80 FR 74829 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Amend Rule 804(g)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 229 (November 30, 2015)
Federal Register Volume 80, Issue 229 (November 30, 2015)
| Page Range | 74829-74831 | |
| FR Document | 2015-30242 |
[Federal Register Volume 80, Number 229 (Monday, November 30, 2015)] [Notices] [Pages 74829-74831] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-30242] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76506; File No. SR-ISE-2015-30] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Amend Rule 804(g) 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 10, 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 and II 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 Substance of the Proposed Rule Change The Exchange proposes to amend Rule 804(g) to require Clearing Member approval for market makers to resume trading after a market-wide speed bump is triggered. 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 purpose of the proposed rule change is to amend Rule 804(g) on ``Automated Quotation Adjustments'' to [[Page 74830]] require Clearing Member \3\ approval for Primary Market Makers (``PMMs'') and Competitive Market Makers (``CMMs'') (collectively, ``market makers'') to resume trading after a market-wide speed bump is triggered. The Exchange offers market makers functionality whereby the Exchange will automatically remove a market maker's quote in all series or complex order strategies in an options class if a ``curtailment event'' occurs based on parameters set by the market maker on a class- by-class basis.\4\ In particular, the Exchange will automatically remove a market maker's quote in a class when, during a time period established by the market maker, the market maker exceeds: (i) The specified number of total contracts in the class, (ii) the specified percentage of the total size of the market maker's quotes in the class, (iii) the specified absolute value of the net between contracts bought and contracts sold in the class, or (iv) the specified absolute value of the net between (a) calls purchased plus puts sold in the class, and (b) calls sold plus puts purchased in the class.\5\ In addition, the Exchange provides market-wide functionality whereby a market maker's quote in all options classes are automatically cancelled if, during a configurable time period, the total number of curtailment events in simple and complex instruments exceeds a market-wide parameter set by the market maker.\6\ This market-wide functionality, which is available for ISE only or across both ISE and ISE's affiliate, ISE Gemini, LLC,\7\ is useful to members as numerous curtailment events triggered across multiple options classes, and if chosen, multiple exchanges, may signify a larger problem being experienced by the market maker that warrants its quotes being removed from the market. Currently, the Exchange only requires that a market maker notify Market Operations of its intention to reenter the market to resume trading after the market- wide speed bump has been activated. Due to the significant nature of events that may trigger this market-wide speed bump functionality, the Exchange now proposes also to require Clearing Member approval prior to allowing the market maker to resume quoting. Pursuant to the proposed rule change, a market maker must notify its Clearing Member(s) when it is ready to resume trading following a market-wide speed bump. Exchange staff may also notify the Clearing Member(s) when the market maker's quotes have been removed, to facilitate a better response time. Each Clearing Member must then contact the Exchange directly to give their authorization for the market maker to resume trading.\8\ --------------------------------------------------------------------------- \3\ The term ``Clearing Member'' means a Member that is self- clearing or an Electronic Access Member that clears Exchange Transactions for other Members of the Exchange. See Rule 100(a)(8). \4\ See Rule 804(g)(i) for simple instruments, and Supplementary Material .04 to Rule 722 for complex instruments. \5\ Id. \6\ See Rule 804(g)(ii). This functionality is known as ``market-wide speed bump'' and is the subject of this filing. \7\ Id. \8\ If a market maker has multiple Clearing Members, it must receive approval from each Clearing Member to resume trading. --------------------------------------------------------------------------- Each market maker authorized to trade on the Exchange must obtain from a Clearing Member a ``Market Maker Letter of Guarantee'' wherein the Clearing Member accepts financial responsibility for all Exchange transactions made by the market maker.\9\ The Exchange believes that it is appropriate to require Clearing Member approval before a market maker can reenter the market after the market-wide speed bump has been triggered as the Clearing Member guarantees the market makers trades, and therefore bears ultimate financial risk associated with those transactions. The Exchange notes that while not all market makers are Clearing Members, all market makers require a Clearing Member's consent to clear transactions on their behalf in order to conduct business on the Exchange. As the Clearing Member ultimately bears the risk for a trade they clear on any market makers behalf, the Exchange believes it is reasonable to require that the Clearing Member authorize the market maker to continue trading after the market-wide speed bump is triggered. --------------------------------------------------------------------------- \9\ See Rule 808. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.\10\ In particular, the proposal is consistent with Section 6(b)(5) of the Act,\11\ because it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change removes impediments to and perfects the mechanism of a free and open market by requiring that Clearing Members authorize continued trading by a market maker after that market maker triggers a market-wide speed bump. The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest because it will permit Clearing Members with a financial interest in a market maker's risk management to better monitor and manage the potential risks assumed by that market maker. The Exchange already shares market makers' risk settings with their Clearing Members in order to assist those Clearing Members in monitoring risks at firms on whose behalf they clear trades.\12\ The proposed rule change would further assist Clearing Members in monitoring risk, and provide these Clearing Members with greater control and flexibility over their risk tolerance and exposure. Because the Clearing Member guarantees all of the market maker's trades it is in a unique position to objectively evaluate the risk of a market maker reentering the market following a serious systems or other issue. While in some cases this may result in a minimal delay for a market maker that wants to reenter the market quickly following a market-wide speed bump, the Exchange believes that Clearing Member approval is appropriate to ensure that the market maker does not prematurely enter the market without adequate safeguards in place. --------------------------------------------------------------------------- \12\ See Securities Exchange Act Release No. 74623 (April 1, 2015), 80 FR 18447 (April 6, 2015) (SR-ISE-2015-12). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes the proposal is consistent with Section 6(b)(8) of the Act \13\ in that it does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any aspect of competition, but is rather intended to provide additional safeguards by requiring Clearing Member approval before market makers are allowed to reenter the market following a market-wide speed bump. The Exchange believes that this would allow Clearing Members to better monitor and manage the potential risks assumed by market makers on whose behalf they have executed a Market Maker Letter of Guarantee, and does not [[Page 74831]] impose any unnecessary burden on competition. --------------------------------------------------------------------------- \13\ 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 Within 45 days of the publication date of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) by order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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 CommentsUse 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-ISE-2015-30 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-2015-30. 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-ISE-2015-30 and should be submitted on or before December 21, 2015. --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ Robert W. Errett, Deputy Secretary. [FR Doc. 2015-30242 Filed 11-27-15; 8:45 am] BILLING CODE 8011-01-P
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The fees that the Exchange proposes Specialists and Market Makers because SECURITIES AND EXCHANGE
to refund to eligible Specialists and these members of the Exchange would COMMISSION
Market Makers represent the difference effectively be subject to the Fixed Active [Release No. 34–76506; File No. SR–ISE–
between the Variable Active SQF Port SQF Port Fee during the month of April 2015–30]
Fees and the Fixed Active SQF Port Fee 2015, which was a month that the
that became operative on May 1, 2015, Variable Active SQF Port Fees were Self-Regulatory Organizations;
each subject to the $42,000 monthly operative under the Exchange’s rules. International Securities Exchange,
cap.20 For example, according to the The Commission further notes that the LLC; Notice of Filing of Proposed Rule
Exchange, if Specialist A was assessed proposed change from the Variable Change To Amend Rule 804(g)
and paid a Variable Active SQF Port Fee
Active SQF Port Fees to the Fixed November 23, 2015.
of $16,000 for the month of April 2015
Active SQF Port Fee was contained in Pursuant to Section 19(b)(1) of the
(4 ports at $4,000 per port) whereas the
Specialist would have paid only a an April 2015 submission by the Securities Exchange Act of 1934 (the
$5,000 Fixed Active SQF Port Fee if this Exchange for immediate effectiveness ‘‘Act’’),1 and Rule 19b–4 thereunder,2
fee had been operative in April (4 ports pursuant to Section 19(b)(3)(A) 24 of the notice is hereby given that on November
at $1,250 per port), the Exchange would Act and Rule 19b–4(f)(2) 25 thereunder; 10, 2015, the International Securities
pay that member a refund amount of however that submission was rejected Exchange, LLC (the ‘‘Exchange’’ or the
$11,000. In addition, if Market Maker B by the Commission because it was not ‘‘ISE’’) filed with the Securities and
was assessed and paid a Variable Active filed in accordance with the Exchange Commission the proposed
SQF Port Fee of $42,000 for the month requirements of the Act and the rules rule change, as described in Items I and
of April 2015 (8 ports at $15,000 per and regulations thereunder.26 The II below, which Items have been
port for an uncapped total of $120,000, proposed fee changes would otherwise prepared by the self-regulatory
to which the cap was applied) whereas qualify for immediate effectiveness organization. The Commission is
the Market Maker would have paid only pursuant to Section 19(b)(3)(A)27 of the publishing this notice to solicit
a $10,000 Fixed Active SQF Port Fee if Act and Rule 19b–4(f)(2) thereunder.28 comments on the proposed rule change
this fee had been operative in April (8 However, because the proposed rule from interested persons.
ports at $1,250 per port), the Exchange change seeks retroactive application of a I. Self-Regulatory Organization’s
would pay that member a refund fee change, the Exchange filed the Statement of the Terms of Substance of
amount of $32,000.21 The Exchange proposed rule change pursuant to the Proposed Rule Change
notes that the payment of a refund to Section 19(b)(2) of the Act,29 seeking
eligible Specialists and Market Makers The Exchange proposes to amend
approval retroactive to April 1, 2015. Rule 804(g) to require Clearing Member
is unique to April 2015 only and applies
Retroactive approval of this proposal approval for market makers to resume
only to the April 2015 Billing Period.
allows the proposed rule change to take trading after a market-wide speed bump
III. Discussion and Commission’s effect for the month of April 2015. is triggered. The text of the proposed
Findings rule change is available on the
IV. Conclusion
After careful review, the Commission Exchange’s Web site (http://
finds that the proposed rule change is It is therefore ordered, pursuant to www.ise.com), at the principal office of
consistent with the requirements of the Section 19(b)(2) of the Act,30 that the the Exchange, and at the Commission’s
Act and the rules and regulations proposed rule change (File No. SR– Public Reference Room.
thereunder applicable to a national Phlx–2015–79) be, and hereby is, II. Self-Regulatory Organization’s
securities exchange.22 In particular, approved. Statement of the Purpose of, and
approval of the retroactive application Statutory Basis for, the Proposed Rule
of the proposal is consistent with For the Commission, by the Division of
Trading and Markets, pursuant to delegated Change
Section 6(b)(4) of the Act,23 which
requires that the rules of a national authority.31 In its filing with the Commission, the
securities exchange provide for the Robert W. Errett, self-regulatory organization included
equitable allocation of reasonable dues, Deputy Secretary. statements concerning the purpose of,
fees, and other charges among its and basis for, the proposed rule change
[FR Doc. 2015–30332 Filed 11–27–15; 8:45 am]
members and issuers and other parties and discussed any comments it received
BILLING CODE 8011–01–P
using its facilities. on the proposed rule change. The text
The Commission notes that the refund of these statements may be examined at
the Exchange proposes to pay would the places specified in Item IV below.
have a retroactive effect on eligible The self-regulatory organization has
prepared summaries, set forth in
2015, but had to pay higher fees because the filing sections A, B and C below, of the most
to delete the Variable Active SQF Port Fees was significant aspects of such statements.
initially rejected by the Commission. See Notice,
supra note 3, at 61537, n.6. A. Self-Regulatory Organization’s
20 The Exchange represents that a few members
Statement of the Purpose of, and
reached the cap of $42,000 for the Variable Active Statutory Basis for, the Proposed Rule
SQF Port Fees and would have also reached the cap
of $42,000 for the Fixed Active SQF Port Fee.
24 15 U.S.C. 78s(b)(3)(A). Change
jstallworth on DSK7TPTVN1PROD with NOTICES
25 17 CFR 240.19b–4(f)(2).
According to the Exchange, these members did not
pay any overage and would not be eligible for a 26 See 17 CFR 240.19b–4 and 17 CFR 249.819 1. Purpose
refund. See Notice, supra note 3, at 61538, n.13. Appendix A. The purpose of the proposed rule
21 See Notice, supra note 3, at 61538.
22 Additionally, in approving the proposed rule
27 15 U.S.C. 78s(b)(3)(A).
change is to amend Rule 804(g) on
change, the Commission has considered the
28 17 CFR 240.19b–4(f)(2).
‘‘Automated Quotation Adjustments’’ to
29 15 U.S.C. 78s(b)(2).
proposed rule’s impact on efficiency, competition,
30 Id. 1 15
and capital formation. See 15 U.S.C. 78c(f). U.S.C. 78s(b)(1).
23 15 U.S.C. 78f(b)(4). 31 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 80, No. 229 / Monday, November 30, 2015 / Notices 74831
impose any unnecessary burden on communications relating to the and therefore this transaction is
competition. proposed rule change between the considered a financing of an Associate
Commission and any person, other than requiring prior SBA approval.
C. Self-Regulatory Organization’s Notice is hereby given that any
those that may be withheld from the
Statement on Comments on the interested person may submit written
public in accordance with the
Proposed Rule Change Received From comments on the transaction, within
provisions of 5 U.S.C. 552, will be
Members, Participants or Others fifteen days of the date of this
available for Web site viewing and
The Exchange has not solicited, and printing in the Commission’s Public publication, to the Associate
does not intend to solicit, comments on Reference Room, 100 F Street NE., Administrator for Investment, U.S.
this proposed rule change. The Washington, DC 20549, on official Small Business Administration, 409
Exchange has not received any business days between the hours of Third Street SW., Washington, DC
unsolicited written comments from 10:00 a.m. and 3:00 p.m. Copies of the 20416.
members or other interested parties. filing also will be available for Dated: November 18, 2015.
III. Date of Effectiveness of the inspection and copying at the principal John R. Williams,
Proposed Rule Change and Timing for office of the Exchange. All comments Acting Deputy Associate Administrator,
Commission Action received will be posted without change; Office of Investment and Innovation.
the Commission does not edit personal [FR Doc. 2015–30246 Filed 11–27–15; 8:45 am]
Within 45 days of the publication date identifying information from BILLING CODE 8025–01–P
of this notice in the Federal Register or submissions. You should submit only
within such longer period up to 90 days information that you wish to make
(i) as the Commission may designate if available publicly. All submissions
it finds such longer period to be DEPARTMENT OF STATE
should refer to File Number SR–ISE–
appropriate and publishes its reasons 2015–30 and should be submitted on or [Public Notice: 9364]
for so finding or (ii) as to which the self- before December 21, 2015.
regulatory organization consents, the Culturally Significant Objects Imported
Commission will: For the Commission, by the Division of for Exhibition Determinations:
Trading and Markets, pursuant to delegated
(A) by order approve or disapprove authority.14
‘‘Everywhen: The Eternal Present in
such proposed rule change, or Indigenous Art from Australia’’
Robert W. Errett,
(B) institute proceedings to determine Exhibition
whether the proposed rule change Deputy Secretary.
[FR Doc. 2015–30242 Filed 11–27–15; 8:45 am] SUMMARY: Notice is hereby given of the
should be disapproved.
BILLING CODE 8011–01–P
following determinations: Pursuant to
IV. Solicitation of Comments the authority vested in me by the Act of
Interested persons are invited to October 19, 1965 (79 Stat. 985; 22 U.S.C.
submit written data, views, and SMALL BUSINESS ADMINISTRATION 2459), Executive Order 12047 of March
arguments concerning the foregoing, 27, 1978, the Foreign Affairs Reform and
[License No. 05/05–0298] Restructuring Act of 1998 (112 Stat.
including whether the proposed rule
change is consistent with the Act. 2681, et seq.; 22 U.S.C. 6501 note, et
LaSalle Capital Group II–A, L.P.; Notice seq.), Delegation of Authority No. 234 of
Comments may be submitted by any of Seeking Exemption Under Section 312
the following methods: October 1, 1999, Delegation of Authority
of the Small Business Investment Act, No. 236–3 of August 28, 2000 (and, as
Electronic Comments Conflicts of Interest appropriate, Delegation of Authority No.
• Use the Commission’s Internet Notice is hereby given that LaSalle 257 of April 15, 2003), I hereby
comment form http://www.sec.gov/ Capital Group II–A, L.P. 70 W Madison determine that the objects to be
rules/sro.shtml); or Street, Suite 5710, Chicago, IL 60602, a included in the exhibition ‘‘Everywhen:
• Send an email to rule-comments@ Federal Licensee under the Small The Eternal Present in Indigenous Art
sec.gov. Please include File Number SR– Business Investment Act of 1958, as from Australia,’’ imported from abroad
ISE–2015–30 on the subject line. amended (‘‘the Act’’), in connection for temporary exhibition within the
with the financing of a small concern, United States, are of cultural
Paper Comments significance. The objects are imported
has sought an exemption under Section
• Send paper comments in triplicate 312 of the Act and Section 107.730, pursuant to loan agreements with the
to Secretary, Securities and Exchange Financings which Constitute Conflicts foreign owners or custodians. I also
Commission, 100 F Street NE., of Interest of the Small Business determine that the exhibition or display
Washington, DC 20549–1090. Administration (‘‘SBA’’) Rules and of the exhibit objects at the Harvard Art
All submissions should refer to File Regulations (13 CFR 107.730). LaSalle Museums, Cambridge, Massachusetts,
Number SR–ISE–2015–30. This file Capital Group II–A, L.P. proposes to from on about February 5, 2016, until on
number should be included on the merge Westminster Foods II, LLC, 1 or about September 18, 2016, and at
subject line if email is used. To help the Scale Avenue, Suite 8, Rutland, possible additional exhibitions or
Commission process and review your Vermont 05701 and Dr. Lucy’s LLC, venues yet to be determined, is in the
comments more efficiently, please use 7420 Central Business Park Drive, Suite national interest. I have ordered that
only one method. The Commission will 1, Norfolk, Virginia 23513 together. The Public Notice of these Determinations
post all comments on the Commission’s financing is brought within the purview be published in the Federal Register.
jstallworth on DSK7TPTVN1PROD with NOTICES
Internet Web site (http://www.sec.gov/ of § 107.730(a)(1) of the Regulations FOR FURTHER INFORMATION CONTACT: For
rules/sro.shtml). Copies of the because Westminster Foods II, LLC and further information, including a list of
submission, all subsequent Dr. Lucy’s, LLC all Associates of LaSalle the imported objects, contact the Office
amendments, all written statements Capital Group II–A, L.P., will merge of Public Diplomacy and Public Affairs
with respect to the proposed rule together as Westminster Foods II, LLC, in the Office of the Legal Adviser, U.S.
change that are filed with the Department of State (telephone: 202–
Commission, and all written 14 17 CFR 200.30–3(a)(12). 632–6471; email: section2459@
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Document Created: 2018-03-01 11:11:31
Document Modified: 2018-03-01 11:11:31
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