[Federal Register Volume 79, Number 169 (Tuesday, September 2, 2014)]
[Notices]
[Pages 52096-52097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-20701]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72919; File No. SR-ISE Gemini-2014-22]


Self-Regulatory Organizations; ISE Gemini Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change on Sweep 
Orders

August 26, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 19, 2014, ISE Gemini, LLC (the ``Exchange'' or ``ISE 
Gemini'') filed with the Securities and Exchange Commission 
(``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 proposes to amend its rules to adopt a definition of 
``Sweep Order,'' an order type that will be introduced in rules 
incorporated by reference to rules of the Exchange's affiliate, 
International Securities Exchange, LLC (``ISE''), and to allow market 
makers to enter Sweep Orders in their appointed options classes. 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 July 31, 2014, the ISE filed a proposed rule change that 
introduced a new order type: The ``Sweep Order.'' \3\ Pursuant to the 
rules adopted in the ISE filing, which will become effective on 
September 1, 2014, a ``Sweep Order'' is a limit order that is executed 
against any available interest in the order book at the NBBO or better 
and immediately sent to the Linkage Handler for away market routing, 
without being exposed to members first under Supplementary Material .02 
to ISE Rule 1901. Furthermore, a Sweep Order that is not marketable 
when it is submitted is cancelled, as is any portion of a marketable 
Sweep Order that is not immediately executed by an eligible exchange. 
New Supplementary Material .05 to ISE Rule 1901, which describes order 
handling for Sweep Orders, is incorporated by reference into Chapter 19 
of ISE Gemini rules. The purpose of this proposed rule change is to 
amend ISE Gemini Rule 715 to include a definition of ``Sweep Order,'' 
as described above. In conjunction with this change, the Exchange also 
proposes to amend ISE Gemini Rule 805(a) to allow market makers to 
submit Sweep Orders in their appointed options classes,\4\ consistent 
with treatment on the ISE.
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    \3\ See Securities Exchange Act Release No. 72816 (August 12, 
2014), 79 FR 48811 (August 18, 2014) (SR-ISE-2014-37).
    \4\ Market makers are currently permitted to submit the 
following order types in their appointed options classes: Opening 
only orders, immediate-or-cancel (``IOC'') orders, market orders, 
fill-or-kill orders, and certain block orders and non-displayed 
penny orders. See ISE Gemini Rule 805(a).
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2. Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act,\5\ and the rules and regulations 
thereunder that are applicable to a national securities exchange, 
including the requirements of Section 6(b) of the Act.\6\ In 
particular, the proposal is consistent with Section 6(b)(5) of the 
Act,\7\ because it is designed to promote just and equitable principles 
of trade, remove impediments to and perfect the mechanisms of a free 
and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).

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[[Page 52097]]

    ISE Gemini's affiliated exchange, ISE, recently adopted Sweep 
Orders in a filing that will become effective on September 1, 2014, and 
order handling for this order type is provided for in rules that will 
be incorporated by reference into ISE Gemini rules. The introduction of 
Sweep Orders on ISE Gemini will facilitate the routing of Public 
Customer and Non-Customer Orders, and will allow Members to quickly 
access available liquidity on ISE Gemini and away markets. The proposed 
rule change removes impediments to and perfects the mechanism of a free 
and open market and a national market system because it clarifies ISE 
Gemini rules, which as stated above will incorporate order handing for 
Sweep Orders, by adopting a definition for this order type. 
Furthermore, ISE Gemini believes that it is in the public interest to 
allow market makers to enter Sweep Orders in their appointed options 
classes so that they can use this order type to access liquidity on ISE 
Gemini and other options exchanges. Under ISE Gemini Rules, Market 
Makers are permitted to provide resting liquidity in their appointed 
classes through the use of quotes entered in compliance with Rule 804. 
In order to access liquidity provided by other firms, however, Market 
Makers use IOC and other order types that do not rest on the regular 
order book.\8\ Because any portion of a Sweep Order that is not 
executed is cancelled, the proposed addition of Sweep Orders to the 
list of order types that market makers may use in their appointed 
classes 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\ See supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act as it merely defines an order 
type that will be available on the Exchange, and allows market makers 
to enter this order type, consistent with treatment on the ISE. With 
the introduction of Sweep Orders, both Public Customer and Non-Customer 
Orders will be able to use this order type to quickly access better-
priced liquidity on ISE Gemini and other competing markets.

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 foregoing 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, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and 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. The 
Exchange has satisfied this requirement.
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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-2014-22 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-2014-22. 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 such 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 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-2014-22 and should 
be submitted on or before September 23, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-20701 Filed 8-29-14; 8:45 am]
BILLING CODE 8011-01-P