Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34623 

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

2 17 CFR 240.19b–4. 

3Rule 723(c)(1) defines an Improvement Order. 

The Exchange will designate via circular a time of 

no less than 100 milliseconds and no more than 1 

second for Members to indicate the size and price 

at which they want to participate in the execution 

of the Agency Order (‘‘Improvement Orders’’). 

4See Securities Exchange Act Release No. 70050 

(July 26, 2013), 78 FR 46622 (August 1, 2013) (File 

No. 10–209) (‘‘Exchange Approval Order’’). The 

Exchange subsequently changed its name to ISE 

Gemini and then later Nasdaq GEMX. 

5 Id. 

6See Securities Exchange Act Release No. 50819 

(December 8, 2004), 69 FR 75093 (December 15, 

2004) (SR–ISE–2003–06) (Order Granting Approval 

of Proposed Rule Change and Amendment No. 1 

Thereto and Notice of Filing and Order Granting 

Accelerated Approval to Amendments No. 2 and 3 

Thereto by the International Securities Exchange, 

Inc. To Establish Rules Implementing a Price 

Improvement Mechanism) (‘‘Adopting Filing’’). 

7The Counter-Side Order may represent interest 

for the EAM’s own account, or interest the EAM has 

solicited from one or more other parties, or a 

combination of both. 

8 Id. 

9The broadcast message would include the series, 

price, and size of the Agency Order and whether it 

is to buy or sell. 

10The ISE would broadcast Improvement Orders 

to all Members. Crossing Transactions and 

Improvement Orders would not be displayed in the 

ISE BBO and would not be disseminated to the 

Options Price Reporting Authority. 11 GEMX Rule 723(c)(2). 

12 GEMX Rule 723(c)(4). 

13Phlx Rule 1087 permits any member to submit 

for execution an order it represents as agent on 

behalf of a public customer, broker-dealer, or any 

other entity (‘‘PIXL Order’’). 

14BX Rules at Chapter VI, Section 9 provides that 

‘‘A Participant may electronically submit for 

execution an order it represents as agent on behalf 

of a Public Customer, broker dealer, or any other 

entity (‘‘PRISM Order’’). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83641; File No. SR–GEMX– 

2018–25] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Improvement 

Orders Entered Into the Price 

Improvement Mechanism 

July 16, 2018. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on July 5, 

2018, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

GEMX Rule 723, entitled ‘‘Price 

Improvement Mechanism for Crossing 

Transactions.’’ 

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 

GEMX proposes to amend Rule 723, 

entitled ‘‘Price Improvement 

Mechanism for Crossing Transactions.’’ 

Specifically, the Exchange proposes to 

amend Rule 723(c)(2) to expand the 

types of Improvement Orders 3 that may 

be entered into the Price Improvement 

Mechanism or ‘‘PIM.’’ The Exchange 

also proposes to amend Rule 723(d)(1)– 

(3) to more specifically clarify terms 

such as ‘‘orders’’ and ‘‘responses’’ in 

that section. 

Background 

The Exchange adopted PIM as part of 

its application to be registered as a 

national securities exchange under its 

previous name of Topaz Exchange, 

LLC.4 In approving PIM, the 

Commission noted that it was largely 

based on a similar functionality offered 

by the International Securities 

Exchange, LLC (now Nasdaq ISE, LLC) 

(‘‘ISE’’).5 ISE received approval to 

establish its PIM in 2004 that would 

allow an ISE Electronic Access Member 

(‘‘EAM’’) to enter matched trades 

(‘‘Crossing Transactions’’).6 As noted in 

the Adopting Filing, a Crossing 

Transaction would be comprised of an 

order that the EAM represents as agent 

(‘‘Agency Order’’) and an order that is 

executable against the Agency Order for 

the full size of the Agency Order (the 

‘‘Counter-Side Order’’).7 In the 

Adopting Filing, ISE specified in Rule 

723(c)(2) that Improvement Orders may 

be for the account of a Public Customer 

or for the Member’s own account.8 The 

Adopting Filing noted that ISE would 

broadcast Crossing Orders to all 

Members.9 Further, it was noted in the 

Adopting Filing that during a three 

second auction, all ISE Members could 

enter ‘‘Improvement Orders,’’ in penny 

increments, to improve the price of the 

Agency Order.10 The Adopting Filing 

stated that Improvement Orders may be 

for the account of a Public Customer or 

for the Member’s own account.11

Finally, the Adopting Filing noted that 

during the exposure period, the 

aggregate size of the best prices, 

including the Counter-Side Order, 

Improvement Orders, and any change to 

either, would continually be updated 

and broadcast to all Members.12

Rule 723(c)(2) 

With respect to the current limitation 

of Improvement Orders for the account 

of a Public Customer or for the 

Member’s own account, ISE noted in its 

Adopting Filing that ‘‘all ISE Members 

would be permitted to participate in a 

PIM . . . unrelated orders could 

compete in standard increments to trade 

with the Agency Order in the PIM. Such 

unrelated orders could include agency 

orders on behalf of Public Customers, 

market makers on other exchanges, and 

non-ISE member broker-dealers, as well 

as non-Improvement orders submitted 

by ISE members.’’ 

At this time, the Exchange proposes to 

permit any GEMX Member to enter an 

Improvement Order marked as a 

response to a PIM auction similar to 

Nasdaq PHLX LLC (‘‘Phlx’’) 13 and 

Nasdaq BX, Inc. (‘‘BX’’) 14 rules. The 

Exchange no longer desires to limit 

Members who may enter Improvement 

Orders into PIM to simply those orders 

for the account of a Public Customer or 

for the Member’s own account. The 

Exchange desires to expand the types of 

orders that may be entered as 

Improvement Orders similar to Phlx and 

BX. The Exchange is therefore removing 

this limitation in Rule 723(c)(2) so that 

the proposed rule text would read: 

‘‘Improvement Orders may be entered 

by all Members in one-cent increments 

at the same price as the Crossing 

Transaction or at an improved price for 

the Agency Order, and for any size up 

to the size of the Agency Order.’’ 

Rule 723(d)(1)–(3) 

The Exchange proposes to amend 

GEMX Rule 723(d)(1)–(3), which 


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34624 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 

15 GEMX Rule 100(a)(52) provides the term 

‘‘Professional Order’’ means an order that is for the 

account of a person or entity that is not a Priority 

Customer. 

16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(5). 

explains the manner in which a PIM 

Order shall be allocated to conform this 

text to the change which is proposed in 

Rule 723(c)(2). Rule 723(d)(1) currently 

provides, ‘‘At a given price, Priority 

Customer interest is executed in full 

before Professional Orders 15 and any 

other interest of Members (i.e., 

proprietary interest from Electronic 

Access Members and Exchange market 

makers).’’ The Exchange proposes to 

expand upon the term interest by 

adopting the defined terms ‘‘Priority 

Customer Interest’’ for Priority Customer 

Orders and Improvement Orders from 

Priority Customers, and ‘‘Professional 

Interest’’ for Professional Orders, 

Improvement Orders from non-Priority 

Customers, and Market Maker quotes. 

The Exchange believes that adding these 

defined terms would clarify what is 

meant by interest. As proposed, 

Professional Interest identifies all orders 

(including Improvement Orders) that are 

not for the account of a Priority 

Customer as well as Market Maker 

quotes, thereby incorporating the 

current reference to ‘‘Professional 

Orders’’ within its terms and 

eliminating the necessity to include the 

current rule text which provides, ‘‘any 

other interest of Members (i.e., 

proprietary interest from Electronic 

Access Members and Exchange market 

makers).’’ 

The Exchange proposes to amend 

Rule 723(d)(2) which currently 

provides, ‘‘After Priority Customer 

interest at a given price, Professional 

Orders and Members’ interest will 

participate in the execution of the 

Agency Order based upon the 

percentage of the total number of 

contracts available at the price that is 

represented by the size of the Members’ 

interest.’’ The Exchange proposes to 

replace the reference to ‘‘Priority 

Customer interest’’ with the defined 

term ‘‘Priority Customer Interest’’ 

proposed to be added in Rule 723(d)(1), 

as described above. The Exchange also 

proposes to change ‘‘Professional 

Orders’’ to ‘‘Professional Interest’’ 

which will be defined in Rule 723(d)(1) 

to include Professional Orders as well as 

Improvement Orders from non-Priority 

Customers and Market Maker quotes. 

Since Professional Interest is defined in 

this manner, the Exchange also proposes 

to remove the language referring to 

‘‘Members’ interest’’ from the sentence 

because Professional Interest would 

include all orders from non-Priority 

Customers and Market Maker quotes. 

The Exchange proposes to amend 

Rule 723(d)(3) to again remove the rule 

text relating to ‘‘Members’ interest’’ and 

instead utilize the defined ‘‘Professional 

Interest’’ term consistent with proposed 

changes to Rule 723(d)(1) and (2). The 

Exchange also proposes to make similar 

changes to add the term ‘‘Professional 

Interest’’ to the sentence in Rule 

723(d)(3) that currently reads: 

‘‘Thereafter, all other orders, Responses, 

and quotes at the price point will 

participate in the execution of the 

Agency Order based upon the 

percentage of the total number of 

contracts available at the price that is 

represented by the size of the order, 

Response or quote.’’ In particular, the 

language related to ‘‘other orders, 

Responses, and quotes’’ in this sentence 

will be replaced with ‘‘Professional 

Interest’’ since this term includes all 

orders from non-Priority Customers and 

Market Maker quotes, as described 

above. The Exchange notes that the 

references in this sentence to 

‘‘Responses,’’ currently an undefined 

term, should instead refer to the defined 

term ‘‘Improvement Orders,’’ and the 

proposed changes should therefore 

clarify how Rule 723(d)(3) will apply. 

Finally, the Exchange proposes to 

replace the word ‘‘Priority Customer 

Orders’’ with ‘‘Priority Customer 

Interest’’ as defined in proposed Rule 

723(d)(1) to clarify that those orders as 

well as responses (i.e., Improvement 

Orders from Priority Customers) are 

applicable. The proposed amendments 

add more specificity to the exact order/ 

quotes and responses which apply in 

this section. 

The amendments to Rule 723(d)(1)– 

(3) conform to the proposed amendment 

to Rule 723(c)(2) and other proposed 

amendments as described above which 

do not change the manner in which PIM 

operates today, rather the other word 

changes seek to bring specificity to the 

manner in which order, quotes and 

responses are treated. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,16 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,17

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

The Exchange’s proposal to amend 

Rule 723(c)(2) seeks to broaden the 

types of orders that may be submitted as 

Improvement Orders into PIM. As ISE 

previously noted, in its Adopting Filing, 

all Members are able to participate in a 

PIM today as an unrelated order that 

rests on the Order Book. Unrelated 

orders that rest on the Order Book can 

participate in PIM and trade with the 

Agency Order in the PIM. The Exchange 

proposes to allow all Members to submit 

Improvement Orders directly into PIM 

to provide an even greater number of 

GEMX Members to more directly 

participate in PIM and provide price 

improvement. The Exchange’s proposal 

is consistent with the Act because 

allowing a greater number of Members 

to directly respond with an 

Improvement Order in a PIM will 

increase the likelihood of price 

improvement in that auction thereby 

removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system. This approach will enable 

greater participation in PIM auctions. 

The Exchange’s proposal to amend 

Rule 723(d) conforms the text with 

changes made with respect to the 

proposal to amend Rule 723(c)(2) for 

consistency. The proposed changes to 

remove the more generic ‘‘Members’ 

interest’’ and instead substitute very 

specific terms to define interest and add 

quotes provide more specificity as to the 

manner in which interest entered into 

PIM will be allocated. The Exchange’s 

proposed amendments to Rule 

723(d)(1)–(3) are consistent with the Act 

because the amendments seek to 

conform the rule text to the proposed 

Rule 723(c)(2) amendment and describe 

in greater detail how interest will be 

allocated by defining terms and eligible 

interest and this transparency benefits 

investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange’s proposal to amend Rule 

723(c)(2) to broaden the types of orders 

that may be submitted as Improvement 

Orders into PIM does not unduly 

burden competition because all 

Members will be permitted to submit 

Improvement Orders directly into PIM 

to provide an even greater number of 

GEMX Members to more directly 

participate in PIM. The amendments to 

Rule 723(d) will conform the rule text 

and bring clarity to the allocation 

method for PIM. 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34625 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the 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. 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 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) of the Act 18 and Rule 19b– 

4(f)(6) thereunder.19

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 20 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 21

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay so that it may allow all 

Members to submit Improvement Orders 

directly into PIM to provide an even 

greater number of GEMX Members an 

opportunity to more directly participate 

in PIM and provide price improvement. 

The Exchange states that it will issue an 

Options Trader Alert to notify Members 

of the date within which this 

functionality will be implemented. The 

Commission believes the waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby waives the operative delay and 

designates the proposed rule change 

operative upon filing.22

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 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 rule-comments@

sec.gov. Please include File Number SR– 

GEMX–2018–25 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–GEMX–2018–25. 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 such 

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–2018–25, and 

should be submitted on or before 

August 10, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15501 Filed 7–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83639; File No. SR–ISE– 

2018–61] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Schedule of Fees To Add 

Establish Fees and Rebates for NQX 

Options and Make Several Clarifying 

Changes 

July 16, 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 July 2, 

2018, Nasdaq ISE, LLC (‘‘ISE’’ 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 amend the 

Exchange’s Schedule of Fees. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://ise.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 


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