[Federal Register Volume 86, Number 60 (Wednesday, March 31, 2021)]
[Notices]
[Pages 16801-16806]
[FR Doc No: 2021-06559]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91408; File No. SR-GEMX-2021-01]

Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Various
Rules in Options 3

March 25, 2021.
    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 March 12, 2021, 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 various rules in Options 3.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/gemx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to amend various rules
in Options 3. The proposed changes consist of conforming existing rules
to current System technology, amending rule text to add greater detail
on how certain Exchange functionality operate today. Furthermore, the
proposed changes are intended to harmonize the Exchange's rules where
appropriate with the rules of the Exchange's affiliated options
markets, including by using consistent language to describe identical
functionality.\3\ As such, no System changes to existing functionality
are being made pursuant to this proposal. Rather, this proposal is
designed to reduce any potential investor confusion as to the features
and applicability of certain functionality presently available on the
Exchange. These changes are described in detail below, and include
amending Exchange rules governing: (1) The Block Order Mechanism
(``Block''),\4\ (2) the Facilitation Mechanism (``Facilitation''),\5\
(3) the Solicited Order Mechanism (``Solicitation''),\6\ (4) the Price
Improvement Mechanism (``PIM''),\7\ and (5) Anti-Internalization.\8\
---------------------------------------------------------------------------

    \3\ The Exchange's affiliate, Nasdaq ISE, LLC (``ISE'') recently
filed a substantially similar rule change as part of this exercise.
See Securities Exchange Act Release No. 91223 (February 26, 2021)
(SR-ISE-2021-01).
    \4\ See Options 3, Section 11(a).
    \5\ See Options 3, Section 11(b).
    \6\ See Options 3, Section 11(d).
    \7\ See Options 3, Section 13.
    \8\ See Options 3, Section 15(a)(3)(A).
---------------------------------------------------------------------------

Universal Changes
    In September 2019, the Exchange amended its regular allocation rule
in Options 7, Section 10 (Priority of Quotes and Orders) to make non-
substantive changes, among other changes, to replace references to
Professional interest with non-Priority Customer interest.\9\ The
Exchange now proposes to make similar changes to replace all instances
of ``Professional'' interest with ``non-Priority Customer'' interest
throughout its auction allocation rules in Options 3, Section 11 and
Section 13 to align with the changes made in SR-GEMX-2019-10.\10\ While
the term ``Professional Orders'' is defined within Options 1, Section
1(a)(38) as an order that is for the account of a person or entity that
is not a Priority Customer, the Exchange believes that using the term
``non-Priority Customer'' is more clear in describing the types of
market participant to which the allocation applies, and also reduces
confusion regarding any reference to Professional Orders or
Professional Customer orders.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 86946 (September 12,
2019), 84 FR 49158 (September 18, 2019) (SR-GEMX-2019-10).
    \10\ Specifically in Options 3, Section 11, the Exchange will
amend current subsections (a)(2)(ii), (b)(3)(i)-(iii) (renumbered to
(b)(4)(i)-(iii) under this proposal), and (d)(2)(iii) (renumbered to
(d)(3)(iii) under this proposal). In Options 3, Section 13, the
Exchange will amend current subsections (d)(1)-(3).
---------------------------------------------------------------------------

    In addition, the Exchange proposes to make universal changes in its
Facilitation and Solicitation rules \11\ to clearly delineate between
orders and Responses \12\ of the same capacity. For example, where the
existing rule text currently states ``Priority Customer bids
(offers),'' the Exchange proposes instead to state ``Priority Customer
Orders and Priority Customer Responses to buy (sell).'' The Exchange
notes that this is merely a non-substantive change as auction orders
and Responses of the same capacity do not get treated differently for
allocation purposes today. With the proposed changes, the Exchange is
merely seeking to bring greater transparency around how allocation
takes place in those auction mechanisms today.
---------------------------------------------------------------------------

    \11\ Specifically in Options 3, Section 11, subsections
(b)(3)(i)-(iii) (renumbered to (b)(4)(i)-(iii)), and (d)(2)(i) and
(iii) (renumbered to (d)(3)(i) and (iii)) will be updated.
    \12\ A ``Response'' is an electronic message that is sent by
Members in response to a broadcast message. See Options 3, Section
11.
---------------------------------------------------------------------------

Block Order Mechanism
    The Exchange proposes minor changes to the current descriptions of
the Block execution and allocation process in Options 3, Section 11(a).
As discussed below, the proposed Block changes are non-substantive in
nature, and are intended to harmonize with the Block rule on its
affiliated market, BX Options (``BX'') in order to ensure rule
consistency between the Exchange and its affiliate offering identical
functionality.
    First, the Exchange proposes to add ``up to the size of the block
order'' at the end of subsection (a)(2)(i). As amended, the rule will
provide that bids (offers) on the Exchange at the time the block order
is time the block order is executed

that are priced higher (lower) than the block execution price, as well
as Responses that are priced higher (lower) than the block execution
price, will be executed in full at the block execution price up to the
size of the block order. The Exchange is making this non-substantive
change to align with BX's Block rule,\13\ which will ensure rule
consistency for identical functionality across affiliated markets. The
language states that better priced interest gets executed in full only
if there is sufficient size to execute against such interest, which is
how block orders are executed and priced on the Exchange and BX today.
---------------------------------------------------------------------------

    \13\ See BX Options 3, Section 11(a)(2)(A).
---------------------------------------------------------------------------

    Second, the Exchange proposes a non-substantive change in the first
sentence of subsection (a)(2)(ii) to replace ``first and in time
priority'' with ``first in price time priority.'' As amended, the rule
will provide that at the block execution price, Priority Customer
Orders and Priority Customer Responses will be executed first in price
time priority. This is not a change to the current Block allocation
methodology, but rather a non-substantive change for better
readability, and to align with BX's Block rule \14\ in order to ensure
rule consistency for identical functionality across affiliated markets.
Block orders will continue to trade at a single execution price that
allows the maximum number of contracts of the block order to be
executed against both the Responses entered to trade against the order
and unrelated interest on the Exchange's order book.
---------------------------------------------------------------------------

    \14\ See BX Options 3, Section 11(a)(2)(B).
---------------------------------------------------------------------------

Example 1
Block order is entered to buy 50 contracts @1.50

    The following Responses are received:

Priority Customer Response 1 to sell 40 contracts @ 1.40
Priority Customer Response 2 to sell 10 contracts @ 1.40
Priority Customer Response 3 to sell 10 contracts @ 1.39

    The block execution price would be $1.40 (i.e., the price at which
the maximum number of contracts could be executed) and would be
executed as follows:

Block order trades 10 with Priority Customer Response 3 @1.40
Block order trades 40 with Priority Customer Response 1 @1.40

    As shown above, Priority Customer Response 3 would be executed in
full since it is priced better than the block execution price and there
is sufficient size to execute Response 3 against the block order, while
Priority Customer Responses 1 and 2, which are priced at the block
execution price, would participate in price time priority--i.e., the
remaining 40 contracts would go to Response 1, which was received
before Response 2.
Facilitation Mechanism
    The Exchange proposes a number of changes to its Facilitation rule,
none of which will change the current operation of this technology
offering.
    In Options 3, Section 11(b), the Exchange proposes to add new
subsection (b)(1),\15\ which will provide that Orders must be entered
into the Facilitation Mechanism at a price that is (A) equal to or
better than the NBBO on the same side of the market as the agency order
unless there is a Priority Customer order on the same side Exchange
best bid or offer, in which case the order must be entered at an
improved price; and (B) equal to or better than the ABBO \16\ on the
opposite side. Orders that do not meet these requirements are not
eligible for the Facilitation Mechanism and will be rejected. The
Exchange is not proposing any other changes to the current entry
requirements for Facilitation. The new subsection (b)(1) would simply
provide additional detail about Facilitation's existing entry checks.
---------------------------------------------------------------------------

    \15\ As a result, current subsections (b)(1)-(3) will be
renumbered as (b)(2)-(4). The Exchange will also renumber current
subsection (b)(3)(iv) as subsection (b)(5).
    \16\ The term ``Away Best Bid or Offer'' or ``ABBO'' means the
displayed National Best Bid or Offer not including the Exchange's
Best Bid or Offer. See Options 1, Section 1(a)(4).
---------------------------------------------------------------------------

Example 2
    Assume the following market:

Exchange BBO: 1 x 2 (also NBBO)
CBOE: 0.75. x 2.25 (next best exchange quote)
Facilitation order is entered to buy 50 contracts @ 2.05

    No Responses are received.
    The Facilitation order executes with resting 50 lot quote @2. In
this instance, the Facilitation order is able to begin crossed with the
contra side Exchange BBO because in execution, the resting 50 lot quote
@2 is able to provide price improvement to the facilitation order.
    In renumbered subsection (b)(3), the Exchange proposes to replace
the words ``must not exceed'' with ``will only be considered up to.''
This change more accurately describes current behavior in that the
System will cap Responses to the size of the auction for purposes of
allocation methodology.
    In renumbered subsections (b)(4)(ii) and (b)(4)(iii), the Exchange
proposes to amend the rule to provide that the facilitating Member will
be allocated up to forty percent (40%) (or such lower percentage
requested by the Member) of the original size of the facilitation
order. If the Member requests a lower allocation percentage, the
contra-side order would receive an allocation consistent with the
percentage requested by the Member. Regardless of the Member's request,
the contra-side order would still be responsible for executing up to
the full size of the agency order if there is not enough interest to
execute the agency order at a particular price.\17\
---------------------------------------------------------------------------

    \17\ Other options exchanges such as BX provide similar
functionality that allows members using an auction mechanism to
configure allocation priority. See, e.g., BX Options 3, Section 13,
which provides a similar feature for the BX Options Price
Improvement Auction (``PRISM'') called ``Surrender.'' ISE also
recently amended its Facilitation rule in ISE Options 3, Section
11(b), which governs identical functionality on ISE as the
Exchange's Facilitation Mechanism, to make the same change as
proposed herein. See supra note 3.
---------------------------------------------------------------------------

    The Exchange also proposes to more accurately describe
Facilitation's auto-match functionality, which provides an enhanced
price improvement opportunity for the agency order by permitting the
contra-side order to further participate in the cross by auto-matching
the price and size of competing interest providing price improvement
from other market participants. The Exchange adopted Facilitation (and
its auto-match functionality) as part of its application to be
registered as a national securities exchange.\18\ In approving
Facilitation, the Commission noted that it was largely based on similar
functionality offered by ISE.\19\ The rule currently provides that upon
entry of an order into the Facilitation Mechanism, the facilitating
Electronic Access Member can elect to automatically match the price and
size of orders, quotes and responses received during the exposure
period up to a specified limit price or without specifying a limit
price. In this case, the facilitating Electronic Access Member will be
allocated its full size at each price point, or at each price point
within its limit price is a limit is specified, until a price point is
reached

where the balance of the order can be fully executed.\20\ The Exchange
proposes to state that if a Member elects to auto-match, the
facilitating Electronic Access Member will be allocated the aggregate
size of all competing quotes, orders, and Responses (instead of ``its
full size'') at each price point, or at each price point up to the
specified limit price (instead of ``within its limit price'') if a
limit is specified, until a price point is reached where the balance of
the order can be fully executed. The Exchange believes that the
modified language more accurately explains how the functionality works
today, and better aligns with how this feature is described in the
Auto-Match Filing.\21\
---------------------------------------------------------------------------

    \18\ See Securities Exchange Act Release No. 70050 (July 26,
2013), 78 FR 46622 (August 1, 2013) (File No. 10-209).
    \19\ ISE adopted its auto-match functionality in 2010. See
Securities Exchange Act Release No. 62644 (August 4, 2010), 75 FR
48395 (August 10, 2010) (SR-ISE-2010-61) (``Auto-Match Filing''). As
discussed later in this filing, the Auto-Match Filing also
introduced the auto-match feature on ISE's PIM, which is
functionally identical to the Exchange's PIM. As such, the Exchange
is proposing to make similar changes in PIM's auto-match rule as
proposed for Facilitation's auto-match rule.
    \20\ See Options 3, Section 11(b)(3)(iii) (renumbered to Section
11(b)(4)(iii) under this proposal).
    \21\ The Auto-Match Filing describes the auto-match feature as
allowing the initiating member to submit a contra-side order that
will automatically match the price and size set forth by the
competing interest from other market participants (i.e., auction
responses, quotes, and orders) at any price level during the auction
or up to a specified limit price if a limit is specified.
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to add at the end of Supplementary
Material .01 to Options 3, Section 11 that any solicited contra orders
entered by Members into the Facilitation Mechanism to trade against
Agency Orders may not be for the account of an Exchange Market Maker
that is assigned to the options class.\22\ This language was included
in the approval order to SR-ISE-2006-78 to allow solicited transactions
in ISE's Facilitation Mechanism. As discussed above, the Exchange's
Facilitation Mechanism is functionally identical to ISE's Facilitation
Mechanism. As such, the Exchange seeks to import the same prohibition
into the Exchange's rule text for greater transparency.
---------------------------------------------------------------------------

    \22\ See Securities Exchange Act Release No. 55557 (March 29,
2007), 72 FR 16838 (April 5, 2007) (SR-ISE-2006-78) (Order Granting
Approval of Proposed Rule Change Relating to Facilitation
Mechanism).
---------------------------------------------------------------------------

Solicited Order Mechanism
    The Exchange proposes the below changes to its Solicitation rule,
none of which will change the current operation of this technology
offering.
    In Options 3, Section 11(d), the Exchange proposes to add new
subsection (d)(1),\23\ which will provide that orders must be must be
entered into the Solicited Order Mechanism at a price that is equal to
or better than the NBBO on both sides of the market; provided that, if
there is a Priority Customer order on the Exchange best bid or offer,
the order must be entered at an improved price. Orders that do not meet
these requirements are not eligible for the Solicited Order Mechanism
and will be rejected. The Exchange is not proposing any other changes
to the current entry requirements for Solicitation. The new subsection
(d)(1) would simply provide additional detail about Solicitation's
existing entry checks.
---------------------------------------------------------------------------

    \23\ As a result, current paragraphs (d)(1)-(3) will be
renumbered accordingly. The Exchange will also renumber current
paragraph (d)(2)(iv) as paragraph (d)(4).
---------------------------------------------------------------------------

Example 3
    Assume the following market:

Exchange BBO: 1 x 2 (also NBBO)
CBOE: 0.75. x 2.25 (next best exchange quote)
Solicitation order is entered to buy 500 contracts @2.05

    The Solicitation order is rejected upon entry for being crossed
with the NBBO on the contra side. In contrast to Example 2 above for
Facilitation, the Solicitation order in this instance is not able to
begin crossed with the contra side Exchange BBO because of the all-or-
none contingency of the Solicitation order.\24\
---------------------------------------------------------------------------

    \24\ See Options 3, Section 11(d) (requiring that each
Solicitation order be designated as all-or-none).
---------------------------------------------------------------------------

Price Improvement Mechanism
    The Exchange proposes a number of changes to the PIM rule, none of
which will change the current operation of this technology offering. As
noted above, many of these modifications are similar to the changes
proposed for Facilitation.
    The Exchange proposes in Options 3, Section 13(b)(2) to delete
``national best bid or offer'' as NBBO is already defined in subsection
(b)(1) above. The Exchange proposes in subsection (c)(2) to provide
that responses in the PIM (i.e., ``Improvement Orders'') will only be
considered up to the size of the Agency Order. The proposed amendment
will specify that the System will cap the size of the Improvement
Orders to the auction size for purposes of the allocation methodology.
This is similar to the change proposed above for Facilitation. The
Exchange also proposes in subsection (c)(3) to amend the internal
numbering from (1) and (2) to (i) and (ii) for greater numbering
consistency within the PIM rule.
    In subsection (d)(3), which describes how allocation and execution
takes place in PIM, the Exchange proposes that the Counter-Side Order
will be allocated the greater of one contract or 40% (or such lower
percentage requested by the Member) of the initial size of the Agency
Order. Similar to Facilitation as discussed above, the System currently
permits Members entering orders into PIM to elect to receive a
percentage allocation that is less than 40%, although the current rule
is silent in this regard. If the Member requests a lower allocation
percentage, the Counter-Side Order would receive an allocation
consistent with the percentage requested by the Member. Regardless of
the Member's request, the Counter-Side Order would still be responsible
for executing up to the full size of the agency order if there is not
enough interest to execute the agency order at a particular price.\25\
---------------------------------------------------------------------------

    \25\ As noted above, BX has a similar feature called Surrender
for its PRISM auction. See supra note 17.
---------------------------------------------------------------------------

    The Exchange also proposes to more accurately describe PIM's auto-
match functionality in a similar manner as Facilitation's auto-match
functionality, as discussed above. In this instance, the Exchange
proposes to amend the third sentence of subsection (d)(3) to provide:
``If a Member elects to auto-match, the Counter-Side Order will be
allocated the aggregate size of all competing quotes, orders, and
Responses at each price point up to the specified limit price if a
limit is specified, until a price point is reached where the balance of
the order can be fully executed.'' Similar to the proposed amendments
to Facilitation's auto-match, the Exchange believes that the proposed
language for PIM's auto-match more clearly explains how the
functionality works today, and better aligns with how this feature is
described in the Auto-Match Filing.
    The Exchange further proposes technical amendments in subsection
(d)(3) to replace all instances of ``Counter-Side order'' as ``Counter-
Side Order'' to use the correct terminology.
Anti-Internalization
    The Exchange proposes to amend its anti-internalization (``AIQ'')
rule in Options 3, Section 15(a)(3)(A). Specifically, the Exchange
proposes to add that AIQ does not apply during the opening process or
reopening process following a trading halt pursuant to Options 3,
Section 8 to provide more specificity on how this functionality
currently operates. The Exchange notes that the same procedures used
during the opening process are used to reopen an option series after a
trading halt, and therefore proposes to specify that AIQ will not apply
during an Opening Process (i.e., the opening and halt reopening
process) in addition to an auction, as currently within the Rule. AIQ
is unnecessary during an Opening Process due to the high level of
control that Market Makers exercise over their quotes during this
process. The

proposed changes will align the Exchange's AIQ rule with BX's AIQ rule,
which sets forth materially identical functionality.\26\
---------------------------------------------------------------------------

    \26\ See BX Options 3, Section 15(c)(1).
---------------------------------------------------------------------------

Technical Amendments
    The Exchange proposes two technical changes in the Supplementary
Material to Options 3, Section 11. First, the Exchange proposes in
Supplementary Material .03 to update an incorrect cross-cite from
Options 3, Section 22(d) to Section 22(b), which limits principal
transactions. Second, the Exchange proposes in Supplementary Material
.05 to update the reference to ``Block Mechanism'' to ``Block Order
Mechanism'' to use the correct terminology.
    Lastly, the Exchange proposes to retitle General 4 (currently
titled ``Regulation'') to ``Registration Requirements'' to harmonize
its General Rule titles with that of its affiliates The Nasdaq Stock
Market LLC and Nasdaq BX, Inc.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\27\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\28\ 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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal is consistent with the
protection of investors and public interest as all of the proposed
changes will increase transparency around how various existing Exchange
mechanisms work today. As such, no System changes to existing
functionality are being made pursuant to this proposal. Rather, this
proposal is designed to reduce any potential investor confusion as to
the features and applicability of certain functionality presently
available on the Exchange.
    Furthermore, the proposed changes seek to provide greater
harmonization between the rules of the Exchange and its affiliates.\29\
The Exchange believes that these harmonizing changes would result in
greater uniformity, and ultimately less burdensome and more efficient
regulatory compliance by market participants. As such, the proposed
rule change would foster cooperation and coordination with persons
engaged in facilitating transactions in securities and would remove
impediments to and perfect the mechanism of a free and open market and
a national market system. The Exchange also believes that more
consistent rules will increase the understanding of the Exchange's
operations for Members that are also members on the Exchange's
affiliates, thereby contributing to the protection of investors and the
public interest.
---------------------------------------------------------------------------

    \29\ See supra note 3.
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposed universal
changes to replace all instances of Professional interest with non-
Priority Customer interest throughout the Exchange's auction allocation
rules will add greater consistency within the Exchange's rules. As
discussed above, the Exchange previously made the same modifications
within its standard allocation rule in Options 7, Section 10, so the
proposed changes will promote more consistent terminology in the rules
and make them easier for market participants to navigate and
comprehend. The Exchange also believes that using the term ``non-
Priority Customer'' reduces any potential confusion regarding any
reference to Professional Orders or Professional Customer orders. In
addition, the Exchange believes that clearly delineating between orders
and Reponses of the same capacity in the Facilitation and Solicitation
rules will bring clarity and transparency around how allocation takes
place in those auction mechanisms today. The Exchange is simply adding
more granularity within its rules and specifying the capacity of such
order or Response. As noted above, the Exchange is not changing the
current allocation methodology, and auction orders and Responses of the
same capacity do not get treated differently for allocation purposes
today.
    The Exchange believes that the proposed changes to the Block rule
are consistent with the protection of investors and the public interest
as the modifications will more accurately reflect the handling of
auctions in Block, specifically as it relates to execution and
allocation. The proposed changes will specify that better priced
interest entered into Block gets executed in full only if there is
sufficient size to execute against such interest, and that Priority
Customer interest gets executed first in price time priority. This
specificity will be helpful to market participants utilizing Block and
provide greater certainty as to how their Block orders will be executed
and allocated. The Exchange also believes that the proposed changes
will continue to ensure a fair and orderly market by maintaining and
protecting the priority of Priority Customer orders, while still
affording the opportunity for all market participants to seek liquidity
and potential price improvement during each Block auction commenced on
the Exchange. As noted above, the Exchange is not proposing any changes
to the current execution or allocation methodology but believes that
the changes will promote consistency with the rulebook of its
affiliated exchange BX, which offers identical functionality.\30\
---------------------------------------------------------------------------

    \30\ See supra notes 13-14, and accompanying text.
---------------------------------------------------------------------------

    Similarly, the Exchange believes that specifying the entry checks
for Facilitation and Solicitation is consistent with the protection of
investors and the public interest by bringing more transparency around
how the entry checks operate today. The Exchange is not amending the
current Facilitation and Solicitation entry checks; rather, the
proposed changes are simply intended to add a more robust description
of current System behavior in the Exchange's rules. The Exchange also
believes it is appropriate to require that the Facilitation order be
entered at an improved price if there is a Priority Customer order on
the same side Exchange best bid or offer as the agency order. The
Exchange believes this will ensure a fair and orderly market by
maintaining priority of orders and quotes and protecting Priority
Customer orders, while still affording the opportunity to seek
liquidity and for potential price improvement during each Facilitation
auction commenced on the Exchange. For the same reasons, the Exchange
believes that it is appropriate to require that the Solicitation order
be entered at an improved price if there is a Priority Customer order
on the Exchange best bid or offer.
    The proposed changes to replace ``must not exceed'' with ``will
only be considered up to'' in the Facilitation and PIM rules are
intended to more accurately describe that the System will cap the size
of Responses to the size of the agency order for purposes of
allocation. The Exchange is not amending current System behavior;
rather, the modifications will more clearly articulate the handling of
Responses by the System.
    The Exchange believes that its proposal to specify in the
Facilitation and PIM rules that an initiating Member may elect to
receive a percentage allocation lower than 40% is consistent with the
Act. This feature provides an initiating Member that submits an order
into Facilitation or PIM with the flexibility to configure its
allocation

percentage up to the full 40% entitlement. The Exchange notes that
regardless of the Member's instruction, the contra-side order would
still be responsible for executing up to the full size of the agency
order if there is not enough interest to execute the agency order at a
particular price. The Exchange continues to believe that the 40%
allocation entitlement is consistent with the statutory standards for
competition and free and open markets by promoting price competition
within Facilitation and PIM as Members would still have a reasonable
opportunity to compete for a significant percentage of the incoming
order. The Exchange also notes that the configurable 40% allocation
entitlement for Facilitation and PIM is consistent with the
configurable allocation entitlements in place on its affiliated
exchanges.\31\ Accordingly, the Exchange believes that the proposed
changes will promote consistency across the rulebooks of exchanges
offering identical functionality.
---------------------------------------------------------------------------

    \31\ See supra note 17.
---------------------------------------------------------------------------

    With respect to the proposed changes to the Facilitation and PIM
auto-match feature, the Exchange is amending the current rule text so
that it more accurately explains how the Exchange will allocate an
order designated for auto-match today. As discussed above, the Exchange
is not making any substantive changes to the allocation procedure
itself; rather the proposed changes are intended to better align how
this feature is described in the Auto-Match Filing.\32\ Similarly, the
Exchange believes that the proposed change in Supplementary Material
.01 to Options 3, Section 11 to add the provision that any solicited
contra orders entered by Members into the Facilitation Mechanism to
trade against Agency Orders may not be for the account of an Exchange
Market Maker that is assigned to the options class will better align
the rule text with SR-ISE-2006-78. As discussed above, this restriction
was included in the approval order to the rule filing that allowed
solicited transactions in ISE's Facilitation Mechanism, which is
identical to the Exchange's Facilitation Mechanism, so the Exchange
will import that language into the rule text for greater
transparency.\33\
---------------------------------------------------------------------------

    \32\ See supra note 21.
    \33\ See supra note 22.
---------------------------------------------------------------------------

    The Exchange believes its proposal to provide that AIQ will not
apply during an Opening Process (i.e., the opening process or halt
reopening process) will more accurately state how this functionality
currently operates. AIQ prevents Market Makers from trading against
their own quotes and orders. While the Exchange believes that this
protection is useful for Market Makers to manage their trading during
regular market hours, applying AIQ is unnecessary during an Opening
Process due to the high level of control that Market Makers already
exercise over their quotes during this process. Furthermore, the
proposed AIQ changes will promote consistency with the rulebook of its
affiliated exchange BX, which offers identical functionality.\34\
---------------------------------------------------------------------------

    \34\ See supra note 26.
---------------------------------------------------------------------------

    The Exchange further believes that the technical changes it is
proposing throughout Options 3 are non-substantive changes intended to
enhance the accuracy of the Exchange's Rulebook, which will alleviate
potential confusion as to the applicability of its rules. As discussed
above, these changes consist of updating cross-cites and using correct
terminology. Lastly, the Exchange believes that the harmonizing change
to retitle General 4, as discussed above, will serve to further
harmonize its Rule titling with that of its affiliates, thereby
promoting efficiency and conformity of its processes with those of its
affiliated exchanges.

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. As indicated above, no System
changes to existing functionality are being made pursuant to this
proposal; rather, this proposal is designed to reduce any potential
investor confusion as to the features and applicability of certain
functionality presently available on the Exchange. Therefore, the
proposed changes are designed to enhance clarity and consistency in the
Exchange's Rulebook.
    Furthermore, many of the proposed changes seek to provide greater
harmonization between the rules of the Exchange and its affiliates, and
therefore promotes fair competition among the options exchanges. In
particular, the proposed changes discussed above for Block and AIQ are
based on BX rules governing identical functionality.\35\ The Exchange
notes that it operates in a highly competitive market in which market
participants can readily direct order flow to competing venues who
offer similar functionality. The Exchange believes that the proposed
rule change will enhance competition among the various markets for
auction execution, potentially resulting in more active trading in
auction mechanisms across all options exchanges.
---------------------------------------------------------------------------

    \35\ See BX Options 3, Section 11(a) (Block) and Section
15(c)(1) (AIQ).
---------------------------------------------------------------------------

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 \36\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\37\
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \37\ 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-2021-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-GEMX-2021-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-GEMX-2021-01, and should be submitted on
or before April 21, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06559 Filed 3-30-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: June 29, 2006 (Volume 71, Number 125)]
[Notices]
[Page 37066-37067]
[DOCID:fr29jn06-42]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Notice of Application for Non-Project Use of Project Lands and
Waters and Soliciting Comments, Motions To Intervene, and Protests

June 19, 2006.
    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection.
    a. Type of Application: Non-Project Use of Project Lands and
Waters.
    b. Project No.: 271-094.
    c. Date filed: May 26, 2006.
    d. Applicant: Entergy Arkansas, Inc.
    e. Name of Project: Carpenter & Remmel Dams.
    f. Location: Lake Hamilton on the Quachita River, Garland and Hot
Springs Counties, Arkansas.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791(a)-825(r).
    h. Applicant Contact: Mr. W. Henry Jones, Manager Hydro Operations,
Entergy Fossil Operations, Lake Catherine/Hydro/Lynch, 141 West County
Line Road, Malvern, AR 72104, Telephone<PHONE_NUMBER>.
    i. FERC Contact: John K. Novak, Telephone<PHONE_NUMBER>, e-mail
<EMAIL_ADDRESS>
    j. Deadline for filing comments and or motions: July 17, 2006.
    k. Description of Proposal: Entergy, Arkansas, Inc. is requesting
Commission approval to authorize the City of Hot Springs (City) to
increase its water withdrawal to 30 million gallons per day (MGD) from
Lake Hamilton for municipal use. Currently the City is authorized to
withdraw 20 MGD from Lake Hamilton. Under the current proposal the City
would be allowed to withdraw up to 30 MGD in a single day, not to
exceed an average of 20 MGD within a rolling 3-month period. This
proposal would require no new construction or alteration of the
existing water withdrawal facilities.
    l. Locations of the Application: A copy of the application is
available for inspection and reproduction at the Commission's Public
Reference Room, located at 888 First Street, NE., Room 2A, Washington,
DC 20426, or by calling<PHONE_NUMBER>. This filing may also be viewed
on the Commission's Web site at http://www.ferc.gov using the

``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field (p-271) to access the document. You
may also register online at http://ferc.gov/docs-filing/esubscription.asp
 to be notified via e-mail of new filings and

issuances related to this or other pending projects. For assistance,
call 1-866-208-3676 or e-mail<EMAIL_ADDRESS>for TTY, call
(202) 502-8659. A copy is also available for inspection and
reproduction at the address in item (h) above.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments, Protest, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211,
and .214. In determining the appropriate action to take, the Commission
will consider all protests or other comments filed, but only those who
file a motion to intervene in accordance with the Commission's Rules
may become a party to the proceeding. Any comments, protests, or
motions to intervene must be received on or before the specified
comment date for the particular application.
    o. Filing and Service of Responsive Documents: Any filings must
bear in capital letters the title ``COMMENTS'', RECOMMENDATIONS FOR
TERMS AND CONDITIONS'', ``PROTEST'', or ``MOTION TO INTERVENE'', as
applicable, and the Project Number of the particular application to
which the filing refers (P-271-094). All documents (original and eight
copies) should be filed with: Magalie R. Salas, Secretary, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426. A copy of any motion to intervene must also be served upon each

representative of the Applicant specified in the particular
application.
    p. Agency Comments: Federal, state, and local agencies are invited
to file comments on the described application. A copy of the
application may be obtained by agencies directly from the Applicant. If
an agency does not file comments within the time specified for filing
comments, it will be presumed to have no comments. One copy of an
agency's comments must also be sent to the Applicant's representatives.
    q. Comments, protests and interventions may be filed electronically
via the Internet in lieu of paper. See, 18 CFR 385.2001(a)(1)(iii) and
the instructions on the Commission's Web site at http://www.ferc.gov

under the ``e-Filing'' link.

Magalie R. Salas,
Secretary.
[FR Doc. E6-10126 Filed 6-27-06; 8:45 am]

BILLING CODE 6717-01-P