46564 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Rule 716(c). 

4See Rule 716(a). 

5A ‘‘Response’’ is an electronic message that is 

sent by members in response to a broadcast 

message. See Rule 716(b). 

6See Supplementary Material .04 to Rule 716. 

7Responses and orders and quotes on the order 

book at the time the block order is executed that 

are priced better than the block execution price are 

executed at the block execution price. See Rule 

716(c)(2)(i). 

8See Rule 716(c)(2). 

9The term ‘‘Professional Order’’ means an order 

that is for the account of a person or entity that is 

not a Priority Customer. See Rule 100(a)(37C). 

10See Rule 716(d). 

11See Rule 716(e). 

12See Rule 723. 

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– 

CHX–2017–13 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–CHX–2017–13. 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 Web site (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 changes 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 Web site 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 CHX. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–CHX–2017– 

13 and should be submitted on or before 

October 26, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–21401 Filed 10–4–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81770; File No. SR–GEMX– 

2017–43] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 716(c) on 

the Block Order Mechanism 

September 29, 2017. 

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 

September 18, 2017, 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 amend 

Rule 716(c) to more accurately describe 

the allocation methodology used in the 

Block Order Mechanism, and add 

language regarding how the block 

execution price is determined. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at www.ise.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 Block Order Mechanism is a 

process by which a member can obtain 

liquidity for the execution of blocksized orders,3 defined as orders for fifty 

contracts or more.4 When an order is 

entered in the Block Order Mechanism, 

that order is exposed to members who 

are given an opportunity to respond 

with the prices and sizes at which they 

would be willing to trade with the 

block-sized order.5 The exposure period 

is designated by the Exchange via 

circular, but must be no less than 100 

milliseconds and no more than 1 

second.6 At the conclusion of the 

exposure period, either an execution 

will occur at a single block execution 

price,7 or the order will be cancelled.8

The purpose of the proposed rule 

change is to amend Rule 716(c) to more 

accurately describe the allocation 

methodology used in the Block Order 

Mechanism, and add language regarding 

how the block execution price is 

determined. The Exchange believes that 

these changes will increase 

transparency around the operation of 

the Block Order Mechanism to the 

benefit of members and market 

participants. 

Currently, Rule 716(c)(2)(ii) provides 

that Responses, quotes, and Professional 

Orders 9 at the block execution price 

will participate in the execution of the 

block-size order according to Rule 

713(e)—i.e., the Exchange’s regular 

allocation rule. As implemented today, 

however, interest that is executed in the 

Block Order Mechanism follows the 

customer priority pro-rata allocation 

methodology designed for the 

Exchange’s auction mechanisms, 

including, for example, the Facilitation 

Mechanism,10 Solicited Order 

Mechanism,11 and Price Improvement 

Mechanism,12 with the exception that 

those two-sided auction mechanisms 

also allocate contracts against the contra 

order. This auction allocation 

methodology is similar to the 

Exchange’s regular allocation 

methodology but does not provide 

enhanced allocations to the Primary 

Market Maker (‘‘PMM’’) pursuant to 


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Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices 46565 

13Supplementary Material .01(b) to Rule 713 

provides that, if the PMM is quoting at the best 

price, it has participation rights equal to the greater 

of the proportion of the total size at the best price 

represented by the size of its quote, or a percentage 

allocation entitlement based on the number of other 

Professional Orders and market maker quotations at 

the best price. 

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

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

16See supra notes 10–12 and accompanying text. 

17 15 U.S.C. 78f(b)(8). 

Rule 713(e) and Supplementary Material 

.01(b) to Rule 713.13 The Exchange 

therefore proposes to amend Rule 

716(c)(2)(ii) to provide that, at the block 

execution price, Priority Customer 

Orders and Priority Customer Responses 

will be executed first in time priority, 

and then quotes, Professional Orders, 

and Professional Responses will 

participate in the execution of the blocksize order based upon the percentage of 

the total number of contracts available 

at the block execution price that is 

represented by the size of the quote, 

Professional Order, or Professional 

Response. In addition, the Exchange 

proposes to specify in Rule 716(c)(2)(i) 

that interest that is priced better than 

the block execution price is executed in 

full. In particular, the Exchange 

proposes to amend this rule to state that 

bids (offers) on the Exchange at the time 

the block order is executed that are 

priced higher (lower) than the block 

execution price, as well as Responses 

that are priced higher (lower) than the 

block execution price, will be executed 

in full at the block execution price. 

Although Rule 716(c)(2)(ii) described 

above explains how allocations are 

handled at the block execution price, 

the Exchange believes that additional 

the additional clarity that interest that is 

priced better than the block execution 

price is executed in full would be 

helpful to members. With these two 

proposed changes, Rule 716(c) will 

more accurately describe the allocation 

methodology used in the Block Order 

Mechanism. 

Furthermore, the Exchange proposes 

add language to Rule 716(c)(2)(i) that 

explains the price at which orders 

entered into the Block Order 

Mechanism are executed. In particular, 

the Exchange proposes to state that 

Responses, orders, and quotes will be 

executed at a single block execution 

price that is the price for the block-size 

order at which the maximum number of 

contracts can be executed consistent 

with the member’s instruction. For 

example, if a member enters a blocksized order to buy 100 contracts at $1.00 

into the Block Order Mechanism, and 

members enter Response A to sell 50 

contracts at $0.90 and Response B to sell 

40 contracts at $0.95, the block 

execution price would be $0.95 as this 

is the price at which the maximum 

number of contracts could be executed. 

The block-sized order and both 

Responses would then be executed at 

this single block execution price. 

Responses A and B would be executed 

in full since there is sufficient size to 

execute both Responses against the 

block-size order. In addition, if two 

other members also enter Responses C 

(Priority Customer) and D (non-Priority 

Customer) to sell at $0.98 for 10 

contracts each, the block execution 

price would be $0.98 as additional 

contracts could be executed at that 

price. In that instance, Responses A and 

B, which are priced better than the 

block execution price, would be 

executed in full, while Responses B and 

C, which are priced at the block 

execution price, would participate in 

accordance with the allocation 

methodology described in this proposed 

rule change—i.e., the remaining 10 

contracts would go to Response C, 

which is a Priority Customer Response. 

The Block Order Mechanism is designed 

to provide an opportunity for members 

to receive liquidity for their block-sized 

orders and therefore trades at a price 

that allows the maximum number of 

contracts of such order to be executed 

against Responses entered to trade 

against the block-size order and interest 

on the Exchange’s order book. The 

Exchange believes that describing how 

the block execution price is determined 

in Rule 716(c)(2)(i) will increase 

transparency around pricing of 

executions in the Block Order 

Mechanism. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the 

Act.14 In particular, the proposal is 

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

Act,15 because is designed to promote 

just and equitable principles of trade, 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed changes to the allocation 

language in Rule 716(c)(2)(i)–(ii) are 

consistent with the protection of 

investors and the public interest as the 

proposed allocation language more 

accurately reflects the Exchange’s 

process for allocating contracts executed 

in the Block Order Mechanism. 

Although the Exchange’s allocation rule 

for the Block Order Mechanism 

currently references the allocation 

process for regular trading, the 

allocation methodology does not 

include certain parts of the regular 

allocation procedure. In particular, the 

Exchange does not grant any special 

allocation to the PMM for interest 

executed in the Block Order 

Mechanism. The Exchange believes that 

it is appropriate to not provide an 

enhanced allocation entitlement to the 

PMM for interest executed in the Block 

Order Mechanism, as the Block Order 

Mechanism provides an auction process 

that does not rely on market maker 

quoting and other obligations to source 

liquidity. Furthermore, the Exchange 

believes that it is helpful to explain in 

this rule that interest that is priced 

better than the block execution price 

would be executed in full. The 

allocation process used for the Block 

Order Mechanism is similar to how the 

Exchange allocates contracts in other 

auction mechanisms, including, for 

example, the Facilitation Mechanism, 

Solicited Order Mechanism, and Price 

Improvement Mechanism, with the 

exception that those two-sided auction 

mechanisms also allocate contracts 

against the contra order.16

The Exchange also believes that the 

proposed changes to describe how the 

block execution price is determined is 

consistent with the protection of 

investors and the public interest as this 

change will increase transparency 

around the price at which interest is 

executed in the Block Order 

Mechanism. As explained above, the 

Block Order Mechanism is designed to 

provide an opportunity for members to 

receive liquidity for their block-sized 

orders and therefore trades at a price 

that allows the maximum number of 

contracts of such order to be executed 

against Responses entered to trade 

against the block-size order and interest 

on the Exchange’s order book. The 

Exchange believes that describing how 

the block execution price is determined 

in Rule 716(c)(2)(i) will increase 

transparency around pricing of 

executions in the Block Order 

Mechanism. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,17 the Exchange does not believe 

that the proposed rule change will 

impose any burden on intermarket or 

intramarket competition that is not 

necessary or appropriate in furtherance 


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46566 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices 

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

19 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. 

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 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. 

of the purposes of the Act. The 

proposed rule change is designed to 

correct the Exchange’s rules to more 

accurately reflect the handling of 

auctions in the Block Order Mechanism. 

No changes are proposed to the 

operation of the Exchange’s trading 

system, and no members will be 

impacted by the proposed rule, which 

merely reflects current functionality 

offered to members that trade in the 

Block Order Mechanism. The proposed 

rule change is therefore not designed to 

impose any significant burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 18 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.19

A proposed rule change filed under 

Rule 19b–4(f)(6) 20 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),21 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange requests that the 

Commission waive the 30-day operative 

delay. The Exchange notes that a waiver 

is consistent with the protection of 

investors and the public interest 

because it will allow the Exchange to 

correct its Block Order Mechanism rules 

to reflect the current functionality of the 

system without undue delay. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Accordingly, the 

Commission hereby waives the 30-day 

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: (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–2017–43 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–2017–43. 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 Web site (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 Web site 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; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–GEMX– 

2017–43 and should be submitted on or 

before October 26, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–21406 Filed 10–4–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81766; File No. SR– 

NYSEArca–2017–86] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To List and Trade Shares 

of the JPMorgan Managed Futures ETF 

Under NYSE Arca Rule 8.600–E 

September 29, 2017. 

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 

September 14, 2017, NYSE Arca, Inc. 

(‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 self-regulatory 

organization. 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 list and 

trade shares of the following under 

NYSE Arca Rule 8.600–E (‘‘Managed 

Fund Shares’’): JPMorgan Managed 

Futures ETF. The proposed change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 


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