UNITED STATES SECURITIES AND EXCHANGE … · J.P. Morgan Securities LLC (“JPMS”) is a registered broker-dealer and the owner and operator of JPM-X. JPMS operates JPM-X as a proprietary

Form ATS Page 2

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

INITIAL OPERATION REPORT, AMENDMENT TO INITIAL OPERATION REPORT AND CESSATION OF OPERATIONS REPORT FOR ALTERNATIVE TRADING SYSTEMS

OFFICIAL USE

OFFICIAL USE ONLY

Alternative trading system name: CRD Number:

Filing date: SEC File Number: 8

2. If this is an initial operation report, the date the alternative trading system expects to commence operation:

3. Attach as Exhibit A , a description of classes of subscribers (for example, broker -dealer, institution, or retail). Also describe any differences in access to the services offered by the alternative trading system to different groups or classes of subscribers.

4. Attach as Exhibit B:

a. A list of the types of securities the alternative trading system trades (for example, debt, equity , listed, Nasdaq NM), or if this is an initial operation report, the types of securities it expects to trade. Note whether any types of securities are not registered under Section 12(a) of the Exchange Act of 1934 (“Exchange Act”).

b. A list of the securities the alternative trading system trades, or if this is an initial operation report, the securities it expects to trade. Note whether any securities are not registered under Section 12(a) of the Exchange Act.

5. Attach as Exhibit C, the name, address, and telephone number of counsel for the alternative trading system.

6. Attach as Exhibit D, a copy of the constitution, articles of incorporation or association, with all amendments, and of the existing by-laws or corresponding rules or instruments, whatever the name, of the alternative trading system. If this information is publicly available on a continuous basis on an Internet site controlled by the alternative trading system, the alternative trading system may indicate the location of the Internet web site where such information may be found in lieu of filing such information with the Commission.

7. Attach as Exhibit E , the name of any entity , other than the alternative trading system, that will be involved in operation of the alternative trading system, including the execution, trading, clearing, and settling of transactions on behalf of the alternative trading system. Provide a description of the role and responsibilities of each entity.

8. Attach as Exhibit F, the following information:

a. The manner of operation of the alternative trading system;

b. Procedures governing entry of orders into the alternative trading system;

c. The means of access to the alternative trading system;

d. The procedures governing execution, reporting, clearance, and settlement of transactions effected through the alternative trading system;

e. Procedures for ensuring subscriber compliance with system guidelines; and

f. A copy of the alternative trading system’s subscriber manual and any other materials provided to subscribers.

9. Attach as Exhibit G, a brief description of the alternative trading system’s procedures for reviewing system capacity, security, and contingency planning procedures.

10. If any other entity, other than the alternative trading system, will hold or safeguard subscriber funds or securities on a regular basis, attach as Exhibit H the name of such entity and a brief description of the controls that will be implemented to ensure the safety of such funds and securities.

11. Attach as Exhibit I, a list providing the full legal name of those direct owners reported on Schedule A of F orm BD.

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EXHIBIT A

JPM-X, CRD Number: 79 SEC File Number: 8-35008

Filing Date: 01/30/18

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Exhibit A Attach as Exhibit A, a description of classes of subscribers (for example, broker-dealers, institution, or retail). Also describe any differences in access to the services offered by the alternative trading system to different groups or classes of subscribers. J.P. Morgan Securities LLC (“JPMS”) is a registered broker-dealer and the owner and operator of JPM-X. JPMS operates JPM-X as a proprietary computerized system, access to which is limited to certain users of JPMS’ trading services, which include institutional investors, broker-dealers, and trading desks or lines of business within JPMS and its affiliates (collectively, “JPM”) that engage in agency or principal trading.

Users with Algorithmic/SOR Access. JPMS offers a variety of electronic order execution services, including algorithmic trading strategies (e.g., VWAP trading strategies), smart order routing (“SOR”) technology, and alternative trading systems (JPM-X and JPB-X). Depending on a user’s particular trading execution objective, the software program behind an algorithmic trading strategy or SOR technology handling the user’s order generally breaks the order into smaller orders over the specified time period and routes individual orders to one or more national securities exchanges, alternative trading systems, and other market centers, each according to imbedded routing logic (the algorithmic and SOR generated orders are referred to herein, collectively as “Algo/SOR Orders”). JPM-X is one of the market centers to which such Algo/SOR Orders may be routed, and unless the user specifically opts out, all Algo/SOR Orders may be routed to JPM-X to determine whether there is contra-side trading interest available in a particular symbol. In addition, users that obtain access to JPM-X via JPMS algorithmic trading strategies or SOR technology also may submit conditional order messages to JPM-X as described in Exhibit F, subject to the limitations discussed therein.

Subscribers (Users with Direct Access). Some users of JPMS’ trading services also will be provided with a separate capability to send trading interest directly to JPM-X as a destination market center. The orders sent by such users are referred to as “Directed Orders.” JPM-X considers those users that are eligible to send Directed Orders to be subscribers of JPM-X.

Participation. JPM-X users are assigned one or more of the following order flow types, which are placed into tiers as discussed in Exhibit F, in JPMS’ sole discretion:

• External Institutional Flows o I-1: Institutional investor client flow accessing JPM-X via algorithms/SOR o I-2: Institutional investor client flow with direct access to JPM-X o I-3: Broker-dealer client flow (both agency and principal) accessing JPM-X via

algorithms/SOR o I-4: Flow of external broker-dealers acting as electronic liquidity providers with

direct access to JPM-X o I-5: Flow of broker-dealers not acting as electronic liquidity providers (both agency

and principal) with direct access to JPM-X



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• Internal JPMS Principal Flow o P-1: JPMS trading desk flow accessing JPM-X via algorithms/SOR o P-2: Internal electronic liquidity provider flow with direct access to JPM-X

Users may, at their discretion, opt out of having their JPM-X orders interact with particular order flow types and/or tiers. A client can participate in more than one tier depending upon the client’s order flow types.

EXHIBIT B



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Exhibit B a. A list of the types of securities the alternative trading system trades (for example, debt,

equity, listed, Nasdaq NM), or if this is an initial operation report, the types of securities it expects to trade. Note whether any types of securities are not registered under Section 12(a) of the Exchange Act.

JPM-X is permitted to trade all National Market System (“NMS”) stocks, as defined in Rule 600(b)(47) under Regulation NMS, including among others, stocks listed on the New York Stock Exchange, NYSE Arca, NYSE American, NASDAQ, CBOE BZX, and IEX. JPM-X trades NMS stocks at JPM-X’s discretion.

b. A list of the securities the alternative trading system trades, or if this is an initial

operation report, the securities it expects to trade. Note whether any securities are not registered under Section 12(a) of the Exchange Act.

As stated above, all NMS stocks are eligible for trading on JPM-X. The list of NMS stocks can be found at http://www.finra.org/industry/oats/oats-reportable-securities-list. (JPM-X does not trade the securities marked as OTC equity securities on this list.)

http://www.finra.org/industry/oats/oats-reportable-securities-list

EXHIBIT C



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Exhibit C Attach as Exhibit C, the name, address, and telephone number of counsel for the alternative trading system. Counsel to JPM-X is:

EXHIBIT D



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Exhibit D

Attach as Exhibit D, a copy of the constitution, articles of incorporation or association, with all amendments, and of the existing by-laws or corresponding rules or instruments, whatever the name, of the alternative trading system. If this information is publicly available on a continuous basis on the Internet site controlled by the alternative trading system, the alternative trading system may indicate the location of the Internet web site where such information may be found in lieu of filing such information with the Commission.

A copy of the Amended and Restated Limited Liability Company Agreement of J.P. Morgan Securities LLC (dated October 1, 2016) was enclosed as Appendix 1 with JPMS’ Amendment to the Initial Operation Report, filed on April 27, 2017. Documents pertaining to J.P. Morgan Futures Inc.’s merger with and into JPMS on June 1, 2011, were enclosed as Appendix 1 with JPMS’ Amendment to the Initial Operation Report, filed on February 22, 2012. Documents pertaining to JPMS’ change in corporate form from a Delaware corporation to a Delaware limited liability company were enclosed as Appendix 1 with JPMS’ Amendment to the Initial Operation Report, filed on October 12, 2010. For all other documents pertaining to this Exhibit, please refer to Exhibit D of JPMS’ Initial Operation Report, filed on May 18, 2009.

EXHIBIT E



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Exhibit E

Attach as Exhibit E, the name of any entity, other than the alternative trading system, that will be involved in the operation of the alternative trading system, including the execution, trading, clearing, and settling of transactions on behalf of the alternative trading system. Provide a description of the role and responsibilities of each entity.

JPM-X is owned and operated by JPMS, which is responsible for overseeing all aspects of JPM-X’s operations, including execution, trading, clearing, and settlement of transactions. JPMS is part of a global financial services organization (JPMorgan Chase & Co. (“JPMC”)), and, while JPMS is ultimately responsible for the oversight and regulatory compliance of JPM-X, some support functions for JPM-X may be performed by compliance, legal, operations, technology, and other support personnel of JPM. Such personnel are subject to JPMC’s firm-wide policies governing the use of confidential information, including the JPMC Code of Conduct. The JPMC Code of Conduct is updated periodically and is available on JPMC’s website at http://www.jpmorganchase.com/corporate/About-JPMC/code-of-conduct.htm.

http://www.jpmorganchase.com/corporate/About-JPMC/code-of-conduct.htm

EXHIBIT F



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Exhibit F

Attach as Exhibit F, the following information:

a. The manner of operation of the alternative trading system As described in Exhibit A, JPM-X is operated by JPMS as follows:

Hours of Operation – JPM-X operates during the regular trading hours set by the primary market for each security, which typically are from 9:30 a.m. to 4:00 p.m. (New York time). Manner of Operation – JPM-X offers continuous, real-time matching of orders that it receives (Algo/SOR Orders or Directed Orders) on an anonymous basis. As described in Exhibit A, Algo/SOR Orders are routed to JPM-X through the operation of various algorithmic/SOR order execution services, while Directed Orders are sent directly to JPM-X by subscribers. JPM-X supports the following order attributes:

• Limit Order – An order to buy or sell stock at a specific price or better.

• Primary Peg Order – An order to buy or sell stock that allows an order to have its price automatically set with reference to the inside quotation on the same side of the market of the National Best Bid or Offer (“NBBO”). This order may have a limit price.

• Midpoint Peg Order – An order to buy or sell stock that allows an order to have its price automatically set with reference to the midpoint between the inside bid and the inside offer of the NBBO. This order may have a limit price.

• Market Peg Order – An order to buy or sell stock that allows an order to have its price automatically set with reference to the inside quotation on the opposite side of the market of the NBBO. This order may have a limit price.

• “Immediate or Cancel” Order (“IOC Order”) – An order to buy or sell a stock that must be executed immediately. Any portion of an IOC order that cannot be filled immediately will be cancelled.

• Day Order – An order intended to rest in the book maintained by JPM-X (the “Order Book”) until it is executed or canceled at the end of the trading day or earlier in accordance with the time interval specified by the user or an



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algorithm selected by the user. Any day orders held in the Order Book may be canceled or replaced prior to execution or the end of the trading day.

All incoming orders, regardless of their origin, are eligible for continuous, real-time matching based on the liquidity available in the Order Book, except to the extent that a particular incoming order (a) has a participation constraint limiting the order flow type that it may be crossed against, or (b) is committed to a conditional order message during a firm-up period, as described below with regard to the Conditional Order Process. Orders submitted to JPM-X are not displayed to any parties other than authorized personnel involved in the operation of JPM-X. Note, however, that certain trading information is shared with potential contra-parties during the Conditional Order Process, as discussed below. Subject to compliance with Rule 201 of Regulation SHO, if a circuit breaker in Rule 201 has been triggered for a security trading in JPM-X, the execution will be done above the current national best bid. JPMS executes transactions in JPM-X based on market data received from direct feeds or, in the case of any market data for CHX, NYSE American, NYSE National, and ADF, Securities Information Processors (the “SIP”). 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). The list of market centers for which JPMS receives market data from direct feeds may change from time to time. Executions are consistent with all applicable price and volume conditions placed on the order. Those conditions include minimum fill size requirements as well as price parameters that are associated with any orders that are pegged to track market prices (e.g., the NBBO midpoint).

JPM-X does not display its order book to any of its users. Furthermore, the firm’s Algos/SOR does not receive or otherwise contain information about dark orders resident in JPM-X’s order book other than the orders placed into the order book by the Algos/SOR itself.



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b. Procedures governing entry of orders into the alternative trading system

As described in Exhibit A, JPM-X accepts Algo/SOR Orders and Directed Orders from users. Regardless of their origin, orders are supported by JPM-X as follows: o Round, odd, and mixed lot orders are accepted. Currently, there is no minimum

order size limitation imposed by JPM-X.

o Only orders for purchases and sales of NMS stocks are accepted.

o Short sale exempt orders are not accepted by JPM-X.

o Orders priced in a sub-penny increment are not accepted by JPM-X for all NMS orders that are priced at or above $1.00 per share. For orders priced below $1.00, JPM-X will not accept orders priced in an increment less than $.0001.

o Tick Size Pilot Support

Group 1 Securities: JPM-X will not accept orders with limit prices in a pricing increment smaller than 5 cents.

Group 2 Securities: JPM-X will not accept orders with limit prices in a pricing increment smaller than 5 cents. JPM-X will execute at prices in 5 cent increments or the midpoint of the NBBO. When the midpoint of the effective limits (see section d below regarding determining effective limit) is not a 5 cent increment, the execution price will be rounded to the nearest 5 cent increment or midpoint of the NBBO, giving price improvement to the liquidity taker.

Group 3 Securities: JPM-X will not accept orders with limit prices in a pricing increment smaller than 5 cents. JPM-X will only execute at the midpoint of the NBBO, even when not a 5 cent increment. Primary peg orders in these securities will be rejected, as they will not be able to cross at midpoint.

c. The means of access to the alternative trading system Algo/SOR Orders and conditional order messages from users of JPMS’ algorithmic/SOR order execution services and Directed Orders from internal JPMS users are transmitted to JPM-X through JPMS’ internal system connectivity. Directed Orders and conditional order messages from external users are routed to JPM-X directly via JPMS’ external connectivity gateways. These connectivity gateways utilize the FIX protocol and are not transport-vendor specific.



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d. The procedures governing execution, reporting, clearance, and settlement of transactions effected through the alternative trading system Execution - As noted above, JPM-X operates during the regular trading hours set by the primary market for each security, which typically are from 9:30 a.m. to 4:00 p.m. (New York time). Orders are not crossed in any stock until a trade in the stock has been executed and reported to the Consolidated Tape on that trading day by the primary market for the security. All executions take place within JPM-X. JPM-X does not route orders to other market centers. If only a partial execution of an order occurs, the unexecuted residual portion of that order is canceled or held in the Order Book based on the instruction of a user or an algorithm selected by a user. Crossing Constraints - JPM-X continuously looks for crossing opportunities at or within the NBBO for orders that it accepts. JPM-X does not execute a cross if the inside market for a stock is crossed (where the bid price exceeds the offer price) or locked (where the bid price is equal to the offer price). JPM-X also does not execute a cross in any security that is subject to a regulatory halt. In looking for crossing opportunities, JPM-X complies with any applicable participation instruction associated with each order. All orders, once found eligible for crossing, are executed by JPM-X on the basis of price/tier/time priority. The JPM-X order book is tiered in JPMS’ sole discretion using the order flow types described in Exhibit A, as follows:



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TIER

ORDER FLOW TYPE

DESCRIPTION

1

I-1

Institutional investor client flow accessing JPM-X via algorithms/SOR

2

I-2

Institutional investor client flow with direct access to JPM-X

3

I-3

Broker-dealer client flow (both agency and principal) accessing JPM-X via algorithms/SOR

4

P-1 P-2

JPMS trading desk flow accessing JPM-X via algorithms/SOR Internal electronic liquidity provider flow with direct access to JPM-X

5

I-4 I-5

Flow of external broker-dealers acting as electronic liquidity providers with direct access to JPM-X Flow of broker-dealers not acting as electronic liquidity providers (both agency and principal) with direct access to JPM-X

Clients can choose to specifically opt out of interacting with one or more order flow types or tiers. Clients can opt-out in various ways, which include but are not limited to by connectivity session, a custom set-up, or on an order by order basis. In addition, JPMS may further limit the order flow types or tiers with which an order interacts pursuant to JPMS’ best execution obligations; accordingly, a client may be prevented from interacting with an order flow type or tier with which the client has not opted-out of interacting. All executions by JPM-X are subject to applicable trade compliance and supervision policies and procedures of JPMS, including those designed to ensure compliance with Regulation NMS. In general, the crossing engine prices executions as follows. An effective limit price is calculated for each JPM-X order. For marketable limit orders, the effective limit is the offer price for buys and the bid price for sells. For pegged orders, the effective limit is the better of the limit price specified on the order and the price defined by the peg instruction. (For example, for a midpoint pegged order, the effective limit will be the better of the



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order’s limit price and the NBBO midpoint.) If the effective limits of two orders overlap, the orders will cross at or within the effective limits. When Rule 201 of Regulation SHO is in effect for a security and JPM-X is executing a cross where the sell side of the cross constitutes a short sale, JPM-X will always execute above the National Best Bid.

Conditional Order Process – JPM-X provides a process for finding potential trading interest using conditional parameters, called the Conditional Order Process. The Conditional Order Process makes use of two types of trading interests. The first type of trading interest is a conditional order message, which describes a user’s potential interest in a trade. Specifically, the message describes the price, size, side, symbol and minimum quantity of the user’s trading interest. JPM-X accepts limit and pegged conditional order messages. The message is marked as conditional and therefore is not executable. The second type of trading interest is a conditional-eligible Resting Order, which is a Resting Order sent to JPM-X (as previously described here in Exhibit F) that is eligible to participate in the Conditional Order Process because the user submitting the Resting Order has not opted out of participation in the Conditional Order Process. IOC Orders routed to JPM-X are not eligible to participate in the Conditional Order Process as contra-side trading interest to conditional order messages.

The Conditional Order Process operates as follows: User 1 submits to JPM-X a conditional order message. If and when eligible contra-side trading interest – which may be another conditional order message or a conditional-eligible Resting Order -- that could potentially match against the conditional order message is submitted to JPM-X (by User 2, for example), JPM-X will send to User 1 a message that indicates that a potential match has been found (“firm-up invitation”). The firm-up invitation describes the side and symbol of the potentially matching interest. If User 2 sent a conditional-eligible Resting Order that is the subject of the firm-up invitation, User 2 will not receive any indication that there is a potential for a match based on the conditional order message; if User 2, however, sent a conditional order message that is the subject of the firm-up invitation, User 2 will receive a firm-up invitation, as described above. Once a firm-up invitation is sent, the contra-side trading interest will be committed to the conditional order message, i.e., it will not be eligible to trade with any subsequent trading interest for the duration of the firm-up period. This firm-up period will be less than 2 seconds. Upon receipt of the firm-up invitation, User 1 has the option to (1) do nothing, or (2) send a firm order within the firm-up period to JPM-X. If User 1 does not intend to submit a firm order in response to the firm-up invitation within the firm-up period, User 1 need not respond to the firm-up invitation because the firm-up invitation cancels the conditional order message. If User 1 sends a firm order in response to the firm-up invitation, User 1’s firm order will be executed against User 2’s contra-side order (or other available contra side orders, if the contra side order is no longer available) pursuant to the execution priorities described above. If there is no eligible matching order for User 1’s firm order, User 1’s firm order will be canceled back to User 1.



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JPM-X users will be informed of the Conditional Order Process and all JPM-X users will have the ability to opt out of having their Resting Orders included in the Conditional Order Process and/or submitting conditional order messages to JPM-X. See Appendix 1 to Exhibit F, which contains the form of a letter that was sent from JPMS to JPM-X users regarding conditional orders. Similar disclosures relating to conditional orders are provided to JPM-X users at account opening and on a periodic basis. Firm orders have priority over conditional order messages at a given price level. In addition, conditional order messages will be classified in the same JPM-X tier as any firm interest relating to the same order flow type, and all existing crossing preferences determined by a user will apply.

JPMS reserves the right to limit or prohibit the use of conditional order messages by users at its own discretion based on relevant facts, including but not limited to previous JPM-X trading history. For example, JPMS may revoke or limit a user’s ability to submit conditional order messages if its review of the user’s JPM-X trading history indicates that the user has a low rate of responding to firm-up invitations with firm orders.

Conditional order messages and firm-up invitations sent during the Conditional Order Process are all handled on an automated basis and are not disseminated to any other users, third-parties, or personnel within JPMS, although compliance and technology personnel for JPM-X may access this information for their assigned compliance or technology purposes. In addition, conditional order messages will comply with all rules and regulations applicable to such messages.

Reporting – Once a cross has been executed, the trade is reported by JPMS to a recognized trade reporting facility of an SRO in accordance with applicable SRO rules. JPMS also maintains audit trail information for orders submitted to JPM-X as required by Order Audit Trail System reporting. JPMS will not submit OATS reports for conditional order messages in compliance with FINRA’s OATS Frequently Asked Question – Compliance Number C76. Clearance and Settlement - All trades for JPM-X are cleared and settled by JPMS using its existing clearance and settlement infrastructure. In its capacity as a self-clearing firm, JPMS has the requisite operational capabilities to clear and settle all of the trades executed by JPM-X. In the case of trades involving orders of customers of third-party broker-dealers, transactions are cleared and settled through the submission of locked-in trades to an approved Trade Reporting Facility (“TRF”).



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e. Procedures for ensuring user compliance with system guidelines The order entry functionality of JPMS’ algorithmic/SOR order execution services and the JPM trading desks are configured to facilitate compliance with various regulatory requirements and system-related order entry parameters (e.g., accepting orders in NMS stocks only), and activity reports are regularly generated and reviewed to monitor compliance with JPM-X policies and procedures, including applicable SEC and SRO rules and regulations. Pursuant to the terms of their agreement and/or account documentation, most external users have contractual obligations to abide by all applicable rules and regulations, including any requirements imposed by a market center.

f. A copy of the alternative trading system’s subscriber manual and any other

materials provided to subscribers No subscriber manual is provided to JPM-X users in connection with the operation of JPM-X. JPM-X users are provided with the Electronic Access and Trading Agreement, the template for which was enclosed as Appendix 2 to Exhibit F of JPMS’ Amendment to the Initial Operation Report, filed on October 28, 2016. In addition, JPMS clients, including JPM-X users, receive the J.P. Morgan Special Disclosure Statement, which was enclosed as Appendix 3 to Exhibit F of JPMS’ Amendment to the Initial Operation Report, filed on April 27, 2017, and largely duplicative disclosures on an annual basis. JPMS also makes available to JPM-X users the J.P. Morgan Securities LLC Electronic Client Solutions JPM-X Frequently Asked Questions – U.S. (also referred to as the JPM-X U.S. FAQs), which is enclosed as Appendix 4 to Exhibit F, and the JPM-X U.S. Monthly Summary, versions of which have been enclosed as Appendix 5 to Exhibit F of JPMS’ Amendments to the Initial Operation Report filed since October 28, 2016. Versions of the JPM-X U.S. Monthly Summary from the previous quarter are enclosed as Appendix 5 to Exhibit F. JPMS revises these documents from time to time. The JPM-X U.S. FAQs and JPM-X U.S. Monthly Summaries, as well as additional information regarding JPMS’ electronic trading services, including JPM-X, are available online at www.jpmorgan.com/ecs, including a redacted version of the Form ATS for JPM-X (without all appendices). This information is updated online periodically as appropriate. JPMS may send notices about the operation of JPM-X to some or all JPM-X users as relevant from time to time.



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APPENDIX 1 TO EXHIBIT F: FORM OF LETTER TO JPMS CUSTOMERS RE CONDITIONAL ORDERS

(July 26, 2013)



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July __, 2013

Dear Valued Customer,

In order to deliver world-class execution services to our clients, J.P. Morgan Securities LLC (“JPMS”) is continually enhancing our suite of trading products. In that spirit, our algorithmic suite and our alternative trading system, JPM-X, will begin to support conditional orders in August 2013 in two ways:

• Initially, our algorithmic suite will generate conditional orders, which will seek to match against resting orders in JPM-X.

• In the upcoming weeks, clients will be able to place conditional orders directly into JPM-X.

Algorithmic Conditional Orders. Conditional orders will be utilized by JPMS algorithms, on JPM-X and other venues that support them, to enhance our clients’ ability to seek liquidity. These orders will not be firm orders in the JPM-X book or the books of other venues. Rather, they will allow JPMS algorithms to seek liquidity in more than one destination (including JPM-X) simultaneously, without the risk of overfill. If a JPMS algorithm submits a conditional order to JPM-X and JPM-X detects a resting contra order (either a firm order or another conditional order) that matches the algorithm’s conditional order, it will send a notice, or “firm-up request” to the algorithm. The algorithm will then determine whether it can respond with a firm order. The resting contra order will be committed to the conditional order, i.e., it will not be eligible to trade with any subsequent trading interest for the duration of the firm-up request period. This firm-up period will be less than 2 seconds. Immediate-or cancel orders routed to JPM-X can never be a contra order to a conditional order, even if such orders meet the parameters of conditional orders. Firm orders have priority over conditional orders at a given price level.

Direct Conditional Orders. JPM-X also will support conditional orders entered by clients directly into the JPM-X book, i.e., not via a JPMS algorithm. These orders will function in the same manner as described above. The orders will be classified in the same JPM-X tier as any firm interest from that user, and all existing crossing preferences relative to that user’s orders will apply. In order to ensure the integrity of these conditional orders, the JPMS ECS team will monitor the firm-up rates for each client submitting conditional orders. Clients failing to meet our required firm-up rates or other criteria deemed relevant will have their conditional order access revoked.

Conditional orders submitted to venues other than JPM-X will be executed in accordance with the rules of such venues.

We are committed to transparency in our trading products. As a result, all clients may opt out of participating in JPMS’s conditional order functionality in whole or in part, (either by not having their resting orders act as contra orders to conditional orders in JPM-X, and/or by not permitting their algorithmic orders to generate conditional orders) at any time.

To opt out, or should you have any questions regarding JPM-X or our electronic trading offering, please contact the Electronic Client Services team at

Sincerely,

The J.P. Morgan Securities LLC ECS Team



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APPENDIX 2 TO EXHIBIT F: TEMPLATE FOR ELECTRONIC ACCESS AND TRADING AGREEMENT

See Appendix 2 to Exhibit F of JPMS’ Amendment to the Initial Operation Report, filed on October 28, 2016.



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APPENDIX 3 TO EXHIBIT F: J.P. MORGAN SPECIAL DISCLOSURE STATEMENT

See Appendix 3 to Exhibit F of JPMS’ Amendment to the Initial Operation Report, filed on April 27, 2017.



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APPENDIX 4 TO EXHIBIT F: JPM-X U.S. FAQs



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APPENDIX 5 TO EXHIBIT F: JPM-X U.S. MONTHLY SUMMARIES

See Appendix 5 to Exhibit F of JPMS’ Amendments to the Initial Operation Report filed since October 28, 2016 for JPM-X U.S. Monthly Summaries from earlier quarters.

EXHIBIT G



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Exhibit G

Attach as Exhibit G, a brief description of the alternative trading system’s procedures for reviewing system capacity, security, and contingency planning procedures.

JPMS has firm-wide IT Risk Management policies and procedures in place to address risks to operations across all of JPMS and its subsidiaries and affiliates, including JPM-X. These procedures address, among other things, JPM-X’s system capacity, security, and contingency planning.

A. Capacity The JPM-X matching engine processing capacity is regularly reviewed to ensure that it can handle the system’s average and peak message and order volumes. Regular testing will be performed as a preventative step to assess capacity needs as they arise.

JPMS also has procedures designed to test and verify its systems’ resilience. Specifically, JPMorgan IT Risk Management designs policies regarding resiliency of core applications and their supporting infrastructure. In accordance with these policies, systems are in place to monitor CPU/Disk/Network system health and utilization. Regular capacity tests are performed on all core systems. Support staff is automatically alerted as thresholds are reached at both systemic and application levels. JPM-X will be subject to these policies and procedures.

Finally, JPMorgan IT Risk Management also uses periodic audits to assess and manage risk to JPMS’ information technology, including JPM-X. This approach is complemented by an established technology risk methodology, which provides guidance on evaluating, testing and documenting reviews of technology controls through the audit planning, fieldwork, and reporting phases to ensure effective coverage of technology risks and controls.

B. Security Policies and procedures are in place to ensure that only persons responsible for the operation of and/or compliance by JPM-X will have access to JPM-X’s live order production system. Personnel with access to such information include technology, product specialists, compliance, supervisors, and senior managers responsible for or involved in the operation of JPM-X. Certain client service personnel may also have limited access to the system to respond to client inquiries or help resolve operational issues on a strict need-to-know basis and subject to permissioning. Activities involving these systems are logged and auditable. Authentication is required to establish each connected session and is validated on a per-message basis. A multi-tiered firewall paradigm is in place to safeguard JPM-X data centers from unauthorized access. JPMS or its affiliates also provides for physical security, including security guards, surveillance cameras, etc., for its data centers and facilities, including those related to JPM-X. With respect to order information stored in other data-storage facilities and data repositories, technology, product specialists, client services, supervisors, senior managers, and operational and control groups, including but not limited to legal, compliance, operations, and middle office, will have access to such information on a need-to-know basis solely for performance of their respective responsibilities and subject to permissioning.



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C. Contingency Planning JPMS has in place procedures regarding contingency planning. Such procedures address, among other things, issues related to data backup, cessation of operations, and communications with users. Regular backups are performed on all core data systems and maintained in third-party facilities. If there is a system issue with a significant impact on the operation of JPM-X, JPMS will cease operation of JPM-X until the issue can be resolved. Upon the occurrence of such an event, JPM-X will endeavor to inform its users of the cessation of operation in a timely manner.

EXHIBIT H



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Exhibit H

If any other entity, other than the alternative trading system, will hold or safeguard subscriber funds or securities on a regular basis, attach as Exhibit H the name of such entity and a brief description of the controls that will be implemented to ensure the safety of such funds and securities.

Not applicable.

EXHIBIT I



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Exhibit I

Attach as Exhibit I, a list providing the full legal name of those direct owners reported on Schedule A of Form BD.

The direct owner of JPMS, owner and operator of JPM-X, is J.P. Morgan Broker-Dealer Holdings Inc.