[Federal Register Volume 79, Number 224 (Thursday, November 20, 2014)]
[Notices]
[Pages 69168-69170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27450]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73600; File No. SR-ISEGemini-2014-28]


Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Schedule of Fees

November 14, 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 November 3, 2014, ISE Gemini, LLC (the ``Exchange'' or ``ISE 
Gemini'') filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change, as described in Items I, II, 
and III 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    ISE Gemini is proposing to amend its Schedule of Fees to introduce 
a new higher maker rebate for certain Market Maker orders. 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
    The purpose of the proposed rule change is to amend the Schedule of 
Fees to introduce a new higher maker rebate for certain Market Maker 
\3\ orders. The Exchange's Schedule of Fees has separate tables for 
fees applicable to Standard Options and Mini Options. The Exchange 
notes that while the discussion below relates to fees for Standard 
Options, the fees for Mini Options, which are not discussed below, are 
and shall continue to be 1/10th of the fees for Standard Options.
---------------------------------------------------------------------------

    \3\ The term Market Maker refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. Market Makers 
orders sent to the Exchange by an Electronic Access Member are 
assessed fees and rebates at the same level as Market Maker orders. 
See footnote 2, Schedule of Fees, Section I and II.
---------------------------------------------------------------------------

    Currently, Market Maker orders that add liquidity on ISE Gemini are 
provided a maker rebate in Penny Symbols \4\ and SPY of $0.30 per 
contract for Tier 1, $0.32 per contract for Tier 2, $0.34 per contract 
for Tier 3, $0.37 per contract for Tier 4, and $0.38 per contract for 
Tier 5. In Non-Penny Symbols \5\ this maker rebate is $0.40 per 
contract for Tier 1, $0.42 per contract for Tier 2, and $0.44 per 
contract for Tier 3, $0.47 per contract for Tier 4, and $0.49 per 
contract for Tier 5. In order to incentivize Market Makers to quote 
more aggressively on ISE Gemini, the Exchange now proposes to provide a 
higher maker rebate to Tier 2 members that meet an additional average 
daily volume (``ADV'') threshold with respect to Market Maker orders 
executed in a given month.\6\ In particular, Market Makers that achieve 
Tier 2 and execute an ADV of 100,000 to 124,999 contracts in a given 
month, including both maker and taker volume, will qualify for a maker 
rebate of $0.33 per contract in Penny Symbols and SPY, and $0.43 per 
contract in Non-Penny Symbols.
---------------------------------------------------------------------------

    \4\ ``Penny Symbols'' are options overlying all symbols listed 
on ISE Gemini that are in the Penny Pilot Program.
    \5\ ``Non-Penny Symbols'' are options overlying all symbols 
excluding Penny Symbols.
    \6\ A Tier 2 member is a member that executes a Total Affiliated 
Member ADV of 50,000 to 124,999 contracts, Priority Customer Maker 
ADV of 20,000 to 49,999 contracts, or a Total Affiliated Member ADV 
of 40,000 to 99,999 contracts with a minimum Priority Customer Maker 
ADV of 15,000 contracts.

---------------------------------------------------------------------------

[[Page 69169]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\7\ in general, and Section 
6(b)(4) of the Act,\8\ in particular, in that it is designed to provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fee change is reasonable 
and equitable as the new maker rebate is designed to attract additional 
volume from Market Makers that do not qualify for Tier 3 or higher 
maker rebates. The Exchange believes that providing higher maker 
rebates for orders executed by Market Makers that have achieved the 
volume threshold for this new ``sub-tier'' will attract that order flow 
to ISE Gemini, and thereby create additional liquidity to the benefit 
of all market participants who trade on the Exchange. The Exchange 
further believes that the proposed rule change is not unfairly 
discriminatory as all Market Makers that achieve the new volume 
threshold will receive the same maker rebate. The Exchange does not 
believe that it is unfairly discriminatory to offer this higher rebate 
only to Market Maker orders as Market Makers are subject to additional 
requirements and obligations (such as quoting requirements) that other 
market participants are not. Moreover, the Exchange believes that the 
proposed fee change will encourage Market Makers to quote more 
aggressively on the Exchange in order to qualify for the new maker 
rebate, which will benefit all market participants.
    The Exchange notes that it has determined to charge fees and 
provide rebates in Mini Options at a rate that is 1/10th the rate of 
fees and rebates the Exchange provides for trading in Standard Options. 
The Exchange believes it is reasonable and equitable and not unfairly 
discriminatory to assess lower fees and rebates to provide market 
participants an incentive to trade Mini Options on the Exchange. The 
Exchange believes the proposed fees and rebates are reasonable and 
equitable in light of the fact that Mini Options have a smaller 
exercise and assignment value, specifically 1/10th that of a standard 
option contract, and, as such, is providing fees and rebates for Mini 
Options that are 1/10th of those applicable to Standard Options.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ 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 fee change will promote 
competition as it is designed to allow ISE Gemini to better compete for 
order flow by offering higher rebates to orders executed by Market 
Makers that meet the new volume threshold for the new ``sub tier.'' The 
Exchange operates in a highly competitive market in which market 
participants can readily direct their order flow to competing venues. 
In such an environment, the Exchange must continually review, and 
consider adjusting, its fees to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
the proposed fee changes reflect this competitive environment.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\10\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\11\ because it establishes a due, fee, or other charge 
imposed by ISE Gemini.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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-2014-28 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISEGemini-2014-28. 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-2014-28, and 
should be submitted on or before December 11, 2014.

[[Page 69170]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27450 Filed 11-19-14; 8:45 am]
BILLING CODE 8011-01-P