MEMORANDUM							July 27, 2005

SUBJECT: 		Data Evaluation Records (DER) for the Product Chemistry of
Iodine

From:			A. Najm Shamim, Ph.D., Chemist

Regulatory Management Branch II

Antimicrobials Division (7510C)

To:			Ben Chambliss, Team Leader,

Regulatory Management Branch II

Antimicrobials Division (7510C)

Thru:			Tim McMahon, Senior Toxicologist and Chair: AD Tox Committee

Antimicrobials Division (7510C)

And

Michelle Centra, Member ADTC and Science Coordinator for Iodine-Iodophor
RED

Regulatory Management Branch II

Antimicrobials Division (7510C)

And

Heather Garvie, CRM for Iodine/Iodophor RED

Regulatory Management Branch II

Antimicrobials Division (&510C)

And

Mark Hartman, Chief

Regulatory Management Branch II

Antimicrobials Division

PRODUCT CHEMISTRY CHAPTER

IODINE

A.  Chemical Overview

The chemical Iodine is most commonly used in: sanitation, animal feed
and pharmaceutical production.

B.  Chemical Identification

Name:			Iodine

Chemical Family: 		Halogen

Common/Trade Names:	None

CAS Number:		7553-56-2

Molecular Formula:		I2

C.  Physical/Chemical Properties

The following characteristics have been reported for iodine:

Technical Grade Active Ingredient (TGAI):

Molecular Weight:			253.809

Color:				Bluish-black

Physical State:			Solid; scales or plates

Specific gravity:			4.93

Dissociation Constant:		No data available

pH:				No data available

Stability:			No data available

Melting point:			113.6(C

Boiling point:                                      185.24(C

Water Solubility:			330mg/L at 25(C

Log Kow				0.40

Vapor Pressure:			0.305 mm Hg at 25oC

POTASSIUM  IODIDE

A.  Chemical Overview

The chemical Potassium iodide is most commonly used in: sanitation,
animal feed, catalysts, and for treatment of radioiodide poisoning
resulting from nuclear accidents.

B.  Chemical Identification

Name:			Potassium iodide

Chemical Family: 		Halogen

Common/Trade Names:	None

CAS Number:		7681-11-0

Molecular Formula:		KI

C.  Physical/Chemical Properties

The following characteristics have been reported for potassium iodide:

Technical Grade Active Ingredient (TGAI):

Molecular Weight:			166.02

Color:				Colorless or white

Physical State:			Solid; crystals, granules, or powder

Specific gravity:			3.12

Dissociation Constant:		N/A: Completely ionized in aqueous medium

pH:				No data available

Stability:			Stable , but turn yellowish over prolonged period of time

Melting point:			680(C

Boiling point:                                      1323(C

Water Solubility:			1429 g/L at 25(C

pH;				Aqueous Solution: neutral to basic: 7-9

Log Kow:			0.04

Vapor Pressure:			9.9 x 10-18 mm Hg

SODIUM IODIDE

	Chemical Over view:

This chemical is used in sanitization.

CHEMICAL IDENTIFICATION:

Name:				Sodium Iodide

Chemical Family:	Halogen

Common/Trade Name:	None

CAS#:				7681-82-5

Molecular Formula:	NaI

Physical/Chemical Properties:

Following Characteristics have been reported for Technical Grade Active
Ingredient(TGAI):

Molecular Weight:	149.89

Color:				White, which on prolonged exposure to air turns brown as it
releases Iodine

Physical State:		Solid

Melting Point:		321 o C

Boiling Point:		732 o C

Specific Gravity:	3.67

pH:				Basic in aqueous medium: 8- 9.5

Stability:			Delinquent, absorb moisture from air and become brown

Water Solubility:	22 g/L

Dissociation Constant:	N/A: Completely ionized in water.

Log Kow			0.04

Henry Law Constant:	2.8 x10-23 atm-m3/mol

Vapor Pressure:		9.9 x 10-18 mm Hg

AA.  Chemical Overview of  Iodophors4

I. Subgroup A (Propoxyethoxy (PO/EO) Copolymer Carriers)

Butoxypolypropoxypolyethoxyethanol

Butoxypolypropoxypolyethoxyethanol is synthesized by the ethoxylation
reaction of

propylene oxide (PO) and ethylene oxide (EO) with a butanol "starter."
For iodophor

production, so-called block copolymers are used. In the synthesis of
these molecules, PO

and EO are added in sequential steps (rather than simultaneously) to
form "blocks" of

polypropoxy and polyethoxy units within the molecule. The final
polyalkylene glycol

(PAG) is not a single compound but is a mixture of polymer chains which
have an

approximate normal distribution around the desired molecular weight. The
molecular

weights used in iodophor production range from 2000 to 4000 a.m.u.

Polypropoxypolyethoxyethanol

Polypropoxypolyethoxyethanol is synthesized by the ethoxylation reaction
of propylene

oxide (PO) and ethylene oxide (EO) with a water "starter." Except for
the initiator, these

polymers are the same as the butoxypolypropoxypolyethoxyethanol
carriers.

Alkyl(polypropoxy)polyethoxyethanol

The alkyl EO and PO/EO carriers,
alpha-alkyl-omega-hydroxypoly(oxyethylene) and alkyl (C12-15)
poly(oxypropylene)poly(oxyethylene), are synthesized by the ethoxylation
reaction of propylene oxide (PO) and/or ethylene oxide (EO) with a
longer alkyl chain (than butanol) "starter". The
alpha-alkyl-omega-hydroxypoly(oxyethylene) is a linear alcohol
ethoxylate identical to those used extensively in soaps, detergents, and
many other common products. Except for the initiator, the alkyl (C12-15)
poly(oxypropylene)- poly(oxyethylene) polymers are the same as the
butoxypolypropoxypolyethoxyethanol carriers and the approach to the
toxicology profile is identical.

Structurally-related Polyalkylene Glycols (used in toxicological
evaluation of Subgroup A)

Polyethylene glycols (PEGs; CAS No. 25322-68-3) have been used
extensively in thousands of applications including drug excipients,
direct food additives, cosmetics, and many others that lead to
substantial human contact. These products are produced in ethoxylation
reactions similar to those for the Iodophor carriers and are essentially
the same chemicals without the propylene oxide components. Polypropylene
glycols (PPG) are similar and a FIFRA Registered fly repellent,
Stabilene, is simply the polypropylene glycol equivalent of a PEG with a
molecular weight of approximately 700 a.m.u.  The following is the
chemical structure for PEG:

II. Subgroup B (Phenoxypolyethoxyethanol Carriers)

Nonylphenoxypolyethoxyethanol

Nonylphenoxypolyethoxyethanols (nonylphenol polyethoxylates; NPE; CAS
No. 9016-45-9 or 26027-38-3) are commonly used surfactants in industrial
cleaners, pesticide adjuvants, and, for the most commonly made 9-mole
ethoxylate, spermicides. A wide range of ethoxylation (approximately 4
to 100 moles of EO) are used to provide different properties. The NPEs
are produced by introducing the preferred molar ratio of EO and
nonylphenol (NP) into a reactor.  The C9 chain of the NP is comprised of
approximately 25-30 isomers with different branching. As with the EO/PO
polymers discussed above, the final products are not a single compound
but are mixtures of chains which have an approximate normal distribution
around the desired molecular weight. For example, the most commonly
produced 9-mole ethoxylate (known as Nonoxynol in spermicide use)
contains congeners ranging from approximately 5 to 16 moles of EO.
Therefore, each NPE is a complex mixture of isomers of the nonene chain
and congeners of the EO chain.  Nonylphenoxypolyethoxyethanol is in the
form a blue liquid, with a specific gravity of 1.01.
Nonylphenoxypolyethoxyethanol has a listed pH factor of 9.5 ( 2.

Octylphenoxypolyethoxyethanol

Octylphenoxypolyethoxyethanols (octylphenol polyethoxylates; OPE; CAS
No. 9002-93-1) also known as Triton X-100 are surfactants similar to the
NPEs but are less commonly used. They are produced in a similar process
replacing octylphenol (OP) for NP. Approximately 97% of the OP is the
tertiary branched isomer and, therefore, the OPEs are less heterogeneous
than the NPEs (but retain the normal distribution of EO chain lengths).
OPEs are more costly to produce and, therefore, are generally used only
in specialized applications.  The physical and chemical properties of
technical grade octylphenoxypolyethoxyethanol found are listed below:

Molecular weight:	206.1534

Molecular Formula:	C14H22O ( (C2H4O)n

Color:		Clear to slightly hazy

Physical state:	Liquid

Specific gravity:	1.082

pH:		6-8

Melting point:	7 (C

Boiling point:	270 (C

Water Solubility:	Soluble in water

Vapor pressure:	< 1mm Hg at 25 (C

III. Subgroup C (Polyvinylpyrrolidone Carriers)

Polyvinylpyrrolidone (Povidone)

Povidone (PVP; CAS No. 9003-39-8) is a synthetic polymer principally
consisting of linear 1-vinyl-2-pyrrolidone groups, produced as a series
of products having mean molecular weights ranging from about 10,000 to
about 1 million a.m.u. or greater.  The monomer molecular weight is 11.1
a.m.u  In addition to its use in disinfectants, it is used as a
dispersing agent, and has been used as a tablet binder, coating agent,
and viscosity-increasing agent in pharmaceutical preparations.  The
chemical formula is (C6H9NO) x.

PVP is an odorless faintly yellow powder and is soluble in water,
ethanol, and chloroform and insoluble in ether.  PVP has a specific
gravity of 1.1-1.3 and a pH ranging from 3.0 to 7.0 in a 1:20 solution.
The melting point is 100oC.  The amide region of the pyrrolidone
substituent absorbs in the UV region at wavelengths below 235 nm.

IV. Amino Acid Complex

Tetraglycine Hydroperiodide

For the iodophor used for emergency water disinfection (tetraglycine
hydroperiodide), the iodine complex is formed by a catalyst driven
reaction with the essential amino acid glycine, to produce the complex:
2[(CH2NH2COOH)8 ( (HI)2 2.5I2]

V. Iodinated Resin Complex

Quat Amine divinylbenzene/ styrene copolymer

Triosyn( resin is produced by thermally fusing pure iodine crystals
under high pressure with a specialized quaternary amine
divinylbenzene/styrene polymer. During this process, a stable
electrochemical bond is formed between the iodine and the polymer,
allowing no free release of iodine in the media employed. This
electrochemical bond serves as a demand-release mechanism that allows
iodine molecules to be released from Triosyn( resin in the presence of
demand-causing microorganisms and in amounts required to eliminate the
source of the demand. Triosyn( is activated by the strong ionic charge
of surface proteins that cover microorganisms and then interacts with
organisms through ionic transfer. Upon contact with a microorganism,
ionic molecular iodine is transferred from Triosyn( resin, to the more
strongly charged surface proteins of the microbe. The iodine immediately
devitalizes the microorganism by removing electrons from the organism's
surface proteins which are necessary for life and reproduction.

This process provides disinfectant properties to items such as tent
fabric and outdoor paint. There is little human contact with the
poymeric Triosyn( resin.

NOTE:	 It has been noted by the Agency that when Iodine is present in
the iodophor ( matrixed in one of the polymeric structures discussed
below, the vapor pressure of iodine decreases considerably. A one page
document provided by Iodophors Joint Venture Group (Nov. 24, 2004),
shows that  iodine present  at  use level of 300 ppm in an iodophor,
its vapor pressure decreases from 0.3 mm Hg to

 6.6 x10-6 mm Hg, which is a considerable reduction.

BIBLIOGRAPHY

MRID#					CITATION

--------------------	1. Budavari S, O(Neil MJ, Smith A, et al., eds.
1998. The Merck index: An encyclopedia of chemicals, drugs, and
biologicals. Whitehouse Station, NJ: Merck and Co., Inc.

---------------------	2. Chemfinder. 2001. Iodine. Chemfinder.com:
Database and internet searching. http://www.chemfinder.com.

---------------------	3.  Lide DR, ed. 2000. CRC Handbook of Chemistry
and Physics. 81 st ed. Boca Raton, FL: CRC Press.

---------------------	4. Non-MRID  Documents provided by Iodophor Joint
Venture on Iodophors Chemistry Background.

--------------------	5.  Calculations of the Maximum Atmospheric Iodine
Concentration From Solutions of Iodophors..  Memo from Iodophor Joint
Venture, Nov.24, 2004


                                 ATTACHMENT 1                                                          Toxic Substances Control Action Section 8(e)                                                                        15 U.S.C. 2607(e)

From the U.S. Code Online via GPO Access [wais.access.gpo.gov] [Laws in effect as of January 7, 2003]

  TITLE 15--COMMERCE AND TRADE   CHAPTER 53--TOXIC SUBSTANCES CONTROL   SUBCHAPTER I--CONTROL OF TOXIC SUBSTANCES   Sec. 2607. Reporting and retention of information

* * *

(e) Notice to Administrator of substantial risks

    Any person who manufactures, processes, or distributes in commerce as chemical substance or mixture and who obtains information which reasonably supports the conclusion that such substance or mixture presents a substantial risk of injury to health or the environment shall immediately inform the Administrator of such information unless such person has actual knowledge that the Administrator has been adequately informed of such information.


[Federal Register: November 19, 2009 (Volume 74, Number 222)]
[Notices]
[Page 60022-60025]
[DOCID:fr19no09-93]

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

 [Docket ID. FMCSA-2009-0303]

Qualification of Drivers; Exemption Applications; Vision

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of applications for exemptions; request for comments.

-----------------------------------------------------------------------

SUMMARY: FMCSA announces receipt of applications from 27 individuals
for exemption from the vision requirement in the Federal Motor Carrier
Safety Regulations. If granted, the exemptions would enable these
individuals to qualify as drivers of commercial motor vehicles (CMVs)
in interstate commerce without meeting the Federal vision standard.

DATES: Comments must be received on or before December 21, 2009.

ADDRESSES: You may submit comments bearing the Federal Docket
Management System (FDMS) Docket ID FMCSA-2009-0303 using any of the
following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the on-line instructions for submitting
comments.
     Mail: Docket Management Facility; U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., West Building Ground
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery: West Building Ground Floor, Room W12-140,
1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal Holidays.
     Fax: 1-202-493-2251.
    Each submission must include the Agency name and the docket ID for
this Notice. Note that DOT posts all comments received without change
to http://www.regulations.gov, including any personal information
included in a comment. Please see the Privacy Act heading below.
    Docket: For access to the docket to read background documents or
comments, go to http://www.regulations.gov at any time or Room W12-140
on the ground level of

the West Building, 1200 New Jersey Avenue, SE., Washington, DC, between
9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The
FDMS is available 24 hours each day, 365 days each year. If you want
acknowledgment that we received your comments, please include a self-
addressed, stamped envelope or postcard or print the acknowledgement
page that appears after submitting comments on-line.
    Privacy Act: Anyone may search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or of the person signing the comment, if
submitted on behalf of an association, business, labor union, etc.).
You may review the DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (65 FR 19476). This information is
also available at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Dr. Mary D. Gunnels, Director, Medical
Programs,<PHONE_NUMBER><EMAIL_ADDRESS>FMCSA, Department of
Transportation, 1200 New Jersey Avenue, SE., Room W64-224, Washington,
DC 20590-0001. Office hours are from 8:30 a.m. to 5 p.m., Monday
through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

    Under 49 U.S.C. 31136(e) and 31315, FMCSA may grant an exemption
for a 2-year period if it finds ``such exemption would likely achieve a
level of safety that is equivalent to, or greater than, the level that
would be achieved absent such exemption.'' FMCSA can renew exemptions
at the end of each 2-year period. The 27 individuals listed in this
notice each have requested an exemption from the vision requirement in
49 CFR 391.41(b)(10), which applies to drivers of CMVs in interstate
commerce. Accordingly, the Agency will evaluate the qualifications of
each applicant to determine whether granting the exemption will achieve
the required level of safety mandated by statute.

Qualifications of Applicants

Teddy S. Bioni

    Mr. Bioni, age 47, has complete loss of vision in his left eye. The
best corrected visual acuity in his right eye is 20/20. Following an
examination in 2009, his ophthalmologist noted, ``I believe he has
sufficient vision to perform driving tasks required to operate a
commercial vehicle.'' Mr. Bioni reported that he has driven straight
trucks for 28 years, accumulating 140,000 miles, and tractor-trailer
combinations for 28 years, accumulating 140,000 miles. He holds a Class
A CDL from Pennsylvania. His driving record for the last 3 years shows
no crashes and no convictions for moving violations in a CMV.

John K. Butler

    Mr. Butler, 55, has had amblyopia in his right eye since childhood.
The best corrected visual acuity in his right eye is 20/200, and in his
left eye, 20/20. Following an examination in 2009, his ophthalmologist
noted, ``Mr. Butler displays sufficient vision to perform the driving
tasks required to operate a commercial vehicle.'' Mr. Butler reported
that he has driven straight trucks for 6 years, accumulating 156,000
miles, and tractor-trailer combinations for 29 years, accumulating
452,400 miles. He holds a Class A CDL from Connecticut. His driving
record for the last 3 years shows no crashes and no convictions for
moving violations in a CMV.

James J. Coffield

    Mr. Coffield, 47, has loss of vision in his left eye due a
traumatic injury sustained 25 years ago. The best corrected visual
acuity in his right eye is 20/20, and in his left eye, 20/200.
Following an examination in 2009, his optometrist noted, ``In my
opinion, Mr. Coffield has sufficient visual performance to meet the
driving requirements for a commercial vehicle operation license.'' Mr.
Coffield reported that he has driven tractor-trailer combinations for
14 years, accumulating 770,000 miles. He holds a Class A Commercial
Driver's License (CDL) from New Mexico. His driving record for the last
3 years shows no crashes and no convictions for moving violations in a
CMV.

Roy E. Crayne

    Mr. Crayne, 57, has a macular hole in his left eye due to a
traumatic injury sustained as a child. The visual acuity in his right
eye is 20/20, and in his left eye, 20/400. Following an examination in
2009, his ophthalmologist noted, ``In my opinion, Mr. Crayne has
sufficient vision to perform the driving tasks required to operate a
commercial vehicle.'' Mr. Crayne reported that he has driven tractor-
trailer combinations for 35 years, accumulating 2.1 million miles. He
holds a Class A CDL from Washington. His driving record for the last 3
years shows one crash, and no convictions for moving violations in a
CMV.

Ralph G. DeBardi

    Mr. DeBardi, 42, has had retinopathy of prematurity in his right
eye since birth. The best corrected visual acuity in his right eye is
light perception only, and in his left eye, 20/25. Following an
examination in 2009, his optometrist noted, ``In my medical opinion,
Mr. DeBardi has sufficient vision to perform the driving tasks required
to operate a commercial vehicle.'' Mr. DeBardi reported that he has
driven straight trucks for 15 years, accumulating 352,500 miles. He
holds a Class D operator's license from West Virginia. His driving
record for the last 3 years shows no crashes and no convictions for
moving violations in a CMV.

James A. DuBay

    Mr. DuBay, 48, has had optic nerve hyperplasia, and apparent
fibrotic scaring of the posterior hole in his left eye since birth. The
best corrected visual acuity in his right eye is 20/20, and in his left
eye, count-finger vision. Following an examination in 2009, his
optometrist noted, ``I believe Mr. Dubay's Mr. DuBay has the visual
skills required to perform the driving tasks required to operate a
commercial vehicle.'' Mr. DuBay reported that he has driven straight
trucks for 30 years, accumulating 900,000 miles. He holds a Class C
chauffeur's license from Michigan. His driving record for the last 3
years shows no crashes and no convictions for moving violations in a
CMV.

Chad D. Grose

    Mr. Grose, 40, has had amblyopia in his right eye since birth. The
best corrected visual acuity in his right eye is 20/400, and in his
left eye, 20/20. Following an examination in 2009, his optometrist
noted, ``In my medical opinion, your vision is stable and more than
adequate for you to perform the driving task required to operate a
commercial vehicle.'' Mr. Grose reported that he has driven straight
trucks for 18 years, accumulating 324,000 miles. He holds a Class D
operator's license from Illinois. His driving record for the last 3
years shows no crashes and no convictions for moving violations in a
CMV.

Donald E. Halvorson

    Mr. Halvorson, 57, has complete loss of vision in his right eye due
to a traumatic injury sustained in early 1990. The visual acuity in his
left eye is 20/20. Following an examination in 2009, his
ophthalmologist noted, ``It is my medical opinion that Mr. Halvorson
has the necessary vision to see and operate a commercial vehicle
safely.'' Mr.

Halvorson reported that he has driven straight trucks for 5 years,
accumulating 50,000 miles, and tractor-trailer combinations for 25
years, accumulating 450,000 miles. He holds a Class A CDL from New
Mexico. His driving record for the last 3 years shows no crashes and no
convictions for moving violations in a CMV.

Gerald Harrison

    Mr. Harrison, 59, has had amblyopia in his left eye since birth.
The best corrected visual acuity in his right eye is 20/40, and in his
left eye, 20/200. Following an examination in 2009, his optometrist
noted, ``In my opinion, he has sufficient vision to operate a
commercial vehicle.'' Mr. Harrison reported that he has driven tractor-
trailer combinations for 30 years, accumulating 3 million miles. He
holds a Class A CDL from Florida. His driving record for the last 3
years shows no crashes and one conviction for a moving violation in a
CMV; failure to obey a traffic control device.

Roger D. Kool

    Mr. Kool, 54, has had central serous retinopathy in his left eye
since 2005. The best corrected visual acuity in his right eye is 20/20,
and in his left eye, 20/800. Following an examination in 2009, his
optometrist noted, ``It is my medical opinion that Roger has sufficient
vision to perform the driving tasks required to operate a commercial
vehicle.'' Mr. Kool reported that he has driven straight trucks for 15
years, accumulating 37,500 miles, and tractor-trailer combinations for
15 years, accumulating 15,000 miles. He holds a Class A CDL from Iowa.
His driving record for the last 3 years shows no crashes and no
convictions for moving violations in a CMV.

Curtis M. Lawless

    Mr. Lawless, 54, has wet macular degeneration in his right eye. The
visual acuity in his right eye is 20/200, and in his left eye, 20/20.
Following an examination in 2009, his ophthalmologist noted, ``I
certify that in medical opinion, Mr. Lawless has sufficient vision to
perform the driving tasks required to operate a commercial vehicle.''
Mr. Lawless reported that he has driven straight trucks for 10 years,
accumulating 150,000 miles, and tractor-trailer combinations for 21
years, accumulating 1.3 million miles. He holds a Class A CDL from
Virginia. His driving record for the last 3 years shows one crash and
one conviction for a moving violation in a CMV. He failed to yield the
right of way to another vehicle.

Michael E. Lindquist

    Mr. Lindquist, 50, has had amblyopia in his right eye since
childhood. The best corrected visual acuity in his right eye is 20/20,
and in his left eye, 20/50. Following an examination in 2009, his
optometrist noted, ``I certify that Michael Lindquist has sufficient
and stable visual acuity to perform and operate a commercial motor
vehicle in interstate commerce.'' Mr. Lindquist reported that he has
driven straight trucks for 4 years, accumulating 93,600 miles. He holds
a Class B CDL from Washington. His driving record for the last 3 years
shows no crashes and no convictions for moving violations in a CMV.

Philip J.C. Locke

    Mr. Locke, 39, has had amblyopia in his right eye since birth. The
best corrected visual acuity in his right eye is 20/300 and in his left
eye, 20/20. Following an examination in 2009, his ophthalmologist
noted, ``In my opinion, the patient continues to have sufficient vision
to perform driving tasks required to operate a commercial vehicle.''
Mr. Locke reported that he has driven straight trucks for 20 years,
accumulating 200,000 miles, and tractor-trailer combinations for 18
years, accumulating 1.4 million miles. He holds a Class A CDL from
Colorado. His driving record for the last 3 years shows no crashes and
no convictions for moving violations in a CMV.

Travis J. Luce

    Mr. Luce, 36, has had amblyopia in his left eye since childhood.
The best corrected visual acuity in his right eye is 20/20, and in his
left eye, 20/200. Following an examination in 2009, his optometrist
noted, ``In my opinion, Travis has sufficient visual ability to operate
a commercial vehicle.'' Mr. Luce reported that he has driven straight
trucks for 2 years, accumulating 20,000 miles, and tractor-trailer
combinations for 7 years, accumulating 175,000 miles. He holds a Class
A CDL from Michigan. His driving record for the last 3 years shows no
crashes and no convictions for moving violations in a CMV.

Cameron S. McMillen

    Mr. McMillen, 56, has had amblyopia in his right eye since
childhood. The best corrected visual acuity in his right eye is count-
finger-vision, and in his left eye, 20/25. Following an examination in
2009, his ophthalmologist noted, ``In my opinion, Scott has adequate
visual function to operate a commercial vehicle.'' Mr. McMillen
reported that he has driven straight trucks for 38 years, accumulating
380,000 miles, and tractor-trailer combinations for 18 years,
accumulating 1.7 million miles. He holds a Class A CDL from New Mexico.
His driving record for the last 3 years shows no crashes and no
convictions for moving violations in a CMV.

Carl L. Miles

    Mr. Miles, 58, has had amblyopia in his left eye since childhood.
The best corrected visual acuity in his right eye is 20/20, and in his
left eye 20/200. Following an examination in 2009, his optometrist
noted, ``Based upon my findings and medical expertise, I hereby certify
Carl Miles to be visually able to safely operate a commercial motor
vehicle.'' Mr. Miles reported that he has driven straight trucks for 14
years, accumulating 1.4 million miles, and tractor-trailer combinations
for 8 years, accumulating 600,000 miles. He holds a Class A CDL from
Kentucky. His driving record for the last 3 years shows no crashes and
no convictions for moving violations in a CMV.

Rashawn L. Morris

    Mr. Morris, 28, has loss of vision in his left eye since birth. The
best corrected visual acuity in his right eye is 20/20, and in his left
eye, count-finger vision. Following an examination in 2009, his
ophthalmologist noted, ``I explained to Mr. Morris that his visual
status appears to be stable and that I believe he can see well enough
to perform all the tasks required to operate a commercial vehicle.''
Mr. Morris reported that he has driven straight trucks for 5 years,
accumulating 50,000 miles. He holds a Class A CDL from Virginia. His
driving record for the last 3 years shows no crashes and no convictions
for moving violations in a CMV.

Brian T. Nelson

    Mr. Nelson, 43, has loss of vision in his left eye due to
retinopathy since 1988. The best corrected visual acuity in his right
eye is 20/40 and in his left eye, 20/200. Following an examination in
2009, his ophthalmologist noted, ``In my opinion, Brian Nelson has
sufficient vision to perform the driving tasks required to operate a
commercial vehicle.'' Mr. Nelson reported that he has driven straight
trucks for 19 years, accumulating 114,000 miles, and tractor-trailer
combinations for 16 years, accumulating 64,000 miles. He holds a Class
A CDL from Minnesota. His driving record for the last 3 years shows no
crashes and no convictions for moving violations in a CMV.

James C. New

    Mr. New, 66, has had aphakia and macular scarring in his left eye
since 1965. The best corrected visual acuity in his right eye is 20/20,
and in his left eye, count-finger vision. Following an examination in
2009, his optometrist noted, ``It is my opinion that Mr. New has
sufficient vision to perform the commercial driving tasks in
question.'' Mr. New reported that he has driven straight trucks for 2
years, accumulating 54,000 miles, and tractor-trailer combinations for
38 years, accumulating 2.7 million miles. He holds a Class D operator's
license from Mississippi. His driving record for the last 3 years shows
no crashes and no convictions for moving violations in a CMV.

Thomas E. O'Compo

    Mr. O'Compo, 42, has had exotropia in his right eye since birth.
The best corrected visual acuity in his right eye is 20/80, and in his
left eye, 20/20. Following an examination in 2009, his optometrist
noted, ``In my opinion. Mr. O'Compo has sufficient vision to perform
the driving tasks required to operate a commercial vehicle.'' Mr.
O'Compo reported that he has driven straight trucks for 4 years,
accumulating 100,000 miles, and tractor-trailer combinations for 9
years, accumulating 360,000 million miles. He holds a Class A CDL from
California. His driving record for the last 3 years shows no crashes
and no convictions for moving violations in a CMV.

Christopher M. Rivera

    Mr. Rivera, 37, has had amblyopia in his left eye since birth. The
best corrected visual acuity in his right eye is 20/20, and in his left
eye, 20/200. Following an examination in 2009, his optometrist noted,
``I certify that in my opinion, Christopher Rivera has sufficient
vision to perform the driving tasks to operate a commercial vehicle.''
Mr. Rivera reported that he has driven straight trucks for 9 years,
accumulating 60,300 miles, and tractor-trailer combinations for 9
years, accumulating 60,300 miles. He holds a Class A CDL from New
Mexico. His driving record for the last 3 years shows no crashes, and
one conviction for speeding in a CMV. He exceeded the speed limit by
5mph.

Richard J. Robb

    Mr. Robb, 55, has had amblyopia in his left eye since childhood.
The best corrected visual acuity in his right eye is 20/15, and in his
left eye, 20/300. Following an examination in 2009, his ophthalmologist
noted, ``It is my medical opinion that Mr. Robb has the necessary
vision to see and operate a commercial vehicle safely.'' Mr. Robb
reported that he has driven straight trucks for 5 years, accumulating
142,500 miles, and tractor-trailer combinations for 20 years,
accumulating 750,000 miles. He holds a Class A CDL from New Mexico. His
driving record for the last 3 years shows no crashes and no convictions
for moving violations in a CMV.

Larry L. Sapp

    Mr. Sapp, 44, has a prosthetic left eye due to a traumatic injury
since childhood. The visual acuity in his right eye is 20/20. Following
an examination in 2009, his optometrist noted, ``Mr. Sapp has
sufficient vision to perform driving tasks required to operate a
commercial vehicle.'' Mr. Sapp reported that he has driven straight
trucks for 9 years, accumulating 36,000 miles. He holds a Class O
operator's license from Michigan. His driving record for the last 3
years shows no crashes and no convictions for moving violations in a
CMV.

Temesgn H. Teklezig

    Mr. Teklezig, 31, has loss of vision in his right eye due to a
traumatic injury sustained 13 years ago. The visual acuity in his right
eye is 20/200 and in his left eye, 20/20. Following an examination in
2009, his ophthalmologist noted, ``In my professional opinion, Mr.
Teklezig has sufficient vision to drive a commercial vehicle.'' Mr.
Teklezig reported that he has driven straight trucks for 7 years,
accumulating 252,000 miles, and tractor-trailer combinations for 3
years, accumulating 111,000 miles. He holds a Class A CDL from
Washington. His driving record for the last 3 years shows no crashes
and no convictions for moving violations in a CMV.

Robert E. Whitney

    Mr. Whitney, 71, has complete loss of vision in his left eye due to
an injury sustained as a child. The best corrected visual acuity in his
left eye is 20/25. Following an examination in 2009, his optometrist
noted, ``In my opinion, he has sufficient vision to operate a
commercial vehicle.'' Mr. Whitney reported that he has driven straight
trucks for 3 years, accumulating 40,500 miles. He holds a Class D
operator's license from Illinois. His driving record for the last 3
years shows no crashes and no convictions for moving violations in a
CMV.

Robert D. Williams

    Mr. Williams, 57, has a prosthetic right eye due to a traumatic
injury since 1986. The best corrected visual acuity in his left eye is
20/20. Following an examination in 2009, his optometrist noted,
``Vision is sufficient to operate a commercial vehicle.'' Mr. Williams
reported that he has driven straight trucks for 38 years, accumulating
692,018 miles. He holds a Class E operator's license from Louisiana.
His driving record for the last 3 years shows no crashes and no
convictions for moving violations in a CMV.

James M. Wood

    Mr. Wood, 59, has had amblyopia in his left eye since birth. The
best corrected visual acuity in his right eye is 20/20, and in his left
eye, 20/200. Following an examination in 2009, his optometrist noted,
``His vision should not preclude him from operating a commercial
vehicle.'' Mr. Wood reported that he has driven straight trucks for
13\1/2\ years, accumulating 474,997 miles. He holds a Class B CDL from
North Carolina. His driving record for the last 3 years shows no
crashes and no convictions for moving violations in a CMV.

Request for Comments

    In accordance with 49 U.S.C. 31136(e) and 31315, FMCSA requests
public comment from all interested persons on the exemption petitions
described in this notice. The Agency will consider all comments
received before the close of business December 21, 2009. Comments will
be available for examination in the docket at the location listed under
the ADDRESSES section of this notice. The Agency will file comments
received after the comment closing date in the public docket, and will
consider them to the extent practicable. In addition to late comments,
FMCSA will also continue to file, in the public docket, relevant
information that becomes available after the comment closing date.
Interested persons should monitor the public docket for new material.

    Issued on November 12, 2009.
Larry W. Minor,
Associate Administrator for Policy and Program Development.
[FR Doc. E9-27840 Filed 11-18-09; 8:45 am]

BILLING CODE 4910-EX-P


[Federal Register Volume 84, Number 181 (Wednesday, September 18, 2019)]
[Notices]
[Pages 49158-49165]
[FR Doc No: 2019-20152]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86946; File No. SR-GEMX-2019-10]

Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Priority of Quotes and Orders Rule

September 12, 2019.
    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 August 28, 2019, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend GEMX Options 2, Section 5 titled
``Market Maker Quotations,'' Options 3, Section 7, titled ``Types of
Orders,'' and Options 3, Section 10, titled ``Priority of Quotes and
Orders.''
    The text of the proposed rule change is available on the Exchange's
website at http://nasdaqgemx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Options 3, Section 10, titled
``Priority of Quotes and Orders'' to provide additional detail to the
rule and make other technical and organizational modifications. The
Exchange also proposes to amend cross-references within Options 2,
Section 5 titled ``Market Maker Quotations'' and Options 3, Section 7,
titled ``Types of Orders.'' Finally, the Exchange proposes to relocate
certain rule text as described herein. Each change is described below
in detail. This rule change is intended to further clarify the
Exchange's current allocation process. This rule change does not amend
the current System.
Options 3, Section 10
    The Exchange proposes to retitle this rule, ``Allocation and
Priority of Quotes and Orders.''
Definitions
    The Exchange proposes to capitalize the defined terms ``Market
Order'' \3\ and ``Limit Order'' \4\ within Options 3, Section 10.
---------------------------------------------------------------------------

    \3\ Market Order is defined within Options 3, Section 7(a).
    \4\ Limit Order is defined within Options 3, Section 7(b).
---------------------------------------------------------------------------

    The Exchange proposes to amend Options 3, Section 10(a) to re-title
this section ``Definitions and Applicability'' instead of simply
``Definitions.'' The Exchange proposes to renumber the current rule
text as ``(i)'' and add the following to proposed new ``(ii)'':

    Applicability. This rule does not apply to the Block Order
Mechanism described within Options 3, Section 11(a), the
Facilitation Mechanism described within Options 3, Section 11(b),
the Solicited Order Mechanism described within Options 3, Section
11(d), the Price Improvement Mechanism described within Options 3,
Section 13, orders described within Options 3, Section 12 or an
exposure period as provided in Options 5, Section 2 at Supplementary
Material .02, unless Options 3, Section 10 is specifically
referenced within GEMX Rules applicable to the aforementioned
functionality.

    The Exchange notes that today, Options 3, Section 10 is applicable
to interest on the Order Book. The Exchange has separate and distinct
rules for functionality related to the Block Order Mechanism, the
Facilitation Mechanism and the Solicited Order Mechanism within Options
3, Section 11, the Price Improvement Mechanism within Options 3,
Section 13, and an exposure period as provided in Options 5, Section 2
at Supplementary Material .02. The Exchange proposes to make clear that
Options 3, Section 10 shall not apply to the aforementioned
functionalities unless Options 3, Section 10 is specifically referred
to within GEMX Rules applicable to the aforementioned functionality.
The Exchange notes that the current Options 3, Section 10 at Commentary
.01(c) only makes reference to the Facilitation Mechanism. The Exchange
notes that it is amending the rule to reflect all the mechanisms which
have their own allocation methodologies. Proposed Options 3, Section
10(a)(ii) reflects the current System. This is not a change to the
current System. The Exchange believes that adding the proposed
applicability section will better explain the interaction as between
Options 3, Section 10 and other trading functionality.
Zero-Bid
    The Exchange proposes to create a new proposed Options 3, Section
10(b)(1) and title that rule ``Zero-Bid Option Series.'' The Exchange
proposes to capitalize the defined terms ``Market Order'' \5\ and
``Limit Order'' within this rule. The Exchange proposes to amend the
first sentence to add the phrase ``accepted by the System'' to provide
more context to the rule. This rule does not apply to a Market Order
that is not accepted because it was rejected upon entry.\6\ The
Exchange also proposes to add greater detail to the zero bid rule by
providing, ``With respect to Market Orders to sell which are submitted
prior to the Opening Process and persist after the Opening Process,
those orders are posted at a price equal to the minimum trading
increment as defined in Options 3, Section 3.'' This detail represents
the Exchange's current practice. The Exchange believes this rule text
will add greater detail to the GEMX rule which operates in a similar
manner to the Nasdaq Phlx, LLC (``Phlx'').\7\
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    \5\ Market Order is defined within Options 3, Section 7(a).
    \6\ For example, a Market Order that it rejected due to Limit-Up
Limit-Down would not be treated as a Limit Order because it was not
accepted by the System.
    \7\ See Phlx 1035, which contains a similar sentence as proposed
herein.
---------------------------------------------------------------------------

Priority
    The Exchange proposes to amend Options 3, Section 10 because the
proposed description of priority adds greater detail to each allocation
tier. The general allocation and priority provisions are contained
within the Supplementary Material to Options 3, Section 10. The rule
therefore needs to be read by referring to the Supplementary Material
while reading the main rule. The Exchange proposes to amend the current
priority rule within Options 3, Section 10 to explain the allocation of
interest and the priority of such allocation in a timeline format to
avoid confusion and ease the reading of the rule. Further, the Exchange
proposes to add greater detail to the current rule.
    The Exchange proposes to rename current Options 3, Section 10(c)
titled, ``Priority,'' as ``Execution Priority and Processing in the
System.'' The Exchange proposes to provide greater detail to this rule.
The Exchange proposes to state that it will apply a Size Pro-Rata
execution algorithm to orders, unless otherwise specified. The Exchange
proposes to detail the manner in which it applies Size Pro-Rata
execution today by stating, ``The System shall execute trading interest
within the System in price priority, meaning it will execute all
trading interest at the best price level within the System before
executing trading interest at the next best price. Size Pro-Rata
Priority shall mean that if there are two or more resting orders or
quotes at the same price, the System allocates contracts from an
incoming order or quote to resting orders and quotes beginning with the
resting order or quote displaying the largest size proportionally
according to displayed size, based on the total number of contracts
displayed at that price. If the result is not a whole number, it will
be rounded up to the nearest whole number. If there are still contracts
to be allocated after the displayed size of all orders at that price
has been executed, the remaining size from the incoming order will be
allocated proportionally against non-displayed interest according to
remaining total size of each resting order at such price, beginning
with the order which has the largest total size remaining.'' The
Exchange notes that this proposed rule text represents the Exchange's
current practice. The Exchange is not amending the manner in which it
applies the Size Pro-Rata allocation. This practice is explained in
Supplementary Material .01(a) to Options 3, Section 10 wherein it
states, ``Professional Orders and market maker quotes at the best price
receive allocations based upon the percentage of the total number of
contracts available at the best price that is represented by the size
of the Professional Order or quote.'' The Exchange believes that this
rule text will provide Members with transparency as to the allocation

methodology applied within the System.
    The Exchange proposes to add a new Options 3, Section 10(c)(1)
which provides, ``Priority Overlays Applicable to Size Pro-Rata
Execution Algorithm: The Exchange will apply the following designated
Member priority overlays. No Member shall be entitled to receive a
number of contracts that is greater than the size that is associated
with their quotation or order.'' This language represents current
practice within Supplementary Material .01(c) to Options 3, Section 10.
The Exchange is proposing to introduce each priority category in the
order that they are allocated, as is currently expressed in the rule
today, and note specifically that no Member may receive an allocation
greater than their size which is the case today. Current rule text
within Supplementary Material .01(c) to Options 3, Section 10 provides,
``No market participant is allocated any portion of an execution unless
it has an existing interest at the execution price. Moreover, no market
participant can execute a greater number of contracts than is
associated with the price of its existing interest.''
    The below priority overlays described herein will be applied by the
Exchange as explained within the proposed rule for all options series.
Priority Customer
    Proposed Options 3, Section 10(c)(1)(A) describes Priority Customer
\8\ allocation. As is the case today, Priority Customers on the
Exchange have priority over other market participants at the same price
and in the same option series as specified in current Options 3,
Section 10(c). The Exchange proposes to replace Options 3, Section
10(c) and (d) with the following rule text which represents the current
System:
---------------------------------------------------------------------------

    \8\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Options 1,
Section 1 (a)(36).

    (A) Priority Customer: the highest bid and lowest offer shall
have priority except that Priority Customer orders shall have
priority over non-Priority Customer interest at the same price in
the same options series. If there are two or more Priority Customer
orders for the same options series at the same price, priority shall
be afforded to such Priority Customer orders in the sequence in
---------------------------------------------------------------------------
which they are received by the System.

    The Exchange proposes to initially note the priority that is
afforded to Priority Customers and make clear that time priority
continues to apply. Specifically, the Exchange proposes to make clear
in the introductory paragraph of proposed Options 3, Section 10(c) that
non-displayed Priority Customer interest will not trade ahead of other
displayed interest at the same price regardless of the displayed
interest's capacity, as is the case today within Options 3, Section
10(1)(c) and (d). The Exchange believes that the proposed rule text
provides clarity to the current allocation methodology.
Primary Market Maker
    The Exchange proposes new rule text at Options 3, Section
10(c)(1)(B) to describe the current manner in which the System handles
Enhanced Primary Market Maker \9\ Priority:
---------------------------------------------------------------------------

    \9\ The term ``Primary Market Maker'' means a Member that is
approved to exercise trading privileges associated with PMM Rights.
See Options 1, Section 1(a)(34).

    Enhanced Primary Market Maker Priority: A Primary Market Maker
may be assigned by the Exchange in each option class in accordance
with Options 2, Section 3(b). After all Priority Customer orders
have been fully executed, provided the Primary Market Maker's quote
is at the NBBO, the Primary Market Maker shall be entitled to
receive the allocation described in Options 3, Section
10(c)(1)(B)(i), unless the incoming order to be allocated is a
Preferenced Order and the Primary Market Maker is not the Preferred
Market Maker, in which case allocation would be pursuant to
(c)(1)(C). If the order is a Preferenced Order and the Primary
Market Maker is also the Preferred Market Maker (``Preferred Market
Maker Priority'') then the Preferred Market Maker Participation
Entitlement in (c)(1)(C) or (c)(1)(E) applies. The Primary Market
Maker shall not be entitled to receive a number of contracts that is
greater than the size associated with such Primary Market Maker's
---------------------------------------------------------------------------
quote.

    The Exchange proposes to note that a Primary Market Maker may be
assigned by the Exchange in each option class in accordance with
Options 2, Section 3(b). Reiterating the priority afforded to Priority
Customer orders, the Exchange notes that Priority Customers must be
first fully executed and then Primary Market Maker allocation would be
accounted for in that order.
    The Exchange proposes to state that provided the Primary Market
Maker's quote is at the NBBO the Primary Market Maker shall be entitled
to receive the allocation described in Options 3, Section
10(c)(1)(B)(i), unless the incoming order to be allocated is a
Preferenced Order and the Primary Market Maker is not the Preferred
Market Maker.
    Current Options 3, Section 10(e) provides,

    Precedence of Professional Orders and Market Maker Quotes.
Except as provided under Options 3, Section 7(g), if there are two
(2) or more Professional Orders or Market Maker quotes at the
Exchange's best bid or offer, after all Priority Customer Orders (if
any) at that price have been filled, executions at that price will
be allocated between the Professional Orders and Market Maker quotes
pursuant to an allocation procedure to be determined by the Exchange
from time to time; provided, however, that if the Primary Market
Maker is quoting at the Exchange's best bid or offer, it shall have
precedence over Professional Orders and Competitive Market Maker
quotes for execution of orders that are for a specified number of
contracts or fewer, which number shall be determined by the Exchange
from time to time.

    Current Supplementary Material .01 to Options 3, Section 10(a) and
(b) provide,

    (a) Subject to the two limitations in paragraphs (b) and (c)
below and subject to paragraph .03 (Preferenced Orders),
Professional Orders and Market Maker quotes at the best price
receive allocations based upon the percentage of the total number of
contracts available at the best price that is represented by the
size of the Professional Order or quote;
    (b) If the Primary Market Maker is quoting at the best price, it
has participation rights equal to the greater of (i) the proportion
of the total size at the best price represented by the size of its
quote, or (ii) sixty percent (60%) of the contracts to be allocated
if there is only one (1) other Professional Order or Market Maker
quotation at the best price, forty percent (40%) if there are two
(2) other Professional Orders and/or Market Maker quotes at the best
price, and thirty percent (30%) if there are more than two (2) other
Professional Orders and/or Market Maker quotes at the best price . .
.

    The current rule text describes the precedence of orders for
Professional Orders \10\ and market maker \11\ quotes together. The
Exchange notes that Primary Market Makers may receive certain
allocations that other market participants do not receive and therefore
the Exchange is proposing to provide for Primary Market Maker
allocations separately and then account for allocations of all other
market participant allocations. As is the case today, after Priority
Customers are allocated, Primary Market Makers would be allocated
before any other market participant. The Exchange notes that pursuant
to the current rule, a Primary Market Maker quoting at the

Exchange's best bid or offer shall have precedence over Professional
Orders and Competitive Market Maker quotes for execution of orders that
are for a specified number of contracts or fewer.
---------------------------------------------------------------------------

    \10\ The term ``Professional Order'' means an order that is for
the account of a person or entity that is not a Priority Customer.
See Options 1, Section 1(a)(37).
    \11\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1,
Section 1(a)(20). The term ``Competitive Market Maker'' means a
Member that is approved to exercise trading privileges associated
with CMM Rights. See Options 1, Section 1(a)(11).
---------------------------------------------------------------------------

    First, the Exchange proposes to replace the term ``best price''
with ``NBBO.'' \12\ The best price in this case is the NBBO. The
amendment to this term does not reflect a substantive change to the
current System. With respect to a Primary Market Maker's quote, the
quote will not be executed at a price that trades through another
market or displayed at a price that would lock or cross another market.
The ``NBBO'' is the best Protected Bid and Protected Offer as defined
in the Options Order Protection and Locked/Crossed Markets Plan;
Protected Bids and Protected Offers that are displayed at a price but
available on the Exchange at a better non-displayed price shall be
included in the NBBO at their better non-displayed price for purposes
of this rule.\13\
---------------------------------------------------------------------------

    \12\ A Primary Market Maker's quote may be executed at the BBO
provided the BBO is not inferior to the NBBO. The Primary or
Preferenced Market Maker may receive either the Enhanced Primary
Market Maker Allocation or the Preferenced Market Maker Allocation
if they are quoting at the BBO, which would be equivalent to the
NBBO, if an ISO Order is received because the ISO Order would have
been routed simultaneously with other orders to any better priced
interest at away markets in accordance with GEMX Options 5, Section
1(h). Other options markets have a rule equivalent to Options 5,
Section 1(h). See also Options 3, Section 7(b)(4) which provides,
``An Intermarket Sweep Order (ISO) is a limit order that meets the
requirements of Options 5, Section 1(h).''
    \13\ See 17 CFR 242.600(a)(43). National best bid and national
best offer means, with respect to quotations for an NMS security,
the best bid and best offer for such security that are calculated
and disseminated on a current and continuing basis by a plan
processor pursuant to an effective national market system plan;
provided, that in the event two or more market centers transmit to
the plan processor pursuant to such plan identical bids or offers
for an NMS security, the best bid or best offer (as the case may be)
shall be determined by ranking all such identical bids or offers (as
the case may be) first by size (giving the highest ranking to the
bid or offer associated with the largest size), and then by time
(giving the highest ranking to the bid or offer received first in
time).
---------------------------------------------------------------------------

    Second, the Exchange proposes to replace the words ``other
Professional Orders and market maker quotes'' with ``other non-Priority
Customer orders and Market Maker quotes.'' While the term
``Professional Orders'' is defined within Options 1, Section 1(a)(37)
to mean an order that is for the account of a person or entity that is
not a Priority Customer, the Exchange believes that simply stating
``non-Priority Customer'' is a less circular manner in which to
describe the type of market participant to which the allocation
applies. The Exchange believes that the term ``non-Priority Customer''
reduces any confusion regarding any reference to Professional Order or
Professional Customer. Orders and quotes are counted individually for
purposes of allocation even if they are from the same market
participant.\14\ The Exchange notes that if a Competitive Market Maker
had both a quote and order at the NBBO, the Competitive Market Maker's
quote and order would be considered separately for purposes of
allocation pursuant to proposed Options 3, Section 10(c)(1)(E) based on
Size Pro-Rata. Whichever quote or order is larger at the best price
level will be allocated first based on its individually represented
size. This amendment is not a change to current System operations.
---------------------------------------------------------------------------

    \14\ For example, if a Competitive Market Maker submits 2 orders
and one quote, this would equate to 3 non-Priority Customer interest
(orders and quotes) for purposes of determining the number of market
participants for the allocation percentage.
---------------------------------------------------------------------------

    Third, the Exchange proposes to reiterate the language in current
Supplementary Material .01(b) to Options 3, Section 10 by stating
within proposed Options 3, Section 10(c)(1)(B)(i),

    (i) When the Primary Market Maker is at the same price as a non-
Priority Customer Order or Market Maker quote and the number of
contracts is greater than 5, the Primary Market Maker shall receive
the greater of:
    a. 60% of remaining interest if there is one other non-Priority
Customer Order or Market Maker quote at that price; 40% of remaining
interest if there are two other non-Priority Customer Orders or
Market Maker quotes at that price; or 30% of remaining interest if
there are more than two other non-Priority Customer Orders and
Market Maker quotes at that price (the ``Primary Market Maker
Participation Entitlement''); or
    b. the Primary Market Maker's Size Pro-Rata share under
subparagraph (a)(1)(E) (``All Other Remaining Interest'').

    Fourth, the Exchange proposes to provide within Options 3, Section
10(a)(1)(B) the following new rule text, ``The Primary Market Maker
shall not be entitled to receive a number of contracts that is greater
than the size associated with such Primary Market Maker's quote.'' This
is also the case today.
    The Exchange proposes to explain the allocation methodology based
on the size of the order within Options 3, Section 10(c)(1)(B)(i). When
the number of contracts is greater than 5 allocation would be pursuant
to Options 3, Section 10(c)(1)(B) and when the number of contracts is 5
or fewer, allocation would be pursuant to Options 3, Section
10(c)(1)(D). Further, the Exchange proposes within proposed Options 3,
Section 10(c)(1)(B) to distinguish when the Primary Market Maker and
the Preferred Market Maker Participation Entitlement apply. The
Exchange notes if the incoming order to be allocated is a Preferenced
Order and the Primary Market Maker is not the Preferred Market Maker,
allocation would be pursuant to (c)(1)(C) provided the Preferred Market
Maker's quote is at the NBBO. The Preferred Market Maker allocation is
provided for within proposed Options 3, Section 10(c)(1)(C). If the
order is a Preferenced Order and the Primary Market Maker is also the
Preferred Market Maker (``Preferred Market Maker Priority'') then the
Preferred Market Maker Participation Entitlement in (c)(1)(C) or
(c)(1)(E) applies, depending on whether the Primary Market Maker is
quoting at the NBBO.
Preferred Market Maker
    The Exchange proposes to provide for the allocation that a
Preferred Market Maker is entitled to within proposed Options 3,
Section 10(c)(1)(C). The Exchange notes within proposed Options 3,
Section 10(c)(1)(B) that if the incoming order to be allocated is a
Preferenced Order and the Primary Market Maker is not the Preferred
Market Maker, the Enhanced Primary Market Maker Priority shall not
apply. The Exchange rules currently provides within Supplementary
Material .03 to Options 3, Section 10 the following:

    Preferenced Orders. An Electronic Access Member may designate a
``Preferred Market Maker'' on orders it enters into the System
(``Preferenced Orders'').
    (a) A Preferred Market Maker may be the Primary Market Maker
appointed to the options class or any Competitive Market Maker
appointed to the options class.
    (b) If the Preferred Market Maker is not quoting at a price
equal to the NBBO at the time the Preferenced Order is received, the
allocation procedure contained in paragraph .01 shall be applied to
the execution of the Preferenced Order.
    (c) If the Preferred Market Maker is quoting at the NBBO at the
time the Preferenced Order is received, the allocation procedure
contained in paragraph .01 shall be applied to the execution of the
Preferenced Order except that the Primary Market Maker will not
receive the participation rights described in paragraphs .01(b) and
(c), and instead the Preferred Market Maker shall have participation
rights equal to the greater of:
    (i) the proportion of the total size at the best price
represented by the size of its quote,
    (ii) sixty percent (60%) of the contracts to be allocated if
there is only one (1) other Professional Order or market maker
quotation at the best price and forty percent (40%) if there are two
(2) or more other Professional Orders and/or market maker quotes at
the best price, or
    (iii) the full size of a Preferenced Order for five (5)
contracts or fewer if the Primary Market Maker appointed to the
options class is designated as the Preferred Market Maker.

    First, the Exchange proposes to amend cross-references within this

current rule text and relocate certain rule text into new proposed
Options 3, Section 10(c)(1)(C) which proposes to state,

    (C) Preferred Market Maker Priority: After all Priority Customer
orders have been fully executed, upon receipt of a Preferenced Order
pursuant to Supplementary .01 to Options 3, Section 10, provided the
Preferred Market Maker's quote is at the NBBO, the Preferred Market
Maker will be afforded a participation entitlement. Preferred Market
Maker participation entitlements will apply only after the Opening
Process.
    (i) When the Preferred Market Maker is at the same price as a
non-Priority Customer Order or Market Maker quote, pursuant to the
Preferred Market Maker participation entitlement, the Preferred
Market Maker shall receive, with respect to a Preferenced Order, the
greater of:
    a. 60% of remaining interest if there is one other non-Priority
Customer Order or Market Maker quote at that price; or 40% of
remaining interest if there are two or more other non-Priority
Customer Orders or Market Maker quotes at that price; or
    b. the Preferred Market Maker's Size Pro-Rata share under
subparagraph (c)(1)(E) (``All Other Remaining Interest''); or
    c. the entitlement for Orders of 5 Contracts or Fewer under
subparagraph (c)(1)(D) if the Preferred Market Maker is also the
Primary Market Maker and the incoming Order is for 5 Contracts or
Fewer.

    Second, the Exchange is proposing to reiterate that a Preferred
Market Maker shall be allocated after Priority Customer orders have
been fully executed. The Exchange notes that the Preferred Market
Maker's bid/offer must be at the NBBO for an entitlement to apply. The
Exchange notes that the Preferred Market Maker participation
entitlements will apply only after the Opening Process. This is the
case today, but is not currently noted within Options 3, Section 10.
The Exchange proposes to memorialize this limitation for clarity.
    Third, the Exchange proposes to replace the words ``other
Professional Orders and market maker quotes'' with ``other non-Priority
Customer Orders and Market Maker quotes.'' The Exchange believes that
the term ``non-Priority Customer'' reduces any confusion regarding any
reference to Professional Order or Professional Customer. Orders and
quotes are counted individually for purposes of allocation even if they
are from the same market participant. This amendment is not a change to
current System operations.
    The new proposed rule text seeks to capture allocation text
currently within Supplementary Material .03 to Options 3, Section 10
and add text to demonstrate the interaction between the Entitlement for
Orders of 5 Contracts or Fewer and the new proposed bucket of
allocation within proposed Options 3, Section 10(c)(1)(E) for all other
market participants. The Exchange believes that new rule text makes
clear the manner in which the various allocations interact with one
another and make clear that the Member is entitled to the greater of
all potential allocations.
Orders for 5 Contracts or fewer
    Current Supplementary .01(c) to Options 3, Section 10 provides,

    Orders for five (5) contracts or fewer will be executed first by
the Primary Market Maker; provided however, that on a quarterly
basis the Exchange will evaluate what percentage of the volume
executed on the Exchange (excluding volume resulting from the
execution of orders in the Facilitation Mechanism (see Options 3,
Section 11(d))) is comprised of orders for five (5) contracts or
fewer executed by Primary Market Makers, and will reduce the size of
the orders included in this provision if such percentage is over
forty percent (40%).

    The Exchange proposes new rule text within Options 3, Section
10(c)(1)(D) to specifically describe in greater detail the manner in
which Orders of 5 Contracts or Fewer are handled. The Exchange notes
that the Entitlement for Orders of 5 Contracts or Fewer shall only
apply after the Opening Process. The Exchange noted within proposed
Options 3, Section 10(a)(ii) that Options 3, Section 10 was not
applicable to the Block Order Mechanism, Facilitation Mechanism or the
Solicited Order Mechanism within Options 3, Sections 11, the Price
Improvement Mechanism within Options 3, Section 13 and an exposure
period as provided in Options 5, Section 2 at Supplementary Material
.02, unless Options 3, Section 10 is specifically referenced within
GEMX Rules applicable to the aforementioned functionality. These
limitations apply today and the Exchange proposes to memorialize the
limitations within the rule for clarity. The Exchange proposes to amend
and relocate the language concerning the quarterly evaluation into this
proposed new rule text. Specifically, the Exchange proposes to delete
the rule text which excludes volume resulting from the execution of
orders in the Facilitation Mechanism as explained herein with the
proposed applicability rule text. The Exchange specifically describes
allocating orders on the Order Book within Options 3, Section 10. The
Exchange describes functionality and allocations for the Block Order
Mechanism, the Facilitation Mechanism, the Solicited Order Mechanism,
the Price Improvement Mechanism, orders described within Options 3,
Section 11 or an exposure period within other GEMX Rules.\15\ The
Entitlement for Orders of 5 Contracts or Fewer is only allocated
pursuant to proposed Options 3, Section 10(c)(1)(D) and applies
specifically to the Order Book.
---------------------------------------------------------------------------

    \15\ See Options 5, Section 2 at Supplementary Material .02,
unless Options 3, Section 10.
---------------------------------------------------------------------------

    The Exchange proposes to make clear the manner in which Orders of 5
Contracts or Fewer may be allocated by providing that a Primary Market
Maker is entitled to priority with respect to Orders of 5 Contracts or
Fewer if the Primary Market Maker has a quote at the NBBO with no other
Priority Customer or Preferenced Market Maker interest present which
has a higher priority, including when the Primary Market Maker is also
the Preferred Market Maker. Further, the Exchange notes that if the
Primary Market Maker is quoting at the NBBO and the Primary Market
Maker is also the Preferred Market Maker or there is no Preferred
Market Maker quoting at the NBBO, and a Priority Customer has a higher
priority at the time of execution, the Priority Customer will be
allocated the Orders of 5 Contracts or Fewer up to their displayed size
\16\ pursuant to Options 3, Section 10(c)(1)(A) and if contracts
remain, the Primary Market Maker will be allocated the remainder
pursuant to Options 3, Section 10(c)(1)(D).\17\ Finally, if the Primary
Market Maker is quoting at the NBBO and no Priority Customer has a
higher priority at the time of execution and a Preferred Market Maker,
who is not the Primary Market Maker, is quoting at the NBBO then
allocation shall proceed according to Options 3, Section 10(c)(1)(C).
This rule text represents the current practice. The Exchange believes
that spelling out the potential scenarios and explaining the resulting
allocations will make the allocation of Orders of 5 Contracts or Fewer
more transparent.
---------------------------------------------------------------------------

    \16\ The Exchange notes that the inverse is also true. If the
Primary Market Maker is quoting at the NBBO and the Preferenced
Market Maker is not the Primary Market Maker and is quoting at the
NBBO then the Priority Customer would receive the allocation.
    \17\ The Primary Market Maker may receive the remaining
contracts (i.e. if a Priority Customer has 1 contract order and the
Primary Market Maker and a Competitive Market Maker have 5 contracts
each, an incoming order of 5 contracts would be allocated such that
the Priority Customer receives 1 contract and the remaining 4
contracts would be allocated to the Primary Market Maker).
---------------------------------------------------------------------------

    The Exchange proposes a new category of allocation for all other
market participants. The Exchange proposes to note within proposed new
Options 3, Section 10(c)(1)(E), ``If there are contracts remaining
after all priorities in (A)-(D) have been fully executed,
notwithstanding Options 3,

Section 7(g)(3),\18\ such contracts shall be executed based on the Size
Pro-Rata execution algorithm as described within Options 3, Section
10(c). The Exchange notes that the priority of allocation for all other
market participants' changes with respect to the order in which
displayed and non-displayed volume is allocated for non-Priority
Customer market participants. Displayed volume will be allocated before
non-displayed volume. Further Priority Customer non-displayed Reserve
Orders will be allocated before non-Priority Customer non-displayed
Reserve Orders. Proposed Options 3, Section 10(c) describes the manner
in which Priority Customers are allocated pursuant to Size Pro-Rata
priority. The Exchange believes that separating out all other market
participants as a new category as well as referring to the allocation
methodology within each bucket of allocation will make clear the manner
in which the Exchange allocates. This amendment does not change the
operation of the current System.
---------------------------------------------------------------------------

    \18\ Options 3, Section 7(g) concerns Reserve Orders. A Reserve
Order is a limit order that contains both a displayed portion and a
non-displayed portion. Specifically, Options 3, Section 7(g)
provides, ``The displayed portion of a Reserve Order will trade in
accordance with Options 3, Section 10(c) and (d) for Priority
Customer Orders, and Options 3, Section 10(e) and Supplementary
Material .01, for Professional Orders.''
---------------------------------------------------------------------------

    Finally, the Exchange proposes to state that, ``A Market Maker is
entitled only to an Enhanced Primary Market Maker Priority pursuant to
Options 3, Section 10(c)(1)(B) or the Entitlement for Orders of 5
Contracts or Fewer pursuant to Options 3, Section 10(c)(1)(D) on a
quote, or the Preferred Market Maker Priority pursuant to Options 3,
Section 10(c)(1)(C) on a quote.'' The Exchange believes that this text
makes clear that only a market maker quote may receive these enhanced
allocations. Only a Primary Market Maker quote entitles a Primary
Market Maker to the allocations within Options 3, Section 10(c)(1)(B)
or (D) while a quote or a Market Maker Order entitles a Preferred
Market Maker to the allocation within Options 3, Section 10(c)(1)(C).
This amendment does not change the operation of the current System.
Current Rule Text
    The Exchange proposes to delete current Options 3, Section 10(c)-
(e) as this rule text is being replaced by proposed Options 3, Section
10(c)(1)(A), (B) and (E). The Exchange proposes to delete current
Supplementary Material .01 to Options 3, Section 10 which is being
replaced by proposed Options 3, Section 10(a)(1)(A), (B), (D) and (E).
The Exchange proposes to delete current Supplementary Material .02 to
Options 3, Section 10 which is reserved.
    The Exchange proposes to relocate current Supplementary Material
.03 (a) and (b) and part of (c) to Options 2, Section 10, which is
currently reserved, and title that section ``Preferenced Orders''. The
Exchange is proposing to delete part of current Supplementary Material
.03(c) to Options 3, Section 10 which is being replaced by proposed
Options 3, Section 10(c)(1)(C). The Exchange believes that providing a
separate rule for Preferenced Orders will make it easier to locate.
GEMX Options 3, Section 7(g) and Options 2, Section 4
    The Exchange proposes to amend Options 3, Section 7 and Options 2,
Section 4 to update cross-references to Options 3, Section 10.
    The Exchange also proposes, similar to the changes made within
Options 3, Section 10 to remove the term ``Professional'' and
substitute that term with a broader term. In this case, the Exchange
proposes to utilize the term ``non-Priority Customer'' in place of
Professional to indicate market participants who are not Priority
Customers.

Examples

1. Size-Pro Rate Description. This provides a description of size
pro-rata allocation.

Primary Market Maker quote<EMAIL_ADDRESS>x a79697e79695899797
Order1 Priority Customer Buy<EMAIL_ADDRESS>exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order2 Priority Customer Reserve Buy [email protected]">2[email protected] (display qty = 5)
exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order3 Firm Reserve Buy [email protected]">2[email protected] (display qty = 5)
exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order4 Firm Buy [email protected]">2[email protected]
Order5 Firm Reserve Buy<EMAIL_ADDRESS>(display qty = 5) Sell 79eabdea6b0aeae

First Allocation Tier--Priority Customer, displayed, price time

    Sell order trades with:
--Order1<EMAIL_ADDRESS>exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
--Order[email protected]">2[email protected] (displayed only)

Second Allocation Tier--non- Priority Customer, displayed, pro-rata

    Sell Order Trades with:

exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
--Order4 [email protected]">2[email protected]
--Order3<EMAIL_ADDRESS>--Order5<EMAIL_ADDRESS>
    Order 4 has priority because it is the largest order. The
displayed size determines the priority of allocation. If there are
two or more resting orders or quotes at the same price, the System
allocates contracts beginning with the resting order or quote
displaying the largest size proportionally according to displayed
size, based on the total number of contracts displayed at that
price.

Third Allocation Tier--Priority Customer, non-displayed, price time

    Sell Order Trades with:

--Order2<EMAIL_ADDRESS>
Fourth Allocation Tier--non-Priority Customer, non-displayed, pro-rata

    Sell Order trades with:

exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order3 [email protected]">1[email protected]
Order5<EMAIL_ADDRESS>
    The sell order had a size of 75 contracts. In this final
allocation, there were still contracts to be allocated after the
displayed size of all orders at that price has been executed. The
remaining size from the incoming order is allocated proportionally
according to remaining total size of each resting order at such
price, beginning with the order which has the largest total size
remaining.

2. Priority Customer with no other interest

Priority Customer Buy [email protected]$12.00
Priority Customer Sell<EMAIL_ADDRESS>Sell order trades with resting buy order @8.00 pursuant to Section
10(c)(1)(A)

3. Priority Customer with other interest present and displayed v.
non-displayed

Primary Market Maker quote<EMAIL_ADDRESS>x 4d7c7d0d7c7f637d7d
Order1 Priority Customer Buy<EMAIL_ADDRESS>exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order2 Priority Customer Reserve Buy [email protected]">2[email protected] (display qty = 5)
exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order3 Priority Customer Reserve Buy [email protected]">2[email protected] (display qty = 5)
exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
Order4 Priority Customer Buy [email protected]">2[email protected]
Order5 Firm Reserve Buy<EMAIL_ADDRESS>(display qty = 5)
Sell<EMAIL_ADDRESS>
Sell order trades with: Priority Customer displayed, price-time

--Order1<EMAIL_ADDRESS>exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
--Order[email protected]">2[email protected] (displayed only)
--Order3<EMAIL_ADDRESS>(displayed only)
exception occurred on : 2019-20152.htm
exception occurred on : 2019-20152.htm
--Order4 [email protected]">2[email protected]
Non-Priority Customer displayed, Size Pro-Rata

    In this case the Primary Market Maker is allocated the full
quantity which is better than entitlement pursuant to Section
10(c)(1)(B)(i). The incoming sell order has only executed 36 of its
100 contracts; 64 remain. There are only 15 displayed contracts
remaining (10 PMM and 5 Firm), so each of those displayed quantities
are able to be completely filled.

--Primary Market Maker quote<EMAIL_ADDRESS>--Order5<EMAIL_ADDRESS>(displayed only)

Priority Customer non-displayed, price-time

--Order2<EMAIL_ADDRESS>(non-displayed)
--Order3<EMAIL_ADDRESS>(non-displayed)

Non-Priority Customer non-displayed, pro-rata

Order5<EMAIL_ADDRESS>Remaining Sell<EMAIL_ADDRESS>rests on the order book

4. Primary Market Maker allocation where it is 30% and with 5 lot
include rounding

30% example below in #4
    5 lot:

Primary Market Maker quote<EMAIL_ADDRESS>x 6d5c5d2d5c5f435d5d (at NBBO)

Order1 Firm Sell<EMAIL_ADDRESS>Order2 Firm Sell<EMAIL_ADDRESS>Buy<EMAIL_ADDRESS>Buy order trades with Primary Market Maker quote<EMAIL_ADDRESS>pursuant to
Section 10(c)(1)(B)(a)

5. Primary Market Maker's Size Pro-Rata share pursuant Section
10(c)(1)(E) (``All Other Remaining Interest'')

Primary Market Maker quote<EMAIL_ADDRESS>x e7d6d7d7a7d6d5c9d7d7 (at NBBO)
Order1 Firm sell<EMAIL_ADDRESS>Order2 Firm sell<EMAIL_ADDRESS>MM quote<EMAIL_ADDRESS>x<PHONE_NUMBER>352a3d31
Buy<EMAIL_ADDRESS>
Buy order trades with: Best price

--MM quote<EMAIL_ADDRESS>Final price, other interest Size Pro-Rata

    Primary Market Maker is allocated the Size Pro-Rate quantity
pursuant to Section 10(c)(1)(B)(i)(b). This allocation quantity was
greater than 30% allocation pursuant to 10(c)(1)(B)(i)(a).

--Primary Market Maker quote<EMAIL_ADDRESS>--Order1<EMAIL_ADDRESS>--Order2<EMAIL_ADDRESS>
6. Primary Market Maker is Preferenced Market Maker and gets
Preferenced Allocation

Primary Market Maker quote<EMAIL_ADDRESS>x 9dacadadddacafb3adad (at NBBO)
Order1 Firm sell<EMAIL_ADDRESS>MM1 Quote<EMAIL_ADDRESS>x 4b7a7b7b0b7a79657b7b
MM2 Quote<EMAIL_ADDRESS>x d5e4e5e595e4e7fbe5e5
Buy order<EMAIL_ADDRESS>preferenced to Primary Market Maker

    Buy order trades with: Preferenced Market Maker 40% priority
share pursuant to Section 10(c)(1)(c)(i)(a).

--Primary Market Maker quote<EMAIL_ADDRESS>
    Pro-rata with other interest:

--Order1<EMAIL_ADDRESS>--MM1 Quote<EMAIL_ADDRESS>--MM2 Quote<EMAIL_ADDRESS>
7. Primary Market Maker and Preferenced Market Maker are not the
same

Primary Market Maker quote<EMAIL_ADDRESS>x 94a5a4a4d4a5a6baa4a4 (at NBBO)
Order1 Firm sell<EMAIL_ADDRESS>MM1 Quote<EMAIL_ADDRESS>x a6979696e69794889696 (at NBBO)
MM2 Quote<EMAIL_ADDRESS>x 3d0c0d0d7d0c0f130d0d
Buy order<EMAIL_ADDRESS>preferenced to MM1

    Buy order trades with: Preferenced Market Maker 40% priority
share pursuant to Section 10(c)(1)(c)(i)(a).

--MM1 Quote<EMAIL_ADDRESS>
Pro-rata with other interest:

--Primary Maker Maker quote<EMAIL_ADDRESS>--Order1<EMAIL_ADDRESS>--MM2 Quote<EMAIL_ADDRESS>2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\19\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\20\ 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
reorganize Options 3, Section 10, add additional context and provide
for limitations in the Opening Process and the auctions is consistent
with the Act because the additional organization and detail will bring
greater transparency to the Exchange's rule. Proposed Options 3,
Section 10(a)(ii) reflects the current System. This rule change does
not amend the current System.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, with respect to zero-bid options series, indicating
that Market Orders to sell which are submitted prior to the Opening
Process and persist after the Opening Process will be posted at a price
equal to the minimum trading increment as defined in Options 3, Section
3 will provide additional information to Members about the Exchange's
current practice. The Exchange believes that providing Members with the
anticipated outcome of submitting zero-bid Market Orders will remove
impediments to and perfect the mechanism of a free and open market.
    The Exchange proposes to replace the words ``other Professional
Orders and market maker quotes'' with ``other non-Priority Customer
orders and Market Maker quotes.'' The Exchange believes that the term
``non-Priority Customer'' reduces any confusion regarding any reference
to Professional Order or Professional Customer. Orders and quotes are
counted individually for purposes of allocation even if they are from
the same market participant. This amendment is not a change to current
System operations.
    The Exchange's proposal to replace the term ``best price'' with
``NBBO'' is consistent with the Act because it will provide greater
transparency to the allocation process. The best price in this case is
the NBBO. The amendment to this term does not reflect a substantive
change to the current System. With respect to a Primary Market Maker's
quote, the quote will not be executed at a price that trades through
another market or displayed at a price that would lock or cross another
market. The ``NBBO'' is the best Protected Bid and Protected Offer as
defined in the Options Order Protection and Locked/Crossed Markets
Plan; Protected Bids and Protected Offers that are displayed at a price
but available on the Exchange at a better non-displayed price shall be
included in the NBBO at their better non-displayed price for purposes
of this rule.\21\
---------------------------------------------------------------------------

    \21\ See 17 CFR 242.600(b)(43).
---------------------------------------------------------------------------

    Providing a more detailed description of the manner in which the
System applied Size Pro-Rata allocation in the current rule text, which
is not currently contained in current Options 3, Section 10, is
consistent with the Act because expanding upon the Exchange's current
practice will further detail for Members the manner in which allocation
occurs in the System. The Exchange's proposal is not intended to change
the Exchange's allocation methodology, rather the Exchange is proposing
to make clear the manner in which allocation is structured within the
System. Further the Exchange's proposal to describe the manner in which
orders are allocated to various types of market participants by
category of participant and the possible outcomes if multiple
allocations apply is consistent with the Act because understanding the
potential outcomes protects investors and the public interest by
increasing transparency. The Exchange's proposal to relocate current
rule text into the current rule and provide additional detail including
limitations for Preferred Market Maker participation entitlements
during the Opening Process and limitations on allocations of Orders of
5 Contracts or Fewer during the Opening Process and auctions will
increase transparency for the protection of investors and the public
interest. These limitations exist today. Finally, the Exchange believes
that including all potential scenarios for allocation Orders of 5
Contracts or Fewer more clearly explains the Exchange's current
allocation process. The Exchange believes that providing more detail
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 does
not amend the current manner in which the Exchange allocates interest
among market participants. The amendments to the rule reflect the
manner in which the current System operates. The Exchange notes that
Priority Customers will continue to be afforded certain allocation
rights which are not available to other market participants. This is
the case today. Primary Market Makers and

Preferred Market Makers will continue to be afforded certain
entitlements because of the continuing obligations they are bound to
with respect to provide liquidity and quoting on the Exchange.\22\ The
Exchange notes that other market participants will continue to be
allocated in the same manner as they are today on a Size Pro-Rata basis
after other entitlements have been allocated. The Exchange believes the
proposed rule provides more detail and offers more transparency into
the allocation process.
---------------------------------------------------------------------------

    \22\ See GEMX Rule Options 2, Section 3.
---------------------------------------------------------------------------

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 \23\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\24\
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \24\ 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.
---------------------------------------------------------------------------

    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<EMAIL_ADDRESS>Please include
File Number SR-GEMX-2019-10 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-GEMX-2019-10. 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
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-2019-10 and should be submitted on or before October 9, 2019.
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20152 Filed 9-17-19; 8:45 am]
 BILLING CODE 8011-01-P