[Federal Register Volume 79, Number 68 (Wednesday, April 9, 2014)]
[Notices]
[Pages 19685-19687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07884]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71854; File No. SR-ISEGemini-2014-11]


Self-Regulatory Organizations; ISE Gemini Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Permit 
Market Makers To Enter Opening Only Orders in Appointed Options Classes

April 3, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on March 26, 2014, ISE Gemini, LLC (the ``Exchange'' or ``ISE 
Gemini'') filed with the Securities and Exchange Commission the 
proposed rule change, as described in Items I and II below, which items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    ISE Gemini is proposing to amend Rule 805(a) to permit market 
makers to enter Opening Only Orders in the options classes to which 
they are appointed. The text of the proposed rule change is available 
on the Exchange's Internet Web site at http://www.ise.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    On February 25, 2014 ISE Gemini's sister exchange, the 
International Securities Exchange, LLC (``ISE''), filed an immediately 
effective rule change to permit market makers on that exchange to enter 
Opening Only Orders in the options classes to which they are 
appointed.\3\ That ISE filing restored functionality that was 
previously available to ISE market makers through the use of immediate-
or-cancel (``IOC'') orders prior to the introduction of the ISE's T7 
trading system, which introduced Opening Only Orders on that exchange, 
and limited IOC orders to intraday.\4\ As was previously the case on 
the ISE, market makers on ISE Gemini are not presently permitted to 
submit Opening Only Orders in the options classes to which they are 
appointed.\5\ The Exchange therefore proposes to amend Rule 805(a), 
which is based on the ISE rule amended by the filing referenced above, 
to similarly permit ISE Gemini market makers to enter Opening Only 
Orders in their appointed options classes.\6\ The proposed rule change 
is meant to conform the rules of ISE Gemini to the rules of other 
options exchanges, including the ISE, where market makers presently 
have the ability to enter Opening Only Orders in their appointed 
classes.\7\
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    \3\ See Securities Exchange Act Release No. 71685 (March 11, 
2014), 79 FR 14774 (March 17, 2014) (SR-ISE-2014-11).
    \4\ Prior to the launch of the ISE's T7 trading system, ISE 
market makers could submit IOC orders at any time prior to the 
opening of trading, which, like Opening Only Orders, would execute 
during the opening rotation, with any unexecuted portion being 
cancelled.
    \5\ Market makers are currently permitted to submit the 
following order types in their appointed options classes: IOC 
orders, market orders, fill-or-kill orders, and certain block orders 
and non-displayed penny orders. See ISE Gemini Rule 805(a).
    \6\ An ``Opening Only Order'' is a limit order that can be 
entered for the opening rotation only. Any portion of the order that 
is not executed during the opening rotation is cancelled.
    \7\ See supra note 3. As another example, market makers on the 
MIAX Options Exchange (``MIAX'') similarly have the ability to enter 
``opening only'' orders in their appointed classes. See MIAX Rule 
605(a).

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[[Page 19686]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Securities Exchange Act of 1934 
(the ``Act''),\8\ in general, and with Section 6(b)(5) of the Act,\9\ 
in particular, in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest. The Exchange 
believes that allowing market makers to use Opening Only Orders will 
give those members greater flexibility to update prices during the 
opening rotation. Specifically, market makers have requested that they 
be permitted to use Opening Only Orders so that they may use this order 
type to update their prices in single series during the opening process 
more efficiently, and thereby more readily, than relying on quoting 
systems that are designed to update prices across multiple series. As 
explained above, ``opening only'' orders types are available to market 
makers on other exchanges, including ISE Gemini's sister exchange. 
Moreover, because any portion of an Opening Only Order that is not 
executed during the opening rotation is cancelled, this proposed rule 
change is generally consistent with Rule 805(a), which was intended to 
prevent market makers from having both standing limit orders and quotes 
in the same options class.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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 B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\10\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. To the contrary, 
the Exchange believes that the proposed rule change is pro-competitive 
as it permits market makers to use functionality already available to 
other ISE Gemini members, and to market makers on other exchanges, who 
are currently able to submit Opening Only Orders or other similar order 
types.
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    \10\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) 
thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange stated that 
the proposal will allow market makers, during the opening process, to 
use an order type that more efficiently update their prices. The 
Exchange also stated that Opening Only Orders are presently available 
to other ISE Gemini members and to market makers on competing options 
exchanges. The Commission believes that the proposed rule change 
presents no novel issues. Moreover, the Commission believes that the 
proposed rule change is consistent with the protection of investors and 
the public interest, because it allows the market makers to more 
efficiently, and thereby more readily, display updated prices to the 
public. Therefore, the Commission waives the 30-day operative delay 
requirement and designates the proposed rule change to be operative 
upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ISEGemini-2014-11 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISEGemini-2014-11. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal

[[Page 19687]]

identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-ISEGemini-2014-11 and should be 
submitted on or before April 30, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07884 Filed 4-8-14; 8:45 am]
BILLING CODE 8011-01-P