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Friday, November 16, 2018

Options Regulatory Alert #2018 - 35
Nasdaq ISE, Nasdaq GEMX, and Nasdaq MRX Intra-day Electronic Quoting

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  • System Impact

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Below is a reminder of the intra-day quoting obligations for Nasdaq ISE (“ISE”), Nasdaq GEMX (“GEMX”), and Nasdaq MRX (“MRX”) Primary Market Makers (“PMMs”), Competitive Market Makers (“CMMs”), and Preferred CMMs (together, “Market Makers”), respectively. A Member is required to meet each market making obligation separately. A CMM who is also the PMM will be held to the PMM obligations in options series in which the PMM is assigned and will be held to CMM obligations in all other options series where assigned. A CMM who receives a Preferenced Order shall be held to the standard of a Preferred CMM in all options series of the options class in which it receives the Preferenced Order.

ISE / GEMX / MRX CMMs:

Rule Requirement804(e)(1)
Percentage of Series to be QuotedA CMM may initiate quoting in an assigned options class intra-day. If a CMM initiates quoting in an options class, the CMM, associated with the same Member, is collectively required to provide two-sided quotations in 60% of the cumulative number of seconds, or such higher percentage as the exchange may announce in advance, for which that Member’s assigned options class is open for trading.
Exceptions to Quoting RequirementsQuarterly Options Series, any Adjusted Options Series, and any options series with an expiration of nine months or greater for options on equites and ETFs or with an expiration of twelve months or greater for index options
Quote Width RequirementsNo wider than $5 between the bid and offer

ISE / GEMX / MRX PMMs:

Rule Requirement804(e)(2)
Percentage of Series to be QuotedA PMM, associated with the same Member, is collectively required to provide two-sided quotations in 90% of the cumulative number of seconds, or such higher percentage as the exchange may announce in advance, for which that Member’s assigned options class is open for trading.
Exceptions to Quoting RequirementsNone*
Quote Width RequirementsNo wider than $5 between the bid and offer

*PMMs will be required to quote Quarterly Options Series, any Adjusted Options Series, and any options series with an expiration of nine months or greater for options on equites and ETFs or with an expiration of twelve months or greater for index options

ISE / GEMX / MRX Preferred CMMs:

Rule Requirement804(e)(3)
Percentage of Series to be QuotedA Preferred CMM, associated with the same Member, is collectively required to provide two-sided quotations in 90% of the cumulative number of seconds, or such higher percentage as the exchange may announce in advance, for which that Member’s assigned options class is open for trading. A Member shall be considered preferenced in an assigned options class once the Member receives a Preferenced Order in any options class in which they are assigned and shall be considered preferenced for that day in all series for that options class in which it received the Preferenced Order.*
Exceptions to Quoting RequirementsQuarterly Options Series, any Adjusted Options Series, and any options series with an expiration of nine months or greater for options on equites and ETFs or with an expiration of twelve months or greater for index options
Quote Width RequirementsNo wider than $5 between the bid and offer

* Pursuant to Supplementary Material .03 to Rule 713, in order to be considered preferenced, the Member must also be quoting at the NBBO at the time the Preferenced Order is received and execute the order.

The Exchange will calculate the percentage of the series to be quoted by (i) taking the total number of seconds the Member disseminates quotes in each assigned options series, excluding, for CMMs and Preferred CMMs, Quarterly Options Series, any Adjusted Options Series, and any options series with an expiration of nine months or greater for options on equites and ETFs or with an expiration of twelve months or greater for index options; and (ii) dividing that time by the eligible total number of seconds each assigned options series in the options class is open for trading that day. Quoting is not required in every assigned options series. Compliance with this requirement is determined by reviewing the aggregate of quoting in assigned options series for the Member.

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