[Federal Register Volume 82, Number 93 (Tuesday, May 16, 2017)]
[Notices]
[Pages 22595-22598]
[FR Doc No: 2017-09821]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80649; File No. SR-GEMX-2017-07]

Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Establish INET
Ports

May 10, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 27, 2017, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I and II, below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to establish ports that members use to
connect to the Exchange with the migration of the Exchange's trading
system to the Nasdaq INET architecture.
    The text of the proposed rule change is available on the Exchange's
Web site at www.ise.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to establish ports that
members use to connect to the Exchange with the migration of the
Exchange's

trading system to the Nasdaq INET architecture.\3\ In particular, the
Exchange proposes to establish the following connectivity options that
are available in connection with the re-platform of the Exchange's
trading system: Specialized Quote Feed (``SQF''), SQF Purge, Ouch to
Trade Options (``OTTO''), Clearing Trade Interface (``CTI''), Financial
Information eXchange (``FIX''), FIX Drop, Disaster Recovery, and Market
Data. These connectivity options, which are described in more detail
below, are the same as connectivity options currently used to connect
to the Exchange's affiliates, including Nasdaq Phlx (``Phlx''), Nasdaq
Options Market (``NOM''), and Nasdaq BX (``BX'').\4\ The Exchange
recently filed a proposed rule change to adopt fees for its port
offerings, which are currently offered free of charge,\5\ and is filing
this proposed rule change to establish the ports themselves.
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    \3\ See Securities Exchange Act Release No. 80011 (February 10,
2017), 82 FR 10927 (February 16, 2017) (SR-ISEGemini-2016-17).
    \4\ See Phlx Pricing Schedule, VII. Other Member Fees, B. Port
Fees; NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM--Ports and
other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 BX--
Ports and other Services.
    \5\ See Securities Exchange Act Release No. 80213 (March 10,
2017), 82 FR 14066 (March 16, 2017) (SR-ISEGemini-2017-10).
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1. Specialized Quote Feed
    SQF is an interface that allows market makers to connect and send
quotes, sweeps and auction responses into the Exchange. Data includes
the following: (1) Options Auction Notifications (e.g., opening
imbalance, Flash, PIM, Solicitation and Facilitation or other
information); (2) Options Symbol Directory Messages; (3) System Event
Messages (e.g., start of messages, start of system hours, start of
quoting, start of opening); (4) Option Trading Action Messages (e.g.,
halts, resumes); (5) Execution Messages (6) Quote Messages (quote/sweep
messages, risk protection triggers or purge notifications).
2. SQF Purge
    SQF Purge is a specific port for the SQF interface that only
receives and notifies of purge requests from the market maker.
Dedicated SQF Purge Ports enable market makers to seamlessly manage
their ability to remove their quotes in a swift manner.
3. Ouch to Trade Options
    OTTO is an interface that allows market participants to connect and
send orders, auction orders and auction responses into the Exchange.
Data includes the following: (1) Options Auction Notifications (e.g.,
Flash, PIM, Solicitation and Facilitation or other information); (2)
Options Symbol Directory Messages; (3) System Event Messages (e.g.,
start of messages, start of system hours, start of quoting, start of
opening); (5) Option Trading Action Messages (e.g., halts, resumes);
(6) Execution Messages (7) Order Messages (order messages, risk
protection triggers or purge notifications).
4. Clearing Trade Interface
    CTI is a real-time clearing trade update is a message that is sent
to a member after an execution has occurred and contains trade details.
The message containing the trade details is also simultaneously sent to
The Options Clearing Corporation. The information includes, among other
things, the following: (i) The Clearing Member Trade Agreement or
``CMTA'' or The Options Clearing Corporation or ``OCC'' number; (ii)
Exchange badge or house number; (iii) the Exchange internal firm
identifier; and (iv) an indicator which will distinguish electronic and
non-electronically delivered orders; (v) liquidity indicators and
transaction type for billing purposes; (vi) capacity
5. Financial Information eXchange
    FIX is an interface that allows market participants to connect and
send orders and auction orders into the Exchange. Data includes the
following: (1) Options Symbol Directory Messages; (2) System Event
Messages (e.g., start of messages, start of system hours, start of
quoting, start of opening); (3) Option Trading Action Messages (e.g.,
halts, resumes); (4) Execution Messages (5) Order Messages (order
messages, risk protection triggers or purge notifications).
6. FIX Drop
    FIX Drop is a real-time order and execution update is a message
that is sent to a member after an order been received/modified or an
execution has occurred and contains trade details. The information
includes, among other things, the following: (1) Executions (2)
cancellations (3) modifications to an existing order (4) busts or post-
trade corrections.
7. Disaster Recovery
    Disaster Recovery ports provide connectivity to the exchange's
disaster recovery data center in Chicago to be utilized in the event
the exchange has to fail over during the trading day. DR Ports are
available for SQF, SQF Purge, CTI, OTTO, FIX and FIX Drop.
8. Market Data
    Market Data ports provide connectivity to the Exchange's
proprietary market data feeds, including the Nasdaq GEMX Real-time
Depth of Market Raw Data Feed (``Depth of Market Feed''),\6\ the Nasdaq
GEMX Order Feed (``Order Feed''),\7\ the Nasdaq GEMX Top Quote Feed
(``Top Quote Feed''),\8\ and the Nasdaq GEMX Trades Feed (``Trades
Feed'').\9\ The Depth Feed, Order Feed, and Top Quote Feed have each
previously been established as market data offerings of the
Exchange,\10\ and market participants are charged for subscriptions to
these products.\11\ The Trades Feed is a free market data product
provided to subscribers of at least one of the fee liable market data
products described above. In connection with the adoption of Market
Data ports described above, the Exchange further proposes to establish
the Trades Feed. Market Data ports are available via multicast, TCP, or
as an intra-day snapshot, except that the intra-day snapshot option is
available solely for the Depth of Market Feed and Top Quote Feed. In
connection with the adoption of Market Data ports, which

will provide connectivity to the four market data feeds described
above, the Exchange also proposes to remove references to ITCH-to-Trade
Options (``ITTO'') ports from the Schedule of Fees and replace them
with references to Market Data ports. ITTO is currently defined as a
port that provides connectivity to the Depth Feed. As noted above,
Market Data ports will provide access to Depth Feed along with the
Order Feed, Top Quote Feed, and Trades Feed.
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    \6\ The Depth Feed, provides aggregate quotes and orders at the
top five price levels on the Exchange, and provides subscribers with
a consolidated view of tradable prices beyond the BBO, showing
additional liquidity and enhancing transparency for GEMX traded
options. The data provided for each instrument includes the symbols
(series and underlying security), put or call indicator, expiration
date, the strike price of the series, and trading status. In
addition, subscribers are provided with total quantity, customer
quantity (if present), price, and side (i.e., bid/ask). This
information is provided for each of the five indicated price levels
on the Depth Feed. The feed also provides participants of imbalances
on opening/reopening.
    \7\ The Order Feed provides information on new orders resting on
the book. In addition, the feed also announces auctions. The data
provided for each instrument includes the symbols (series and
underlying security), put or call indicator, expiration date, the
strike price of the series, and trading status. The feed also
provides participants of imbalances on opening/reopening.
    \8\ The Top Quote Feed calculates and disseminates its best bid
and offer position, with aggregated size (Total & Customer), based
on displayable order and quote interest in the options market
system. The feed also provides last trade information along with
opening price, cumulative volume, high and low prices for the day.
The data provided for each instrument includes the symbols (series
and underlying security), put or call indicator, expiration date,
the strike price of the series, and trading status.
    \9\ The Trades Feed displays last trade information along with
opening price, cumulative volume, high and low prices for the day.
The data provided for each instrument includes the symbols (series
and underlying security), put or call indicator, expiration date,
the strike price of the series, and trading status.
    \10\ See Securities Exchange Act Release No. 71087 (December 17,
2013), 78 FR 77545 (December 23, 2013) (SR-Topaz-2013-17).
    \11\ See GEMX Schedule of Fees, Section V., Market Data.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act'') \12\ in
general, and furthers the objectives of Section 6(b)(5) of the Act \13\
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
for a free and open market and a national market system, and, in
general, to protect investors and the public interest.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is consistent
with the protection of investors and the public interest as it
establishes various ports used to connect to the GEMX INET trading
system. The Exchange's port offerings are changing with the re-platform
as the ports used by INET differ from the ports used to connect to the
T7 trading system. Market participants that connect to the INET trading
system may use the following ports mentioned above: SQF, SQF Purge,
OTTO, CTI, FIX, FIX Drop, Disaster Recovery, and Market Data. These
ports are the same as ports currently used by the Exchange's
affiliates, and therefore offer a familiar experience for market
participants. The ports described in this filing provide a range of
important features to market participants, including the ability to
submit orders and quotes, receive market data, and perform other
functions necessary to manage trading on the Exchange. The Exchange
recently adopted port fees for the ports described in this filing, and
believes that filing separately to establish these ports will increase
transparency to market participants regarding connectivity options
provided by the Exchange.
    The Exchange also believes that it is consistent with the
protection of investors and public interest to establish the Trades
Feed as this feed, which is currently provided free of charge, provides
valuable trade information to subscribers. The Trades Feed designed to
promote just and equitable principles of trade by providing all
subscribers with data that should enable them to make informed
decisions on trading in GEMX options by using the data to assess
current market conditions that directly affect such decisions. The
market data provided by this feed removes impediments to, and is
designed to further perfect, the mechanisms of a free and open market
and a national market system by making the GEMX market more transparent
and accessible to market participants making routing decisions
concerning their options orders.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As explained
above, the Exchange is establishing the ports used to connect to the
GEMX INET trading system. The Exchange does not believe that
establishing these ports, which are currently offered free of charge,
will have any competitive impact. Similarly, the exchange does not
believe that establishing the Trades Feed, which is also a free
offering, will have any competitive impact.
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    \14\ 15 U.S.C. 78f(b)(8).
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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 \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 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.
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    In its filing, GEMX requested that the Commission waive the 30-day
operative delay in order to enable the Exchange to more quickly
establish the Trades Feed and the ports used by members to connect to
the Exchange's INET trading system. The Commission believes that such
waiver is consistent with the protection of investors and the public
interest. GEMX noted that its members have received numerous
communications regarding the availability of the new port offerings,
which are the same as the connectivity options used to connect to the
Exchange's affiliates; in fact, members are already using these ports
to connect to INET. Similarly, GEMX explained that the proposed Trades
Feed has already been disclosed to members and that subscribers to GEMX
market data have already been given access to the proposed Trades Feed.
To avoid disrupting member usage of GEMX connectivity and data options,
the Commission designates the proposed rule change to be operative upon
filing.\17\
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    \17\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-GEMX-2017-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-GEMX-2017-07. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-GEMX-2017-07 and should be
submitted on or before June 6, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12) and (59).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09821 Filed 5-15-17; 8:45 am]
 BILLING CODE 8011-01-P