81 FR 20021 - Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing of Proposed Rule Change Related to Market Wide Risk Protection
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 66 (April 6, 2016)
Federal Register Volume 81, Issue 66 (April 6, 2016)
| Page Range | 20021-20024 | |
| FR Document | 2016-07833 |
[Federal Register Volume 81, Number 66 (Wednesday, April 6, 2016)] [Notices] [Pages 20021-20024] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-07833] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77488; File No. SR-ISEGemini-2016-03] Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing of Proposed Rule Change Related to Market Wide Risk Protection March 31, 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 March 17, 2016, the ISE Gemini, LLC (the ``Exchange'' or ``ISE Gemini'') filed with the Securities and Exchange Commission (``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. --------------------------------------------------------------------------- \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 introduce new activity based order protections as described in more detail below. 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 introduce new risk protections for orders designed to aid members in their risk management by supplementing current price [[Page 20022]] reasonability checks with activity based order protections.\3\ In particular, the Exchange proposes to introduce two activity based risk protections that will be mandatory for all members: (1) The ``Order Entry Rate Protection,'' which protects members against entering orders at a rate that exceeds predefined thresholds,\4\ and (2) the ``Order Execution Rate Protection,'' which protects members against executing orders at a rate that exceeds their predefined risk settings. Both of these risk protections are detailed in Proposed Rule 714(d), ``Market Wide Risk Protection.'' \5\ The Exchange will announce the implementation date of the Market Wide Risk Protection in a circular to be distributed to members prior to implementation. --------------------------------------------------------------------------- \3\ The Exchange provides members with limit order price protections designed to prevent erroneous executions by rejecting orders priced too far through the market. See Rule 714(b)(2). \4\ The Exchange will determine when to initiate the Order Entry Rate Protection pre-open to allow members time to load their orders without inadvertently triggering the protection. The precise time will be established by the Exchange and communicated to members via circular prior to implementation. \5\ The term ``Market Wide Risk Protection'' includes both the ``Order Entry Rate Protection'' and the ``Order Execution Rate Protection.'' --------------------------------------------------------------------------- Pursuant to the proposed Market Wide Risk Protection rule, the Exchange's trading system (the ``System'') will maintain one or more counting programs on behalf of each member that will count the number of orders entered, and the number of contracts traded on ISE Gemini or, if chosen by the member,\6\ across both ISE Gemini and ISE Gemini's affiliate, the International Securities Exchange, LLC (``ISE''), which shares a trading system with ISE Gemini. Members can use multiple counting programs to separate risk protections for different groups established within the member.\7\ The counting programs will maintain separate counts, over rolling time periods specified by the member for each count, of: (1) The total number of orders entered; and (2) the total number of contracts traded.\8\ Contracts executed on the agency and contra-side of a two-sided crossing order will be counted separately for the Order Execution Rate Protection. --------------------------------------------------------------------------- \6\ Members will have the option to set different risk parameters for their trading activity on each exchange, or set risk parameters that apply to their trading across both ISE Gemini and ISE, if desired. \7\ The Exchange will explain how members can go about setting up risk protections for different groups (e.g., business units) in a circular issued to members. \8\ The member's allowable order rate for the Order Entry Rate Protection is comprised of the parameter defined in (1), while the allowable contract execution rate for the Order Execution Rate Protection is comprised of the parameter defined in (2). --------------------------------------------------------------------------- Members will have discretion to establish the applicable time period for each of the counts maintained under the Market Wide Risk Protection, provided that the selected period must be within minimum and maximum parameters established by the Exchange and announced via circular.\9\ While the Market Wide Risk Protection is mandatory for all members, the Exchange is not proposing to establish minimum or maximum values for the order entry and execution parameters described in (1) and (2) above. The Exchange believes that this approach will give members the flexibility needed to appropriately tailor the Market Wide Risk Protection to their respective risk management needs. In this regard, the Exchange notes that each member is in the best position to determine risk settings appropriate for their firm based on the member's trading activity and business needs. In the interest of maintaining a fair and orderly market, however, the Exchange will establish default values for the applicable time period and order entry and execution parameters in a circular to be distributed to members. Default values established by the Exchange will apply only to members that do not submit their own parameters for the Market Wide Risk Protection. --------------------------------------------------------------------------- \9\ The Exchange anticipates that the minimum and maximum values for the applicable time period will be initially set at one second and a full trading day, respectively. --------------------------------------------------------------------------- The System will trigger the Market Wide Risk Protection when the counting program has determined that the member has either (1) entered during the specified time period a number of orders exceeding its designated allowable order rate, or (2) executed during the specified time period a number of contracts exceeding its designated allowable contract execution rate. In particular, after a member enters an order, or a member's order is executed, the System will look back over the specified time period to determine whether the member has exceeded the threshold that it has set for the total number of orders entered or the total number of contracts traded, as applicable. If the member's threshold has been exceeded, the Market Wide Risk Protection will be triggered and the System will automatically reject all subsequent incoming orders entered by the member on ISE Gemini or, if applicable, across both ISE Gemini and ISE.\10\ In addition, if the member has opted in to this functionality, the System will automatically cancel all of the member's existing orders. The Market Wide Risk Protection will remain engaged until the member manually (e.g., via email) notifies the Exchange to enable the acceptance of new orders; however, the System will still allow members to interact with existing orders entered before the protection was triggered, including sending cancel order messages and receiving trade executions for those orders. --------------------------------------------------------------------------- \10\ Members that set different risk parameters for ISE Gemini and ISE will only have their orders rejected on the exchange whose threshold was exceeded. --------------------------------------------------------------------------- The Exchange believes that the proposed Market Wide Risk Protection will assist members in better managing their risk when trading on ISE Gemini. In particular, the proposed rule change provides functionality that allows members to set risk management thresholds for the number of orders entered or contracts executed on the Exchange during a specified period. This is similar to how other options exchanges have implemented activity-based risk management protections,\11\ and the Exchange believes this functionality will likewise be beneficial for ISE Gemini members. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release Nos. 74118 (January 22, 2015), 80 FR 4605 (January 28, 2015) (Notice); 74496 (March 13, 2015), 80 FR 14421 (March 19, 2015) (Approval) (SR-MIAX-2015-03). --------------------------------------------------------------------------- The examples below illustrate how the Market Wide Risk Protection would work both for order entry and order execution protections: Example 1, Order Entry Rate Protection: Broker Dealer 1 (``BD1'') designates an allowable order rate of 499 orders/1 second. @0 milliseconds, BD1 enters 200 orders. (Order total: 200 orders) @450 milliseconds, BD1 enters 250 orders. (Order total: 450 orders) @950 milliseconds, BD1 enters 50 orders. (Order total: 500 orders) Market Wide Risk Protection is triggered on ISE Gemini, and, if applicable, ISE \12\ due to exceeding 499 orders in 1 second. All subsequent orders are rejected, and if BD1 has opted in to this functionality, all existing orders are cancelled. BD1 must contact Market Operations to resume trading. --------------------------------------------------------------------------- \12\ Members that share risk settings across both ISE Gemini and ISE will have the Market Wide Risk Protection triggered on both markets. --------------------------------------------------------------------------- Example 2, Order Execution Rate Protection: BD1 designates an allowable execution rate of 15,000 contracts/2 seconds. [[Page 20023]] @0 milliseconds, BD1 receives executions for 5,000 contracts. (Execution total: 5,000 contracts) @600 milliseconds, BD1 receives executions for 10,000 contracts. (Execution total: 15,000 contracts) @1550 milliseconds, BD1 receives executions for 2,000 contracts. (Execution total: 17,000 contracts) Market Wide Risk Protection is triggered on ISE Gemini, and, if applicable, ISE \13\ due to exceeding 15,000 contracts in 2 seconds. All subsequent orders are rejected, and if BD1 has opted in to this functionality, all existing orders are cancelled. BD1 must contact Market Operations to resume trading. --------------------------------------------------------------------------- \13\ Members that share risk settings across both ISE Gemini and ISE will have the Market Wide Risk Protection triggered on both markets. --------------------------------------------------------------------------- 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.\14\ Specifically, the proposed rule change is consistent with Section 6(b)(5) of the Act,\15\ because it is designed to promote just and equitable principles of trade, 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. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change would assist with the maintenance of a fair and orderly market by establishing new activity based risk protections for orders. The Exchange currently offers a risk protection mechanism for market maker quotes that removes the member's quotes if a specified number of curtailment events occur during a set time period (``Market Wide Speed Bump'').\16\ The Exchange believes that this Market Wide Speed Bump functionality has been successful in reducing market maker risk and now proposes to adopt risk protections for orders that would allow other members to properly manage their exposure to excessive risk. In particular, the proposed rule change would implement two new risk protections based on the rate of order entry and order execution, respectively. The Exchange believes that both of these new protections, which together encompass the proposed Market Wide Risk Protection, would enable members to better manage their risk when trading options on the Exchange by limiting the member's risk exposure when systems or other issues result in orders being entered or executed at a rate that exceeds predefined thresholds. In today's market the Exchange believes that robust risk management is becoming increasingly more important for all members. The proposed rule change would provide an additional layer of risk protection for market participants that trade on the Exchange. --------------------------------------------------------------------------- \16\ See Rule 804(g)(2). --------------------------------------------------------------------------- The proposed Market Wide Risk Protection is similar to risk management functionality provided by other options exchanges, including, for example, the MIAX Options Exchange (``MIAX''), which recently received Commission approval for its ``Risk Protection Monitor'' for orders.\17\ In particular, the Market Wide Risk Protection is designed to reduce risk associated with system errors or market events that may cause members to send a large number of orders, or receive multiple, automatic executions, before they can adjust their exposure in the market. Without adequate risk management tools, such as those proposed in this filing, members could reduce the amount of order flow and liquidity that they provide. Such actions may undermine the quality of the markets available to customers and other market participants. Accordingly, the proposed rule change is designed to encourage members to submit additional order flow and liquidity to the Exchange, thereby removing impediments to and perfect [sic] the mechanisms of a free and open market and a national market system and, in general, protecting investors and the public interest. In addition, providing members with more tools for managing risk will facilitate transactions in securities because, as noted above, the members will have more confidence that protections are in place that reduce the risks from potential system errors and market events. As a result, the new functionality has the potential to promote just and equitable principles of trade. --------------------------------------------------------------------------- \17\ See supra note 9 [sic]. --------------------------------------------------------------------------- The Exchange also believes that it is consistent with the protection of investors and the public interest to offer the Market Wide Risk Protection to members across both ISE Gemini and ISE as this will permit members to more effectively manage their risk simultaneously on both markets if desired. The Exchange already offers cross market risk protections for market makers [sic] quotes,\18\ and is now proposing to similarly offer a cross market risk protection for orders in order to reduce the risk that members face when entering orders on multiple exchanges. The Exchange notes that issues that would trigger the Market Wide Risk Protection are not normally confined to a member's activity on a single exchange. Accordingly, the Exchange believes that offering the Market Wide Risk Protection on a cross- market basis would help members to more effectively manage their risk when trading on multiple markets, and reduce disruptive trading events to the benefit of all members and investors. --------------------------------------------------------------------------- \18\ See Securities Exchange Act Release Nos. 71758 (March 20, 2014), 79 FR 16846 (March 26, 2014) (``Notice''); 73148 (September 19, 2014), 79 FR 57626 (September 25, 2014) (Approval) (SR-ISE Gemini-2014-09). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,\19\ the Exchange does not believe that the proposed rule change would impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed Market Wide Risk Protection is similar to risk protections already available on other options exchanges,\20\ and is designed to be a competitive offering that would mitigate the risk associated with trading on the Exchange. Market makers already benefit from Market Wide Speed Bump functionality available for quotes. The proposed change would extend new risk protections to orders so that additional market participants can benefit from risk mitigating functionality. Like the Exchange's Market Wide Speed Bump, the proposed rule change would also be offered cross-market to members that want to be protected from inadvertent exposure to excessive risk when trading on both ISE Gemini and ISE. Permitting this functionality to be cross-market will not have any impact on competition that is not necessary or appropriate in furtherance of the purposes of the Act. In addition, the proposed functionality would be mandatory for all members, and would be made available on an equal and non-discriminatory basis. As such, the Exchange does not believe that the proposed rule change would impose any unnecessary burden on competition. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b)(8). \20\ See supra notes 10 [sic] and 15 [sic]. --------------------------------------------------------------------------- [[Page 20024]] 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 or within such longer period (1) as the Commission may designate up to 45 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (2) 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-ISEGemini-2016-03 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-2016-03. 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-2016-03 and should be submitted on or before April 27, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-07833 Filed 4-5-16; 8:45 am] BILLING CODE 8011-01-P
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traded options on futures contracts by (12) While the Fund will be permitted SECURITIES AND EXCHANGE
virtue of: (a) Its membership in ISG; or to borrow as permitted under the 1940 COMMISSION
(b) a comprehensive surveillance Act, the Fund’s investments will not be
[Release No. 34–77488; File No. SR–
sharing agreement. used to seek performance that is the ISEGemini–2016–03]
(6) Prior to the commencement of multiple or inverse multiple (i.e., 2X
trading, the Exchange will inform its and ¥3X) of the Benchmark. Self-Regulatory Organizations; ISE
members in an Information Circular (13) A minimum of 100,000 Shares Gemini, LLC; Notice of Filing of
(‘‘Circular’’) of the special will be outstanding at the Proposed Rule Change Related to
characteristics and risks associated with commencement of trading on the Market Wide Risk Protection
trading the Shares. Specifically, the Exchange.
Circular will discuss the following: (a) The Exchange represents that all March 31, 2016.
The procedures for purchases and statements and representations made in Pursuant to Section 19(b)(1) of the
redemptions of Shares in Creation Units the filing regarding (a) the description of Securities Exchange Act of 1934
(and that Shares are not individually the portfolio, (b) limitations on portfolio (‘‘Act’’),1 and Rule 19b–4 thereunder,2
redeemable); (b) BATS Rule 3.7, which holdings or reference assets, or (c) the notice is hereby given that, on March
imposes suitability obligations on applicability of Exchange rules and 17, 2016, the ISE Gemini, LLC (the
Exchange members with respect to surveillance procedures constitute ‘‘Exchange’’ or ‘‘ISE Gemini’’) filed with
recommending transactions in the continued listing requirements for the Securities and Exchange
Shares to customers; (c) how listing the Shares on the Exchange. In Commission (‘‘Commission’’) the
information regarding the IIV and the addition, the issuer has represented to proposed rule change, as described in
Disclosed Portfolio is disseminated; (d) the Exchange that it will advise the Items I, II, and III below, which Items
the risks involved in trading the Shares Exchange of any failure by the Fund to have been prepared by the self-
during the Pre-Opening 40 and After comply with the continued listing regulatory organization. The
Hours Trading Sessions 41 when an requirements, and, pursuant to its Commission is publishing this notice to
updated IIV will not be calculated or obligations under Section 19(g)(1) of the solicit comments on the proposed rule
publicly disseminated; (e) the Act, the Exchange will surveil for change from interested persons.
requirement that members deliver a compliance with the continued listing
I. Self-Regulatory Organization’s
prospectus to investors purchasing requirements. If the Fund is not in
Statement of the Terms of Substance of
newly issued Shares prior to or compliance with the applicable listing
the Proposed Rule Change
concurrently with the confirmation of a requirements, the Exchange will
transaction; and (f) trading information. commence delisting procedures under The Exchange proposes to introduce
(7) For initial and continued listing, Exchange Rule 14.12. This approval new activity based order protections as
the Fund and the Subsidiary must be in order is based on all of the Exchange’s described in more detail below. The text
compliance with Rule 10A–3 under the representations and description of the of the proposed rule change is available
Act.42 Fund, including those set forth above on the Exchange’s Web site (http://
(8) The Fund may hold up to an and in the Notice. The Commission www.ise.com), at the principal office of
aggregate amount of 15% of its net notes that the Fund and the Shares must the Exchange, and at the Commission’s
assets in illiquid assets (calculated at comply with the requirements of BATS Public Reference Room.
the time of investment), including Rule 14.11(i), including those set forth II. Self-Regulatory Organization’s
securities deemed illiquid by the in this proposed rule change, to be Statement of the Purpose of, and
Adviser under the 1940 Act. listed and traded on the Exchange on an Statutory Basis for, the Proposed Rule
(9) The Fund will invest in initial and continuing basis. Change
Commodities through investments in For the foregoing reasons, the
the Subsidiary and will not invest Commission finds that the proposed In its filing with the Commission, the
directly in physical commodities. The rule change, as modified by Amendment self-regulatory organization included
Fund’s investment in the Subsidiary Nos. 1, 2, and 3 thereto, is consistent statements concerning the purpose of,
may not exceed 25% of the Fund’s total with Section 6(b)(5) of the Act 43 and the and basis for, the proposed rule change
assets. The Fund and the Subsidiary rules and regulations thereunder and discussed any comments it received
will not invest in any non-U.S. equity applicable to a national securities on the proposed rule change. The text
securities (other than shares of the exchange. of these statements may be examined at
Subsidiary). the places specified in Item IV below.
(10) Investments in non-centrally IV. Conclusion The self-regulatory organization has
cleared swaps (through the Subsidiary) It is therefore ordered, pursuant to prepared summaries, set forth in
will not represent more than 20% of the Section 19(b)(2) of the Act,44 that the sections A, B and C below, of the most
Fund’s net assets. proposed rule change (SR–BATS–2015– significant aspects of such statements.
(11) At least 75% of corporate debt 105), as modified by Amendment Nos.
A. Self-Regulatory Organization’s
obligations will have a minimum 1, 2, and 3 thereto, be, and it hereby is,
Statement of the Purpose of, and
principal amount outstanding of $100 approved.
Statutory Basis for, the Proposed Rule
million or more. In addition, the For the Commission, by the Division of
exchange-traded investment companies Change
Trading and Markets, pursuant to delegated
and commodity-linked instruments in authority.45 1. Purpose
asabaliauskas on DSK3SPTVN1PROD with NOTICES
which the Fund invests will be listed Robert W. Errett, The purpose of the proposed rule
and traded in the U.S. on registered Deputy Secretary. change is to introduce new risk
exchanges. [FR Doc. 2016–07832 Filed 4–5–16; 8:45 am] protections for orders designed to aid
40 The
BILLING CODE 8011–01–P members in their risk management by
Pre-Opening Session is from 8:00 a.m. to
9:30 a.m. Eastern Time. supplementing current price
41 The After Hours Trading Session is from 4:00 43 15 U.S.C. 78f(b)(5).
p.m. to 5:00 p.m. Eastern Time. 44 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1).
42 See 17 CFR 240.10A–3. 45 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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@0 milliseconds, BD1 receives enable members to better manage their makers [sic] quotes,18 and is now
executions for 5,000 contracts. risk when trading options on the proposing to similarly offer a cross
(Execution total: 5,000 contracts) Exchange by limiting the member’s risk market risk protection for orders in
@600 milliseconds, BD1 receives exposure when systems or other issues order to reduce the risk that members
executions for 10,000 contracts. result in orders being entered or face when entering orders on multiple
(Execution total: 15,000 contracts) executed at a rate that exceeds exchanges. The Exchange notes that
@1550 milliseconds, BD1 receives predefined thresholds. In today’s market issues that would trigger the Market
executions for 2,000 contracts. the Exchange believes that robust risk Wide Risk Protection are not normally
(Execution total: 17,000 contracts) management is becoming increasingly confined to a member’s activity on a
Market Wide Risk Protection is more important for all members. The single exchange. Accordingly, the
triggered on ISE Gemini, and, if proposed rule change would provide an Exchange believes that offering the
applicable, ISE 13 due to exceeding additional layer of risk protection for Market Wide Risk Protection on a cross-
15,000 contracts in 2 seconds. All market participants that trade on the market basis would help members to
subsequent orders are rejected, and if Exchange. more effectively manage their risk when
BD1 has opted in to this functionality, The proposed Market Wide Risk trading on multiple markets, and reduce
all existing orders are cancelled. BD1 Protection is similar to risk management disruptive trading events to the benefit
must contact Market Operations to functionality provided by other options of all members and investors.
resume trading. exchanges, including, for example, the
2. Statutory Basis MIAX Options Exchange (‘‘MIAX’’), B. Self-Regulatory Organization’s
which recently received Commission Statement on Burden on Competition
The Exchange believes that the
approval for its ‘‘Risk Protection
proposed rule change is consistent with In accordance with Section 6(b)(8) of
Monitor’’ for orders.17 In particular, the
the requirements of the Act and the the Act,19 the Exchange does not believe
rules and regulations thereunder that Market Wide Risk Protection is designed
that the proposed rule change would
are applicable to a national securities to reduce risk associated with system
errors or market events that may cause impose any burden on intermarket or
exchange, and, in particular, with the intramarket competition that is not
requirements of Section 6(b) of the members to send a large number of
orders, or receive multiple, automatic necessary or appropriate in furtherance
Act.14 Specifically, the proposed rule of the purposes of the Act. The
change is consistent with Section 6(b)(5) executions, before they can adjust their
exposure in the market. Without proposed Market Wide Risk Protection
of the Act,15 because it is designed to is similar to risk protections already
promote just and equitable principles of adequate risk management tools, such as
those proposed in this filing, members available on other options exchanges,20
trade, remove impediments to and and is designed to be a competitive
perfect the mechanisms of a free and could reduce the amount of order flow
and liquidity that they provide. Such offering that would mitigate the risk
open market and a national market
actions may undermine the quality of associated with trading on the
system and, in general, to protect
the markets available to customers and Exchange. Market makers already
investors and the public interest.
The Exchange believes that the other market participants. Accordingly, benefit from Market Wide Speed Bump
proposed rule change would assist with the proposed rule change is designed to functionality available for quotes. The
the maintenance of a fair and orderly encourage members to submit proposed change would extend new risk
market by establishing new activity additional order flow and liquidity to protections to orders so that additional
based risk protections for orders. The the Exchange, thereby removing market participants can benefit from
Exchange currently offers a risk impediments to and perfect [sic] the risk mitigating functionality. Like the
protection mechanism for market maker mechanisms of a free and open market Exchange’s Market Wide Speed Bump,
quotes that removes the member’s and a national market system and, in the proposed rule change would also be
quotes if a specified number of general, protecting investors and the offered cross-market to members that
curtailment events occur during a set public interest. In addition, providing want to be protected from inadvertent
time period (‘‘Market Wide Speed members with more tools for managing exposure to excessive risk when trading
Bump’’).16 The Exchange believes that risk will facilitate transactions in on both ISE Gemini and ISE. Permitting
this Market Wide Speed Bump securities because, as noted above, the this functionality to be cross-market will
functionality has been successful in members will have more confidence not have any impact on competition that
reducing market maker risk and now that protections are in place that reduce is not necessary or appropriate in
proposes to adopt risk protections for the risks from potential system errors furtherance of the purposes of the Act.
orders that would allow other members and market events. As a result, the new In addition, the proposed functionality
to properly manage their exposure to functionality has the potential to
would be mandatory for all members,
excessive risk. In particular, the promote just and equitable principles of
and would be made available on an
proposed rule change would implement trade.
equal and non-discriminatory basis. As
two new risk protections based on the The Exchange also believes that it is such, the Exchange does not believe that
rate of order entry and order execution, consistent with the protection of the proposed rule change would impose
respectively. The Exchange believes that investors and the public interest to offer any unnecessary burden on
both of these new protections, which the Market Wide Risk Protection to
asabaliauskas on DSK3SPTVN1PROD with NOTICES
competition.
together encompass the proposed members across both ISE Gemini and
Market Wide Risk Protection, would ISE as this will permit members to more 18 See Securities Exchange Act Release Nos.
effectively manage their risk
13 Members that share risk settings across both 71758 (March 20, 2014), 79 FR 16846 (March 26,
simultaneously on both markets if 2014) (‘‘Notice’’); 73148 (September 19, 2014), 79
ISE Gemini and ISE will have the Market Wide Risk
Protection triggered on both markets.
desired. The Exchange already offers FR 57626 (September 25, 2014) (Approval) (SR–ISE
14 15 U.S.C. 78f(b). cross market risk protections for market Gemini–2014–09).
15 15 U.S.C. 78f(b)(5). 19 15 U.S.C. 78f(b)(8).
16 See Rule 804(g)(2). 17 See supra note 9 [sic]. 20 See supra notes 10 [sic] and 15 [sic].
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![20024 Federal Register / Vol. 81, No. 66 / Wednesday, April 6, 2016 / Notices
C. Self-Regulatory Organization’s Commission and any person, other than I. Self-Regulatory Organization’s
Statement on Comments on the those that may be withheld from the Statement of the Terms of Substance of
Proposed Rule Change Received From public in accordance with the the Proposed Rule Change
Members, Participants, or Others provisions of 5 U.S.C. 552, will be
available for Web site viewing and The Exchange proposes to adopt
The Exchange has not solicited, and requirements for the collection and
does not intend to solicit, comments on printing in the Commission’s Public
Reference Room, 100 F Street NE., transmission of data pursuant to
this proposed rule change. The
Washington, DC 20549, on official Appendices B and C of the Regulation
Exchange has not received any
unsolicited written comments from business days between the hours of NMS Plan to Implement a Tick Size
members or other interested parties. 10:00 a.m. and 3:00 p.m. Copies of the Pilot Program (‘‘Plan’’). The proposed
filing also will be available for rule change is available on the
III. Date of Effectiveness of the Exchange’s Web site at www.nyse.com,
inspection and copying at the principal
Proposed Rule Change and Timing for at the principal office of the Exchange,
office of the Exchange. All comments
Commission Action and at the Commission’s Public
received will be posted without change;
Within 45 days of the publication date the Commission does not edit personal Reference Room.
of this notice or within such longer identifying information from II. Self-Regulatory Organization’s
period (1) as the Commission may submissions. You should submit only Statement of the Purpose of, and
designate up to 45 days of such date if information that you wish to make
it finds such longer period to be Statutory Basis for, the Proposed Rule
available publicly. All submissions Change
appropriate and publishes its reasons should refer to File Number SR–
for so finding or (2) as to which the self- ISEGemini–2016–03 and should be In its filing with the Commission, the
regulatory organization consents, the submitted on or before April 27, 2016. self-regulatory organization included
Commission will: statements concerning the purpose of,
(a) by order approve or disapprove For the Commission, by the Division of
Trading and Markets, pursuant to delegated and basis for, the proposed rule change
such proposed rule change; or
authority.21 and discussed any comments it received
(b) institute proceedings to determine
Robert W. Errett, on the proposed rule change. The text
whether the proposed rule change
should be disapproved. of those statements may be examined at
Deputy Secretary.
the places specified in Item IV below.
IV. Solicitation of Comments [FR Doc. 2016–07833 Filed 4–5–16; 8:45 am]
The Exchange has prepared summaries,
BILLING CODE 8011–01–P
Interested persons are invited to set forth in sections A, B, and C below,
submit written data, views and of the most significant parts of such
arguments concerning the foregoing, statements.
SECURITIES AND EXCHANGE
including whether the proposed rule COMMISSION A. Self-Regulatory Organization’s
change is consistent with the Act.
Statement of the Purpose of, and
Comments may be submitted by any of
[Release No. 34–77484; File No. SR– Statutory Basis for, the Proposed Rule
the following methods:
NYSEARCA–2016–52] Change
Electronic Comments
Self-Regulatory Organizations; NYSE 1. Purpose
• Use the Commission’s Internet
comment form (http://www.sec.gov/ Arca, Inc.; Notice of Filing and On August 25, 2014, NYSE Group,
rules/sro.shtml); or Immediate Effectiveness of Proposed Inc., on behalf of the Exchange, New
• Send an email to rule-comments@ Rule Change Adopting Requirements York Stock Exchange LLC, NYSE MKT
sec.gov. Please include File Number SR– for the Collection and Transmission of LLC, the Bats BZX Exchange, Inc. f/k/a
ISEGemini–2016–03 on the subject line. Data Pursuant to Appendices B and C BATS Exchange, Inc. (‘‘BZX’’), BATS
of the Regulation NMS Plan To BYX Exchange, Inc. f/k/a BATS Y-
Paper Comments Implement a Tick Size Pilot Program Exchange, Inc. (‘‘BYX’’), Bats EDGA
• Send paper comments in triplicate Exchange, Inc., Bats EDGX Exchange,
March 31, 2016.
to Secretary, Securities and Exchange Inc., Chicago Stock Exchange, Inc.,
Commission, 100 F Street NE., Pursuant to Section 19(b)(1) 1 of the Financial Industry Regulatory
Washington, DC 20549–1090. Securities Exchange Act of 1934 (the Authority, Inc. (‘‘FINRA’’), NASDAQ
All submissions should refer to File ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 OMX BX, Inc., NASDAQ OMX PHLX
Number SR–ISEGemini–2016–03. This notice is hereby given that, on March LLC, and the Nasdaq Stock Market LLC
file number should be included on the 29, 2016, NYSE Arca, Inc. (the (collectively ‘‘Participants’’), filed with
subject line if email is used. To help the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange
Commission process and review your the Securities and Exchange Commission (‘‘Commission’’), pursuant
comments more efficiently, please use Commission (the ‘‘Commission’’) the to Section 11A of the Act 4 and Rule 608
only one method. The Commission will proposed rule change as described in of Regulation NMS thereunder,5 the
post all comments on the Commission’s Items I and II below, which Items have Plan to Implement a Tick Size Pilot
Internet Web site (http://www.sec.gov/
asabaliauskas on DSK3SPTVN1PROD with NOTICES
been prepared by the Exchange. The Program (‘‘Pilot’’).6 The Participants
rules/sro.shtml). Copies of the Commission is publishing this notice to filed the Plan to comply with an order
submission, all subsequent solicit comments on the proposed rule issued by the Commission on June 24,
amendments, all written statements change from interested persons.
with respect to the proposed rule 4 15 U.S.C. 78k–1.
change that are filed with the 21 17 CFR 200.30–3(a)(12). 5 17 CFR 242.608.
Commission, and all written 1 15 U.S.C. 78s(b)(1). 6 See Letter from Brendon J. Weiss, Vice
communications relating to the 2 15 U.S.C. 78a.
President, Intercontinental Exchange, Inc., to
proposed rule change between the 3 17 CFR 240.19b–4. Secretary, Commission, dated August 25, 2014.
VerDate Sep<11>2014 17:54 Apr 05, 2016 Jkt 238001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\06APN1.SGM 06APN1](https://thefederalregister.org/doc/81_FR_20087/page/4.svg)
Document Created: 2018-02-07 13:51:52
Document Modified: 2018-02-07 13:51:52
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 20021 |
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