82 FR 23891 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Schedule of Fees To Offer the Historical GEMX Open/Close Trade Profile
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 99 (May 24, 2017)
Federal Register Volume 82, Issue 99 (May 24, 2017)
| Page Range | 23891-23893 | |
| FR Document | 2017-10590 |
[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)] [Notices] [Pages 23891-23893] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-10590] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80722; File No. SR-GEMX-2017-13] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Schedule of Fees To Offer the Historical GEMX Open/Close Trade Profile May 18, 2017. 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 5, 2017, 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 the Exchange's Schedule of Fees to offer the historical GEMX Open/Close Trade Profile, which will offer historical opening and closing trade data for each GEMX-listed option on both an intraday and end-of-day basis, as described further below. The text of the proposed rule change is available on the Exchange's Web site at www.ise.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Schedule of Fees to offer the historical GEMX Open/Close Trade Profile, which will offer historical opening and closing trade data for GEMX-listed options on both an intraday and end-of-day basis. The data provided with this product is similar to the historical data provided with the ISE Open/Close Trade Profile products.\3\ The Exchange is prepared to offer this product upon filing. --------------------------------------------------------------------------- \3\ Nasdaq ISE, Schedule of Fees, Chapter VIII (Market Data), A (Nasdaq ISE Open/Close Trade Profile End of Day) and B (Nasdaq ISE Open/Close Trade Profile Intraday); see also Securities Exchange Act Release 56254 (August 15, 2007) 72 FR 47104 (August 22, 2007) (SR- ISE-2007-70). --------------------------------------------------------------------------- The historical GEMX Open/Close Trade Profile, available to both members and non-members, will provide subscribers with the ability to analyze trade and volume data for options and create and test trading models and analytical strategies. The service will provide over 80 fields of data for GEMX-listed options, which will include an ``Origin Code'' \4\ identifying the type of trader participating in a transaction; data on opening buys and sells and closing buys and sells; \5\ trading volume and number of trades information summarized by day and series; a code indicating the degree to which a series is ``in'' or ``out'' of the ``money''; \6\ the [[Page 23892]] number of days to expiration; an indication of the degree to which there is ``Open Interest'' \7\ for each series; and a comparison of the volume of trading at GEMX relative to the industry as a whole. The data will help subscribers understand the market, identifying, for example, the types of market participants--Customers, Professional Customers, Firms or Market Makers--trading in certain options or engaging in particular trading strategies. --------------------------------------------------------------------------- \4\ The ``Origin Code'' identifies the type of trader involved in a transaction: Customer, Professional Customer, Firm or Market Maker. ``Customer'' includes both retail and institutional customers. A ``Professional Customer'' is a high-activity customer that enters into more than 390 orders per day over the course of a one-month period. A ``Firm'' is a broker-dealer trading in its own proprietary account or on behalf of another broker-dealer. A ``Market Maker'' is a broker-dealer that assumes the risk of holding a position in a series to facilitate trading. \5\ An opening buy is a transaction that creates or increases a long position and an opening sell is a transaction that creates or increases a short position. A closing buy is a transaction made to close out an existing position. A closing sell is a transaction to reduce or eliminate a long position. \6\ The degree to which a series is ``in'' or ``out'' of the ``money'' will be identified according to the following five levels of ``moneyness'': (i) ``Deep in the Money'' means that the strike price of this option is more than 12% lower than the price of the underlying security if it is a call or more than 12% higher if it is a put; (ii) ``In the Money'' means that the strike price of this option is within the range of 5%-12% lower than the price of the underlying security if it is a call or within the range of 5%-12% higher if it is a put; (iii) ``At the Money'' means that the strike price of this option is within the range of 5% higher or lower than the price of the underlying security; (iv) ``Out of the Money'' means that the strike price of this option is within the range of 5%-12% higher than the price of the underlying security if it is a call or 5%-12% lower if it is a put; and (v) ``Deep out of the Money'' means that the strike price of this option is more than 12% higher than the price of the underlying security if it is a call or more than 12% lower if it is a put. \7\ ``Open Interest'' is the total number of outstanding contracts for each series across all options exchanges for the trade date of the file. --------------------------------------------------------------------------- Requests for end-of-day data will be charged $400 per request per month, and requests for intraday data (available in 10 minute increments) will be charged $750 per request per month. Historical data is available starting in August 2013. The proposed rule change is fair and reasonable and will increase transparency in the market by making previously unavailable data on GEMX-listed options available to both members and non-members. This newly-available data will allow firms to create and test trading models and analytical strategies that may be used to improve market performance. The proposed fees are entirely optional in that they apply only to firms that elect to purchase these products. The proposed changes do not impact the cost of any other GEMX product. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\8\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b). \9\ 15 U.S.C. 78f(b)(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.'' \10\ --------------------------------------------------------------------------- \10\ 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 \11\ (``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.\12\ 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.'' \13\ --------------------------------------------------------------------------- \11\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). \12\ See NetCoalition, at 534-535. \13\ Id. at 537. --------------------------------------------------------------------------- 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'. . . .'' \14\ 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. --------------------------------------------------------------------------- \14\ 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)). --------------------------------------------------------------------------- The Exchange believes that the creation of the historical GEMX Open/Close Trade Profile product is reasonable and equitable in accordance with Section 6(b)(4) of the Act, and not unreasonably discriminatory in accordance with Section 6(b)(5) of the Act. The proposed changes will increase transparency by allowing firms currently unable to access the information contained in the GEMX Open/Close Trade Profile the ability to analyze option trade and volume data and create and test trading models and analytical strategies. The proposed fees, like all proprietary data fees, are constrained by the Exchange's need to compete for order flow, and are subject to competition from other options exchanges.\15\ The proposed fees are not unfairly discriminatory because the Exchange will apply the same fee to all similarly-situated subscribers. --------------------------------------------------------------------------- \15\ The Exchange notes that the fees for the proposed product are less than the fees for similar products sold by the Nasdaq ISE exchange. See Nasdaq ISE, Schedule of Fees, Chapter VIII (Market Data), A (Nasdaq ISE Open/Close Trade Profile End of Day) and B (Nasdaq ISE Open/Close Trade Profile Intraday). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed changes will amend the Exchange's Schedule of Fees to offer the historical GEMX Open/Close Trade Profile, which will offer historical opening and closing trade data for GEMX-listed options on both an intraday and end-of-day basis. End-of-day data will be available for $400 per request per month, and intraday data will be available for $750 per request per month. GEMX market data fees are constrained by competition among exchanges and other entities seeking to attract order flow, and the existence of substitutes that are offered, or may be offered, by other entities. Order flow is the ``life blood'' of the exchanges. For a variety of reasons, competition from new entrants, especially for order execution, has increased dramatically over the last decade, as demonstrated by the proliferation of new options exchanges such as EDGX Exchange and MIAX Options within the last four years. Each options exchange is permitted to produce proprietary data products. The markets for order flow and proprietary data are inextricably linked: A trading platform cannot generate market information unless it receives trade orders. As a result, the competition for order flow constrains the prices that platforms can charge for proprietary data products. Firms make decisions on how much and what types of data to consume based on the total cost of interacting with GEMX and other exchanges. Data fees are but one factor in a total platform analysis. If the cost of the product exceeds its expected value, the prospective customer will choose not to buy it. A supracompetitive increase in the fees charged for either transactions or proprietary data has the potential to impair revenues from both products. The price of options data is also constrained by the existence of multiple substitutes offered by a number of entities, and non- proprietary data disseminated by the Options Price Reporting Authority, LLC (``OPRA''). [[Page 23893]] OPRA is a securities information processor that disseminates last sale reports and quotations, as well as the number of options contracts traded, open interest and end-of-day summaries. Many customers that obtain information from OPRA do not also purchase proprietary data, but in cases in which customers buy both products, they may shift purchasing decisions based on price changes. OPRA constrains the price of proprietary data products on options exchanges because no customer would pay an excessive price for these products when they already have data from OPRA. Similarly, no customer would pay an excessive price for Exchange data when they have the ability to obtain similar proprietary data from other exchanges. It is not necessary that products be identical in order to be reasonable substitutes for each other. For these reasons, the competition for order flow and the existence of multiple substitutes will constrain prices for the GEMX Trade Profile product. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \16\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\17\ --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(3)(A)(iii). \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the Exchange can immediately offer subscribers the historical GEMX Open/Close Trade Profile. The Exchange represents that waiver of the 30-day operative delay would allow it to provide data to customers who have expressed a specific interest in purchasing it. The Exchange also represents that the data is purely historical and only of use to create and test trading models and analytical strategies, similar data is already being provided by the ISE, and the purchase of such data is purely optional. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change operative upon filing.\20\ --------------------------------------------------------------------------- \18\ 17 CFR 240.19b-4(f)(6). \19\ 17 CFR 240.19b-4(f)(6)(iii). \20\ For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-GEMX-2017-13 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-2017-13. 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 Web site (http://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 Web site 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; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-GEMX-2017-13 and should be submitted on or before June 14, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-10590 Filed 5-23-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices 23891
arguments concerning the foregoing, SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
including whether the proposed rule COMMISSION Statement of the Purpose of, and
change is consistent with the Act. Statutory Basis for, the Proposed Rule
Comments may be submitted by any of [Release No. 34–80722; File No. SR–GEMX–
Change
the following methods: 2017–13] 1. Purpose
Electronic Comments The Exchange proposes to amend its
Self-Regulatory Organizations; Nasdaq
• Use the Commission’s Internet Schedule of Fees to offer the historical
GEMX, LLC; Notice of Filing and
comment form (http://www.sec.gov/ GEMX Open/Close Trade Profile, which
Immediate Effectiveness of Proposed will offer historical opening and closing
rules/sro.shtml); or Rule Change To Amend the trade data for GEMX-listed options on
• Send an email to rule-comments@ Exchange’s Schedule of Fees To Offer both an intraday and end-of-day basis.
sec.gov. Please include File Number SR– the Historical GEMX Open/Close Trade The data provided with this product is
PEARL–2017–22 on the subject line. Profile similar to the historical data provided
Paper Comments May 18, 2017. with the ISE Open/Close Trade Profile
products.3 The Exchange is prepared to
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the offer this product upon filing.
to Secretary, Securities and Exchange Securities Exchange Act of 1934 The historical GEMX Open/Close
Commission, 100 F Street NE., (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Trade Profile, available to both members
Washington, DC 20549–1090. notice is hereby given that on May 5, and non-members, will provide
All submissions should refer to File 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or subscribers with the ability to analyze
Number SR–PEARL–2017–22. This file ‘‘Exchange’’) filed with the Securities trade and volume data for options and
number should be included on the and Exchange Commission (‘‘SEC’’ or create and test trading models and
subject line if email is used. To help the ‘‘Commission’’) the proposed rule analytical strategies. The service will
Commission process and review your change as described in Items I and II, provide over 80 fields of data for GEMX-
comments more efficiently, please use below, which Items have been prepared listed options, which will include an
only one method. The Commission will by the Exchange. The Commission is ‘‘Origin Code’’ 4 identifying the type of
post all comments on the Commission’s publishing this notice to solicit trader participating in a transaction;
Internet Web site (http://www.sec.gov/ comments on the proposed rule change data on opening buys and sells and
rules/sro.shtml). Copies of the from interested persons. closing buys and sells; 5 trading volume
submission, all subsequent and number of trades information
amendments, all written statements I. Self-Regulatory Organization’s summarized by day and series; a code
with respect to the proposed rule Statement of the Terms of Substance of indicating the degree to which a series
change that are filed with the the Proposed Rule Change is ‘‘in’’ or ‘‘out’’ of the ‘‘money’’; 6 the
Commission, and all written
The Exchange proposes to amend the 3 Nasdaq ISE, Schedule of Fees, Chapter VIII
communications relating to the
Exchange’s Schedule of Fees to offer the (Market Data), A (Nasdaq ISE Open/Close Trade
proposed rule change between the Profile End of Day) and B (Nasdaq ISE Open/Close
historical GEMX Open/Close Trade
Commission and any person, other than Trade Profile Intraday); see also Securities
Profile, which will offer historical
those that may be withheld from the Exchange Act Release 56254 (August 15, 2007) 72
public in accordance with the opening and closing trade data for each FR 47104 (August 22, 2007) (SR–ISE–2007–70).
provisions of 5 U.S.C. 552, will be GEMX-listed option on both an intraday 4 The ‘‘Origin Code’’ identifies the type of trader
and end-of-day basis, as described involved in a transaction: Customer, Professional
available for Web site viewing and Customer, Firm or Market Maker. ‘‘Customer’’
printing in the Commission’s Public further below. includes both retail and institutional customers. A
Reference Room, 100 F Street NE., The text of the proposed rule change ‘‘Professional Customer’’ is a high-activity customer
that enters into more than 390 orders per day over
Washington, DC 20549, on official is available on the Exchange’s Web site the course of a one-month period. A ‘‘Firm’’ is a
business days between the hours of at www.ise.com, at the principal office broker-dealer trading in its own proprietary account
10:00 a.m. and 3:00 p.m. Copies of the of the Exchange, and at the or on behalf of another broker-dealer. A ‘‘Market
filing also will be available for Commission’s Public Reference Room. Maker’’ is a broker-dealer that assumes the risk of
holding a position in a series to facilitate trading.
inspection and copying at the principal 5 An opening buy is a transaction that creates or
office of the Exchange. All comments II. Self-Regulatory Organization’s
increases a long position and an opening sell is a
received will be posted without change; Statement of the Purpose of, and transaction that creates or increases a short
the Commission does not edit personal Statutory Basis for, the Proposed Rule position. A closing buy is a transaction made to
identifying information from Change close out an existing position. A closing sell is a
transaction to reduce or eliminate a long position.
submissions. You should submit only In its filing with the Commission, the 6 The degree to which a series is ‘‘in’’ or ‘‘out’’
information that you wish to make Exchange included statements of the ‘‘money’’ will be identified according to the
available publicly. All submissions following five levels of ‘‘moneyness’’: (i) ‘‘Deep in
concerning the purpose of and basis for the Money’’ means that the strike price of this
should refer to File Number SR– the proposed rule change and discussed option is more than 12% lower than the price of
PEARL–2017–22 and should be the underlying security if it is a call or more than
any comments it received on the
submitted on or before June 14, 2017. 12% higher if it is a put; (ii) ‘‘In the Money’’ means
proposed rule change. The text of these that the strike price of this option is within the
For the Commission, by the Division of statements may be examined at the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
range of 5%–12% lower than the price of the
Trading and Markets, pursuant to delegated places specified in Item IV below. The underlying security if it is a call or within the range
authority.23 of 5%–12% higher if it is a put; (iii) ‘‘At the
Exchange has prepared summaries, set
Eduardo A. Aleman, Money’’ means that the strike price of this option
forth in sections A, B, and C below, of is within the range of 5% higher or lower than the
Assistant Secretary. the most significant aspects of such price of the underlying security; (iv) ‘‘Out of the
[FR Doc. 2017–10593 Filed 5–23–17; 8:45 am] statements. Money’’ means that the strike price of this option
BILLING CODE 8011–01–P
is within the range of 5%–12% higher than the
price of the underlying security if it is a call or 5%–
1 15 U.S.C. 78s(b)(1). 12% lower if it is a put; and (v) ‘‘Deep out of the
23 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Continued
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![23892 Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
number of days to expiration; an promoting market competition in its unfairly discriminatory because the
indication of the degree to which there broader forms that are most important to Exchange will apply the same fee to all
is ‘‘Open Interest’’ 7 for each series; and investors and listed companies.’’ 10 similarly-situated subscribers.
a comparison of the volume of trading Likewise, in NetCoalition v. Securities
and Exchange Commission 11 B. Self-Regulatory Organization’s
at GEMX relative to the industry as a
(‘‘NetCoalition’’) the D.C. Circuit upheld Statement on Burden on Competition
whole. The data will help subscribers
understand the market, identifying, for the Commission’s use of a market-based The Exchange does not believe that
example, the types of market approach in evaluating the fairness of the proposed rule change will impose
participants—Customers, Professional market data fees against a challenge any burden on competition not
Customers, Firms or Market Makers— claiming that Congress mandated a cost- necessary or appropriate in furtherance
trading in certain options or engaging in based approach.12 As the court of the purposes of the Act. The
particular trading strategies. emphasized, the Commission ‘‘intended proposed changes will amend the
Requests for end-of-day data will be in Regulation NMS that ‘market forces, Exchange’s Schedule of Fees to offer the
charged $400 per request per month, rather than regulatory requirements’ historical GEMX Open/Close Trade
and requests for intraday data (available play a role in determining the market Profile, which will offer historical
in 10 minute increments) will be data . . . to be made available to opening and closing trade data for
charged $750 per request per month. investors and at what cost.’’ 13 GEMX-listed options on both an
Historical data is available starting in Further, ‘‘[n]o one disputes that intraday and end-of-day basis. End-of-
August 2013. competition for order flow is ‘fierce.’ day data will be available for $400 per
The proposed rule change is fair and . . . As the SEC explained, ‘[i]n the U.S. request per month, and intraday data
reasonable and will increase national market system, buyers and will be available for $750 per request
transparency in the market by making sellers of securities, and the broker- per month.
previously unavailable data on GEMX- dealers that act as their order-routing GEMX market data fees are
listed options available to both members agents, have a wide range of choices of constrained by competition among
and non-members. This newly-available where to route orders for execution’; exchanges and other entities seeking to
data will allow firms to create and test [and] ‘no exchange can afford to take its attract order flow, and the existence of
trading models and analytical strategies market share percentages for granted’ substitutes that are offered, or may be
that may be used to improve market because ‘no exchange possesses a offered, by other entities. Order flow is
performance. monopoly, regulatory or otherwise, in the ‘‘life blood’’ of the exchanges. For a
The proposed fees are entirely the execution of order flow from broker variety of reasons, competition from
optional in that they apply only to firms dealers’. . . .’’ 14 Although the court new entrants, especially for order
that elect to purchase these products. and the SEC were discussing the cash execution, has increased dramatically
The proposed changes do not impact the equities markets, the Exchange believes over the last decade, as demonstrated by
cost of any other GEMX product. that these views apply with equal force the proliferation of new options
to the options markets. exchanges such as EDGX Exchange and
2. Statutory Basis The Exchange believes that the MIAX Options within the last four
The Exchange believes that its creation of the historical GEMX Open/ years. Each options exchange is
proposal is consistent with Section 6(b) Close Trade Profile product is permitted to produce proprietary data
of the Act,8 in general, and furthers the reasonable and equitable in accordance products.
objectives of Section 6(b)(5) of the Act,9 with Section 6(b)(4) of the Act, and not The markets for order flow and
in particular, in that it provides for the unreasonably discriminatory in proprietary data are inextricably linked:
equitable allocation of reasonable dues, accordance with Section 6(b)(5) of the A trading platform cannot generate
fees, and other charges among members Act. The proposed changes will increase market information unless it receives
and issuers and other persons using any transparency by allowing firms trade orders. As a result, the
facility, and is not designed to permit currently unable to access the competition for order flow constrains
unfair discrimination between information contained in the GEMX the prices that platforms can charge for
customers, issuers, brokers, or dealers. Open/Close Trade Profile the ability to proprietary data products. Firms make
The Commission and the courts have analyze option trade and volume data decisions on how much and what types
repeatedly expressed their preference and create and test trading models and of data to consume based on the total
for competition over regulatory analytical strategies. The proposed fees, cost of interacting with GEMX and other
intervention in determining prices, like all proprietary data fees, are exchanges. Data fees are but one factor
products, and services in the securities constrained by the Exchange’s need to in a total platform analysis. If the cost
markets. In Regulation NMS, while compete for order flow, and are subject of the product exceeds its expected
adopting a series of steps to improve the to competition from other options value, the prospective customer will
current market model, the Commission exchanges.15 The proposed fees are not choose not to buy it. A supracompetitive
highlighted the importance of market increase in the fees charged for either
forces in determining prices and SRO 10 Securities Exchange Act Release No. 51808
transactions or proprietary data has the
revenues and, also, recognized that (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
potential to impair revenues from both
current regulation of the market system 11 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. products.
‘‘has been remarkably successful in 2010). The price of options data is also
asabaliauskas on DSK3SPTVN1PROD with NOTICES
12 See NetCoalition, at 534–535. constrained by the existence of multiple
Money’’ means that the strike price of this option 13 Id. at 537.
substitutes offered by a number of
is more than 12% higher than the price of the 14 Id. at 539 (quoting Securities Exchange Act
underlying security if it is a call or more than 12%
entities, and non-proprietary data
Release No. 59039 (December 2, 2008), 73 FR
lower if it is a put. 74770, 74782–83 (December 9, 2008) (SR–
disseminated by the Options Price
7 ‘‘Open Interest’’ is the total number of
NYSEArca–2006–21)). Reporting Authority, LLC (‘‘OPRA’’).
outstanding contracts for each series across all 15 The Exchange notes that the fees for the
options exchanges for the trade date of the file. proposed product are less than the fees for similar Data), A (Nasdaq ISE Open/Close Trade Profile End
8 15 U.S.C. 78f(b).
products sold by the Nasdaq ISE exchange. See of Day) and B (Nasdaq ISE Open/Close Trade Profile
9 15 U.S.C. 78f(b)(5). Nasdaq ISE, Schedule of Fees, Chapter VIII (Market Intraday).
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![Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices 23893
OPRA is a securities information 4(f)(6)(iii) 19 permits the Commission to Commission, 100 F Street NE.,
processor that disseminates last sale designate a shorter time if such action Washington, DC 20549–1090.
reports and quotations, as well as the is consistent with the protection of All submissions should refer to File
number of options contracts traded, investors and the public interest. The Number SR–GEMX–2017–13. This file
open interest and end-of-day Exchange has requested that the number should be included on the
summaries. Many customers that obtain Commission waive the 30-day operative subject line if email is used. To help the
information from OPRA do not also delay so that the Exchange can Commission process and review your
purchase proprietary data, but in cases immediately offer subscribers the comments more efficiently, please use
in which customers buy both products, historical GEMX Open/Close Trade only one method. The Commission will
they may shift purchasing decisions Profile. The Exchange represents that post all comments on the Commission’s
based on price changes. OPRA waiver of the 30-day operative delay Internet Web site (http://www.sec.gov/
constrains the price of proprietary data would allow it to provide data to rules/sro.shtml). Copies of the
products on options exchanges because customers who have expressed a submission, all subsequent
no customer would pay an excessive specific interest in purchasing it. The amendments, all written statements
price for these products when they Exchange also represents that the data is with respect to the proposed rule
already have data from OPRA. purely historical and only of use to change that are filed with the
Similarly, no customer would pay an create and test trading models and Commission, and all written
excessive price for Exchange data when analytical strategies, similar data is communications relating to the
they have the ability to obtain similar already being provided by the ISE, and proposed rule change between the
proprietary data from other exchanges. the purchase of such data is purely Commission and any person, other than
It is not necessary that products be optional. The Commission believes that those that may be withheld from the
identical in order to be reasonable waiver of the 30-day operative delay is public in accordance with the
substitutes for each other. consistent with the protection of provisions of 5 U.S.C. 552, will be
For these reasons, the competition for investors and the public interest. available for Web site viewing and
order flow and the existence of multiple Therefore, the Commission hereby printing in the Commission’s Public
substitutes will constrain prices for the waives the 30-day operative delay and Reference Room, 100 F Street NE.,
GEMX Trade Profile product. designates the proposed rule change Washington, DC 20549, on official
Accordingly, the Exchange does not operative upon filing.20 business days between the hours of
believe that the proposed changes will At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the
impair the ability of members or filing of the proposed rule change, the filing also will be available for
competing order execution venues to Commission summarily may inspection and copying at the principal
maintain their competitive standing in temporarily suspend such rule change if office of the Exchange. All comments
the financial markets. it appears to the Commission that such received will be posted without change;
C. Self-Regulatory Organization’s action is: (i) Necessary or appropriate in the Commission does not edit personal
Statement on Comments on the the public interest; (ii) for the protection identifying information from
Proposed Rule Change Received From of investors; or (iii) otherwise in submissions. You should submit only
Members, Participants, or Others furtherance of the purposes of the Act. information that you wish to make
No written comments were either If the Commission takes such action, the available publicly. All submissions
solicited or received. Commission shall institute proceedings should refer to File Number SR–GEMX–
to determine whether the proposed rule 2017–13 and should be submitted on or
III. Date of Effectiveness of the should be approved or disapproved. before June 14, 2017.
Proposed Rule Change and Timing for
Commission Action IV. Solicitation of Comments For the Commission, by the Division of
Trading and Markets, pursuant to delegated
Because the foregoing proposed rule Interested persons are invited to authority.21
change does not: (i) Significantly affect submit written data, views, and Eduardo A. Aleman,
the protection of investors or the public arguments concerning the foregoing, Assistant Secretary.
interest; (ii) impose any significant including whether the proposed rule
[FR Doc. 2017–10590 Filed 5–23–17; 8:45 am]
burden on competition; and (iii) become change is consistent with the Act.
BILLING CODE 8011–01–P
operative for 30 days from the date on Comments may be submitted by any of
which it was filed, or such shorter time the following methods:
as the Commission may designate, it has Electronic Comments SECURITIES AND EXCHANGE
become effective pursuant to Section COMMISSION
19(b)(3)(A)(iii) of the Act 16 and • Use the Commission’s Internet
subparagraph (f)(6) of Rule 19b–4 comment form (http://www.sec.gov/ [Release No. 34–80714; File No. SR–
thereunder.17 rules/sro.shtml); or BatsBZX–2016–60]
A proposed rule change filed under • Send an email to rule-comments@
Rule 19b–4(f)(6) 18 normally does not sec.gov. Please include File Number SR– Self-Regulatory Organizations; Bats
become operative for 30 days after the GEMX–2017–13 on the subject line. BZX Exchange, Inc.; Notice of
date of filing. However, Rule 19b– Withdrawal of a Proposed Rule Change
Paper Comments to Bats BZX Rule 14.13, Company
asabaliauskas on DSK3SPTVN1PROD with NOTICES
16 15 U.S.C. 78s(b)(3)(A)(iii). • Send paper comments in triplicate Listing Fees, and to the Bats BZX Fee
17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
to Secretary, Securities and Exchange Schedule
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file May 18, 2017.
19 17 CFR 240.19b–4(f)(6)(iii).
the proposed rule change at least five business days On September 29, 2016, Bats BZX
prior to the date of filing of the proposed rule 20 For purposes only of waiving the 30-day
Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’)
change, or such shorter time as designated by the operative delay, the Commission also has
Commission. The Exchange has satisfied this considered the proposed rule’s impact on filed with the Securities and Exchange
requirement. efficiency, competition, and capital formation. See
18 17 CFR 240.19b–4(f)(6). 15 U.S.C. 78c(f). 21 17 CFR 200.30–3(a)(12).
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Document Created: 2017-05-24 01:02:52
Document Modified: 2017-05-24 01:02:52
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Customer, Professional Customer, Firm or Market Maker. ``Customer'' includes both retail and institutional customers. A ``Professional Customer'' is a high-activity customer that enters into more than 390 orders per day over the course of a one-month period. A ``Firm'' is a broker-dealer trading in its own proprietary account or on behalf of another broker-dealer. A ``Market Maker'' is a broker-dealer that assumes the risk of holding a position in a series to facilitate trading. | |
| FR Citation | 82 FR 23891 |
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