80_FR_75055 80 FR 74826 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating Alternative Primary Market Makers

80 FR 74826 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating Alternative Primary Market Makers

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 229 (November 30, 2015)

Page Range74826-74828
FR Document2015-30244

Federal Register, Volume 80 Issue 229 (Monday, November 30, 2015) 
[Federal Register Volume 80, Number 229 (Monday, November 30, 2015)]
[Notices]
[Pages 74826-74828]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30244]



[[Page 74826]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76508; File No. SR-ISE-2015-42]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing of Proposed Rule Change Relating Alternative 
Primary Market Makers

November 23, 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 November 16, 2015, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') 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

    The purpose of this proposed rule change is to permit any 
Competitive Market Maker (``CMM'') that is appointed to act as an 
Alternative Primary Market Maker (``Alternative PMM'') to voluntarily 
act as a Back-Up Primary Market Maker (``Back-Up PMM''). The text of 
the proposed rule change is available on the Exchange's Web site 
(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 self-regulatory organization 
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 permit any CMM that is approved to act as 
an Alternative PMM to voluntarily act as a Back-Up PMM in options 
series in which it is quoting when the appointed PMM fails to have a 
quote in the System. In doing so, the Exchange would further enhance 
its markets by having additional Back-Up PMMs to take over a PMM's 
responsibilities when the appointed PMM faces operational difficulties 
or ceases operations. The Exchange also proposes to amend the process 
by which a Back-Up PMM is chosen to replace a PMM that fails to have a 
quote in the System, when more than one CMM is quoting in the series.
Background
    Currently, CMMs that are also PMMs on the Exchange may voluntarily 
act as Back-Up PMMs when the appointed PMM has technical difficulties 
that interrupt its participation in the market.\3\ These CMMs/PMMs are 
permitted to be Back-Up PMMs because they already have systems built to 
undertake the responsibilities of a PMM on the Exchange.\4\ Back-Up 
PMMs reduce volatility that occurs during, and the duration of, non-
firm or ``fast market'' states disseminated by the ISE and facilitate 
uninterrupted trading even when a PMM experiences difficulties that 
cause it to remove its quotes from the market. In these situations, the 
Back-Up PMM assumes most of the responsibilities and privileges of a 
PMM under the Rules with respect to any series in which the appointed 
PMM fails to have a quote in the System.\5\ The system automatically 
switches back to the appointed PMM when it re-establishes its quotes in 
the series, but the Back-Up PMM continues to be responsible for any 
outstanding unexecuted orders it is handling.
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    \3\ Securities Exchange Act Release No. 34-53419 (March 6, 
2006), 71 FR 12758 (March 13, 2006) (SR-ISE-2005-50).
    \4\ If there is more than one eligible member quoting in the 
series, the System will automatically switch to the member with the 
largest offer in the series.
    \5\ A CMM does not become subject to the requirement in Rule 
804(e)(1) to enter continuous quotations in all of the series of all 
of the options classes to which it is appointed, as opposed to only 
60% of the options classes under Rule 804(e)(2), by acting as a 
Back-Up PMM.
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    The Exchange's Rules also allow the Exchange to appoint a CMM as an 
Alternative PMM when a PMM does not wish to trade in an option 
class.\6\ These CMMs are permitted to be Alternative PMMs because they 
have appropriate systems and procedures in place to undertake the 
responsibilities of a PMM. Alternative PMMs enable the Exchange to list 
and retain options classes that PMMs do not wish to trade.\7\ 
Specifically, when no PMMs want the allocation of an option class, the 
Alternative PMMs are offered the opportunity to serve as PMM in the 
option class in accordance with the Exchange's regular allocation 
procedures. In these situations, the Alternative PMM has all of the 
responsibilities and privileges of a PMM with respect to all appointed 
options classes.\8\ Additionally, if an Alternative PMM ceases trading 
in an option class, that option class would be reallocated by the 
Exchange.
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    \6\ Securities Exchange Act Release No. 34-59250 (January 14, 
2009), 74 FR 4062 (January 22, 2009) (SR-ISE-2008-90).
    \7\ Under Rule 802, allocations are voluntary, and at times ISE 
was unable to list new products because none of the PMMs were 
interested in trading the class. As a result, the Exchange was 
unable to list new products because existing PMMs were not 
interested in trading the option class. At other times, ISE delisted 
certain products due to lack of PMM interest. ISE represents that 
this occurs most frequently with respect to options on stocks that 
have pending corporate actions and options products that are not 
listed at any other options exchange. ISE believes that despite the 
lack of PMM interest, these products may be of interest to other 
Members of the Exchange.
    \8\ For example, Alternative PMMs would enjoy privileges that 
include, among other things, participation rights and small order 
execution preference while accepting responsibilities that include, 
among other things, the obligation to provide continuous quotations 
in the option class to which the Alternative PMM is appointed, and 
the obligation to conduct the opening rotation on a daily basis for 
as long as the Alternative PMM is appointed to that option class.
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Proposed Rule Change
    The Exchange now proposes to permit an Alternative PMM to 
voluntarily act as a Back-Up PMM in options series in which it is 
quoting \9\ and assume most of the responsibilities and privileges of a 
PMM under the Rules with respect to any option series in which the 
appointed PMM fails to have a quote in the System.\10\ This may occur 
when, for example, the appointed PMM has technical difficulties that 
interrupt its participation in the market or a PMM exits the options 
market making business. Under the proposal, an Alternative PMM is 
eligible to act as a Back-Up PMM because it already has in place 
written procedures and systems built to assume the responsibilities of 
a

[[Page 74827]]

PMM on the Exchange. The Exchange also proposes to further amend the 
process by which a Back-Up PMM is chosen to replace a PMM that fails to 
have a quote in the System, when more than one Back-Up PMM is quoting 
in the series.
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    \9\ The Exchange notes that under its current rules it may only 
appoint PMMs (i.e. CMMs that are also PMMs in other option classes) 
as Back-up PMMs.
    \10\ See Supplementary Material .03(a) to ISE Rule 803.
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    In situations where a PMM fails to have a quote in the System, the 
System will choose a Back-Up PMM, from the available CMMs, to replace 
the PMM. The System will choose the CMM with the lowest offer price in 
the series at that time. If there are two or more CMMs at the same 
offer price, the CMM with the highest bid price will be chosen. If 
there are two or more CMMs at the same bid and offer price, the CMM 
with the largest offer quantity will be chosen. If there are two or 
more CMMs with the same offer quantity, the CMM with the largest bid 
quantity will be chosen. If there remains two or more CMMs with the 
same bid and offer quantity and prices, the one with the highest time 
priority on the offer will be chosen as the Back-Up PMM.\11\ 
Additionally, when possible, the System will automatically switch back 
to the appointed PMM when it re-establishes its quotes in the series, 
but the Back-Up PMM will continue to be responsible for any outstanding 
unexecuted orders it is handling.
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    \11\ See Supplementary Material .03(b) to ISE Rule 803.
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    The proposed rule change enhances ISE's market because it ensures 
ISE has an adequate number of willing Members to act as Back-Up PMMs 
for PMMs that are not participating in the market. Ultimately, having 
more Back-Up PMMs will further: (1) Reduce the volatility that occurs 
during, and the duration of, non-firm or ``fast market'' \12\ states 
disseminated by ISE and (2) allow for virtually seamless trading even 
when multiple PMMs experience difficulties that cause PMMs to remove 
their quotes from the market.
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    \12\ Fast markets occur when there is rapid trading in a 
security that causes a delay in the electronic updating of its last 
sale. Trades can occur so rapidly that market orders may be executed 
at a very different price from the price at the time the order was 
placed. This leads to investors being disadvantaged because 1) 
quotes can be inaccurate when PMMs are unable to keep up with the 
pace of trading or 2) a broker may not be able to fill orders when 
investors want or expect them to because the PMM is not quoting the 
other side of the market resulting in the purchase or sale of an 
investor's securities at undesirable price levels.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \13\ in general, and furthers the objectives of Section 
6(b)(5) \14\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, 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.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market by 
enhancing the Exchange's market by reducing volatility that occurs 
during and the duration of non-firm or ``fast market'' states 
disseminated by the ISE and allowing for virtually uninterrupted 
trading even when multiple PMMs experience difficulties that cause PMMs 
to remove their quotes from the market. Uninterrupted trading is 
possible because 1) Back-Up PMMs have appropriate systems and 
procedures in place to undertake the responsibilities of a PMM when 
necessary and 2) having an adequate amount of Back-Up PMMs means a 
Back-Up PMM will be available to take over for a PMM, and post firm and 
accurate quotes when a situation causes a PMM to fail to have a quote 
in the System. The Exchange believes that the proposed rule change is 
consistent with the protection of investors and the public interest 
because it enhances the Exchange's ability to disseminate firm markets. 
Additionally, by amending and explaining the detailed steps for 
choosing Back-Up PMMs, members will have additional clarity on the 
process by which a Back-Up PMM is chosen in certain situations.

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

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Exchange Act because ISE is enhancing its market by allowing 
additional Members, which have systems built to assume the 
responsibilities of a PMM on the Exchange to be Backup-PMMs when 
appointed PMMs face operational difficulties or cease market making 
operations.

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 significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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) of the Act \15\ and Rule 19b-
4(f)(6) thereunder.\16\ The Exchange provided the Commission with 
written notice of its 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 the proposed rule 
change, or such shorter time as designated by the Commission, as 
required by Rule 19b-4(f)(6).
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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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 No. SR-ISE-2015-42 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-ISE-2015-42. 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

[[Page 74828]]

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-2015-42 and should be 
submitted by December 21, 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\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30244 Filed 11-27-15; 8:45 am]
 BILLING CODE 8011-01-P

74826 Federal Register / Vol. 80, No. 229 / Monday, November 30, 2015 / Notices SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s wish to trade in an option class.6 These COMMISSION Statement of the Purpose of, and CMMs are permitted to be Alternative Statutory Basis for, the Proposed Rule PMMs because they have appropriate [Release No. 34–76508; File No. SR–ISE– Change systems and procedures in place to 2015–42] undertake the responsibilities of a PMM. 1. Purpose Alternative PMMs enable the Exchange Self-Regulatory Organizations; The Exchange proposes to permit any to list and retain options classes that International Securities Exchange, CMM that is approved to act as an PMMs do not wish to trade.7 LLC; Notice of Filing of Proposed Rule Alternative PMM to voluntarily act as a Specifically, when no PMMs want the Back-Up PMM in options series in allocation of an option class, the Change Relating Alternative Primary which it is quoting when the appointed Alternative PMMs are offered the Market Makers PMM fails to have a quote in the opportunity to serve as PMM in the November 23, 2015. System. In doing so, the Exchange option class in accordance with the would further enhance its markets by Exchange’s regular allocation Pursuant to Section 19(b)(1) of the procedures. In these situations, the having additional Back-Up PMMs to Securities Exchange Act of 1934 (the Alternative PMM has all of the take over a PMM’s responsibilities when ‘‘Act’’),1 and Rule 19b–4 thereunder,2 responsibilities and privileges of a PMM the appointed PMM faces operational notice is hereby given that on November with respect to all appointed options difficulties or ceases operations. The 16, 2015, the International Securities Exchange also proposes to amend the classes.8 Additionally, if an Alternative Exchange, LLC (the ‘‘Exchange’’ or the process by which a Back-Up PMM is PMM ceases trading in an option class, ‘‘ISE’’) filed with the Securities and chosen to replace a PMM that fails to that option class would be reallocated Exchange Commission the proposed have a quote in the System, when more by the Exchange. rule change as described in Items I, II, than one CMM is quoting in the series. Proposed Rule Change and III below, which Items have been prepared by the self-regulatory Background The Exchange now proposes to permit organization. The Commission is an Alternative PMM to voluntarily act Currently, CMMs that are also PMMs as a Back-Up PMM in options series in publishing this notice to solicit on the Exchange may voluntarily act as which it is quoting 9 and assume most comments on the proposed rule change Back-Up PMMs when the appointed of the responsibilities and privileges of from interested persons. PMM has technical difficulties that a PMM under the Rules with respect to interrupt its participation in the any option series in which the I. Self-Regulatory Organization’s market.3 These CMMs/PMMs are appointed PMM fails to have a quote in Statement of the Terms of Substance of permitted to be Back-Up PMMs because the System.10 This may occur when, for the Proposed Rule Change they already have systems built to example, the appointed PMM has The purpose of this proposed rule undertake the responsibilities of a PMM technical difficulties that interrupt its change is to permit any Competitive on the Exchange.4 Back-Up PMMs participation in the market or a PMM Market Maker (‘‘CMM’’) that is reduce volatility that occurs during, and exits the options market making appointed to act as an Alternative the duration of, non-firm or ‘‘fast business. Under the proposal, an market’’ states disseminated by the ISE Alternative PMM is eligible to act as a Primary Market Maker (‘‘Alternative and facilitate uninterrupted trading Back-Up PMM because it already has in PMM’’) to voluntarily act as a Back-Up even when a PMM experiences place written procedures and systems Primary Market Maker (‘‘Back-Up difficulties that cause it to remove its built to assume the responsibilities of a PMM’’). The text of the proposed rule quotes from the market. In these change is available on the Exchange’s situations, the Back-Up PMM assumes 6 Securities Exchange Act Release No. 34–59250 Web site (http://www.ise.com), at the most of the responsibilities and (January 14, 2009), 74 FR 4062 (January 22, 2009) principal office of the Exchange, and at privileges of a PMM under the Rules (SR–ISE–2008–90). the Commission’s Public Reference with respect to any series in which the 7 Under Rule 802, allocations are voluntary, and at times ISE was unable to list new products Room. appointed PMM fails to have a quote in because none of the PMMs were interested in II. Self-Regulatory Organization’s the System.5 The system automatically trading the class. As a result, the Exchange was switches back to the appointed PMM unable to list new products because existing PMMs Statement of the Purpose of, and were not interested in trading the option class. At when it re-establishes its quotes in the Statutory Basis for, the Proposed Rule other times, ISE delisted certain products due to series, but the Back-Up PMM continues lack of PMM interest. ISE represents that this occurs Change to be responsible for any outstanding most frequently with respect to options on stocks unexecuted orders it is handling. that have pending corporate actions and options In its filing with the Commission, the products that are not listed at any other options self-regulatory organization included The Exchange’s Rules also allow the exchange. ISE believes that despite the lack of PMM statements concerning the purpose of, Exchange to appoint a CMM as an interest, these products may be of interest to other Alternative PMM when a PMM does not Members of the Exchange. and basis for, the proposed rule change 8 For example, Alternative PMMs would enjoy and discussed any comments it received privileges that include, among other things, 3 Securities Exchange Act Release No. 34–53419 on the proposed rule change. The text participation rights and small order execution (March 6, 2006), 71 FR 12758 (March 13, 2006) (SR– preference while accepting responsibilities that of these statements may be examined at ISE–2005–50). include, among other things, the obligation to the places specified in Item IV below. 4 If there is more than one eligible member provide continuous quotations in the option class jstallworth on DSK7TPTVN1PROD with NOTICES The self-regulatory organization has quoting in the series, the System will automatically to which the Alternative PMM is appointed, and the prepared summaries, set forth in switch to the member with the largest offer in the obligation to conduct the opening rotation on a series. daily basis for as long as the Alternative PMM is sections A, B and C below, of the most 5 A CMM does not become subject to the appointed to that option class. significant aspects of such statements. requirement in Rule 804(e)(1) to enter continuous 9 The Exchange notes that under its current rules quotations in all of the series of all of the options it may only appoint PMMs (i.e. CMMs that are also classes to which it is appointed, as opposed to only PMMs in other option classes) as Back-up PMMs. 1 15 U.S.C. 78s(b)(1). 60% of the options classes under Rule 804(e)(2), by 10 See Supplementary Material .03(a) to ISE Rule 2 17 CFR 240.19b–4. acting as a Back-Up PMM. 803. VerDate Sep<11>2014 15:23 Nov 27, 2015 Jkt 238001 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 E:\FR\FM\30NON1.SGM 30NON1

Federal Register / Vol. 80, No. 229 / Monday, November 30, 2015 / Notices 74827 PMM on the Exchange. The Exchange particular, in that it is designed to III. Date of Effectiveness of the also proposes to further amend the prevent fraudulent and manipulative Proposed Rule Change and Timing for process by which a Back-Up PMM is acts and practices, to promote just and Commission Action chosen to replace a PMM that fails to equitable principles of trade, to remove Because the foregoing proposed rule have a quote in the System, when more impediments to and perfect the change does not significantly affect the than one Back-Up PMM is quoting in mechanism of a free and open market protection of investors or the public the series. and a national market system, and, in interest, does not impose any significant In situations where a PMM fails to general, to protect investors and the burden on competition, and, by its have a quote in the System, the System public interest. terms, does not become operative for 30 will choose a Back-Up PMM, from the The Exchange believes that the days from the date on which it was available CMMs, to replace the PMM. proposed rule change would remove filed, or such shorter time as the The System will choose the CMM with impediments to and perfect the Commission may designate, it has the lowest offer price in the series at that mechanism of a free and open market by become effective pursuant to Section time. If there are two or more CMMs at enhancing the Exchange’s market by 19(b)(3)(A) of the Act 15 and Rule 19b– the same offer price, the CMM with the reducing volatility that occurs during 4(f)(6) thereunder.16 The Exchange highest bid price will be chosen. If there and the duration of non-firm or ‘‘fast provided the Commission with written are two or more CMMs at the same bid market’’ states disseminated by the ISE notice of its intent to file the proposed and offer price, the CMM with the and allowing for virtually uninterrupted rule change, along with a brief largest offer quantity will be chosen. If trading even when multiple PMMs description and text of the proposed there are two or more CMMs with the experience difficulties that cause PMMs rule change, at least five business days same offer quantity, the CMM with the to remove their quotes from the market. prior to the date of filing the proposed largest bid quantity will be chosen. If Uninterrupted trading is possible rule change, or such shorter time as there remains two or more CMMs with because 1) Back-Up PMMs have designated by the Commission, as the same bid and offer quantity and appropriate systems and procedures in required by Rule 19b-4(f)(6). prices, the one with the highest time place to undertake the responsibilities At any time within 60 days of the priority on the offer will be chosen as filing of such proposed rule change, the of a PMM when necessary and 2) having the Back-Up PMM.11 Additionally, Commission summarily may an adequate amount of Back-Up PMMs when possible, the System will temporarily suspend such rule change if means a Back-Up PMM will be available automatically switch back to the to take over for a PMM, and post firm it appears to the Commission that such appointed PMM when it re-establishes and accurate quotes when a situation action is necessary or appropriate in the its quotes in the series, but the Back-Up causes a PMM to fail to have a quote in public interest, for the protection of PMM will continue to be responsible for the System. The Exchange believes that investors, or otherwise in furtherance of any outstanding unexecuted orders it is the proposed rule change is consistent the purposes of the Act. If the handling. The proposed rule change enhances with the protection of investors and the Commission takes such action, the ISE’s market because it ensures ISE has public interest because it enhances the Commission shall institute proceedings an adequate number of willing Members Exchange’s ability to disseminate firm to determine whether the proposed rule to act as Back-Up PMMs for PMMs that markets. Additionally, by amending and should be approved or disapproved. are not participating in the market. explaining the detailed steps for IV. Solicitation of Comments Ultimately, having more Back-Up PMMs choosing Back-Up PMMs, members will have additional clarity on the process by Interested persons are invited to will further: (1) Reduce the volatility submit written data, views, and that occurs during, and the duration of, which a Back-Up PMM is chosen in certain situations. arguments concerning the foregoing, non-firm or ‘‘fast market’’ 12 states including whether the proposed rule disseminated by ISE and (2) allow for B. Self-Regulatory Organization’s change is consistent with the Act. virtually seamless trading even when Statement on Burden on Competition Comments may be submitted by any of multiple PMMs experience difficulties This proposed rule change does not the following methods: that cause PMMs to remove their quotes from the market. impose any burden on competition that Electronic Comments is not necessary or appropriate in 2. Statutory Basis • Use the Commission’s Internet furtherance of the purposes of the comment form (http://www.sec.gov/ The Exchange believes that its Exchange Act because ISE is enhancing rules/sro.shtml); or proposal is consistent with Section 6(b) its market by allowing additional • Send an email to rule-comments@ of the Act 13 in general, and furthers the Members, which have systems built to sec.gov. Please include File No. SR–ISE– objectives of Section 6(b)(5) 14 in assume the responsibilities of a PMM on 2015–42 on the subject line. the Exchange to be Backup-PMMs when 11 See Supplementary Material .03(b) to ISE Rule appointed PMMs face operational Paper Comments 803. difficulties or cease market making 12 Fast markets occur when there is rapid trading • Send paper comments in triplicate in a security that causes a delay in the electronic operations. to Secretary, Securities and Exchange updating of its last sale. Trades can occur so rapidly C. Self-Regulatory Organization’s Commission, 100 F Street NE., that market orders may be executed at a very Washington, DC 20549–1090. different price from the price at the time the order Statement on Comments on the was placed. This leads to investors being Proposed Rule Change Received From All submissions should refer to File jstallworth on DSK7TPTVN1PROD with NOTICES disadvantaged because 1) quotes can be inaccurate Members, Participants or Others Number SR–ISE–2015–42. This file when PMMs are unable to keep up with the pace number should be included on the of trading or 2) a broker may not be able to fill The Exchange has not solicited, and subject line if email is used. To help the orders when investors want or expect them to does not intend to solicit, comments on because the PMM is not quoting the other side of Commission process and review your the market resulting in the purchase or sale of an this proposed rule change. The comments more efficiently, please use investor’s securities at undesirable price levels. Exchange has not received any 13 15 U.S.C. 78f(b). unsolicited written comments from 15 15 U.S.C. 78s(b)(3)(A). 14 15 U.S.C. 78f(b)(5). members or other interested parties. 16 17 CFR 240.19b–4(f)(6). VerDate Sep<11>2014 15:23 Nov 27, 2015 Jkt 238001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\30NON1.SGM 30NON1

74828 Federal Register / Vol. 80, No. 229 / Monday, November 30, 2015 / Notices only one method. The Commission will Makers a refund for a portion of the Fees with a monthly Fixed Active SQF post all comments on the Commission’s monthly variable Active Specialized Port Fee was rejected.12 As a result, the Internet Web site (http://www.sec.gov/ Quote Feed (‘‘SQF’’) Port Fees Exchange assessed Specialists and rules/sro.shtml). Copies of the (‘‘Variable Active SQF Port Fees’’) that Market Makers the applicable Variable submission, all subsequent were in effect under Section VII.B. of Active SQF Port Fees that were in effect amendments, all written statements the Phlx Pricing Schedule during the from April 1, 2015—April 30, 2015 with respect to the proposed rule month of April 2015. The proposed rule (‘‘April 2015 Billing Period’’) and not change that are filed with the change was published for comment in the comparably lower Fixed Active SQF Commission, and all written the Federal Register on October 13, Port Fee.13 The Exchange subsequently communications relating to the 2015.3 The Commission did not receive refiled another proposed rule change for proposed rule change between the any comments on the proposal. This immediate effectiveness pursuant to Commission and any person, other than order approves the proposed rule Section 19(b)(3)(A) 14 of the Act and those that may be withheld from the change. Rule 19b–4(f)(2) 15 thereunder to replace public in accordance with the the monthly Variable Active SQF Port II. Description of the Proposal provisions of 5 U.S.C. 552, will be Fees with the monthly Fixed Active available for Web site viewing and On April 2, 2015, the Exchange SQF Port Fee.16 This proposal became printing in the Commission’s Public submitted a proposed rule change for operative May 1, 2015. Reference Room, 100 F Street NE., immediate effectiveness pursuant to According to the Exchange, because Washington, DC 20549 on official Section 19(b)(3)(A) 4 of the Act and Rule the April 2015 submission to replace the business days between the hours of 19b–4(f)(2) 5 thereunder to, among other Variable Active SQF Port Fees with the 10:00 a.m. and 3:00 p.m. Copies of such things, replace monthly Variable Active Fixed Active SQF Port Fee was rejected, filing also will be available for SQF Port Fees applicable to Specialists 6 the Exchange is proposing to pay a inspection and copying at the principal and Market Makers 7 with a monthly refund to eligible Specialists and Market office of the Exchange. All comments fixed Active SQF Port Fee (‘‘Fixed Makers for a portion of the Variable received will be posted without change; Active SQF Port Fee’’).8 According to Active SQF Port Fees that the Exchange the Commission does not edit personal the Exchange, all Specialists and Market assessed during the month of April 2015 identifying information from Makers on the Exchange were subject to and that these eligible Specialists and submissions. You should submit only the following Variable Active SQF Port Market Makers paid to the Exchange.17 information that you wish to make Fees beginning in April 2015: 9 The Exchange states that it did not available publicly. All submissions intend to impose the Variable Active should refer to File Number SR–ISE– Monthly SQF Port Fees in April 2015, but rather Number of active SQF port fee per port 2015–42 and should be submitted the Exchange intended to charge the less byDecember 21, 2015. 1 ............................................ $2,500 expensive Fixed Active SQF Port Fee for $4,000 the April 2015 Billing Period. The 18 For the Commission, by the Division of 2–6 ........................................ Trading and Markets, pursuant to delegated 7 and over ............................ $15,000 Exchange notes that, because the Fixed authority.17 Active SQF Port Fee did not become Robert W. Errett, The Variable Active SQF Port Fees operative until May 1, 2015, and the fee Deputy Secretary. were capped at $42,000 per month.10 reduction resulting from the Fixed Under the Fixed Active SQF Port Fees, Active SQF Port Fee did not occur as [FR Doc. 2015–30244 Filed 11–27–15; 8:45 am] Specialists and Market Makers would intended on April 1, 2015, Specialists BILLING CODE 8011–01–P pay $1,250 per port per month and this and Market Makers were not able to take fee would also be capped at $42,000 per advantage of the cheaper Fixed Active month.11 SQF Port Fee for April 2015 and had to SECURITIES AND EXCHANGE The Exchange notes that the April pay the more expensive Variable Active COMMISSION 2015 submission proposing to replace SQF Port Fees for the April 2015 Billing [Release No. 34–76513; File No. SR–Phlx– the monthly Variable Active SQF Port Period. The Exchange also states that 2015–79] Specialists and Market Makers paid 3 See Securities Exchange Act Release No. 76083 more in April 2015 than was anticipated Self-Regulatory Organizations; (October 6, 2015), 80 FR 61537 (SR–Phlx–2015–79) by the Exchange and the Specialists and NASDAQ OMX PHLX LLC; Order (‘‘Notice’’). 4 15 U.S.C. 78s(b)(3)(A). Market Makers.19 Approving a Proposed Rule Change 5 17 CFR 240.19b–4(f)(2). Relating to the Active Specialized 6A 12 See id. at 61537. ‘‘Specialist’’ is an Exchange member who is Quote Feed Port Fee registered as an options specialist pursuant to 13 See id. Exchange Rule 1020(a). 14 15 U.S.C. 78s(b)(3)(A). November 24, 2015. 7 ‘‘Market Makers’’ include Registered Options 15 17 CFR 240.19b–4(f)(2). I. Introduction Traders (Exchange Rule 1014(b)(i) and (ii)), which 16 See Securities Exchange Act Release No. 74833 include Streaming Quote Traders (Exchange Rule (April 29, 2015), 80 FR 25749 (May 5, 2015) (SR– On September 23, 2015, NASDAQ 1014(b)(ii)(A)) and Remote Streaming Quote Phlx–2015–36) (proposed rule change that, among OMX PHLX LLC (‘‘Phlx’’ or Traders (Exchange Rule 1014(b)(ii)(B)). other things, instituted the Fixed Active SQF Port 8 See SR–Phlx–2015–33, available at http:// Fee in lieu of the Variable Active SQF Port Fees as ‘‘Exchange’’) filed with the Securities nasdaqomxphlx.cchwallstreet.com/ of May 1, 2015). and Exchange Commission NASDAQOMXPHLX/pdf/phlx-filings/2015/SR- 17 See Notice, supra note 3, at 61537. (‘‘Commission’’), pursuant to Section Phlx-2015-33.pdf. 18 See id. jstallworth on DSK7TPTVN1PROD with NOTICES 19(b)(1) of the Securities Exchange Act 9 See Notice, supra note 3, at 61538. 19 See Nasdaq Equity Trader Alert No. 2015–37 of 1934 (‘‘Act’’) 1 and Rule 19b–4 10 See id. at 61537. See also Securities Exchange (March 25, 2015), available at http:// thereunder,2 a proposed rule change to Act Release No. 73687 (November 25, 2014), 79 FR nasdaqtrader.com/TraderNews.aspx?id=ETA2015- 71485 (December 2, 2014) (SR–Phlx–2014–73) 37; and Nasdaq Options Trader Alert No. 2015–9 pay eligible Specialists and Market (implementing the Variable Active SQF Port Fees (April 14, 2015), available at http://www.phlx.com/ with a delayed operative date of April 1, 2015). TraderNews.aspx?id=OTA2015-9 (the ‘‘Alerts’’). 17 17 CFR 200.30–3(a)(12). 11 See Notice, supra note 3, at 61538 (referencing The Exchange notes that the Alerts show how some 1 15 U.S.C. 78s(b)(1). note 26 in Section VII.B. of the Phlx Pricing Exchange members may have anticipated the 2 17 CFR 240.19b–4. Schedule). proposed lower Fixed Active SQF Port Fee in April VerDate Sep<11>2014 15:23 Nov 27, 2015 Jkt 238001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\30NON1.SGM 30NON1


Document Created: 2018-03-01 11:12:40
Document Modified: 2018-03-01 11:12:40
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 74826 
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