83_FR_28818 83 FR 28699 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Increase Certain Route-Out Fees Set Forth in Section II.A of the Schedule of Fees

83 FR 28699 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Increase Certain Route-Out Fees Set Forth in Section II.A of the Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 119 (June 20, 2018)

Page Range28699-28701
FR Document2018-13170

Federal Register, Volume 83 Issue 119 (Wednesday, June 20, 2018)
[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28699-28701]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13170]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83445; File No. SR-GEMX-2018-20]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Increase Certain 
Route-Out Fees Set Forth in Section II.A of the Schedule of Fees

June 14, 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 June 1, 2018, Nasdaq GEMX, LLC (``GEMX'' 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to increase certain route-out fees set forth 
in Section II.A of the Schedule of Fees.
    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 increase certain 
route-out fees set forth in Section II.A of the Schedule of Fees. 
Today, the Exchange charges Non-Priority Customers (i.e., Market 
Maker,\3\ Non-Nasdaq GEMX Market Maker,\4\ Firm Proprietary \5\/Broker-
Dealer,\6\ and Professional Customer \7\) route-out fees of $0.95 per 
contract for orders in Non-Penny Symbols that are routed to away 
exchanges in connection with the Options Order Protection and Locked/
Crossed Market Plan (the ``Plan''). The Exchange now proposes to 
increase this fee to $1.09 per contract for all Non-Priority Customer 
orders in Non-Penny Symbols that are routed to away

[[Page 28700]]

exchanges in connection with the Plan. The Exchange believes that the 
proposed increase will help offset the costs associated with routing 
orders through the Plan, such as paying the transaction fees for such 
executions at other exchanges.
---------------------------------------------------------------------------

    \3\ The term ``Market Makers'' refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See Rule 
100(a)(30).
    \4\ A ``Non-Nasdaq GEMX Market Maker'' is a market maker as 
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, 
as amended, registered in the same options class on another options 
exchange.
    \5\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \6\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \7\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\9\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that proposed increase in the Non-Priority 
Customer route-out fees from $0.95 to $1.09 per contract for orders in 
Non-Penny Symbols is reasonable because it is designed to help recoup 
costs associated with routing orders to away exchanges in connection 
with the Plan, such as paying the transaction fees for such executions 
at other exchanges. Furthermore, the Exchange notes that the proposed 
fees remain competitive with the fees of other options exchanges which, 
in addition to a fixed routing fee, assess the actual transaction 
fees.\10\
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    \10\ For example, CBOE C2 Exchange, Inc. (``C2'') charges $1.63 
per routed contract for non-public customer, non-C2 market-maker 
orders in non-penny classes. See C2 Fees Schedule, Section 1.A 
(Transaction Fees) and Section 2 (Linkage Routing).
---------------------------------------------------------------------------

    The Exchange believes that proposed increase in the Non-Priority 
Customer route-out fees is an equitable allocation and is not unfairly 
discriminatory because the Exchange will apply the same fee to all 
similarly situated members. The Exchange believes it is equitable and 
not unfairly discriminatory to increase the route-out fees for all 
market participants other than Priority Customers \11\ because the 
Exchange seeks to encourage Priority Customer order flow and the 
liquidity that such order flow brings to the marketplace, which in turn 
benefits all market participants.
---------------------------------------------------------------------------

    \11\ A ``Priority Customer'' is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in Nasdaq GEMX Rule 
100(a)(37A).
---------------------------------------------------------------------------

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. In particular, the proposed 
increase to the route-out fees will apply equally to all Non-Priority 
Customer orders that are routed to away exchanges in connection with 
the Plan, and will help offset costs associated with routing orders via 
the Plan. Furthermore as noted above, the Exchange believes that its 
proposed fees remain competitive with another options exchange.
    The Exchange notes that it 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 with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. 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. In sum, if the changes proposed 
herein are unattractive to market participants, it is likely that the 
Exchange will lose market share as a result. Accordingly, 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\12\ and Rule 19b-4(f)(2) \13\ thereunder. 
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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-GEMX-2018-20 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-GEMX-2018-20. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet 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-2018-20 and

[[Page 28701]]

should be submitted on or before July 11, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13170 Filed 6-19-18; 8:45 am]
BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices                                                       28699

                                                registered under the Exchange Act, to                   Act if such exemption is necessary or                   I. Self-Regulatory Organization’s
                                                sell shares to Funds of Funds beyond                    appropriate in the public interest and                  Statement of the Terms of Substance of
                                                the limits of section 12(d)(1)(B) of the                consistent with the protection of                       the Proposed Rule Change
                                                Act. The application’s terms and                        investors and the purposes fairly                          The Exchange proposes to increase
                                                conditions are designed to, among other                 intended by the policy and provisions of                certain route-out fees set forth in
                                                things, help prevent any potential (i)                  the Act. Section 12(d)(1)(J) of the Act                 Section II.A of the Schedule of Fees.
                                                undue influence over a Fund through                     provides that the Commission may                           The text of the proposed rule change
                                                control or voting power, or in                          exempt any person, security, or                         is available on the Exchange’s website at
                                                connection with certain services,                       transaction, or any class or classes of                 http://nasdaqgemx.cchwallstreet.com/,
                                                transactions, and underwritings, (ii)                   persons, securities, or transactions, from              at the principal office of the Exchange,
                                                excessive layering of fees, and (iii)                   any provision of section 12(d)(1) if the                and at the Commission’s Public
                                                overly complex fund structures, which                   exemption is consistent with the public                 Reference Room.
                                                are the concerns underlying the limits
                                                                                                        interest and the protection of investors.               II. Self-Regulatory Organization’s
                                                in sections 12(d)(1)(A) and (B) of the
                                                                                                        Section 17(b) of the Act authorizes the                 Statement of the Purpose of, and
                                                Act.
                                                   8. Applicants request an exemption                   Commission to grant an order                            Statutory Basis for, the Proposed Rule
                                                from sections 17(a)(1) and 17(a)(2) of the              permitting a transaction otherwise                      Change
                                                Act to permit persons that are Affiliated               prohibited by section 17(a) if it finds                    In its filing with the Commission, the
                                                Persons, or Second Tier Affiliates, of the              that (a) the terms of the proposed                      Exchange included statements
                                                Funds, solely by virtue of certain                      transaction are fair and reasonable and                 concerning the purpose of and basis for
                                                ownership interests, to effectuate                      do not involve overreaching on the part                 the proposed rule change and discussed
                                                purchases and redemptions in-kind. The                  of any person concerned; (b) the                        any comments it received on the
                                                deposit procedures for in-kind                          proposed transaction is consistent with                 proposed rule change. The text of these
                                                purchases of Creation Units and the                     the policies of each registered                         statements may be examined at the
                                                redemption procedures for in-kind                       investment company involved; and (c)                    places specified in Item IV below. The
                                                redemptions of Creation Units will be                   the proposed transaction is consistent                  Exchange has prepared summaries, set
                                                the same for all purchases and                          with the general purposes of the Act.                   forth in sections A, B, and C below, of
                                                redemptions, and Deposit Instruments                                                                            the most significant aspects of such
                                                                                                          For the Commission, by the Division of
                                                and Redemption Instruments will be                      Investment Management, under delegated                  statements.
                                                valued in the same manner as those                      authority.
                                                investment positions currently held by                                                                          A. Self-Regulatory Organization’s
                                                the Funds. Applicants also seek relief                  Eduardo A. Aleman,                                      Statement of the Purpose of, and
                                                from the prohibitions on affiliated                     Assistant Secretary.                                    Statutory Basis for, the Proposed Rule
                                                transactions in section 17(a) to permit a               [FR Doc. 2018–13217 Filed 6–19–18; 8:45 am]             Change
                                                Fund to sell its shares to and redeem its               BILLING CODE 8011–01–P                                  1. Purpose
                                                shares from a Fund of Funds, and to
                                                                                                                                                                   The purpose of the proposed rule
                                                engage in the accompanying in-kind
                                                                                                                                                                change is to increase certain route-out
                                                transactions with the Fund of Funds.3                   SECURITIES AND EXCHANGE                                 fees set forth in Section II.A of the
                                                The purchase of Creation Units by a                     COMMISSION                                              Schedule of Fees. Today, the Exchange
                                                Fund of Funds directly from a Fund will
                                                                                                                                                                charges Non-Priority Customers (i.e.,
                                                be accomplished in accordance with the                  [Release No. 34–83445; File No. SR–GEMX–                Market Maker,3 Non-Nasdaq GEMX
                                                policies of the Fund of Funds and will                  2018–20]                                                Market Maker,4 Firm Proprietary 5/
                                                be based on the NAVs of the Funds.
                                                   9. Applicants also request relief to                                                                         Broker-Dealer,6 and Professional
                                                                                                        Self-Regulatory Organizations; Nasdaq                   Customer 7) route-out fees of $0.95 per
                                                permit a Feeder Fund to acquire shares                  GEMX, LLC; Notice of Filing and
                                                of another registered investment                                                                                contract for orders in Non-Penny
                                                                                                        Immediate Effectiveness of Proposed                     Symbols that are routed to away
                                                company managed by the Adviser                          Rule Change To Increase Certain
                                                having substantially the same                                                                                   exchanges in connection with the
                                                                                                        Route-Out Fees Set Forth in Section                     Options Order Protection and Locked/
                                                investment objectives as the Feeder
                                                                                                        II.A of the Schedule of Fees                            Crossed Market Plan (the ‘‘Plan’’). The
                                                Fund (‘‘Master Fund’’) beyond the
                                                limitations in section 12(d)(1)(A) and                                                                          Exchange now proposes to increase this
                                                                                                        June 14, 2018.
                                                permit the Master Fund, and any                                                                                 fee to $1.09 per contract for all Non-
                                                principal underwriter for the Master                       Pursuant to Section 19(b)(1) of the                  Priority Customer orders in Non-Penny
                                                Fund, to sell shares of the Master Fund                 Securities Exchange Act of 1934                         Symbols that are routed to away
                                                to the Feeder Fund beyond the                           (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                limitations in section 12(d)(1)(B).                     notice is hereby given that on June 1,                     3 The term ‘‘Market Makers’’ refers to

                                                                                                        2018, Nasdaq GEMX, LLC (‘‘GEMX’’ or                     ‘‘Competitive Market Makers’’ and ‘‘Primary Market
                                                   10. Section 6(c) of the Act permits the                                                                      Makers’’ collectively. See Rule 100(a)(30).
                                                Commission to exempt any persons or                     ‘‘Exchange’’) filed with the Securities                    4 A ‘‘Non-Nasdaq GEMX Market Maker’’ is a

                                                transactions from any provision of the                  and Exchange Commission                                 market maker as defined in Section 3(a)(38) of the
                                                                                                        (‘‘Commission’’) the proposed rule                      Securities Exchange Act of 1934, as amended,
                                                   3 The requested relief would apply to direct sales   change as described in Items I and II                   registered in the same options class on another
                                                                                                                                                                options exchange.
                                                of shares in Creation Units by a Fund to a Fund of      below, which Items have been prepared
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                                                                                   5 A ‘‘Firm Proprietary’’ order is an order
                                                Funds and redemptions of those shares. Applicants,      by the Exchange. The Commission is
                                                moreover, are not seeking relief from section 17(a)                                                             submitted by a member for its own proprietary
                                                for, and the requested relief will not apply to,        publishing this notice to solicit                       account.
                                                transactions where a Fund could be deemed an            comments on the proposed rule change                       6 A ‘‘Broker-Dealer’’ order is an order submitted

                                                Affiliated Person, or a Second-Tier Affiliate, of a     from interested persons.                                by a member for a broker-dealer account that is not
                                                Fund of Funds because an Adviser or an entity                                                                   its own proprietary account.
                                                controlling, controlled by or under common control                                                                 7 A ‘‘Professional Customer’’ is a person or entity
                                                                                                          1 15   U.S.C. 78s(b)(1).
                                                with an Adviser provides investment advisory                                                                    that is not a broker/dealer and is not a Priority
                                                services to that Fund of Funds.                           2 17   CFR 240.19b–4.                                 Customer.



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                                                28700                         Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices

                                                exchanges in connection with the Plan.                     any burden on competition not                           investors; or (iii) otherwise in
                                                The Exchange believes that the                             necessary or appropriate in furtherance                 furtherance of the purposes of the Act.
                                                proposed increase will help offset the                     of the purposes of the Act. In particular,              If the Commission takes such action, the
                                                costs associated with routing orders                       the proposed increase to the route-out                  Commission shall institute proceedings
                                                through the Plan, such as paying the                       fees will apply equally to all Non-                     to determine whether the proposed rule
                                                transaction fees for such executions at                    Priority Customer orders that are routed                should be approved or disapproved.
                                                other exchanges.                                           to away exchanges in connection with
                                                                                                           the Plan, and will help offset costs                    IV. Solicitation of Comments
                                                2. Statutory Basis
                                                                                                           associated with routing orders via the                    Interested persons are invited to
                                                   The Exchange believes that its                          Plan. Furthermore as noted above, the                   submit written data, views, and
                                                proposal is consistent with Section 6(b)                   Exchange believes that its proposed fees                arguments concerning the foregoing,
                                                of the Act,8 in general, and furthers the                  remain competitive with another                         including whether the proposed rule
                                                objectives of Sections 6(b)(4) and 6(b)(5)                 options exchange.                                       change is consistent with the Act.
                                                of the Act,9 in particular, in that it                       The Exchange notes that it operates in                Comments may be submitted by any of
                                                provides for the equitable allocation of                   a highly competitive market in which                    the following methods:
                                                reasonable dues, fees, and other charges                   market participants can readily favor
                                                among members and issuers and other                        competing venues if they deem fee                       Electronic Comments
                                                persons using any facility, and is not                     levels at a particular venue to be                        • Use the Commission’s internet
                                                designed to permit unfair                                  excessive, or rebate opportunities                      comment form (http://www.sec.gov/
                                                discrimination between customers,                          available at other venues to be more                    rules/sro.shtml); or
                                                issuers, brokers, or dealers.                              favorable. In such an environment, the                    • Send an email to rule-comments@
                                                   The Exchange believes that proposed                     Exchange must continually adjust its                    sec.gov. Please include File Number SR–
                                                increase in the Non-Priority Customer                      fees to remain competitive with other                   GEMX–2018–20 on the subject line.
                                                route-out fees from $0.95 to $1.09 per                     exchanges and with alternative trading
                                                contract for orders in Non-Penny                           systems that have been exempted from                    Paper Comments
                                                Symbols is reasonable because it is                        compliance with the statutory standards                    • Send paper comments in triplicate
                                                designed to help recoup costs associated                   applicable to exchanges. Because                        to Secretary, Securities and Exchange
                                                with routing orders to away exchanges                      competitors are free to modify their own                Commission, 100 F Street NE,
                                                in connection with the Plan, such as                       fees in response, and because market                    Washington, DC 20549–1090.
                                                paying the transaction fees for such                       participants may readily adjust their
                                                executions at other exchanges.                                                                                     All submissions should refer to File
                                                                                                           order routing practices, the Exchange
                                                Furthermore, the Exchange notes that                                                                               Number SR–GEMX–2018–20. This file
                                                                                                           believes that the degree to which fee
                                                the proposed fees remain competitive                                                                               number should be included on the
                                                                                                           changes in this market may impose any
                                                with the fees of other options exchanges                                                                           subject line if email is used. To help the
                                                                                                           burden on competition is extremely
                                                which, in addition to a fixed routing fee,                                                                         Commission process and review your
                                                                                                           limited. In sum, if the changes proposed
                                                assess the actual transaction fees.10                                                                              comments more efficiently, please use
                                                                                                           herein are unattractive to market
                                                   The Exchange believes that proposed                                                                             only one method. The Commission will
                                                                                                           participants, it is likely that the
                                                increase in the Non-Priority Customer                                                                              post all comments on the Commission’s
                                                                                                           Exchange will lose market share as a
                                                route-out fees is an equitable allocation                                                                          internet website (http://www.sec.gov/
                                                                                                           result. Accordingly, the Exchange does
                                                and is not unfairly discriminatory                                                                                 rules/sro.shtml). Copies of the
                                                                                                           not believe that the proposed changes
                                                because the Exchange will apply the                                                                                submission, all subsequent
                                                                                                           will impair the ability of members or
                                                same fee to all similarly situated                                                                                 amendments, all written statements
                                                                                                           competing order execution venues to
                                                members. The Exchange believes it is                                                                               with respect to the proposed rule
                                                                                                           maintain their competitive standing in
                                                equitable and not unfairly                                                                                         change that are filed with the
                                                                                                           the financial markets.
                                                discriminatory to increase the route-out                                                                           Commission, and all written
                                                fees for all market participants other                     C. Self-Regulatory Organization’s                       communications relating to the
                                                than Priority Customers 11 because the                     Statement on Comments on the                            proposed rule change between the
                                                Exchange seeks to encourage Priority                       Proposed Rule Change Received From                      Commission and any person, other than
                                                Customer order flow and the liquidity                      Members, Participants, or Others                        those that may be withheld from the
                                                that such order flow brings to the                           No written comments were either                       public in accordance with the
                                                marketplace, which in turn benefits all                    solicited or received.                                  provisions of 5 U.S.C. 552, will be
                                                market participants.                                                                                               available for website viewing and
                                                                                                           III. Date of Effectiveness of the                       printing in the Commission’s Public
                                                B. Self-Regulatory Organization’s                          Proposed Rule Change and Timing for                     Reference Room, 100 F Street NE,
                                                Statement on Burden on Competition                         Commission Action                                       Washington, DC 20549, on official
                                                  The Exchange does not believe that                          The foregoing rule change has become                 business days between the hours of
                                                the proposed rule change will impose                       effective pursuant to Section                           10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                           19(b)(3)(A)(ii) of the Act,12 and Rule                  filing also will be available for
                                                  8 15  U.S.C. 78f(b).                                     19b–4(f)(2) 13 thereunder. At any time                  inspection and copying at the principal
                                                  9 15  U.S.C. 78f(b)(4) and (5).                          within 60 days of the filing of the                     office of the Exchange. All comments
                                                   10 For example, CBOE C2 Exchange, Inc. (‘‘C2’’)
                                                                                                           proposed rule change, the Commission                    received will be posted without change.
                                                charges $1.63 per routed contract for non-public                                                                   Persons submitting comments are
sradovich on DSK3GMQ082PROD with NOTICES




                                                customer, non-C2 market-maker orders in non-               summarily may temporarily suspend
                                                penny classes. See C2 Fees Schedule, Section 1.A           such rule change if it appears to the                   cautioned that we do not redact or edit
                                                (Transaction Fees) and Section 2 (Linkage Routing).        Commission that such action is: (i)                     personal identifying information from
                                                   11 A ‘‘Priority Customer’’ is a person or entity that
                                                                                                           Necessary or appropriate in the public                  comment submissions. You should
                                                is not a broker/dealer in securities, and does not                                                                 submit only information that you wish
                                                place more than 390 orders in listed options per day
                                                                                                           interest; (ii) for the protection of
                                                on average during a calendar month for its own
                                                                                                                                                                   to make available publicly. All
                                                beneficial account(s), as defined in Nasdaq GEMX            12 15   U.S.C. 78s(b)(3)(A)(ii).                       submissions should refer to File
                                                Rule 100(a)(37A).                                           13 17   CFR 240.19b–4(f)(2).                           Number SR–GEMX–2018–20 and


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                                                                             Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices                                                      28701

                                                should be submitted on or before July                   II. Self-Regulatory Organization’s                     7.31(d)(1)(C), a Reserve Order must be
                                                11, 2018.                                               Statement of the Purpose of, and                       designated Day and may be combined
                                                  For the Commission, by the Division of
                                                                                                        Statutory Basis for, the Proposed Rule                 with a Limit Non-Routable Order or a
                                                Trading and Markets, pursuant to delegated              Change                                                 Primary Pegged Order.
                                                                                                                                                                  Rule 7.36(h) provides that Setter
                                                authority.14                                               In its filing with the Commission, the
                                                                                                                                                               Priority will be assigned to an order
                                                Eduardo A. Aleman,                                      self-regulatory organization included
                                                                                                                                                               ranked Priority 2—Display Orders with
                                                Assistant Secretary.                                    statements concerning the purpose of,
                                                                                                                                                               a display quantity of at least a round lot
                                                                                                        and basis for, the proposed rule change
                                                [FR Doc. 2018–13170 Filed 6–19–18; 8:45 am]                                                                    if such order (i) establishes a new BBO
                                                                                                        and discussed any comments it received
                                                BILLING CODE 8011–01–P                                                                                         and (ii) either establishes a new NBBO
                                                                                                        on the proposed rule change. The text
                                                                                                                                                               or joins an Away Market NBBO and that
                                                                                                        of those statements may be examined at
                                                                                                                                                               only one order is eligible for Setter
                                                                                                        the places specified in Item IV below.
                                                SECURITIES AND EXCHANGE                                                                                        Priority at each price.7 Rule 7.36(h)(1)
                                                                                                        The Exchange has prepared summaries,                   provides that an order will be evaluated
                                                COMMISSION                                              set forth in sections A, B, and C below,               for Setter Priority on arrival, which
                                                                                                        of the most significant parts of such                  includes when any portion of an order
                                                [Release No. 34–83432; File No. SR–NYSE–                statements.
                                                2018–26]
                                                                                                                                                               that has routed returns unexecuted and
                                                                                                        A. Self-Regulatory Organization’s                      when it becomes eligible to trade for the
                                                Self-Regulatory Organizations; New                      Statement of the Purpose of, and the                   first time upon transitioning to a new
                                                York Stock Exchange LLC; Notice of                      Statutory Basis for, the Proposed Rule                 trading session.
                                                Filing of Proposed Rule Change, as                      Change                                                 Proposed Rule Change to Reserve
                                                Modified by Amendment No. 1, To                         1. Purpose                                             Orders
                                                Amend Pillar Trading Platform Rule                                                                                The Exchange proposes to amend
                                                                                                           The Exchange proposes to amend
                                                7.31 Relating to Reserve Orders and                     Rule 7.31 relating to Reserve Orders and               Rule 7.31(d)(1) to change the manner by
                                                Rule 7.36 Relating to Setter Priority                   Rule 7.36 relating to Setter Priority.                 which the display portion of a Reserve
                                                                                                        These proposed changes would be                        Order would be replenished. As
                                                June 14, 2018.
                                                                                                        operative for trading on the Pillar                    proposed, rather than replenishing the
                                                   Pursuant to Section 19(b)(1) 1 of the                trading platform only. Because the                     display quantity following any
                                                Securities Exchange Act of 1934                         Exchange trades only UTP Securities 5                  execution, the Exchange proposes to
                                                (‘‘Act’’) 2 and Rule 19b–4 thereunder,3                 on the Pillar trading platform at this                 replenish the Reserve Order when the
                                                notice is hereby given that, on June 1,                 time, these proposed changes would not                 display quantity is decremented to
                                                2018, New York Stock Exchange LLC                       be applicable to NYSE-listed securities.               below a round lot. This proposed
                                                (‘‘NYSE’’ or ‘‘Exchange’’) filed with the                                                                      functionality is consistent with how
                                                                                                        Background                                             Reserve Orders are replenished on other
                                                Securities and Exchange Commission
                                                (‘‘Commission’’) a proposed rule                          Rule 7.31(d)(1) defines a Reserve                    equity exchanges.8
                                                change. On June 8, 2018, the Exchange                   Order as a Limit Order with a quantity                    As is currently the case, the replenish
                                                                                                        of the size displayed and with a reserve               quantity would be the minimum display
                                                filed Amendment No. 1 to the proposed
                                                                                                        quantity of the size (‘‘reserve interest’’)            size of the order or the remaining
                                                rule change, as described in Items I, II,
                                                                                                        that is not displayed. The displayed                   quantity of reserve interest if it is less
                                                and III below, which Items have been                                                                           than the minimum display quantity. To
                                                prepared by the Exchange.4 The                          quantity of a Reserve Order is ranked
                                                                                                        Priority 2—Display Orders and the                      reflect this functionality, the Exchange
                                                Commission is publishing this notice to                                                                        proposes that Rule 7.31(d)(1)(A) would
                                                solicit comments on the proposed rule                   reserve interest is ranked Priority 3—
                                                                                                        Non-Display Orders.6 Rule 7.31(d)(1)(A)                be amended as follows (deleted text
                                                change from interested persons.                                                                                bracketed; new text underlined):
                                                                                                        provides that on entry, the display
                                                I. Self-Regulatory Organization’s                       quantity of a Reserve Order must be                       (A) On entry, the display quantity of
                                                                                                        entered in round lots and the displayed                a Reserve Order must be entered in
                                                Statement of the Terms of Substance of
                                                                                                        portion of a Reserve Order will be                     round lots. The displayed portion of a
                                                the Proposed Rule Change
                                                                                                        replenished following any execution.                   Reserve Order will be replenished when
                                                  The Exchange proposes to amend                        That rule further provides that the                    the display quantity is decremented to
                                                Pillar trading platform Rule 7.31 relating              Exchange will display the full size of                 below a round lot. The replenish
                                                to Reserve Orders and Rule 7.36 relating                the Reserve Order when the unfilled                    quantity will be the minimum display
                                                to Setter Priority. This Amendment No.                  quantity is less than the minimum                      quantity of the order or the remaining
                                                                                                                                                               quantity of the reserve interest if it is
                                                1 supersedes the original filing in its                 display size for the order. Rule
                                                                                                                                                               less than the minimum display quantity
                                                entirety. The proposed rule change is                   7.31(d)(1)(B) provides that each time a
                                                                                                                                                               [following any execution. The Exchange
                                                available on the Exchange’s website at                  Reserve Order is replenished from
                                                                                                                                                               will display the full size of the Reserve
                                                www.nyse.com, at the principal office of                reserve interest, a new working time is
                                                                                                                                                               Order when the unfilled quantity is less
                                                the Exchange, and at the Commission’s                   assigned to the replenished quantity of
                                                                                                                                                               than the minimum display size for the
                                                Public Reference Room.                                  the Reserve Order, while the reserve
                                                                                                                                                               order].
                                                                                                        interest retains the working time of                      Under current functionality, because
                                                                                                        original order entry. Pursuant to Rule                 the replenished quantity is assigned a
sradovich on DSK3GMQ082PROD with NOTICES




                                                  14 17 CFR 200.30–3(a)(12).
                                                                                                           5 The term ‘‘UTP Securities’’ is defined in Rule
                                                                                                                                                               new working time, it is feasible for a
                                                  1 15 U.S.C. 78s(b)(1).
                                                                                                        1.1 to mean a security that is listed on a national    single Reserve Order to have multiple
                                                  2 15 U.S.C. 78a.

                                                  3 17 CFR 240.19b–4.
                                                                                                        securities exchange other than the Exchange and
                                                                                                        that trades on the Exchange pursuant to unlisted          7 The terms ‘‘BBO,’’ ‘‘NBBO,’’ ‘‘PBBO,’’ and
                                                  4 Amendment No. 1 replaces and supersedes the
                                                                                                        trading privileges.                                    ‘‘Away Market’’ are defined in Rule 1.1.
                                                original filing in its entirety. In Amendment No. 1,       6 The terms ‘‘Priority 2—Display Orders’’ and          8 See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule
                                                the Exchange modified the definition of ‘‘child         ‘‘Priority 3—Non-Display Orders’’ are defined in       11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’)
                                                order’’ in proposed rule 7.31.                          Rule 7.36(e).                                          Rule 7503(h).



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Document Created: 2018-06-20 00:19:13
Document Modified: 2018-06-20 00:19:13
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 28699 

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