82 FR 25894 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 106 (June 5, 2017)

[Federal Register Volume 82, Number 106 (Monday, June 5, 2017)]
[Notices]
[Pages 25894-25895]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11503]



[[Page 25894]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80808; File No. SR-GEMX-2017-20]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Schedule of Fees

May 30, 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 22, 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, II, and III, below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Schedule of Fees to assess fees 
for SQF and SQF Purge Ports that members will use to connect to the 
Exchange.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes amending the Schedule of Fees to increase 
fees for Specialized Quote Feed (``SQF'') \3\ and SQF Purge \4\ Ports 
that Market Makers utilize to connect to the Exchange.\5\ Currently, 
the Exchange does not charge Market Makers, i.e., Primary Market Makers 
(``PMMs'') and Competitive Market Makers (``CMM''), a fee for SQF and 
SQF Purge Ports. The Exchange proposes to begin assessing SQF and SQF 
Purge Port Fees of $1,250 per port, per month in order to recoup the 
costs of supporting its architecture. The Exchange also proposes to cap 
these fees for Market Makers utilizing these ports at $12,500 per 
month. The Exchange believes that its pricing remains competitive.
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    \3\ SQF is an interface that allows market makers to connect and 
send quotes, sweeps and auction responses into GEMX. Data includes 
the following: (1) Options Auction Notifications (e.g., opening 
imbalance, Flash, PIM, Solicitation and Facilitation or other 
information); (2) Options Symbol Directory Messages; (3) System 
Event Messages (e.g., start of messages, start of system hours, 
start of quoting, start of opening); (4) Option Trading Action 
Messages (e.g., halts, resumes); (5) Execution Messages; and (6) 
Quote Messages (quote/sweep messages, risk protection triggers or 
purge notifications).
    \4\ SQF Purge is a specific port for the SQF interface that only 
receives and notifies of purge requests from the market maker.
    \5\ The Exchange filed the proposed fee increase on May 17, 2017 
(SR-GEMX-2017-19). On May 22, 2017, the Exchange withdrew that 
filing and submitted this filing.
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    A reference to ``Exchange'' is being removed from the Schedule of 
Fees as the reference is extraneous.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\6\ in general, and Section 
6(b)(4) of the Act,\7\ in particular, in that it is designed to provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable to increase the SQF and 
SQF Purge Port fees at this time because the GEMX INET migration is 
complete and the Exchange desires to recoup costs associated with 
supporting its architecture. The Exchange initially offered these ports 
free of cost to aid in the migration of the Exchange's trading system 
to the INET technology. Today, the Bats BZX Exchange, Inc. (``BATS 
BZX'') assesses $1,500 to its market makers for Ports with Bulk Quoting 
Capabilities.\8\ Additionally, the Exchange proposes to cap the fees 
for Market Makers utilizing these ports at $12,500 per month, which 
will limit the amount of SQF and SQF Purge Ports Fees that Market 
Makers will pay per month. The Exchange believes that it is reasonable 
to cap these ports for Market Makers so that the increased costs for 
SQF and SQF Purge Ports will not exceed $12,500 a month. The Exchange 
believes that the amount of the proposed cap is reasonable because it 
will allow Market Makers to cap their costs beyond 10 ports. The 
Exchange proposes 10 ports because it desires to cap infrastructure 
costs for Market Makers who incur more significant fees because of the 
greater amount of ports that these Market Makers access because of 
their larger market making footprint on the Exchange.
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    \8\ See Bats BZX Options Exchange Fee Schedule. BZX assesses 
$1,500 for the first 5 ports, per month and $2,000 for 6 or more 
ports, per month.
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    The Exchange believes that it is equitable and not unfairly 
discriminatory to increase the SQF and SQF Purge Port fees to $1,250 
per port, per month because all Market Makers would be uniformly 
assessed the same SQF and SQF Purge Port Fees. The Exchange will also 
uniformly apply the proposed $12,500 per month cap to Market Makers 
utilizing SQF and SQF Purge Ports. No Market Maker who utilizes more 
than 10 SQF or SQF Purge Ports will be assessed a fee beyond the 10 
ports.
    Finally, removing the extraneous reference to ``Exchange'' will 
bring clarity to the rule text.

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

    In accordance with Section 6(b)(8) of the Act,\9\ the Exchange does 
not believe that the proposed rule change will impose any burden on 
intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed SQF 
and SQF Purge Port fees will be uniformly assessed to all Market 
Makers. The fees remain competitive with fees at other markets.\10\ The 
Exchange will also uniformly apply the proposed $12,500 per month cap 
to Marker Makers utilizing SQF and SQF Purge Ports.
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    \9\ 15 U.S.C. 78f(b)(8).
    \10\ See note 8 above.
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    The Exchange operates in a highly competitive market in which 
market participants can readily direct their order flow to competing 
venues. In such an environment, the Exchange must continually review, 
and consider adjusting, its fees and rebates to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed fee changes reflect this competitive environment.

[[Page 25895]]

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.\11\ 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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    \11\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-GEMX-2017-20 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-2017-20. 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 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-2017-20, and should be 
submitted on or before June 26, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11503 Filed 6-2-17; 8:45 am]
 BILLING CODE 8011-01-P