ATS-N/UA 0000782124-26-000015 LIVE 0000782124 XXXXXXXX 013-00110 false false JPM-X This Updating Amendment relates to (i) the inclusion of the assessment and passing through of regulatory Consolidated Audit Trail (CAT) fees to Subscribers, as described in Part III, Item 19; and (ii) the updates to the broker-dealer operator's schedule of direct owners and executive officers, in response to Part I, Item 8. The changes apply to all Subscribers and the broker-dealer operator. Y J.P. MORGAN SECURITIES LLC 008-35008 000000079 Financial Industry Regulatory Authority 12/17/1936 JPMX http://www.jpmorgan.com/ecs Equinix NY4 New York IBX Data Center 755 Secaucus Rd. Secaucus 07094 US-NJ false false The following business units of JPMS are able to enter or direct the entry of firm orders and trading interest in the form of conditional orders (collectively, "Firm/Conditional Orders") into a JPMS algorithmic trading strategy or JPMS' smart order routing technology (collectively, the "algorithms/SOR"), which in turn is able to enter, or to be directed by the units below to enter, Firm/Conditional Orders into JPM-X (using the "JPMS" MPID). The business units may enter or direct the entry of Firm/Conditional Orders in the capacities listed below. Note, references to principal activity may include executing principally for clients on a riskless principal basis: 1. The Over-the-Counter ("OTC") Listed International Sales and Trading unit of JPMS trades on an agency, riskless principal, or principal basis and primarily (i) facilitates client trading, including high-touch, electronic and portfolio trading, and hedges and/or unwinds the resulting risk and (ii) acts as a market maker or block positioner in U.S. and non-U.S. equities, equity listed options, OTC options, equity swaps, exchange-traded funds, preferred stocks, credit products, and equity structured products. The OTC Listed International Sales and Trading unit includes the following trading desks: (i) Americas Credit Indices, which trades on a principal basis in credit derivatives, fixed income, commodities, and currencies ETFs, and associated hedges and/or unwinds of the residual risk using, among others, listed equity, options, rates, and futures; (ii) Central Liquidity Book, which manages firm positions, including client facilitations on a principal basis; (iii) Commodities Trading, which trades principally in listed options and ETFs to hedge client facing commodity positions; (iv) Convertible Trading, which trades equities, futures, convertible corporate bonds and equity preferreds and convertible preferreds on a principal or agency basis; (v) Corporate Trading, which trades equities, futures, equity listed options, equity OTC options, equity swaps, and equity structured products and facilitates open market activities for corporate clients on a principal basis; (vi) Electronic Client Solutions Trading, which, on a principal or agency basis, primarily coordinates customer access to, and the monitoring and support of, JPMS direct-to-market (including agency-only direct to JPM-X), and algorithmic/SOR trading products; (vii) Equity Finance Trading, which finances client and counterparty equity positions through swap transactions on a principal basis; (viii) Exchange Traded Fund ("ETF") Flow, which, on a principal or agency basis, conducts and facilitates customer trading in U.S. exchange-listed ETP securities, acts as a block positioner in certain U.S. exchange-listed ETF securities, and engages in domestic and international creation/redemptions of ETFs, derivatives (OTC & Listed) and other securities; (ix) Exotic, which trades equities, futures, equity listed options, exotic equity options, equity swaps, and equity structured products on a principal basis; (x) FICC ETF, which, on a principal or agency basis, conducts and facilitates customer trading in U.S. exchange listed ETF securities and hedges risk using fixed income instruments as well as ETFs. In addition, the desk also acts as a block positioner in certain U.S. exchange listed ETF securities. Its activity also includes domestic and international creation/redemption of ETFs; (xi) Flow Index, which trades equities, exotic equity options, futures, equity listed options, equity swaps, and equity structured products on a principal or agency basis; (xii) Franchise, which books block transactions with clients on a principal or agency basis and conducts and facilitates customer trading, on both an agency and a principal basis, in U.S exchange-listed, OTCBB, and pink sheet securities and also acts as a market maker or block positioner in certain U.S. exchange-listed, OTCBB, and pink sheet securities; (xiii) High Yield Loan Trading Distressed, which trades on a principal basis and provides liquidity and risk management services to different clients in fixed income products and unlisted equity, and may hedge and/or unwind the residual risk using, among others, listed equity, options, futures and ETFs (bonds and equity); (xiv) Index Swaps, which, trades index swaps and passive index-arb orders on a principal basis; (xv) International Trade, which primarily conducts and facilitates customer trading on both an agency and a principal basis in international securities (both ADRs and "locals") and acts as a market maker or block positioner in certain ADRs; (xvi) North America Delta One Swap, which engages in financing client and counterparty swap transactions related to custom baskets and ETFs, facing institutional clients on swaps and hedging the client swaps by executing in the market and with counterparties on a principal basis; (xvii) Program Trading, which primarily trades baskets on a principal or agency basis; (xiii) Program Trading Risk, which primarily manages risk associated with client facing program trading risk transactions on a principal basis; (xix) Single Stock Flow Volatility, which trades equities, equity indices, futures, equity listed options, equity vanilla OTC options, swaps, and equity structured products on a principal or agency basis; and (xx) Systematic Derivatives, which, on a principal or agency basis, facilitates customer transactions in equity derivatives, futures, exotic equity options, equity swaps and equity structured products and hedges the risk associated with this activity with various instruments, including cash equities, futures and options. 2. Equity Finance, which may, on a principal basis, buy or sell stocks in connection with its facilitation of stock borrows and loans; and 3. WMIS, which handles order flow derived from Wealth Management business lines on an agency basis and is able to source liquidity from other units of the JPMS equities business that in turn are able to access JPM-X via the algorithms/SOR as described above. Y N N The JPMS affiliates listed below are able to enter, for their own or client accounts (e.g., as principal or agent), Firm/Conditional Orders into JPMS' algorithms/SOR as clients of the Electronic Client Solutions Trading desk described in response to Part II, Item 1(a). The affiliates also are able to route Firm/Conditional Orders to one or more of the other JPMS business units identified in Item 1(a), which in turn are able to enter or direct the entry of Firm/Conditional Orders into the algorithms/SOR on the affiliates' behalf and as discussed in Item 1(a). The algorithms/SOR is able to enter, or to be directed by the affiliate or a business unit to enter Firm/Conditional Orders into JPM-X (using the "JPMS" MPID). As non-FINRA members, the affiliates listed below do not have their own MPIDs. 1. JPMorgan Asset Management (China) Company Limited (regulated by the China Securities Regulatory Commission ("CSRC"), the People's Bank of China, and the State Administration for Market Regulation of the People's Republic of China), which issues and sells funds and engages in investment management and other businesses approved by CSRC 2. Highbridge Capital Management LLC (regulated by the SEC, Securities and Futures Commission in Hong Kong, and Financial Conduct Authority in the United Kingdom ("FCA-UK")), which is a registered investment adviser and has developed a diversified investment platform, including hedge funds, daily liquidity products, and other similar investment products 3. J.P. Morgan Alternative Asset Management Inc. (regulated by the SEC), which is a U.S. investment advisory branch o J.P. Morgan Asset Management 4. J.P. Morgan Investment Management Inc. ("JPMIM") (regulated by the SEC, FCA-UK, Securities and Exchange Board India, Financial Supervisory Service in South Korea, and Financial Services Agency of Japan), which is registered with the SEC as an investment adviser; JPMIM and affiliated investment advisers comprise J.P. Morgan Asset Management 5. J.P. Morgan Private Investments Inc. (regulated by the SEC), which is an investment adviser registered with the SEC and operates within the Asset & Wealth Management line of business 6. J.P. Morgan Securities (Asia Pacific) Limited (regulated by the Hong Kong Monetary Authority and Securities and Futures Commission in Hong Kong), which engages in investment banking (corporate finance advisory and debt/equities securities origination and trading), market making of government bills and bonds, and the trading and marketing of FX, rate, money market, derivatives, cash equities, convertible bonds, distressed, and high yield assets 7. J.P. Morgan Securities Asia Private Limited (regulated by the Monetary Authority of Singapore), which holds a Capital Markets Services license to deal in securities and advise on corporate finance 8. J.P. Morgan Securities Australia Limited (regulated by the Australian Securities and Investments Commission), which a market, clearing, and settlement participant on the ASX and engages in stockbroking, equity research and services in t ETO market for wholesale clients and makes markets in and advises on equity swaps, OTC options, and exchange listed warrants 9. JPMorgan Asset Management (Asia Pacific) Limited (regulated by the Securities and Futures Commission in Hong Kong), which provides investment management services 10. J.P. Morgan Securities (Far East) Limited (regulated by the Securities and Futures Commission in Hong Kong), which a broker and lead underwriter in PRC and engages in securities dealing and investment banking activities in its Seoul Branch 11. J.P. Morgan Securities plc (regulated by the FCA-UK and Prudential Regulation Authority in the United Kingdom), the principal activity of which is to be a booking and processing entity for investment banking activities initiated by other JPMorgan Chase & Co. ("JPMC") entities 12. J.P. Morgan (Suisse) SA (regulated by the Swiss Financial Market Supervisory Authority), which serves Swiss and international clients across the Private Banking and Investor Services lines of business 13. JPMorgan Asset Management (Europe) S.a.r.l. (regulated by the Commission de Surveillance du Secteur Financier), which is an investment management and management company 14. 55I, LLC (regulated by the SEC), which is a registered investment adviser and provides advisory services associated with tax harvesting solutions as well as ongoing trading and rebalancing services for clients 15. J.P. Morgan Markets Limited (regulated by the FCA-UK), which engages in global credit and equities trading 16. JPMorgan Asset Management (Japan) Limited (regulated by the Financial Services Agency of Japan), which engage in investment trust management, non-discretionary investment advisory services and discretionary investment management services, and the offering of beneficiary certificates of investment trusts and shares of non-Japanese pooled funds 17. JPMorgan Asset Management (Singapore) Limited (regulated by the Monetary Authority of Singapore), which engages in fund management 18. JPMorgan Asset Management (Taiwan) Limited (regulated by the Financial Supervisory Commission and Investment Commission of Ministry of Economic Affairs in Taiwan), which is an investment manager and securities investment trust 19. JPMorgan Asset Management (UK) Limited (regulated by the FCA-UK), which is a discretionary investment adviser 20. JPMorgan Chase Bank, National Association (regulated by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation in the United States; Hong Kong Monetary Authority and Securities and Futures Commission in Hong Kong; Monetary Authority of Singapore; and FCA-U and Prudential Regulation Authority in the United Kingdom), which is a wholly owned bank subsidiary of JPMC 21. JPMorgan Chase Funding Inc. (regulated by the Board of Governors of the Federal Reserve System), which may engage in activities permitted for a financial holding company as set forth in Board Regulation Y 22. JPMorgan Securities Japan Co., Ltd. ("JPMSJ") (regulated by the Financial Services Agency of Japan), which underwrites and trades securities, offers and brokers securities transactions, advises clients on business strategies, capital structures, and financial strategies, and engages in M & A derivative transactions booked outside of JPMSJ 23. Security Capital Research & Management Incorporated ("SCRM") (regulated by the SEC), which is registered with the SEC as an investment adviser; SCRM and affiliated investment advisers comprise J.P. Morgan Asset Management 24. J.P. Morgan SE (regulated by the German Federal Financial Supervisory Authority, German Central Bank, and European Central Bank), which facilitates the provision of J.P. Morgan Global capabilities to Commercial & Investment Banking clients in the European Economic Area, also to EMEA clients in Private Bank 25. Almea 2 Segregated Portfolio Company (regulated by Cayman Island Monetary Authority), which is a wholly owned subsidiary of JPMorgan Chase Holdings LLC established to acquire hedge positions (for client trades) to the extent permitted to be acquired by JPMC and its subsidiaries 26. J.P. Morgan Mansart Management Limited (regulated by the FCA-UK), which is an investment manager. Y N N As detailed below, Subscribers can opt-out of interacting with JPMS's principal or agency order flow by opting-out of specific tiers or opting-out of principal executions generally. Tiers: Subscribers may opt-out from interacting with Firm/Conditional Orders that are assigned to Tier 3 - principal flow of JPMS and JPMS' s affiliates (excluding JPMS principal flow included in Tier 1 if the Subscriber has not opted-out of Tier 1 as well), that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR make a determination related to venue or price, as described in Part III, Item 13. Subscribers also may opt-out of JPMS principal and agency flows included in Tier 1, as described in Part III, Item 13, by opting out of Tier 1 entirely. By doing so, Subscribers would opt-out of JPMS principal flow within that tier along with institutional investor client order flow and broker-dealer client order flow received by JPMS or JPMS's affiliates and handled on an agency basis that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR make a determination related to venue or price. Subscribers also may opt-out of order flow of institutional investors and non-U.S. registered broker-dealers received by JPMS or JPMS's affiliates and handled on an agency basis and routed directly to JPM-X via direct access or using directed orders through the algorithms/SOR included in Tier 2, as described in Part III, Item 13, by opting out of Tier 2 entirely. Executions: Separately, Subscribers may request to opt-out of interacting with any orders from Tier 1 and Tier 3 that would result in a principal execution (e.g., requested because of the client's inability to receive principal executions consistent with soft dollar arrangements). By doing so, Subscribers would not opt-out of interacting with institutional client order flow and broker-dealer client order flow received by JPMS or JPMS's affiliates and handled on an agency basis that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR make a determination related to venue or price from Tier 1. As described in Part III, Item 14, a Subscriber can specify the tiers with which the Subscriber has opted out from interacting (i) on an order-by-order basis in the Firm/Conditional Order instructions submitted to JPMS or (ii) by contacting the Subscriber's JPMS sales representative with respect to a subset of Firm/Conditional Orders or all order flow. In each case, JPMS implements the restriction as soon as reasonably practicable. Subscribers can opt-out from interacting with Firm/Conditional Orders of JPMS's affiliates by opting out of Tier 1, Tier 2, and/or Tier 3. As described in Part III, Item 13, Firm/Conditional Orders of JPMS's affiliates comprised of institutional investor client order flow and broker-dealer client order flow received by JPMS's affiliates and handled on an agency basis that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR make a determination related to venue or price are assigned to Tier 1, Firm/Conditional Orders of institutional investors and non-U.S.-registered broker-dealers received by JPMS or JPMS's affiliates and handled on an agency basis and routed directly to JPM-X via direct access or using directed orders through the algorithms/SOR (i.e., where the algorithms/SOR do not make a determination related to venue or price) are assigned to Tier 2, and principal flow of JPMS's affiliates, that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR make a determination related to venue or price are assigned to Tier 3. Subscribers can only opt-out of JPMS's affiliate flows identified and included in Tier 1 in Part III, Item 13, by opting out of Tier 1 entirely. By doing so, Subscribers would also opt-out of interacting with applicable JPMS principal flow as well as institutional investor client flow and external broker-dealer client flow received by JPMS and handled on an agency basis that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR makes a determination related to venue or price. Subscribers can only opt-out of JPMS's affiliate flows identified and included in Tier 2 in Part III, Item 13, by opting out of Tier 2 entirely. By doing so, Subscribers would also opt-out of interacting with order flow of institutional investor and non-U.S.-registered broker-dealer received by JPMS and handled on an agency basis and routed directly to JPM-X via direct access or using directed orders through the algorithms/SOR (i.e., where the algorithms/SOR do not make a determination related to venue or price). In addition, Subscribers can only opt-out of JPMS's affiliate flows identified and included in Tier 3 in Part III, Item 13, by opting out of Tier 3 entirely. By doing so, Subscribers would also opt-out of interacting with JPMS principal flow (excluding JPMS principal flow included in Tier 1 if the Subscriber has not opted-out of Tier 1 as well). As described in Part III, Item 14, a Subscriber can specify the tiers with which the Subscriber has opted out from interacting (i) on an order-by-order basis in the Firm/Conditional Order instructions submitted to JPMS or (ii) by contacting the Subscriber's JPMS sales representative with respect to a subset of Firm/Conditional Orders or all order flow. In each case, JPMS implements the restriction as soon as reasonably practicable. Y JPMS has entered into mutual access agreements with UBS Securities LLC; Morgan Stanley & Co. LLC; BofA Securities, Inc.; and Goldman Sachs & Co. (the "Mutual Access Counterparties"). The terms of these agreements (regarding, e.g., intellectual property rights, warranties, indemnification obligations, and limitations of liability) cover the Mutual Access Counterparties' electronic access to JPM-X and JPMS' electronic access to the Mutual Access Counterparties' respective alternative trading systems. None of these agreements require any of the Mutual Access Counterparties to access JPM-X or require JPMS to access the Mutual Access Counterparties' respective alternative trading systems. As with other trading centers that access JPM-X, the Mutual Access Counterparties submit Firm/Conditional Orders to JPM-X in the same manner as other Subscribers. N JPMS, sometimes in conjunction with its affiliates, offers Subscribers 1. Access to JPMS' algorithms/SOR, which in turn is able to access numerous trading centers, including JPM-X (as discussed in Part III, Item 5), 2. Access to JPMS' JISU technology, which is a low-latency platform, accessed via a FIX connection, that (a) can be used to access directly JPMS' algorithmic trading strategies, smart order routing technology, JPM-X, and/or external venues and (b) is the only means by which Subscribers can access JPM-X directly (as discussed in Part III, Items 5-6), and 3. Neovest, which is an order and execution management system developed by JPMS' affiliate Neovest, Inc. and can be used to access numerous brokers, including JPMS and, specifically, JPMS' algorithms/SOR. JPMS may offer Subscribers access to its algorithms/SOR and/or JISU technology pursuant to any applicable contractual agreements with JPMS, such as any Electronic Trading Terms of Service, the terms of which (regarding, e.g., intellectual property rights, warranties, indemnification obligations, and limitations of liability) are sometimes negotiated and generally do not contain specific terms and conditions for routing Firm/Conditional Orders to JPM-X. Subscribers may utilize Neovest to access numerous brokers, including JPMS, pursuant to a click-through user agreement with Neovest, Inc. Y Neovest, Inc., an affiliate of JPMS, offers Subscribers Neovest, an order and execution management system that can be used to access numerous brokers, including JPMS and, specifically, JPMS' algorithms/SOR, which in turn is able to access numerous trading centers, including JPM-X (as discussed in Part III, Item 5). Subscribers utilize Neovest pursuant to a click-through user agreement with Neovest, Inc. Certain Subscribers utilize Neovest pursuant to an agreement with Neovest, Inc., the terms of which are sometimes negotiated, authorizing the Subscriber to access Neovest and to sub-license access to Neovest to the Subscriber's clients. Y Confidential trading information consists of data regarding open or partially open Firm/Conditional Orders in JPM-X ("real-time data") and data regarding fully or partially completed Firm/Conditional Orders in JPM-X, including executions and cancellations ("historical data"). Confidential trading information, however, does not include post-execution reporting under applicable reporting rules or regulations. Confidential trading information also does not include aggregated data resulting from the combination of the JPM-X historical data associated with a Subscriber's Firm/Conditional Order with data regarding other Firm/Conditional Orders of the Subscriber or other JPMS clients, whether or not such Firm/Conditional Orders were routed to JPM-X ("Aggregated Data"). Aggregated Data includes JPM-X historical data from only the prior trading day, including end of trading on trade date, or earlier. Aggregated Data can include any JPM-X historical data or some subset of JPM-X historical data. Aggregated Data sourced only from JPM-X historical data does not provide Subscriber-specific or symbol-specific information. Aggregated Data can be used (i) by JPMS to provide market color or trend analyses externally and/or to internal principal or agency trading desks or senior management (e.g., JPMS prepares, and makes available online, a monthly summary of JPM-X activity that includes aggregate statistics such as the average trade size for each order flow type described in response to Part III, Item 13(a)); (ii) by JPMS to advertise, report on, or enhance the quality of its execution or other services offered to clients (e.g., JPMS has included in marketing materials aggregate VWAP slippage statistics that incorporate execution data from JPM-X and other venues to which Subscribers' VWAP orders were routed); and (iii) by third parties so they can provide JPMS with analytics (regarding, e.g., its market share or other performance metrics on a client-by-client basis). Such data sets are sufficiently aggregated and/or anonymized that they protect the confidentiality of Subscribers' trading strategies and are not themselves confidential trading information. Moreover, the use of such data sets, depending on the context, may be subject to confidentiality restrictions under agreements with recipients of the data sets and/or JPMC policies and procedures. No employee or contingent worker ("workforce member") of JPMS or its affiliates is dedicated solely to servicing the operations of JPM-X. Shared workforce members with some level of access to confidential trading information on JPM-X include those described below to the extent they have a need to know such information to perform their respective responsibilities in connection with (i) the operations and support of JPM-X; (ii) JPMS' risk management and compliance with applicable law in operating JPM-X; (iii) assisting clients, senior management, and business units that send orders to JPM-X; or (iv) developing or maintaining JPMS's infrastructure and applications, including those related to JPM-X. In particular, as detailed below, limited groups of shared workforce members have access to all real-time and historical data in JPM-X (1), and limited groups of shared workforce members have access to all historical data from JPM-X (2). Separately, there are groups of shared workforce members that have access to real-time and/or historical data regarding subsets of orders and executions that occur in JPM-X to perform their respective responsibilities (3). Shared workforce members authorized to access confidential trading information in connection with the responsibilities noted below are prohibited from using confidential trading information for purposes other than those described below. Shared workforce members may be employed by (i) JPMS; (ii) an affiliate listed in Part II, Item 2; or (iii) a non-securities trading JPMS affiliate. References below to "affiliates worldwide" generally include an affiliate listed in Part II, Item 2, e.g., JPMorgan Chase Bank, National Association ("JPMCB"). While some individual shared workforce members may be employed by a JPMS affiliate listed in Part II, Item 2, only those shared workforce members described below as having trading responsibilities may in fact enter or direct the entry of Firm/Conditional Orders that ultimately access JPM-X. For example, those JPMCB-employed shared workforce members outlined in Section 1(b) below have access to certain confidential trading information but do not engage in trading activity while those JPMCB-employed shared workforce members outlined in Section 3(e) below have access to certain confidential trading information and can engage in trading activity. As noted above and in Part II, Item 7(a), shared workforce members with access to confidential trading information, including those employed by a JPMS affiliate listed in Part II, Item 2, have such access to the extent they have a need to know such information to perform their respective responsibilities and are prohibited from unauthorized or improper use of such information, e.g., front-running client orders. (1) The following groups have access to all real-time and all historical data in JPM-X for the purposes described below: a) Electronic Client Solutions ("ECS") Liquidity Product Specialists (workforce members of JPMS and its affiliates worldwide) responsible for the development and day-to-day operation of JPMS' smart order routing technology (the "SOR") and JPMS' alternative trading systems, including JPM-X, who can access the JPM-X order book, which includes all real-time and historical data. This access allows ECS Liquidity Product Specialists to monitor the performance of JPM-X, prepare aggregated data sets as described above, detect any Subscriber behavior resulting in a materially negative impact to the operation of JPM-X or to other Subscribers or indicating a need to change a Subscriber's order flow type or tier assignment, work to resolve issues related to the foregoing that may arise, develop further product initiatives, and respond to client inquiries and regulatory requests; and b) Personnel in technology groups (workforce members of JPMS affiliates worldwide) responsible for providing technical support or developing and maintaining applications, e.g., trading applications and other applications or services that support trading personnel described below, or infrastructure across JPMS, including the applications and infrastructure on which JPM-X relies, can access real-time and historical data regarding orders and executions that occur in JPM-X as necessary in the course of their work to provide support and develop and maintain the applications and infrastructure. (2) The following groups have access to all historical data from JPM-X for the purposes described below: a) Operations personnel (workforce members of JPMS affiliates worldwide) responsible for processing and providing operational support for transactions effected by JPMS and its affiliates, including trades in JPM-X, who can access historical data so they can monitor the post-trade processing of and provide operational support for transactions executed in JPM-X, including with respect to the clearance, settlement, and allocation of such transactions, and work to resolve any processing or other operational issues that may arise; and b) Personnel in Compliance, Compliance and Operational Risk, Business Control Management , and technology groups (workforce members of JPMS affiliates worldwide), who can access historical data so they can maintain (i) JPMS' and its affiliates' compliance with laws applicable to the operation of JPM-X, including through supervision, surveillance and the preparation of regulatory reports and responses to regulatory requests; and (ii) related systems. (3) The following groups have access to real-time and/or historical data regarding subsets of orders and executions that occur in JPM-X for the purposes described below: a) The ECS Client Coverage, ECS Product, ECS Connectivity, and ECS Sales groups (workforce members of JPMS and its affiliates worldwide), which provide client services to ECS clients, including JPM-X Subscribers, and can access real-time and historical data regarding subsets of orders and executions that occur in JPM-X so they can field inquiries from clients regarding orders routed to JPM-X by or on behalf of the clients; b) ECS senior management (workforce members of JPMS and its affiliates worldwide) responsible for the ECS business, including the JPM-X offering and its operation, who can access real-time and historical data at a summary level (e.g., aggregated order quantities by client or symbol) so they can appropriately supervise and manage the ECS Liquidity Product Specialists, ECS Client Coverage, ECS Product, ECS Connectivity, and ECS Sales groups; c) Personnel in the equities Analytics, Automation, and Optimization quantitative research groups, Electronic Trading quantitative research groups, and the Markets Business Intelligence Group (together, the "Equities Quantitative Research Groups") (workforce members of JPMS and its affiliates worldwide), who can access real-time and/or historical data regarding JPM-X activity occurring through the upstream systems or desks they support when necessary in the course of their work to provide support or develop and maintain applications and infrastructure (including, in the case of (i) the Electronic Trading quantitative research group, to, e.g., develop quantitative models employed by the applications and to analyze the performance of these applications and their underlying models; (ii) the Analytics, Automation, and Optimization quantitative research group to, e.g., maintain the applications that support trading personnel described below and the integrity of data used by such applications; and (iii) the Markets Business Intelligence Group to, e.g., provide senior management with aggregated trading analytics); d) Personnel in Operations and Business Control Management (described in section 2 above), who can access real-time data on a limited basis in connection with their responsibilities described above; e) Business unit sales and trading personnel who are responsible for Firm/Conditional Orders routed to JPM-X via the algorithms/SOR or directly to JPM-X (workforce members of JPMS and its affiliates worldwide), can access real-time and historical data regarding orders and executions that occur in JPM-X regarding only that business unit's or a subset of that business unit's Firm/Conditional Orders so they can monitor such Firm/Conditional Orders, field inquiries regarding their orders, including those Firm/Conditional Orders routed to JPM-X, or provide technical support for related trading applications; and f) Personnel in Model Risk Governance and Review (workforce members of JPMS and its affiliates worldwide) who can access historical data so they can perform model governance and model review functions, including conducting independent assessment and monitoring of the performance of Firm models that execute transactions in JPM-X. Lucera, a third-party connectivity provider, is described in Part III, Item 6; Equinix, Inc., a third-party data center provider, maintains the Equinix NY4 New York IBX Data Center, the data center in which the JPM-X matching system is located, as described in Part III, Item 6; and Redline, a market data provider, is described in Part III, Item 23. Redline, a market data provider used by JPM-X, is wholly owned by an entity in which a JPMS affiliate that is not a Subscriber of JPM-X owns a minority interest. JPMS understands that other market participants (or affiliated entities of other market participants) who are Subscribers of JPM-X also own an interest in Redline's affiliate. Y JPMS has established written safeguards and procedures that restrict (i) access to all real-time and historical data regarding Subscribers' JPM-X Firm/Conditional Order information to identified in categories 1 and 2 of the response to Part II, Item 6(a) above and (ii) the personal trading of such individuals with access to Subscriber confidential trading information identified in Part II, Item 6(a). JPMS also has adopted and implemented written oversight procedures intended to ensure that the above safeguards and procedures are followed. Access to Subscribers' confidential trading information is restricted as described below. Systems with Real-Time and Historical Data. Real-time and historical data is accessible via a front-office graphical user interface ("GUI") and database, each of which can be used to view the status of, and generate reports regarding, Firm/Conditional Orders routed to JPM-X; order management systems used to route Firm/Conditional Orders to the algorithms/SOR or JPM-X; and the servers upon which the GUI, database, order management systems, algorithms/SOR, JPM-X matching engine run. The algorithms/SOR and JPM-X matching engine generate and access such data for the purpose of routing Firm/Conditional Orders and matching and executing Firm/Conditional Orders, respectively. Access to real-time and historical data regarding all orders and executions that occur in JPM-X through these systems is restricted, via permissioned electronic logins, to personnel described in category 1 in response to Part II, Item 6(a) above (for the reasons stated therein). Access, through the above-referenced systems, to real-time and/or historical data regarding subsets of orders and executions that occur in JPM-X is restricted, via permissioned electronic logins, to personnel described in sub-parts (a) through (f) of category 3 of the response to Part II, Item 6(a) above (for the reasons stated therein). Systems with Historical Data. In addition to the systems noted above, JPMS maintains systems that include only historical data, i.e., these systems do not include real-time data. These systems include a GUI used to view JPMS' transaction data; Middle Office systems for the post-trade processing of transactions; and the servers upon which these systems run. Access to these systems, through which all historical data is accessible, is restricted, via permissioned electronic logins, to the personnel described in category 2 in response to Part II, Item 6(a) above (for the purposes stated therein) Policies and Procedures The above restrictions are maintained in part through written procedures requiring the escalation and approval of requests to access JPM-X data and the periodic review of such access. Moreover, JPMC has adopted written policies and procedure (the "Personal Account Dealing Policy" or "PAD Policy") requiring (i) employees and contingent workers subject to the PA Policy ("PAD Workforce Members") to disclose accounts that can hold and transact in the purchase or sale of publicly traded securities and over which PAD Workforce Members or related persons can exercise discretion ("Covered Accounts") and review and certify annually as to the accuracy and completeness of all Covered Account details, (ii) JPMC to monitor transaction details for Covered Accounts, (iii) PAD Workforce Members to preclear purchases, sales, pledges, and gifts of publicly traded and privately held financial instruments, and (iv) managers to review trading requests to prevent the improper use of material non-public information or other confidential information, conflicts of interest, and other applicable trading restrictions. Written supervisory procedures applicable to the JPMS U.S. Equities Division (the "WSPs") require reviews, documented at least on a monthly basis, to make certain that (i) new employees receive training with respect to the PAD Policy, (ii) employees have obtained preclearance appropriately, (iii) trading subject to the PAD Policy has been appropriately monitored, and (iv) escalated personal trading violations have been followed up on appropriately. JPMS' written procedures for limiting access to confidential trading information, pursuant to JPMS' obligations under Regulation ATS Rule 301(b)(10), include a section of the WSPs regarding JPMS' alternative trading systems. The section requires reviews, documented at least on a quarterly basis, (i) to verify the appropriateness of the access afforded to those described in response to Part II, Item 6 who are authorized to view JPM-X data via certain front office and transaction data processing systems and (ii) to approve, or verify the appropriate approval of, all new requests to access JPM-X order data via such systems. In addition, JPMC policies and procedures require that confidential trading information be shared only on a "need to know basis (i.e., shared only with a person with a legitimate business need, in the normal exercise of the person's employment duties, for knowing or having access to the information) and prohibit the unauthorized or improper use of confidential information and/or the front-running of client orders. Only the workforce members identified in response to Part II, Item 6 are deemed by JPMS to have such a need to know Subscribers' confidential trading information. JPMS has received requests from Subscribers to provide confidential trading information pertaining to their respective Firm/Conditional Orders to third parties that provide analyses of trading information. A Subscriber, at any time, can provide JPMS with notice of the Subscriber's consent to the disclosure of confidential trading information pertaining to the Subscriber's executed and cancelled Firm/Conditional Orders, or the executed and cancelled portions thereof, to such third parties by contacting the Subscriber's JPMS sales representative. JPMS will commence such disclosure as soon as reasonably practicable following receipt of the Subscriber's notice. A Subscriber, at any time, can provide JPMS with notice of the withdrawal of the Subscriber's consent to the disclosure described in response to Part II, Item 7(b) by contacting the Subscriber's JPMS sales representative. JPMS will discontinue such disclosure as soon as reasonably practicable following receipt of the Subscriber's notice. The shared workforce members described in response to Part II, Item 6(a) are the only individuals who have access to Subscriber confidential trading information on JPM-X. The information to which such individuals have access and the basis for their access are described in response to Part II, Item 6(a). The systems described in response to Part II, Item 7(a) are the only systems that have access to Subscriber confidential trading information on JPM-X. Investment Companies Issuers Brokers Asset Managers Principal Trading Firms Hedge Funds Market Makers Banks Dealers Other Other types of Subscribers that can use JPM-X include insurance companies, pension funds, sovereign wealth funds, and governmental entities. N Only Persons that have satisfied JPMS' onboarding requirements are permitted to be JPMS clients, and only JPMS clients that are either "institutional accounts," as defined by FINRA Rule 4512, or broker-dealers are permitted to be Subscribers of JPM-X. JPMS' onboarding requirements are based in part on, e.g., regulatory "Know Your Customer" and anti-money laundering requirements and vary depending on the characteristics of the Person's business. Before accessing JPM-X, a Subscriber must work with JPMS to establish connectivity (i) between the Subscriber and the algorithms/SOR (via JPMS' JISU technology or an order management system selected by the Subscriber) if the Subscriber will access JPM-X via the algorithms/SOR and/or (ii) between the Subscriber and JPM-X (via JISU) if the Subscriber will access JPM-X directly. Subscribers that access JPM-X, whether directly or via the algorithms/SOR, are subject to any applicable contractual agreements with JPMS (e.g., Electronic Trading Terms of Service). Y N JPMS can deny a Subscriber access to JPM-X (both direct access and access via the algorithms/SOR) if the Subscriber fails to satisfy the requirements for becoming a JPMS client or accessing JPM-X (see Part III, Item 2) or based on considerations suggesting high-risk activity, including regulatory actions, surveillance findings indicating potential market manipulation, or other inappropriate activity, or JPMS' overall business relationship with the Subscriber and its affiliates. JPMS also can deny a Subscriber access to JPM-X if ECS Liquidity Product Specialists, responsible for the operation of JPM-X, detect systematic behavior resulting in a materially negative impact to the operation of JPM-X or to other Subscribers as evidenced by, e.g., significant price reversion, a high cancellation rate, or a low firm-up rate in response to firm-up invitations (see Part III, Item 9). Moreover, JPMS reserves the right (i) to disable any JPM-X functionality, in whole or in part, if such functionality experiences technical issues or could otherwise pose a detrimental risk to Subscribers, JPM-X, or the capital markets and (ii) to restrict the entry of a Subscriber's Firm/Conditional Orders into JPM-X if certain thresholds are exceeded (e.g., risk limits imposed by JPMS pursuant to its obligations under SEC Rule 15c3-5) or to mitigate operational risk by reducing the volume of messaging in JPM-X. Y JPM-X operates during the regular trading hours set by the primary markets for NMS stocks; the hours for such a primary market typically are from 9:30 a.m. to 4:00 p.m. (New York time), Monday-Friday, except on holidays observed by the primary market. JPM-X can accept Firm/Conditional Orders from the algorithms/SOR starting at 6:30 a.m. and can accept Firm/Conditional Orders routed directly to JPM-X starting at 7:00 a.m.; however, JPM-X cancels back immediate-or-cancel ("IOC") orders in an NMS stock until after the NMS stock has had an opening execution on its primary market. JPM-X does not match or execute Firm/Conditional Orders in an NMS stock until after the NMS stock has has had an opening execution on its primary market. In circumstances where the primary market is unavailable for trading and has not yet had an opening execution (e.g., due to a system issue), JPMS may choose to accept IOC orders or begin matching and/or executing Firm/Conditional Orders during regular trading hours. Orders received after regular trading hours will be rejected by JPM-X. Y Subscribers can enter Firm/Conditional Orders directly into JPM-X by routing through JPMS' JISU technology, a low-latency platform accessible through a standard FIX messaging protocol (FIX 4.2 API). JPMS' JISU technology accesses JPM-X through a proprietary FIX messaging protocol and is the only means by which Subscribers can access JPM-X directly. Y Subscribers can enter firm orders into JPMS' algorithmic trading strategies, which can create child Firm/Conditional Orders that are routed to market centers, including JPM-X, by the SOR at the direction of the Subscribers or algorithmic trading strategies or at the SOR's own direction. Instead, or in addition, Subscribers can enter Firm/Conditional Orders directly into the SOR, which then can route, or be directed by Subscribers to route, the Firm/Conditional Orders to market centers, including JPM-X. The SOR accesses JPM-X through a proprietary FIX messaging protocol. Subscribers can enter firm orders into JPMS algorithmic trading strategies and the SOR via a client gateway (JPMS' JISU technology, described in response to Part III, Item 5(a), or an order management system selected by the Subscriber). Subscribers can opt out of having the algorithms/SOR route Firm/Conditional Orders to JPM-X. Subscribers that access the algorithms/SOR are subject to any applicable contractual agreements with JPMS, such as any Electronic Trading Terms of Service, the terms of which (regarding, e.g., intellectual property rights, warranties, indemnification obligations, and limitations of liability) are sometimes negotiated and generally do not contain specific terms and conditions for accessing JPM-X through the algorithms/SOR. There is no means by which to access JPM-X through the algorithms/SOR that is available to JPMS business units or JPMS affiliates but not to Subscribers. Y JPMS' JISU technology, a low-latency platform that is accessible through a standard FIX messaging protocol (FIX 4.2 API), can share the same rack space in the Equinix NY4 New York IBX Data Center with the JPMS trading algorithms, SOR, and JPM-X. Subscribers that access JPM-X by routing Firm/Conditional Orders directly to JPM-X route via JISU. In addition, Subscribers that access JPM-X by routing orders to JPMS trading algorithms or by routing Firm/Conditional Orders to the SOR can increase the speed of their communications with JPM-X by routing via JISU. U.S.-registered broker-dealer Subscribers, assigned to Tier 4 and Tier 5 as described in Part III, Item 13, access JISU via a 10 GB/sec fiber cross-connect between the hardware of Lucera, a third-party connectivity provider, and JISU. All other Subscribers can access JISU either via a 10GB/sec fiber cross-connect between the hardware of Lucera and JISU, or via the following direct cross-connects to JISU: (a) 1 GB/sec fiber, (b) 10GB/sec fiber, or (c) copper. Such direct cross-connect is provided by Equinix, the operator of the data center. Subscribers that access JISU are subject to any applicable contractual agreements with JPMS (such as Electronic Trading Terms of Service, discussed in response to Part III, Item 5(c)) and/or with Lucera and could be liable for charges resulting from such connectivity under the agreements. Subscribers also can contract directly with Equinix to be located in the Equinix NY4 New York IBX Data Center, the same data center in which the JPMS trading algorithms, SOR, JISU, and JPM-X are located. Subscribers, however, cannot share the same rack space with the JPMS trading algorithms, SOR, JISU, and JPM-X. Subscribers, irrespective of their location, can, but are not required to, access JISU. Y N N The following order types are eligible for execution in JPM-X: --Non-Peg Limit Order - an order to buy or sell at a specified fixed price or better; --Primary Peg Order - an order to buy or sell at the inside quotation of the National Best Bid or Offer ("NBBO") on the same side of the market, even as the NBBO changes (with or without a limit price); --Midpoint Peg Order - an order to buy or sell at the midpoint between the inside bid and the inside offer of the NBBO, even as the NBBO changes (with or without a limit price); and --Market Peg Order - an order to buy or sell at the inside quotation of the NBBO on the opposite side of the market, even as the NBBO changes (with or without a limit price). Each of the above order types can have one of the following two time-in-force instructions: --Immediate-or-Cancel ("IOC"), which is an instruction that the order be executed immediately with any portion of the order that cannot be executed immediately being cancelled; and --Day, which is an instruction that the order rest in the book maintained by JPM-X (the "Order Book") until the order is executed, with any portion of the order that cannot be executed by the end of the trading day, or earlier in accordance with the time interval specified by the Subscriber or an algorithm selected by the Subscriber, being cancelled. A blank time-in-force field is treated as a Day time-in-force instruction. The above order types are available for use by Subscribers that access JPM-X directly or via the algorithms/SOR, irrespective of whether such access occurs through JISU. JPM-X does not offer post-only order types, and none of the above order types is eligible for routing to other Trading Centers. As described in response to Part III, Item 9, JPM-X accepts limit and pegged conditional order messages corresponding to the order types described above with a day (but not IOC) time-in-force instruction. The above order types cannot be combined (i.e., an order cannot be more than one order type). Subscribers that access JPM-X by routing to it or the SOR directly, and algorithms that access JPM-X via the SOR on behalf of Subscribers, can modify, replace, or cancel day orders routed to JPM-X. The modification or replacement of a day order results in the entry of a replacement order with a new time stamp and lower priority in time than the original order, unless the modification is reduction in the quantity of the order, in which case the replacement order has a new time stamp but the same priority in time that the original order had prior to its replacement. JPM-X rejects (1) short sale exempt, buy-minus and sell-plus orders; (2) orders priced at or above $1.00 per share if priced in a sub-penny increment; (3) orders priced below $1.00 per share if priced in an increment of less than $.0001; (4) orders that exceed limits imposed by JPMS pursuant to its obligations under SEC Rule 15c3-5; (5) any order types and/or orders with any time-in-force instructions other than those identified above (for example, non-Peg Market orders and/or orders with a time-in-force instruction of "On the Open"); and (6) orders that cannot be assigned to an order flow type, as defined in Part III, Item 13, because they lack the required information. An order is ineligible for execution in JPM-X unless the price, minimum quantity, and counterparty preference instructions associated with the order, if any, are satisfied. Accordingly, a partially executed order is cancelled if the leaves quantity is less than the minimum quantity instruction associated with the order. An order also is ineligible for execution in JPM-X if t order is a firm-up order or an order committed to a conditional order message during a firm-up period, as described in response to Part III, Item 9. Once JPM-X determines that an order is eligible for execution, it is crossed with other eligible order(s) on the opposite side of the market based on price/tier/time priority (e.g., at a given price level, Tier 1 orders, regardless of order capacity, have higher priority than Tier 2 orders, and at a given price level within the same tier, orders received earlier in time have higher priority than orders received later in time). (As described in response to Part III, Item 11(c), as between firm orders and conditional order messages at the same price, firm orders always have priority over conditional order messages irrespective of their tier or when they were received by JPM-X.) When two orders eligible for execution are crossed, they are executed at or within their effective limit prices, as described in response to Part III, Item 11(c). Accordingly, a peg order is executed at its pegged price or better. JPM-X does not execute a cross if the inside quotation of the NBBO is crossed (i.e., the inside bid exceeds the inside offer) or locked (i.e., the inside bid is equal to the inside offer). In addition, JPM-X does not execute a cross in any NMS stock that is subject to a regulatory or trading halt (although, as described in response to Part III, Item 20, JPM-X will continue to accept Firm/Conditional Orders in such an NMS stock and instructions to modify, cancel, or replace Firm/Conditional Orders in that NMS stock using the priority logic described in response to Part III, Item 11(c)). Although a change in the NBBO would not affect the relative priority of orders (including peg orders) that remain eligible f execution after the change, the change could affect whether an order with a price instruction associated with it (including peg order) is eligible for execution and the execution price at which orders that remain eligible for execution (including peg orders) are crossed. Y JPM-X does not have a minimum or maximum Firm/Conditional Order size requirement; however, JPMS prevents the entry of Firm/Conditional Orders that exceed limits imposed by JPMS pursuant to, e.g., its obligations under SEC Rule 15c3-5 to maintain reasonably designed risk management controls. Certain limits referenced in response to Part III, Item 8(a) are based on Subscriber-specific credit thresholds maintained by JPMS pursuant to its obligations under SEC Rule 15c3-5. Odd lot orders are handled in the same manner as round lot orders. Y Mixed lot orders are handled in the same manner as round lot orders. Y JPMS offers Subscribers a process by which they can find potential contra-side trading interest in JPM-X (the "Conditional Order Process"). The Conditional Order Process makes use of two types of trading interest. The first type of trading interest is a conditional order message, which describes the price, size, side, symbol, and minimum quantity attributes of the Subscriber's trading interest. JPM-X accepts limit and pegged conditional order messages corresponding to the order types described in response to Part III, Item 7(a) with a day (but not IOC) time-in-force instruction. Subscribers can transmit conditional order messages to JPM-X directly through a proprietary FIX messaging protocol or via the SOR. JPMS trading algorithms also can transmit conditional order messages to JPM-X via the SOR on behalf of Subscribers. Conditional order messages, unlike firm orders, are not executable upon receipt. The second type of trading interest is a firm order resting in the Order Book that is eligible to be matched with conditional order messages (a "Resting Order"). A Subscriber's firm order resting in the Order Book is eligible to be matched with conditional order messages unless (i) it has an IOC time-in-force instruction or (ii) the Subscriber has opted out of participating in the Conditional Order Process. When a Subscriber or JPMS trading algorithm on behalf of a Subscriber ("User 1" for purposes of this discussion) transmits a conditional order message to JPM-X, JPM-X looks for contra-side trading interests that are eligible to be matched with the conditional order message. A contra-side trading interest can take the form of another conditional order message or a Resting Order transmitted by a Subscriber or JPMS trading algorithm on behalf of a Subscriber ("User 2" for purposes of this discussion). JPM-X determines whether User 2's contra-side trading interest is eligible to be matched with User 1's conditional order message based on (i) the price, size, side, symbol, and minimum quantity attributes reflected in User 1's conditional order message and User 2's conditional order message or Resting Order and (ii) User 1's and User 2's respective counterparty preferences (see response to Part III, Item 14). As with firm orders, JPM-X matches conditional order messages with contra-side trading interest on the basis of price/tier/time priority, as described in response to Part III, Item 11(c). (As described in response to Part III, Item 11(c), as between firm orders and conditional order messages at the same price, firm orders always have priority over conditional order messages irrespective of their tier or when they were received by JPM-X.) If JPM-X matches User 2's contra-side trading interest with User 1's conditional order message, JPM-X transmits to User 1 a message indicating that contra-side trading interest has been found (a "firm-up invitation"), describing the symbol, quantity, price of the conditional order initially routed by User 1, and, for conditional orders originating from JPMS' trading algorithms and transmitted to JPM-X via the SOR, the matched size of contra-side trading interest. The matched size of the contra-side trading interest is not provided on the firm-up invitation for conditional orders that do not originate from JPMS algorithms. JPM-X transmits the firm-up invitation to User 1 (i) via a proprietary FIX messaging protocol if User 1 is a Subscriber that transmitted the conditional order message to JPM-X directly or (ii) via the SOR if User 1 is a Subscriber or JPMS trading algorithm that transmitted the conditional order message to JPM-X via the SOR. JPM-X simultaneously transmits a firm-up invitation to User 2 describing the symbol, quantity, price of the conditional order initially routed by User 2, and, for a conditional order routed from JPMS' trading algorithms and transmitted to JPM-X via the SOR, the matched size of contra-side trading interest, in which case JPM-X transmits the firm-up invitation to User 2 (i) via a proprietary FIX messaging protocol if User 2 is a Subscriber that transmitted the conditional order message to JPM-X directly or (ii) via the SOR if User 2 is a Subscriber or JPMS trading algorithm that transmitted the conditional order message to JPM-X via the SOR. The matched size of the contra-side trading interest is not provided on the firm-up invitation for conditional orders that do not originate from JPMS algorithms and transmitted to JPM-X via the SOR. JPM-X will not send a firm-up invitation to User 2 if User 2's contra-side trading interest is in the form of a Resting Order. When JPM-X transmits a firm-up invitation to User 1, JPM-X cancels User 1's conditional order message, and User 2's contra-side trading interest is not eligible to trade for the duration of the firm-up period, which is the shorter of (i) the time it takes for JPM-X to match User 1's firm-up order, described below, with User 2's firm-up order or Resting Order and (ii) the default firm-up period, which is currently two seconds. Upon receipt of the firm-up invitation, User 1 and, if applicable, User 2 have the option to (1) do nothing or (2) transmit a firm order in response to the firm-up invitation (a "firm-up order") within the default firm-up period to JPM-X. The price, size, and minimum quantity attributes reflected in a Subscriber's firm-up order may differ from the corresponding attributes reflected in the Subscriber's earlier conditional order message. If User 2's contra-side trading interest is in the form of a conditional order message and User 1 and User 2 transmit firm-up orders within the default firm-up period, JPM-X will cross the two firm-up orders based on their respective order attributes; if only one firm-up order is transmitted within the default firm-up period, JPM-X will cross the firm-up order with an available firm order resting in the Order Book, if any, consistent with the execution priorities described in response to Part III, Item 7(a). If User 2's contra-side trading interest is in the form of a Resting Order and User 1 transmits a firm-up order within the default firm-up period, JPM-X will cross the firm-up order and Resting Order based on their respective order attributes; if the Resting Order has been cancelled, JPM-X will cross the firm-up order with an available firm order resting in the Order Book, if any, consistent with the execution priorities described in response to Part III, Item 7(a). If JPM-X is unable to cross a firm-up order with another order or partially crosses a firm-up order with another order, JPM-X will cancel the unexecuted firm-up order or unexecuted portion of the firm-up order. JPMS logs details regarding conditional order messages (including information regarding firm-up invitations sent, firm-up orders received, and execution quantities) within JPM-X system files that can be reviewed by ECS Liquidity Product Specialists to assess whether Subscribers have engaged in systematic behavior resulting in a materially negative impact to the operation of JPM-X or to other Subscribers, as evidenced by, e.g., a low firm-up rate in response to firm-up invitations (see Part III, Item 3), and consequently should be permitted to continue to transmit conditional order messages. By default, (i) JPMS trading algorithms can transmit conditional order messages to JPM-X via the SOR and (ii) firm orders resting in the Order Book are eligible to be matched with conditional order messages. Subscribers can opt out of (i) the transmission of conditional order messages on their behalf and/or (ii) having their firm orders resting in the Order Book be matched with conditional order messages. Subscribers can opt out in whole or in part (with respect to a subset of Firm/Conditional Orders or all order flow) by contacting their JPMS sales representatives. JPMS implements such restrictions as soon as reasonably practicable. Y JPM-X accepts the Firm/Conditional Order types described in response to Part III, Item 7(a) prior to the start of the trading day and during any regulatory or trading halt (but not during a suspension or technical system outage, described in response to Part III, Item 20(a)). JPM-X begins crossing firm orders, and matching conditional order messages with contra-side trading interest, in an NMS stock after the stock has opened on its primary exchange and, in the case of a stoppage during regular trading hours, after trading has resumed. Firm/Conditional Orders are priced, prioritized, matched, and executed after JPM-X opens or re-opens for trading as described in response to Part III, Items 7, 9, and 11. Y Once the trading day commences or a stoppage has been lifted, JPM-X handles Firm/Conditional Orders as described in response to Part III, Items 7, 9, and 11. If a stoppage of trading in an NMS stock occurs during regular trading hours while a firm-up period for one or more conditional order messages in that security is underway, JPM-X rejects any firm-up order received during the firm-up period while the stoppage is in place. Y There is no difference between executions following a stoppage of trading during regular trading hours and other executions during regular trading hours; however, as described in response to Part III, Item 10(a), pre-opening executions do not occur in JPM-X. JPM-X is an NMS Stock ATS that operates within JPMS as part of the Equities Division of the Commercial and Investment Bank in JPMC, of which JPMS is a subsidiary, and offers matching services in NMS stocks. JPM-X is a crossing system that matches non-displayed firm orders and conditional order messages. Y JPM-X accepts non-peg limit, primary peg, midpoint peg, and market peg Firm/Conditional Orders unless they (i) are marked short sale exempt, buy-minus, or sell-plus; (ii) are priced in a sub-penny increment if priced at or above $1.00 per share; (iii) are priced in an increment of less than $.0001 if priced below $1.00 per share; (iv) exceed limits imposed by JPMS pursuant to its obligations under SEC Rule 15c3-5; (v) any order types and/or orders with any time-in-force instructions other than those identified in the response to Part III, Item 7 above (for example, non-Peg Market orders and/or orders with a time-in-force instruction of "On the Open"); or (vi) cannot be assigned to an order flow type, as defined in Part III, Item 13, because they lack required information. All Firm/Conditional Orders accepted by JPM-X (whether routed directly by a Subscriber or routed via the SOR by a Subscriber or JPMS trading algorithm on behalf of a Subscriber) -- other than firm-up orders and Resting Orders that are committed to a conditional order message during a firm-up period, as described in response to Part III, Item 9 -- are eligible for matching based on the liquidity available in the Order Book. JPM-X matches Firm/Conditional Orders on opposite side of the market in an NMS stock based on the price, size, and counterparty preference instructions associated with them. Firm/Conditional Orders, once found eligible for crossing, are matched by JPM-X on the basis of price/tier/time priority, which means, e.g., that (i) at a given price level, orders in lower numbered tiers have priority over orders in higher numbered tiers and (ii) at a given price level within the same tier, orders received earlier in time have priority over orders received later in time. Accordingly, of two equally priced orders, the one that is in the lower numbered tier will have priority over the one that is in the higher numbered tier regardless of the times at which the orders were received by JPM-X. As between firm orders and conditional order messages at the same price, firm orders always have priority over conditional order messages irrespective of their tier or when they were received by JPM-X. When crossing two orders matched for execution, JPM-X executes at or within their effective limit prices. For marketable limit orders, the effective limit price is the NBBO inside offer for buy orders and the NBBO inside bid for sell orders. For p orders, the effective limit price is the better of the limit price specified on the order, if any, and the price defined by the pe instruction. (For example, for a midpoint peg order with a limit price, the effective limit price is the better of the order's limit price and the NBBO midpoint.) If the effective limit prices of two orders overlap, the orders will cross within, or at one of, the effective limit prices. Note that JPM-X does not execute a cross if the inside quotation of the NBBO is crossed (i.e., the inside bid exceeds the inside offer) or locked (i.e., the inside bid is equal to the inside offer). JPM-X also does not execute a cross in any NMS stock that is subject to a regulatory or trading halt. In addition, when a circuit breaker has been triggered for an NMS stock under Rule 201 of Regulation SHO and JPM-X has matched a short sale order for execution, JPM-X will only execute at a price that is above the NBBO inside bid. JPMS, at the request of a Subscriber or on JPMS' own initiative, may determine to review any transaction in JPM-X to assess whether it was adversely affected by a technical issue or "clearly erroneous" as defined by relevant regulators (e. under FINRA Rule 11891, "the terms of a transaction are 'clearly erroneous' when there is an obvious error in any term, such as price, number of shares, or other unit of trading, or identification of the security"). If JPMS determines that a transaction was adversely affected by a technical issue or clearly erroneous, whether or not as a result of JPMS or Subscriber error, JPMS, depending on the facts and circumstances, may work with the affected Subscriber(s) to resolve the error and may cancel (bust) the transaction or assume responsibility for one side of the transaction and work to cove the resulting position as soon as is practicable. JPM-X also may suspend matching in the event of volatile market conditions (e.g., wide bid/offer spreads). JPM-X time stamps orders upon receipt and executions at the time they occur and reports them in milliseconds in accordance with applicable FINRA Consolidated Audit Trail System and trade reporting rules. JPM-X determines queue position based on new order receipt times with microsecond precision, except in the case of a reduction in the quantity of an order in which case, the replacement order assumes the queue position of the original order. Y N Subscriber Firm/Conditional Order flow is assigned to an order flow type, each of which corresponds to a tier used for purposes of determining priority (given JPM-X's use of price/tier/time priority as described in response to Part III, Item 1 l(c)). JPMS assigns a Subscriber's Firm/Conditional Order flow to an order flow type based upon a review of information received from the Subscriber at onboarding and order characteristics received (e.g., for Tier 4 and Tier 5, based upon the order capacity of the order). The order flow types and corresponding tiers are provided below. For the avoidance of doubt, "institutional investor client flow" and "broker-dealer client flow" do not include JPMS principal flow or JPMS affiliates' principal flow. JPMS principal flow in Tier 3 may also include JPMS executing principally for clients on a riskless principal basis. Tier 1 -- Comprised of the following flows, each of which access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR makes a determination related to venue or price: (i) institutional investor client order flow and broker-dealer client order flow received by JPMS or JPMS's affiliates and handled on an agency basis; (ii) JPMS principal flow originating from the Equity Finance Trading desk and designated as hedging low-touch and no-touch client security-based swaps activity; and (iii) JPMS principal flow facilitating agency orders designated as non-standard settlement through JPMS' s Electronic Client Trading desk; Tier 2 - Order flow of institutional investors and non-U.S.-registered broker-dealers received by JPMS or JPMS' s affiliates and handled on an agency basis and routed directly to JPM-X via direct access or using directed orders through the algorithms/SOR (i.e., where the algorithms/SOR do not make a determination related to venue or price); Tier 3 -Principal order flow of JPMS and JPMS's affiliates (excluding principal order flows identified in Tier 1 above), that access JPM-X via JPMS algorithms/SOR and where the algorithms/SOR make a determination related to venue or price; Tier 4 - Order flow of U.S.-registered broker-dealers, received by JPMS with an order capacity designation of agency, and routed directly to JPM-X via direct access or using directed orders through the algorithms/SOR (i.e., where the algorithms/SOR do not make a determination related to venue or price); and Tier 5 - Order flow of U.S.-registered broker-dealers, received by JPMS with an order capacity designation of principal, and routed directly to JPM-X via direct access or using directed orders through the algorithms/SOR (i.e., where the algorithms/SOR do not make a determination related to venue or price). There is no specific length of time that an order flow type or tier assignment for a Subscriber will remain in effect; however, JPMS conducts a quarterly review of the trading activity in JPM-X of a sample set of Subscribers to confirm the accuracy of the Subscribers' order flow type and tier assignments, and JPMS reserves the right to review and add, remove, or revise an order flow type or tier assignment for a Subscriber at any time. Based on a review of a Subscriber's trading activity (including, e.g., discussions with the Subscriber about changes in its business or observed changes in order flow characteristics), ECS Liquidity Product Specialists can request that the Subscriber modify its order flow and/or trading behavior to conform to its assigned order flow type or, if such a modification seems unlikely, determine to amend the Subscriber's order flow type assignment. JPMS would notify the Subscriber in the event of a change in the order flow type or tier assignment for the Subscriber. JPMS may change an order flow type or tier assignment for a Subscriber as described in response to Part III, Items 13-14 but does not otherwise override such an assignment once made. The segmentation of order flow described above affects order interaction insofar as, in looking for matching opportunities for a Subscriber's Firm/Conditional Orders, JPM-X complies with the Subscriber's counterparty preferences regarding the order flow types or tiers with which the Subscriber would like to interact, as described in response to Part III, Item 14. In addition, Firm/Conditional Orders, once found eligible for crossing, are matched by JPM-X on the basis of price/tier/time priority, which means, e.g., that at a given price level, orders in lower numbered tiers have priority over orders in higher numbered tiers, regardless of order capacity, as described in response to Part III, Item 11(c). Accordingly, of two equally priced orders, the one that is in the lower numbered tier will have priority over the one that is in the higher numbered tier regardless of order capacity or the times at which the orders were received by JPM-X. As between firm orders and conditional order messages at the same price, firm orders always have priority over conditional order messages irrespective of their tier or when they were received by JPM-X. Y JPMS informs Subscribers of their assigned order flow type and tier classification at onboarding and upon request. A request by a Subscriber to contest such an assignment can be communicated through a JPMS sales representative and will be reviewed by ECS Liquidity Product Specialists. Y Y Subscribers can restrict the order flow types or tiers with which their Firm/Conditional Orders interact. Subscribers can identify order flow type or tier restrictions (i) on an order-by-order basis in the Firm/Conditional Order instructions submitted to JPMS or (ii) by contacting the Subscriber's JPMS sales representative with respect to a subset of Firm/Conditional Orders or all order flow. In each case, ECS Liquidity Product Specialists implement the restriction as soon as reasonably practicable. ECS Liquidity Product Specialists may modify the Subscriber's configuration settings to the extent the restrictions relate to multiple orders. JPMS may further limit the order flow types or tiers with which a Subscriber's Firm/Conditional Orders interact based on the Subscriber's trading objectives, consistent with the Subscriber's order instructions (e.g., when a Subscriber has informed JPMS that the Subscriber seeks a low participation rate and so JPMS, in light of that objective, reduces the liquidity available to the Subscriber in JPM-X by restricting the order flow tiers with which the Subscriber's Firm/Conditional Orders would interact). In addition, JPMS can apply self-crossing restrictions and may consult with the Subscriber in determining such restrictions. Y N JPM-X continuously makes known, on a real-time basis, the available resting firm orders of the JPM-X Order Book to the SOR. For resting firm liquidity (i.e., Day orders only), the symbol, price, side, quantity, order type (e.g., market vs limit and peg instructions), assigned segmentation tier, counter-party preference, and minimum quantity attributes will be provided from JPM-X to the SOR. Amongst other things, the SOR will not receive information concerning the Subscriber's identity. Subscribers accessing JPM-X cannot opt-out of the inclusion of their information in the feed. Consistent with Part II, Item 7, the SOR uses this information solely to decide whether to route firm orders to JPM-X and does not share the information with any other trading system or desk. In addition, Firm/Conditional Orders are made known to the SOR when they are routed through it. When JPMS trading algorithms and Subscribers route conditional orders to JPM-X, JPM-X may send firm-up invitations back to the JPMS trading algorithms and Subscribers via the SOR. As described in response to Part III, Item 9, a firm-up invitation includes the symbol, quantity, price of the associated same-side conditional order that prompted the firm-up invitation, and, for a conditional order routed from JPMS' trading algorithms and transmitted to JPM-X via the SOR, the matched size of contra-side trading interest. The SOR does not retain information about Firm/Conditional Orders resident in the Order Book other than Firm/Conditional Orders that the SOR itself determined to route to JPM-X. Y N N Y N JPMS charges unbundled subscription fees for JPM-X to Subscribers that access JPM-X by routing to it or the SOR directly. Such fees can take the form of either a fixed fee or a volume-based fee (with a floor of $0/share in both cases and no set maximum). The availability of these fee types is not limited by Subscriber type. In addition, a Subscriber that accesses JPM-X by routing to it directly may be charged a volume-based monthly connectivity fee. The amount of the connectivity fee, if applied, can range between $0 and $300 per FIX session and is dependent on whether the volume of shares executed by the Subscriber via direct routes to JPM-X is above or below a fixed share volume threshold per session for the Subscriber. The share volume threshold may vary by Subscriber. Variables that impact the amount of the above fees and the share volume threshold include the volume of the client's trading through JPMS and JPMS' overall business relationship with the client and its affiliates. JPM-X is assessed Consolidated Audit Trail (CAT) regulatory fees in connection with trading on JPM-X. With the exception of certain principal transactions noted below, JPM-X is the CAT executing broker on both buy and sell tape reported transaction reports and may pass through the assessed CAT regulatory fees to the Subscribers associated with such transaction reports. JPMS may determine whether to pass the CAT regulatory fee through to a Subscriber based on the volume of the client's trading through JPMS and JPMS' overall business relationship with the client and its affiliates. Separately, where a FINRA-registered broker-dealer Subscriber trades with a principal order originating from a JPMS business unit, the Subscriber is reported as the contra-side broker on a tape-reported transaction report and will be assessed the CAT regulatory fee directly. JPMS individually negotiates fees and charges with clients that use multiple JPMS order handling and execution services, which include algorithmic trading strategies, the SOR, research, prime brokerage, high-touch trading, and/or program trading. Such clients include those that access JPM-X via the algorithms/SOR. These fees and charges necessarily vary across clients based on the products and services provided to them by JPMS and can take the form of a Cost+ fee (including a volume-based or flat fee commission) or an All-In fee (negotiated at an overall client-level). The availability of these fee types is not limited by client type. Variables that impact the amount of the fee include the volume of the client's trading through JPMS and JPMS' overall business relationship with the client and its affiliates. As the CAT executing broker on both buy and sell tape-reported transaction reports, JPM-X may pass through the assessed CAT regulatory fees to Cost+ fee-Subscribers (but not All-In fee-Subscribers) associated with such transaction reports. JPMS may determine whether to pass the CAT regulatory fee through to a Cost+ fee-Subscriber based on the volume of the client's trading through JPMS and JPMS' overall business relationship with the client and its affiliates. Where a FINRA-registered broker-dealer Subscriber (whether Cost+ or All-In) trades with a principal order originating from a JPMS business unit, the Subscriber is reported as the contra-side broker on a tape-reported transaction report and will be assessed the CAT regulatory fee directly. JPMS does not offer rebates for the use of JPM-X. JPMS individually negotiates fees and charges, which may be bundled as described above in response to Part III, Item 19(b), resulting in fees and charges that may vary across Subscribers. JPMS can, in its sole discretion, elect to suspend operation of JPM-X at any time, including the suspension of trading in individual NMS stocks for, among other reasons, approaching Regulation ATS Fair Access and Regulation SCI volume thresholds. JPMS also may suspend trading in an NMS stock if, e.g., (i) JPMS is unable to report trades in that stock as described in response to Part III, Item 21 or (ii) the market data received by JPM-X for the stock from the Securities Information Processors (discussed in response to Part III, Item 23) is unavailable, unstable, experiencing unacceptable latencies, or detected to be providing quotes that appear to have quality issues. JPMS will make reasonable efforts to notify electronically Subscribers that access JPM-X directly in a timely manner in the event of such suspensions. In the event of a technical system outage at JPM-X, the JPMS Electronic Trading Technology Production Management team can in its discretion: -- Disable routing from the algorithms/SOR to JPM-X; -- Disable routing from JISU to JPM-X; -- Disable the acceptance of orders in JPM-X; and -- Cease the matching process in JPM-X by cancelling any open Firm/Conditional Orders. If an NMS stock is subject to a regulatory or trading halt, JPM-X will continue to accept Firm/Conditional Orders in that NMS stock and instructions to modify, cancel, or replace Firm/Conditional Orders in that NMS stock using the priority logic described in response to Part III, Item 11(c), but JPM-X will not match or execute Firm/Conditional Orders in that NMS stock. In the event of a halt in an NMS stock imposed by JPM-X, it will not accept, match, or execute Firm/Conditional Orders in that NMS stock and will not accept instructions to modify, cancel, or replace Firm/Conditional Orders in that NMS stock. Moreover, as noted in response to Part III, Item 3(a), JPMS reserves the right (i) to disable any JPM-X functionality, in whole or in part, if such functionality experiences technical issues or could otherwise pose a detrimental risk to Subscribers, JPM-X, or the capital markets and (ii) to restrict the entry of a Subscriber's Firm/Conditional Orders into JPM-X if certain thresholds are exceeded (e.g., risk limits imposed by JPMS pursuant to its obligations under SEC Rule 15c3-5) or to mitigate operational risk by reducing the volume of messaging in JPM-X. For instance, JPMS reserves the right to disable matching in JPM-X when market conditions warrant a reduction of operational risk (e.g., in the event of excessive market volatility). Y Once a cross has been executed JPMS will report any qualifying trades to a recognized trade reporting facility of a self-regulatory organization ("SRO") in accordance with applicable SRO rules. JPMS currently reports trades to the FINRA/Nasdaq Trade Reporting Facility (FINRA/Nasdaq TRF Carteret) or, as a backup, the FINRA Alternative Display Facility. In accordance with FINRA Trade Reporting FAQs 100.4 and 104.7, where matches between two JPMS principal orders within the same aggregation unit occur, such matches will be treated as an internal transfer of shares (book transfer) and, therefore, not reported to a trade reporting facility, given there is no change of beneficial ownership. JPMS also maintains audit trail information for orders submitted to JPM-X as required by Consolidated Audit Trail ("CAT") reporting. JPMS will not submit CAT reports for conditional order messages in compliance with FINRA's CATNMSPLAN Frequently Asked Question - Compliance Number B40. Y JPM-X transactions are cleared and settled by JPMS using its existing clearance and settlement infrastructure. In its capacity as a self-clearing firm, JPMS submits transactions in JPM-X for clearance at the National Securities Clearing Corporation ("NSCC") and settlement at the Depository Trust Company ("DTC"), except as described below. All JPM-X transactions clear versus JPMS and according to the settlement instructions provided to JPMS by Subscribers. Subscribers either must self-clear or have their own clearing arrangements with broker-dealer clearing firms (such as JPMS) and/or a custodial relationship with a broker-dealer or bank. If JPMS' clearing counterparty is JPMS itself, JPMS w clear the transaction internally. If JPMS' clearing counterparty is an NSCC-eligible broker-dealer other than JPMS, JPMS will submit the transaction to the NSCC pursuant to a Qualified Service Representative Agreement, NASDAQ ACT Automated Give-Up Agreement, or Correspondent Clearing 9A/9B Authorization. If JPMS' clearing counterparty is a non NSCC-eligible broker-dealer or a custodial broker-dealer or bank, JPMS will settle the transaction DVP/RVP through DTC. In accordance with FINRA Trade Reporting FAQs 100.4 and 104.7, where matches between JPMS principal orders within the same aggregation unit occur, i.e., where there is no change of beneficial ownership, no transaction will need to clear or settle as such matches are treated as an internal transfer of shares (book transfer). Y JPMS determines the NBBO and protected quotes and prices, prioritizes, and executes Firm/Conditional Orders in JPM-X based on market data received from direct feeds through Redline, JPM-X's market data provider, which uses (a) proprietary feeds from all national securities exchanges other than the Long-Term Stock Exchange and and 24X National Exchange and (b) the Securities Information Processors (the "SIP") for the aforementioned exchanges. Redline or JPMS will switch to extracting equivalent data from the SIP where a proprietary feed is unavailable, unstable, experiencing unacceptable latencies, or detected to be providing quotes that appear to have quality issues. When a direct feed is affected, the SIP is used for market data from the affected market, and Redline or JPMS will continue to use direct feeds from the unaffected markets to determine the NBBO. In the event of any disruption of services or other issues with any of the direct feeds, JPMS reserves the right to execute transactions in JPM-X based on market data from the SIP for any (or all) market center(s). As described in response to Part III, Item 20, JPMS may suspend trading in an NMS stock if the market data received by JPM-X for the stock from the SIP is unavailable, unstable, experiencing unacceptable latencies, or detected to be providing quotes that appear to have quality issues. Y N N true true