[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Notices]
[Pages 72063-72065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28172]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87844; File No. SR-GEMX-2019-18]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Adopt a Mass 
Cancellation Rule and Amend Other Sections of the Rulebook

December 23, 2019.
    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 9, 2019, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``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 amend definitions within General 1, 
Section 1, adopt a new definition for ``Away Best Bid or Offer'' within 
Options 1, Section 1, and update rule citations in various other rules.
    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 adopt a new rule at Options 3, Section 19 
titled ``Mass Cancellation of Trading Interest.'' The Exchange also 
proposes to amend definitions within General 1, Section 1, adopt a new 
definition for ``Away Best Bid or Offer within Options 1, Section 1, 
and update rule citations in various other rules.
Mass Cancellation of Trading Interest
    The Exchange proposes to adopt a new rule at Options 3, Section 19 
titled ``Mass Cancellation of Trading Interest.'' The Nasdaq Options 
Market LLC (``NOM'') and Nasdaq BX, Inc. (``BX'') rules at Chapter VII, 
Section 11 permit Participants on those markets to contact market 
operations and manually request cancellation of interest. The Exchange 
proposes to adopt a rule which also permits Members to contact market 
operations and request the Exchange to manually cancel interest. The 
proposed new rule would state, ``A Member may cancel any bids, offers, 
and orders in any series of options by requesting GEMX Market 
Operations \3\ staff to effect such cancellation as per the 
instructions of the Member.'' This new rule reflects the Exchange's 
current practice of allowing Members to contact GEMX Market Operations 
and request the Exchange to cancel any bid, offer or order in any 
series of options. The Exchange would cancel such bid, offer or order 
pursuant to the Member's instruction. The Exchange desires to 
memorialize the availability of this service.
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    \3\ The request to Market Operations is a manual request which 
is made telephonically.
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Definitions
    The Exchange proposes to make a technical amendment to General 1, 
Section 1(a)(6) to note the acronym for an Electronic Access Member, an 
``EAM'' within the definition. The acronym is utilized throughout the 
Rulebook. Defining the acronym within the definition will add 
transparency to the Rulebook.
    The Exchange proposes to add the definition of an ``Away Best Bid 
or Offer'' or ``ABBO'' within Options 1, Section 1(a)(4). This term is 
utilized throughout the Rulebook. Defining this term will bring greater 
transparency to the Rulebook. The Exchange also proposes to update the 
numbering in the remainder of the rule and also update

[[Page 72064]]

cross-references throughout the Rulebook \4\ as a result of the 
renumbering.
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    \4\ See Options 3, Section 10 and Options 7, Section 1.
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Other Changes
    The Exchange proposes to reserve certain rules \5\ in connection 
with a Rulebook harmonization project which organizes the rules of the 
Nasdaq affiliated markets.
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    \5\ Options 2, Section 3 and Options 3, Section 28 are being 
reserved.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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Mass Cancellation of Trading Interest
    The Exchange's proposal to memorialize the Mass Cancellation of 
Trading Interest rule within Options 3, Section 19 is consistent with 
the Act because permitting Members to contact Market Operations as a 
manual alternative to automated functionality which similarly allows 
Members to cancel interest provides Members experiencing their own 
system issues with a means to manage risk. Today, Members are able to 
cancel interest, in an automated fashion through protocols \8\ and the 
Kill Switch.\9\ This is a voluntary services offered to all Members.
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    \8\ See Options 3 at Supplementary Material .03 to Section 7.
    \9\ See Options 3, Section 17.
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    The Exchange notes that offering this service, which permits 
Members to cancel interest, will not diminish a Market Maker's 
obligation with respect to providing two-sided quotations and this rule 
is not inconsistent with other firm quote obligations of the Market 
Maker. Upon the request of a Member, GEMX Market Operations will 
manually input a mass cancellation message into the System consistent 
with the Member's instruction to cancel trading interest. Once the mass 
cancellation message is entered into the System by GEMX Market 
Operations, the message will be accepted by the System in the order of 
receipt in the queue such that the interest that was already accepted 
into the System will be processed prior to the mass cancellation 
message. In addition, mass cancellation messages entered into the 
System by GEMX Market Operations are handled by the System through the 
same queuing mechanism that a quote or order message is handled by the 
System. The Exchange notes its processing of a mass cancellation 
message inputted by GEMX Market Operations and handled by the System is 
consistent with firm quote and order handling rules.
    As noted above, NOM and BX Rules at Chapter VII, Section 11 allow 
NOM and BX Participants to also contact market operations and request 
cancellations of interest. This new rule reflects the Exchange's 
current practice.
Definitions
    The Exchange's proposal to add the acronym for an Electronic Access 
Member, an ``EAM'' within General 1, Section 1 and add the definition 
of an ``Away Best Bid or Offer'' or ``ABBO'' within Options 1, Section 
1(a)(4) are consistent with the Act because these amendments will add 
transparency to the Rulebook.
Other Changes
    The remainder of the changes to correct numbering and citations are 
non-substantive.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.
Mass Cancellation of Trading Interest
    The Exchange's proposal to memorialize the Mass Cancellation of 
Trading Interest rule within Options 3, Section 19 does not impose an 
undue burden on competition because all Members may utilize this 
service. This new rule reflects the Exchange's current practice.
Definitions
    The Exchange's proposal to add the acronym for an Electronic Access 
Member, an ``EAM'' within General 1, Section 1 and add the definition 
of an ``Away Best Bid or Offer'' or ``ABBO'' within Options 1, Section 
1(a)(4) do not impose an undue burden on competition because these 
amendments will add transparency to the Rulebook.
Other Changes
    The remainder of the changes to correct numbering and citations are 
non-substantive.

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 \10\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange 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) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requests 
that the Commission waive the 30-day operative delay so that the 
proposal may become operative immediately upon filing. The Exchange 
notes that NOM and BX currently have rules that permit NOM and BX 
Participants to cancel interest,\14\ and that the Exchange proposes the 
additional changes to provide greater clarity in its rules. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission waives the 30-day operative delay and 
designates the proposed rule change operative upon filing.\15\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ See NOM and BX Rules at Chapter VII, Section 11.
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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 72065]]

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:

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-2019-18 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-2019-18. 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-2019-18 and should be submitted on 
or before January 21, 2020.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-28172 Filed 12-27-19; 8:45 am]
BILLING CODE 8011-01-P