Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 3, 33179-33181 [2023-10906]

Download as PDF Federal Register / Vol. 88, No. 99 / Tuesday, May 23, 2023 / Notices Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–MIAX–2023–20. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File Number SR–MIAX–2023–20 and should be submitted on or before June 13, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.44 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–10905 Filed 5–22–23; 8:45 am] (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 9, 2023, 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, 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 GEMX’s Pricing Schedule at Options 7, Section 3, ‘‘Regular Order Fees and Rebates.’’ 3 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 Pricing Schedule at Options 7, Section 3, ‘‘Regular Order Fees and Rebates’’ to decrease the Penny Symbol Priority Customer 4 Taker Fees. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97521; File No. SR–GEMX– 2023–07] 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The Exchange originally filed SR–GEMX–2023– 06 on May 1, 2023. On May 9, 2023, the Exchange withdrew SR–GEMX–2023–06 and replaced that filing with the instant filing. 4 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 the Pricing Schedule the term ‘‘Priority Customer’’ includes ‘‘Retail’’. See Options 7, Section 1(c). lotter on DSK11XQN23PROD with NOTICES1 2 17 Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 3 May 17, 2023. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 DATES: 44 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:24 May 22, 2023 Jkt 259001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 33179 Today, GEMX assesses 5 tiers of Penny Symbol Taker Fees. Market Makers,5 and Non-Nasdaq GEMX Market Makers (FarMM) 6 are assessed the following Penny Symbol Taker Fees: a Tier 1 Taker Fee of $0.50 per contract; a Tier 2 Taker Fee of $0.50 per contract; a Tier 3 Taker Fee of $0.50 per contract; a Tier 4 Taker Fee of $0.50 per contract; and a Tier 5 Taker Fee of $0.48 per contract. In comparison, GEMX assesses Firm Proprietary 7/Broker Dealers 8 and Professional Customers 9 the following Penny Symbol Taker Fees: a Tier 1 Taker Fee of $0.50 per contract; a Tier 2 Taker Fee of $0.50 per contract; a Tier 3 Taker Fee of $0.50 per contract; a Tier 4 Taker Fee of $0.50 per contract; and a Tier 5 Taker Fee of $0.49 per contract. Finally, Priority Customers are assessed the following Penny Symbol Taker Fees: a Tier 1 Taker Fee of $0.48 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 $0.48 per contract; and a Tier 5 Taker Fee of $0.43 per contract. At this time, GEMX proposes to decrease the Penny Symbol Priority Customer Taker Fees. Specifically, GEMX proposes to decrease Penny Symbol Priority Customer Taker Fees Tiers 1 through 4 from $0.48 per contract to $0.41 per contract. Additionally, GEMX proposes to decrease Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 per contract. GEMX is not proposing to amend the Qualifying Tier Thresholds to achieve these tiers. GEMX believes that decreasing the Priority Customer Taker Fees in Penny Symbols will incentivize GEMX Members to send additional order flow to GEMX. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,10 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) 5 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See Options 1, Section 1(a)(21). 6 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 Options 7, Section 1(c). 7 A ‘‘Firm Proprietary’’ order is an order submitted by a member for its own proprietary account. See Options 7, Section 1(c). 8 A ‘‘Broker-Dealer’’ order is an order submitted by a member for a broker-dealer account that is not its own proprietary account. See Options 7, Section 1(c). 9 A ‘‘Professional Customer’’ is a person or entity that is not a broker/dealer and is not a Priority Customer. 10 See 15 U.S.C. 78f(b). E:\FR\FM\23MYN1.SGM 23MYN1 lotter on DSK11XQN23PROD with NOTICES1 33180 Federal Register / Vol. 88, No. 99 / Tuesday, May 23, 2023 / Notices of the Act,11 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 proposed changes to the Pricing Schedule are reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for order flow, which constrains its pricing determinations. The fact that the market for order flow is competitive has long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated, ‘‘[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’. . . .’’ 12 Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for options transaction services. The Exchange is only one of sixteen options exchanges to which market participants may direct their order flow. Within this environment, market participants can freely and often do shift their order flow among the Exchange and competing venues in response to changes in their respective pricing schedules. Within the foregoing context, the proposal represents a reasonable attempt by the Exchange to attract additional order flow to the Exchange and increase its market share relative to its competitors. GEMX’s proposal to decrease Penny Symbol Priority Customer Taker Fees Tiers 1 through 4 from $0.48 per contract to $0.41 per contract and Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 per contract is reasonable because decreasing the Priority Customer Taker Fees in Penny Symbols should incentivize GEMX Members to send additional order flow to GEMX. GEMX’s proposal to decrease Penny Symbol Priority Customer Taker Fees 11 See 15 U.S.C. 78f(b)(4) and (5). NetCoalition, 615 F.3d at 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR–NYSEArca–2006–21)). 12 See VerDate Sep<11>2014 17:24 May 22, 2023 Jkt 259001 Tiers 1 through 4 from $0.48 per contract to $0.41 per contract and Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 per contract is equitable and not unfairly discriminatory because 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, to the benefit of all market participants. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Intermarket Competition The Exchange believes its proposal remains competitive with other options markets, and will offer market participants with another choice of venue 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. 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. Intramarket Competition GEMX’s proposal to decrease Penny Symbol Priority Customer Taker Fees Tiers 1 through 4 from $0.48 per contract to $0.41 per contract and Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 per contract does not impose an undue burden on intermarket competition because 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, to the benefit of all market participants. PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 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.13 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–2023–07 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–2023–07. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than 13 15 E:\FR\FM\23MYN1.SGM U.S.C. 78s(b)(3)(A)(ii). 23MYN1 Federal Register / Vol. 88, No. 99 / Tuesday, May 23, 2023 / Notices 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. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File Number SR–GEMX–2023–07 and should be submitted on or before June 13, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–10906 Filed 5–22–23; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–97519; File No. SR– PEARL–2023–22] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the MIAX Pearl Equities Fee Schedule lotter on DSK11XQN23PROD with NOTICES1 May 17, 2023. Pursuant to the provisions of 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 May 9, 2023, MIAX PEARL, LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The Exchange proposes to amend the Fee Schedule to: (i) reduce the fees for orders in securities priced at or above $1.00 per share that are routed to the primary listing market’s opening or reopening process pursuant to the Route to Primary Auction (‘‘PAC’’) routing option; 3 and (ii) reduce the fees for orders in securities priced below $1.00 per share that are routed to the primary listing market’s opening or re-opening process pursuant to the PAC routing option. The Exchange initially filed this proposal on April 28, 2023, with the proposed fee changes effective beginning May 1, 2023 (SR–PEARL– 2023–20). On May 9, 2023, the Exchange withdrew SR–PEARL–2023– 20 and refiled this proposal as SR– PEARL–2023–22. Background The PAC routing option enables an Equity Member 4 to designate that their order be routed to the primary listing market to participate in the primary listing market’s opening, re-opening or 3 See Exchange Rule 2617(b)(5)(B). term ‘‘Equity Member’’ is a Member authorized by the Exchange to transact business on MIAX Pearl Equities. See Exchange Rule 1901. 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 4 The 1 15 17:24 May 22, 2023 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 SECURITIES AND EXCHANGE COMMISSION VerDate Sep<11>2014 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend the fee schedule (the ‘‘Fee Schedule’’) applicable to MIAX Pearl Equities, an equities trading facility of the Exchange. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal office, and at the Commission’s Public Reference Room. Jkt 259001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 33181 closing process.5 Exchange Rule 2617(b)(5)(B) provides that PAC is a routing option for Market Orders 6 and displayed Limit Orders 7 designated with a time-in-force of Regular Hours Only (‘‘RHO’’) 8 that the entering firm wishes to designate for participation in the opening, re-opening (following a regulatory halt, suspension, or pause), or closing process 9 of a primary listing market (Cboe BZX Exchange, Inc. (‘‘Cboe BZX’’), the New York Stock Exchange LLC (‘‘NYSE’’), The Nasdaq Stock Market LLC (‘‘Nasdaq’’), NYSE American LLC (‘‘NYSE American’’), or NYSE Arca, Inc. (‘‘NYSE Arca’’)), if received before the opening, re-opening, or closing process of such market. For displayed Limit Orders designated with the PAC routing option, any shares that remain unexecuted after attempting to execute in the primary listing market’s opening or re-opening process will either be posted to the MIAX Pearl Equities Book, executed, or routed pursuant to the Price Improvement (‘‘PI’’) routing option.10 The Exchange adopted the standard liquidity indicator code of ‘‘X’’ in its Fee Schedule for routed liquidity. This code applies to an order that is routed to and executed on an away market. Additionally, this code is used to identify orders that were routed to an away market (including orders that were routed using the PAC routing strategy) and executed as ‘‘Taker.’’ On July 5, 2022, the Exchange filed its proposal to, among other things, adopt new liquidity indicator codes and associated fees and rebates for orders that the Exchange routes pursuant to the PAC routing option.11 In particular, the Exchange adopted the following liquidity indicator codes and associated fees for orders that the Exchange routes to the primary listing market’s opening 5 See Exchange Rule 2617(b)(5)(B). Exchange Rule 2614(a)(2). 7 See Exchange Rule 2614(a)(1). 8 Exchange Rule 2614(b)(2) defines ‘‘Regular Hours Only’’ or ‘‘RHO’’ as ‘‘[a]n order that is designated for execution only during Regular Trading Hours, which includes the Opening Process for equity securities. An order with a time-in-force of RHO entered into the System before the opening of business on the Exchange as determined pursuant to Exchange Rule 2600 will be accepted but not eligible for execution until the start of Regular Trading Hours.’’ 9 The Exchange notes that it will route Market Orders to the primary listing market’s closing process in certain limited circumstances. See Exchange Rule 2617(b)(5)(B)(1)(ii)(b). 10 See Exchange Rule 2617(b)(5)(B)(1)(i)(a). 11 See Securities Exchange Act Release No. 95210 (July 7, 2022), 87 FR 41750 (July 13, 2022) (SR– PEARL–2022–26). 6 See E:\FR\FM\23MYN1.SGM 23MYN1

Agencies

[Federal Register Volume 88, Number 99 (Tuesday, May 23, 2023)]
[Notices]
[Pages 33179-33181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10906]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97521; File No. SR-GEMX-2023-07]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, 
Section 3

DATES: May 17, 2023.
    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 May 9, 2023, 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, 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 GEMX's Pricing Schedule at Options 
7, Section 3, ``Regular Order Fees and Rebates.'' \3\
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    \3\ The Exchange originally filed SR-GEMX-2023-06 on May 1, 
2023. On May 9, 2023, the Exchange withdrew SR-GEMX-2023-06 and 
replaced that filing with the instant filing.
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    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 Pricing Schedule at Options 7, Section 
3, ``Regular Order Fees and Rebates'' to decrease the Penny Symbol 
Priority Customer \4\ Taker Fees.
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    \4\ 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 the Pricing 
Schedule the term ``Priority Customer'' includes ``Retail''. See 
Options 7, Section 1(c).
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    Today, GEMX assesses 5 tiers of Penny Symbol Taker Fees. Market 
Makers,\5\ and Non-Nasdaq GEMX Market Makers (FarMM) \6\ are assessed 
the following Penny Symbol Taker Fees: a Tier 1 Taker Fee of $0.50 per 
contract; a Tier 2 Taker Fee of $0.50 per contract; a Tier 3 Taker Fee 
of $0.50 per contract; a Tier 4 Taker Fee of $0.50 per contract; and a 
Tier 5 Taker Fee of $0.48 per contract. In comparison, GEMX assesses 
Firm Proprietary \7\/Broker Dealers \8\ and Professional Customers \9\ 
the following Penny Symbol Taker Fees: a Tier 1 Taker Fee of $0.50 per 
contract; a Tier 2 Taker Fee of $0.50 per contract; a Tier 3 Taker Fee 
of $0.50 per contract; a Tier 4 Taker Fee of $0.50 per contract; and a 
Tier 5 Taker Fee of $0.49 per contract. Finally, Priority Customers are 
assessed the following Penny Symbol Taker Fees: a Tier 1 Taker Fee of 
$0.48 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 $0.48 per 
contract; and a Tier 5 Taker Fee of $0.43 per contract.
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    \5\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See Options 1, 
Section 1(a)(21).
    \6\ 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 Options 7, Section 1(c).
    \7\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account. See Options 7, Section 1(c).
    \8\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account. 
See Options 7, Section 1(c).
    \9\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
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    At this time, GEMX proposes to decrease the Penny Symbol Priority 
Customer Taker Fees. Specifically, GEMX proposes to decrease Penny 
Symbol Priority Customer Taker Fees Tiers 1 through 4 from $0.48 per 
contract to $0.41 per contract. Additionally, GEMX proposes to decrease 
Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 per 
contract. GEMX is not proposing to amend the Qualifying Tier Thresholds 
to achieve these tiers. GEMX believes that decreasing the Priority 
Customer Taker Fees in Penny Symbols will incentivize GEMX Members to 
send additional order flow to GEMX.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5)

[[Page 33180]]

of the Act,\11\ 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.
---------------------------------------------------------------------------

    \10\ See 15 U.S.C. 78f(b).
    \11\ See 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The proposed changes to the Pricing Schedule are reasonable in 
several respects. As a threshold matter, the Exchange is subject to 
significant competitive forces in the market for order flow, which 
constrains its pricing determinations. The fact that the market for 
order flow is competitive has long been recognized by the courts. In 
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit 
stated, ``[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'. . . .'' \12\
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    \12\ See NetCoalition, 615 F.3d at 539 (D.C. Cir. 2010) (quoting 
Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 
74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)).
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    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
options transaction services. The Exchange is only one of sixteen 
options exchanges to which market participants may direct their order 
flow. Within this environment, market participants can freely and often 
do shift their order flow among the Exchange and competing venues in 
response to changes in their respective pricing schedules. Within the 
foregoing context, the proposal represents a reasonable attempt by the 
Exchange to attract additional order flow to the Exchange and increase 
its market share relative to its competitors.
    GEMX's proposal to decrease Penny Symbol Priority Customer Taker 
Fees Tiers 1 through 4 from $0.48 per contract to $0.41 per contract 
and Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 
per contract is reasonable because decreasing the Priority Customer 
Taker Fees in Penny Symbols should incentivize GEMX Members to send 
additional order flow to GEMX.
    GEMX's proposal to decrease Penny Symbol Priority Customer Taker 
Fees Tiers 1 through 4 from $0.48 per contract to $0.41 per contract 
and Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 
per contract is equitable and not unfairly discriminatory because 
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, to 
the benefit of all market participants.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
Intermarket Competition
    The Exchange believes its proposal remains competitive with other 
options markets, and will offer market participants with another choice 
of venue 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. 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.
Intramarket Competition
    GEMX's proposal to decrease Penny Symbol Priority Customer Taker 
Fees Tiers 1 through 4 from $0.48 per contract to $0.41 per contract 
and Penny Symbol Priority Customer Taker Fee Tier 5 from $0.43 to $0.41 
per contract does not impose an undue burden on intermarket competition 
because 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, to 
the benefit of all market participants.

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.\13\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is: (i) necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) otherwise in 
furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \13\ 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 [email protected]. Please include 
File Number SR-GEMX-2023-07 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-2023-07. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than

[[Page 33181]]

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. Do 
not include personal identifiable information in submissions; you 
should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to File Number SR-GEMX-2023-07 and should 
be submitted on or before June 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10906 Filed 5-22-23; 8:45 am]
BILLING CODE 8011-01-P
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