82 FR 37253 - Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Ports That Members Use To Connect to the Exchange

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 152 (August 9, 2017)

[Federal Register Volume 82, Number 152 (Wednesday, August 9, 2017)]
[Notices]
[Pages 37253-37255]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-16744]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81312; File No. SR-MRX-2017-13)


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Establish Ports 
That Members Use To Connect to the Exchange

August 3, 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 July 20, 2017, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``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.
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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 (1) establish ports that members use to 
connect to the Exchange with the migration of the Exchange's trading 
system to the Nasdaq INET architecture, and (2) amend the Schedule of 
Fees to adopt fees for those ports.
    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 purpose of the proposed rule change is to: (1) Establish ports 
that members use to connect to the Exchange with the migration of the 
Exchange's trading system to the Nasdaq INET architecture,\3\ and (2) 
amend the Schedule of Fees to adopt fees for those ports. In 
particular, the Exchange proposes to establish and adopt fees for the 
following connectivity options that are available in connection with 
the re-platform of the Exchange's trading system: Specialized Quote 
Feed (``SQF''), SQF Purge, Ouch to Trade Options (``OTTO''), Clearing 
Trade Interface (``CTI''), Financial Information eXchange (``FIX''), 
FIX Drop, and Disaster Recovery. These port options, which are 
described in more detail below, are the same as those currently used to 
connect to the Exchange's affiliates, including Nasdaq GEMX, LLC 
(``GEMX''), Nasdaq Phlx (``Phlx''),

[[Page 37254]]

Nasdaq Options Market (``NOM''), and Nasdaq BX (``BX'').\4\
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    \3\ See Securities Exchange Act Release No. 80815 (May 30, 
2017), 82 FR 25827 (June 5, 2017) (SR-MRX-2017-02).
    \4\ See GEMX Schedule of Fees, IV. Access Services, Port Fees, 
4. Ports; Phlx Pricing Schedule, VII. Other Member Fees, B. Port 
Fees; NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM--Ports and 
other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 BX--
Ports and other Services.
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1. Specialized Quote Feed Port
    SQF is an interface that allows market makers to connect and send 
quotes, sweeps and auction responses into the Exchange. 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; (6) Quote Messages (quote/
sweep messages, risk protection triggers or purge notifications).
2. SQF Purge Port
    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.
3. Ouch to Trade Options Port
    OTTO is an interface that allows market participants to connect and 
send orders, auction orders and auction responses into the Exchange. 
Data includes the following: (1) Options Auction Notifications (e.g., 
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); (5) Option Trading Action Messages (e.g., halts, resumes); 
(6) Execution Messages; (7) Order Messages (order messages, risk 
protection triggers or purge notifications).
4. Clearing Trade Interface Port
    CTI is a real-time clearing trade update message that is sent to a 
member after an execution has occurred and contains trade details. The 
message containing the trade details is also simultaneously sent to The 
Options Clearing Corporation. The information includes, among other 
things, the following: (i) The Clearing Member Trade Agreement or 
``CMTA'' or The Options Clearing Corporation or ``OCC'' number; (ii) 
Exchange badge or house number; (iii) the Exchange internal firm 
identifier; and (iv) an indicator which will distinguish electronic and 
non-electronically delivered orders; (v) liquidity indicators and 
transaction type for billing purposes; (vi) capacity.
5. Financial Information eXchange Port
    FIX is an interface that allows market participants to connect and 
send orders and auction orders into the Exchange. Data includes the 
following: (1) Options Symbol Directory Messages; (2) System Event 
Messages (e.g., start of messages, start of system hours, start of 
quoting, start of opening); (3) Option Trading Action Messages (e.g., 
halts, resumes); (4) Execution Messages; (5) Order Messages (order 
messages, risk protection triggers or purge notifications).
6. FIX Drop Port
    FIX Drop is a real-time order and execution update message that is 
sent to a member after an order been received/modified or an execution 
has occurred and contains trade details. The information includes, 
among other things, the following: (1) Executions; (2) cancellations; 
(3) modifications to an existing order (4) busts or post-trade 
corrections.
7. Disaster Recovery Port
    Disaster Recovery ports provide connectivity to the exchange's 
disaster recovery systems to be utilized in the event the exchange has 
to fail over during the trading day. DR Ports are available for SQF, 
SQF Purge, CTI, OTTO, FIX and FIX Drop.
8. Fees
    Currently, the Exchange does not charge any port fees. With the re-
platform of the Exchange's trading system, the Exchange will now be 
offering a new set of ports for connecting to the Exchange as described 
in more detail above. The Exchange therefore proposes to adopt fees for 
these connectivity options, which will initially be $0 per port per 
month.\5\ The Exchange believes that it is appropriate to provide these 
connectivity options without charge during this initial migration 
period until the Exchange has enough experience with these ports to 
begin charging. In addition, adding these fees to the Schedule of Fees 
now will alert members to the fact that they will not be charged for 
access through these new connectivity options at this time.
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    \5\ Fees apply only to connectivity to the MRX INET trading 
system.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act'') 
\6\ in general, and furthers the objectives of Section 6(b)(5) of the 
Act \7\ in particular, in that it is designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism for a free and open market and a national market system, and, 
in general, to protect investors and the public interest. In addition, 
the Exchange believes that the proposed fees being adopted for INET 
ports are consistent with the provisions of Section 6 of the Act,\8\ in 
general, and Section 6(b)(4) of the Act,\9\ in particular, in that they 
are 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(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is consistent 
with the protection of investors and the public interest as it 
establishes ports used to connect to the MRX INET trading system. The 
Exchange's offerings are changing with the re-platform as the ports 
used by INET differ from those used to connect to the T7 trading 
system. Market participants that connect to the INET trading system may 
use the following connectivity options mentioned above: SQF, SQF Purge, 
OTTO, CTI, FIX, FIX Drop, and Disaster Recovery. These connectivity 
options are the same as those currently used by the Exchange's 
affiliates, and therefore offer a familiar experience for market 
participants. The ports described in this filing provide a range of 
important features to market participants, including the ability to 
submit orders and quotes and perform other functions necessary to 
manage trading on the Exchange. The Exchange believes that filing to 
establish these port options will increase transparency to market 
participants regarding connectivity options provided by the Exchange.
    Finally, the Exchange believes that it is reasonable and equitable 
to adopt fees for the various ports used to connect to the Exchange's 
new INET trading system. As explained above, the ports that will be 
used to connect to the INET trading system are generally the same as 
those currently used by the Exchange's affiliates. The Exchange has 
determined to offer these connectivity options free of cost for the 
time being in order to aid in the migration of the Exchange's trading 
system to INET technology.

[[Page 37255]]

Adding these fees to the Schedule of Fees will clarify to members that 
they will not have to pay for access to both T7 and INET trading 
systems. The Exchange also does not believe that the proposed fee 
change is unfairly discriminatory as each of the proposed port fees are 
initially proposed to be free of charge for all members.

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

    In accordance with Section 6(b)(8) of the Act,\10\ 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. As explained 
above, the Exchange is establishing the ports used to connect to the 
MRX INET trading system. In addition, the Exchange is adopting fees for 
access to these connectivity options, which will be offered initially 
free of cost to aid in the migration of the Exchange's trading system 
to Nasdaq INET technology. The Exchange does not believe that 
establishing these ports, or providing them to members free of charge, 
will have any competitive impact.
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    \10\ 15 U.S.C. 78f(b)(8).
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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 \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requests 
that the Commission waive the 30-day operative delay. The Exchange 
notes that its members have received numerous communications regarding 
the availability of the new ports. The Exchange also explains that the 
proposed port options are the same as those currently used to connect 
to the Exchange's affiliates, and that members will use the new ports 
as the Exchange migrates its trading system to INET. The Exchange 
represents that it anticipates the migration will happen on or around 
August 14, 2017. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest as it will allow the Exchange to establish the proposed 
ports ahead of the system migration and thereby avoid potential 
disruptions to members' connectivity to the Exchange. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposed rule change operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MRX-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-MRX-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-MRX-2017-1 and should be 
submitted on or before August 30, 2017.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16744 Filed 8-8-17; 8:45 am]
 BILLING CODE 8011-01-P