Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 6, 88461-88463 [2023-28041]
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Federal Register / Vol. 88, No. 244 / Thursday, December 21, 2023 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
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–
BOX–2023–20 on the subject line.
Paper Comments
khammond on DSKJM1Z7X2PROD with NOTICES
• 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–BOX–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
a.m. and 3 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–BOX–2023–20 and should be
submitted on or before January 11, 2024.
Rebuttal comments should be submitted
by January 25, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.272
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–28043 Filed 12–20–23; 8:45 am]
BILLING CODE 8011–01–P
272 17
CFR 200.30–3(a)(57).
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18:15 Dec 20, 2023
Jkt 262001
[Release No. 34–99190; File No. SR–GEMX–
2023–19]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 7,
Section 6
December 15, 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 December
5, 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 its
Rules at Options 7, Section 6, C, Ports
and Other Services.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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Exchange initially filed the proposed
pricing changes on November 28, 2023 (SR–GEMX–
2023–16). On December 5, 2023, the Exchange
withdrew that filing and submitted this filing.
2 17
PO 00000
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88461
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Options 7, Section 6, C, Ports and Other
Services. Specifically, the Exchange
proposes to amend the monthly caps for
SQF Ports 4 and SQF Purge Ports.5
Today, GEMX assesses $1,250 per
port, per month for an SQF Port as well
as an SQF Purge Port.6 Also, today, SQF
Ports and SQF Purge Ports are subject to
a monthly cap of $17,500, which cap is
applicable to Market Makers.
At this time, the Exchange proposes to
increase the SQF Port and SQF Purge
Port monthly cap fee of $17,500 per
month to $27,500 per month. The
Exchange is not amending the $1,250
per port, per month SQF Port and SQF
Purge Port. As is the case today, the
Exchange would not assess a Member an
SQF Port or SQF Purge Port fee beyond
the monthly cap once the Member has
exceeded the monthly cap for the
respective month. Despite increasing the
monthly cap for SQF Ports and SQF
Purge Ports from $17,500 per month to
4 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an
interface that allows Market Makers to connect,
send, and receive messages related to quotes,
Immediate-or-Cancel Orders, and auction responses
to the Exchange. Features include the following: (1)
options symbol directory messages (e.g., underlying
instruments); (2) System event messages (e.g., start
of trading hours messages and start of opening); (3)
trading action messages (e.g., halts and resumes); (4)
execution messages; (5) quote messages; (6)
Immediate-or-Cancel Order messages; (7) risk
protection triggers and purge notifications; (8)
opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF
Purge Interface only receives and notifies of purge
requests from the Market Maker. Market Makers
may only enter interest into SQF in their assigned
options series. Immediate-or-Cancel Orders entered
into SQF are not subject to the Order Price
Protection, Market Order Spread Protection, and
Size Limitation Protection in Options 3, Section
15(a)(1)(A), (1)(B), and (2)(B) respectively. See
Supplementary Material .03(c) to Options 3, Section
7.
5 SQF Purge is a specific port for the SQF
interface that only receives and notifies of purge
requests from the Market Maker. Dedicated SQF
Purge Ports enable Market Makers to seamlessly
manage their ability to remove their quotes in a
swift manner. The SQF Purge Port is designed to
assist Market Makers in the management of, and
risk control over, their quotes. Market Makers may
utilize a purge port to reduce uncertainty and to
manage risk by purging all quotes in their assigned
options series. Of note, Market Makers may only
enter interest into SQF in their assigned options
series. Additionally, the SQF Purge Port may be
utilized by a Market Maker in the event that the
Member has a system issue and determines to purge
its quotes from the order book.
6 The Exchange proposes to add a comma
between ‘‘per port’’ and ‘‘per month’’ in the Options
7, Section 6, C, SQF Port and SQF Purge Port Fee
rule text. The Exchange also proposes to remove an
extraneous period in Options 7, Section 6, C, in the
second paragraph.
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Federal Register / Vol. 88, No. 244 / Thursday, December 21, 2023 / Notices
$27,500 per month, the Exchange will
continue to offer Members the
opportunity to cap their SQF Port and
SQF Purge Port fees so that they would
not be assessed these fees beyond the
cap. Further, a GEMX Market Maker
requires only one SQF Port to submit
quotes in its assigned options series into
GEMX. A GEMX Market Maker may
submit all quotes through one SQF Port
and utilize one SQF Purge Port to view
its purge requests. While a Market
Maker may elect to obtain multiple SQF
Ports and SQF Purge Ports to organize
its business,7 only one SQF Port and
SQF Purge Port is necessary for a Market
Maker to fulfill its regulatory quoting
obligations.8
khammond on DSKJM1Z7X2PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,9 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,10 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 pricing change to
increase the monthly cap applicable to
SQF Ports and SQF Purge Ports is
reasonable in several respects. As a
threshold matter, the Exchange is
subject to significant competitive forces
in the market for options securities
transaction services that constrain its
pricing determinations in that market.
The fact that this market is competitive
has long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[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’
7 For example, a Market Maker may desire to
utilize multiple SQF Ports for accounting purposes,
to measure performance, for regulatory reasons or
other determinations that are specific to that
Member.
8 GEMX Market Makers have various regulatory
requirements as provided for in Options 2, Section
4. Additionally, GEMX Market Makers have certain
quoting requirements with respect to their assigned
options series as provided in Options 2, Section 5.
SQF Ports are the only quoting protocol available
on GEMX and only Market Makers may utilize SQF
Ports. The same is true for SQF Purge Ports.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
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18:15 Dec 20, 2023
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because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’ 11
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.’’ 12
Numerous indicia demonstrate the
competitive nature of this market.
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.
The proposed pricing change to
increase the SQF Port and SQF Purge
Port monthly cap from $17,500 per
month to $27,500 per month is
reasonable because despite the increase
in the monthly cap, the Exchange will
continue to offer Members the
opportunity to cap their SQF Port and
SQF Purge Port fees so that they would
not be assessed these fees beyond the
cap. Additionally, a GEMX Market
Maker requires only one SQF Port to
submit quotes in its assigned options
series into GEMX. A GEMX Market
Maker may submit all quotes through
one SQF Port and utilize one SQF Purge
Port to view its purge requests. While a
Market Maker may elect to obtain
multiple SQF Ports and SQF Purge Ports
to organize its business,13 only one SQF
Port and SQF Purge Port is necessary for
a Market Maker to fulfill its regulatory
quoting obligations.14
11 NetCoalition
v. SEC, 615 F.3d 525, 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 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
13 For example, a Market Maker or may desire to
utilize multiple SQF Ports for accounting purposes,
to measure performance, for regulatory reasons or
other determinations that are specific to that
Member.
14 GEMX Market Makers have various regulatory
requirements as provided for in Options 2, Section
4. Additionally, GEMX Market Makers have certain
quoting requirements with respect to their assigned
options series as provided in Options 2, Section 5.
SQF Ports are the only quoting protocol available
on GEMX and only Market Makers may utilize SQF
Ports.
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
The Exchange’s proposed pricing
change to increase the SQF Port and
SQF Purge Port monthly cap from
$17,500 per month to $27,500 per
month is equitable and not unfairly
discriminatory because the Exchange
would uniformly not assess any Market
Makers that exceeded the proposed
monthly cap any SQF Port and SQF
Purge Port fees for that month beyond
the cap. Market Makers are the only
market participants that are assessed
SQF Port and SQF Purge Port fees
because they are the only market
participants that are permitted to quote
on the Exchange.
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 proposal does not impose an
undue burden on intermarket
competition. The Exchange believes its
proposal remains competitive with
other options markets who also offer
order entry protocols. 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. In such
an environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges.
Because competitors are free to modify
their own fees in response, and because
market participants may readily adjust
their order routing practices, the
Exchange believes that the degree to
which fee changes in this market may
impose any burden on competition is
extremely limited.
Intramarket Competition
The Exchange’s proposed pricing
change to increase the SQF Port and
SQF Purge Port monthly cap from
$17,500 per month to $27,500 per
month does not impose an undue
burden on competition because the
Exchange would uniformly not assess
any Market Makers that exceeded the
proposed monthly cap any SQF Port
and SQF Purge Port fees for that month
beyond the cap. Market Makers are the
only market participants that are
assessed SQF Port and SQF Purge Port
fees because they are the only market
participants that are permitted to quote
on the Exchange.
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Federal Register / Vol. 88, No. 244 / Thursday, December 21, 2023 / Notices
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.15 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:
khammond on DSKJM1Z7X2PROD with NOTICES
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–2023–19 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–2023–19. 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
15 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
18:15 Dec 20, 2023
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
a.m. and 3 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–2023–19 and should be
submitted on or before January 11, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–28041 Filed 12–20–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–222, OMB Control No.
3235–0233]
Submission for OMB Review;
Comment Request; Extension: Form
2–E
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension of the
previously approved collection of
information discussed below.
Rule 609 (17 CFR 230.609) under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.) requires small business investment
companies and business development
companies that have engaged in
offerings of securities that are exempt
from registration pursuant to Regulation
E under the Securities Act of 1933 (17
CFR 230.601 to 610a) to report semiannually on Form 2–E (17 CFR 239.201)
the progress of the offering. The form
solicits information such as the dates an
16 17
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PO 00000
CFR 200.30–3(a)(12).
Frm 00104
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88463
offering commenced and was completed
(if completed), the number of shares
sold and still being offered, amounts
received in the offering, and expenses
and underwriting discounts incurred in
the offering. The information provided
on Form 2–E assists the staff in
monitoring the progress of the offering
and in determining whether the offering
has stayed within the limits set for an
offering exempt under Regulation E.
Although there have been no filings of
Form 2–E since 2017, for administrative
purposes the Commission estimates
that, on average, approximately one
respondent submits a Form 2–E filing
each year. The Commission further
estimates that this information
collection imposes an annual burden of
four hours and imposes no annual
external cost burden.
The collection of information under
Form 2–E is mandatory. The
information provided by the form will
not be kept confidential. An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
of information unless it displays a
currently valid OMB control number.
Written comments continue to be
invited on: (a) whether this collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice by January 22, 2024 to (i)
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov and (ii) David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission, c/
o John Pezzullo, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
E:\FR\FM\21DEN1.SGM
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Agencies
[Federal Register Volume 88, Number 244 (Thursday, December 21, 2023)]
[Notices]
[Pages 88461-88463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28041]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99190; File No. SR-GEMX-2023-19]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7,
Section 6
December 15, 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 December 5, 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.
---------------------------------------------------------------------------
\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 its Rules at Options 7, Section 6,
C, Ports and Other Services.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed pricing changes on
November 28, 2023 (SR-GEMX-2023-16). On December 5, 2023, the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------
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
The Exchange proposes to amend Options 7, Section 6, C, Ports and
Other Services. Specifically, the Exchange proposes to amend the
monthly caps for SQF Ports \4\ and SQF Purge Ports.\5\
---------------------------------------------------------------------------
\4\ ``Specialized Quote Feed'' or ``SQF'' is an interface that
allows Market Makers to connect, send, and receive messages related
to quotes, Immediate-or-Cancel Orders, and auction responses to the
Exchange. Features include the following: (1) options symbol
directory messages (e.g., underlying instruments); (2) System event
messages (e.g., start of trading hours messages and start of
opening); (3) trading action messages (e.g., halts and resumes); (4)
execution messages; (5) quote messages; (6) Immediate-or-Cancel
Order messages; (7) risk protection triggers and purge
notifications; (8) opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF Purge Interface
only receives and notifies of purge requests from the Market Maker.
Market Makers may only enter interest into SQF in their assigned
options series. Immediate-or-Cancel Orders entered into SQF are not
subject to the Order Price Protection, Market Order Spread
Protection, and Size Limitation Protection in Options 3, Section
15(a)(1)(A), (1)(B), and (2)(B) respectively. See Supplementary
Material .03(c) to Options 3, Section 7.
\5\ SQF Purge is a specific port for the SQF interface that only
receives and notifies of purge requests from the Market Maker.
Dedicated SQF Purge Ports enable Market Makers to seamlessly manage
their ability to remove their quotes in a swift manner. The SQF
Purge Port is designed to assist Market Makers in the management of,
and risk control over, their quotes. Market Makers may utilize a
purge port to reduce uncertainty and to manage risk by purging all
quotes in their assigned options series. Of note, Market Makers may
only enter interest into SQF in their assigned options series.
Additionally, the SQF Purge Port may be utilized by a Market Maker
in the event that the Member has a system issue and determines to
purge its quotes from the order book.
---------------------------------------------------------------------------
Today, GEMX assesses $1,250 per port, per month for an SQF Port as
well as an SQF Purge Port.\6\ Also, today, SQF Ports and SQF Purge
Ports are subject to a monthly cap of $17,500, which cap is applicable
to Market Makers.
---------------------------------------------------------------------------
\6\ The Exchange proposes to add a comma between ``per port''
and ``per month'' in the Options 7, Section 6, C, SQF Port and SQF
Purge Port Fee rule text. The Exchange also proposes to remove an
extraneous period in Options 7, Section 6, C, in the second
paragraph.
---------------------------------------------------------------------------
At this time, the Exchange proposes to increase the SQF Port and
SQF Purge Port monthly cap fee of $17,500 per month to $27,500 per
month. The Exchange is not amending the $1,250 per port, per month SQF
Port and SQF Purge Port. As is the case today, the Exchange would not
assess a Member an SQF Port or SQF Purge Port fee beyond the monthly
cap once the Member has exceeded the monthly cap for the respective
month. Despite increasing the monthly cap for SQF Ports and SQF Purge
Ports from $17,500 per month to
[[Page 88462]]
$27,500 per month, the Exchange will continue to offer Members the
opportunity to cap their SQF Port and SQF Purge Port fees so that they
would not be assessed these fees beyond the cap. Further, a GEMX Market
Maker requires only one SQF Port to submit quotes in its assigned
options series into GEMX. A GEMX Market Maker may submit all quotes
through one SQF Port and utilize one SQF Purge Port to view its purge
requests. While a Market Maker may elect to obtain multiple SQF Ports
and SQF Purge Ports to organize its business,\7\ only one SQF Port and
SQF Purge Port is necessary for a Market Maker to fulfill its
regulatory quoting obligations.\8\
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\7\ For example, a Market Maker may desire to utilize multiple
SQF Ports for accounting purposes, to measure performance, for
regulatory reasons or other determinations that are specific to that
Member.
\8\ GEMX Market Makers have various regulatory requirements as
provided for in Options 2, Section 4. Additionally, GEMX Market
Makers have certain quoting requirements with respect to their
assigned options series as provided in Options 2, Section 5. SQF
Ports are the only quoting protocol available on GEMX and only
Market Makers may utilize SQF Ports. The same is true for SQF Purge
Ports.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ 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.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The proposed pricing change to increase the monthly cap applicable
to SQF Ports and SQF Purge Ports is reasonable in several respects. As
a threshold matter, the Exchange is subject to significant competitive
forces in the market for options securities transaction services that
constrain its pricing determinations in that market. The fact that this
market is competitive has long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[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'. . . .'' \11\
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\11\ NetCoalition v. SEC, 615 F.3d 525, 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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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.'' \12\
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\12\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Numerous indicia demonstrate the competitive nature of this market.
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.
The proposed pricing change to increase the SQF Port and SQF Purge
Port monthly cap from $17,500 per month to $27,500 per month is
reasonable because despite the increase in the monthly cap, the
Exchange will continue to offer Members the opportunity to cap their
SQF Port and SQF Purge Port fees so that they would not be assessed
these fees beyond the cap. Additionally, a GEMX Market Maker requires
only one SQF Port to submit quotes in its assigned options series into
GEMX. A GEMX Market Maker may submit all quotes through one SQF Port
and utilize one SQF Purge Port to view its purge requests. While a
Market Maker may elect to obtain multiple SQF Ports and SQF Purge Ports
to organize its business,\13\ only one SQF Port and SQF Purge Port is
necessary for a Market Maker to fulfill its regulatory quoting
obligations.\14\
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\13\ For example, a Market Maker or may desire to utilize
multiple SQF Ports for accounting purposes, to measure performance,
for regulatory reasons or other determinations that are specific to
that Member.
\14\ GEMX Market Makers have various regulatory requirements as
provided for in Options 2, Section 4. Additionally, GEMX Market
Makers have certain quoting requirements with respect to their
assigned options series as provided in Options 2, Section 5. SQF
Ports are the only quoting protocol available on GEMX and only
Market Makers may utilize SQF Ports.
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The Exchange's proposed pricing change to increase the SQF Port and
SQF Purge Port monthly cap from $17,500 per month to $27,500 per month
is equitable and not unfairly discriminatory because the Exchange would
uniformly not assess any Market Makers that exceeded the proposed
monthly cap any SQF Port and SQF Purge Port fees for that month beyond
the cap. Market Makers are the only market participants that are
assessed SQF Port and SQF Purge Port fees because they are the only
market participants that are permitted to quote on the Exchange.
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 proposal does not impose an undue burden on intermarket
competition. The Exchange believes its proposal remains competitive
with other options markets who also offer order entry protocols. 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. In such an environment,
the Exchange must continually adjust its fees to remain competitive
with other exchanges. Because competitors are free to modify their own
fees in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which fee changes in this market may impose any burden on competition
is extremely limited.
Intramarket Competition
The Exchange's proposed pricing change to increase the SQF Port and
SQF Purge Port monthly cap from $17,500 per month to $27,500 per month
does not impose an undue burden on competition because the Exchange
would uniformly not assess any Market Makers that exceeded the proposed
monthly cap any SQF Port and SQF Purge Port fees for that month beyond
the cap. Market Makers are the only market participants that are
assessed SQF Port and SQF Purge Port fees because they are the only
market participants that are permitted to quote on the Exchange.
[[Page 88463]]
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.\15\ 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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-GEMX-2023-19 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-2023-19. 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
a.m. and 3 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-2023-19 and should be
submitted on or before January 11, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-28041 Filed 12-20-23; 8:45 am]
BILLING CODE 8011-01-P