Federal Register / Vol. 86, No. 161 / Tuesday, August 24, 2021 / Notices 47355 

52The Commission notes that almost all 

commenters urged comprehensive, Commission-led 

reform to the current reimbursement structure. See 

First FINRA Letter, Second FINRA Letter, First STA 

Letter, Second STA Letter, First Computershare 

Letter, Second Computershare Letter, SCC Letter, 

First ICI Letter, Second ICI Letter. See also letters 

from: Timothy W. McHale, Senior Vice President & 

Senior Counsel, Capital Research and Management 

Company, and Anthony M. Seiffert, Chief 

Compliance Officer, American Funds Service 

Company, dated January 11, 2021; Catherine L. 

Newell, General Counsel and Executive Vice 

President, Dimensional Fund Advisors LP, dated 

January 11, 2021; Peter J. Germain, Chief Legal 

Officer, Federated Hermes, Inc., dated January 11, 

2021; Basil K. Fox, Jr., President, Franklin 

Templeton Investor Services, LLC, dated January 

11, 2021; Heidi Hardin, Executive Vice President 

and General Counsel, MFS Investment 

Management, dated January 11, 2021; Thomas E. 

Faust Jr., Chairman and Chief Executive Officer, 

Eaton Vance Corp., dated January 14, 2021; Noah 

Hamman, Chief Executive Officer, AdvisorShares 

Investments, LLC, dated January 14, 2021; Timothy 

W. McHale, Senior Vice President & Senior 

Counsel, Capital Research and Management 

Company, and Anthony M. Seiffert, Chief 

Compliance Officer, American Funds Service 

Company, dated May 18, 2021; and Heidi Hardin, 

Executive Vice President and General Counsel, MFS 

Investment Management, dated May 19, 2021. The 

Commission must consider the proposed rule 

change that was filed, and thus such reform is 

beyond the scope of this proposed rule change. As 

noted above, the Exchange stated that the proposed 

rule change is not intended to take a position on 

the appropriateness of the fee schedules for proxy 

and other distributions currently set forth in NYSE 

Rules 451 and 465 or in the rules of any other SRO. 

See supra note 19 and accompanying text. 

53Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

54 In disapproving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

55 15 U.S.C. 78f(b)(5). 

56 15 U.S.C. 78s(b)(2). 

57 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

and is the industry standard that all 

brokers with street name accounts and 

issuers rely upon. Approval of NYSE’s 

proposed elimination of its rate 

schedule therefore would do more than 

simply conform NYSE’s rules to those of 

other exchanges; it would result in 

NYSE’s relinquishment of an important 

market-wide regulatory function that it 

currently performs, and without there 

being evidence in the record of this 

filing of an available and equally viable 

alternative for that function. 

When assessing this proposed rule 

change, the Commission must consider 

its consistency with the Act and the 

applicable rules and regulations issued 

thereunder.52 As stated above, under the 

Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the 

[Exchange] Act and the rules and 

regulations issued thereunder . . . is on 

the self-regulatory organization that 

proposed the rule change.’’ 53 For the 

foregoing reasons, the Exchange has not 

met its burden to demonstrate that it 

would be consistent with the Act for the 

Exchange to relinquish its current role 

in setting the maximum reimbursement 

rates that establish the industry 

standard. In particular, the Exchange 

has not adequately demonstrated that, 

in its absence from that role, issuer 

interests would continue to be 

considered and not unfairly 

discriminated against. As a result, the 

Commission does not have sufficient 

information to find that the Exchange’s 

proposal would promote just and 

equitable principles of trade and protect 

investors and the public interest, and 

not permit unfair discrimination 

between customers, issuers, brokers, or 

dealers. Accordingly, the Commission 

must disapprove the proposal because 

the Exchange has not met its burden to 

demonstrate that the proposal is 

consistent with Section 6(b)(5) of the 

Act.54

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange, and in particular, with 

Section 6(b)(5) of the Act.55

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,56 that the 

proposed rule change (SR–NYSE–2020– 

96) is disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.57

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–18119 Filed 8–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92698; File No. SR–GEMX– 

2021–08] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Amend GEMX’s 

Options Regulatory Fee 

August 18, 2021. 

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 August 9, 

2021, Nasdaq GEMX, LLC (‘‘GEMX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

GEMX’s Pricing Schedule at Options 7, 

Section 5 related to the Options 

Regulatory Fee or ‘‘ORF’’. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated the amendments become 

operative on October 1, 2021. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/gemx/rules, 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 

Currently, GEMX assesses an ORF of 

$0.0018 per contract side as specified in 

GEMX’s Pricing Schedule at Options 7, 

Section 5. The Exchange proposes to 

waive its ORF from October 1, 2021 to 

January 31, 2022, and then recommence 

the ORF on February 1, 2022. 

By way of background, the options 

industry has experienced extremely 

high options trading volumes and 

volatility. This historical anomaly of 

persistent increased options volumes 

has impacted GEMX’s ORF collection 

which, in turn, has caused the Exchange 

to continue to revisit its financial 

forecast to reflect the sustained elevated 

options volumes and volatility. As the 

Exchange continues to monitor the 

amount of revenue collected from the 

ORF to ensure that our ORF collection, 


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3 Participants must record the appropriate 

account origin code on all orders at the time of 

entry of the order. The Exchange represents that it 

has surveillances in place to verify that members 

mark orders with the correct account origin code. 

4 The Exchange uses reports from OCC when 

assessing and collecting the ORF. 

5 See Options Trader Alert 2021–45. 

6 See data from OCC at: https://

www.businesswire.com/news/home/ 

20201202005584/en/OCC-November-2020-TotalVolume-Up-71-Percent-From-a-Year-Ago. 

7 See data from OCC at: https://www.theocc.com/ 

Market-Data/Market-Data-Reports/Volume-andOpen-Interest/Volume-by-Account-Type. 

8 Id. 

in combination with other regulatory 

fees and fines, does not exceed 

regulatory costs, the Exchange has 

found it difficult to determine when 

volumes will return to more normal 

levels. In order to avoid iterative rule 

changes to amend its ORF, the Exchange 

believes it is prudent to instead waive 

its ORF from October 1, 2021 to January 

31, 2022, to permit the Exchange to plan 

future forecasts without the need to 

account for any ORF collection during 

that timeframe. This proposal would 

ensure that revenue collected from the 

ORF, in combination with other 

regulatory fees and fines, would not 

exceed the Exchange’s total regulatory 

costs. GEMX would recommence 

assessing its current ORF rate of $0.0018 

per contract side as of February 1, 2022. 

Furthermore, prior to February 1, 2022, 

GEMX will examine its ORF rate to 

determine if the $0.0018 per contract 

side ORF is justified given the current 

volumes in 2022 as well as the current 

Exchange regulatory expenses at that 

time. GEMX would file a proposed rule 

change to amend its per contract ORF if 

changes are necessary to ensure an 

equitable allocation of reasonable ORF, 

if e.g., the Exchange believes that the 

volumes GEMX experiences in the 

second half of 2021 are likely to persist 

throughout 2022. Of note, GEMX 

proposes to continue to operate with the 

ORF fee waived in January 2022 to 

allow its members and other broker 

dealers time to align their systems for 

February 1, 2022, allowing for time after 

the holiday period which traditionally 

have year-end code freezes in place. 

Collection of ORF 

Currently, GEMX assesses its ORF for 

each customer option transaction that is 

either: (1) Executed by a member on 

GEMX; or (2) cleared by an GEMX 

member at The Options Clearing 

Corporation (‘‘OCC’’) in the customer 

range,3 even if the transaction was 

executed by a non-member of GEMX, 

regardless of the exchange on which the 

transaction occurs.4

ORF Revenue and Monitoring of ORF 

The Exchange monitors the amount of 

revenue collected from the ORF to 

ensure that it, in combination with other 

regulatory fees and fines, does not 

exceed regulatory costs. In determining 

whether an expense is considered a 

regulatory cost, the Exchange reviews 

all costs and makes determinations if 

there is a nexus between the expense 

and a regulatory function. The Exchange 

notes that fines collected by the 

Exchange in connection with a 

disciplinary matter offset ORF. 

Revenue generated from ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, is 

designed to recover a material portion of 

the regulatory costs to the Exchange of 

the supervision and regulation of 

member customer options business 

including performing routine 

surveillances, investigations, 

examinations, financial monitoring, and 

policy, rulemaking, interpretive, and 

enforcement activities. Regulatory costs 

include direct regulatory expenses and 

certain indirect expenses in support of 

the regulatory function. The direct 

expenses include in-house and thirdparty service provider costs to support 

the day-to-day regulatory work such as 

surveillances, investigations and 

examinations. The indirect expenses 

include support from such areas as 

Office of the General Counsel, 

technology, and internal audit. Indirect 

expenses are estimated to be 

approximately 42% of the total 

regulatory costs for 2021. Thus, direct 

expenses are estimated to be 

approximately 58% of total regulatory 

costs for 2021. 

The ORF is designed to recover a 

material portion of the costs to the 

Exchange of the supervision and 

regulation of its members, including 

performing routine surveillances, 

investigations, examinations, financial 

monitoring, and policy, rulemaking, 

interpretive, and enforcement activities. 

Proposal 

Based on the Exchange’s most recent 

review, the Exchange proposes to waive 

ORF from October 1, 2021 to January 31, 

2022, to help ensure that revenue 

collected from the ORF, in combination 

with other regulatory fees and fines, 

does not exceed the Exchange’s total 

regulatory costs. GEMX would 

recommence assessing its current ORF 

rate of $0.0018 per contract side as of 

February 1, 2022. The Exchange issued 

an Options Trader Alert on August 9, 

2021 indicating the proposed rate 

change for October 1, 2021.5

The proposed waiver is based on 

recent options volume which has 

remained at abnormally and 

unexpectedly high levels. Options 

volume in 2021 remains significantly 

high when that volume is compared to 

2019 and 2020 options volume. For 

example, total options contract volume 

in November 2020 was 71% higher than 

the total options contract volume in 

November 2019.6 Below is industry data 

from OCC 7 which illustrates the 

significant increase in volume during 

the fourth quarter of 2020. 

Volume October 2020 November 2020 December 2020 Q4 2020 

Total ......................................................................................... 633,365,184 673,660,858 753,568,354 2,060,594,396 

Customer ................................................................................. 587,707,301 630,297,252 708,037,956 1,926,042,509 

Total ADV ................................................................................ 28,789,326.55 33,683,042.90 34,253,107.00 32,196,787.44 

Customer ADV ......................................................................... 26,713,968.23 31,514,862.60 32,183,543.45 30,094,414.20 

Below is industry data from OCC8

which illustrates the significant increase 

in volume from January 2021 through 

March 2021. The options volume in the 

first quarter of 2021 was higher than the 

fourth quarter of 2020. Also, April and 

May 2021 volumes remain significantly 

high as compared to 2020 options 

volume in general. 

Volume January 2021 February 2021 March 2021 April 2021 May 2021 

Total ....................................................... 838,339,790 823,412,827 898,653,388 711,388,828 718,368,993 

Customer ............................................... 784,399,878 782,113,450 837,247,059 667,208,963 659,913,862 

Total ADV .............................................. 44,123,146.84 43,337,517.20 39,071,886.40 33,875,658.50 35,918,449.70 


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9 The Exchange notes that its regulatory 

responsibilities with respect to member compliance 

with options sales practice rules have largely been 

allocated to FINRA under a 17d–2 agreement. The 

ORF is not designed to cover the cost of that options 

sales practice regulation. 

10 The Exchange will provide members with such 

notice at least 30 calendar days prior to the effective 

date of the change. 

11 The Exchange notes that in connection with 

this proposal, it provided the Commission 

confidential details regarding the Exchange’s 

projected regulatory revenue, including projected 

revenue from ORF, along with a projected 

regulatory expenses. 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(4). 

14 15 U.S.C. 78f(b)(5). 

15 If the OCC clearing member is a GEMX 

member, ORF is assessed and collected on all 

cleared customer contracts (after adjustment for 

CMTA); and (2) if the OCC clearing member is not 

a GEMX member, ORF is collected only on the 

cleared customer contracts executed at GEMX, 

taking into account any CMTA instructions which 

Continued 

Volume January 2021 February 2021 March 2021 April 2021 May 2021 

Customer ADV ....................................... 41,284,204.11 41,163,865.79 36,402,046.04 31,771,855.38 32,995,693.10 

As a result of the historical anomaly 

created by these high options volumes, 

GEMX has no assurance that the 

Exchange’s final costs for 2021 will not 

differ materially from these expectations 

and prior practice, nor can the Exchange 

predict with certainty whether options 

volume will remain at the current level 

going forward. The Exchange notes 

however, that when combined with 

regulatory fees and fines, the revenue 

being generated utilizing the current 

ORF rate may result in revenue in 

excess of the Exchange’s estimated 

regulatory costs for the year. 

Particularly, as noted above, the options 

market has seen a substantial increase in 

volume in 2021 as compared to 2020, 

due in large part to the continued 

extreme volatility in the marketplace as 

a result of the COVID–19 pandemic. 

This unprecedented spike in volatility 

resulted in significantly higher volume 

than was originally projected by the 

Exchange (thereby resulting in 

substantially higher ORF revenue than 

projected). The Exchange therefore 

proposes to waive ORF from October 1, 

2021 to January 31, 2022 to ensure it 

does not exceed its regulatory costs for 

2021. Particularly, the Exchange 

believes that waiving ORF from October 

1, 2021 to January 31, 2022 and 

considering all of the Exchange’s other 

regulatory fees and fines would allow 

the Exchange to continue covering a 

material portion of its regulatory costs, 

while lessening the potential for 

generating excess revenue that may 

otherwise occur using the current rate.9

GEMX would recommence assessing 

its current ORF rate of $0.0018 per 

contract side as of February 1, 2022. 

Until October 1, 2021, the Exchange will 

continue to monitor the amount of 

revenue collected from the ORF to 

ensure that it, in combination with its 

other regulatory fees and fines, does not 

exceed regulatory costs. The Exchange 

would also continue monitoring the 

amount of revenue collected from the 

ORF when it recommences assessing 

ORF on February 1, 2022. If the 

Exchange determines regulatory 

revenues exceed regulatory costs, the 

Exchange will adjust the ORF by 

submitting a fee change filing to the 

Commission and notifying 10 its 

members via an Options Trader Alert.11

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.12 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,13 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members, and other persons using its 

facilities. Additionally, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) 14

requirement that the rules of an 

exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes the proposed 

fee waiver is reasonable because 

customer transactions will be subject to 

no ORF from October 1, 2021 to January 

31, 2022. Moreover, the proposed 

waiver is necessary, so the Exchange 

does not collect revenue in excess of its 

anticipated regulatory costs, in 

combination with other regulatory fees 

and fines, which is consistent with the 

Exchange’s practices. 

The Exchange designed the ORF to 

generate revenues that would be less 

than the amount of the Exchange’s 

regulatory costs to ensure that it, in 

combination with its other regulatory 

fees and fines, does not exceed 

regulatory costs, which is consistent 

with the view of the Commission that 

regulatory fees be used for regulatory 

purposes and not to support the 

Exchange’s business operations. As 

discussed above, however, after review 

of its regulatory costs and regulatory 

revenues, which includes revenues from 

ORF and other regulatory fees and fines, 

the Exchange determined that absent a 

reduction in ORF, it may be collecting 

revenue in excess of its regulatory costs. 

Indeed, the Exchange notes that when 

considering the recent options volume, 

which included an increase in customer 

options transactions, it estimates the 

ORF may generate revenues that may 

cover more than the approximated 

Exchange’s projected regulatory costs. 

As such, the Exchange believes it is 

reasonable and appropriate to waive 

ORF from October 1, 2021 to January 31, 

2022 and recommence assessing ORF on 

February 1, 2022. 

The Exchange also believes the 

proposed fee change is equitable and 

not unfairly discriminatory as no 

member would be assessed an ORF from 

October 1, 2021 to January 31, 2022. 

While the Exchange has assessed and 

collected ORF from January through 

September 2021, but will not collect 

ORF, with this proposal, from October 

2021 through January 2022, the 

Exchange does not believe that it is 

unfairly discriminatory to not assess the 

ORF from October 2021 through January 

2022 because the ORF is designed and 

intended to recover a portion of the 

Exchange’s regulatory costs without 

collecting in excess of those costs. 

Unexpectedly high and sustained 

customer volume has resulted in higher 

revenues from the ORF that, if not 

suspended, will likely result in overcollection of ORF, which would be 

inconsistent with the Exchange’s prior 

representations and undertaking to not 

collect ORF in excess of regulatory 

expenses. The Exchange did not 

decrease the amount of the ORF earlier 

in 2021 because it did not expect, based 

on its prior experience, that customer 

volume would remain abnormally high. 

Also, it is equitable and not unfairly 

discriminatory to recommence the 

assessment of the ORF on February 1, 

2022 because assessing the ORF to each 

member for options transactions cleared 

by OCC in the customer range where the 

execution occurs on another exchange 

and is cleared by a GEMX member is an 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and issuers and other persons 

using its facilities.15


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may result in collecting the ORF from a nonmember. 

16 See Securities Exchange Act Release No. 85140 

(February 14, 2019), 84 FR 5511 (February 21, 2019) 

(SR–GEMX–2019–01) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend the Options Regulatory Fee). The 

Exchange also noted in this rule change that, ‘‘As 

a result, the costs associated with administering the 

customer component of the Exchange’s overall 

regulatory program are materially higher than the 

costs associated with administering the noncustomer component (e.g., member proprietary 

transactions) of its regulatory program.’’ Further, 

the Exchange notes that it has broad regulatory 

responsibilities with respect to activities of its 

members, irrespective of where their transactions 

take place. Many of the Exchange’s surveillance 

programs for customer trading activity may require 

the Exchange to look at activity across all markets, 

such as reviews related to position limit violations 

and manipulation. Indeed, the Exchange cannot 

effectively review for such conduct without looking 

at and evaluating activity regardless of where it 

transpires. In addition to its own surveillance 

programs, the Exchange also works with other SROs 

and exchanges on intermarket surveillance related 

issues. Through its participation in the Intermarket 

Surveillance Group (‘‘ISG’’) the Exchange shares 

information and coordinates inquiries and 

investigations with other exchanges designed to 

address potential intermarket manipulation and 

trading abuses. Accordingly, there is a strong nexus 

between the ORF and the Exchange’s regulatory 

activities with respect to customer trading activity 

of its members.’’ 

17 The Exchange adopted the ORF in 2013. See 

Securities Exchange Act Release No. 70200 (August 

14, 2013), 78 FR 51242 (August 20, 2013) (SRTopaz-2013–01). GEMX amended its ORF in 2017, 

but no rate change occurred at that time. See 

Securities Exchange Act Release No. 81342 (August 

8, 2017), 82 FR 37971 (August 14, 2017) (SR– 

GEMX–2017–31). 

18 See Securities Exchange Act Release No. 91420 

(March 26, 2021), 86 FR 17223 (April 1, 2021) (SR– 

ISE–2021–04) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

ISE’s Pricing Schedule at Options 7, Section 9, Part 

C To Reduce the Options Regulatory Fee). 

19 See Securities Exchange Act Release Nos. 

85127 (February 13, 2019), 84 FR 5173 (February 

20, 2019) (SR–MRX–2019–03). 

20 Of note, prior to February 1, 2019, MRX 

assessed no ORF thereby creating a calendar year 

where members were assessed no ORF for a period 

similar to what is proposed. 

21 15 U.S.C. 78s(b)(3)(A). 

22 17 CFR 240.19b–4(f). 

The Exchange believes recommencing 

the ORF on February 1, 2022 at the same 

rate, unless options volumes or the 

Exchange’s regulatory expense at that 

time warrant a proposed rule change, 

continues to ensure fairness by 

assessing higher fees to those members 

that require more Exchange regulatory 

services based on the amount of 

customer options business they 

conduct. As noted in prior ORF rule 

changes which set the current ORF rate 

of $0.0018 per contract side, regulating 

customer trading activity is much more 

labor intensive and requires greater 

expenditure of human and technical 

resources than regulating non-customer 

trading activity, which tends to be more 

automated and less labor-intensive. For 

example, there are costs associated with 

main office and branch office 

examinations (e.g., staff expenses), as 

well as investigations into customer 

complaints and the terminations of 

registered persons.16

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 does not believe that this 

proposal creates an unnecessary or 

inappropriate intra-market or intermarket burden on competition for 

several reasons. First, while GEMX’s 

ORF has been not [sic] been amended 

since its inception in 2013,17 other 

exchanges have amended their ORF. For 

example, ISE amended its ORF rate on 

April 1, 2021, from $0.0020 to $0.0018 

per contract side.18 With respect to that 

filing, members who either executed a 

transaction on ISE or cleared a 

transaction at OCC in the customer 

range would have been assessed a 

higher ORF for a transaction executed 

on ISE on March 31, 2021 ($0.0020 per 

contract side) as compared to April 1, 

2021 ($0.0018 per contract side). 

Second, GEMX’s regulatory costs have 

varied over time. For example, if GEMX 

received payment of a fine from a 

disciplinary action, that fine would 

offset regulatory costs and would cause 

GEMX to require less regulatory revenue 

for a particular period. The changing 

regulatory costs would impact the ORF 

assessed by GEMX to members. Third, 

options markets assess ORF at different 

rates. For instance, today, Nasdaq MRX, 

LLC (‘‘MRX’’) assesses a lower ORF of 

$0.0004 per contract side.19 MRX has 

assessed this rate since February 1, 

2019.20 Depending on where a customer 

order is executed, a member could be 

assessed a much different ORF. For 

example, in the case where a customer 

order is sent to GEMX and routed to 

MRX, and a non-member cleared that 

transaction, the GEMX ORF of $0.0018 

would not be assessed to the member 

who executed the transaction or cleared 

the transaction, rather the MRX rate of 

$0.0004 per contract side would be 

assessed. In that same scenario 

presuming a non-member cleared the 

transaction, if the customer order could 

have executed on GEMX instead of 

routing away the member would have 

been assessed the GEMX ORF of 

$0.0018 per contract side. The customer, 

in that instance, would have no 

knowledge of where the order could be 

executed, as the liquidity profile of each 

exchange may differ at that exact 

moment. Therefore, members could be 

assessed a different ORF on the same 

day on the same transaction based on 

routing decisions, and in those cases the 

member would continue to benefit from 

the regulatory program available on 

each market and discover where the 

liquidity is available, irrespective of any 

ORF rate differentials across markets. 

The Exchange believes recommencing 

the ORF on February 1, 2022 at the same 

rate, unless options volumes or the 

Exchange’s regulatory expense at that 

time warrant a proposed rule change, 

does not create an undue burden on 

competition because the ORF applies to 

all customer activity, thereby raising 

regulatory revenue to offset regulatory 

expenses. It also supplements the 

regulatory revenue derived from noncustomer activity. Recommencing the 

assessment of the current ORF does not 

create an unnecessary or inappropriate 

inter-market burden on competition 

because it is a regulatory fee that 

supports regulation in furtherance of the 

purposes of the Act. The Exchange is 

obligated to ensure that the amount of 

regulatory revenue collected from the 

ORF, in combination with its other 

regulatory fees and fines, does not 

exceed regulatory costs. 

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) 

of the Act 21 and paragraph (f) of Rule 

19b–4 22 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 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 will institute proceedings 

to determine whether the proposed rule 

change 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. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 161 / Tuesday, August 24, 2021 / Notices 47359 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90684 

(December 16, 2020) 85 FR 83637 (December 22, 

2020) (SR–CboeBZX–2020–091) (the ‘‘Initial 

Filing’’). 

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 No. SR– 

GEMX–2021–08 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 No. 

SR–GEMX–2021–08. 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 No. 

SR–GEMX–2021–08, and should be 

submitted on or before September 14, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–18122 Filed 8–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92701; File No. SR– 

CboeBZX–2021–056] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To Allow the 

Invesco Focused Discovery Growth 

ETF and Invesco Select Growth ETF To 

Strike and Publish an Intra-Day NAV 

and an End-of-Day NAV 

August 18, 2021. 

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 August 

12, 2021, Cboe BZX Exchange, Inc. filed 

with the Securities and Exchange 

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 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule 

amendment to allow the Invesco 

Focused Discovery Growth ETF and 

Invesco Select Growth ETF (each a 

‘‘Fund’’ and, collectively, the ‘‘Funds’’), 

each a series of the Invesco Actively 

Managed Exchange-Traded Fund Trust 

(the ‘‘Trust’’), to strike and publish an 

intra-day net asset value (‘‘NAV’’) and 

an end-of-day NAV. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

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 proposed and the 

Commission approved a rule to permit 

the listing and trading of the Shares of 

each Fund.3 On December 22, 2020, the 

Exchange commenced trading in the 

Shares of each Fund. The Exchange now 

proposes to continue listing and trading 

the Shares of each Fund pursuant to 

Rule 14.11(m) and to permit the Funds 

to strike and publish a single intra-day 

NAV in addition to the current practice 

of striking and publishing an end-of-day 

NAV. This proposal is designed to assist 

market makers in assessing and 

managing their intra-day risk, provide 

greater flexibility in creating and 

redeeming shares and provide the 

marketplace with additional 

information about the Funds. The 

Exchange believes this feature of the 

Funds will allow market participants to 

better assess and manage their intra-day 

risk in making a market in the Funds’ 

shares, and provide additional certainty 

around intra-day price and hedging for 

the Funds’ shares. 

The NAV represents the value of a 

fund’s assets minus its liabilities 

divided by the number of shares 

outstanding and is used in valuing 

exchange-traded products (‘‘ETPs’’), 

including Tracking Fund Shares. By 

way of background, an ETP issues 

shares that can be bought or sold 

throughout the day in the secondary 

market at a market-determined price. 

Authorized participants that have 

contractual arrangements with the ETP 

(and/or its distributor) purchase and 

redeem ETP shares directly from the 

ETP in blocks called creation units at a 

price equal to the next-calculated NAV, 

and may then purchase or sell 

individual ETP shares in the secondary 

market at market-determined prices. 

ETP shares trade at market prices, but 

the market price typically will be more 

or less than the fund’s NAV per share 

due to a variety of factors, including the 

underlying prices of the ETP’s assets 

and the demand for the ETP shares. 

Nonetheless, an ETP’s market price is 

generally kept close to the ETP’s end-ofday NAV because of the arbitrage 

function inherent to the structure of the 

ETP. An arbitrage opportunity is 


lotter on DSK11XQN23PROD with NOTICES1