83 FR 1646 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Market Makers' Regulatory Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 9 (January 12, 2018)

[Federal Register Volume 83, Number 9 (Friday, January 12, 2018)]
[Notices]
[Pages 1646-1647]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-00411]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82460; File No. SR-GEMX-2017-62]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Market 
Makers' Regulatory Fees

January 8, 2018.
    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 December 26, 2017, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III, below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Schedule of Fees, as 
described further below.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on January 2, 2018.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqgemx.cchwallstreet.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 amend the Exchange's 
Schedule of Fees to (i) eliminate the annual regulatory fee currently 
assessed to Market Makers (i.e., Primary Market Makers and Competitive 
Market Makers) at Section III.C and (ii) make a number of non-
substantive clean-up changes to update the Table of Contents. Each 
change is discussed further below.
Eliminate Annual Regulatory Fee
    GEMX currently charges its members various non-transaction fees to 
trade on the Exchange and use its facilities, including a tiered annual 
regulatory fee. This fee is assessed to all Primary Market Makers 
(``PMMs'') and Competitive Market Makers (``CMMs'') to help defray the 
regulatory and administrative costs associated with a member's use of 
the Exchange's facilities. In particular, the regulatory fee is $1,000 
per year for a PMM membership, and, for PMMs that are also CMMs, $250 
per year for each CMM membership. For CMMs that are not also PMMs the 
regulatory fee is $500 per year for the first CMM membership, and $250 
per year for each additional CMM membership.\3\ The Exchange does not 
charge a regulatory fee to Electronic Access Members (``EAMs'').
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    \3\ See GEMX Schedule of Fees, Section III.C Regulatory Fees.
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    The Exchange proposes to eliminate the annual regulatory fee and 
all related references from the Schedule of Fees because it has 
determined that this fee is outdated and no longer reflects the costs 
associated with supporting and regulating its members today. The annual 
regulatory fee was adopted in 2013, and has not been amended since that 
time.\4\ And because GEMX charges its members various non-transaction 
fees outside of the annual regulatory fee to help defray such costs, as 
noted above, the Exchange believes that the proposed fee change will be 
a more accurate reflection of the administration and regulatory costs 
associated with a member's use of the Exchange today.
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    \4\ See Securities Exchange Act Release No. 71149 (December 19, 
2013), 78 FR 78447 (December 26, 2013) (SR-Topaz-2013-16).
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Update Table of Contents
    Currently, the Exchange's Schedule of Fees contains a number of 
section headings that are not currently reflected in the Table of 
Contents. The Exchange added, eliminated, or renamed these headings as 
part of a previously-approved rule change, and inadvertently did not 
make the corresponding updates to the Table of Contents.\5\ 
Accordingly, the Exchange proposes to update the Table of Contents to 
make its Schedule of Fees easier to read.
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    \5\ In particular, the Exchange renamed Section IV, deleted 
Section IV.C, and added Sections IV.F-IV.I as part of a previous 
rule change to amend GEMX's connectivity fees. See Securities 
Exchange Release No. 81902 (October 19, 2017), 82 FR 49453 (October 
25, 2017) (SR-GEMX-2017-48).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among members and issuers and other persons using any facility, 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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Eliminate Annual Regulatory Fee
    The Exchange believes that the proposed elimination of the annual 
regulatory fee and all related references from the Schedule of Fees is 
reasonable because the Exchange has determined that the annual 
regulatory fee is outdated and no longer reflects the costs associated 
with supporting and regulating its members. This fee has not been 
amended since its adoption in 2013. Furthermore, GEMX charges its 
members various non-transaction fees outside of the annual regulatory 
fee to help defray such costs, as noted above. The Exchange therefore 
believes that the proposed fee change will be a more accurate 
reflection of the administration and regulatory costs associated with a 
member's use of the Exchange today.
    The Exchange also believes that the proposed elimination of the 
annual regulatory fee is equitable and not unfairly discriminatory 
because the proposed change will apply equally to all similarly 
situated members.
Update Table of Contents
    The Exchange believes that the clean-up changes to update the Table 
of Contents is reasonable, equitable and not unfairly discriminatory 
because these are non-substantive changes

[[Page 1647]]

intended to make the Schedule of Fees more transparent to members and 
investors.

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. As discussed above, the 
proposed changes are intended to more accurately reflect the regulatory 
and administrative costs associated with a member's use of the 
Exchange, or are clean-ups to make the Schedule of Fees more 
transparent to members and investors. The Exchange operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive. Because competitors are free to modify 
their own fees in response, and because market participants may readily 
adjust their order routing practices, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\8\ At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend such rule change if it appears to the Commission that such 
action is: (i) Necessary or appropriate in the public interest; (ii) 
for the protection of investors; or (iii) otherwise in furtherance of 
the purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-GEMX-2017-62 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-2017-62. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-GEMX-2017-62 and should be submitted on 
or before February 2, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00411 Filed 1-11-18; 8:45 am]
 BILLING CODE 8011-01-P