82 FR 40190 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Quoting at the Opening
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 163 (August 24, 2017)
Federal Register Volume 82, Issue 163 (August 24, 2017)
| Page Range | 40190-40193 | |
| FR Document | 2017-17907 |
[Federal Register Volume 82, Number 163 (Thursday, August 24, 2017)] [Notices] [Pages 40190-40193] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-17907] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81434; File No. SR-ISE-2017-78] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Quoting at the Opening August 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 August 17, 2017, Nasdaq ISE, LLC (``ISE'' 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. --------------------------------------------------------------------------- \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 ISE Rule 701, entitled ``Opening.'' 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 this rule change is to amend ISE Rule 701, ``Opening'' to specifically amend opening obligations for Primary Market Makers or ``PMMs.'' The Exchange notes that the proposed rule change is similar to a Nasdaq MRX, LLC (``MRX'') rule.\3\ --------------------------------------------------------------------------- \3\ See MRX Rule 701. --------------------------------------------------------------------------- Today, ISE Rule 701(c)(3) states that the PMM assigned in a particular equity option must enter a Valid Width Quote not later than one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index. The PMM assigned in a particular U.S. dollar-settled foreign currency option must enter a Valid Width Quote not later than one minute after the announced market opening. First, the Exchange proposes to add the words ``or index'' to further clarify that the requirement applies to equities and index options. The Exchange proposes this addition to further clarify [[Page 40191]] the requirement in Rule 701(c)(3) clearly applies to equity and index options. Second, the Exchange proposes to modify the PMM's current obligation to enter Valid Width Quotes not later than one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index for all assigned options, or in the case of a U.S. dollar-settled foreign currency option after the announced market opening. The Exchange believes that the current requirement is very burdensome and instead proposes to add ``in 90% of their assigned series'' to require a PMM to enter a Valid Width Quote not later than one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in 90% of their assigned series, or in the case of a U.S. dollar-settled foreign currency option in 90% of their assigned series not late [sic] than one minute after the announced market opening. Further, the Exchange proposes to require PMMs to promptly enter a Valid Width Quote in the remainder of their assigned series, which did not open within one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index, or with respect to a U.S. dollar-settled foreign currency option, following the announced market opening. The Exchange's proposal is intended to account for market conditions which may prevent a PMM from opening all assigned series, for example an extremely volatile market which may impact the PMM's ability to enter aggressive quotes. Another example would be that news pertaining to a specific security is causing the underlying price to fluctuate rapidly and significantly, thereby causing the PMM to await the underlying equity price to settle before entering a Valid Width Quote. The Exchange's surveillance staff would monitor to ensure that PMMs are complying with these requirements during the Opening Process. Today, the Opening Process for an options series will be conducted on or after 9:30 a.m. if the system has received, within two minutes (or such shorter time as determined by the Exchange and disseminated to membership on the Exchange's Web site) of the opening trade or quote on the market for the underlying security in the case of equity options or, in the case of index options, within two minutes of the receipt of the opening price in the underlying index (or such shorter time as determined by the Exchange and disseminated to membership on the Exchange's Web site), or within two minutes of market opening for the underlying currency in the case of a U.S. dollar-settled foreign currency option (or such shorter time as determined by the Exchange and disseminated to membership on the Exchange's Web site) the PMM's Valid Width Quote, the Valid Width Quotes of two Competitive Market Makers (``CMMs'') or if neither the PMM's Valid Width Quote nor the Valid Width Quote of two CMM's have been submitted within such timeframe, if one CMM has submitted a Valid Width Quote.\4\ --------------------------------------------------------------------------- \4\ See proposed Rule 701(c)(1)(i)-(iii). --------------------------------------------------------------------------- Implementation The Exchange proposes to implement this rule change on September 29, 2017. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\5\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\6\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest for the reasons stated below. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78f(b). \6\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange's first proposal at Rule 701(c)(3) to clarify that the requirement applies to equities and index options will make clear the applicability of the PMM's requirement to enter Valid Width Quotes. This proposed amendment is non-substantive and is intended to add clarity to the rules. The second proposal to amend a PMM's requirement to enter Valid Width Quotes during the Opening Process is consistent with the Act because the 90% requirement to provide a Valid Width Quote in a series to which the PMM is assigned will continue to ensure that options series are opened in a timely manner, while not imposing a burdensome requirement on market participants. PMMs would be required to promptly enter a Valid Width Quote in the remainder of their assigned series, which did not open within one minute of the dissemination of a quote or trade by the market for the underlying security or in the case of index options, following the receipt of the opening price or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening. The Exchange would monitor PMMs to ensure that they promptly provided a Valid Width Quote for the remainder of the series within a reasonable amount of time. The Exchange notes that market conditions could cause a PMM to experience circumstances where opening 100% of all of their assigned series within one minute of the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar- settled foreign currency options, following the announced market opening is not feasible. The Exchange believes that the proposed 90% Valid Width Quoting obligation, not later than one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening, along with the ``prompt'' standard for the remaining 10% of their assigned series will ensure all series are opened in a timely manner. The Exchange's proposal accounts for market conditions which may prevent a PMM from opening all assigned series, for example an extremely volatile market which may impact the PMM's ability to enter aggressive quotes. Another example would be that news pertaining to a specific security is causing the underlying price to fluctuate rapidly and significantly, thereby causing the PMM to await the underlying equity price to settle before entering a Valid Width Quote. The Exchange believes that the time frame for PMMs to provide a Valid Width Quote in 90% of their assigned series not later than one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening will ensure liquidity on ISE during the Opening Process. The Exchange desires to encourage PMMs to continue to make markets on ISE at the Opening. The Exchange believes that requiring PMMs to provide a Valid Width Quote in 90% of their assigned options not later than one minute following the dissemination of a quote [[Page 40192]] or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening along with the ``prompt'' standard for the remaining 10% will enhance the market making functions for PMMs and serve to maintain a fair and orderly market thereby promoting the protection of investors and the public interest. 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 proposal does not change the intense competition that exists among the options markets for options business including on the opening. Nor does the Exchange believe that the proposal will impose any burden on intra-market competition; the Opening Process involves many types of participants and interest. The Exchange's proposal to require a PMM to enter a Valid Width Quote in 90% of their assigned series not later than one minute time following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening and promptly enter a Valid Width quote for the remaining 10% their assigned series does not create an undue burden on competition. The proposal will continue to ensure that options series are opened in a timely manner, while not imposing a burdensome requirement on market participants. PMMs would be required to promptly enter a Valid Width Quote in the remainder of their assigned series which were not open within one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening. The Exchange would monitor PMMs to ensure that they promptly entered a Valid Width Quote for the remainder of their assigned series within a reasonable amount of time. The Exchange notes that market conditions could cause a PMM to experience circumstances where entering a Valid Width Quote for 100% of all of their assigned series within one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or with respect to U.S. dollar- settled foreign currency options within one minute after the announced market opening is not feasible. The Exchange believes that the proposed 90% obligation to enter a Valid Width Quote not later than one minute following the dissemination of a quote or trade by the market for the underlying security or, in the case of index options, following the receipt of the opening price in the underlying index or, with respect to U.S. dollar-settled foreign currency options, following the announced market opening for the underlying security along with the ``prompt'' standard for the remaining series will ensure all series are opened in a timely manner. 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 \7\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\8\ --------------------------------------------------------------------------- \7\ 15 U.S.C. 78s(b)(3)(A)(iii). \8\ 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, along with a brief description and text of 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. --------------------------------------------------------------------------- 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-ISE-2017-78 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-ISE-2017-78. 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 N., 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-ISE-2017-78 and should be submitted on or before September 14, 2017. [[Page 40193]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\9\ --------------------------------------------------------------------------- \9\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-17907 Filed 8-23-17; 8:45 am] BILLING CODE 8011-01-P
![40190 Federal Register / Vol. 82, No. 163 / Thursday, August 24, 2017 / Notices
C. Self-Regulatory Organization’s number should be included on the (‘‘Commission’’) the proposed rule
Statement on Comments on the subject line if email is used. To help the change as described in Items I and II
Proposed Rule Change Received From Commission process and review your below, which Items have been prepared
Members, Participants, or Others comments more efficiently, please use by the Exchange. The Commission is
No written comments were either only one method. The Commission will publishing this notice to solicit
solicited or received. post all comments on the Commission’s comments on the proposed rule change
Internet Web site (http://www.sec.gov/ from interested persons.
III. Date of Effectiveness of the rules/sro.shtml). Copies of the
Proposed Rule Change and Timing for submission, all subsequent I. Self-Regulatory Organization’s
Commission Action amendments, all written statements Statement of the Terms of Substance of
with respect to the proposed rule the Proposed Rule Change
Because the foregoing proposed rule
change does not: (i) Significantly affect change that are filed with the The Exchange proposes to amend ISE
the protection of investors or the public Commission, and all written Rule 701, entitled ‘‘Opening.’’
interest; (ii) impose any significant communications relating to the The text of the proposed rule change
burden on competition; and (iii) become proposed rule change between the is available on the Exchange’s Web site
operative for 30 days from the date on Commission and any person, other than at www.ise.com, at the principal office
which it was filed, or such shorter time those that may be withheld from the of the Exchange, and at the
as the Commission may designate, it has public in accordance with the Commission’s Public Reference Room.
become effective pursuant to Section provisions of 5 U.S.C. 552, will be
available for Web site viewing and II. Self-Regulatory Organization’s
19(b)(3)(A)(iii) of the Act 7 and Statement of the Purpose of, and
subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public
Reference Room, 100 F Street NE., Statutory Basis for, the Proposed Rule
thereunder.8 Change
At any time within 60 days of the Washington, DC 20549, on official
filing of the proposed rule change, the business days between the hours of In its filing with the Commission, the
Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the Exchange included statements
temporarily suspend such rule change if filing also will be available for concerning the purpose of and basis for
it appears to the Commission that such inspection and copying at the principal the proposed rule change and discussed
action is: (i) Necessary or appropriate in office of the Exchange. All comments any comments it received on the
the public interest; (ii) for the protection received will be posted without change; proposed rule change. The text of these
of investors; or (iii) otherwise in the Commission does not edit personal statements may be examined at the
furtherance of the purposes of the Act. identifying information from places specified in Item IV below. The
If the Commission takes such action, the submissions. You should submit only Exchange has prepared summaries, set
Commission shall institute proceedings information that you wish to make forth in sections A, B, and C below, of
to determine whether the proposed rule available publicly. All submissions the most significant aspects of such
should be approved or disapproved. should refer to File Number SR–GEMX– statements.
2017–38 and should be submitted on or
IV. Solicitation of Comments before September 14, 2017. A. Self-Regulatory Organization’s
Interested persons are invited to Statement of the Purpose of, and
For the Commission, by the Division of Statutory Basis for, the Proposed Rule
submit written data, views, and Trading and Markets, pursuant to delegated
arguments concerning the foregoing, authority.9 Change
including whether the proposed rule Robert W. Errett, 1. Purpose
change is consistent with the Act. Deputy Secretary.
Comments may be submitted by any of The purpose of this rule change is to
[FR Doc. 2017–17908 Filed 8–23–17; 8:45 am] amend ISE Rule 701, ‘‘Opening’’ to
the following methods:
BILLING CODE 8011–01–P specifically amend opening obligations
Electronic Comments for Primary Market Makers or ‘‘PMMs.’’
• Use the Commission’s Internet The Exchange notes that the proposed
comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE rule change is similar to a Nasdaq MRX,
rules/sro.shtml); or COMMISSION LLC (‘‘MRX’’) rule.3
• Send an email to rule-comments@ [Release No. 34–81434; File No. SR–ISE– Today, ISE Rule 701(c)(3) states that
sec.gov. Please include File Number SR– 2017–78] the PMM assigned in a particular equity
GEMX–2017–38 on the subject line. option must enter a Valid Width Quote
Self-Regulatory Organizations; Nasdaq not later than one minute following the
Paper Comments ISE, LLC; Notice of Filing and dissemination of a quote or trade by the
• Send paper comments in triplicate Immediate Effectiveness of Proposed market for the underlying security or, in
to Secretary, Securities and Exchange Rule Change Related to Quoting at the the case of index options, following the
Commission, 100 F Street NE., Opening receipt of the opening price in the
Washington, DC 20549–1090. underlying index. The PMM assigned in
August 18, 2017.
All submissions should refer to File Pursuant to Section 19(b)(1) of the a particular U.S. dollar-settled foreign
Number SR–GEMX–2017–38. This file Securities Exchange Act of 1934 currency option must enter a Valid
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Width Quote not later than one minute
7 15 U.S.C. 78s(b)(3)(A)(iii).
notice is hereby given that on August after the announced market opening.
rmajette on DSKBCKNHB2PROD with NOTICES
8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
17, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or First, the Exchange proposes to add
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file ‘‘Exchange’’) filed with the Securities the words ‘‘or index’’ to further clarify
the proposed rule change, along with a brief and Exchange Commission that the requirement applies to equities
description and text of the proposed rule change, and index options. The Exchange
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
9 17 CFR 200.30–3(a)(12). proposes this addition to further clarify
1 15 U.S.C. 78s(b)(1).
as designated by the Commission. The Exchange
has satisfied this requirement. 2 17 CFR 240.19b–4. 3 See MRX Rule 701.
VerDate Sep<11>2014 15:29 Aug 23, 2017 Jkt 241001 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 E:\FR\FM\24AUN1.SGM 24AUN1](https://thefederalregister.org/doc/82_FR_40353/page/1.svg)
![Federal Register / Vol. 82, No. 163 / Thursday, August 24, 2017 / Notices 40191
the requirement in Rule 701(c)(3) clearly index options, within two minutes of U.S. dollar-settled foreign currency
applies to equity and index options. the receipt of the opening price in the options, following the announced
Second, the Exchange proposes to underlying index (or such shorter time market opening. The Exchange would
modify the PMM’s current obligation to as determined by the Exchange and monitor PMMs to ensure that they
enter Valid Width Quotes not later than disseminated to membership on the promptly provided a Valid Width Quote
one minute following the dissemination Exchange’s Web site), or within two for the remainder of the series within a
of a quote or trade by the market for the minutes of market opening for the reasonable amount of time. The
underlying security or, in the case of underlying currency in the case of a Exchange notes that market conditions
index options, following the receipt of U.S. dollar-settled foreign currency could cause a PMM to experience
the opening price in the underlying option (or such shorter time as circumstances where opening 100% of
index for all assigned options, or in the determined by the Exchange and all of their assigned series within one
case of a U.S. dollar-settled foreign disseminated to membership on the minute of the dissemination of a quote
currency option after the announced Exchange’s Web site) the PMM’s Valid or trade by the market for the
market opening. The Exchange believes Width Quote, the Valid Width Quotes of underlying security or, in the case of
that the current requirement is very two Competitive Market Makers index options, following the receipt of
burdensome and instead proposes to (‘‘CMMs’’) or if neither the PMM’s Valid the opening price in the underlying
add ‘‘in 90% of their assigned series’’ to Width Quote nor the Valid Width Quote index or, with respect to U.S. dollar-
require a PMM to enter a Valid Width of two CMM’s have been submitted settled foreign currency options,
Quote not later than one minute within such timeframe, if one CMM has following the announced market
following the dissemination of a quote submitted a Valid Width Quote.4 opening is not feasible.
or trade by the market for the
Implementation The Exchange believes that the
underlying security or, in the case of
proposed 90% Valid Width Quoting
index options, following the receipt of The Exchange proposes to implement obligation, not later than one minute
the opening price in 90% of their this rule change on September 29, 2017. following the dissemination of a quote
assigned series, or in the case of a U.S.
2. Statutory Basis or trade by the market for the
dollar-settled foreign currency option in
The Exchange believes that its underlying security or, in the case of
90% of their assigned series not late
proposal is consistent with Section 6(b) index options, following the receipt of
[sic] than one minute after the
of the Act,5 in general, and furthers the the opening price in the underlying
announced market opening.
Further, the Exchange proposes to objectives of Section 6(b)(5) of the Act,6 index or, with respect to U.S. dollar-
require PMMs to promptly enter a Valid in particular, in that it is designed to settled foreign currency options,
Width Quote in the remainder of their promote just and equitable principles of following the announced market
assigned series, which did not open trade, to remove impediments to and opening, along with the ‘‘prompt’’
within one minute following the perfect the mechanism of a free and standard for the remaining 10% of their
dissemination of a quote or trade by the open market and a national market assigned series will ensure all series are
market for the underlying security or, in system, and, in general to protect opened in a timely manner. The
the case of index options, following the investors and the public interest for the Exchange’s proposal accounts for
receipt of the opening price in the reasons stated below. market conditions which may prevent a
underlying index, or with respect to a The Exchange’s first proposal at Rule PMM from opening all assigned series,
U.S. dollar-settled foreign currency 701(c)(3) to clarify that the requirement for example an extremely volatile
option, following the announced market applies to equities and index options market which may impact the PMM’s
opening. The Exchange’s proposal is will make clear the applicability of the ability to enter aggressive quotes.
intended to account for market PMM’s requirement to enter Valid Another example would be that news
conditions which may prevent a PMM Width Quotes. This proposed pertaining to a specific security is
from opening all assigned series, for amendment is non-substantive and is causing the underlying price to fluctuate
example an extremely volatile market intended to add clarity to the rules. rapidly and significantly, thereby
which may impact the PMM’s ability to The second proposal to amend a causing the PMM to await the
enter aggressive quotes. Another PMM’s requirement to enter Valid underlying equity price to settle before
example would be that news pertaining Width Quotes during the Opening entering a Valid Width Quote. The
to a specific security is causing the Process is consistent with the Act Exchange believes that the time frame
underlying price to fluctuate rapidly because the 90% requirement to provide for PMMs to provide a Valid Width
and significantly, thereby causing the a Valid Width Quote in a series to Quote in 90% of their assigned series
PMM to await the underlying equity which the PMM is assigned will not later than one minute following the
price to settle before entering a Valid continue to ensure that options series dissemination of a quote or trade by the
Width Quote. The Exchange’s are opened in a timely manner, while market for the underlying security or, in
surveillance staff would monitor to not imposing a burdensome requirement the case of index options, following the
ensure that PMMs are complying with on market participants. PMMs would be receipt of the opening price in the
these requirements during the Opening required to promptly enter a Valid underlying index or, with respect to
Process. Width Quote in the remainder of their U.S. dollar-settled foreign currency
Today, the Opening Process for an assigned series, which did not open options, following the announced
options series will be conducted on or within one minute of the dissemination market opening will ensure liquidity on
after 9:30 a.m. if the system has of a quote or trade by the market for the ISE during the Opening Process. The
rmajette on DSKBCKNHB2PROD with NOTICES
received, within two minutes (or such underlying security or in the case of Exchange desires to encourage PMMs to
shorter time as determined by the index options, following the receipt of continue to make markets on ISE at the
Exchange and disseminated to the opening price or, with respect to Opening. The Exchange believes that
membership on the Exchange’s Web requiring PMMs to provide a Valid
site) of the opening trade or quote on the 4 See proposed Rule 701(c)(1)(i)–(iii). Width Quote in 90% of their assigned
market for the underlying security in the 5 15 U.S.C. 78f(b). options not later than one minute
case of equity options or, in the case of 6 15 U.S.C. 78f(b)(5). following the dissemination of a quote
VerDate Sep<11>2014 15:29 Aug 23, 2017 Jkt 241001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 E:\FR\FM\24AUN1.SGM 24AUN1](https://thefederalregister.org/doc/82_FR_40353/page/2.svg)
![Federal Register / Vol. 82, No. 163 / Thursday, August 24, 2017 / Notices 40193
For the Commission, by the Division of Members and/or use such exchanges for (a) individually executed
Trading and Markets, pursuant to delegated functionalities themselves. marketable orders if GEMX is at the
authority.9 The text of the proposed rule change national best bid or offer (‘‘NBBO’’),
Robert W. Errett, is available on the Exchange’s Web site regardless of size or time or (b) orders
Deputy Secretary. at www.ise.com, at the principal office that establish a new NBBO on GEMX’s
[FR Doc. 2017–17907 Filed 8–23–17; 8:45 am] of the Exchange, and at the Order Book, but allow any user to
BILLING CODE 8011–01–P Commission’s Public Reference Room. manually override GEMX as the default
II. Self-Regulatory Organization’s destination on an order-by-order basis.
The Exchange would require GEMX
Statement of the Purpose of, and
SECURITIES AND EXCHANGE Members desiring to participate in
Statutory Basis for, the Proposed Rule
COMMISSION MARS 4 to complete a form, in a manner
Change
prescribed by the Exchange, and
[Release No. 34–81431; File No. SR–GEMX– In its filing with the Commission, the
2017–39]
reaffirm their information on a quarterly
Exchange included statements basis to the Exchange. Any GEMX
Self-Regulatory Organizations; Nasdaq concerning the purpose of and basis for Member would be permitted to apply
the proposed rule change and discussed for MARS, provided the above-
GEMX, LLC; Notice of Filing and
any comments it received on the referenced requirements are met,
Immediate Effectiveness of Proposed
proposed rule change. The text of these including a robust and reliable System.
Rule Change To Create the Market
statements may be examined at the The Member would be solely
Access and Routing Subsidy Program
places specified in Item IV below. The responsible for implementing and
August 18, 2017. Exchange has prepared summaries, set operating its System.
Pursuant to Section 19(b)(1) of the forth in sections A, B, and C below, of
Securities Exchange Act of 1934 the most significant aspects of such MARS Eligible Contracts
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 statements. A MARS Payment would be made to
notice is hereby given that on August 9, A. Self-Regulatory Organization’s GEMX Members that have System
2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or Statement of the Purpose of, and Eligibility and have routed the requisite
‘‘Exchange’’) filed with the Securities Statutory Basis for, the Proposed Rule number of Eligible Contracts daily in a
and Exchange Commission (‘‘SEC’’ or Change month, which were executed on GEMX.
‘‘Commission’’) the proposed rule For the purpose of qualifying for the
change as described in Items I and II, 1. Purpose MARS Payment, Eligible Contracts
below, which Items have been prepared GEMX proposes a new subsidy would include Non-Nasdaq GEMX
by the Exchange. The Commission is program, MARS, which would pay a Market Maker (FARMM) 5, Firm
publishing this notice to solicit subsidy to GEMX Members that provide Proprietary 6/Broker-Dealer 7 and
comments on the proposed rule change certain order routing functionalities to Professional Customer 8 Orders that are
from interested persons. other GEMX Members and/or use such executed. Eligible Contracts do not
I. Self-Regulatory Organization’s functionalities themselves. Generally,
under MARS, GEMX proposes to make 4 If a GEMX Member desires to qualify for MARS,
Statement of the Terms of Substance of that Member must submit an application and certify
payments to participating GEMX
the Proposed Rule Change to the System Eligibility requirements for the entire
Members to subsidize their costs of time period in which the Member will be eligible
The Exchange proposes to create a providing routing services to route for MARS Rebates. A GEMX Member may apply
subsidy program, the Market Access and orders to GEMX. The Exchange believes anytime during the month in which the GEMX
Routing Subsidy (‘‘MARS’’), for GEMX that MARS will attract higher volumes Member desires to participant in MARS and would
Members that provide certain order be eligible for the entire month, provided the GEMX
of equity and ETF options volume to the Member certified System Eligibility for that entire
routing functionalities 3 to other GEMX Exchange from non-GEMX market month. For example, a GEMX Member submitting
participants as well as GEMX Members. an application on the 15th of the month, would
9 17 CFR 200.30–3(a)(12). have to certify System Eligibility for that entire
1 15 U.S.C. 78s(b)(1). MARS System Eligibility month. A form must be submitted no later than the
2 17 CFR 240.19b–4. last business day of the month in which the GEMX
To qualify for MARS, a GEMX Member desires to participate in MARS. The
3 The order routing functionalities permit a
Member’s order routing functionality application will require the GEMX Member to
GEMX Member to provide access and connectivity
to other Members as well utilize such access for would be required to meet certain identify the GEMX Member seeking the MARS
themselves. The Exchange notes that under this criteria. Specifically the Member’s Payment and must list, among other things, the
connections utilized by the GEMX Member to
arrangement it will be possible for one GEMX routing system (hereinafter ‘‘System’’) provide Exchange access to other GEMX Members
Member to be eligible for payments under MARS, would be required to: (1) Enable the
while another GEMX Member might potentially be and/or itself. MARS Payments would be made one
liable for transaction charges associated with the electronic routing of orders to all of the month in arrears (i.e., a MARS Payment earned for
execution of the order, because those orders were U.S. options exchanges, including activity in September would be paid to the
qualifying GEMX Member in October), as is the case
delivered to the Exchange through a GEMX GEMX; (2) provide current consolidated with all other transactional payments and
Member’s connection to the Exchange and that market data from the U.S. options
Member qualified for the MARS Payment. assessments made by the Exchange.
exchanges; and (3) be capable of 5 A ‘‘Non-Nasdaq GEMX Market Maker’’ is a
Consider the following example: Both Members A
and B are GEMX Members but A does not utilize interfacing with GEMX’s API to access market maker as defined in Section 3(a)(38) of the
its own connections to route orders to the current GEMX match engine Securities Exchange Act of 1934, as amended,
registered in the same options class on another
Exchange, and instead utilizes B’s connections. functionality. The Member’s System options exchange.
Under this program, B will be eligible for the MARS would also need to cause GEMX to be
rmajette on DSKBCKNHB2PROD with NOTICES
6 A ‘‘Firm Proprietary’’ order is an order
Payment while A is liable for any transaction
charges resulting from the execution of orders that one of the top four default destination submitted by a Member for its own proprietary
originate from A, arrive at the Exchange via B’s account.
7 A ‘‘Broker-Dealer’’ order is an order submitted
connectivity, and subsequently execute and clear at be liable for any transaction resulting from the
The Options Clearing Corporation or ‘‘OCC,’’ where execution of orders that originate from B, arrive at by a Member for a broker-dealer account that is not
A is the valid executing clearing Member or give- the Exchange via B’s connectivity, and its own proprietary account.
up on the transaction. Similarly, where B utilizes subsequently execute and clear at OCC, where B is 8 A ‘‘Professional Customer’’ is a person or entity
its own connections to execute transactions, B will the valid executing clearing Member or give-up on that is not a broker/dealer and is not a Priority
be eligible for the MARS Payment, but would also the transaction. Customer.
VerDate Sep<11>2014 15:29 Aug 23, 2017 Jkt 241001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\24AUN1.SGM 24AUN1](https://thefederalregister.org/doc/82_FR_40353/page/4.svg)
Document Created: 2018-10-24 12:37:23
Document Modified: 2018-10-24 12:37:23
| 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 | |
| FR Citation | 82 FR 40190 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR