq MRX, LLC 
(collectively, the ``Affiliated Exchanges'')) added shell structures 
to their respective rulebooks with the purpose of improving 
efficiency and readability and to align their respective rules.
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    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 delete its Existing Connectivity Rules, 
currently under General 8, and incorporate by reference the 
corresponding Nasdaq rules, at General 8 of Nasdaq's rulebook. The 
Exchange proposes to remove the current rule text from General 8 and 
replace it with the following text:

General 8 Connectivity

    The rules contained in The Nasdaq Stock Market LLC General 8, as 
such rules may be in effect from time to time (the ``General 8 
Rules''), are hereby incorporated by reference into this Nasdaq GEMX 
General 8, and are thus Nasdaq GEMX Rules and thereby applicable to 
Nasdaq GEMX Members. Nasdaq GEMX Members shall comply with the 
General 8 Rules as though such rules were fully set forth herein. 
All defined terms, including any variations thereof, contained in 
the General 8 Rules shall be read to refer to the Nasdaq GEMX 
related meaning of such term. Solely by way of example, and not in 
limitation or in exhaustion: the defined term

[[Page 67793]]

``Exchange'' in the General 8 Rules shall be read to refer to the 
Nasdaq GEMX Exchange; the defined term ``Rule'' in the General 8 
Rules shall be read to refer to the Nasdaq GEMX Rule.\4\
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    \4\ The Exchange shall include a hyperlink to Nasdaq's General 8 
for ease of reference.

    Over the past year, the Affiliated Exchanges each took steps to 
harmonize their respective rules on colocation, connectivity, and 
direct connectivity, first by relocating them to General 8 of their 
respective rulebooks, and then by eliminating substantive differences 
among the rules. The Affiliated Exchanges harmonized these rules 
because the Affiliated Exchanges offer colocation, connectivity, and 
direct connectivity services and related products to their customers on 
a shared basis with one another,\5\ and to do so, the rules and fees 
governing such shared products and services should be the same for all 
of the Affiliated Exchanges.
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    \5\ The offering of products and services on a shared basis 
means that a customer purchases colocation, connectivity, and direct 
connectivity products and services once to gain access to any or all 
of the Affiliated Exchanges to which the customer is otherwise 
entitled to receive access under the respective rules of the 
Affiliated Exchanges. In other words, the Affiliated Exchanges only 
charge customers once for these shared products and services, even 
to the extent that a customer uses the products and services to 
connect to more than one of the Affiliated Exchanges. Likewise, the 
rules provide for connectivity to third-party services and market 
data feeds on a shared basis, meaning that a firm need only purchase 
a subscription to these services once, regardless of whether the 
firm is a member or member organization, as applicable, of multiple 
Affiliated Exchanges.
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    Because the text of the Exchange's General 8 is already 
substantively identical \6\ to Nasdaq's General 8, the proposal will 
not effect any substantive changes to the Exchange's General 8. 
Instead, the proposal will merely adopt language indicating that the 
Exchange is incorporating by reference Nasdaq's General 8 and it will 
make conforming cross-reference changes.
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    \6\ A small number of minor differences exist among the Section 
8s of the Affiliated Exchanges. However, these differences, such as 
the use of the word ``the'' before the phrase ``Nasdaq Data Center'' 
in one version of the Rulebook and not in the others, are technical 
and do result in substantive variations in the meanings of the 
Rulebooks.
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    This proposal is the penultimate step in the harmonization process. 
The Exchange plans to file with the Commission a request to exempt it 
from Section 19(b) of the Act with respect to General 8, as amended 
herein, so that the Exchange will not need to file a proposed rule 
change whenever Nasdaq amends its General 8 rules. The Exchange 
proposes that this rule change become operative at such time as it 
receives approval for this exemption from the Commission, pursuant to 
its authority under Section 36 of the Act \7\ and Rule 0-12 
thereunder.\8\
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    \7\ 15 U.S.C. 78mm.
    \8\ See 17 CFR 240.0-12; Exchange Act Release No. 39624 
(February 5, 1998), 63 FR 8101 (February 18, 1998).
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    The Exchange's General 8 and Nasdaq's General 8 are regulatory in 
nature.\9\ Should any rules which impact trading behavior be added to 
Nasdaq General 8 in the future, those rules shall not become subject to 
the incorporation by reference and shall be placed elsewhere within the 
Exchange's Rulebook. The Exchange notes that as a condition of any 
exemption approved by the Commission, the Exchange agrees to provide 
written notice to its members whenever Nasdaq proposes a change to its 
General 8 Rules.\10\ Such notice will alert Exchange members to the 
proposed Nasdaq rule change and give them an opportunity to comment on 
the proposal. The Exchange will similarly inform its members in writing 
when the Commission approves any such proposed change.
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    \9\ The General 8 Rules are categories of rules that are not 
trading rules. See 17 CFR 200.30-3(a)(76) (contemplating such 
requests). In addition, several other SROs incorporate by reference 
certain regulatory rules of another SRO and have received from the 
Commission similar exemptions from Section 19(b) of the Exchange 
Act. See e.g., Securities Exchange Act Release Nos. 57478 (March 12, 
2008), 73 FR 14521 (March 18, 2008), 53128 (January 13, 2006), 71 FR 
3550 (January 23, 2006); 49260 (February 17, 2004), 69 FR 8500 
(February 24, 2004).
    \10\ The Exchange will provide such notice via a posting on the 
same website location where it posts its own rule filings pursuant 
to Rule 19b-4 within the timeframe require by such Rule. The website 
posting will include a link to the location on the Nasdaq website 
where the applicable proposed rule change is posted.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that harmonizing the Existing Connectivity 
Rules with the colocation, connectivity, and direct connectivity rules 
of Nasdaq will improve efficiency and reduce the burden on firms as 
they only will need to be familiar with a single set of rules going 
forward governing colocation, connectivity, and direct connectivity. 
Because the text of the Existing Connectivity Rules and Nasdaq General 
8 are already the same, the proposed change will have no substantive 
impact on firms that colocate with or connect to the Exchange.

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. The proposed rule change does 
not make any substantive change to Exchange General 8 and will not 
impact competition.

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 \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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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    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 necessary or 
appropriate in the public interest, for the protection of investors, or 
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:


[[Page 67794]]



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-2018-43 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-2018-43. 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-2018-43 and should be submitted on 
or before January 22, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28390 Filed 12-28-18; 8:45 am]
 BILLING CODE 8011-01-P