82 FR 44235 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees To Offer Monthly Subscriptions for Open and Close Trade Profile Information
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 182 (September 21, 2017)
Federal Register Volume 82, Issue 182 (September 21, 2017)
| Page Range | 44235-44238 | |
| FR Document | 2017-20088 |
[Federal Register Volume 82, Number 182 (Thursday, September 21, 2017)] [Notices] [Pages 44235-44238] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-20088] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81632; File No. SR-GEMX-2017-42] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees To Offer Monthly Subscriptions for Open and Close Trade Profile Information September 15, 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 September 1, 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 its Schedule of Fees to offer monthly subscriptions for Open and Close Trade Profile Information. 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 monthly [[Page 44236]] subscriptions for Open and Close Trade Profile Information; subscriptions will be available for both end-of-day and intraday updates.\3\ --------------------------------------------------------------------------- \3\ The Exchange initially filed this proposal as a fee filing on August 25, 2017 (SR-GEMX-2017-41). The proposal was rejected on August 31, 2017, and is being resubmitted as a proposal that (i) does not significantly affect the protection of investors or the public interest, and (ii) does not impose any significant burden on competition under Exchange Act Rule 19b-4(f)(6)(iii). --------------------------------------------------------------------------- The Open/Close Trade Profile provides over 80 fields of trading and volume data for GEMX-listed options that can be used to create and test trading models and analytical strategies. Trade Profile data includes: ``Origin Code'' (the type of trader participating in the transaction); \4\ opening and closing buys and sells; \5\ trading volume and number of trades categorized by day and series; \6\ the degree to which a series is ``in'' or ``out'' of the ``money'' ; \7\ the number of days to expiration; an indication of the degree to which there is ``Open Interest'' \8\ for each series; and a comparison of the volume of trading at GEMX relative to the industry as a whole. --------------------------------------------------------------------------- \4\ ``Origin Code'' categories include Customer, Professional Customer, Firm and Market Maker. ``Customer'' applies to any transaction identified by a member or a member organization for clearing in the Customer range at the Options Clearing Corporation which is not for the account of a broker or dealer or a Professional. 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\ Trading volume is the number of contracts traded; the number of trades is the number of transactions. \7\ The degree to which a series is ``in'' or ``out'' of the ``money'' is 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. \8\ ``Open Interest'' is the total number of outstanding contracts for each series across all options exchanges for the trade date of the file. --------------------------------------------------------------------------- The GEMX Open/Close Trade Profile is currently available as an historical database available upon request, and the Exchange proposes to offer intraday and end-of-day subscriptions to Trade Profile information as well. Such subscriptions will be available to both members and non-members, similar to the ISE Open/Close Trade Profile.\9\ The end-of-day file is updated overnight and available for download the following morning. The intraday file is updated at 10 minute intervals to provide a cumulative record of transactions that take place over the course of the trading day. The end-of-day subscription will be available for $500 per month; the intraday subscription will be available for $1,000 per month. --------------------------------------------------------------------------- \9\ Nasdaq ISE Rulebook, Fee Schedule, Chapter VIII (Market Data), A (offering an annual subscription to Nasdaq ISE Open/Close Trade Profile End of Day for $759 per month) and B (offering a monthly subscription to the Nasdaq ISE Open/Close Trade Profile Intraday for $2,000 per month). --------------------------------------------------------------------------- The proposed rule change will increase transparency in the market by increasing the amount of information available to market participants to assist them in making investment decisions related to GEMX-listed options. The proposed fees are optional in that they apply only to firms that elect to purchase these products. The 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,\10\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\11\ 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. The proposal is to make open and close trade profile information, currently available only on an historical basis, available at 10 minute intervals over the course of the trading day and in summary form at the end of the trading day, thereby increasing the flow of information and removing impediments to a free and open market. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 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.'' \12\ --------------------------------------------------------------------------- \12\ 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 \13\ (``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.\14\ 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.'' \15\ --------------------------------------------------------------------------- \13\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). \14\ See NetCoalition, at 534--535. \15\ 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' . . .'' \16\ 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. --------------------------------------------------------------------------- \16\ 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 adding the proposed subscriptions to the Exchange's Open/Close Trade Profile 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 providing information about options activity throughout and at the end of the trading day. 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. As explained in [[Page 44237]] further detail below, the proposal will impose no burden on competition because GEMX transaction information is disseminated by the Options Price Reporting Authority, LLC (``OPRA''), and customers would not pay a premium for GEMX information when similar transaction information is available at a lower cost from OPRA, and because the price of GEMX proprietary data is constrained by the need for GEMX to compete for order flow. The Exchange further notes that GEMX Open/Close Trade Profile information is an optional service that only applies to firms that elect to purchase the product. Moreover, the proposed service is similar to services already provided by other exchanges, such as the ISE Open/Close Trade Profile.\17\ --------------------------------------------------------------------------- \17\ Nasdaq ISE Rulebook, Fee Schedule, Chapter VIII (Market Data), A (offering an annual subscription to Nasdaq ISE Open/Close Trade Profile End of Day for $759 per month) and B (offering a monthly subscription to the Nasdaq ISE Open/Close Trade Profile Intraday for $2,000 per month). --------------------------------------------------------------------------- The proposed changes are an equitable allocation of reasonable dues, fees, and other charges because fees will be the same for all of the purchasers of each product and it is equitable to charge more for the intraday product--which provides updates at 10 minute intervals over the course of the trading day--than the end-of-day product, which provides updates once per day. 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 allow the Exchange to offer intraday and end-of-day subscriptions to options trading data. If the price of the proposed subscriptions were to be set above a competitive price, the Exchange may lose revenue as a result. 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 OPRA. 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. As such, the price of the GEMX Open/Close Trade Profile product is constrained by other exchanges in the competition for order flow and the availability of similar data from OPRA. Customers choose exchanges based on the total cost of interacting with the exchange; if the GEMX Open/Close Trade Profile were set above market price, the total cost of interacting with GEMX would be above market price, and GEMX would lose market share as a result. In addition, the availability of trading information from OPRA will constrain the price of the GEMX Open/Close Trade Profile because customers would not pay an excessive amount for proprietary data when similar information is available at a lower price; two products need not be identical for each product to act as a constraint on the price of the other. For these reasons, 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 \18\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\19\ --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A)(iii). \19\ 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) \20\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ 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 a product similar to the proposed product is already being sold by another exchange. The Exchange also asserts that the addition of the proposed product can increase competition, and will not harm firms that do not purchase the product as the service is optional. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the 30-day operative delay and designates the [[Page 44238]] proposed rule change operative upon filing.\22\ --------------------------------------------------------------------------- \20\ 17 CFR 240.19b-4(f)(6). \21\ 17 CFR 240.19b-4(f)(6)(iii). \22\ 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). --------------------------------------------------------------------------- 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-2017-42 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-2017-42. 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-2017-42 and should be submitted on or before October 12, 2017. --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-20088 Filed 9-20-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 182 / Thursday, September 21, 2017 / Notices 44235
submit additional comments at this Paper Comments SECURITIES AND EXCHANGE
time, they need not re-submit earlier COMMISSION
comments. In addition, the Commission • Send paper comments in triplicate
to Secretary, Securities and Exchange [Release No. 34–81632; File No. SR–GEMX–
seeks comment on the following: 2017–42]
1. The Proposed Rule Change would Commission, 100 F Street NE.,
require each Netting Member to attest Washington, DC 20549–1090. Self-Regulatory Organizations; Nasdaq
that its Individual Total Amount has All submissions should refer to File GEMX, LLC; Notice of Filing and
been incorporated into its liquidity Number SR–FICC–2017–002. This file Immediate Effectiveness of Proposed
plans (‘‘Attestation Requirement’’).11 number should be included on the Rule Change To Amend Its Schedule of
The Commission requests comment on subject line if email is used. To help the Fees To Offer Monthly Subscriptions
the means by which the various types of Commission process and review your for Open and Close Trade Profile
Netting Members anticipate complying comments more efficiently, please use Information
with the Proposed Rule Change, only one method. The Commission will September 15, 2017.
including the Attestation Requirement, post all comments on the Commission’s Pursuant to Section 19(b)(1) of the
and the expected cost (monetary or
Internet Web site (http://www.sec.gov/ Securities Exchange Act of 1934
otherwise) of such compliance. To the
rules/sro.shtml). Copies of the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
extent possible, please provide specific
submission, all subsequent notice is hereby given that on
data, analyses, or studies for support.
amendments, all written statements September 1, 2017, Nasdaq GEMX, LLC
2. The Proposed Rule Change would with respect to the Proposed Rule (‘‘GEMX’’ or ‘‘Exchange’’) filed with the
require FICC to provide each Netting Change that are filed with the Securities and Exchange Commission
Member with a daily ‘‘liquidity funding (‘‘SEC’’ or ‘‘Commission’’) the proposed
Commission, and all written
report’’ to help the Netting Member rule change as described in Items I and
communications relating to the
monitor and manage the liquidity risk it II, below, which Items have been
Proposed Rule Change between the
presents to FICC. The Commission prepared by the Exchange. The
requests comment on the value of such Commission and any person, other than
Commission is publishing this notice to
daily reporting to Netting Members and those that may be withheld from the
solicit comments on the proposed rule
the extent to which and, if so, how public in accordance with the
change from interested persons.
Netting Members anticipate adjusting provisions of 5 U.S.C. 552, will be
their trading behavior or otherwise available for Web site viewing and I. Self-Regulatory Organization’s
managing the liquidity risk they present printing in the Commission’s Public Statement of the Terms of Substance of
to FICC, whether in reliance on the Reference Room, 100 F Street NE., the Proposed Rule Change
daily liquidity funding report or Washington, DC 20549, on official The Exchange proposes to amend its
otherwise. Please explain and, to the business days between the hours of Schedule of Fees to offer monthly
extent possible, provide specific data, 10:00 a.m. and 3:00 p.m. Copies of such subscriptions for Open and Close Trade
analyses, or studies on potential filings also will be available for Profile Information.
changes to trading behavior or other inspection and copying at the principal The text of the proposed rule change
adjustments to manage liquidity office of FICC and on DTCC’s Web site is available on the Exchange’s Web site
obligations to FICC for support. (http://dtcc.com/legal/sec-rule- at www.ise.com, at the principal office
a. If such adjustments would include filings.aspx). All comments received of the Exchange, and at the
changes in market participation, will be posted without change; the Commission’s Public Reference Room.
participation in certain market Commission does not edit personal II. Self-Regulatory Organization’s
segments, or the quantity or price of identifying information from Statement of the Purpose of, and
services offered to clients, please submissions. You should submit only Statutory Basis for, the Proposed Rule
provide information of such changes, in information that you wish to make Change
addition to any supporting data, available publicly. All submissions In its filing with the Commission, the
analyses, or studies. should refer to File Number SR–FICC– Exchange included statements
b. If such adjustments would include 2017–002 and should be submitted on concerning the purpose of and basis for
deciding to clear repo transactions or before October 6, 2017. Any person the proposed rule change and discussed
bilaterally, instead of centrally through who wishes to file a rebuttal to any any comments it received on the
FICC, please provide the rationale and other person’s submission must file that proposed rule change. The text of these
factors considered in making that rebuttal on or before October 12, 2017. statements may be examined at the
decision, in addition to any supporting places specified in Item IV below. The
For the Commission, by the Division of
data, analyses, or studies. Exchange has prepared summaries, set
Trading and Markets, pursuant to delegated
Comments may be submitted by any authority.12 forth in sections A, B, and C below, of
of the following methods: the most significant aspects of such
Eduardo Aleman, statements.
Electronic Comments Assistant Secretary.
A. Self-Regulatory Organization’s
• Use the Commission’s Internet [FR Doc. 2017–20090 Filed 9–20–17; 8:45 am]
Statement of the Purpose of, and
asabaliauskas on DSKBBXCHB2PROD with NOTICES
comment form (http://www.sec.gov/ BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
rules/sro.shtml); or Change
• Send an email to rule-comments@
1. Purpose
sec.gov. Please include File Number SR–
FICC–2017–002 on the subject line. The Exchange proposes to amend its
Schedule of Fees to offer monthly
11 See Securities Exchange Act Release No. 80234
1 15 U.S.C. 78s(b)(1).
(March 14, 2017), 82 FR 14401 (March 20, 2017)
(SR–FICC–2017–002). 12 17 CFR 200.30–3(a)(57). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 17:52 Sep 20, 2017 Jkt 241001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\21SEN1.SGM 21SEN1](https://thefederalregister.org/doc/82_FR_44417/page/1.svg)
![44236 Federal Register / Vol. 82, No. 182 / Thursday, September 21, 2017 / Notices
subscriptions for Open and Close Trade at GEMX relative to the industry as a adopting a series of steps to improve the
Profile Information; subscriptions will whole. current market model, the Commission
be available for both end-of-day and The GEMX Open/Close Trade Profile highlighted the importance of market
intraday updates.3 is currently available as an historical forces in determining prices and SRO
database available upon request, and the revenues and, also, recognized that
The Open/Close Trade Profile
Exchange proposes to offer intraday and current regulation of the market system
provides over 80 fields of trading and
end-of-day subscriptions to Trade ‘‘has been remarkably successful in
volume data for GEMX-listed options Profile information as well. Such promoting market competition in its
that can be used to create and test subscriptions will be available to both broader forms that are most important to
trading models and analytical strategies. members and non-members, similar to investors and listed companies.’’ 12
Trade Profile data includes: ‘‘Origin the ISE Open/Close Trade Profile.9 The Likewise, in NetCoalition v. Securities
Code’’ (the type of trader participating end-of-day file is updated overnight and and Exchange Commission 13
in the transaction); 4 opening and available for download the following (‘‘NetCoalition’’) the D.C. Circuit upheld
closing buys and sells; 5 trading volume morning. The intraday file is updated at the Commission’s use of a market-based
and number of trades categorized by day 10 minute intervals to provide a approach in evaluating the fairness of
and series; 6 the degree to which a series cumulative record of transactions that market data fees against a challenge
is ‘‘in’’ or ‘‘out’’ of the ‘‘money’’ ; 7 the take place over the course of the trading claiming that Congress mandated a cost-
number of days to expiration; an day. The end-of-day subscription will be based approach.14 As the court
indication of the degree to which there available for $500 per month; the emphasized, the Commission ‘‘intended
is ‘‘Open Interest’’ 8 for each series; and intraday subscription will be available in Regulation NMS that ‘market forces,
a comparison of the volume of trading for $1,000 per month. rather than regulatory requirements’
The proposed rule change will play a role in determining the market
3 The Exchange initially filed this proposal as a increase transparency in the market by data . . . to be made available to
fee filing on August 25, 2017 (SR–GEMX–2017–41). increasing the amount of information investors and at what cost.’’ 15
The proposal was rejected on August 31, 2017, and available to market participants to assist Further, ‘‘[n]o one disputes that
is being resubmitted as a proposal that (i) does not them in making investment decisions competition for order flow is ‘fierce.’
significantly affect the protection of investors or the
public interest, and (ii) does not impose any related to GEMX-listed options. . . . As the SEC explained, ‘[i]n the U.S.
significant burden on competition under Exchange The proposed fees are optional in that national market system, buyers and
Act Rule 19b–4(f)(6)(iii). they apply only to firms that elect to sellers of securities, and the broker-
4 ‘‘Origin Code’’ categories include Customer,
purchase these products. The changes dealers that act as their order-routing
Professional Customer, Firm and Market Maker. do not impact the cost of any other
‘‘Customer’’ applies to any transaction identified by
agents, have a wide range of choices of
a member or a member organization for clearing in GEMX product. where to route orders for execution’;
the Customer range at the Options Clearing
2. Statutory Basis [and] ‘no exchange can afford to take its
Corporation which is not for the account of a broker market share percentages for granted’
or dealer or a Professional. A ‘‘Professional The Exchange believes that its because ‘no exchange possesses a
Customer’’ is a high-activity customer that enters proposal is consistent with Section 6(b)
into more than 390 orders per day over the course monopoly, regulatory or otherwise, in
of a one-month period. A ‘‘Firm’’ is a broker-dealer of the Act,10 in general, and furthers the the execution of order flow from broker
trading in its own proprietary account or on behalf objectives of Section 6(b)(5) of the Act,11 dealers’ . . .’’ 16 Although the court and
of another broker-dealer. A ‘‘Market Maker’’ is a in particular, in that it is designed to the SEC were discussing the cash
broker-dealer that assumes the risk of holding a promote just and equitable principles of
position in a series to facilitate trading. equities markets, the Exchange believes
5 An opening buy is a transaction that creates or
trade, to remove impediments to and that these views apply with equal force
increases a long position and an opening sell is a perfect the mechanism of a free and to the options markets.
transaction that creates or increases a short open market and a national market The Exchange believes that adding the
position. A closing buy is a transaction made to system, and, in general to protect proposed subscriptions to the
close out an existing position. A closing sell is a investors and the public interest. The
transaction to reduce or eliminate a long position.
Exchange’s Open/Close Trade Profile is
6 Trading volume is the number of contracts
proposal is to make open and close reasonable and equitable in accordance
traded; the number of trades is the number of trade profile information, currently with Section 6(b)(4) of the Act, and not
transactions. available only on an historical basis, unreasonably discriminatory in
7 The degree to which a series is ‘‘in’’ or ‘‘out’’
available at 10 minute intervals over the accordance with Section 6(b)(5) of the
of the ‘‘money’’ is identified according to the course of the trading day and in
following five levels of ‘‘moneyness’’: (i) ‘‘Deep in
Act. The proposed changes will increase
the Money’’ means that the strike price of this
summary form at the end of the trading transparency by providing information
option is more than 12% lower than the price of day, thereby increasing the flow of about options activity throughout and at
the underlying security if it is a call or more than information and removing impediments the end of the trading day. The
12% higher if it is a put; (ii) ‘‘In the Money’’ means to a free and open market. proposed fees, like all proprietary data
that the strike price of this option is within the The Commission and the courts have
range of 5%–12% lower than the price of the fees, are constrained by the Exchange’s
underlying security if it is a call or within the range repeatedly expressed their preference need to compete for order flow, and are
of 5%–12% higher if it is a put; (iii) ‘‘At the for competition over regulatory subject to competition from other
Money’’ means that the strike price of this option intervention in determining prices, options exchanges. As explained in
is within the range of 5% higher or lower than the products, and services in the securities
price of the underlying security; (iv) ‘‘Out of the
Money’’ means that the strike price of this option markets. In Regulation NMS, while 12 Securities Exchange Act Release No. 51808
asabaliauskas on DSKBBXCHB2PROD with NOTICES
is within the range of 5%–12% higher than the (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
price of the underlying security if it is a call or 5%– 9 Nasdaq ISE Rulebook, Fee Schedule, Chapter (‘‘Regulation NMS Adopting Release’’).
13 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
12% lower if it is a put; and (v) ‘‘Deep out of the VIII (Market Data), A (offering an annual
Money’’ means that the strike price of this option subscription to Nasdaq ISE Open/Close Trade 2010).
is more than 12% higher than the price of the Profile End of Day for $759 per month) and B 14 See NetCoalition, at 534—535.
underlying security if it is a call or more than 12% (offering a monthly subscription to the Nasdaq ISE 15 Id. at 537.
lower if it is a put. Open/Close Trade Profile Intraday for $2,000 per 16 Id. at 539 (quoting Securities Exchange Act
8 ‘‘Open Interest’’ is the total number of month). Release No. 59039 (December 2, 2008), 73 FR
10 15 U.S.C. 78f(b).
outstanding contracts for each series across all 74770, 74782–83 (December 9, 2008) (SR–
options exchanges for the trade date of the file. 11 15 U.S.C. 78f(b)(5). NYSEArca–2006–21)).
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![44238 Federal Register / Vol. 82, No. 182 / Thursday, September 21, 2017 / Notices
proposed rule change operative upon 10:00 a.m. and 3:00 p.m. Copies of the In ruling on the petition for review,
filing.22 filing also will be available for the D.C. Circuit concluded that the
At any time within 60 days of the inspection and copying at the principal Approval Order did not ‘‘represent the
filing of the proposed rule change, the office of the Exchange. All comments kind of reasoned decisionmaking
Commission summarily may received will be posted without change; required by either the Exchange Act or
temporarily suspend such rule change if the Commission does not edit personal the Administrative Procedure Act,’’ and
it appears to the Commission that such identifying information from therefore remanded the case to the
action is: (i) Necessary or appropriate in submissions. You should submit only Commission for further proceedings.4 In
the public interest; (ii) for the protection information that you wish to make so ruling, the court did not reach any of
of investors; or (iii) otherwise in available publicly. All submissions petitioners’ arguments that the Plan was
furtherance of the purposes of the Act. should refer to File Number SR–GEMX– inconsistent with the substantive
If the Commission takes such action, the 2017–42 and should be submitted on or requirements of the Exchange Act,
Commission shall institute proceedings before October 12, 2017. finding instead that the Commission’s
to determine whether the proposed rule For the Commission, by the Division of failure to make the required findings
should be approved or disapproved. Trading and Markets, pursuant to delegated under the Act required a remand.5
IV. Solicitation of Comments authority.23 The court also considered whether to
Eduardo A. Aleman, vacate the Approval Order prior to
Interested persons are invited to Assistant Secretary. remand, and decided not to vacate. As
submit written data, views, and the court explained, ‘‘the SEC may be
[FR Doc. 2017–20088 Filed 9–20–17; 8:45 am]
arguments concerning the foregoing, able to approve the Plan once again,
BILLING CODE 8011–01–P
including whether the proposed rule after conducting a proper analysis on
change is consistent with the Act. remand.’’ 6 Because both parties had
Comments may be submitted by any of SECURITIES AND EXCHANGE assured the court that it would be
the following methods: COMMISSION possible to unwind the Capital Plan at
Electronic Comments a later time, and ‘‘no party contends that
[File No. SR–OCC–2015–02; Release No. the task would be materially more
• Use the Commission’s Internet 81628] difficult if done then rather than now,’’
comment form (http://www.sec.gov/ the court declined to vacate the Capital
rules/sro.shtml); or Before the Securities and Exchange
Commission; Securities Exchange Act Plan and instead remanded the case ‘‘to
• Send an email to rule-comments@ give the SEC an opportunity to properly
sec.gov. Please include File Number SR– of 1934; In the Matter of the Options
Clearing Corporation; Corrected Order evaluate the Plan.’’ 7 The D.C. Circuit’s
GEMX–2017–42 on the subject line. mandate, which issued on August 18,
Denying Motion for Stay
Paper Comments 2017, returned the matter to the
September 14, 2017. Commission for further proceedings.8
• Send paper comments in triplicate
On February 11, 2016, the Petitioners 9 now seek a partial stay of
to Secretary, Securities and Exchange
Commission issued an order (‘‘Approval the Capital Plan—specifically, a stay of
Commission, 100 F Street NE.,
Order’’) approving the Options Clearing the dividend payments to be made to
Washington, DC 20549–1090.
Corporation’s (‘‘OCC’’) plan for raising the shareholder exchanges under the
All submissions should refer to File additional capital (‘‘Capital Plan’’ or Plan—while the Commission considers
Number SR–GEMX–2017–42. This file ‘‘Plan’’) to support its function as a the Plan as directed by the D.C. Circuit.
number should be included on the systemically important financial market OCC opposes the motion.
subject line if email is used. To help the utility.1 BOX Options Exchange LLC, In determining whether to grant a stay
Commission process and review your KCG Holdings, Inc. (‘‘KCG’’), Miami motion, the Commission typically
comments more efficiently, please use International Securities Exchange, LLC, considers whether (i) there is a strong
only one method. The Commission will and Susquehanna International Group, likelihood that the moving party will
post all comments on the Commission’s LLP (collectively ‘‘petitioners’’) 2 filed a succeed on the merits of its appeal; (ii)
Internet Web site (http://www.sec.gov/ petition for review of the Approval the moving party will suffer irreparable
rules/sro.shtml). Copies of the Order in the U.S. Court of Appeals for harm without a stay; (iii) any person
submission, all subsequent the District of Columbia Circuit (‘‘D.C. will suffer substantial harm as a result
amendments, all written statements Circuit’’), challenging the Commission’s of a stay; and (iv) a stay is likely to serve
with respect to the proposed rule Approval Order as inconsistent with the
change that are filed with the Exchange Act and lacking in the Commission’s review of the Capital Plan. The
Commission, and all written reasoned decisionmaking required by Commission found, however, that it was ‘‘in the
communications relating to the the Administrative Procedure Act. public interest to the lift the stay during the
proposed rule change between the After filing their petition for review, pendency of the Commission’s review.’’ Exchange
Commission and any person, other than Act Release No. 75886 at 2 (Sept. 10, 2015), File No.
petitioners filed a motion for a stay in SR–OCC–2015–02. The Commission noted that it
those that may be withheld from the the D.C. Circuit asking the court to stay ‘‘believes that the concerns raised by Petitioners
public in accordance with the the Commission’s Approval Order regarding potential monetary and competitive harm
provisions of 5 U.S.C. 552, will be pending the court’s review. The D.C. do not currently justify maintaining the stay during
available for Web site viewing and the pendency of the Commission’s review.’’ Id.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Circuit denied petitioners’ request for a 4 Susquehanna Int’l Grp., LLP v. SEC, 866 F.3d
printing in the Commission’s Public stay.3 442, 443 (D.C. Cir. 2017).
Reference Room, 100 F Street NE., 5 Id. at 446.
Washington, DC 20549, on official 23 17 CFR 200.30–3(a)(12). 6 Id. at 451.
business days between the hours of 1 Exchange Act Release No. 77112 (Feb. 11, 2016), 7 Id.
File No. SR–OCC–2015–02. 8 By separate order of today’s date, we are issuing
22 For purposes only of waiving the 30-day 2 BATS Global Markets, Inc. (‘‘BATS’’) was a scheduling order governing the proceedings on
operative delay, the Commission has considered the initially a petitioner, but later withdrew. remand.
proposed rule’s impact on efficiency, competition, 3 The petitioners had also opposed OCC’s motion 9 Petitioner KCG has not joined the instant
and capital formation. See 15 U.S.C. 78c(f). to lift the automatic stay in place pending the motion.
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Document Created: 2018-10-24 14:33:22
Document Modified: 2018-10-24 14:33:22
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| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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