80 FR 14419 - Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 53 (March 19, 2015)

[Federal Register Volume 80, Number 53 (Thursday, March 19, 2015)]
[Notices]
[Pages 14419-14421]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06263]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74505; File No. SR-ISEGemini-2015-06]


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

March 13, 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 March 2, 2015, ISE Gemini, LLC (the ``Exchange'' or ``ISE 
Gemini'') filed with the Securities and Exchange Commission (the 
``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 the 
Substance of the Proposed Rule Change

    ISE Gemini proposes to amend the Schedule of Fees as described in 
more detail below. 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 increase 
Priority Customer \3\ rebates in Penny Symbols \4\ and SPY as well as 
related fees for non-Priority Customer orders trading against Priority 
Customer orders in these symbols.
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    \3\ 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 Rule 100(a)(37A).
    \4\ ``Penny Symbols'' are options overlying all symbols listed 
on ISE Gemini that are in the Penny Pilot Program.
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    Currently, Priority Customer orders that add liquidity on ISE 
Gemini are provided a maker rebate in Penny Symbols and SPY of $0.25 
per contract for Tier 1,\5\ $0.40 per contract for Tier 2, $0.46 per 
contract for Tier 3, $0.48 per contract for Tier 4, and $0.50 per 
contract for Tier 5. In order to incentivize members to bring their 
Priority Customer orders to ISE Gemini, the Exchange now proposes to 
provide higher maker rebates to members that achieve Tier 3 or higher. 
In particular, the Exchange proposes to increase the

[[Page 14420]]

Priority Customer rebate in Penny Symbols and SPY to $0.48 per contract 
for Tier 3, $0.50 per contract for Tier 4, and $0.52 per contract for 
Tier 5.
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    \5\ This rebate is $0.32 per contract for members that execute a 
Priority Customer Maker ADV of 5,000 to 19,999 contracts in a given 
month.
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    Market Maker,\6\ Non-ISE Gemini Market Maker,\7\ Firm Proprietary 
\8\/Broker-Dealer,\9\ and Professional Customer \10\ (i.e. non-Priority 
Customer) orders currently pay a taker fee of $0.49 per contract, 
subject to a discount to $0.48 per contract for Market Makers that 
achieve the highest tier. In connection with the increased Priority 
Customer rebates described above, the Exchange further proposes to 
charge non-Priority Customer orders a taker fee of $0.50 per contract 
when trading against a Priority Customer order.\11\
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    \6\ The term Market Maker refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See Rule 
100(a)(25).
    \7\ 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.
    \8\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \9\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \10\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \11\ The Exchange notes that there will be no Tier 5 Market 
Maker discount when trading against a Priority Customer.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\12\ in general, and 
Section 6(b)(4) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to 
increase the rebates offered to Priority Customer orders in Penny 
Symbols and SPY, as the proposed change is designed to attract 
additional Priority Customer volume to the Exchange. The Exchange 
already provides enhanced rebates for Priority Customer orders, and 
believes that further increasing the rebates will incentivize members 
to send additional Priority Customer order flow to ISE Gemini, creating 
additional liquidity to the benefit of all members that trade on the 
Exchange. The Exchange further believes that it is reasonable and 
equitable to increase the fee charged to non-Priority Customers that 
trade against a Priority Customer order as this change is designed to 
offset the enhanced rebates offered to incentivize the other side of 
the trade. As explained above, the Exchange believes that all members 
will benefit from the additional liquidity created by the higher 
Priority Customer rebates. Furthermore, the proposed taker fee for non-
Priority Customer orders trading against a Priority Customer is within 
the range of fees charged by other options exchanges, including the BOX 
Options Exchange (``BOX''), which charges as much as $0.59 per contract 
for non-customer orders in penny pilot symbols that trade against a 
public customer.\14\
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    \14\ See BOX Fee Schedule, Section 1, Exchange Fees, A. Non-
Auction Transactions.
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    In addition, while the Exchange is increasing Priority Customer 
rebates as well as corresponding fees for non-Priority Customers 
trading against Priority Customer orders, the Exchange does not believe 
that these proposed changes are unfairly discriminatory. As has 
historically been the case, Priority Customer orders remain entitled to 
more favorable fees and rebates than other market participants in order 
to encourage this order flow. 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.

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

    In accordance with Section 6(b)(8) of the Act,\15\ 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. The proposed 
changes to fees and rebates in Penny Symbols and SPY are designed to 
attract additional order flow to the Exchange. The Exchange believes 
that the proposed fees and rebates are competitive with fees and 
rebates offered to orders executed on other options exchanges. 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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    \15\ 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,\16\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\17\ because it establishes a due, fee, or other charge 
imposed by ISE Gemini.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 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
     Send an email to [email protected]. Please include 
File Number SR-ISEGemini-2015-06 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-2015-06. This 
file number should be included on the

[[Page 14421]]

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-2015-06, and should be submitted on or before 
April 9, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06263 Filed 3-18-15; 8:45 am]
BILLING CODE 8011-01-P