63992 Federal Register / Vol. 79, No. 207 / Monday, October 27, 2014 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 ‘‘Non-Select Symbols’’ are options overlying all 

symbols excluding Select Symbols. 

4A Non-Customer Order is an order for the 

account of a person or entity that is a broker or 

dealer in securities. See ISE Rules 100(a)(27)–(28). 

5A Priority Customer is defined in ISE Rule 

100(a)(37A) as 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). 

6A Professional Customer is a person who is not 

a broker/dealer and is not a Priority Customer. 

7See Securities Exchange Act Release No. 72816 

(August 12, 2014), 79 FR 48811 (August 18, 2014) 

(SR–ISE–2014–37). 

8 ‘‘Select Symbols’’ are options overlying all 

symbols listed on the ISE that are in the Penny Pilot 

Program. 

9The term ‘‘Market Makers’’ refers to 

‘‘Competitive Market Makers’’ and ‘‘Primary Market 

Makers’’ collectively. See ISE Rule 100(a)(25). 

10A Non-ISE Market Maker, or Far Away Market 

Maker (‘‘FARMM’’), is a market maker as defined 

in Section 3(a)(38) of the Securities Exchange Act 

of 1934 registered in the same options class on 

another options exchange. 

11A ‘‘Firm Proprietary’’ order is an order 

submitted by a member for its own proprietary 

account. 

12A Broker-Dealer order is an order submitted by 

a Member for a non-Member broker-dealer account. 

13 15 U.S.C. 78f. 

14 15 U.S.C. 78f(b)(4). 

15See NOM Chapter XV Options Pricing, Sec. 2 

NASDAQ Options Market—Fees and Rebates; Arca 

Options Fees and Charges, Trade-Related Charges 

for Standard Options. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73394; File No. SR–ISE– 

2014–50] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Amend the Schedule of 

Fees 

October 21, 2014. 

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 October 

10, 2014, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) filed with the Securities and 

Exchange Commission the proposed 

rule change, as described in Items I, II, 

and III below, which items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The ISE is proposing to amend its 

Schedule of Fees to increase the routeout fee applicable to Professional 

Customer orders in Non-Select Symbols, 

and adopt a route-out fee for NonCustomer orders routed to away 

markets. 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 the Schedule of Fees 

to increase the route-out fee applicable 

to Professional Customer orders in NonSelect Symbols,3 and adopt a route-out 

fee for Non-Customer orders 4 routed to 

away markets. The Exchange’s Schedule 

of Fees has separate fees applicable to 

Standard Options and Mini Options. 

The Exchange notes that while the 

discussion below relates to fees for 

Standard Options, the fees for Mini 

Options, which are not discussed below, 

are and shall continue to be 1/10th of 

the fees for Standard Options. 

The Exchange presently charges a 

route-out fee applicable to Priority 

Customer 5 and Professional Customer 6

orders routed to away markets pursuant 

to the Options Order Protection and 

Locked/Crossed Market Plan (the 

‘‘Plan’’). Specifically, the Exchange 

charges a route-out fee of $0.45 per 

contract for Priority Customer orders 

and $0.55 per contract for Professional 

Customer orders in all symbols. The 

Exchange now proposes to increase the 

route-out fee for Professional Customer 

orders in Non-Select Symbols to $0.95 

per contract to reduce the negative 

economics associated with executing 

these orders on other options exchanges. 

Professional Customer orders in Select 

Symbols and Priority Customer orders 

will continue to pay route-out fees at 

their respective rates described above. 

On July 31, 2014 the Exchange filed 

a proposed rule change that introduced 

linkage routing for Non-Customer 

orders, which became effective on 

September 1, 2014.7 In connection with 

this new functionality, the Exchange 

now proposes to adopt a route-out fee 

for Non-Customer orders routed to other 

options exchanges. The proposed routeout fee will be $0.55 per contract in 

Select Symbols,8 and $0.95 per contract 

in Non-Select Symbols, in line with the 

rates described above for Professional 

Customer orders, and will be applicable 

to all Market Maker,9 Non-ISE Market 

Maker,10 and Firm Proprietary 11/ 

Broker-Dealer 12 orders routed to away 

markets pursuant to the Plan. 

In connection with the proposed fee 

changes described above, the Exchange 

also proposes to reformat its route-out 

fee table to include separate columns for 

Select Symbols and Non-Select 

Symbols, as well as for Standard 

Options and Mini Options, and to 

reduce the number of duplicative 

footnotes. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,13

in general, and Section 6(b)(4) of the 

Act,14 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. 

In particular, the Exchange believes 

the proposed route-out fees are 

reasonable and equitable as they offset 

costs incurred by the Exchange in 

connection with using unaffiliated 

broker-dealers to access other exchanges 

for linkage executions. Other options 

exchanges, such as the NASDAQ 

Options Market (‘‘NOM’’) and NYSE 

Arca Options (‘‘Arca’’), have fees for 

taking liquidity that are as high as $0.89 

per contract for Professional Customer 

orders in Non-Select Symbols.15 It has 

thus become necessary for the Exchange 

to raise the route-out fees applicable to 

these orders to recoup the higher costs 

associated with executing orders on 

these markets. Furthermore, as the 

Exchange recently expanded its linkage 

routing capabilities to include NonCustomer orders, the Exchange believes 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 207 / Monday, October 27, 2014 / Notices 63993 

16See PHLX Fee Schedule, Section V, Routing 

Fees. 

17 15 U.S.C. 78s(b)(3)(A)(ii). 

18 17 CFR 240.19b–4(f)(2). 

that it is appropriate to adopt 

corresponding fees at this time. The 

route-out fees proposed herein for NonCustomer orders are lower than those 

charged by some of the Exchange’s 

competitors, including, for example, 

NASDAQ OMX PHLX (‘‘PHLX’’), which 

charges a fee of $0.97 per contract for 

routing Non-Customer orders to away 

markets.16

Furthermore, the Exchange believes 

that the proposed fees are not unfairly 

discriminatory because these fees would 

be uniformly applied, as appropriate, to 

all Professional Customer and NonCustomer orders. As has historically 

been the case, Priority Customer orders 

will continue to pay lower route-out 

fees than orders from other market 

participants, including Professional 

Customer and, now, Non-Customer 

orders. The Exchange believes that it is 

equitable and not unfairly 

discriminatory to charge lower fees for 

Priority Customer orders than 

Professional Customer and NonCustomer orders as a Priority Customer 

is by definition not a broker or 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). This 

limitation does not apply to participants 

whose behavior is substantially similar 

to that of market professionals, 

including Professional Customers and 

Non-Customers, who will generally 

submit a higher number of orders (many 

of which do not result in executions) 

than Priority Customers. Moreover, the 

Exchange notes that Priority Customer 

orders are often charged lower taker fees 

than Professional Customer and NonCustomer orders on other options 

exchanges, meaning that the execution 

costs to the Exchange for routing these 

orders is correspondingly lower. As 

such, the Exchange believes that it is 

equitable and not unfairly 

discriminatory to pass on this cost 

savings to the firms entering these 

orders. 

The Exchange has determined to 

charge fees for regular orders in Mini 

Options at a rate that is 1/10th the rate 

of fees the Exchange currently provides 

for trading in Standard Options. The 

Exchange believes it is reasonable and 

equitable and not unfairly 

discriminatory to assess lower fees to 

provide market participants an 

incentive to trade Mini Options on the 

Exchange. The Exchange believes the 

proposed fees are reasonable and 

equitable in light of the fact that Mini 

Options have a smaller exercise and 

assignment value, specifically 1/10th 

that of a Standard Option contract, and, 

as such, levying fees that are 1/10th of 

what market participants pay to trade 

Standard Options. As a result, routing 

fees for Mini Options will continue to 

be charged at 1/10th the rate of fees of 

Standard Options. 

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 intermarket or 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act as it simply 

adjusts Professional Customer route-out 

fees to be consistent with the costs 

associated with routing orders to away 

markets, and adopts fees for routing 

Non-Customer orders to other options 

exchanges, in connection with the 

introduction of linkage routing for those 

orders. 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 to remain competitive 

with other exchanges. For the reasons 

described above, the Exchange believes 

that the proposed fee change reflects 

this competitive environment. 

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)(ii) of the Act 17 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder,18 because it establishes a 

due, fee, or other charge imposed by 

ISE. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an Email to rulecomments@sec.gov. Please include File 

No. SR–ISE–2014–50 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–2014–50. 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 ISE. 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– 

2014–50 and should be submitted by 

November 17, 2014. 


tkelley on DSK3SPTVN1PROD with NOTICES
63994 Federal Register / Vol. 79, No. 207 / Monday, October 27, 2014 / Notices 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A Non-Customer Order is an order for the 

account of a person or entity that is a broker or 

dealer in securities. See ISE Gemini Rules 

100(a)(27)–(28). 

4A Priority Customer is defined in ISE Gemini 

Rule 100(a)(37A) as 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). 

5A Professional Customer is a person who is not 

a broker/dealer and is not a Priority Customer. 

6 ‘‘Penny Symbols’’ are options overlying all 

symbols listed on ISE Gemini that are in the Penny 

Pilot Program 

7 ‘‘Non- Penny Symbols’’ are options overlying all 

symbols excluding Penny Symbols. 

8See Securities Exchange Act Release No. 72816 

(August 12, 2014), 79 FR 48811 (August 18, 2014) 

(SR–ISE–2014–37). 

9See Securities Exchange Act Release No. 72919 

(August 26, 2014) 79 FR 52096 (September 2, 2014) 

(SR–ISE Gemini-2014–22). 

10The term ‘‘Market Makers’’ refers to 

‘‘Competitive Market Makers’’ and ‘‘Primary Market 

Makers’’ collectively. See ISE Gemini Rule 

100(a)(25). 

11A Non-ISE Gemini Market Maker, or Far Away 

Market Maker (‘‘FARMM’’), is a market maker as 

defined in Section 3(a)(38) of the Securities 

Exchange Act of 1934 registered in the same options 

class on another options exchange. 

12A ‘‘Firm Proprietary’’ order is an order 

submitted by a member for its own proprietary 

account. 

13A Broker-Dealer order is an order submitted by 

a Member for a non-Member broker-dealer account. 

14 15 U.S.C. 78f. 

15 15 U.S.C. 78f(b)(4). 

16See PHLX Fee Schedule, Section V, Routing 

Fees. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–25430 Filed 10–24–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73393; File No. SR– 

ISEGemini–2014–27] 

Self-Regulatory Organizations; ISE 

Gemini, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Schedule 

of Fees 

October 21, 2014. 

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 October 

10, 2014 ISE Gemini, LLC (the 

‘‘Exchange’’ or ‘‘ISE Gemini’’) filed with 

the Securities and Exchange 

Commission the proposed rule change, 

as described in Items I, II, and III below, 

which items have been prepared by the 

self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

ISE Gemini is proposing to amend its 

Schedule of Fees to adopt a route-out 

fee for Non-Customer orders routed to 

away markets. The text of the proposed 

rule change is available on the 

Exchange’s Internet Web site at 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 

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 

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 the Schedule of Fees 

to adopt a route-out fee for NonCustomer orders 3 routed to away 

markets. The Exchange’s Schedule of 

Fees has separate fees applicable to 

Standard Options and Mini Options. 

The Exchange notes that while the 

discussion below relates to fees for 

Standard Options, the fees for Mini 

Options, which are not discussed below, 

are and shall continue to be 1/10th of 

the fees for Standard Options. 

The Exchange presently charges a 

route-out fee applicable to Priority 

Customer 4 and Professional Customer 5

orders routed to away markets pursuant 

to the Options Order Protection and 

Locked/Crossed Market Plan (the 

‘‘Plan’’). Specifically, Priority Customer 

orders pay a route-out fee of $0.50 per 

contract in Penny Symbols (including 

SPY),6 and $0.90 per contract in NonPenny Symbols.7 Professional Customer 

orders pay a fee of $0.55 per contract in 

Penny Symbols (including SPY), and 

$0.95 per contract in Non-Penny 

Symbols. On July 31, 2014 the 

Exchange’s sister exchange, the 

International Securities Exchange, LLC 

(‘‘ISE’’), filed a proposed rule change 

that introduced linkage routing for NonCustomer orders, which became 

effective on September 1, 2014.8

Thereafter, the Exchange filed its own 

proposed rule change, which noted that 

certain of the rules adopted in the ISE 

filing are incorporated by reference into 

ISE Gemini rules, and adopted other 

related rules in chapters that are not 

incorporated by reference, effective as of 

September 18, 2014.9 In connection 

with this new functionality, the 

Exchange now proposes to adopt a 

route-out fee for Non-Customer orders 

routed to other options exchanges. The 

proposed route-out fee will be $0.55 per 

contract in Penny Symbols (including 

SPY), and $0.95 per contract in NonPenny Symbols, in line with the rates 

described above for Professional 

Customer orders, and will be applicable 

to all Market Maker,10 Non-ISE Gemini 

Market Maker,11 and Firm 

Proprietary 12/Broker-Dealer 13 orders 

routed to away markets pursuant to the 

Plan. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,14

in general, and Section 6(b)(4) of the 

Act,15 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. 

In particular, the Exchange believes 

the proposed route-out fee is reasonable 

and equitable as it offsets costs incurred 

by the Exchange in connection with 

using unaffiliated broker-dealers to 

access other exchanges for linkage 

executions. As the Exchange recently 

expanded its linkage routing capabilities 

to include Non-Customer orders, the 

Exchange believes that it is appropriate 

to adopt corresponding fees at this time. 

The fees proposed herein are lower than 

those charged by some of the Exchange’s 

competitors, including, for example, 

NASDAQ OMX PHLX (‘‘PHLX’’), which 

charges a fee of $0.97 per contract for 

routing Non-Customer orders to away 

markets.16

Furthermore, the Exchange believes 

that the proposed fees are not unfairly 

discriminatory because these fees are 

equivalent to fees currently charged for 

Professional Customer orders routed by 

the Exchange to other options markets, 

and would therefore be uniformly 

applied to all Professional Customer and 

Non-Customer orders. As has 

historically been the case, Priority 


tkelley on DSK3SPTVN1PROD with NOTICES