[Federal Register Volume 81, Number 194 (Thursday, October 6, 2016)]
[Notices]
[Pages 69556-69558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24148]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79013; File No. SR-ISEGemini-2016-12]


Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Adopt a New Rule 
209

September 30, 2016.
    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 September 28, 2016, ISE Gemini, LLC (``ISE Gemini'' or ``Exchange'') 
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 Exchange. 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

    The Exchange proposes to adopt a new Rule 209 entitled, 
``Collection of Exchange Fees and Other Claims'' to require Members to 
provide a clearing account number at the National Securities Clearing 
Corporation (``NSCC'') for purposes of permitting the

[[Page 69557]]

Exchange to debit any undisputed or final fees, fines, charges and/or 
other monetary sanctions or monies due and owing to the Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at 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 Exchange 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 collect undisputed or 
final fees, fines, charges and/or other monetary sanctions or monies 
due and owing to the Exchange through NSCC.\3\ This proposal will 
provide a cost savings to the Exchange in that it will alleviate 
administrative processes related to the collection of monies owed to 
the Exchange.\4\ Collection matters divert staff resources away from 
the Exchange's regulatory and business purposes. In addition, the 
debiting process will prevent Member accounts from becoming overdue. 
The Exchange notes that it has a billing dispute policy.
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    \3\ The Exchange will not debit accounts for fees that are 
unusually large or for special circumstances, unless such debiting 
is requested by the Member.
    \4\ Today, some fees are collected through The Options Clearing 
Corporation, but not all fees.
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    The Exchange proposes to adopt new Rule 209 and require Members, 
and all applicants for registration as such to provide a clearing 
account number for an account at NSCC for purposes of permitting the 
Exchange to debit any undisputed or final fees, fines, charges and/or 
other monetary sanctions or monies due and owing to the Exchange or 
other charges related to Rules 205 and 206.\5\
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    \5\ See ISE Gemini Rules 205 (Participant Fees) and 206 
(Liability for Payment of Fees).
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    The Exchange will send a monthly invoice \6\ to each Member on 
approximately the 4th-6th business day of the following month.\7\ The 
Exchange will also send a file to NSCC each month on approximately the 
23rd of the following month to initiate the debit of the appropriate 
amount stated on the Member's invoice for the prior month. Because the 
Members will receive an invoice well before any monies are debited 
(normally within two weeks), the Members will have adequate time to 
contact the staff with any questions concerning their invoice. If a 
Member disputes an invoice, the Exchange will not include the disputed 
amount in the debit if the Member has disputed the amount in writing to 
the Exchange's designated staff by the 15th of the month, or the 
following business day if the 15th is not a business day, and the 
amount in dispute is at least $10,000 or greater.
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    \6\ The monthly invoice will indicate that the amount on the 
invoice will be debited from the designated NSCC account. Each 
month, the Exchange will send a file to the Member's clearing firm 
which will indicate the amounts to be debited from each Member. If a 
Member is ``self-clearing,'' no such file would be sent as the 
Member would receive the invoice, as noted above, which would 
indicate the amount to be debited.
    \7\ By way of example, October invoices would be sent on 
November 7th.
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    Once NSCC receives the file from the Exchange, NSCC would proceed 
to debit the amounts indicated from the Clearing Members' account. In 
the instance where the Member clears through an Exchange Clearing 
Member, the estimated transactions fees owed to the Exchange are 
reconciled daily by the Clearing Member to ensure adequate funds have 
been escrowed. The Exchange would debit any monies owed including 
undisputed or final fees,\8\ fines, charges and/or other monetary 
sanctions or monies due and owing to the Exchange.\9\
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    \8\ Exchange fees are noted on the Exchange Fee Schedule.
    \9\ This includes, among other things, fines which result from 
the imposition of fines pursuant to Rules 1611, Judgment and 
Sanction; and 1614, Imposition of Fines for Minor Rules Violations. 
With respect to disciplinary sanctions that are imposed by either 
the Business Conduct Committee or a Hearing Panel, the Exchange 
would not debit any monies until such action is final. The Exchange 
would not consider an action final until all appeal periods have run 
and/or all appeal timeframes are exhausted. With respect to non-
disciplinary actions, the Exchange would similarly not take action 
to debit a Member account until all appeal periods have run and/or 
all appeal timeframes are exhausted. Any uncontested disciplinary or 
non-disciplinary actions will be debited, and the amount due will 
appear on the Member's invoice prior to the actual NSCC debit.
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    The Exchange proposes this rule change become operative on October 
1, 2016. On November 23, 2016, the Exchange will debit October 2016 
billing pursuant to the process described in this rule change.\10\ The 
Exchange will notify Members of this rule change to provide its Members 
ample time to provide the Exchange with the information necessary for 
the direct debit and prepare for the change to the collection process.
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    \10\ The initial debit will include all outstanding fees through 
October 1, 2016.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, 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 by providing Members with an 
efficient process to pay undisputed or final fees, fines, charges and/
or monetary sanctions or monies dues and owing to the Exchange.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal to debit NSCC accounts is 
reasonable because it would ease the Member's administrative burden in 
paying monthly invoices, avoid overdue balances and provide same day 
collection from all Members who owe monies to the Exchange. The 
Exchange has a billing dispute policy. The Member may dispute the 
invoice prior to the debit. This policy also lowers the Exchange's 
administrative costs because staff resources would not be diverted to 
review of untimely requests regarding billing.
    The Exchange believes that its proposal to debit NSCC accounts is 
equitable and not unfairly discriminatory because it will apply to all 
Members in a uniform manner. Today, the debit process is applied at all 
Nasdaq exchanges.\13\
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    \13\ See NASDAQ Phlx LLC Rule 909, The NASDAQ Stock Market LLC 
Rule 7007, NASDAQ Options Market LLC Rules at Chapter XV, Section 1, 
NASDAQ BX, Inc. Rule 7011 and BX Option Rules at Chapter XV, Section 
1 (collectively ``Nasdaq exchanges'').
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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. With this

[[Page 69558]]

proposal, the proposed debit process would apply uniformly to all 
Members.
    Further, this proposal would provide a cost savings to the Exchange 
in that it would alleviate administrative processes related to the 
collection of monies owed to the Exchange. Collection matters divert 
staff resources away from the Exchange's regulatory and business 
purposes. In addition, the debiting process would prevent Member 
accounts from becoming overdue.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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)(iii) of the Act \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. In its filing with the Commission, 
the Exchange requests that the Commission waive the 30-day operative 
delay. The Exchange proposes that the proposed rule change become 
operative on October 1, 2016. On November 23, 2016, the Exchange would 
debit October 2016 billing pursuant to the process set forth in the 
proposed rule change. The Exchange represents that waiver of the 30-day 
operative delay would allow it to conform its billing processes similar 
to the process in place at the various Nasdaq exchanges.\17\ The 
Exchange notes that all ISE Gemini Members have an NSCC account or have 
a clearing firm with an NSCC account. Direct debit is an options 
industry standard. According to the Exchange, all members should be 
able to provide ISE Gemini with an NSCC account prior to the date of 
the November 23, 2016 debit. Further, the Exchange believes that this 
process will alleviate administrative processes related to the 
collection of monies owed to the Exchange. For these reasons, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission designates the proposed rule change to be 
operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ See supra note 13.
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission also has 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-2016-12 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-2016-12. 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 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-2016-12 and should 
be submitted on or before October 27, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24148 Filed 10-5-16; 8:45 am]
 BILLING CODE 8011-01-P