82 FR 13893 - Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 49 (March 15, 2017)

[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)]
[Notices]
[Pages 13893-13895]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-05085]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80184; File No. SR-ISEGemini-2017-09]


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

March 9, 2017.
    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 February 27, 2017, ISE Gemini, LLC (``ISE Gemini'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I and 
II, below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Schedule of Fees to (1) 
eliminate fees and rebates for trades in Calpine Corporation executed 
on February 27-28, 2017, and (2) modify the Exchange's average daily 
volume calculation for March 2017.
    The text of the proposed rule change is available on the Exchange's 
Web site at www.ise.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Schedule of 
Fees to (1) eliminate fees and rebates for trades in Calpine 
Corporation (``CPN'') executed on February 27-28, 2017, and (2) modify 
the Exchange's average daily volume (``ADV'') calculation for March 
2017. These changes are both being made in connection with the 
migration of the Exchange's trading system to the Nasdaq INET 
technology, which is scheduled to begin on February 27, 2017.
    The Exchange will launch its re-platformed INET trading system 
beginning with a single symbol--CPN--on February 27, 2017. The Exchange 
proposes to eliminate fees and rebates for trades in options overlying 
Symbol CPN executed on the INET trading system during the last two 
trading days of the month, i.e., February 27-28, 2017. Because the 
Exchange is eliminating fees and rebates for trades in this

[[Page 13894]]

symbol, during this two day period trades in options overlying Symbol 
CPN will not be counted towards a member's tier for February activity. 
The proposed change would allow the Exchange to bill February fees 
solely based on activity traded on the current T7 trading system, and 
is an inducement for members to trade the first symbol launched on the 
INET trading system as there would be no transaction fees for doing so.
    In addition, the Exchange currently provides volume-based maker 
rebates to Market Maker \3\ and Priority Customer \4\ orders in four 
tiers based on a member's ADV in the following categories: (1) Total 
Affiliated Member ADV,\5\ and (2) Priority Customer Maker ADV,\6\ as 
shown in the table below.\7\ In addition, the Exchange charges volume 
based taker fees to market participants based on achieving these volume 
thresholds.
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    \3\ The term Market Maker refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively.
    \4\ A Priority Customer is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s).
    \5\ The Total Affiliated Member ADV category includes all volume 
in all symbols and order types, including both maker and taker 
volume and volume executed in the PIM, Facilitation, Solicitation, 
and QCC mechanisms.
    \6\ The Priority Customer Maker ADV category includes all 
Priority Customer volume that adds liquidity in all symbols.
    \7\ All eligible volume from affiliated Members will be 
aggregated in determining applicable tiers, provided there is at 
least 75% common ownership between the Members as reflected on each 
Member's Form BD, Schedule A.
    The highest tier threshold attained above applies retroactively 
in a given month to all eligible traded contracts and applies to all 
eligible market participants.
    Any day that the market is not open for the entire trading day 
or the Exchange instructs members in writing to route their orders 
to other markets may be excluded from the ADV calculation; provided 
that the Exchange will only remove the day for members that would 
have a lower ADV with the day included.

                                                     Table 1
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                   Tier                     Total affiliated member ADV        Priority customer maker ADV
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Tier 1...................................  0-99,999....................  0-19,999.
Tier 2...................................  100,000-224,999.............  20,000-99,999.
Tier 3...................................  225,000-349,999.............  100,000-149,999.
Tier 4...................................  350,000 or more.............  150,000 or more.
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    The Exchange proposes to provide two alternatives for calculation 
of ADV during the month of March, i.e., the first month where members 
will be charged for trading activity on the INET trading system. In 
particular, for March 2017 only, all Qualifying Tier Threshold ADV 
calculations will be based on the better of (1) the member's full month 
ADV for the period of March 1-31, 2017, or (2) the member's ADV for the 
period of March 1-24, 2017. March 1-24, 2017 represents a partial month 
where, due to the Exchange's rollout of symbols on the INET trading 
system, the vast majority of volume is expected to trade on the current 
T7 trading system. On the following trading day, i.e., March 27, 2017, 
the Exchange intends to ramp up its symbol rollout, resulting in a 
large volume of trading occurring on the INET trading system.\8\ The 
Exchange believes that the proposed approach to calculating tiers will 
minimize the impact to members that trade on the Exchange during the 
symbol rollout as members can achieve their tier either based on the 
full month or on the part of the month where trading primarily occurred 
on the current T7 trading system.
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    \8\ The rollout scheduled for March 27, 2017 contains symbols 
that account for approximately 35% of the industry volume. Prior to 
that date, the Exchange expects to be trading symbols that account 
for between 2% and 3% of industry volume on the INET trading system.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and Section 
6(b)(4) of the Act,\10\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and other persons using its facilities.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to 
eliminate fees and rebates for CPN during the first two days of trading 
on the Exchange's re-platformed trading system. Eliminating fees and 
rebates for CPN during those two days will simplify the Exchange's 
billing and serve as an inducement for members to trade the first 
symbol migrated to the INET trading system. Because the Exchange is 
offering free executions in CPN, volume executed in CPN on February 27-
28, 2017 will not be counted towards any volume based tiers. The 
Exchange believes that these two changes will be attractive to members 
that trade on the new INET trading system. The Exchange also believes 
that this proposed change is not unfairly discriminatory as it will 
apply to trades in CPN that are executed by all members. As noted 
above, CPN was selected for this treatment as it will be the first 
symbol traded on the INET trading system, and will be the only symbol 
traded on INET during February.
    In addition, the Exchange believes that the proposed changes to the 
ADV tier calculation for March 2017 is reasonable and equitable as it 
will give members the opportunity to trade on the INET trading system 
while, if more favorable to the member, keeping their ADV tier based on 
the first portion of the month where most trading occurred on T7. The 
Exchange believes that this change is appropriate given the pending 
migration of the Exchange's trading system to INET. Come the first 
trading day of April, i.e., April 3, 2017, the Exchange intends to roll 
out the remaining symbols on INET,\11\ and ADV tiers will once again be 
based solely on full month volume. The Exchange also believes that this 
proposed change is not unfairly discriminatory as the alternative means 
of calculating ADV tiers will be available to all members that trade on 
the Exchange, and will only be applied if it is better for the member.
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    \11\ The Exchange intends to roll out symbols accounting for the 
remaining 62% to 63% of industry volume on this date.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\12\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
changes are intended to ease members' transition to the re-platformed

[[Page 13895]]

INET trading system and is not designed to have any significant 
competitive impact. The Exchange operates in a highly competitive 
market in which market participants can readily direct their order flow 
to competing venues. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and rebates to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.
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    \12\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\13\ and Rule 19b-4(f)(2) \14\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is: (i) Necessary or 
appropriate in the public interest; (ii) for the protection of 
investors; or (iii) 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ISEGemini-2017-09 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-2017-09. 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-2017-09 and should 
be submitted on or before April 5, 2017.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05085 Filed 3-14-17; 8:45 am]
 BILLING CODE 8011-01-P