Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Pricing Schedule at Options 7, Section 3, 5508-5511 [2019-02904]

Download as PDF amozie on DSK3GDR082PROD with NOTICES1 5508 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Notices the Commission to waive the 30-day operative delay so that the proposal may become operative upon filing. The Exchange states that waiver of the 30day operative delay would allow the Exchange to immediately amend its rules to correct an error, thereby increasing transparency around the Exchange’s use of the Halt Auction and ensuring that members and investors are appropriately apprised of the fact that this auction is limited to the resumption of trading following a Regulatory Halt, as has always been its practice. For these reasons, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.12 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 change should be approved or disapproved. 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–CboeBZX–2019–008 and should be submitted on or before March 14, 2019. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Eduardo A. Aleman, Deputy 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– CboeBZX–2019–008 on the subject line. SECURITIES AND EXCHANGE COMMISSION 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–CboeBZX–2019–008. This file number should be included on the subject line if email is used. To help the Commission process and review your 12 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). VerDate Sep<11>2014 17:08 Feb 20, 2019 Jkt 247001 [FR Doc. 2019–02903 Filed 2–20–19; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–85143; File No. SR–MRX– 2019–02] Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Pricing Schedule at Options 7, Section 3 February 14, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 31, 2019, Nasdaq MRX, LLC (‘‘MRX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 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 proposes to amend the Pricing Schedule at Options 7, Section 3, entitled ‘‘Regular Order Fees and Rebates.’’ While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on February 1, 2019. The text of the proposed rule change is available on the Exchange’s website at https://nasdaqmrx.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 amend the Pricing Schedule at Options 7, Section 3, entitled ‘‘Regular Order Fees and Rebates’’ at Table 2 to (1) amend PIM Fees for Crossing Orders 3 for both Penny and Non-Penny Symbols; (2) increase NonPenny Fees for Reponses to Crossing Orders; (3) adopt a letter ‘‘(c)’’ within Options 7, Section 1 for ease of reference to defined terms. The Exchange will describe each amendment below. 3 A ‘‘Crossing Order’’ is an order executed in the Exchange’s Facilitation Mechanism, Solicited Order Mechanism, Price Improvement Mechanism (‘‘PIM’’) or submitted as a Qualified Contingent Cross order. For purposes of this Pricing Schedule, orders executed in the Block Order Mechanism are also considered Crossing Orders. E:\FR\FM\21FEN1.SGM 21FEN1 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Notices amozie on DSK3GDR082PROD with NOTICES1 Fees for Crossing Orders Today, MRX assesses a Fee for Crossing Orders in Penny and NonPenny Symbols of $0.20 per contract for Market Maker,4 Non-Nasdaq MRX Market Maker,5 Firm Proprietary,6 Broker-Dealer,7 and Professional Customer 8 orders, and $0.00 per contract for Priority Customer Orders.9 These fees apply to both originating and contra-side orders for all Crossing Orders. MRX proposes to continue assessing the Fees for Crossing Orders in Table 2 for Penny and Non-Penny Symbols with respect to originating PIM Orders. MRX proposes to assess a Fee for Crossing Orders in all symbols for PIM orders of $0.05 per contract provided a market participant is on the contra-side of a PIM auction. This fee would apply to all market participants. This fee represents a reduced fee for Market Maker, NonNasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, and Professional Customer orders (from $0.20 to $0.05 per contract) and an increased fee for Priority Customers (from $0.00 to $0.05 per contract).10 Further, MRX proposes to pay a rebate to an originating Priority Customer PIM Order that executes with a response (an order or quote), other than the PIM contra-side order, of $0.40 per contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols. The Exchange believes that this proposal will encourage greater participation in PIM auctions. The Exchange proposes to amend note 1 within the Pricing Schedule at Options 7, Section 3 to add ‘‘-side’’ after the term ‘‘contra’’ in the existing 4 A ‘‘Market Maker’’ is a market maker as defined in Nasdaq MRX Rule 100(a)(30). Market Maker fees discussed in this section also apply to Market Maker orders sent to the Exchange by Electronic Access Members. 5 A ‘‘Non-Nasdaq MRX 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. 6 A ‘‘Firm Proprietary’’ order is an order submitted by a Member for its own proprietary account. 7 A ‘‘Broker-Dealer’’ order is an order submitted by a Member for a broker-dealer account that is not its own proprietary account. 8 A ‘‘Professional Customer’’ is a person or entity that is not a broker/dealer and is not a Priority Customer. 9 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 MRX Rule 100(a)(37A). 10 MRX is not amending fees with respect the Facilitation Mechanism, Solicited Order Mechanism, or an order submitted as a Qualified Contingent Cross order or an order executed in the Block Order Mechanism. VerDate Sep<11>2014 17:08 Feb 20, 2019 Jkt 247001 sentence. The Exchange also proposes to add the following text to that sentence, ‘‘. . . except for PIM Orders. With respect to PIM Orders, the Fees for Crossing Orders apply to PIM originating orders, however all market participants on the contra-side of a PIM auction will be assessed a Fee for Crossing Orders of $0.05 per contract. An originating Priority Customer PIM Order that executes with any response (order or quote), other than the PIM contra-side order, will receive a rebate of $0.40 per contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols.’’ Fees for Responses to Crossing Orders Today, MRX assesses a Fee for Responses to Crossing Orders of $0.50 per contract in Penny Symbols to all market participants and $0.95 per contract in Non-Penny Symbols to all market participants. MRX proposes to increase the Fees for Responses to Crossing Orders in NonPenny Symbols from $0.95 to $1.10 per contract for all market participants. No changes are proposed to Penny Symbols for Fees for Reponses to Crossing Orders. The Exchange proposes to utilize the increased rate to offer rebates to Priority Customers who submit PIM Orders as described above.11 Options 7, Section 1 The Exchange proposes to amend Options 7, Section 1 to add a letter ‘‘(c)’’ before certain defined terms for ease of reference. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,13 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 changes will attract PIM order flow to MRX, which will create trading opportunities on MRX to the benefit of all Members. 11 MRX proposes herein to pay a rebate to an originating Priority Customer PIM Order that executes with any response, other than the PIM contra-side order, of $0.40 per contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(4) and (5). PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 5509 Fees for Crossing Orders The Exchange believes that its proposal to assess contra-side PIM Orders a reduced Fee for Crossing Orders in both Penny and Non-Penny Symbols of $0.05 per contract instead of $0.20 per contract to Market Maker, Non-Nasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, and Professional Customer orders is reasonable because the Exchange proposes to encourage theses market participants to submit a greater amount of order flow to the MRX PIM auction. The Exchange believes that it is reasonable to assess Priority Customers an increased $0.05 per contract Fee for Crossing Orders 14 for contra-side PIM Orders in Penny and Non-Penny Symbols because the Exchange is also offering Priority Customers an opportunity to receive a rebate of $0.40 per contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols for any originating Priority Customer PIM Order that executes with any response, other than the PIM contraside order. As is the case today, Priority Customers will not pay a Fee for Crossing Orders in Penny and NonPenny Symbols with respect originating PIM Orders and non-PIM Crossing Order transactions. The Exchange believes that its proposal to assess contra-side PIM Orders a lower Fee for Crossing Orders in both Penny and Non-Penny Symbols of $0.05 per contract instead of $0.20 per contract to Market Maker, NonNasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, and Professional Customer orders is equitable and not unfairly discriminatory because the Exchange will uniformly charge all market participants, except Priority Customers, a lower contra-side Fee for Crossing PIM Orders in Penny and Non-Penny Symbols. While a Priority Customer’s contra-side Fee for Crossing PIM Orders will increase from $0.00 to $0.05 per contract in both Penny and Non-Penny Symbols, the Priority Customer has an opportunity to receive a rebate of $0.40 per contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols for any originating Priority Customer PIM Order that executes with any response, other than the PIM contraside order. As is the case today, Priority Customers will not pay an originating Fee for PIM Orders. Further, the Exchange notes that Priority Customer interest brings valuable liquidity to the 14 Today, Priority Customers pay no Fee for Crossing Orders (originating or contra-side orders) with respect to PIM transactions in either Penny or Non-Penny Symbols. E:\FR\FM\21FEN1.SGM 21FEN1 5510 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Notices market, which liquidity benefits other market participants. Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. Fees for Responses to Crossing Orders The Exchange believes that its proposal to increase the Non-Penny Symbol Fees for Responses to Crossing Orders from $0.95 to $1.10 per contract for all market participants is reasonable because while these fees are increasing the Exchange believes that the fees remain competitive and will continue to attract order flow to the Exchange. Further, the Exchange proposes to utilize the increased rate to offer rebates to Priority Customers who submit PIM Orders as described herein.15 Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. The Exchange believes that its proposal to increase the Non-Penny Symbol Fees for Responses to Crossing Orders from $0.95 to $1.10 per contract for all market participants is equitable and not unfairly discriminatory because all market participants will be uniformly assessed the increased fee in Non-Penny Symbols. amozie on DSK3GDR082PROD with NOTICES1 Options 7, Section 1 The Exchange’s proposal to amend Options 7, Section 1 to add a letter ‘‘(c)’’ before certain defined terms is reasonable, equitable and not unfairly discriminatory because this nonsubstantive amendment merely makes the section easier to reference. 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. The Exchange’s proposal does not impose a burden on inter-market competition because the proposed fee structure for Crossing Orders remains competitive with other options exchanges. MRX operates in a highly competitive market 15 See note 9 above. VerDate Sep<11>2014 17:08 Feb 20, 2019 Jkt 247001 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. 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. Fees for Crossing Orders The Exchange believes that its proposal to assess contra-side PIM Orders a lower Fee for Crossing Orders in both Penny and Non-Penny Symbols of $0.05 per contract instead of $0.20 per contract to Market Maker, NonNasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, and Professional Customer orders does not impose a burden on intra-market competition because the Exchange will uniformly pay all market participants, except Priority Customers, a lower contra-side Fee for Crossing PIM Orders in Penny and Non-Penny Symbols. While a Priority Customer’s contra-side Fee for Crossing PIM Orders will increase from $0.00 to $0.05 per contract in Penny and Non-Penny Symbols, the Priority Customer has an opportunity to receive a rebate of $0.40 per contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols for any originating Priority Customer PIM Order that executes with any response, other than the PIM contraside order. As is the case today, Priority Customers will not pay an originating Fee for PIM Orders. Further, the Exchange notes that Priority Customer interest brings valuable liquidity to the market, which liquidity benefits other market participants. Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Market Makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. Fees for Responses to Crossing Orders The Exchange believes that its proposal to increase the Non-Penny Symbol Fees for Responses to Crossing Orders from $0.95 to $1.10 per contract for all market participants does not impose a burden on intra-market competition because all market PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 participants will be uniformly assessed the increased fee in Non-Penny Symbols. Options 7, Section 1 The Exchange’s proposal to amend Options 7, Section 1 to add a letter ‘‘(c)’’ before certain defined terms does not impose an undue burden on intramarket competition because this nonsubstantive amendment merely makes the section easier to reference. 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.16 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. 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– MRX–2019–02 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–MRX–2019–02. This file number should be included on the subject line if email is used. To help the Commission process and review your 16 15 E:\FR\FM\21FEN1.SGM U.S.C. 78s(b)(3)(A)(ii). 21FEN1 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Notices 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–MRX–2019–02 and should be submitted on or before March 14, 2019. 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Deputy Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [FR Doc. 2019–02904 Filed 2–20–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85140; File No. SR–GEMX– 2019–01)] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Options Regulatory Fee amozie on DSK3GDR082PROD with NOTICES1 February 14, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 1, 2019, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 17:08 Feb 20, 2019 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. 1. Purpose Currently, GEMX assesses an ORF of $0.0020 per contract side. The Exchange proposes to decrease this ORF to $0.0018 per contract side as of February 1, 2019. GEMX proposes to decrease its ORF to ensure that regulatory revenues will not exceed regulatory costs. The Exchange’s proposed change to the ORF should balance the Exchange’s regulatory revenue against the anticipated regulatory costs. The Exchange also proposes to delete obsolete language in the rule text as described herein. Collection of ORF Currently, GEMX assesses its ORF for each customer option transaction that is either: (1) Executed by a Member on GEMX; or (2) cleared by a GEMX Member at The Options Clearing Corporation (‘‘OCC’’) in the customer range,3 even if the transaction was 3 Members must record the appropriate account origin code on all orders at the time of entry in order. The Exchange represents that it has 1 15 VerDate Sep<11>2014 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to revise GEMX’s Pricing Schedule to amend its Options Regulatory Fee or ‘‘ORF’’. 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. Jkt 247001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 5511 executed by a non-member of GEMX, regardless of the exchange on which the transaction occurs.4 If the OCC clearing member is a GEMX Member, ORF is assessed and collected on all cleared customer contracts (after adjustment for CMTA 5 ); and (2) if the OCC clearing member is not a GEMX Member, ORF is collected only on the cleared customer contracts executed at GEMX, taking into account any CMTA instructions which may result in collecting the ORF from a non-member. By way of example, if Broker A, a GEMX Member, routes a customer order to CBOE and the transaction executes on CBOE and clears in Broker A’s OCC Clearing account, ORF will be collected by GEMX from Broker A’s clearing account at OCC via direct debit. While this transaction was executed on a market other than GEMX, it was cleared by a GEMX Member in the member’s OCC clearing account in the customer range, therefore there is a regulatory nexus between GEMX and the transaction. If Broker A was not a GEMX Member, then no ORF should be assessed and collected because there is no nexus; the transaction did not execute on GEMX nor was it cleared by a GEMX Member. In the case where a Member both executes a transaction and clears the transaction, the ORF is assessed to and collected from that Member. In the case where a Member executes a transaction and a different member clears the transaction, the ORF is assessed to and collected from the Member who clears the transaction and not the Member who executes the transaction. In the case where a non-member executes a transaction at an away market and a Member clears the transaction, the ORF is assessed to and collected from the Member who clears the transaction. In the case where a Member executes a transaction on GEMX and a nonmember clears the transaction, the ORF is assessed to the Member that executed the transaction on GEMX and collected from the non-member who cleared the transaction. In the case where a Member executes a transaction at an away market and a non-member clears the transaction, the ORF is not assessed to the Member who executed the transaction or collected from the nonmember who cleared the transaction because the Exchange does not have access to the data to make absolutely surveillances in place to verify that members mark orders with the correct account origin code. 4 The Exchange uses reports from OCC when assessing and collecting the ORF. 5 CMTA or Clearing Member Trade Assignment is a form of ‘‘give-up’’ whereby the position will be assigned to a specific clearing firm at OCC. E:\FR\FM\21FEN1.SGM 21FEN1

Agencies

[Federal Register Volume 84, Number 35 (Thursday, February 21, 2019)]
[Notices]
[Pages 5508-5511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02904]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85143; File No. SR-MRX-2019-02]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the 
Pricing Schedule at Options 7, Section 3

February 14, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 31, 2019, Nasdaq MRX, LLC (``MRX'' 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.
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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 the Pricing Schedule at Options 7, 
Section 3, entitled ``Regular Order Fees and Rebates.''
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on February 1, 2019.
    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaqmrx.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 amend the Pricing 
Schedule at Options 7, Section 3, entitled ``Regular Order Fees and 
Rebates'' at Table 2 to (1) amend PIM Fees for Crossing Orders \3\ for 
both Penny and Non-Penny Symbols; (2) increase Non-Penny Fees for 
Reponses to Crossing Orders; (3) adopt a letter ``(c)'' within Options 
7, Section 1 for ease of reference to defined terms. The Exchange will 
describe each amendment below.
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    \3\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism (``PIM'') or submitted as a Qualified Contingent Cross 
order. For purposes of this Pricing Schedule, orders executed in the 
Block Order Mechanism are also considered Crossing Orders.

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[[Page 5509]]

Fees for Crossing Orders
    Today, MRX assesses a Fee for Crossing Orders in Penny and Non-
Penny Symbols of $0.20 per contract for Market Maker,\4\ Non-Nasdaq MRX 
Market Maker,\5\ Firm Proprietary,\6\ Broker-Dealer,\7\ and 
Professional Customer \8\ orders, and $0.00 per contract for Priority 
Customer Orders.\9\ These fees apply to both originating and contra-
side orders for all Crossing Orders.
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    \4\ A ``Market Maker'' is a market maker as defined in Nasdaq 
MRX Rule 100(a)(30). Market Maker fees discussed in this section 
also apply to Market Maker orders sent to the Exchange by Electronic 
Access Members.
    \5\ A ``Non-Nasdaq MRX 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.
    \6\ A ``Firm Proprietary'' order is an order submitted by a 
Member for its own proprietary account.
    \7\ A ``Broker-Dealer'' order is an order submitted by a Member 
for a broker-dealer account that is not its own proprietary account.
    \8\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \9\ 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 MRX Rule 
100(a)(37A).
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    MRX proposes to continue assessing the Fees for Crossing Orders in 
Table 2 for Penny and Non-Penny Symbols with respect to originating PIM 
Orders. MRX proposes to assess a Fee for Crossing Orders in all symbols 
for PIM orders of $0.05 per contract provided a market participant is 
on the contra-side of a PIM auction. This fee would apply to all market 
participants. This fee represents a reduced fee for Market Maker, Non-
Nasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, and 
Professional Customer orders (from $0.20 to $0.05 per contract) and an 
increased fee for Priority Customers (from $0.00 to $0.05 per 
contract).\10\
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    \10\ MRX is not amending fees with respect the Facilitation 
Mechanism, Solicited Order Mechanism, or an order submitted as a 
Qualified Contingent Cross order or an order executed in the Block 
Order Mechanism.
---------------------------------------------------------------------------

    Further, MRX proposes to pay a rebate to an originating Priority 
Customer PIM Order that executes with a response (an order or quote), 
other than the PIM contra-side order, of $0.40 per contract in Penny 
Symbols and $1.00 per contract in Non-Penny Symbols. The Exchange 
believes that this proposal will encourage greater participation in PIM 
auctions.
    The Exchange proposes to amend note 1 within the Pricing Schedule 
at Options 7, Section 3 to add ``-side'' after the term ``contra'' in 
the existing sentence. The Exchange also proposes to add the following 
text to that sentence, ``. . . except for PIM Orders. With respect to 
PIM Orders, the Fees for Crossing Orders apply to PIM originating 
orders, however all market participants on the contra-side of a PIM 
auction will be assessed a Fee for Crossing Orders of $0.05 per 
contract. An originating Priority Customer PIM Order that executes with 
any response (order or quote), other than the PIM contra-side order, 
will receive a rebate of $0.40 per contract in Penny Symbols and $1.00 
per contract in Non-Penny Symbols.''
Fees for Responses to Crossing Orders
    Today, MRX assesses a Fee for Responses to Crossing Orders of $0.50 
per contract in Penny Symbols to all market participants and $0.95 per 
contract in Non-Penny Symbols to all market participants.
    MRX proposes to increase the Fees for Responses to Crossing Orders 
in Non-Penny Symbols from $0.95 to $1.10 per contract for all market 
participants. No changes are proposed to Penny Symbols for Fees for 
Reponses to Crossing Orders. The Exchange proposes to utilize the 
increased rate to offer rebates to Priority Customers who submit PIM 
Orders as described above.\11\
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    \11\ MRX proposes herein to pay a rebate to an originating 
Priority Customer PIM Order that executes with any response, other 
than the PIM contra-side order, of $0.40 per contract in Penny 
Symbols and $1.00 per contract in Non-Penny Symbols.
---------------------------------------------------------------------------

Options 7, Section 1
    The Exchange proposes to amend Options 7, Section 1 to add a letter 
``(c)'' before certain defined terms for ease of reference.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\13\ 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 changes will attract PIM order flow 
to MRX, which will create trading opportunities on MRX to the benefit 
of all Members.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Fees for Crossing Orders
    The Exchange believes that its proposal to assess contra-side PIM 
Orders a reduced Fee for Crossing Orders in both Penny and Non-Penny 
Symbols of $0.05 per contract instead of $0.20 per contract to Market 
Maker, Non-Nasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, 
and Professional Customer orders is reasonable because the Exchange 
proposes to encourage theses market participants to submit a greater 
amount of order flow to the MRX PIM auction. The Exchange believes that 
it is reasonable to assess Priority Customers an increased $0.05 per 
contract Fee for Crossing Orders \14\ for contra-side PIM Orders in 
Penny and Non-Penny Symbols because the Exchange is also offering 
Priority Customers an opportunity to receive a rebate of $0.40 per 
contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols 
for any originating Priority Customer PIM Order that executes with any 
response, other than the PIM contra-side order. As is the case today, 
Priority Customers will not pay a Fee for Crossing Orders in Penny and 
Non-Penny Symbols with respect originating PIM Orders and non-PIM 
Crossing Order transactions.
---------------------------------------------------------------------------

    \14\ Today, Priority Customers pay no Fee for Crossing Orders 
(originating or contra-side orders) with respect to PIM transactions 
in either Penny or Non-Penny Symbols.
---------------------------------------------------------------------------

    The Exchange believes that its proposal to assess contra-side PIM 
Orders a lower Fee for Crossing Orders in both Penny and Non-Penny 
Symbols of $0.05 per contract instead of $0.20 per contract to Market 
Maker, Non-Nasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, 
and Professional Customer orders is equitable and not unfairly 
discriminatory because the Exchange will uniformly charge all market 
participants, except Priority Customers, a lower contra-side Fee for 
Crossing PIM Orders in Penny and Non-Penny Symbols. While a Priority 
Customer's contra-side Fee for Crossing PIM Orders will increase from 
$0.00 to $0.05 per contract in both Penny and Non-Penny Symbols, the 
Priority Customer has an opportunity to receive a rebate of $0.40 per 
contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols 
for any originating Priority Customer PIM Order that executes with any 
response, other than the PIM contra-side order. As is the case today, 
Priority Customers will not pay an originating Fee for PIM Orders. 
Further, the Exchange notes that Priority Customer interest brings 
valuable liquidity to the

[[Page 5510]]

market, which liquidity benefits other market participants. Priority 
Customer liquidity benefits all market participants by providing more 
trading opportunities, which attracts Market Makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants.
Fees for Responses to Crossing Orders
    The Exchange believes that its proposal to increase the Non-Penny 
Symbol Fees for Responses to Crossing Orders from $0.95 to $1.10 per 
contract for all market participants is reasonable because while these 
fees are increasing the Exchange believes that the fees remain 
competitive and will continue to attract order flow to the Exchange. 
Further, the Exchange proposes to utilize the increased rate to offer 
rebates to Priority Customers who submit PIM Orders as described 
herein.\15\ Priority Customer liquidity benefits all market 
participants by providing more trading opportunities, which attracts 
Market Makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
---------------------------------------------------------------------------

    \15\ See note 9 above.
---------------------------------------------------------------------------

    The Exchange believes that its proposal to increase the Non-Penny 
Symbol Fees for Responses to Crossing Orders from $0.95 to $1.10 per 
contract for all market participants is equitable and not unfairly 
discriminatory because all market participants will be uniformly 
assessed the increased fee in Non-Penny Symbols.
Options 7, Section 1
    The Exchange's proposal to amend Options 7, Section 1 to add a 
letter ``(c)'' before certain defined terms is reasonable, equitable 
and not unfairly discriminatory because this non-substantive amendment 
merely makes the section easier to reference.

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. The Exchange's proposal does 
not impose a burden on inter-market competition because the proposed 
fee structure for Crossing Orders remains competitive with other 
options exchanges. MRX 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. 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.
Fees for Crossing Orders
    The Exchange believes that its proposal to assess contra-side PIM 
Orders a lower Fee for Crossing Orders in both Penny and Non-Penny 
Symbols of $0.05 per contract instead of $0.20 per contract to Market 
Maker, Non-Nasdaq MRX Market Maker, Firm Proprietary, Broker-Dealer, 
and Professional Customer orders does not impose a burden on intra-
market competition because the Exchange will uniformly pay all market 
participants, except Priority Customers, a lower contra-side Fee for 
Crossing PIM Orders in Penny and Non-Penny Symbols. While a Priority 
Customer's contra-side Fee for Crossing PIM Orders will increase from 
$0.00 to $0.05 per contract in Penny and Non-Penny Symbols, the 
Priority Customer has an opportunity to receive a rebate of $0.40 per 
contract in Penny Symbols and $1.00 per contract in Non-Penny Symbols 
for any originating Priority Customer PIM Order that executes with any 
response, other than the PIM contra-side order. As is the case today, 
Priority Customers will not pay an originating Fee for PIM Orders. 
Further, the Exchange notes that Priority Customer interest brings 
valuable liquidity to the market, which liquidity benefits other market 
participants. Priority Customer liquidity benefits all market 
participants by providing more trading opportunities, which attracts 
Market Makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
Fees for Responses to Crossing Orders
    The Exchange believes that its proposal to increase the Non-Penny 
Symbol Fees for Responses to Crossing Orders from $0.95 to $1.10 per 
contract for all market participants does not impose a burden on intra-
market competition because all market participants will be uniformly 
assessed the increased fee in Non-Penny Symbols.
Options 7, Section 1
    The Exchange's proposal to amend Options 7, Section 1 to add a 
letter ``(c)'' before certain defined terms does not impose an undue 
burden on intra-market competition because this non-substantive 
amendment merely makes the section easier to reference.

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.\16\ 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.
---------------------------------------------------------------------------

    \16\ 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-MRX-2019-02 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-MRX-2019-02. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your

[[Page 5511]]

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-MRX-
2019-02 and should be submitted on or before March 14, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02904 Filed 2-20-19; 8:45 am]
BILLING CODE 8011-01-P
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