[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Notices]
[Pages 72063-72065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28172]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87844; File No. SR-GEMX-2019-18]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Adopt a Mass
Cancellation Rule and Amend Other Sections of the Rulebook
December 23, 2019.
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 9, 2019, 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.
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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 definitions within General 1,
Section 1, adopt a new definition for ``Away Best Bid or Offer'' within
Options 1, Section 1, and update rule citations in various other rules.
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 Exchange proposes to adopt a new rule at Options 3, Section 19
titled ``Mass Cancellation of Trading Interest.'' The Exchange also
proposes to amend definitions within General 1, Section 1, adopt a new
definition for ``Away Best Bid or Offer within Options 1, Section 1,
and update rule citations in various other rules.
Mass Cancellation of Trading Interest
The Exchange proposes to adopt a new rule at Options 3, Section 19
titled ``Mass Cancellation of Trading Interest.'' The Nasdaq Options
Market LLC (``NOM'') and Nasdaq BX, Inc. (``BX'') rules at Chapter VII,
Section 11 permit Participants on those markets to contact market
operations and manually request cancellation of interest. The Exchange
proposes to adopt a rule which also permits Members to contact market
operations and request the Exchange to manually cancel interest. The
proposed new rule would state, ``A Member may cancel any bids, offers,
and orders in any series of options by requesting GEMX Market
Operations \3\ staff to effect such cancellation as per the
instructions of the Member.'' This new rule reflects the Exchange's
current practice of allowing Members to contact GEMX Market Operations
and request the Exchange to cancel any bid, offer or order in any
series of options. The Exchange would cancel such bid, offer or order
pursuant to the Member's instruction. The Exchange desires to
memorialize the availability of this service.
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\3\ The request to Market Operations is a manual request which
is made telephonically.
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Definitions
The Exchange proposes to make a technical amendment to General 1,
Section 1(a)(6) to note the acronym for an Electronic Access Member, an
``EAM'' within the definition. The acronym is utilized throughout the
Rulebook. Defining the acronym within the definition will add
transparency to the Rulebook.
The Exchange proposes to add the definition of an ``Away Best Bid
or Offer'' or ``ABBO'' within Options 1, Section 1(a)(4). This term is
utilized throughout the Rulebook. Defining this term will bring greater
transparency to the Rulebook. The Exchange also proposes to update the
numbering in the remainder of the rule and also update
[[Page 72064]]
cross-references throughout the Rulebook \4\ as a result of the
renumbering.
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\4\ See Options 3, Section 10 and Options 7, Section 1.
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Other Changes
The Exchange proposes to reserve certain rules \5\ in connection
with a Rulebook harmonization project which organizes the rules of the
Nasdaq affiliated markets.
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\5\ Options 2, Section 3 and Options 3, Section 28 are being
reserved.
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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 Section
6(b)(5) of the Act,\7\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Mass Cancellation of Trading Interest
The Exchange's proposal to memorialize the Mass Cancellation of
Trading Interest rule within Options 3, Section 19 is consistent with
the Act because permitting Members to contact Market Operations as a
manual alternative to automated functionality which similarly allows
Members to cancel interest provides Members experiencing their own
system issues with a means to manage risk. Today, Members are able to
cancel interest, in an automated fashion through protocols \8\ and the
Kill Switch.\9\ This is a voluntary services offered to all Members.
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\8\ See Options 3 at Supplementary Material .03 to Section 7.
\9\ See Options 3, Section 17.
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The Exchange notes that offering this service, which permits
Members to cancel interest, will not diminish a Market Maker's
obligation with respect to providing two-sided quotations and this rule
is not inconsistent with other firm quote obligations of the Market
Maker. Upon the request of a Member, GEMX Market Operations will
manually input a mass cancellation message into the System consistent
with the Member's instruction to cancel trading interest. Once the mass
cancellation message is entered into the System by GEMX Market
Operations, the message will be accepted by the System in the order of
receipt in the queue such that the interest that was already accepted
into the System will be processed prior to the mass cancellation
message. In addition, mass cancellation messages entered into the
System by GEMX Market Operations are handled by the System through the
same queuing mechanism that a quote or order message is handled by the
System. The Exchange notes its processing of a mass cancellation
message inputted by GEMX Market Operations and handled by the System is
consistent with firm quote and order handling rules.
As noted above, NOM and BX Rules at Chapter VII, Section 11 allow
NOM and BX Participants to also contact market operations and request
cancellations of interest. This new rule reflects the Exchange's
current practice.
Definitions
The Exchange's proposal to add the acronym for an Electronic Access
Member, an ``EAM'' within General 1, Section 1 and add the definition
of an ``Away Best Bid or Offer'' or ``ABBO'' within Options 1, Section
1(a)(4) are consistent with the Act because these amendments will add
transparency to the Rulebook.
Other Changes
The remainder of the changes to correct numbering and citations are
non-substantive.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
Mass Cancellation of Trading Interest
The Exchange's proposal to memorialize the Mass Cancellation of
Trading Interest rule within Options 3, Section 19 does not impose an
undue burden on competition because all Members may utilize this
service. This new rule reflects the Exchange's current practice.
Definitions
The Exchange's proposal to add the acronym for an Electronic Access
Member, an ``EAM'' within General 1, Section 1 and add the definition
of an ``Away Best Bid or Offer'' or ``ABBO'' within Options 1, Section
1(a)(4) do not impose an undue burden on competition because these
amendments will add transparency to the Rulebook.
Other Changes
The remainder of the changes to correct numbering and citations are
non-substantive.
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 \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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 so that the
proposal may become operative immediately upon filing. The Exchange
notes that NOM and BX currently have rules that permit NOM and BX
Participants to cancel interest,\14\ and that the Exchange proposes the
additional changes to provide greater clarity in its rules. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission waives the 30-day operative delay and
designates the proposed rule change operative upon filing.\15\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ See NOM and BX Rules at Chapter VII, Section 11.
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such
[[Page 72065]]
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-GEMX-2019-18 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-2019-18. 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-2019-18 and should be submitted on
or before January 21, 2020.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-28172 Filed 12-27-19; 8:45 am]
BILLING CODE 8011-01-P