Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees To Assess Connectivity Fees, 33168-33170 [2017-15097]

Download as PDF 33168 Federal Register / Vol. 82, No. 137 / Wednesday, July 19, 2017 / Notices 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. Notice of Intent to prepare an Environmental Impact Statement. Stanley F. Mires, Attorney, Federal Compliance. [FR Doc. 2017–15082 Filed 7–18–17; 8:45 am] BILLING CODE 7710–12–P POSTAL SERVICE Product Change—Priority Mail Negotiated Service Agreement Postal ServiceTM. ACTION: Notice. AGENCY: The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. DATES: Date of notice required under 39 U.S.C. 3642(d)(1): July 19, 2017. FOR FURTHER INFORMATION CONTACT: Maria W. Votsch, 202–268–6525. SUPPLEMENTARY INFORMATION: The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on July 13, 2017, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Contract 334 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2017–158, CP2017–222. SUMMARY: Stanley F. Mires, Attorney, Federal Compliance. [FR Doc. 2017–15081 Filed 7–18–17; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81136; File No. SR–GEMX– 2017–29] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees To Assess Connectivity Fees asabaliauskas on DSKBBXCHB2PROD with NOTICES July 13, 2017. 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 29, 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 18:49 Jul 18, 2017 Jkt 241001 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 BILLING CODE 7710–12–P 1 15 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Schedule of Fees to assess fees for OTTO Port, CTI Port, FIX Port, FIX Drop Port and Disaster Recovery Port connectivity, and to provide monthly [sic] cap on those fees of $7,500. The Exchange is also proposing to delete fees and descriptions thereof for connectivity no longer used by the Exchange. The text of the proposed rule change is available on the Exchange’s Web site at www.ise.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 1. Purpose The purpose of the proposed rule change is to amend the Schedule of Fees to assess fees for OTTO 3 Port, CTI 4 3 OTTO is an interface that allows market participants to connect and send orders, auction orders and auction responses into ISE Gemini [sic]. Data includes the following: (1) Options Auction Notifications (e.g., Flash, PIM, Solicitation and Facilitation or other information); (2) Options Symbol Directory Messages; (3) System Event Messages (e.g., start of messages, start of system hours, start of quoting, start of opening); (5) Option Trading Action Messages (e.g., halts, resumes); (6) Execution Messages; (7) Order Messages (order messages, risk protection triggers or purge notifications). 4 CTI is a real-time clearing trade update is a 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 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 Port, FIX 5 Port, FIX Drop 6 Port and Disaster Recovery Port 7 connectivity, and to provide a monthly cap on those fees of $7,500. The Exchange recently completed the migration of the Exchange’s trading system to the Nasdaq INET architecture.8 This migration included the adoption of new connectivity, including OTTO, CTI, FIX, FIX Drop, Disaster Recovery Ports, which are the same as connectivity options currently used to connect to the Exchange’s affiliates, including Nasdaq Options Market (‘‘NOM’’), Nasdaq BX (‘‘BX’’) and Nasdaq Phlx (‘‘Phlx’’).9 When the Exchange adopted these new ports it did not assess a fee for them so that members would not be double charged for connectivity to the old Exchange architecture and the new Nasdaq INET architecture.10 The Exchange is proposing to amend the Nasdaq GEMX Schedule of Fees Section IV.E.4. to assess a fee of $650 per month, per port, per account number 11 for OTTO, CTI, FIX, and FIX Drop ports. The Exchange is proposing to assess a fee of $50 per month, per port, per account number for Disaster Recovery Ports. The Exchange notes that it is adding ‘‘per account number’’ to the fees described above to clarify that 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. 5 FIX is an interface that allows market participants to connect and send orders and auction orders into ISE Gemini [sic]. Data includes the following: (1) Options Symbol Directory Messages; (2) System Event Messages (e.g., start of messages, start of system hours, start of quoting, start of opening); (3) Option Trading Action Messages (e.g., halts, resumes); (4) Execution Messages; (5) Order Messages (order messages, risk protection triggers or purge notifications). 6 FIX Drop is a 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, (4) busts or posttrade corrections. 7 Disaster Recovery ports provide connectivity to the exchange’s disaster recovery data center in Chicago to be utilized in the event the exchange has to fail over during the trading day. DR Ports are available for SQF, SQF Purge, CTI, OTTO, FIX and FIX Drop. 8 See Securities Exchange Act Release No. 80011 (February 10, 2017), 82 FR 10927 (February 16, 2017) (SR–ISEGemini–2016–17). 9 See NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM—Ports and other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 BX—Ports and other Services; and Phlx Pricing Schedule, VII. Other Member Fees, B. Port Fees. 10 See Securities Exchange Act Release No. 80213 (March 10, 2017), 82 FR 14066, 37499 [sic] (March 16, 2017) (SR–ISEGemini–2017–10). 11 Account numbers are used to identify member order entry ports. E:\FR\FM\19JYN1.SGM 19JYN1 Federal Register / Vol. 82, No. 137 / Wednesday, July 19, 2017 / Notices billing for the ports is also based on account numbers, which allows the Exchange to identify the members that are fee liable for the port. The Exchange notes that this is similar to how the Exchange’s sister exchanges bill these fees.12 Last, the Exchange is proposing to limit the total amount of fees paid for these ports by applying a $7,500 monthly fee cap per member. The Exchange is also proposing to delete ‘‘Market Makers API Quoting, Order Entry and Listening’’ and its associated $100 per month, per API fee from Nasdaq GEMX Schedule of Fees Section IV.E.1., and ‘‘Nasdaq GEMX Only’’ and its associated $100 per session, per month fee from Nasdaq GEMX Schedule of Fees Section IV.E.2. (EAM Options API).13 The Exchange notes that both of these connectivity options are no longer available on the Exchange post-migration. asabaliauskas on DSKBBXCHB2PROD with NOTICES 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,14 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,15 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. The Exchange believes that the proposed fees are reasonable because they are similar to the fees assessed by other exchanges. As noted above, NOM, BX and Phlx provide some or all of the same connectivity options. For example, Nasdaq assesses a fee of $750 per port, per month for OTTO Ports, $650 per port, per month for CTI, FIX (order entry) Ports and FIX Drop Ports. Moreover, Nasdaq assesses a fee of $25 per port, per month for equities Disaster recovery ports (OUCH, RASH, and DROP).16 Although the proposed Disaster Recovery port fee is higher than the fee assessed by Nasdaq, the higher fee is reasonable because it reflects the ongoing costs in maintaining and supporting the ports, as well as the initial investment in such ports for the Exchange and the fewer subscribers among which it may spread fixed costs 12 See, e.g., NOM Rules, Chapter XV Options Pricing, Section 3(b) (billing per port, per month, per mnemonic). 13 The Exchange is retaining Nasdaq GEMX and Nasdaq ISE connectivity until ISE connectivity is migrated, which the Exchange anticipates will occur in the third quarter 2017. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(4) and (5). 16 See Rule 7015(g)(2). VerDate Sep<11>2014 18:49 Jul 18, 2017 Jkt 241001 associated with offering the ports. As such, the Exchange believes that the proposed fees are consistent with those of other exchanges and therefore reasonable. The Exchange also believes that the proposed $7,500 fee cap is reasonable because, taken together with the proposed new fees, it will allow the Exchange to cover costs while reducing the impact of the fees on members that subscribe to a large number of ports. Because members generally need an increasing number of ports as provided under the Nasdaq GEMX Schedule of Fees Section IV.E.4. as their activity expands on the Exchange, the Exchange believes that without such a cap members may be inhibited from growing their activity on the Exchange. As a general principal, the Exchange believes that greater participation on the Exchange by members improves market quality for all market participants. Thus, in arriving at a fee cap of $7,500, the Exchange balanced the desire to improve market quality against the need to cover costs and make a profit. Last, the Exchange notes that BX provides its options participants a $7,500 per month fee cap for its options market connectivity.17 The Exchange believes that the proposed fees are an equitable allocation and are not unfairly discriminatory because the Exchange must ultimately assesses [sic] fees to cover the costs associated with offering the connectivity. The Exchange notes that members have historically paid fees for Exchange connectivity and, in adopting the connectivity for which the Exchange is proposing to assess a fee, it noted that it was not adopting a fee at that time to avoid being double charged for connectivity to the old Exchange architecture and the new Nasdaq INET architecture. Now that members no longer have connectivity to the old Exchange architecture, and therefore are not assessed connectivity fees, the Exchange is now proposing to assess fees for connectivity to the new Nasdaq INET architecture of the Exchange. The Exchange believes that the proposed $7,500 fee cap is an equitable allocation and is not unfairly discriminatory because the [sic] any member that subscribes to connectivity under the rule that would otherwise exceed $7,500 per month will have its fees capped. Although members that do not have fees under the rule in excess of $7,500 per month will not benefit from the fee cap, the Exchange notes that any member may increase the number of ports subscribed to receive the fee cap, should 17 See BX Rules, Chapter XV Options Pricing, Sec. 3(b). PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 33169 their activity on the Exchange warrant increased subscription. Moreover, members that do not qualify for the fee cap will benefit from the greater liquidity provided by members that conduct a sufficient level of activity on the Exchange to require connectivity in excess of the fee cap. For these reasons, the Exchange believes that the proposed fees are an equitable allocation and are not unfairly discriminatory. 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 terms of inter-market competition, 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 connect to third parties instead of directly connecting to the Exchange, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed changes to the charges assessed for connectivity to the Exchange are consistent with the fees assessed by other exchanges for the same or similar connectivity. Moreover, the Exchange must assess fees to cover the costs incurred in providing connectivity and members had been assessed fees for Exchange connectivity prior to the sunset of the old Exchange architecture. As a consequence, competition will not be burdened by the proposed fees. 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. E:\FR\FM\19JYN1.SGM 19JYN1 33170 Federal Register / Vol. 82, No. 137 / Wednesday, July 19, 2017 / Notices 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.18 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. those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site 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; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–GEMX– 2017–29, and should be submitted on or before August 9, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Jill M. Peterson, Assistant Secretary. Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– GEMX–2017–29 on the subject line. asabaliauskas on DSKBBXCHB2PROD with NOTICES 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: [FR Doc. 2017–15097 Filed 7–18–17; 8:45 am] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt New Rules That Describe the Trading of Complex Orders on the Exchange for the Exchange’s Equity Options Platform 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–2017–29. 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 Web site (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 July 13, 2017. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34- 81137; File No. SR– BatsEDGX–2017–29] Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 30, 2017, Bats EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal for the Exchange’s equity options platform (‘‘EDGX Options’’) to adopt new rules 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 18 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 20:46 Jul 18, 2017 Jkt 241001 PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 that describe the trading of complex orders on the Exchange. The text of the proposed rule change is available at the Exchange’s Web site at www.bats.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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Overview The Exchange proposes to adopt new rules that describe the trading of complex orders on the Exchange. Proposed new Rule 21.20, Complex Orders, details the functionality of the System 3 in the handling of complex orders on the Exchange. The proposed rules are based substantially on similar rules of other exchanges.4 The Exchange believes that the similarity of its proposed complex order rules to those of other exchanges will allow the Exchange’s proposed complex order functionality to fit seamlessly into the greater options marketplace and benefit market participants who are already familiar with similar functionality offered on other exchanges. The Exchange notes that for simplicity it has omitted from its proposal certain functionality that is offered by other options exchanges in connection with their complex order platforms but that the Exchange does not proposed to offer 3 The term ‘‘System’’ means the automated trading system used by EDGX Options for the trading of options contracts. See Exchange Rule 16.1(a)(59). 4 See, e.g., Chicago Board Options Exchange, Inc. (‘‘CBOE’’) Rule 6.53C; C2 Options Exchange, Inc. (‘‘C2’’) Rule 6.13; Miami International Securities Exchange (‘‘MIAX’’) Rule 518; International Securities Exchange LLC (‘‘ISE’’) Rule 722; NYSE MKT LLC (‘‘NYSE MKT’’) Rule 980NY; BOX Options Exchange LLC (‘‘BOX’’) Rule 7240; NASDAQ OMX PHLX LLC (‘‘PHLX’’) Rule 1098; NYSE Arca, Inc. (‘‘NYSEArca’’) Rule 6.91. E:\FR\FM\19JYN1.SGM 19JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 137 (Wednesday, July 19, 2017)]
[Notices]
[Pages 33168-33170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-15097]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81136; File No. SR-GEMX-2017-29]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Schedule of Fees To Assess Connectivity Fees

July 13, 2017.
    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 29, 2017, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Schedule of Fees to assess fees 
for OTTO Port, CTI Port, FIX Port, FIX Drop Port and Disaster Recovery 
Port connectivity, and to provide monthly [sic] cap on those fees of 
$7,500. The Exchange is also proposing to delete fees and descriptions 
thereof for connectivity no longer used by the Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at www.ise.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 amend the Schedule of 
Fees to assess fees for OTTO \3\ Port, CTI \4\ Port, FIX \5\ Port, FIX 
Drop \6\ Port and Disaster Recovery Port \7\ connectivity, and to 
provide a monthly cap on those fees of $7,500. The Exchange recently 
completed the migration of the Exchange's trading system to the Nasdaq 
INET architecture.\8\ This migration included the adoption of new 
connectivity, including OTTO, CTI, FIX, FIX Drop, Disaster Recovery 
Ports, which are the same as connectivity options currently used to 
connect to the Exchange's affiliates, including Nasdaq Options Market 
(``NOM''), Nasdaq BX (``BX'') and Nasdaq Phlx (``Phlx'').\9\ When the 
Exchange adopted these new ports it did not assess a fee for them so 
that members would not be double charged for connectivity to the old 
Exchange architecture and the new Nasdaq INET architecture.\10\
---------------------------------------------------------------------------

    \3\ OTTO is an interface that allows market participants to 
connect and send orders, auction orders and auction responses into 
ISE Gemini [sic]. Data includes the following: (1) Options Auction 
Notifications (e.g., Flash, PIM, Solicitation and Facilitation or 
other information); (2) Options Symbol Directory Messages; (3) 
System Event Messages (e.g., start of messages, start of system 
hours, start of quoting, start of opening); (5) Option Trading 
Action Messages (e.g., halts, resumes); (6) Execution Messages; (7) 
Order Messages (order messages, risk protection triggers or purge 
notifications).
    \4\ CTI is a real-time clearing trade update is a 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.
    \5\ FIX is an interface that allows market participants to 
connect and send orders and auction orders into ISE Gemini [sic]. 
Data includes the following: (1) Options Symbol Directory Messages; 
(2) System Event Messages (e.g., start of messages, start of system 
hours, start of quoting, start of opening); (3) Option Trading 
Action Messages (e.g., halts, resumes); (4) Execution Messages; (5) 
Order Messages (order messages, risk protection triggers or purge 
notifications).
    \6\ FIX Drop is a 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, (4) busts or post-trade corrections.
    \7\ Disaster Recovery ports provide connectivity to the 
exchange's disaster recovery data center in Chicago to be utilized 
in the event the exchange has to fail over during the trading day. 
DR Ports are available for SQF, SQF Purge, CTI, OTTO, FIX and FIX 
Drop.
    \8\ See Securities Exchange Act Release No. 80011 (February 10, 
2017), 82 FR 10927 (February 16, 2017) (SR-ISEGemini-2016-17).
    \9\ See NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM--Ports 
and other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 
BX--Ports and other Services; and Phlx Pricing Schedule, VII. Other 
Member Fees, B. Port Fees.
    \10\ See Securities Exchange Act Release No. 80213 (March 10, 
2017), 82 FR 14066, 37499 [sic] (March 16, 2017) (SR-ISEGemini-2017-
10).
---------------------------------------------------------------------------

    The Exchange is proposing to amend the Nasdaq GEMX Schedule of Fees 
Section IV.E.4. to assess a fee of $650 per month, per port, per 
account number \11\ for OTTO, CTI, FIX, and FIX Drop ports. The 
Exchange is proposing to assess a fee of $50 per month, per port, per 
account number for Disaster Recovery Ports. The Exchange notes that it 
is adding ``per account number'' to the fees described above to clarify 
that

[[Page 33169]]

billing for the ports is also based on account numbers, which allows 
the Exchange to identify the members that are fee liable for the port. 
The Exchange notes that this is similar to how the Exchange's sister 
exchanges bill these fees.\12\ Last, the Exchange is proposing to limit 
the total amount of fees paid for these ports by applying a $7,500 
monthly fee cap per member.
---------------------------------------------------------------------------

    \11\ Account numbers are used to identify member order entry 
ports.
    \12\ See, e.g., NOM Rules, Chapter XV Options Pricing, Section 
3(b) (billing per port, per month, per mnemonic).
---------------------------------------------------------------------------

    The Exchange is also proposing to delete ``Market Makers API 
Quoting, Order Entry and Listening'' and its associated $100 per month, 
per API fee from Nasdaq GEMX Schedule of Fees Section IV.E.1., and 
``Nasdaq GEMX Only'' and its associated $100 per session, per month fee 
from Nasdaq GEMX Schedule of Fees Section IV.E.2. (EAM Options 
API).\13\ The Exchange notes that both of these connectivity options 
are no longer available on the Exchange post-migration.
---------------------------------------------------------------------------

    \13\ The Exchange is retaining Nasdaq GEMX and Nasdaq ISE 
connectivity until ISE connectivity is migrated, which the Exchange 
anticipates will occur in the third quarter 2017.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\14\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fees are reasonable because 
they are similar to the fees assessed by other exchanges. As noted 
above, NOM, BX and Phlx provide some or all of the same connectivity 
options. For example, Nasdaq assesses a fee of $750 per port, per month 
for OTTO Ports, $650 per port, per month for CTI, FIX (order entry) 
Ports and FIX Drop Ports. Moreover, Nasdaq assesses a fee of $25 per 
port, per month for equities Disaster recovery ports (OUCH, RASH, and 
DROP).\16\ Although the proposed Disaster Recovery port fee is higher 
than the fee assessed by Nasdaq, the higher fee is reasonable because 
it reflects the ongoing costs in maintaining and supporting the ports, 
as well as the initial investment in such ports for the Exchange and 
the fewer subscribers among which it may spread fixed costs associated 
with offering the ports. As such, the Exchange believes that the 
proposed fees are consistent with those of other exchanges and 
therefore reasonable. The Exchange also believes that the proposed 
$7,500 fee cap is reasonable because, taken together with the proposed 
new fees, it will allow the Exchange to cover costs while reducing the 
impact of the fees on members that subscribe to a large number of 
ports. Because members generally need an increasing number of ports as 
provided under the Nasdaq GEMX Schedule of Fees Section IV.E.4. as 
their activity expands on the Exchange, the Exchange believes that 
without such a cap members may be inhibited from growing their activity 
on the Exchange. As a general principal, the Exchange believes that 
greater participation on the Exchange by members improves market 
quality for all market participants. Thus, in arriving at a fee cap of 
$7,500, the Exchange balanced the desire to improve market quality 
against the need to cover costs and make a profit. Last, the Exchange 
notes that BX provides its options participants a $7,500 per month fee 
cap for its options market connectivity.\17\
---------------------------------------------------------------------------

    \16\ See Rule 7015(g)(2).
    \17\ See BX Rules, Chapter XV Options Pricing, Sec. 3(b).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fees are an equitable 
allocation and are not unfairly discriminatory because the Exchange 
must ultimately assesses [sic] fees to cover the costs associated with 
offering the connectivity. The Exchange notes that members have 
historically paid fees for Exchange connectivity and, in adopting the 
connectivity for which the Exchange is proposing to assess a fee, it 
noted that it was not adopting a fee at that time to avoid being double 
charged for connectivity to the old Exchange architecture and the new 
Nasdaq INET architecture. Now that members no longer have connectivity 
to the old Exchange architecture, and therefore are not assessed 
connectivity fees, the Exchange is now proposing to assess fees for 
connectivity to the new Nasdaq INET architecture of the Exchange. The 
Exchange believes that the proposed $7,500 fee cap is an equitable 
allocation and is not unfairly discriminatory because the [sic] any 
member that subscribes to connectivity under the rule that would 
otherwise exceed $7,500 per month will have its fees capped. Although 
members that do not have fees under the rule in excess of $7,500 per 
month will not benefit from the fee cap, the Exchange notes that any 
member may increase the number of ports subscribed to receive the fee 
cap, should their activity on the Exchange warrant increased 
subscription. Moreover, members that do not qualify for the fee cap 
will benefit from the greater liquidity provided by members that 
conduct a sufficient level of activity on the Exchange to require 
connectivity in excess of the fee cap. For these reasons, the Exchange 
believes that the proposed fees are an equitable allocation and are not 
unfairly discriminatory.

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 terms of inter-market 
competition, 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 connect to third parties instead of directly 
connecting to the Exchange, the Exchange believes that the degree to 
which fee changes in this market may impose any burden on competition 
is extremely limited.
    In this instance, the proposed changes to the charges assessed for 
connectivity to the Exchange are consistent with the fees assessed by 
other exchanges for the same or similar connectivity. Moreover, the 
Exchange must assess fees to cover the costs incurred in providing 
connectivity and members had been assessed fees for Exchange 
connectivity prior to the sunset of the old Exchange architecture. As a 
consequence, competition will not be burdened by the proposed fees. 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.

[[Page 33170]]

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.\18\ 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-GEMX-2017-29 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-2017-29. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-GEMX-2017-29, and should be 
submitted on or before August 9, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017-15097 Filed 7-18-17; 8:45 am]
 BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.