[Federal Register Volume 80, Number 18 (Wednesday, January 28, 2015)]
[Notices]
[Pages 4603-4605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-01507]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74113; File No. SR-ISE Gemini-2015-02]


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

January 22, 2015.
    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 January 8, 2015, ISE Gemini, LLC (the ``Exchange'' or ``ISE 
Gemini'') filed with the Securities and Exchange 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.
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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 the Schedule of Fees to introduce new 
fees for Crossing Orders and Responses to Crossing Orders executed in 
the Price Improvement Mechanism (``PIM''). 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 Exchange proposes to amend the Schedule of Fees to introduce 
new fees for Crossing Orders and Responses to Crossing Orders executed 
in the PIM. The Exchange's Schedule of Fees has separate 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.
    ISE Gemini charges a fee for Crossing Orders executed in the 
Facilitation Mechanism, Solicited Order Mechanism, Block Order 
Mechanism, PIM, or submitted as a Qualified Contingent Cross (``QCC'') 
order. This fee is currently $0.20 per contract in both Penny \3\ and 
Non-Penny Symbols,\4\ and applies to Market Maker,\5\ Non-ISE Gemini 
Market Maker,\6\ Firm Proprietary \7\/Broker-Dealer,\8\ and

[[Page 4604]]

Professional Customer \9\ (``non-Priority Customer'') orders on both 
the originating and contra side of a Crossing Order. The Exchange now 
proposes to reduce this fee for non-Priority Customer Crossing Orders 
to $0.05 per contract for PIM orders only. Priority Customers \10\ do 
not currently pay a fee for Crossing Orders executed on ISE Gemini. In 
connection with the above change, the Exchange further proposes to 
apply a $0.05 per contract fee to Priority Customer Crossing Orders 
executed in the PIM when the Priority Customer is on the contra-side of 
a PIM auction.
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    \3\ ``Penny Symbols'' are options overlying all symbols listed 
on ISE Gemini that are in the Penny Pilot Program.
    \4\ ``Non- Penny Symbols'' are options overlying all symbols 
excluding Penny Symbols.
    \5\ The term Market Maker refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. Market Maker 
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.
    \6\ A ``Non-ISE Gemini Market Maker'' is a market maker as 
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, 
as amended, registered in the same options class on another options 
exchange.
    \7\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \8\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \9\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \10\ A ``Priority Customer'' is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in ISE Gemini Rule 
100(a)(37A).
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    In addition, the Exchange charges a fee for Responses to Crossing 
Orders. In Penny Symbols this fee is $0.49 per contract for non-
Priority Customer orders, and $0.45 per contract for Priority Customer 
orders. In Non-Penny Symbols this fee is $0.86 per contract for Market 
Maker orders, $0.87 per contract for Non-ISE Gemini Market Maker, Firm 
Proprietary/Broker-Dealer, and Professional Customer orders, and $0.82 
per contract for Priority Customer orders. The Exchange now proposes to 
reduce this fee to $0.05 per contract for PIM orders executed for all 
market participant types.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\11\ in general, and 
Section 6(b)(4) of the Act,\12\ 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.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee changes are reasonable 
and equitable as members that enter or respond to PIM auctions will 
benefit from significantly lower overall fees for their PIM trades, 
leading to greater participation and competition in the PIM, and 
enhanced price improvement opportunities for investors. By lowering 
fees for PIM orders, the proposed fee change is designed to encourage 
members to execute this order flow on ISE Gemini rather than on 
competing exchanges. In addition, the Exchange believes that decreasing 
the fee for Responses to Crossing Orders will encourage market 
participants to be more aggressive in providing additional price 
improvement when they respond to orders entered into the PIM.
    The Exchange believes that the proposed PIM fees are not unfairly 
discriminatory as the proposed fees apply equally to all members that 
enter or respond to PIM auctions, except that Priority Customer orders 
on the originating side of a PIM order will continue to not pay a fee. 
Priority Customer orders on ISE Gemini are generally entitled to lower 
fees and higher rebates as the Exchange believes that attracting more 
liquidity from Priority Customers will benefit all market participants 
that trade on ISE Gemini.\13\ While Priority Customer orders previously 
enjoyed free executions on both the originating and contra-side of PIM 
orders, the Exchange has determined to no longer offer this inducement 
to contra-side orders, which are solicited by members from other 
sophisticated parties that engage in this type of trading activity. As 
such, all market participants that trade on the contra-side of a PIM 
order will pay the same fee for this activity.
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    \13\ A Priority Customer is by definition not a broker or dealer 
in securities, and does not place more than 390 orders in listed 
options per day on average during a calendar month for its own 
beneficial account(s). This limitation does not apply to 
participants whose behavior is substantially similar to that of 
market professionals, including Professional Customers, who will 
generally submit a higher number of orders (many of which do not 
result in executions) than Priority Customers.
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    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,\14\ 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 increase 
competition by making it cheaper to enter or respond to PIM auctions. 
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 and rebates to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed fee changes reflect this competitive environment.
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    \14\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\15\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\16\ because it establishes a due, fee, or other charge 
imposed by ISE Gemini.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
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    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

[[Page 4605]]

     Send an email to [email protected]. Please include 
File No. SR-ISE Gemini-2015-02 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-ISE Gemini-2015-02. 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-ISE Gemini-2015-02 and 
should be submitted on or before February 18, 2015.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Brent J. Fields,
Secretary.
[FR Doc. 2015-01507 Filed 1-27-15; 8:45 am]
BILLING CODE 8011-01-P