52518 Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. 

18 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. 

the development and maintenance of 

other business initiatives and risk 

management products. 

As noted above, the Exchange will 

retain the ability for Members to utilize 

Kill Switch to cancel orders and prevent 

new order submission. The Exchange 

does not believe that decommissioning 

the quote removal portion of the Kill 

Switch tool for Market Makers is 

unfairly discriminatory because Market 

Makers are professional traders with 

their own risk settings, and have more 

sophisticated infrastructures than most 

other market participants. Furthermore, 

as discussed above, the Exchange has 

determined that Market Makers 

currently use the mass purge 

functionality on SQF to pull their 

quotes from the market instead of using 

the quote removal Kill Switch tool to 

achieve the same result. 

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 

proposed rule change will allow the 

Exchange to decommission a risk 

management tool that is rarely, if ever, 

used on the Exchange. As discussed 

above, Market Makers currently have a 

variety of similar tools like the quote 

removal Kill Switch that allow them to 

pull their quotes from the market and 

inhibit the entry of new quotes, 

including the mass quote purge 

functionality on SQF that the Exchange 

has found Market Makers use much 

more frequently than the quote removal 

Kill Switch to achieve the same result. 

As noted above, the Exchange will 

retain the ability for Members to utilize 

Kill Switch to cancel orders and prevent 

new order submission. The Exchange 

does not believe that decommissioning 

the quote removal portion of the Kill 

Switch tool for Market Makers will 

impose an undue burden on 

competition because Market Makers are 

professional traders with their own risk 

settings, and have more sophisticated 

infrastructures than most other market 

participants. 

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) of the Act 16 and Rule 19b– 

4(f)(6) thereunder.17

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. 

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– 

MRX–2021–10 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–MRX–2021–10. 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–MRX–2021–10 and should 

be submitted on or before October 12, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–20335 Filed 9–20–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93010; File No. SR–GEMX– 

2021–09] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Options 3, 

Section 17, To Decommission the 

Exchange’s Quote Removal Kill Switch 

Functionality 

September 15, 2021. 

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 

September 2, 2021, 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 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices 52519 

4Today, Market Makers can log in through a 

graphical user interface (‘‘GUI’’) to send a message 

to the Exchange to initiate the quote removal or 

order cancellation Kill Switch. See Options 3, 

Section 17(a)(2). The Exchange also currently offers 

an order cancellation Kill Switch through its order 

entry ports (i.e., FIX, OTTO, and Precise) as an 

alternative to its GUI Kill Switch. See Options 3, 

Section 17(a)(1). The Exchange is not amending the 

port Kill Switch functionality with this proposal. 

5The term ‘‘System’’ means the electronic system 

operated by the Exchange that receives and 

disseminates quotes, executes orders and reports 

transactions. See Options 1, Section 1(a)(49). 

6 Identifiers include Exchange accounts, ports, 

and/or badges or mnemonics. Thus, a Market Maker 

using Kill Switch may elect to remove quotes for 

an individual Identifier (e.g., badge) or any group 

of Identifiers (e.g., all badges within one Market 

Maker firm). Permissible groups must reside within 

a single Member firm. 

7See Options 3, Section 17(a)(2) and (3). The GUI 

Kill Switch tool also currently allows Members to 

cancel open orders and prevent new order 

submission. As noted above, the Exchange also 

offers an order cancellation Kill Switch through its 

order entry ports. See supra note 3. The Exchange 

is not proposing to decommission the order 

cancellation portion of the GUI Kill Switch or the 

order cancellation port Kill Switch at this time. 

8No Market Makers have used the Kill Switch for 

quote removal in 2021. 

9See Options Trader Alert #2021–49. 

10 ‘‘SQF’’ is an interface that allows Market 

Makers to connect, send, and receive messages 

related to quotes, Immediate-or-Cancel Orders, and 

auction responses to the Exchange. Features include 

the following: (1) Options symbol directory 

messages (e.g., underlying instruments); (2) System 

event messages (e.g., start of trading hours messages 

and start of opening); (3) trading action messages 

(e.g., halts and resumes); (4) execution messages; (5) 

quote messages; (6) Immediate-or-Cancel Order 

messages; (7) risk protection triggers and purge 

notifications; (8) opening imbalance messages; (9) 

auction notifications; and (10) auction responses. 

The SQF Purge Interface only receives and notifies 

of purge requests from the Market Maker. Market 

Makers may only enter interest into SQF in their 

assigned options series. See Supplementary 

Material .03(c) to Options 3, Section 7. 

11See Options 3, Section 19. 

12The rapid fire risk controls automatically 

remove Market Maker quotes submitted over SQF 

when certain firm-set thresholds are met. Once the 

thresholds are triggered, the Market Maker must 

send a re-entry indicator to re-enter the System. See 

Options 3, Section 15(a)(3)(B). 

13When the SQF Port detects the loss of 

communication with a Member’s Client Application 

because the Exchange’s server does not receive a 

Heartbeat message for a certain time period (‘‘nn’’ 

seconds), the Exchange will automatically logoff the 

Member’s affected Client Application and 

automatically cancel all of the Member’s open 

quotes pursuant to Section 18(e). Quotes will be 

cancelled across all Client Applications that are 

associated with the same GEMX Market Maker ID 

and underlying issues. See Options 3, Section 18(b). 

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

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

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 

decommission the Exchange’s quote 

removal Kill Switch functionality at 

Options 3, Section 17. 

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 

The Exchange proposes to amend 

Options 3, Section 17 to decommission 

the Exchange’s quote removal Kill 

Switch functionality, which is an 

optional tool that allows Market Makers 

to initiate a message 4 to the System 5 to 

promptly cancel and restrict their quote 

activity on GEMX, or across both GEMX 

and its affiliate, Nasdaq ISE, in either 

case as set by the Market Maker. Market 

Makers may submit a Kill Switch 

request to the System for certain 

identifier(s) (‘‘Identifier’’) on either a 

user or group level.6 If quotes are 

cancelled by the Market Maker using 

Kill Switch, it will result in the removal 

of all quotes requested for the 

Identifier(s). The Market Maker will be 

unable to enter any additional quotes for 

the affected Identifier(s) until the 

Market Maker sends a re-entry request 

to the Exchange.7

Due to the lack of demand for the 

quote removal Kill Switch by Market 

Makers, the Exchange proposes to 

decommission this optional tool by the 

end of Q4 2021.8 Through consultation 

with individual Market Maker firms 

prior to filing this rule change, the 

Exchange did not receive any negative 

feedback for its proposal to 

decommission the quote removal Kill 

Switch functionality. The Exchange has 

also provided all market participants 

with advance notice that it will 

decommission this functionality in Q4 

2021.9 With the proposed changes, the 

Exchange seeks to streamline its product 

offerings and to reallocate Exchange 

resources to other business and risk 

management initiatives. While the 

Exchange will no longer offer this 

optional functionality to Market Makers, 

it will continue to offer similar quote 

management tools that would assist 

Market Makers with their efforts to 

manage their risk with respect to quotes 

on the Exchange. For example, Market 

Makers are currently able to send a mass 

purge request through Specialized 

Quote Feed (‘‘SQF’’) to pull their 

existing quotes from the market and 

inhibit the entry of new quotes until the 

Market Maker sends a message to the 

Exchange to re-enter the System.10

Indeed, the Exchange has found that 

Market Makers utilize this SQF purge 

functionality instead of the Kill Switch 

quote removal tool when they want to 

remove their quotes from the market. 

In addition, all Members, including 

Market Makers, may contact the 

Exchange’s market operations staff to 

request that the Exchange cancel any of 

their existing bids, offers, or orders in 

any series of options.11 Furthermore, the 

Exchange will continue to have 

mandatory System-enforced risk 

mechanisms that automatically remove 

quotes for the Market Maker once 

certain pre-set thresholds or conditions 

are met. This includes risk protections 

such as rapid fire risk controls 12 and 

cancel on disconnect.13

To effect the decommissioning of the 

quote removal Kill Switch, the 

Exchange proposes to amend Options 3, 

Section 17 by eliminating all references 

to quote cancellation within this Rule. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,14 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,15

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. 

Additionally, the Exchange believes that 

the proposed rule change is consistent 

with the Section 6(b)(5) requirement 

that the rules of an exchange not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

Specifically, the Exchange does not 

believe that the proposed rule change 

will affect the protection of investors or 

the public interest or the maintenance of 

a fair and orderly market because no 

Market Makers have used the quote 

removal Kill Switch risk control in 


lotter on DSK11XQN23PROD with NOTICES1
52520 Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. 18 17 CFR 200.30–3(a)(12). 

2021. In addition, the Exchange notes 

that the use of this tool is completely 

optional, and the Exchange will 

continue to offer Market Makers similar 

risk management tools such as the SQF 

mass quote purge functionality. As 

discussed above, the Exchange has 

found that Market Makers use the SQF 

purge functionality much more 

frequently than the quote removal Kill 

Switch to pull their quotes from the 

market. Furthermore, Market Makers 

will retain the ability to contact market 

operations staff to manually purge their 

quotes from the market. In addition, the 

Exchange will continue to implement 

mandatory System-enforced risk 

mechanisms that automatically remove 

quotes for the Market Maker once 

certain pre-set thresholds or conditions 

are met (i.e., rapid fire and cancel on 

disconnect). 

Also, the Exchange believes that the 

low usage rate for the quote removal Kill 

Switch does not warrant the continuous 

resources necessary for System support 

of such tools. As a result, the Exchange 

also believes that the proposal will 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

allowing the Exchange to reallocate 

System capacity and resources currently 

used to maintain this functionality to 

the development and maintenance of 

other business initiatives and risk 

management products. 

As noted above, the Exchange will 

retain the ability for Members to utilize 

Kill Switch to cancel orders and prevent 

new order submission. The Exchange 

does not believe that decommissioning 

the quote removal portion of the Kill 

Switch tool for Market Makers is 

unfairly discriminatory because Market 

Makers are professional traders with 

their own risk settings, and have more 

sophisticated infrastructures than most 

other market participants. Furthermore, 

as discussed above, the Exchange has 

determined that Market Makers 

currently use the mass purge 

functionality on SQF to pull their 

quotes from the market instead of using 

the quote removal Kill Switch tool to 

achieve the same result. 

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 

proposed rule change will allow the 

Exchange to decommission a risk 

management tool that is rarely, if ever, 

used on the Exchange. As discussed 

above, Market Makers currently have a 

variety of similar tools like the quote 

removal Kill Switch that allow them to 

pull their quotes from the market and 

inhibit the entry of new quotes, 

including the mass quote purge 

functionality on SQF that the Exchange 

has found Market Makers use much 

more frequently than the quote removal 

Kill Switch to achieve the same result. 

As noted above, the Exchange will 

retain the ability for Members to utilize 

Kill Switch to cancel orders and prevent 

new order submission. The Exchange 

does not believe that decommissioning 

the quote removal portion of the Kill 

Switch tool for Market Makers will 

impose an undue burden on 

competition because Market Makers are 

professional traders with their own risk 

settings, and have more sophisticated 

infrastructures than most other market 

participants. 

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) of the Act 16 and Rule 19b– 

4(f)(6) thereunder.17

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. 

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–2021–09 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–2021–09. 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–2021–09 and 

should be submitted on or before 

October 12, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–20336 Filed 9–20–21; 8:45 am] 

BILLING CODE 8011–01–P 


lotter on DSK11XQN23PROD with NOTICES1