Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Primary Market Maker Obligations, 60439-60442 [2017-27347]
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Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
advisors would know with greater
certainty when application for a CUSIP
number is required in private placement
transactions. Similarly, the Commission
believes that while in practice some
non-dealer municipal advisors may be
applying for CUSIP numbers in a
competitive offering before the final
award is made, the proposed rule
change, as modified by Amendment No.
1,would ensure that this is the case,
thus reducing the risk of delays in
secondary market trading where a
competitive offering is awarded but no
CUSIP number has been assigned. The
Commission notes that the MSRB
considered the impact of the proposed
rule change on non-dealer municipal
advisors and concluded that, while nondealer municipal advisors are likely to
incur up-front costs associated with
compliance with the proposed rule
change, the cost would be justified by
the likely benefits of the proposed rule
change over time.115
As noted above, the Commission
received eleven comment letters on the
Notice of Filing and two comment
letters on Amendment No. 1. The
Commission believes that the MSRB,
through its responses and through
Amendment No. 1, has addressed
commenters’ concerns.
For the reasons noted above, the
Commission believes that the proposed
rule change, as modified by Amendment
No. 1, is consistent with the Act.
VI. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause for
approving the proposed rule change, as
modified by Amendment No. 1, prior to
the 30th day after the date of
publication of the Notice of Amendment
No. 1 in the Federal Register. As
discussed above, Amendment No. 1
modifies the proposed rule change by
amending proposed paragraph Rule G–
34(a)(i)(F) of the proposed rule change
to require dealers (and municipal
advisors in a competitive sale) seeking
to rely on the principles-based
exception to reasonably believe the
purchaser’s present intent is to hold the
municipal securities to maturity ‘‘or
earlier redemption or mandatory
tender.’’ Amendment No. 1 also would
modify the proposed rule change to
expand the principles-based exception
in proposed paragraph Rule G–
34(a)(i)(F) to include cases where a
municipal entity purchases the
municipal securities with funds that are
at least in part proceeds of the
purchasing entity’s issue of municipal
obligations, or the municipal securities
being purchased are used to fully or
partially secure or pay the purchasing
entity’s issue of municipal obligations.
For consistency, Amendment No. 1 also
would apply the same amendments to
the principles-based exception for
dealers from the depository eligibility
requirements of the rule set forth in
subparagraph Rule G–34(a)(ii)(A)(3).116
The MSRB stated that the only
substantive change made by
Amendment No. 1 to the proposed rule
change is responsive to commenters and
that Amendment No. 1 expands the
application of the previously proposed
principles-based exception to include
sales of new issue municipal securities
to municipal entities that are purchasing
the underlying municipal securities
with funds that are at least in part
proceeds of the purchasing entity’s issue
of municipal obligations, or the
municipal securities being purchased
are used to fully or partially secure or
pay the purchasing entity’s issue of
municipal obligations.117 The MSRB
further noted that the other amendment
to the proposed rule change made by
Amendment No. 1 merely clarifies that
in a direct purchase transaction there
may be a redemption or mandatory
tender that occurs prior to the
municipal security’s maturity.118
Additionally, the MSRB stated that, in
light of one of the purposes of the
principles-based exception in the
proposed rule change—to allow dealers
and municipal advisors to provide
services without inhibiting their issuer
clients’ access to certain financings—the
revisions are consistent with the
proposed rule change.119
For the foregoing reasons, the
Commission finds good cause for
approving the proposed rule change, as
modified by Amendment No. 1, on an
accelerated basis, pursuant to Section
19(b)(2) of the Act.
VIII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,120 that the
proposed rule change (SR–MSRB–2017–
06), as modified by Amendment No. 1,
be, and hereby is, approved on an
accelerated basis.
116 See
November Response Letter.
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82326; File No. SR–GEMX–
2017–56]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Primary
Market Maker Obligations
December 14, 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 November
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 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 701, entitled ‘‘Openings,’’ to
specify the obligations of a Primary
Market Maker (‘‘PMM’’) when entering
Valid Width Quotes 3 during the
Opening Process.
The text of the proposed rule change
is available on the Exchange’s website at
https://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
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 A ‘‘Valid Width Quote’’ is a two-sided electronic
quotation submitted by a Market Maker that
consists of a bid/ask differential that is compliant
with Rule 803(b)(4). See Rule 701(a)(8).
2 17
119 Id.
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[FR Doc. 2017–27342 Filed 12–19–17; 8:45 am]
1 15
118 Id.
121 17
For the Commission, pursuant to delegated
authority.121
Eduardo A. Aleman,
Assistant Secretary.
Amendment No. 1.
117 Id.
120 15
115 See
60439
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
Rule 701, Openings, to amend the
obligations of a PMM when entering
Valid Width Quotes during the Opening
Process. In addition, the Exchange
proposes to make clear the obligations
of a PMM and a Competitive Market
Maker (‘‘CMM’’) once an options series
has opened.
Currently, Rule 701(c)(1) provides, the
Opening Process for an option series
will be conducted pursuant to
paragraphs (f)–(j) of GEMX Rule 701 on
or after 9:30 a.m. Eastern Time if: The
ABBO, if any, is not crossed; and the
system has received, within two
minutes (or such shorter time as
determined by the Exchange and
disseminated to membership on the
Exchange’s website) of the opening
trade or quote on the market for the
underlying security in the case of equity
options or, in the case of index options,
within two minutes of the receipt of the
opening price in the underlying index
(or such shorter time as determined by
the Exchange and disseminated to
membership on the Exchange’s website),
or within two minutes of market
opening for the underlying security in
the case of U.S. dollar-settled foreign
currency options (or such shorter time
as determined by the Exchange and
disseminated to membership on the
Exchange’s website) any of the
following: (i) The PMM’s Valid Width
Quote; (ii) the Valid Width Quotes of at
least two CMM or (iii) if neither the
PMM’s Valid Width Quote nor the Valid
Width Quotes of two CMMs have been
submitted within such timeframe, one
CMM has submitted a Valid Width
Quote.
Thereafter, Rule 701(c)(3) specifies
that the PMM assigned in a particular
equity or index option must enter a
Valid Width Quote, in 90% of their
assigned series, not later than one
minute following the dissemination of a
quote or trade by the market for the
underlying security or, in the case of
index options, following the receipt of
the opening price in the underlying
index. The PMM assigned in a
particular U.S. dollar-settled foreign
currency option must enter a Valid
Width Quote, in 90% of their assigned
series, not later than one minute after
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the announced market opening. PMMs
must promptly enter a Valid Width
Quote in the remainder of their assigned
series, which did not open within one
minute following the dissemination of a
quote or trade by the market for the
underlying security or, in the case of
index options, following the receipt of
the opening price in the underlying
index or, with respect to U.S. dollarsettled foreign currency options,
following the announced market
opening.
The Exchange proposes to make clear
that a PMM has the obligations specified
in GEMX Rule 701(c)(3) to promptly
enter a Valid Width Quote in the
remainder of their assigned series in
cases where the PMM’s assigned series
was not already opened by a CMM as
permitted by Rule 701(c)(1)(ii) and (iii)
as noted herein. The PMM would
continue to have the ultimate obligation
to open each assigned series, however
this rule change would not require the
PMM to enter a Valid Width Quote for
the 10% of their assigned series, not
later than one minute following the
dissemination of a quote or trade by the
market for the underlying security or, in
the case of index options, following the
receipt of the opening price in the
underlying index during the Opening
Process if an options series has opened
pursuant to Rule 701(c)(1)(ii) and (iii)
within the timeframe specified for the
PMM to enter a Valid Width Quote as
noted in Rule 701(c)(3). Also, the PMM
assigned in a particular U.S. dollarsettled foreign currency option would
not be required to enter a Valid Width
Quote for 10% of their assigned series,
not later than one minute after the
announced market opening during the
Opening Process if an options series
opened pursuant to Rule 701(c)(1)(ii)
and (iii) within the timeframe specified
for the PMM to enter a Valid Width
Quote as noted in Rule 701(c)(3).
Today GEMX Rule 701 requires a
PMM to open the market and provides
an alternative mechanism to permit an
alternative opening by a CMM.4 The
proposal seeks to make clear the
obligations of the PMM with respect to
options series that were open by a CMM
as well as the quoting obligations of a
CMM that opened the options series.
The Exchange proposes to amend GEMX
Rule 701(c)(3) to state that once an
option series has opened pursuant to
Rule 701(c)(1)(i)–(iii), a PMM must
submit continuous, two-sided quotes in
such option series pursuant to
Supplementary .01 to GEMX Rule 804.
The Exchange also proposes to amend
Rule 701(c)(4) to state that a CMM that
4 See
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GEMX Rule 701(c)(1)(i)–(iii).
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submits a quote during the opening in
any option series pursuant to Rule
701(c)(1)(ii) or (iii) must submit
continuous, two-sided quotes in such
options series pursuant to GEMX Rule
804(e)(2)(iii) once an option series has
opened. Specifically, the Exchange
proposes to add rule text to Rule
701(c)(3) to provide that ‘‘once an
options series has opened f pursuant to
Rule 701(c)(1)(i)–(iii), a PMM must
submit continuous, two-sided quotes in
such options series pursuant to
Supplementary Material .01 to Rule
804.’’ Further, the Exchange proposes to
add rule text to Rule 701(c)(4) to states
that ‘‘A CMM that submits a quote
pursuant to Rule 701 in any option
series when the PMM’s quote has not
been submitted shall be required, once
an options series has opened, to submit
continuous, two-sided quotes in such
option series pursuant to Rule
804(e)(2)(iii).’’
The Exchange proposes to make clear
that a PMM has an obligation to enter
Valid Width Quotes during the Opening
Process within the timeframes specified
in Rule 701(c)(3). In the event that an
options series opened pursuant to Rule
701(c)(1)(ii) and (iii), a PMM would be
required to submit continuous, twosided quotes in such options series
pursuant to Supplementary Material .01
to Rule 804. Also, in this instance, a
CMM would be required to submit
continuous, two-sided quotes in such
option series pursuant to Rule
804(e)(2)(iii). The Exchange notes that a
CMM would not have an obligation to
quote in such option series pursuant to
Rule 804(e)(2)(iii), unless the CMM
submitted a quote pursuant to Rule 701
or otherwise submitted a quote intraday.5 The purpose of this new rule text
is to make clear the quoting obligations
for both PMMs and CMMs during the
opening and the manner in which Rule
701, relating to the Opening Process,
and Rule 804, relating to Market Maker
quoting obligations, interact with each
other.
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
5 See GEMX Rule 804(e)(2)(i) which states, ‘‘On
any given day, a Competitive Market Maker is not
required to enter quotations in the options classes
to which it is appointed.’’
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
system, and, in general to protect
investors and the public interest by
amending GEMX Rule 701(c)(3) to
further specify a PMM’s obligations
during the Opening Process and once an
options series as opened as well as the
obligations of a CMM to the extent that
an options series opened pursuant to
Rule 701(c)(1)(ii) and (iii). The
Exchange believes that this proposal is
consistent with the Act because a PMM
continues to be responsible to enter
Valid Width Quotes during the Opening
Process and thereafter submit
continuous, two-sided quotes in such
options series pursuant to
Supplementary Material .01 to Rule 804.
In the event that an options series
opened pursuant to Rule 701(c)(1)(ii)
and (iii), the CMM must submit
continuous, two-sided quotes in such
option series, once the options series
has opened, pursuant to Rule
804(e)(2)(iii). The Exchange believes
that this proposed rule change will
make clear the obligations of the PMM
with respect to submitting Valid Width
Quotes and thereafter, once an options
series has opened, submitting
continuous two-sided quotes, when a
CMM may have already entered a quote
to open an options series. The
Exchange’s proposal to add rule text to
clearly specify the quoting obligations of
a PMM and CMM during the Opening
Process and once an option series has
opened will provide greater clarity to
the Opening Process and also to the
interplay between quoting obligations
during the Opening Process and intraday quoting obligations noted within
Rule 804.
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. Once an
options series has opened, [sic] a PMM
continues to be responsible to enter
Valid Width Quotes during the Opening
Process and thereafter submit
continuous, two-sided quotes in such
options series pursuant to
Supplementary Material .01 to Rule 804.
Also, if an options series opened
pursuant to GEMX Rule 701(c)(1)(ii) or
(iii), a CMM shall be required to submit
continuous, two-sided quotes in such
option series, once an option series has
opened. pursuant to Rule 804(e)(2)(iii).
This proposed rule text makes clear that
CMMs are required to submit
continuous, two-sided quotes in such
option series pursuant to Rule
804(e)(2)(iii), in the event an options
series opened pursuant to Rule
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Jkt 244001
701(c)(1)(ii) and (iii). The proposal
provides greater clarity to the Opening
Process and also to the interplay
between quoting obligations during the
Opening Process and intra-day quoting
obligations noted within Rule 804.
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 8 and
subparagraph (f)(6) of Rule 19b–4
thereunder.9
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of filing. However, Rule 19b–
4(f)(6)(iii) 10 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. In its
filing with the Commission, the
Exchange requests that the Commission
waive the 30-day operative delay. The
Exchange represents that the proposed
rule change would clarify the quoting
obligations for both PMMs and CMMs
during the Opening Process and the
manner in which Rule 701, relating to
the Opening Process, and Rule 804,
relating to Market Maker quoting
obligations, interact with each other.
According to the Exchange, these
obligations should be immediately
clarified to prevent confusion and
uncertainty for Market Makers quoting
on the Exchange. For the reasons
articulated by the Exchange, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Therefore, the
Commission designates the proposed
8 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
10 17 CFR 240.19b–4(f)(6)(iii).
9 17
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60441
rule change to be operative upon
filing.11
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–2017–56 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–2017–56. 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
11 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices
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–2017–56 and
should be submitted on or before
January 10, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27347 Filed 12–19–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82332; File No. SR–NYSE–
2017–30]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Designation of Longer Period for
Commission Action on Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change,
as Modified by Amendment No. 3, To
Amend Section 102.01B of the NYSE
Listed Company Manual To Provide for
the Listing of Companies That List
Without a Prior Exchange Act
Registration and That Are Not Listing
in Connection With an Underwritten
Initial Public Offering and Related
Changes to Rules 15, 104, and 123D
sradovich on DSK3GMQ082PROD with NOTICES
December 14, 2017.
On June 13, 2017, the New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
Rule 19b–4 thereunder,2 a proposed rule
change to amend Section 102.01B of the
NYSE Listed Company Manual to
modify the provisions relating to the
qualification of companies listing
without a prior Exchange Act
registration in connection with an
underwritten initial public offering. The
proposal also would (i) eliminate the
requirement to have a private placement
market trading price if there is a
valuation from an independent third12 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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party of $250 million in market value of
publicly-held shares; (ii) amend Rule 15
to add a Reference Price for when a
security is listed under Footnote (E) to
Section 102.01B; (iii) amend Rule 104 to
specify Designated Market Maker
(‘‘DMM’’) requirements when a security
is listed under Footnote (E) to Section
102.01B and there has been no trading
in the private market for such security;
and (iv) amend Rule 123D to specify
that the Exchange may declare a
regulatory halt in a security that is the
subject of an initial listing on the
Exchange.
The proposed rule change was
published for comment in the Federal
Register on June 20, 2017.3 The
Commission received one comment in
response to the Original Notice.4 The
Exchange filed Amendment No. 1 to the
proposed rule change on July 28, 2017,
which, as noted below, was later
withdrawn. On August 3, 2017, the
Commission extended the time period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change to
September 18, 2017.5
On August 16, 2017, the Exchange
withdrew Amendment No. 1 and filed
Amendment No. 2 to the proposed rule
change, which superseded and replaced
the proposed rule change in its
entirety.6 The Commission published
Amendment No. 2 for comment in the
Federal Register on August 24, 2017.7
On September 15, 2017, the
Commission instituted proceedings to
determine whether to approve or
disapprove the proposed rule change, as
modified by Amendment No. 2.8
Following the Order Instituting
Proceedings, the Commission received
one additional comment letter.9 On
December 8, 2017, the Exchange filed
Amendment No. 3 to the proposed rule
3 See Securities Exchange Act Release No. 80933
(June 15, 2017), 82 FR 28200 (June 20, 2017)
(‘‘Original Notice’’).
4 See letter to the Commission from James J.
Angel, Ph.D., CFA, Georgetown University, dated
July 28, 2017.
5 See Securities Exchange Act Release No. 81309
(August 3, 2017), 82 FR 37244 (August 9, 2017).
6 See Notice, infra note 7, at n. 8, which describes
the changes proposed in Amendment No. 2 from
the original proposal.
7 See Securities Exchange Act Release No. 81440
(August 18, 2017), 82 FR 40183 (August 24, 2017)
(‘‘Notice’’).
8 See Securities Exchange Act Release No. 81640
(September 15, 2017), 82 FR 44229 (September 21,
2017) (‘‘Order Instituting Proceedings’’).
9 See letter to Brent J. Fields, Commission, from
Cleary Gottlieb Steen & Hamilton, dated October 12,
2017.
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change, which superseded and replaced
the proposed rule change in its entirety.
Section 19(b)(2) of the Act 10 provides
that, after initiating proceedings, the
Commission shall issue an order
approving or disapproving the proposed
rule change not later than 180 days after
the date of publication of notice of the
filing of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change,
however, by not more than 60 days if
the Commission determines that a
longer period is appropriate and
publishes the reasons for such
determination. The proposed rule
change was published for notice and
comment in the Federal Register on
June 20, 2017.11 The 180th day after
publication of the Original Notice is
December 17, 2017. The Commission is
extending the time period for approving
or disapproving the proposal for an
additional 60 days.
The Commission finds that it is
appropriate to designate a longer period
within which to issue an order
approving or disapproving the proposed
rule change so that it has sufficient time
to consider the proposed rule change, as
modified by Amendment No. 3.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,12
designates February 15, 2018 as the date
by which the Commission should either
approve or disapprove the proposed
rule change (File No. SR–NYSE–2017–
30), as modified by Amendment No. 3.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27351 Filed 12–19–17; 8:45 am]
BILLING CODE 8011–01–P
10 15
U.S.C. 78s(b)(2).
supra note 3.
12 15 U.S.C. 78s(b)(2).
13 17 CFR 200.30–3(a)(57).
11 See
E:\FR\FM\20DEN1.SGM
20DEN1
]]>Agencies
[Federal Register Volume 82, Number 243 (Wednesday, December 20, 2017)]
[Notices]
[Pages 60439-60442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27347]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82326; File No. SR-GEMX-2017-56]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to Primary
Market Maker Obligations
December 14, 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 November 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 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 Rule 701, entitled ``Openings,'' to
specify the obligations of a Primary Market Maker (``PMM'') when
entering Valid Width Quotes \3\ during the Opening Process.
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\3\ A ``Valid Width Quote'' is a two-sided electronic quotation
submitted by a Market Maker that consists of a bid/ask differential
that is compliant with Rule 803(b)(4). See Rule 701(a)(8).
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The text of the proposed rule change is available on the Exchange's
website at https://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
[[Page 60440]]
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 is proposing to amend Rule 701, Openings, to amend the
obligations of a PMM when entering Valid Width Quotes during the
Opening Process. In addition, the Exchange proposes to make clear the
obligations of a PMM and a Competitive Market Maker (``CMM'') once an
options series has opened.
Currently, Rule 701(c)(1) provides, the Opening Process for an
option series will be conducted pursuant to paragraphs (f)-(j) of GEMX
Rule 701 on or after 9:30 a.m. Eastern Time if: The ABBO, if any, is
not crossed; and the system has received, within two minutes (or such
shorter time as determined by the Exchange and disseminated to
membership on the Exchange's website) of the opening trade or quote on
the market for the underlying security in the case of equity options
or, in the case of index options, within two minutes of the receipt of
the opening price in the underlying index (or such shorter time as
determined by the Exchange and disseminated to membership on the
Exchange's website), or within two minutes of market opening for the
underlying security in the case of U.S. dollar-settled foreign currency
options (or such shorter time as determined by the Exchange and
disseminated to membership on the Exchange's website) any of the
following: (i) The PMM's Valid Width Quote; (ii) the Valid Width Quotes
of at least two CMM or (iii) if neither the PMM's Valid Width Quote nor
the Valid Width Quotes of two CMMs have been submitted within such
timeframe, one CMM has submitted a Valid Width Quote.
Thereafter, Rule 701(c)(3) specifies that the PMM assigned in a
particular equity or index option must enter a Valid Width Quote, in
90% of their assigned series, not later than one minute following the
dissemination of a quote or trade by the market for the underlying
security or, in the case of index options, following the receipt of the
opening price in the underlying index. The PMM assigned in a particular
U.S. dollar-settled foreign currency option must enter a Valid Width
Quote, in 90% of their assigned series, not later than one minute after
the announced market opening. PMMs must promptly enter a Valid Width
Quote in the remainder of their assigned series, which did not open
within one minute following the dissemination of a quote or trade by
the market for the underlying security or, in the case of index
options, following the receipt of the opening price in the underlying
index or, with respect to U.S. dollar-settled foreign currency options,
following the announced market opening.
The Exchange proposes to make clear that a PMM has the obligations
specified in GEMX Rule 701(c)(3) to promptly enter a Valid Width Quote
in the remainder of their assigned series in cases where the PMM's
assigned series was not already opened by a CMM as permitted by Rule
701(c)(1)(ii) and (iii) as noted herein. The PMM would continue to have
the ultimate obligation to open each assigned series, however this rule
change would not require the PMM to enter a Valid Width Quote for the
10% of their assigned series, not later than one minute following the
dissemination of a quote or trade by the market for the underlying
security or, in the case of index options, following the receipt of the
opening price in the underlying index during the Opening Process if an
options series has opened pursuant to Rule 701(c)(1)(ii) and (iii)
within the timeframe specified for the PMM to enter a Valid Width Quote
as noted in Rule 701(c)(3). Also, the PMM assigned in a particular U.S.
dollar-settled foreign currency option would not be required to enter a
Valid Width Quote for 10% of their assigned series, not later than one
minute after the announced market opening during the Opening Process if
an options series opened pursuant to Rule 701(c)(1)(ii) and (iii)
within the timeframe specified for the PMM to enter a Valid Width Quote
as noted in Rule 701(c)(3).
Today GEMX Rule 701 requires a PMM to open the market and provides
an alternative mechanism to permit an alternative opening by a CMM.\4\
The proposal seeks to make clear the obligations of the PMM with
respect to options series that were open by a CMM as well as the
quoting obligations of a CMM that opened the options series. The
Exchange proposes to amend GEMX Rule 701(c)(3) to state that once an
option series has opened pursuant to Rule 701(c)(1)(i)-(iii), a PMM
must submit continuous, two-sided quotes in such option series pursuant
to Supplementary .01 to GEMX Rule 804. The Exchange also proposes to
amend Rule 701(c)(4) to state that a CMM that submits a quote during
the opening in any option series pursuant to Rule 701(c)(1)(ii) or
(iii) must submit continuous, two-sided quotes in such options series
pursuant to GEMX Rule 804(e)(2)(iii) once an option series has opened.
Specifically, the Exchange proposes to add rule text to Rule 701(c)(3)
to provide that ``once an options series has opened f pursuant to Rule
701(c)(1)(i)-(iii), a PMM must submit continuous, two-sided quotes in
such options series pursuant to Supplementary Material .01 to Rule
804.'' Further, the Exchange proposes to add rule text to Rule
701(c)(4) to states that ``A CMM that submits a quote pursuant to Rule
701 in any option series when the PMM's quote has not been submitted
shall be required, once an options series has opened, to submit
continuous, two-sided quotes in such option series pursuant to Rule
804(e)(2)(iii).''
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\4\ See GEMX Rule 701(c)(1)(i)-(iii).
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The Exchange proposes to make clear that a PMM has an obligation to
enter Valid Width Quotes during the Opening Process within the
timeframes specified in Rule 701(c)(3). In the event that an options
series opened pursuant to Rule 701(c)(1)(ii) and (iii), a PMM would be
required to submit continuous, two-sided quotes in such options series
pursuant to Supplementary Material .01 to Rule 804. Also, in this
instance, a CMM would be required to submit continuous, two-sided
quotes in such option series pursuant to Rule 804(e)(2)(iii). The
Exchange notes that a CMM would not have an obligation to quote in such
option series pursuant to Rule 804(e)(2)(iii), unless the CMM submitted
a quote pursuant to Rule 701 or otherwise submitted a quote intra-
day.\5\ The purpose of this new rule text is to make clear the quoting
obligations for both PMMs and CMMs during the opening and the manner in
which Rule 701, relating to the Opening Process, and Rule 804, relating
to Market Maker quoting obligations, interact with each other.
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\5\ See GEMX Rule 804(e)(2)(i) which states, ``On any given day,
a Competitive Market Maker is not required to enter quotations in
the options classes to which it is appointed.''
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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
[[Page 60441]]
system, and, in general to protect investors and the public interest by
amending GEMX Rule 701(c)(3) to further specify a PMM's obligations
during the Opening Process and once an options series as opened as well
as the obligations of a CMM to the extent that an options series opened
pursuant to Rule 701(c)(1)(ii) and (iii). The Exchange believes that
this proposal is consistent with the Act because a PMM continues to be
responsible to enter Valid Width Quotes during the Opening Process and
thereafter submit continuous, two-sided quotes in such options series
pursuant to Supplementary Material .01 to Rule 804. In the event that
an options series opened pursuant to Rule 701(c)(1)(ii) and (iii), the
CMM must submit continuous, two-sided quotes in such option series,
once the options series has opened, pursuant to Rule 804(e)(2)(iii).
The Exchange believes that this proposed rule change will make clear
the obligations of the PMM with respect to submitting Valid Width
Quotes and thereafter, once an options series has opened, submitting
continuous two-sided quotes, when a CMM may have already entered a
quote to open an options series. The Exchange's proposal to add rule
text to clearly specify the quoting obligations of a PMM and CMM during
the Opening Process and once an option series has opened will provide
greater clarity to the Opening Process and also to the interplay
between quoting obligations during the Opening Process and intra-day
quoting obligations noted within Rule 804.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Once an options series has
opened, [sic] a PMM continues to be responsible to enter Valid Width
Quotes during the Opening Process and thereafter submit continuous,
two-sided quotes in such options series pursuant to Supplementary
Material .01 to Rule 804. Also, if an options series opened pursuant to
GEMX Rule 701(c)(1)(ii) or (iii), a CMM shall be required to submit
continuous, two-sided quotes in such option series, once an option
series has opened. pursuant to Rule 804(e)(2)(iii). This proposed rule
text makes clear that CMMs are required to submit continuous, two-sided
quotes in such option series pursuant to Rule 804(e)(2)(iii), in the
event an options series opened pursuant to Rule 701(c)(1)(ii) and
(iii). The proposal provides greater clarity to the Opening Process and
also to the interplay between quoting obligations during the Opening
Process and intra-day quoting obligations noted within Rule 804.
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 \8\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. In its filing with the Commission,
the Exchange requests that the Commission waive the 30-day operative
delay. The Exchange represents that the proposed rule change would
clarify the quoting obligations for both PMMs and CMMs during the
Opening Process and the manner in which Rule 701, relating to the
Opening Process, and Rule 804, relating to Market Maker quoting
obligations, interact with each other. According to the Exchange, these
obligations should be immediately clarified to prevent confusion and
uncertainty for Market Makers quoting on the Exchange. For the reasons
articulated by the Exchange, the Commission believes that waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest. Therefore, the Commission designates the
proposed rule change to be operative upon filing.\11\
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\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ For purposes only of waiving the 30-day operative delay,
the Commission also 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 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-GEMX-2017-56 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-2017-56. 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
[[Page 60442]]
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-2017-56 and should be
submitted on or before January 10, 2018.
For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27347 Filed 12-19-17; 8:45 am]
BILLING CODE 8011-01-P
