[Federal Register Volume 79, Number 199 (Wednesday, October 15, 2014)]
[Notices]
[Pages 61911-61913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24418]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73317; File No. SR-ISEGemini-2014-26]


Self-Regulatory Organizations; ISE Gemini Exchange, LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rule 723 To Add a New PIM ISO Order Type

October 8, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 61912]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 3, 2014 the ISE Gemini Exchange, LLC ``Exchange'' or ``ISE 
Gemini'') filed with the Securities and Exchange Commission 
(``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.
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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

    ISE Gemini proposes to amend its rules to add a new PIM ISO order 
type. 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 this proposed rule change is to amend the Exchange's 
rules to add a new PIM ISO order type.
    The Price Improvement Mechanism (``PIM'') is a process that allows 
Electronic Access Members (``EAM'') to provide price improvement 
opportunities for a transaction wherein the Member seeks to execute an 
agency order as principal or execute an agency order against a 
solicited order (a ``Crossing Transaction''). A Crossing Transaction is 
comprised of the order the EAM represents as agent (the ``Agency 
Order'') and a counter-side order for the full size of the Agency Order 
(the ``Counter-Side Order''). The Counter-Side Order may represent 
interest for the Member's own account, or interest the Member has 
solicited from one or more other parties, or a combination of both. A 
Crossing Transaction must be entered only at a price that is equal to 
or better than the national best bid or offer (``NBBO'') and better 
than the limit order or quote on the ISE Gemini orderbook on the same 
side of the Agency Order.
    An intermarket sweep order (``ISO'') is defined in Rule 1900(h) as 
a limit order that is designated as an ISO in the manner prescribed by 
the Exchange and is executed within the system by Members at multiple 
price levels without respect to Protected Quotations of other Eligible 
Exchanges as defined in Rule 1900.\3\ ISOs are immediately executable 
within the Exchange's options trading system or cancelled, and shall 
not be eligible for routing as set out in Rule 1900. Simultaneously 
with the routing of an ISO to the Exchange's options trading system, 
one or more additional limit orders, as necessary, are routed by the 
entering party to execute against the full displayed size of any 
Protected Bid or Protected Offer in the case of a limit order to sell 
or buy with a price that is superior to the limit price of the limit 
order identified as an ISO. These additional routed orders must be 
identified as ISOs.
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    \3\ Under Rule 1900, a ``Protected Quotation'' includes a 
Protected Bid or Protected Offer. A ``Protected Bid'' or ``Protected 
Offer'' means a Bid or Offer in an options series, respectively, 
that: (i) Is disseminated pursuant to the OPRA Plan; and (ii) is the 
Best Bid or Best Offer, respectively, displayed by an Eligible 
Exchange. ``Bid'' or ``Offer'' means the bid price or the offer 
price communicated by a member of an Eligible Exchange to any broker 
or dealer, or to any customer, at which it is willing to buy or 
sell, as either principal or agent, but shall not include 
indications of interest. The ``OPRA Plan'' means the plan filed with 
the SEC pursuant to Section 11Aa(1)(C)(iii) of the Act, approved by 
the SEC and declared effective as of January 22, 1976, as from time 
to time amended. ``Best Bid'' and ``Best Offer'' mean the highest 
priced Bid and the lowest priced Offer. Finally, ``Eligible 
Exchange'' means a national securities exchange registered with the 
SEC in accordance with Section 6(a) of the Act that: (i) Is a 
Participant Exchange in The Options Clearing Corporation (``OCC'') 
(as that term is defined in Section VII of the OCC by-laws); (ii) is 
a party to the OPRA Plan; and (iii) if the national securities 
exchange is not a party to the OPRA Plan, is a participant in 
another plan approved by the Commission providing for comparable 
trade-through and locked and crossed market protection.
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    The Exchange proposes to implement a PIM ISO order type (``PIM 
ISO'') that will allow the submission of an ISO into the PIM. 
Specifically, a PIM ISO is the transmission of two orders for crossing 
pursuant to Rule 723 without regard for better priced Protected Bids or 
Protected Offers because the Member transmitting the PIM ISO to the 
Exchange has, simultaneously with the routing of the PIM ISO, routed 
one or more ISOs, as necessary, to execute against the full displayed 
size of any Protected Bid or Protected Offer that is superior to the 
starting PIM auction price and has swept all interest in the Exchange's 
book priced better than the proposed auction starting price. Any 
execution(s) resulting from such sweeps shall accrue to the PIM order, 
meaning that any execution(s) obtained from the away side will be given 
to the agency side of the order.
    The Exchange will accept a PIM ISO provided the order adheres to 
the current PIM order acceptance requirements outlined above, but 
without regard to the NBBO. The Exchange will execute the PIM ISO in 
the same manner that it currently executes PIM orders, except that it 
will not protect prices away. Instead, order flow providers will bear 
the responsibility to clear all better priced interest away 
simultaneously with submitting the PIM ISO order. There is no other 
impact to PIM functionality. Specifically, liquidity present at the end 
of the PIM auction will continue to be included in the PIM auction as 
it is with PIM orders not marked as ISOs.
    The Exchange will announce the implementation of this order type in 
an information circular.
2. Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act'') \4\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act \5\ 
in particular, in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
for a free and open market and a national market system, and, in 
general, to protect investors and the public interest. The proposed 
rule change promotes just and equitable principles or trade and removes 
impediments to a free and open market in that it promotes competition, 
as described below. Specifically, the proposal allows the Exchange to 
offer its members an order type that is already offered by another 
exchange.\6\ In addition, the proposal benefits traders and investors 
because it adds a new order type for seeking price improvement through 
the PIM. Finally, the proposal does not unfairly discriminate among 
members because all Members are eligible to submit a PIM ISO order.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ See NASDAQ OMX PHLX LLC (``PHLX'') Rule 1080, Commentary 
.09.

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[[Page 61913]]

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange's proposal to 
adopt a PIM ISO order type is pro-competitive because it will enable 
the Exchange to provide market participants with an additional method 
of seeking price improvement through the PIM. The proposed rule change 
will also allow the Exchange to compete with other markets that already 
allow an ISO order type in their price improvement mechanisms.\7\
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    \7\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) \9\ thereunder because 
the proposal does not: (i) Significantly affect the protection of 
investors or the public interest; (ii) impose any significant burden on 
competition; and (iii) by its terms, become operative for 30 days from 
the date on which it was filed, or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's 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 of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest.
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(C).
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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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f486819891d9979b9999919a8087b4879197da939b82"><span class="__cf_email__" data-cfemail="e99b9c858cc48a8684848c879d9aa99a8c8ac78e869f">[email protected]</span></a>. Please include 
File Number SR-ISEGemini-2014-26 on the subject line.

Paper Comments

    <bullet> 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-2014-26. 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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ISEGemini-2014-26 and should 
be submitted on or before November 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24418 Filed 10-14-14; 8:45 am]
BILLING CODE 8011-01-P


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