Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend GEMX's Pricing Schedule at Options 7, Section 3, 3866-3869 [2022-01325]
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Federal Register / Vol. 87, No. 16 / Tuesday, January 25, 2022 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93999; File No. SR–GEMX–
2022–01]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend GEMX’s
Pricing Schedule at Options 7, Section
3
January 19, 2022.
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 4,
2022, Nasdaq GEMX, LLC (‘‘GEMX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I 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
GEMX’s Pricing Schedule at Options 7,
Section 3, titled ‘‘Regular Order Fees
and Rebates.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/gemx/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
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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
GEMX proposes to amend its Regular
Order Fees and Rebates within Options
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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7, Section 3. Specifically, the Exchange
proposes to: (1) Decrease the Priority
Customer 3 Tier 1 Taker Fee in Penny
Symbols; 4 and (2) eliminate the Tier 5
Maker Rebates and Taker Fees in Penny
Symbols and Non-Penny Symbols.5
Each amendment is described below.
Priority Customer Taker Fee
Currently, Priority Customers are
assessed Penny Symbol Taker Fees as
follows: A Tier 1 Taker Fee of $0.49 per
contract; a Tier 2 Taker Fee of $0.48 per
contract; a Tier 3 Taker Fee of $0.48 per
contract; a Tier 4 Taker Fee of $0.43 per
contract; and a Tier 5 Taker Fee of $0.42
per contract. Other GEMX market
participants are assessed higher Penny
Symbol Taker Fees as compared to
Priority Customers. Market Makers 6 and
Non-Nasdaq GEMX Market Makers
(FarMM) 7 are assessed Tier 1 through
Tier 3 Penny Symbol Taker Fee of $0.50
per contract and a Tier 4 and Tier 5
Penny Symbol Taker Fee of $0.48 per
contract.8 Firm Proprietary 9/Broker
3 A ‘‘Priority Customer’’ is a person or entity that
is not a broker/dealer in securities, and does not
place more than 390 orders in listed options per day
on average during a calendar month for its own
beneficial account(s), as defined in Nasdaq GEMX
Options 1, Section 1(a)(36). Unless otherwise noted,
when used in this Pricing Schedule the term
‘‘Priority Customer’’ includes ‘‘Retail’’ as defined
below. See Options 7, Section 1.
4 ‘‘Penny Symbols’’ are options overlying all
symbols listed on Nasdaq GEMX that are in the
Penny Interval Program. See Options 7, Section 1.
5 ‘‘Non-Penny Symbols’’ are options overlying all
symbols excluding Penny Symbols. See Options 7,
Section 1.
6 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See Options 1, Section
1(a)(21).
7 A ‘‘Non-Nasdaq GEMX Market Maker’’ is a
market maker as defined in Section 3(a)(38) of the
Securities Exchange Act of 1934, as amended,
registered in the same options class on another
options exchange. See GEMX Options 7, Section 1.
8 Non-Priority Customer orders are charged the
Taker Fee for trades executed during the Opening
Process. Priority Customer orders executed during
the Opening Process receive the applicable Maker
Rebate based on the tier achieved. Non-Priority
Customers who execute less than 4.0% of Customer
Total Consolidated Volume are charged a Taker Fee
of $0.50 per contract for trades executed against a
Priority Customer. Non-Priority Customers who
execute 4.0% or greater of Customer Total
Consolidated Volume are charged a Taker Fee of
$0.47 per contract for trades executed against a
Priority Customer. All Priority Customer orders are
charged a Taker Fee of $0.49 per contract for trades
executed against a Priority Customer. For purposes
of note 13 within Options 7, Section 3, Customer
Total Consolidated Volume means the total volume
cleared at The Options Clearing Corporation in the
Customer range in equity and ETF options in that
month. See notes 4 and 16 of Options 7, Section 3.
9 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account. See GEMX Options 7, Section 1.
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Dealers 10 and Professional Customers 11
are assessed Tier 1 through Tier 3 Penny
Symbol Taker Fee of $0.50 per contract
and a Tier 4 and Tier 5 Penny Symbol
Taker Fee of $0.49 per contract.12
At this time, the Exchange proposes to
decrease the current Tier 1 Priority
Customer Penny Symbol Taker Fee from
$0.49 to $0.48 per contract. The
Exchange believes that lowering the Tier
1 Priority Customer Penny Symbol
Taker Fee will attract additional order
flow to the Exchange. With this
proposal, Priority Customers continue to
be assessed the lowest Penny Symbol
Taker Fees.
Tier 5 Maker Rebates and Taker Fees
Today, GEMX pays the following Tier
5 Penny Symbol Maker Rebates: $0.45
per contract to Market Makers and $0.53
per contract to Priority Customers. NonNasdaq GEMX Market Makers (FarMM),
Firm Proprietary/Broker Dealers and
Professional Customers are not eligible
for Tier 5 Penny Symbol Maker Rebates.
Today, GEMX pays the following Tier 5
Non-Penny Symbol Maker Rebates:
$0.75 per contract to Market Makers and
$1.05 per contract to Priority Customers.
Non-Nasdaq GEMX Market Makers
(FarMM), Firm Proprietary/Broker
Dealers and Professional Customers are
not eligible for Tier 5 Non-Penny
Symbol Maker Rebates. Market Maker
and Priority Customer orders are eligible
for higher Penny and Non-Penny
Symbol Maker Rebates based on
achieving volume thresholds in Table 1
within Options 7, Section 3.13
Today, GEMX assesses the following
Tier 5 Penny Symbol Taker Fees: $0.48
per contract to Market Makers and NonNasdaq GEMX Market Makers (FarMM),
$0.49 per contract to Firm Proprietary/
Broker Dealers and Professional
Customers, and $0.42 per contract to
Priority Customers.14 Today, GEMX
assesses the following Tier 5 Non-Penny
Symbol Taker Fees: $0.94 per contract
to Market Makers, Non-Nasdaq GEMX
Market Makers (FarMM), Firm
Proprietary/Broker Dealers, and
Professional Customers, and $0.82 per
contract to Priority Customers.15
At this time, the Exchange proposes to
eliminate Penny and Non-Penny
Symbol Tier 5 Maker Rebates and Taker
10 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account. See GEMX Options 7,
Section 1.
11 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer. See GEMX Options 7, Section 1.
12 See note 8 above.
13 See note 5 of Options 7, Section 3.
14 See note 8 above.
15 See note 8 above.
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Federal Register / Vol. 87, No. 16 / Tuesday, January 25, 2022 / Notices
Fees. The Exchange also proposes to
amend the criteria for Tier 4 of the
Qualifying Tier Thresholds, within
Table 1 of Options 7, Section 3, so that
volume that is 2.5% or greater of
Customer Total Consolidated Volume
and Priority Customer Maker Percentage
of Customer Total Consolidated Volume
of 1.20% or greater would qualify a
GEMX Member for the Tier 4 Penny and
Non-Penny Symbol Maker Rebates and
Taker Fees.
The elimination of the Tier 5 Penny
Symbol Maker Rebates would result in
no change as the same Tier 5 Penny
Symbol Maker Rebates exist for Tier 4
Penny Symbol Maker Rebates, with the
exception of the Penny Symbol Market
Maker Rebate. The Tier 5 Penny Symbol
Market Maker Rebate is $0.45 per
contract, while the Tier 4 Penny Symbol
Market Maker Rebate is $0.41 per
contract. With this proposal, the highest
Penny Symbol Market Maker Rebate
that can be achieved would now be
$0.41 per contract.
The elimination of the Tier 5 Penny
Symbol Taker Fees would result in no
change as the same Tier 5 Penny
Symbol Taker Fees exist for Tier 4
Penny Symbol Taker Fees, with the
exception of the Priority Customer
Penny Symbol Taker Fee. The Tier 5
Penny Symbol Priority Customer Taker
Fee is $0.42 per contract, while the Tier
4 Penny Symbol Priority Customer
Taker Fee is $0.43 per contract. With
this proposal, the lowest Penny Symbol
Priority Customer Taker Fee that would
be assessed would now be $0.43 per
contract.
The elimination of the Tier 5 NonPenny Symbol Maker Rebates and Taker
Fees would result in no change as the
same Tier 5 Non-Penny Symbol Maker
Rebates and Taker Fees exist for Tier 4
Non-Penny Symbol Maker Rebates and
Taker Fees. As noted, with the amended
Tier 4 criteria, a GEMX Member would
continue to be able to achieve the same
Non-Penny Symbol Maker Rebates and
Taker Fees that are currently offered for
Tier 4 Non-Penny Symbol Maker
Rebates and Taker Fees.
With these proposed changes, Priority
Customers would continue to be paid
the highest Market Rebates and be
assessed the lowest Taker Fees in both
Penny and Non-Penny Symbols.
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 Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 18
Likewise, in NetCoalition v. Securities
and Exchange Commission 19
(‘‘NetCoalition’’) the D.C. Circuit upheld
the Commission’s use of a market-based
approach in evaluating the fairness of
market data fees against a challenge
claiming that Congress mandated a costbased approach.20 As the court
emphasized, the Commission ‘‘intended
in Regulation NMS that ‘market forces,
rather than regulatory requirements’
play a role in determining the market
data . . . to be made available to
investors and at what cost.’’ 21
Further, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’ 22 Although the court
and the SEC were discussing the cash
equities markets, the Exchange believes
that these views apply with equal force
to the options markets.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,16 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,17 in particular, in that it
18 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
19 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
20 See NetCoalition, at 534–535.
21 Id. at 537.
22 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
16 15
17 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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17:19 Jan 24, 2022
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Priority Customer Taker Fee
The Exchange’s proposal to decrease
the current Tier 1 Priority Customer
PO 00000
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3867
Penny Symbol Taker Fee from $0.49 to
$0.48 per contract is reasonable as this
decrease would result in a lower Tier 1
Priority Customer Penny Symbol Taker
Fee. The Exchange believes that
lowering the Tier 1 Priority Customer
Penny Symbol Taker Fee will attract
additional order flow to the Exchange.
With this proposal, Priority Customers
continue to be assessed the lowest
Penny Symbol Taker Fees.
The Exchange’s proposal to decrease
the current Tier 1 Priority Customer
Penny Symbol Taker Fee from $0.49 to
$0.48 per contract is equitable and not
unfairly discriminatory. Priority
Customers continue to be assessed the
lowest Penny Symbol Taker Fees.
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.
Tier 5 Maker Rebates and Taker Fees
The Exchange’s proposal to eliminate
Penny and Non-Penny Symbol Tier 5
Maker Rebates and Taker Fees is
reasonable. The elimination of the Tier
5 Penny Symbol Maker Rebates would
result in no change as the same Tier 5
Penny Symbol Maker Rebates exist for
Tier 4 Penny Symbol Maker Rebates,
with the exception of the Penny Symbol
Market Maker Rebate. The Tier 5 Penny
Symbol Market Maker Rebate is $0.45
per contract, while the Tier 4 Penny
Symbol Market Maker Rebate is $0.41
per contract. With this proposal, the
highest Penny Symbol Market Maker
Rebate that can be achieved would now
be $0.41 per contract. The elimination
of the Tier 5 Penny Symbol Taker Fees
would result in no change as the same
Tier 5 Penny Symbol Taker Fees exist
for Tier 4 Penny Symbol Taker Fees,
with the exception of the Priority
Customer Penny Symbol Taker Fee. The
Tier 5 Penny Symbol Priority Customer
Taker Fee is $0.42 per contract, while
the Tier 4 Penny Symbol Priority
Customer Taker Fee is $0.43 per
contract. With this proposal, the lowest
Priority Customer Penny Symbol Taker
Fee that would be assessed would now
be $0.43 per contract. Notwithstanding,
the decreased Penny Symbol Market
Maker Rebate of $0.45 per contract and
the increased Priority Customer Penny
Symbol Taker Fee of $0.43 per contract,
the Exchange believes that the Market
and Taker Tier 4 pricing in Penny
Symbols will continue to attract order
flow to GEMX. The elimination of the
Tier 5 Non-Penny Symbol Maker
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Federal Register / Vol. 87, No. 16 / Tuesday, January 25, 2022 / Notices
Rebates and Taker Fees would result in
no change as the same Tier 5 Non-Penny
Symbol Maker Rebates and Taker Fees
exist for Tier 4 Non-Penny Symbol
Maker Rebates and Taker Fees. As
noted, with the amended Tier 4 criteria
a GEMX Member would continue to be
able to achieve the same Non-Penny
Symbol Maker Rebates and Taker Fees
that are currently offered for Tier 4 NonPenny Symbol Maker Rebates and Taker
Fees. With these proposed changes,
Priority Customers would continue to be
paid the highest Market Rebates and be
assessed the lowest Taker Fees in Penny
and Non-Penny Symbols.
The Exchange’s proposal to eliminate
the Penny and Non-Penny Symbol Tier
5 Maker Rebates and Taker Fees is
equitable and not unfairly
discriminatory. All Members that meet
the qualifications of the Tier 1 through
Tier 4 Qualifying Tier Thresholds
would continue to be eligible,
uniformly, to receive the corresponding
rebates and fees.
Qualifying Tier Thresholds
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The Exchange’s proposal to amend
the description of Tier 4 of the
Qualifying Tier Thresholds, within
Table 1 of Options 7, Section 3, with
respect to the Total Affiliated Member
% of Customer Total Consolidated
Volume,23 to require that a member
execute 2.5% or greater of Customer
Total Consolidated Volume is
reasonable, equitable and not unfairly
discriminatory. Also, the Exchange’s
proposal to amend the description of the
Tier 4 of Qualifying Tier Threshold with
respect to the Priority Customer Maker
% of Customer Total Consolidated
Volume,24 to require that a member
executes Priority Customer Maker
volume of 1.20% or greater of Customer
Total Consolidated Volume is
reasonable, equitable and not unfairly
discriminatory. With the elimination of
Tier 5 Penny and Non-Penny Symbol
Maker Rebates and Taker Fees, the Tier
4 Penny and Non-Penny Symbol Maker
Rebates and Taker Fees would be the
highest Maker Rebate and lowest Taker
Fee. All Members that meet the
qualifications of the Tier 4 Qualifying
Tier Threshold would be eligible,
uniformly, to receive the corresponding
rebates and fees.
23 For purposes of measuring Total Affiliated
Member % of Customer Total Consolidated
Volume, Customer Total Consolidated Volume
means the total volume cleared at The Options
Clearing Corporation in the Customer range in
equity and ETF options in that month.
24 The Priority Customer Maker % of Customer
Total Consolidated Volume category includes all
Priority Customer volume that adds liquidity in all
symbols.
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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.
Fees is equitable and not unfairly
discriminatory. All Members that meet
the qualifications of the Tier 1 through
Tier 4 Qualifying Tier Thresholds
would continue to be eligible,
uniformly, to receive the corresponding
rebates and fees.
Inter-Market Competition
The proposal does not impose an
undue burden on inter-market
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
of where to transact options. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges 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.
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.
Intra-Market Competition
The proposed amendments do not
impose an undue burden on intramarket competition.
Priority Customer Taker Fee
The Exchange’s proposal to decrease
the current Tier 1 Priority Customer
Penny Symbol Taker Fee from $0.49 to
$0.48 per contract does not impose an
undue burden on competition. Priority
Customers continue to be assessed the
lowest Penny Symbol Taker Fees.
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.
Tier 5 Maker Rebates and Taker Fees
The Exchange’s proposal to eliminate
Penny and Non-Penny Symbol Tier 5
Maker Rebates and Taker Fees does not
impose an undue burden on
competition. Exchange’s proposal to
eliminate the Penny and Non-Penny
Symbol Tier 5 Maker Rebates and Taker
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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,25 and Rule
19b–4(f)(2) 26 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.
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–2022–01 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–2022–01. 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
25 15
26 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
25JAN1
Federal Register / Vol. 87, No. 16 / Tuesday, January 25, 2022 / Notices
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–2022–01 and
should be submitted on or before
February 15, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01325 Filed 1–24–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94006; File No. SR–
NYSEArca–2021–37]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Disapproving a
Proposed Rule Change To List and
Trade Shares of the First Trust
SkyBridge Bitcoin ETF Trust Under
NYSE Arca Rule 8.201–E
khammond on DSKJM1Z7X2PROD with NOTICES
January 20, 2022.
I. Introduction
On May 6, 2021, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to list and trade
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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17:19 Jan 24, 2022
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shares (‘‘Shares’’) of the First Trust
SkyBridge Bitcoin ETF Trust (‘‘Trust’’)
under NYSE Arca Rule 8.201–E
(Commodity-Based Trust Shares). The
proposed rule change was published for
comment in the Federal Register on
May 27, 2021.3
On July 7, 2021, pursuant to Section
19(b)(2) of the Exchange Act,4 the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 On August 20,
2021, the Commission instituted
proceedings under Section 19(b)(2)(B) of
the Exchange Act 6 to determine
whether to approve or disapprove the
proposed rule change.7 On November
15, 2021, the Commission designated a
longer period for Commission action on
the proposed rule change.8
This order disapproves the proposed
rule change. The Commission concludes
that NYSE Arca has not met its burden
under the Exchange Act and the
Commission’s Rules of Practice to
demonstrate that its proposal is
consistent with the requirements of
Exchange Act Section 6(b)(5), and in
particular, the requirement that the
rules of a national securities exchange
be ‘‘designed to prevent fraudulent and
manipulative acts and practices’’ and
‘‘to protect investors and the public
interest.’’ 9
When considering whether NYSE
Arca’s proposal to list and trade the
Shares is designed to prevent fraudulent
and manipulative acts and practices, the
Commission applies the same standard
used in its orders considering previous
proposals to list bitcoin 10-based
commodity trusts and bitcoin-based
trust issued receipts.11 As the
3 See Securities Exchange Act Release No. 91962
(May 21, 2021), 86 FR 28646 (May 27, 2021)
(‘‘Notice’’). Comments on the proposed rule change
can be found at: https://www.sec.gov/comments/srnysearca-2021-37/srnysearca202137.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 92333,
86 FR 36826 (July 13, 2021).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 92714,
86 FR 47662 (Aug. 26, 2021).
8 See Securities Exchange Act Release No. 93570,
86 FR 64975 (Nov. 19, 2021).
9 15 U.S.C. 78f(b)(5).
10 Bitcoins are digital assets that are issued and
transferred via a decentralized, open-source
protocol used by a peer-to-peer computer network
through which transactions are recorded on a
public transaction ledger known as the ‘‘bitcoin
blockchain.’’ The bitcoin protocol governs the
creation of new bitcoins and the cryptographic
system that secures and verifies bitcoin
transactions. See, e.g., Notice, 86 FR at 28646–47.
11 See Order Setting Aside Action by Delegated
Authority and Disapproving a Proposed Rule
Change, as Modified by Amendments No. 1 and 2,
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
3869
Commission has explained, an exchange
that lists bitcoin-based exchange-traded
products (‘‘ETPs’’) can meet its
obligations under Exchange Act Section
6(b)(5) by demonstrating that the
exchange has a comprehensive
surveillance-sharing agreement with a
regulated market of significant size
related to the underlying or reference
bitcoin assets.12
The standard requires such
surveillance-sharing agreements since
they ‘‘provide a necessary deterrent to
manipulation because they facilitate the
availability of information needed to
fully investigate a manipulation if it
To List and Trade Shares of the Winklevoss Bitcoin
Trust, Securities Exchange Act Release No. 83723
(July 26, 2018), 83 FR 37579 (Aug. 1, 2018) (SR–
BatsBZX–2016–30) (‘‘Winklevoss Order’’); Order
Disapproving a Proposed Rule Change, as Modified
by Amendment No. 1, To Amend NYSE Arca Rule
8.201–E (Commodity-Based Trust Shares) and To
List and Trade Shares of the United States Bitcoin
and Treasury Investment Trust Under NYSE Arca
Rule 8.201–E, Securities Exchange Act Release No.
88284 (Feb. 26, 2020), 85 FR 12595 (Mar. 3, 2020)
(SR–NYSEArca–2019–39) (‘‘USBT Order’’); Order
Disapproving a Proposed Rule Change To List and
Trade Shares of the WisdomTree Bitcoin Trust
Under BZX Rule 14.11(e)(4), Commodity-Based
Trust Shares, Securities Exchange Act Release No.
93700 (Dec. 1, 2021), 86 FR 69322 (Dec. 7, 2021)
(SR–CboeBZX–2021–024) (‘‘WisdomTree Order’’);
Order Disapproving a Proposed Rule Change to List
and Trade Shares of the Valkyrie Bitcoin Fund
under NYSE Arca Rule 8.201–E (Commodity-Based
Trust Shares), Securities Exchange Act Release No.
93859 (Dec. 22, 2021), 86 FR74156 (Dec. 29, 2021)
(SR–NYSEArca–2021–31) (‘‘Valkyrie Order’’); Order
Disapproving a Proposed Rule Change to List and
Trade Shares of the Kryptoin Bitcoin ETF Trust
under BZX Rule 14.11(e)(4), Commodity-Based
Trust Shares, Securities Exchange Act Release No.
93860 (Dec. 22, 2021), 86 FR 74166 (Dec. 29, 2021)
(SR–CboeBZX–2021–029) (‘‘Kryptoin Order’’). See
also Order Disapproving a Proposed Rule Change,
as Modified by Amendment No. 1, Relating to the
Listing and Trading of Shares of the SolidX Bitcoin
Trust Under NYSE Arca Equities Rule 8.201,
Securities Exchange Act Release No. 80319 (Mar.
28, 2017), 82 FR 16247 (Apr. 3, 2017) (SR–
NYSEArca–2016–101) (‘‘SolidX Order’’). The
Commission also notes that orders were issued by
delegated authority on the following matters: Order
Disapproving a Proposed Rule Change To List and
Trade the Shares of the ProShares Bitcoin ETF and
the ProShares Short Bitcoin ETF, Securities
Exchange Act Release No. 83904 (Aug. 22, 2018),
83 FR 43934 (Aug. 28, 2018) (SR–NYSEArca–2017–
139) (‘‘ProShares Order’’); Order Disapproving a
Proposed Rule Change To List and Trade the Shares
of the GraniteShares Bitcoin ETF and the
GraniteShares Short Bitcoin ETF, Securities
Exchange Act Release No. 83913 (Aug. 22, 2018),
83 FR 43923 (Aug. 28, 2018) (SR–CboeBZX–2018–
001) (‘‘GraniteShares Order’’); Order Disapproving a
Proposed Rule Change To List and Trade Shares of
the VanEck Bitcoin Trust Under BZX Rule
14.11(e)(4), Commodity-Based Trust Shares,
Securities Exchange Act Release No. 93559 (Nov.
12, 2021), 86 FR 64539 (Nov. 18, 2021) (SR–
CboeBZX–2021–019).
12 See USBT Order, 85 FR at 12596. See also
Winklevoss Order, 83 FR at 37592 n.202 and
accompanying text (discussing previous
Commission approvals of commodity-trust ETPs);
GraniteShares Order, 83 FR at 43925–27 nn.35–39
and accompanying text (discussing previous
Commission approvals of commodity-futures ETPs).
E:\FR\FM\25JAN1.SGM
25JAN1
]]>Agencies
[Federal Register Volume 87, Number 16 (Tuesday, January 25, 2022)]
[Notices]
[Pages 3866-3869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01325]
[[Page 3866]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93999; File No. SR-GEMX-2022-01]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend GEMX's
Pricing Schedule at Options 7, Section 3
January 19, 2022.
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 4, 2022, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I 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 amend GEMX's Pricing Schedule at Options
7, Section 3, titled ``Regular Order Fees and Rebates.''
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/gemx/rules, 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
GEMX proposes to amend its Regular Order Fees and Rebates within
Options 7, Section 3. Specifically, the Exchange proposes to: (1)
Decrease the Priority Customer \3\ Tier 1 Taker Fee in Penny Symbols;
\4\ and (2) eliminate the Tier 5 Maker Rebates and Taker Fees in Penny
Symbols and Non-Penny Symbols.\5\ Each amendment is described below.
---------------------------------------------------------------------------
\3\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in Nasdaq GEMX Options 1,
Section 1(a)(36). Unless otherwise noted, when used in this Pricing
Schedule the term ``Priority Customer'' includes ``Retail'' as
defined below. See Options 7, Section 1.
\4\ ``Penny Symbols'' are options overlying all symbols listed
on Nasdaq GEMX that are in the Penny Interval Program. See Options
7, Section 1.
\5\ ``Non-Penny Symbols'' are options overlying all symbols
excluding Penny Symbols. See Options 7, Section 1.
---------------------------------------------------------------------------
Priority Customer Taker Fee
Currently, Priority Customers are assessed Penny Symbol Taker Fees
as follows: A Tier 1 Taker Fee of $0.49 per contract; a Tier 2 Taker
Fee of $0.48 per contract; a Tier 3 Taker Fee of $0.48 per contract; a
Tier 4 Taker Fee of $0.43 per contract; and a Tier 5 Taker Fee of $0.42
per contract. Other GEMX market participants are assessed higher Penny
Symbol Taker Fees as compared to Priority Customers. Market Makers \6\
and Non-Nasdaq GEMX Market Makers (FarMM) \7\ are assessed Tier 1
through Tier 3 Penny Symbol Taker Fee of $0.50 per contract and a Tier
4 and Tier 5 Penny Symbol Taker Fee of $0.48 per contract.\8\ Firm
Proprietary \9\/Broker Dealers \10\ and Professional Customers \11\ are
assessed Tier 1 through Tier 3 Penny Symbol Taker Fee of $0.50 per
contract and a Tier 4 and Tier 5 Penny Symbol Taker Fee of $0.49 per
contract.\12\
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\6\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1,
Section 1(a)(21).
\7\ A ``Non-Nasdaq GEMX Market Maker'' is a market maker as
defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended, registered in the same options class on another options
exchange. See GEMX Options 7, Section 1.
\8\ Non-Priority Customer orders are charged the Taker Fee for
trades executed during the Opening Process. Priority Customer orders
executed during the Opening Process receive the applicable Maker
Rebate based on the tier achieved. Non-Priority Customers who
execute less than 4.0% of Customer Total Consolidated Volume are
charged a Taker Fee of $0.50 per contract for trades executed
against a Priority Customer. Non-Priority Customers who execute 4.0%
or greater of Customer Total Consolidated Volume are charged a Taker
Fee of $0.47 per contract for trades executed against a Priority
Customer. All Priority Customer orders are charged a Taker Fee of
$0.49 per contract for trades executed against a Priority Customer.
For purposes of note 13 within Options 7, Section 3, Customer Total
Consolidated Volume means the total volume cleared at The Options
Clearing Corporation in the Customer range in equity and ETF options
in that month. See notes 4 and 16 of Options 7, Section 3.
\9\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account. See GEMX Options 7, Section
1.
\10\ A ``Broker-Dealer'' order is an order submitted by a member
for a broker-dealer account that is not its own proprietary account.
See GEMX Options 7, Section 1.
\11\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer. See GEMX Options
7, Section 1.
\12\ See note 8 above.
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At this time, the Exchange proposes to decrease the current Tier 1
Priority Customer Penny Symbol Taker Fee from $0.49 to $0.48 per
contract. The Exchange believes that lowering the Tier 1 Priority
Customer Penny Symbol Taker Fee will attract additional order flow to
the Exchange. With this proposal, Priority Customers continue to be
assessed the lowest Penny Symbol Taker Fees.
Tier 5 Maker Rebates and Taker Fees
Today, GEMX pays the following Tier 5 Penny Symbol Maker Rebates:
$0.45 per contract to Market Makers and $0.53 per contract to Priority
Customers. Non-Nasdaq GEMX Market Makers (FarMM), Firm Proprietary/
Broker Dealers and Professional Customers are not eligible for Tier 5
Penny Symbol Maker Rebates. Today, GEMX pays the following Tier 5 Non-
Penny Symbol Maker Rebates: $0.75 per contract to Market Makers and
$1.05 per contract to Priority Customers. Non-Nasdaq GEMX Market Makers
(FarMM), Firm Proprietary/Broker Dealers and Professional Customers are
not eligible for Tier 5 Non-Penny Symbol Maker Rebates. Market Maker
and Priority Customer orders are eligible for higher Penny and Non-
Penny Symbol Maker Rebates based on achieving volume thresholds in
Table 1 within Options 7, Section 3.\13\
---------------------------------------------------------------------------
\13\ See note 5 of Options 7, Section 3.
---------------------------------------------------------------------------
Today, GEMX assesses the following Tier 5 Penny Symbol Taker Fees:
$0.48 per contract to Market Makers and Non-Nasdaq GEMX Market Makers
(FarMM), $0.49 per contract to Firm Proprietary/Broker Dealers and
Professional Customers, and $0.42 per contract to Priority
Customers.\14\ Today, GEMX assesses the following Tier 5 Non-Penny
Symbol Taker Fees: $0.94 per contract to Market Makers, Non-Nasdaq GEMX
Market Makers (FarMM), Firm Proprietary/Broker Dealers, and
Professional Customers, and $0.82 per contract to Priority
Customers.\15\
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\14\ See note 8 above.
\15\ See note 8 above.
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At this time, the Exchange proposes to eliminate Penny and Non-
Penny Symbol Tier 5 Maker Rebates and Taker
[[Page 3867]]
Fees. The Exchange also proposes to amend the criteria for Tier 4 of
the Qualifying Tier Thresholds, within Table 1 of Options 7, Section 3,
so that volume that is 2.5% or greater of Customer Total Consolidated
Volume and Priority Customer Maker Percentage of Customer Total
Consolidated Volume of 1.20% or greater would qualify a GEMX Member for
the Tier 4 Penny and Non-Penny Symbol Maker Rebates and Taker Fees.
The elimination of the Tier 5 Penny Symbol Maker Rebates would
result in no change as the same Tier 5 Penny Symbol Maker Rebates exist
for Tier 4 Penny Symbol Maker Rebates, with the exception of the Penny
Symbol Market Maker Rebate. The Tier 5 Penny Symbol Market Maker Rebate
is $0.45 per contract, while the Tier 4 Penny Symbol Market Maker
Rebate is $0.41 per contract. With this proposal, the highest Penny
Symbol Market Maker Rebate that can be achieved would now be $0.41 per
contract.
The elimination of the Tier 5 Penny Symbol Taker Fees would result
in no change as the same Tier 5 Penny Symbol Taker Fees exist for Tier
4 Penny Symbol Taker Fees, with the exception of the Priority Customer
Penny Symbol Taker Fee. The Tier 5 Penny Symbol Priority Customer Taker
Fee is $0.42 per contract, while the Tier 4 Penny Symbol Priority
Customer Taker Fee is $0.43 per contract. With this proposal, the
lowest Penny Symbol Priority Customer Taker Fee that would be assessed
would now be $0.43 per contract.
The elimination of the Tier 5 Non-Penny Symbol Maker Rebates and
Taker Fees would result in no change as the same Tier 5 Non-Penny
Symbol Maker Rebates and Taker Fees exist for Tier 4 Non-Penny Symbol
Maker Rebates and Taker Fees. As noted, with the amended Tier 4
criteria, a GEMX Member would continue to be able to achieve the same
Non-Penny Symbol Maker Rebates and Taker Fees that are currently
offered for Tier 4 Non-Penny Symbol Maker Rebates and Taker Fees.
With these proposed changes, Priority Customers would continue to
be paid the highest Market Rebates and be assessed the lowest Taker
Fees in both Penny and Non-Penny Symbols.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\16\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\17\ 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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \18\
---------------------------------------------------------------------------
\18\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Likewise, in NetCoalition v. Securities and Exchange Commission
\19\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\20\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \21\
---------------------------------------------------------------------------
\19\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\20\ See NetCoalition, at 534-535.
\21\ Id. at 537.
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Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers' . . . .'' \22\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
---------------------------------------------------------------------------
\22\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------
Priority Customer Taker Fee
The Exchange's proposal to decrease the current Tier 1 Priority
Customer Penny Symbol Taker Fee from $0.49 to $0.48 per contract is
reasonable as this decrease would result in a lower Tier 1 Priority
Customer Penny Symbol Taker Fee. The Exchange believes that lowering
the Tier 1 Priority Customer Penny Symbol Taker Fee will attract
additional order flow to the Exchange. With this proposal, Priority
Customers continue to be assessed the lowest Penny Symbol Taker Fees.
The Exchange's proposal to decrease the current Tier 1 Priority
Customer Penny Symbol Taker Fee from $0.49 to $0.48 per contract is
equitable and not unfairly discriminatory. Priority Customers continue
to be assessed the lowest Penny Symbol Taker Fees. 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.
Tier 5 Maker Rebates and Taker Fees
The Exchange's proposal to eliminate Penny and Non-Penny Symbol
Tier 5 Maker Rebates and Taker Fees is reasonable. The elimination of
the Tier 5 Penny Symbol Maker Rebates would result in no change as the
same Tier 5 Penny Symbol Maker Rebates exist for Tier 4 Penny Symbol
Maker Rebates, with the exception of the Penny Symbol Market Maker
Rebate. The Tier 5 Penny Symbol Market Maker Rebate is $0.45 per
contract, while the Tier 4 Penny Symbol Market Maker Rebate is $0.41
per contract. With this proposal, the highest Penny Symbol Market Maker
Rebate that can be achieved would now be $0.41 per contract. The
elimination of the Tier 5 Penny Symbol Taker Fees would result in no
change as the same Tier 5 Penny Symbol Taker Fees exist for Tier 4
Penny Symbol Taker Fees, with the exception of the Priority Customer
Penny Symbol Taker Fee. The Tier 5 Penny Symbol Priority Customer Taker
Fee is $0.42 per contract, while the Tier 4 Penny Symbol Priority
Customer Taker Fee is $0.43 per contract. With this proposal, the
lowest Priority Customer Penny Symbol Taker Fee that would be assessed
would now be $0.43 per contract. Notwithstanding, the decreased Penny
Symbol Market Maker Rebate of $0.45 per contract and the increased
Priority Customer Penny Symbol Taker Fee of $0.43 per contract, the
Exchange believes that the Market and Taker Tier 4 pricing in Penny
Symbols will continue to attract order flow to GEMX. The elimination of
the Tier 5 Non-Penny Symbol Maker
[[Page 3868]]
Rebates and Taker Fees would result in no change as the same Tier 5
Non-Penny Symbol Maker Rebates and Taker Fees exist for Tier 4 Non-
Penny Symbol Maker Rebates and Taker Fees. As noted, with the amended
Tier 4 criteria a GEMX Member would continue to be able to achieve the
same Non-Penny Symbol Maker Rebates and Taker Fees that are currently
offered for Tier 4 Non-Penny Symbol Maker Rebates and Taker Fees. With
these proposed changes, Priority Customers would continue to be paid
the highest Market Rebates and be assessed the lowest Taker Fees in
Penny and Non-Penny Symbols.
The Exchange's proposal to eliminate the Penny and Non-Penny Symbol
Tier 5 Maker Rebates and Taker Fees is equitable and not unfairly
discriminatory. All Members that meet the qualifications of the Tier 1
through Tier 4 Qualifying Tier Thresholds would continue to be
eligible, uniformly, to receive the corresponding rebates and fees.
Qualifying Tier Thresholds
The Exchange's proposal to amend the description of Tier 4 of the
Qualifying Tier Thresholds, within Table 1 of Options 7, Section 3,
with respect to the Total Affiliated Member % of Customer Total
Consolidated Volume,\23\ to require that a member execute 2.5% or
greater of Customer Total Consolidated Volume is reasonable, equitable
and not unfairly discriminatory. Also, the Exchange's proposal to amend
the description of the Tier 4 of Qualifying Tier Threshold with respect
to the Priority Customer Maker % of Customer Total Consolidated
Volume,\24\ to require that a member executes Priority Customer Maker
volume of 1.20% or greater of Customer Total Consolidated Volume is
reasonable, equitable and not unfairly discriminatory. With the
elimination of Tier 5 Penny and Non-Penny Symbol Maker Rebates and
Taker Fees, the Tier 4 Penny and Non-Penny Symbol Maker Rebates and
Taker Fees would be the highest Maker Rebate and lowest Taker Fee. All
Members that meet the qualifications of the Tier 4 Qualifying Tier
Threshold would be eligible, uniformly, to receive the corresponding
rebates and fees.
---------------------------------------------------------------------------
\23\ For purposes of measuring Total Affiliated Member % of
Customer Total Consolidated Volume, Customer Total Consolidated
Volume means the total volume cleared at The Options Clearing
Corporation in the Customer range in equity and ETF options in that
month.
\24\ The Priority Customer Maker % of Customer Total
Consolidated Volume category includes all Priority Customer volume
that adds liquidity in all symbols.
---------------------------------------------------------------------------
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.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges 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.
Intra-Market Competition
The proposed amendments do not impose an undue burden on intra-
market competition.
Priority Customer Taker Fee
The Exchange's proposal to decrease the current Tier 1 Priority
Customer Penny Symbol Taker Fee from $0.49 to $0.48 per contract does
not impose an undue burden on competition. Priority Customers continue
to be assessed the lowest Penny Symbol Taker Fees. 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.
Tier 5 Maker Rebates and Taker Fees
The Exchange's proposal to eliminate Penny and Non-Penny Symbol
Tier 5 Maker Rebates and Taker Fees does not impose an undue burden on
competition. Exchange's proposal to eliminate the Penny and Non-Penny
Symbol Tier 5 Maker Rebates and Taker Fees is equitable and not
unfairly discriminatory. All Members that meet the qualifications of
the Tier 1 through Tier 4 Qualifying Tier Thresholds would continue to
be eligible, uniformly, to receive the corresponding rebates and fees.
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,\25\ and Rule 19b-4(f)(2) \26\ 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.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(3)(A)(ii).
\26\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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-2022-01 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-2022-01. 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
[[Page 3869]]
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-2022-01 and should be submitted on
or before February 15, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------
\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-01325 Filed 1-24-22; 8:45 am]
BILLING CODE 8011-01-P
