[Federal Register Volume 90, Number 122 (Friday, June 27, 2025)]
[Notices]
[Pages 27686-27691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11869]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103300; File No. SR-GEMX-2025-13]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend GEMX's
Pricing Schedule To Amend Certain Taker Fees and the Qualifying Tier
Thresholds
June 24, 2025.
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 10, 2025, 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, 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 amend GEMX's Pricing Schedule at Options
7, Section 3, ``Regular Order Fees and Rebates'' to (1) amend the Penny
Symbol Tier 3 Taker Fees for Market Makers,\3\ Non-Nasdaq GEMX Market
Makers (FarMM),\4\ Firm Proprietary \5\/Broker Dealers \6\ and
Professional Customers; \7\ (2) amend the Penny Symbol Tier 4 Taker
Fees for Market Makers and Non-Nasdaq GEMX Market Makers (FarMM); (3)
amend current note 17 and add a new note 18 to Options 7, Section 3;
and (4) amend the Qualifying Tier Thresholds and accompanying
descriptions of those thresholds.\8\
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\3\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1,
Section 1(a)(21).
\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. See Options 7, Section 1(c).
\5\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account. See Options 7, Section 1(c).
\6\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
See Options 7, Section 1(c).
\7\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
\8\ On May 30, 2025, SR-GEMX-2025-11 was filed for
implementation on June 2, 2025. On June 10, 2025, SR-GEMX-2025-11
was withdrawn and replaced with this rule change.
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The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/gemx/rulefilings,
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.
[[Page 27687]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
GEMX proposes to amend GEMX's Pricing Schedule at Options 7,
Section 3, ``Regular Order Fees and Rebates'' to (1) amend the Penny
Symbol Tier 3 Taker Fees for Market Makers, Non-Nasdaq GEMX Market
Makers (FarMM), Firm Proprietary/Broker Dealers and Professional
Customers; (2) amend the Penny Symbol Tier 4 Taker Fees for Market
Makers and Non-Nasdaq GEMX Market Makers (FarMM); (3) amend current
note 17 and add a new note 18 to Options 7, Section 3; and (4) amend
the Qualifying Tier Thresholds and accompanying descriptions of those
thresholds.
Taker Fees
Today, GEMX offers 4 tiers of Penny Symbol Taker Fees. Non-Priority
Customers \9\ are assessed Tier 1 and Tier 2 Penny Symbol Taker Fees of
$0.50 per contract. Non-Priority Customers are assessed a Tier 3 Penny
Symbol Taker Fee of $0.49 per contract. Market Makers and Non-Nasdaq
GEMX Market Makers (FarMM) are assessed a Tier 4 Penny Symbol Taker Fee
of $0.47 per contract and Firm Proprietary/Broker Dealers and
Professional Customers are assessed Tier 4 Penny Symbol Taker Fee of
$0.49 per contract. Priority Customers \10\ are assessed a Tier 1 and 2
Penny Symbol Taker Fee of $0.48 per contract, a Tier 3 Penny Symbol
Taker Fee of $0.44 per contract, and a Tier 4 Penny Symbol Taker Fee of
$0.42 per contract.
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\9\ ``Non-Priority Customers'' include Market Makers, Non-Nasdaq
GEMX Market Makers (FarMMs), Firm Proprietary/Broker-Dealers, and
Professional Customers. See Options 7, Section 1(c).
\10\ 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 Options 1,
Section 1(a)(36). Unless otherwise noted, when used in this Pricing
Schedule the term ``Priority Customer'' includes ``Retail''. See
Options 7, Section 1(c).
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With this proposal, GEMX proposes to increase the Non-Priority
Customer Taker Fees for Penny Symbols in Tier 3 from $0.49 to $0.50 per
contract. Also, the Exchange proposes to increase the Market Makers and
Non-Nasdaq GEMX Market Makers (FarMM) Taker Fees for Penny Symbols in
Tier 4 from $0.47 to $0.49 per contract. Despite the proposed increases
in Tier 3 and 4 Penny Symbol Taker Fees, the Exchange believes that its
pricing remains competitive and will continue to attract order flow to
GEMX, particularly given the opportunity to earn the proposed new note
18 fee reduction described below.
The Exchange proposes to amend current note 17 in Options 7,
Section 3 to apply to the Tier 3 Penny Symbol Taker Fee in SPY in
addition to the current Tier 4 Penny Symbol Taker Fee in SPY in note
17. Today, note 17 states, ``Market Maker/Non-Nasdaq GEMX Market Maker
(FarMM) in Tier 4 Taker Fees in SPY will be decreased by $0.01 per
contract.'' In addition to adding the Tier 3 Penny Symbol Taker Fee to
note 17, the Exchange also proposes to add ``Penny Symbol'' to note 17.
The addition of the words ``Penny Symbol'' to note 17 is not a
substantive change because note 17 applies to Penny Symbols today and
does not apply to Non-Penny Symbols. As amended note 17 should continue
to incentivize marker participants to remove liquidity in SPY on GEMX
at a lower cost.
The Exchange proposes a new note 18 to Options 7, Section 3 that
would provide that Tier 3 and 4 Penny Symbol Taker Fees for Market
Makers and Non-Nasdaq GEMX Market Makers (FarMM) will be $0.42 per
contract when the Member is (i) both the buyer and the seller or (ii)
the Member removes liquidity from another Member as an Affiliated
Member \11\ or Affiliated Entity.\12\ The $0.42 per contract Penny
Symbol Taker Fee would be in lieu of the proposed $0.50 per contract
Tier 3 Penny Symbol Taker Fee and in lieu of the proposed $0.49 per
contract Tier 4 Penny Symbol Taker Fee for Market Makers and Non-Nasdaq
GEMX Market Makers (FarMM). Further, in a given month, a Member would
receive the pricing in either amended note 17 or new note 18 with
respect to SPY, whichever is more favorable, but not both. The Exchange
believes that the new note 18 fee reduction will encourage Market
Makers and Non-Nasdaq GEMX Market Makers (FarMM) to remove liquidity on
GEMX at the reduced Penny Symbol Taker Fees in Tiers 3 or 4.
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\11\ An ``Affiliated Member'' is a Member that shares at least
75% common ownership with a particular Member as reflected on the
Member's Form BD, Schedule A. See Options 7, Section 1(c).
\12\ An ``Affiliated Entity'' is a relationship between an
Appointed Market Maker and an Appointed OFP for purposes of
qualifying for certain pricing specified in the Pricing Schedule.
Market Makers and OFPs are required to send an email to the Exchange
to appoint their counterpart, at least 3 business days prior to the
last day of the month to qualify for the next month. The Exchange
will acknowledge receipt of the emails and specify the date the
Affiliated Entity is eligible for applicable pricing, as specified
in the Pricing Schedule. Each Affiliated Entity relationship will
commence on the 1st of a month and may not be terminated prior to
the end of any month. An Affiliated Entity relationship will
automatically renew each month until or unless either party
terminates earlier in writing by sending an email to the Exchange at
least 3 business days prior to the last day of the month to
terminate for the next month. Affiliated Members may not qualify as
a counterparty comprising an Affiliated Entity. Each Member may
qualify for only one (1) Affiliated Entity relationship at any given
time. See Options 7, Section 1(c).
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Qualifying Tier Thresholds
Today, the Exchange has the following Qualifying Tier Thresholds in
Options 7, Section 3 in Table 1:
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Priority customer maker % of
Tier % of customer total customer total consolidated
consolidated volume volume
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Tier 1.......... Executes less than 1.5% Executes Priority Customer
of Customer Total Maker volume of less than
Consolidated Volume. 0.65% of Customer Total
Consolidated Volume.
Tier 2.......... Executes 1.5% to less Executes Priority Customer
than 2.25% of Customer Maker volume of 0.65% to
Total Consolidated less than 1.2% of Customer
Volume. Total Consolidated Volume.
Tier 3.......... Executes 2.25% to less Executes Priority Customer
than 3.0% of Customer Maker volume of 1.2% to less
Total Consolidated than 1.6% of Customer Total
Volume. Consolidated Volume.
Tier 4.......... Executes 3.0% or Executes Priority Customer
greater of Customer Maker volume of 1.6% or
Total Consolidated greater of Customer Total
Volume. Consolidated Volume.
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The Exchange proposes to amend the Qualifying Tier Thresholds, in
Options 7, Section 3 at Table 1 by removing the criteria related to the
percentage of Customer Total Consolidated Volume. Today, the Total
Affiliated Member or Affiliated Entity % of Customer Total Consolidated
Volume category includes all volume in all symbols and order types,
including both maker and taker volume and volume executed in the PIM,
Facilitation, Solicitation, and QCC mechanisms. With this proposal, the
Exchange would also be removing taker volume as a factor in achieving
the
[[Page 27688]]
Qualifying Tier Thresholds. The Exchange would also replace the
Priority Customer Maker percentage in the second column of criteria
with Maker percentage of Customer Total Consolidated Volume. With this
proposal, all market participant maker volume would count toward the
tier thresholds. No taker volume would be counted toward the Qualifying
Tier Thresholds. Further, the Exchange proposes to amend the
percentages for each tier threshold by increasing each tier to account
for the applicability of all market participant maker volume.
Tier 1 criteria currently requires a market participant to execute
Priority Customer Maker volume of less than 0.65% of Customer Total
Consolidated Volume. With the amendment, the Tier 1 criteria would
require a market participant to execute Maker volume of less than 0.85%
of Customer Total Consolidated Volume.
Tier 2 criteria currently requires a market participant to execute
Priority Customer Maker volume of 0.65% to less than 1.2% of Customer
Total Consolidated Volume. With the amendment, the Tier 2 criteria
would require a market participant to execute Maker volume of 0.85% to
less than 1.2% of Customer Total Consolidated Volume.
Tier 3 criteria currently requires a market participant to execute
Priority Customer Maker volume of 1.2% to less than 1.6% of Customer
Total Consolidated Volume. With the amendment, the Tier 3 criteria
would require a market participant to execute Maker volume of 1.2% to
less than 1.75% of Customer Total Consolidated Volume.
Tier 4 criteria currently requires a market participant to execute
Priority Customer Maker volume of 1.6% or greater of Customer Total
Consolidated Volume. With the amendment, the Tier 4 criteria would
require a market participant to execute Maker volume of 1.75% or
greater of Customer Total Consolidated Volume.
Further, the Exchange proposes to remove the rule text at Options
7, Section 3 below Table 1 which states, ``The Total Affiliated Member
or Affiliated Entity % of Customer Total Consolidated Volume category
includes all volume in all symbols and order types, including both
maker and taker volume and volume executed in the PIM, Facilitation,
Solicitation, and QCC mechanisms.'' This rule text is no longer
necessary because the Exchange is eliminating the percentage of
Customer Total Consolidated Volume criteria in Table 1. Additionally,
the Exchange proposes to amend the rule text at Options 7, Section 3
below Table 1 which states, ``The Priority Customer Maker % of Customer
Total Consolidated Volume category includes all Priority Customer
volume that adds liquidity in all symbols.'' Because the Exchange is
eliminating the percentage of Customer Total Consolidated Volume
criteria in Table 1 and amending the second column in Table 1 to apply
to all market participants, the Exchange proposes to amend this rule
text to state, ``The Maker % of Customer Total Consolidated Volume
category includes all eligible market participant volume that adds
liquidity in all symbols.''
The amendments to the Qualifying Tier Thresholds should continue to
encourage market participants to direct orders to GEMX, particularly as
all eligible market participant maker volume will count toward the
criteria for each tier threshold. Today, only Priority Customer maker
volume counted toward the Qualifying Tier Thresholds.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\13\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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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\13\ See 15 U.S.C. 78f(b).
\14\ See 15 U.S.C. 78f(b)(4) and (5).
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The proposed changes to the Pricing Schedule are reasonable in
several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for order flow, which
constrains its pricing determinations. The fact that the market for
order flow is competitive has long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \15\
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\15\ See NetCoalition, 615 F.3d at 539 (D.C. Cir. 2010) (quoting
Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR
74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)).
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options transaction services. The Exchange is only one of eighteen
options exchanges to which market participants may direct their order
flow. Within this environment, market participants can freely and often
do shift their order flow among the Exchange and competing venues in
response to changes in their respective pricing schedules. Within the
foregoing context, the proposal represents a reasonable attempt by the
Exchange to attract additional order flow to the Exchange and increase
its market share relative to its competitors.
Taker Fees
The Exchange's proposal to increase the Non-Priority Customer Taker
Fees for Penny Symbols in Tier 3 from $0.49 to $0.50 per contract is
reasonable because, despite the increase to the fees, the Exchange
believes that the pricing will continue to attract order flow to GEMX,
particularly given the opportunity to earn a lower Market Maker and
Non-Nasdaq GEMX Market Maker (FarMM) Tier 3 Penny Symbol Taker Fee
pursuant to proposed new note 18. The Exchange's proposal to increase
the Non-Priority Customer Taker Fees for Penny Symbols in Tier 3 from
$0.49 to $0.50 per contract is equitable and not unfairly
discriminatory as all Non-Priority Customers would be assessed the same
Tier 3 Penny Symbol Taker Fee. Also, Priority Customers would continue
to pay a lower Tier 3 Penny Symbol Taker Fee. Priority Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts market makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants, to the benefit of all market
participants who may interact with the order flow.
The Exchange's proposal to increase the Market Makers and Non-
Nasdaq GEMX Market Makers (FarMM) Taker Fees for Penny Symbols in Tier
4 from $0.47 to $0.49 per contract is reasonable because, despite the
increase to the fees, the Exchange believes that the pricing will
continue to attract order flow to GEMX, particularly given the
[[Page 27689]]
opportunity to earn a lower Tier 4 Penny Symbol Taker Fee pursuant to
proposed new note 18. The Exchange's proposal to increase the Market
Makers and Non-Nasdaq GEMX Market Makers (FarMM) Taker Fees for Penny
Symbols in Tier 4 from $0.47 to $0.49 per contract is equitable and not
unfairly discriminatory because all Non-Priority Customers would be
assessed the same Tier 4 Penny Symbol Taker Fee. Also, Priority
Customers would continue to pay a lower Tier 4 Penny Symbol Taker Fee.
Priority Customer liquidity benefits all market participants by
providing more trading opportunities, which attracts market makers. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants, to
the benefit of all market participants who may interact with the order
flow.
The Exchange's proposal to amend current note 17 of Options 7,
Section 3 to apply to the Tier 3 Market Maker/Non-Nasdaq GEMX Market
Maker (FarMM) Penny Symbol Taker Fee in SPY is reasonable because the
amendment will decrease the new Tier 3 Penny Symbol Taker Fee in SPY by
$0.01 per contract and incentivize Market Makers/Non-Nasdaq GEMX Market
Makers (FarMM) to remove liquidity in SPY on GEMX at the lower cost,
thereby attracting more SPY order flow to GEMX. The Exchange's proposal
to amend current note 17 of Options 7, Section 3 to apply to the Tier 3
Market Maker/Non-Nasdaq GEMX Market Maker (FarMM) Penny Symbol Taker
Fee in SPY is equitable and not unfairly discriminatory because Market
Makers have different requirements and additional obligations as
compared to other market participants (such as quoting
requirements).\16\ The amended note 17 incentive is designed to
continue to incentivize Market Makers to remove liquidity in SPY
thereby facilitating tighter spreads and contributing towards a robust,
well-balanced market ecosystem, to the benefit of all market
participants. Non-Nasdaq GEMX Market Makers (FarMM) qualify as market
makers on other exchanges. The Exchange believes that market makers not
registered on GEMX will be encouraged to remove liquidity in SPY on
GEMX as an away market maker (Non-Nasdaq GEMX Market Makers (FarMM))
with this incentive. Because the incentive is being offered to both
market makers registered on GEMX and those not registered on GEMX, the
Exchange believes that the proposal is equitable and not unfairly
discriminatory because it encourages market makers to remove liquidity
in SPY thereby filling orders of other market participants. This
proposal recognizes the overall contributions made by market makers to
a listed options market. Finally, adding the words ``Penny Symbol'' to
note 17 is reasonable, equitable and not unfairly discriminatory
because the addition of the language is a non-substantive change as
note 17 only applies to Penny Symbols today.
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\16\ See GEMX Options 2, Section 5.
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The Exchange believes that assessing different pricing for SPY, as
compared to other symbols, is reasonable, equitable and not unfairly
discriminatory because trading in SPY is different from trading in
other symbols in that it is more liquid, has higher volume and
competition for executions is more intense in comparison.
The Exchange's proposal to adopt a new note 18 to Options 7,
Section 3 that would provide that Tier 3 and 4 Penny Symbol Taker Fees
for Market Makers and Non-Nasdaq GEMX Market Makers (FarMM) will be
$0.42 per contract when the Member is (i) both the buyer and the seller
or (ii) the Member removes liquidity from another Member as an
Affiliated Member or Affiliated Entity is reasonable because it would
allow Market Makers and Non-Nasdaq GEMX Market Makers (FarMM) to lower
their Tier 3 and 4 Penny Symbol Taker Fees from the proposed $0.50 per
contract for Tier 3 and the proposed $0.49 per contract for Tier 4 to
$0.42 per contract, thereby attracting more order flow to GEMX. The
Exchange's proposal to adopt a new note 18 to Options 7, Section 3 that
would provide that Tier 3 and 4 Penny Symbol Taker Fees for Market
Makers and Non-Nasdaq GEMX Market Makers (FarMM) will be $0.42 per
contract when the Member is (i) both the buyer and the seller or (ii)
the Member removes liquidity from another Member as an Affiliated
Member or Affiliated Entity is equitable and not unfairly
discriminatory because Market Makers have different requirements and
additional obligations as compared to other market participants (such
as quoting requirements).\17\ Proposed note 18 incentive is designed to
continue to incentivize Market Makers to remove liquidity on GEMX
thereby facilitating tighter spreads and contributing towards a robust,
well-balanced market ecosystem, to the benefit of all market
participants. Non-Nasdaq GEMX Market Makers (FarMM) qualify as market
makers on other exchanges. The Exchange believes that market makers not
registered on GEMX will be encouraged to remove liquidity on GEMX as an
away market maker (Non-Nasdaq GEMX Market Makers (FarMM)) with this
incentive. Because the incentive is being offered to both market makers
registered on GEMX and those not registered on GEMX, the Exchange
believes that the proposal is equitable and not unfairly discriminatory
because it encourages market makers to remove liquidity thereby filling
orders of other market participants. This proposal recognizes the
overall contributions made by market makers to a listed options market.
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\17\ See GEMX Options 2, Section 5.
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Allowing a market participant to receive either the note 17 or 18
incentive with respect to SPY, whichever is more favorable, is
reasonable because the Exchange would permit market participants to
lower fees with either incentive. Allowing a market participant to
receive either the note 17 or 18 incentive, whichever is more
favorable, but not both is equitable and not unfairly discriminatory as
it would be applied uniformly to all market participants that qualify
for the rebate.
Qualifying Tier Thresholds
The Exchange's proposal to amend the Qualifying Tier Thresholds, in
Options 7, Section 3 at Table 1 by removing the criteria related to the
percentage of Customer Total Consolidated Volume and replacing the
Priority Customer Maker percentage in the second column of criteria in
Table 1 with Maker percentage of Customer Total Consolidated Volume is
reasonable because all market participant marker volume would qualify
toward the tier thresholds, not just Priority Customer volume. While
the Exchange is amending the tier thresholds to make them higher and
removing taker volume from any market participant as a qualifier, a
greater amount of market participant maker volume would count toward
each tier threshold. The Exchange believes that the amended
qualifications for executed volume will encourage market participants
to send liquidity to GEMX. All Members may interact with the maker
volume from any market participant that is submitted on GEMX. The
Exchange's proposal to amend the Qualifying Tier Thresholds, in Options
7, Section 3 at Table 1 by removing the criteria related to the
percentage of Customer Total Consolidated Volume and replacing the
Priority Customer Maker percentage in the second column of criteria in
Table 1 with Maker percentage of Customer Total Consolidated Volume is
equitable and
[[Page 27690]]
not unfairly discriminatory because the criteria will apply uniformly
to all GEMX Members in determining a Member's applicable tier. Taker
volume from any market participant will uniformly not be counted toward
the Qualifying Tier Thresholds.
The Exchange's proposal to remove the rule text at Options 7,
Section 3 below Table 1 which states, ``The Total Affiliated Member or
Affiliated Entity % of Customer Total Consolidated Volume category
includes all volume in all symbols and order types, including both
maker and taker volume and volume executed in the PIM, Facilitation,
Solicitation, and QCC mechanisms'' is reasonable, equitable and not
unfairly discriminatory because the rule text is no longer necessary as
the Exchange is eliminating the percentage of Customer Total
Consolidated Volume criteria in Table 1. Additionally, the Exchange's
proposal to amend the rule text at Options 7, Section 3 below Table 1
which states, ``The Priority Customer Maker % of Customer Total
Consolidated Volume category includes all Priority Customer volume that
adds liquidity in all symbols'' is reasonable, equitable and not
unfairly discriminatory because the Exchange is eliminating the
percentage of Customer Total Consolidated Volume criteria in Table 1
and amending the second column to apply to all market participants.
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.
Intermarket Competition
The Exchange believes its proposal remains competitive with other
options markets, and will offer market participants with another choice
of venue to transact options. 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. 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.
Intramarket Competition
Taker Fees
The Exchange's proposal to increase the Non-Priority Customer Taker
Fees for Penny Symbols in Tier 3 from $0.49 to $0.50 per contract does
not impose an undue burden on competition because all Non-Priority
Customers would be assessed the same Tier 3 Penny Symbol Taker Fee and
Priority Customers would continue to pay a lower Tier 3 Penny Symbol
Taker Fee. Priority Customer liquidity benefits all market participants
by providing more trading opportunities, which attracts market makers.
An increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants, to
the benefit of all market participants who may interact with the order
flow.
The Exchange's proposal to increase the Market Makers and Non-
Nasdaq GEMX Market Makers (FarMM) Taker Fees for Penny Symbols in Tier
4 from $0.47 to $0.49 per contract does not impose an undue burden on
competition because all Non-Priority Customers would be assessed the
same Tier 4 Penny Symbol Taker Fee and Priority Customers would
continue to pay a lower Tier 4 Penny Symbol Taker Fee. Priority
Customer liquidity benefits all market participants by providing more
trading opportunities, which attracts market makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants, to the benefit of all market
participants who may interact with the order flow.
The Exchange's proposal to amend current note 17 of Options 7,
Section 3 to apply to the Tier 3 Market Maker/Non-Nasdaq GEMX Market
Maker (FarMM) Penny Symbol Taker Fee in SPY does not impose an undue
burden on competition because Market Makers have different requirements
and additional obligations as compared to other market participants
(such as quoting requirements).\18\ The amended note 17 incentive is
designed to continue to incentivize Market Makers to remove liquidity
in SPY thereby facilitating tighter spreads and contributing towards a
robust, well-balanced market ecosystem, to the benefit of all market
participants. Non-Nasdaq GEMX Market Makers (FarMM) qualify as market
makers on other exchanges. The Exchange believes that market makers not
registered on GEMX will be encouraged to remove liquidity in SPY on
GEMX as an away market maker (Non-Nasdaq GEMX Market Makers (FarMM))
with this incentive. Because the incentive is being offered to both
market makers registered on GEMX and those not registered on GEMX, the
Exchange believes that the proposal is equitable and not unfairly
discriminatory because it encourages market makers to remove liquidity
in SPY thereby filling orders of other market participants. This
proposal recognizes the overall contributions made by market makers to
a listed options market.
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\18\ See GEMX Options 2, Section 5.
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The Exchange believes that assessing different pricing for SPY, as
compared to other symbols, does not impose an undue burden on
competition because trading in SPY is different from trading in other
symbols in that it is more liquid, has higher volume and competition
for executions is more intense in comparison.
The Exchange's proposal to adopt a new note 18 to Options 7,
Section 3 that would provide that Tier 3 and 4 Penny Symbol Taker Fees
for Market Makers and Non-Nasdaq GEMX Market Makers (FarMM) will be
$0.42 per contract when the Member is (i) both the buyer and the seller
or (ii) the Member removes liquidity from another Member as an
Affiliated Member or Affiliated Entity does not impose an undue burden
on competition because Market Makers have different requirements and
additional obligations as compared to other market participants (such
as quoting requirements).\19\ Proposed note 18 incentive is designed to
continue to incentivize Market Makers to remove liquidity on GEMX
thereby facilitating tighter spreads and contributing towards a robust,
well-balanced market ecosystem, to the benefit of all market
participants. Non-Nasdaq GEMX Market Makers (FarMM) qualify as market
makers on other exchanges. The Exchange believes that market makers not
registered on GEMX will be encouraged to remove liquidity on GEMX as an
away market maker (Non-Nasdaq GEMX Market Makers (FarMM)) with this
incentive. Because the incentive is being offered to both market makers
registered on GEMX and those not registered on GEMX, the Exchange
believes that the proposal is equitable and not unfairly discriminatory
because it encourages market makers to remove liquidity thereby filling
orders of other market participants. This proposal recognizes the
overall contributions
[[Page 27691]]
made by market makers to a listed options market.
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\19\ See GEMX Options 2, Section 5.
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Allowing a market participant to receive either the note 17 or 18
incentive with respect to SPY, whichever is more favorable, is
equitable and not unfairly discriminatory as it would be applied
uniformly to all market participants that qualify for the rebate.
Qualifying Tier Thresholds
The Exchange's proposal to amend the Qualifying Tier Thresholds, in
Options 7, Section 3 at Table 1 by removing the criteria related to the
percentage of Customer Total Consolidated Volume and replacing the
Priority Customer Maker percentage in the second column of criteria in
Table 1 with Maker percentage of Customer Total Consolidated Volume
does not impose an undue burden on competition because the criteria
will apply uniformly to all GEMX Members in determining a Member's
applicable tier. Taker volume from any market participant will
uniformly not be counted toward the Qualifying Tier Thresholds.
The Exchange's proposal to remove the rule text at Options 7,
Section 3 below Table 1 which states, ``The Total Affiliated Member or
Affiliated Entity % of Customer Total Consolidated Volume category
includes all volume in all symbols and order types, including both
maker and taker volume and volume executed in the PIM, Facilitation,
Solicitation, and QCC mechanisms'' does not impose an undue burden on
competition because the rule text is no longer necessary as the
Exchange is eliminating the percentage of Customer Total Consolidated
Volume criteria in Table 1. Additionally, the Exchange's proposal to
amend the rule text at Options 7, Section 3 below Table 1 which states,
``The Priority Customer Maker % of Customer Total Consolidated Volume
category includes all Priority Customer volume that adds liquidity in
all symbols'' does not impose an undue burden on competition because
the Exchange is eliminating the percentage of Customer Total
Consolidated Volume criteria in Table 1 and amending the second column
to apply to all market participants.
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.\20\ 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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\20\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-GEMX-2025-13 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-2025-13. 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 (https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-GEMX-2025-13 and should be
submitted on or before July 18, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-11869 Filed 6-26-25; 8:45 am]
BILLING CODE 8011-01-P