Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Increase Certain Route-Out Fees Set Forth in Section II.A of the Schedule of Fees, 28699-28701 [2018-13170]
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Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
registered under the Exchange Act, to
sell shares to Funds of Funds beyond
the limits of section 12(d)(1)(B) of the
Act. The application’s terms and
conditions are designed to, among other
things, help prevent any potential (i)
undue influence over a Fund through
control or voting power, or in
connection with certain services,
transactions, and underwritings, (ii)
excessive layering of fees, and (iii)
overly complex fund structures, which
are the concerns underlying the limits
in sections 12(d)(1)(A) and (B) of the
Act.
8. Applicants request an exemption
from sections 17(a)(1) and 17(a)(2) of the
Act to permit persons that are Affiliated
Persons, or Second Tier Affiliates, of the
Funds, solely by virtue of certain
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions, and Deposit Instruments
and Redemption Instruments will be
valued in the same manner as those
investment positions currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.3
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Applicants also request relief to
permit a Feeder Fund to acquire shares
of another registered investment
company managed by the Adviser
having substantially the same
investment objectives as the Feeder
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and
permit the Master Fund, and any
principal underwriter for the Master
Fund, to sell shares of the Master Fund
to the Feeder Fund beyond the
limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
3 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control
with an Adviser provides investment advisory
services to that Fund of Funds.
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Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–13217 Filed 6–19–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83445; File No. SR–GEMX–
2018–20]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Increase Certain
Route-Out Fees Set Forth in Section
II.A of the Schedule of Fees
June 14, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 1,
2018, 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.
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00093
Fmt 4703
Sfmt 4703
28699
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to increase
certain route-out fees set forth in
Section II.A of the Schedule of Fees.
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
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 increase certain route-out
fees set forth in Section II.A of the
Schedule of Fees. Today, the Exchange
charges Non-Priority Customers (i.e.,
Market Maker,3 Non-Nasdaq GEMX
Market Maker,4 Firm Proprietary 5/
Broker-Dealer,6 and Professional
Customer 7) route-out fees of $0.95 per
contract for orders in Non-Penny
Symbols that are routed to away
exchanges in connection with the
Options Order Protection and Locked/
Crossed Market Plan (the ‘‘Plan’’). The
Exchange now proposes to increase this
fee to $1.09 per contract for all NonPriority Customer orders in Non-Penny
Symbols that are routed to away
3 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See Rule 100(a)(30).
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.
5 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account.
6 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account.
7 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer.
E:\FR\FM\20JNN1.SGM
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28700
Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices
exchanges in connection with the Plan.
The Exchange believes that the
proposed increase will help offset the
costs associated with routing orders
through the Plan, such as paying the
transaction fees for such executions at
other exchanges.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,8 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,9 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 proposed
increase in the Non-Priority Customer
route-out fees from $0.95 to $1.09 per
contract for orders in Non-Penny
Symbols is reasonable because it is
designed to help recoup costs associated
with routing orders to away exchanges
in connection with the Plan, such as
paying the transaction fees for such
executions at other exchanges.
Furthermore, the Exchange notes that
the proposed fees remain competitive
with the fees of other options exchanges
which, in addition to a fixed routing fee,
assess the actual transaction fees.10
The Exchange believes that proposed
increase in the Non-Priority Customer
route-out fees is an equitable allocation
and is not unfairly discriminatory
because the Exchange will apply the
same fee to all similarly situated
members. The Exchange believes it is
equitable and not unfairly
discriminatory to increase the route-out
fees for all market participants other
than Priority Customers 11 because the
Exchange seeks to encourage Priority
Customer order flow and the liquidity
that such order flow brings to the
marketplace, which in turn benefits 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
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
10 For example, CBOE C2 Exchange, Inc. (‘‘C2’’)
charges $1.63 per routed contract for non-public
customer, non-C2 market-maker orders in nonpenny classes. See C2 Fees Schedule, Section 1.A
(Transaction Fees) and Section 2 (Linkage Routing).
11 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
Rule 100(a)(37A).
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any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. In particular,
the proposed increase to the route-out
fees will apply equally to all NonPriority Customer orders that are routed
to away exchanges in connection with
the Plan, and will help offset costs
associated with routing orders via the
Plan. Furthermore as noted above, the
Exchange believes that its proposed fees
remain competitive with another
options exchange.
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 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. 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.
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,12 and Rule
19b–4(f)(2) 13 thereunder. 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
12 15
13 17
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00094
Fmt 4703
Sfmt 4703
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.
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–2018–20 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–GEMX–2018–20. 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–GEMX–2018–20 and
E:\FR\FM\20JNN1.SGM
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Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices
should be submitted on or before July
11, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–13170 Filed 6–19–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83432; File No. SR–NYSE–
2018–26]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change, as
Modified by Amendment No. 1, To
Amend Pillar Trading Platform Rule
7.31 Relating to Reserve Orders and
Rule 7.36 Relating to Setter Priority
June 14, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 1,
2018, New York Stock Exchange LLC
(‘‘NYSE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule
change. On June 8, 2018, the Exchange
filed Amendment No. 1 to the proposed
rule change, as described in Items I, II,
and III below, which Items have been
prepared by the Exchange.4 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
sradovich on DSK3GMQ082PROD with NOTICES
The Exchange proposes to amend
Pillar trading platform Rule 7.31 relating
to Reserve Orders and Rule 7.36 relating
to Setter Priority. This Amendment No.
1 supersedes the original filing in its
entirety. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 Amendment No. 1 replaces and supersedes the
original filing in its entirety. In Amendment No. 1,
the Exchange modified the definition of ‘‘child
order’’ in proposed rule 7.31.
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
self-regulatory organization 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 those 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 7.31 relating to Reserve Orders and
Rule 7.36 relating to Setter Priority.
These proposed changes would be
operative for trading on the Pillar
trading platform only. Because the
Exchange trades only UTP Securities 5
on the Pillar trading platform at this
time, these proposed changes would not
be applicable to NYSE-listed securities.
Background
Rule 7.31(d)(1) defines a Reserve
Order as a Limit Order with a quantity
of the size displayed and with a reserve
quantity of the size (‘‘reserve interest’’)
that is not displayed. The displayed
quantity of a Reserve Order is ranked
Priority 2—Display Orders and the
reserve interest is ranked Priority 3—
Non-Display Orders.6 Rule 7.31(d)(1)(A)
provides that on entry, the display
quantity of a Reserve Order must be
entered in round lots and the displayed
portion of a Reserve Order will be
replenished following any execution.
That rule further provides that the
Exchange will display the full size of
the Reserve Order when the unfilled
quantity is less than the minimum
display size for the order. Rule
7.31(d)(1)(B) provides that each time a
Reserve Order is replenished from
reserve interest, a new working time is
assigned to the replenished quantity of
the Reserve Order, while the reserve
interest retains the working time of
original order entry. Pursuant to Rule
14 17
1 15
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17:58 Jun 19, 2018
Jkt 244001
5 The term ‘‘UTP Securities’’ is defined in Rule
1.1 to mean a security that is listed on a national
securities exchange other than the Exchange and
that trades on the Exchange pursuant to unlisted
trading privileges.
6 The terms ‘‘Priority 2—Display Orders’’ and
‘‘Priority 3—Non-Display Orders’’ are defined in
Rule 7.36(e).
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
28701
7.31(d)(1)(C), a Reserve Order must be
designated Day and may be combined
with a Limit Non-Routable Order or a
Primary Pegged Order.
Rule 7.36(h) provides that Setter
Priority will be assigned to an order
ranked Priority 2—Display Orders with
a display quantity of at least a round lot
if such order (i) establishes a new BBO
and (ii) either establishes a new NBBO
or joins an Away Market NBBO and that
only one order is eligible for Setter
Priority at each price.7 Rule 7.36(h)(1)
provides that an order will be evaluated
for Setter Priority on arrival, which
includes when any portion of an order
that has routed returns unexecuted and
when it becomes eligible to trade for the
first time upon transitioning to a new
trading session.
Proposed Rule Change to Reserve
Orders
The Exchange proposes to amend
Rule 7.31(d)(1) to change the manner by
which the display portion of a Reserve
Order would be replenished. As
proposed, rather than replenishing the
display quantity following any
execution, the Exchange proposes to
replenish the Reserve Order when the
display quantity is decremented to
below a round lot. This proposed
functionality is consistent with how
Reserve Orders are replenished on other
equity exchanges.8
As is currently the case, the replenish
quantity would be the minimum display
size of the order or the remaining
quantity of reserve interest if it is less
than the minimum display quantity. To
reflect this functionality, the Exchange
proposes that Rule 7.31(d)(1)(A) would
be amended as follows (deleted text
bracketed; new text underlined):
(A) On entry, the display quantity of
a Reserve Order must be entered in
round lots. The displayed portion of a
Reserve Order will be replenished when
the display quantity is decremented to
below a round lot. The replenish
quantity will be the minimum display
quantity of the order or the remaining
quantity of the reserve interest if it is
less than the minimum display quantity
[following any execution. The Exchange
will display the full size of the Reserve
Order when the unfilled quantity is less
than the minimum display size for the
order].
Under current functionality, because
the replenished quantity is assigned a
new working time, it is feasible for a
single Reserve Order to have multiple
7 The terms ‘‘BBO,’’ ‘‘NBBO,’’ ‘‘PBBO,’’ and
‘‘Away Market’’ are defined in Rule 1.1.
8 See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule
11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’)
Rule 7503(h).
E:\FR\FM\20JNN1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28699-28701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13170]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83445; File No. SR-GEMX-2018-20]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Increase Certain
Route-Out Fees Set Forth in Section II.A of the Schedule of Fees
June 14, 2018.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 1, 2018, 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.
---------------------------------------------------------------------------
\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 increase certain route-out fees set forth
in Section II.A of the Schedule of Fees.
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 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 increase certain
route-out fees set forth in Section II.A of the Schedule of Fees.
Today, the Exchange charges Non-Priority Customers (i.e., Market
Maker,\3\ Non-Nasdaq GEMX Market Maker,\4\ Firm Proprietary \5\/Broker-
Dealer,\6\ and Professional Customer \7\) route-out fees of $0.95 per
contract for orders in Non-Penny Symbols that are routed to away
exchanges in connection with the Options Order Protection and Locked/
Crossed Market Plan (the ``Plan''). The Exchange now proposes to
increase this fee to $1.09 per contract for all Non-Priority Customer
orders in Non-Penny Symbols that are routed to away
[[Page 28700]]
exchanges in connection with the Plan. The Exchange believes that the
proposed increase will help offset the costs associated with routing
orders through the Plan, such as paying the transaction fees for such
executions at other exchanges.
---------------------------------------------------------------------------
\3\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Rule
100(a)(30).
\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.
\5\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account.
\6\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
\7\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\9\ 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.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that proposed increase in the Non-Priority
Customer route-out fees from $0.95 to $1.09 per contract for orders in
Non-Penny Symbols is reasonable because it is designed to help recoup
costs associated with routing orders to away exchanges in connection
with the Plan, such as paying the transaction fees for such executions
at other exchanges. Furthermore, the Exchange notes that the proposed
fees remain competitive with the fees of other options exchanges which,
in addition to a fixed routing fee, assess the actual transaction
fees.\10\
---------------------------------------------------------------------------
\10\ For example, CBOE C2 Exchange, Inc. (``C2'') charges $1.63
per routed contract for non-public customer, non-C2 market-maker
orders in non-penny classes. See C2 Fees Schedule, Section 1.A
(Transaction Fees) and Section 2 (Linkage Routing).
---------------------------------------------------------------------------
The Exchange believes that proposed increase in the Non-Priority
Customer route-out fees is an equitable allocation and is not unfairly
discriminatory because the Exchange will apply the same fee to all
similarly situated members. The Exchange believes it is equitable and
not unfairly discriminatory to increase the route-out fees for all
market participants other than Priority Customers \11\ because the
Exchange seeks to encourage Priority Customer order flow and the
liquidity that such order flow brings to the marketplace, which in turn
benefits all market participants.
---------------------------------------------------------------------------
\11\ 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 Rule
100(a)(37A).
---------------------------------------------------------------------------
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 particular, the proposed
increase to the route-out fees will apply equally to all Non-Priority
Customer orders that are routed to away exchanges in connection with
the Plan, and will help offset costs associated with routing orders via
the Plan. Furthermore as noted above, the Exchange believes that its
proposed fees remain competitive with another options exchange.
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 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. 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.
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,\12\ and Rule 19b-4(f)(2) \13\ thereunder.
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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
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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-2018-20 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-GEMX-2018-20. 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-GEMX-2018-20 and
[[Page 28701]]
should be submitted on or before July 11, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13170 Filed 6-19-18; 8:45 am]
BILLING CODE 8011-01-P
