Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Discontinue the Options Regulatory Fee Model Scheduled To Be Implemented in June 2025

• Published date: 08 May 2025
• FR Document: 2025-07983
• Citation: 90 FR 19542
• Pages: 19542-19543
• Section: Notices
• Issuer: Securities and Exchange Commission

Federal Register, Volume 90 Issue 88 (Thursday, May 8, 2025)

[Federal Register Volume 90, Number 88 (Thursday, May 8, 2025)]
                [Notices]
                [Pages 19542-19543]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2025-07983]
                [[Page 19542]]
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                SECURITIES AND EXCHANGE COMMISSION
                [Release No. 34-102975; File No. SR-GEMX-2025-09]
                Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
                and Immediate Effectiveness of a Proposed Rule Change To Discontinue
                the Options Regulatory Fee Model Scheduled To Be Implemented in June
                2025
                May 2, 2025.
                 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
                (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
                that on April 28, 2025, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'')
                filed with the Securities and Exchange Commission (the ``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 discontinue the ORF model scheduled to be
                implemented in June 2025.\3\
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                 \3\ See Securities Exchange Act Release No. 101875 (December 11,
                2024), 89 FR 102223 (December 17, 2024) (SR-GEMX-2024-42) (Notice of
                Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
                a New Approach to the Options Regulatory Fee (ORF) in 2025). See
                also Securities Exchange Act Release No. 102341 (February 4, 2025),
                90 FR 9268 (February 10, 2025) (SR-GEMX-2025-05) (Notice of Filing
                and Immediate Effectiveness of a Proposed Rule Change To Delay the
                Implementation of the New Options Regulatory Fee (ORF) and ORF
                Methodology Proposed in SR-GEMX-2024-42) (collectively ``June 2025
                ORF'').
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                 The text of the proposed rule change is available on the Exchange's
                website at https://listingcenter.nasdaq.com/rulebook/gemx/rulefilings,
                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
                 GEMX proposes to discontinue the ORF model scheduled to be
                implemented in June 2025.\4\
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                 \4\ See June 2025 ORF.
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                 GEMX previously filed a proposed amendment to its ORF, effective as
                of January 1, 2025,\5\ to amend its methodology of collection to: (1)
                specify that it is including options transactions in GEMX proprietary
                products; and (2) assess ORF in all clearing ranges except market
                makers who clear as ``M'' at The Options Clearing Corporation
                (``OCC''). Additionally, GEMX proposed to assess a different rate for
                trades executed on GEMX (``Local ORF Rate'') and trades executed on
                non-GEMX exchanges (``Away ORF Rate'').\6\ The Exchange also filed to
                delay the implementation of SR-GEMX-2024-42, with respect to the new
                ORF and methodology therein which was effective on January 1, 2025, so
                that it would be implemented on June 1, 2025.\7\
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                 \5\ See June 2025 ORF.
                 \6\ See June 2025 ORF.
                 \7\ See Securities Exchange Act Release No. 102341 (February 4,
                2025), 90 FR 9268 (February 10, 2025) (SR-GEMX-2025-05) (Notice of
                Filing and Immediate Effectiveness of a Proposed Rule Change To
                Delay the Implementation of the New Options Regulatory Fee (ORF) and
                ORF Methodology Proposed in SR-GEMX-2024-42).
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                 At this time, the Exchange proposes to discontinue its June 2025
                ORF. The Exchange received feedback from Members \8\ and SIFMA \9\
                related to the implementation of its June 2025 ORF. In particular, two
                fields necessary for information sharing of executing exchange
                information among Members and Clearing Members will not be available
                after an upcoming technology migration at OCC.\10\ In light of this
                information, the Exchange has been re-evaluating its ORF model and
                plans to revamp the current process of assessing and collecting ORF,
                which would be subject to, and described further in, a future rule
                filing. Particularly, the Exchange is exploring proposing a modified
                ORF model in which ORF would only be assessed to on-exchange
                transactions and would continue to be assessed only to customers. At
                this this time, the Exchange expects to continue assessing ORF as it
                does today and will continue to ensure that ORF Regulatory Revenue, in
                combination with its other regulatory fees and fines, does not exceed
                Options Regulatory Cost.
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                 \8\ The Exchange has discussed the implementation of its June
                2025 ORF with various Clearing Members.
                 \9\ See SIFMA comment letter at https://www.sec.gov/comments/sr-nasdaq-2024-078/srnasdaq2024078-550079-1574622.pdf.
                 \10\ See https://www.theocc.com/company-information/occ-transformation.
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                 To create real ORF reform, moving to a new ORF model that only
                assesses a fee to transactions that occur on the Exchange would remove
                any duplicative ORF billing. The Exchange believes that each exchange
                should likewise adopt a similar model to ensure consistent industry
                billing of ORF to the benefit of market participants. A consistent
                methodology of assessing and collecting ORF will also remove confusion
                and complexity in the billing of ORF. The Exchange has been engaged in
                remodeling its current ORF over the last year and has held many
                conversations with market participants to establish a framework that is
                practical and fair. The Exchange remains committed to ORF reform and
                will continue to evaluate its ORF model and seek feedback from market
                participants.
                2. Statutory Basis
                 The Exchange believes the proposed rule change is consistent with
                the Securities Exchange Act of 1934 (the ``Act'') and the rules and
                regulations thereunder applicable to the Exchange and, in particular,
                the requirements of Section 6(b) of the Act.\11\ Specifically, the
                Exchange believes the proposed rule change is consistent with Section
                6(b)(4) of the Act,\12\ which provides that Exchange rules may provide
                for the equitable allocation of reasonable dues, fees, and other
                charges among its members, and other persons using its facilities.
                Additionally, the Exchange believes the proposed rule change is
                consistent with the Section 6(b)(5) \13\ requirement that the rules of
                an exchange not be designed to permit unfair discrimination between
                customers, issuers, brokers, or dealers.
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                 \11\ 15 U.S.C. 78f(b).
                 \12\ 15 U.S.C. 78f(b)(4).
                 \13\ 15 U.S.C. 78f(b)(5).
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                 The Exchange's proposal to discontinue its June 2025 ORF is
                reasonable because it has come to light that certain information
                necessary for billing of ORF would not be available later in 2025. In
                light of this information, the Exchange has been re-evaluating its ORF
                model and plans to revamp the current process of assessing and
                collecting ORF, which would be subject to, and described further in, a
                future rule filing. Particularly, the
                [[Page 19543]]
                Exchange anticipates moving to a modified ORF model in which ORF would
                only be assessed to on-exchange transactions and would continue to be
                assessed only to customers. At this this time, the Exchange expects to
                continue assessing ORF as it does today and will continue to ensure
                that ORF Regulatory Revenue, in combination with its other regulatory
                fees and fines, does not exceed Options Regulatory Cost.
                 The Exchange's proposal to discontinue its June 2025 ORF is
                equitable and not unfairly discriminatory as the proposal would not
                apply to any Member.
                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.
                 This proposal does not create an unnecessary or inappropriate
                intra-market burden on competition because no Member would be subject
                to the June 2025 ORF as a result of this proposal.
                 Additionally, this proposal does not create an unnecessary or
                inappropriate inter-market burden on competition because it is a
                regulatory fee that supports regulation in furtherance of the purposes
                of the Act. The Exchange is obligated to ensure that the amount of ORF
                Regulatory Revenue collected from the ORF, in combination with its
                other regulatory fees and fines, does not exceed Options Regulatory
                Cost.
                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
                 The foregoing rule change has become effective pursuant to Section
                19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4 \15\
                thereunder. 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 will institute proceedings to
                determine whether the proposed rule change should be approved or
                disapproved.
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                 \14\ 15 U.S.C. 78s(b)(3)(A).
                 \15\ 17 CFR 240.19b-4(f).
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                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 (https://www.sec.gov/rules/sro.shtml); or
                 Send an email to [email protected]. Please include
                file number SR-GEMX-2025-09 on the subject line.
                Paper Comments
                 Send paper comments in triplicate to Secretary, Securities
                and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
                All submissions should refer to file number SR-GEMX-2025-09. This file
                number should be included on the subject line if email is used. To help
                the Commission process and review your comments more efficiently,
                please use only one method. The Commission will post all comments on
                the Commission's internet website (https://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
                a.m. and 3 p.m. Copies of the filing also will be available for
                inspection and copying at the principal office of the Exchange. Do not
                include personal identifiable information in submissions; you should
                submit only information that you wish to make available publicly. We
                may redact in part or withhold entirely from publication submitted
                material that is obscene or subject to copyright protection. All
                submissions should refer to file number SR-GEMX-2025-09 and should be
                submitted on or before May 29, 2025.
                 For the Commission, by the Division of Trading and Markets,
                pursuant to delegated authority.\16\
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                 \16\ 17 CFR 200.30-3(a)(12).
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                Sherry R. Haywood,
                Assistant Secretary.
                [FR Doc. 2025-07983 Filed 5-7-25; 8:45 am]
                BILLING CODE 8011-01-P