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

3The requested relief would apply to direct sales 

of shares in Creation Units by a Fund to a Fund of 

Funds and redemptions of those shares. Applicants, 

moreover, are not seeking relief from section 17(a) 

for, and the requested relief will not apply to, 

transactions where a Fund could be deemed an 

Affiliated Person, or a Second-Tier Affiliate, of a 

Fund of Funds because an Adviser or an entity 

controlling, controlled by or under common control 

with an Adviser provides investment advisory 

services to that Fund of Funds. 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The term ‘‘Market Makers’’ refers to 

‘‘Competitive Market Makers’’ and ‘‘Primary Market 

Makers’’ collectively. See Rule 100(a)(30). 

4A ‘‘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. 

5A ‘‘Firm Proprietary’’ order is an order 

submitted by a member for its own proprietary 

account. 

6A ‘‘Broker-Dealer’’ order is an order submitted 

by a member for a broker-dealer account that is not 

its own proprietary account. 

7A ‘‘Professional Customer’’ is a person or entity 

that is not a broker/dealer and is not a Priority 

Customer. 

registered under the Exchange Act, to 

sell shares to Funds of Funds beyond 

the limits of section 12(d)(1)(B) of the 

Act. The application’s terms and 

conditions are designed to, among other 

things, help prevent any potential (i) 

undue influence over a Fund through 

control or voting power, or in 

connection with certain services, 

transactions, and underwritings, (ii) 

excessive layering of fees, and (iii) 

overly complex fund structures, which 

are the concerns underlying the limits 

in sections 12(d)(1)(A) and (B) of the 

Act. 

8. Applicants request an exemption 

from sections 17(a)(1) and 17(a)(2) of the 

Act to permit persons that are Affiliated 

Persons, or Second Tier Affiliates, of the 

Funds, solely by virtue of certain 

ownership interests, to effectuate 

purchases and redemptions in-kind. The 

deposit procedures for in-kind 

purchases of Creation Units and the 

redemption procedures for in-kind 

redemptions of Creation Units will be 

the same for all purchases and 

redemptions, and Deposit Instruments 

and Redemption Instruments will be 

valued in the same manner as those 

investment positions currently held by 

the Funds. Applicants also seek relief 

from the prohibitions on affiliated 

transactions in section 17(a) to permit a 

Fund to sell its shares to and redeem its 

shares from a Fund of Funds, and to 

engage in the accompanying in-kind 

transactions with the Fund of Funds.3

The purchase of Creation Units by a 

Fund of Funds directly from a Fund will 

be accomplished in accordance with the 

policies of the Fund of Funds and will 

be based on the NAVs of the Funds. 

9. Applicants also request relief to 

permit a Feeder Fund to acquire shares 

of another registered investment 

company managed by the Adviser 

having substantially the same 

investment objectives as the Feeder 

Fund (‘‘Master Fund’’) beyond the 

limitations in section 12(d)(1)(A) and 

permit the Master Fund, and any 

principal underwriter for the Master 

Fund, to sell shares of the Master Fund 

to the Feeder Fund beyond the 

limitations in section 12(d)(1)(B). 

10. Section 6(c) of the Act permits the 

Commission to exempt any persons or 

transactions from any provision of the 

Act if such exemption is necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Section 17(b) of the Act authorizes the 

Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13217 Filed 6–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

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. 

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 NonPriority Customer orders in Non-Penny 

Symbols that are routed to away 


sradovich on DSK3GMQ082PROD with NOTICES
28700 Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 

8 15 U.S.C. 78f(b). 

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

10For example, CBOE C2 Exchange, Inc. (‘‘C2’’) 

charges $1.63 per routed contract for non-public 

customer, non-C2 market-maker orders in nonpenny classes. See C2 Fees Schedule, Section 1.A 

(Transaction Fees) and Section 2 (Linkage Routing). 

11A ‘‘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). 

12 15 U.S.C. 78s(b)(3)(A)(ii). 

13 17 CFR 240.19b–4(f)(2). 

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. 

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. 

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

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. 

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 NonPriority 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. 

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 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 28701 

14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Amendment No. 1 replaces and supersedes the 

original filing in its entirety. In Amendment No. 1, 

the Exchange modified the definition of ‘‘child 

order’’ in proposed rule 7.31. 

5The term ‘‘UTP Securities’’ is defined in Rule 

1.1 to mean a security that is listed on a national 

securities exchange other than the Exchange and 

that trades on the Exchange pursuant to unlisted 

trading privileges. 

6The terms ‘‘Priority 2—Display Orders’’ and 

‘‘Priority 3—Non-Display Orders’’ are defined in 

Rule 7.36(e). 

7The terms ‘‘BBO,’’ ‘‘NBBO,’’ ‘‘PBBO,’’ and 

‘‘Away Market’’ are defined in Rule 1.1. 

8See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule 

11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’) 

Rule 7503(h). 

should be submitted on or before July 

11, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13170 Filed 6–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83432; File No. SR–NYSE– 

2018–26] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change, as 

Modified by Amendment No. 1, To 

Amend Pillar Trading Platform Rule 

7.31 Relating to Reserve Orders and 

Rule 7.36 Relating to Setter Priority 

June 14, 2018. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on June 1, 

2018, New York Stock Exchange LLC 

(‘‘NYSE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule 

change. On June 8, 2018, the Exchange 

filed Amendment No. 1 to the proposed 

rule change, as described in Items I, II, 

and III below, which Items have been 

prepared by the Exchange.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Pillar trading platform Rule 7.31 relating 

to Reserve Orders and Rule 7.36 relating 

to Setter Priority. This Amendment No. 

1 supersedes the original filing in its 

entirety. The proposed rule change is 

available on the Exchange’s website at 

www.nyse.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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 7.31 relating to Reserve Orders and 

Rule 7.36 relating to Setter Priority. 

These proposed changes would be 

operative for trading on the Pillar 

trading platform only. Because the 

Exchange trades only UTP Securities 5

on the Pillar trading platform at this 

time, these proposed changes would not 

be applicable to NYSE-listed securities. 

Background 

Rule 7.31(d)(1) defines a Reserve 

Order as a Limit Order with a quantity 

of the size displayed and with a reserve 

quantity of the size (‘‘reserve interest’’) 

that is not displayed. The displayed 

quantity of a Reserve Order is ranked 

Priority 2—Display Orders and the 

reserve interest is ranked Priority 3— 

Non-Display Orders.6 Rule 7.31(d)(1)(A) 

provides that on entry, the display 

quantity of a Reserve Order must be 

entered in round lots and the displayed 

portion of a Reserve Order will be 

replenished following any execution. 

That rule further provides that the 

Exchange will display the full size of 

the Reserve Order when the unfilled 

quantity is less than the minimum 

display size for the order. Rule 

7.31(d)(1)(B) provides that each time a 

Reserve Order is replenished from 

reserve interest, a new working time is 

assigned to the replenished quantity of 

the Reserve Order, while the reserve 

interest retains the working time of 

original order entry. Pursuant to Rule 

7.31(d)(1)(C), a Reserve Order must be 

designated Day and may be combined 

with a Limit Non-Routable Order or a 

Primary Pegged Order. 

Rule 7.36(h) provides that Setter 

Priority will be assigned to an order 

ranked Priority 2—Display Orders with 

a display quantity of at least a round lot 

if such order (i) establishes a new BBO 

and (ii) either establishes a new NBBO 

or joins an Away Market NBBO and that 

only one order is eligible for Setter 

Priority at each price.7 Rule 7.36(h)(1) 

provides that an order will be evaluated 

for Setter Priority on arrival, which 

includes when any portion of an order 

that has routed returns unexecuted and 

when it becomes eligible to trade for the 

first time upon transitioning to a new 

trading session. 

Proposed Rule Change to Reserve 

Orders 

The Exchange proposes to amend 

Rule 7.31(d)(1) to change the manner by 

which the display portion of a Reserve 

Order would be replenished. As 

proposed, rather than replenishing the 

display quantity following any 

execution, the Exchange proposes to 

replenish the Reserve Order when the 

display quantity is decremented to 

below a round lot. This proposed 

functionality is consistent with how 

Reserve Orders are replenished on other 

equity exchanges.8

As is currently the case, the replenish 

quantity would be the minimum display 

size of the order or the remaining 

quantity of reserve interest if it is less 

than the minimum display quantity. To 

reflect this functionality, the Exchange 

proposes that Rule 7.31(d)(1)(A) would 

be amended as follows (deleted text 

bracketed; new text underlined): 

(A) On entry, the display quantity of 

a Reserve Order must be entered in 

round lots. The displayed portion of a 

Reserve Order will be replenished when 

the display quantity is decremented to 

below a round lot. The replenish 

quantity will be the minimum display 

quantity of the order or the remaining 

quantity of the reserve interest if it is 

less than the minimum display quantity 

[following any execution. The Exchange 

will display the full size of the Reserve 

Order when the unfilled quantity is less 

than the minimum display size for the 

order]. 

Under current functionality, because 

the replenished quantity is assigned a 

new working time, it is feasible for a 

single Reserve Order to have multiple 


sradovich on DSK3GMQ082PROD with NOTICES