Document ID: SEC-2014-1173-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ISE Gemini, LLC
Posted Date: 2014-07-14T04:00Z

[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Notices]
[Pages 40829-40830]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16366]

[[Page 40829]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72558; File No. SR-ISEGemini-2014-21]

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

July 8, 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 July 1, 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 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 is proposing to amend its Schedule of Fees to introduce 
a new higher maker rebate for Priority Customer orders from Tier 1 
members that execute a set volume of Priority Customer Maker contracts 
in a given month. 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 introduce a new higher maker rebate for Priority Customer 
orders from Tier 1 members that execute a set volume of Priority 
Customer Maker contracts in a given month.\3\ The Exchange's Schedule 
of Fees has separate tables for 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.
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    \3\ A Tier 1 member is a member that does not qualify for Tier 2 
or above by executing a Total Affiliated Member ADV of 50,000 
contracts, Priority Customer Maker ADV of 20,000 contracts, or a 
Total Affiliated Member ADV of 40,000 contracts with a minimum 
Priority Customer Maker ADV of 15,000 contracts.
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    Currently, Priority Customer orders that add liquidity on ISE 
Gemini are provided a maker rebate in Penny Symbols and SPY of $0.25 
per contract for Tier 1, $0.40 per contract for Tier 2, $0.46 per 
contract for Tier 3, $0.48 per contract for Tier 4, and $0.50 per 
contract for Tier 5. In Non-Penny Symbols this maker rebate is $0.75 
per contract for Tier 1, $0.80 per contract for Tier 2, and $0.85 per 
contract for Tier 3 and above.
    In order to incentivize members to bring their Priority Customer 
orders to ISE Gemini, the Exchange now proposes to provide a higher 
maker rebate to Tier 1 members that execute a set volume of Priority 
Customer Maker contracts in a given month. In particular, Tier 1 
members that execute a Priority Customer Maker average daily volume 
(``ADV'') of 5,000 to 19,999 contracts in a given month will qualify 
for the new maker rebates for their Priority Customer orders.\4\ 
Priority Customer orders executed by members that meet the volume 
requirements for this new ``sub-tier'' will be entitled to a maker 
rebate of $0.32 per contract for Penny Symbols and SPY, and $0.76 per 
contract for Non-Penny Symbols.
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    \4\ Members that execute a Priority Customer Maker ADV of 20,000 
contracts or more in a given month would qualify for the higher 
maker rebates applicable to Tier 2 or above.
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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,\5\ in general, and Section 
6(b)(4) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee change is reasonable 
and equitable as the new maker rebate is designed to attract additional 
order flow from members that do not qualify for any of the higher maker 
rebate tiers but nevertheless execute a significant volume of 
liquidity-adding Priority Customer contracts on ISE Gemini. The 
Exchange believes that providing higher maker rebates for Priority 
Customer orders executed by members that are not able to reach the 
higher volume thresholds for Tier 2 but have achieved the volume 
threshold for this new ``sub-tier'' will attract that order flow to ISE 
Gemini, and thereby create additional liquidity to the benefit of all 
market participants who trade on the Exchange. The Exchange further 
believes that the proposed rule change is not unfairly discriminatory 
as all members that achieve the new volume threshold will receive the 
same maker rebate for their Priority Customer orders. The Exchange does 
not believe that it is unfairly discriminatory to offer this higher 
rebate only to Priority Customer orders as this is the order flow that 
the Exchange is trying to attract, and all market participants will 
benefit from the increased liquidity.
    The Exchange notes that it has determined to charge fees and 
provide rebates in Mini Options at a rate that is 1/10th the rate of 
fees and rebates the Exchange provides for trading in Standard Options. 
The Exchange believes it is reasonable and equitable and not unfairly 
discriminatory to assess lower fees and rebates to provide market 
participants an incentive to trade Mini Options on the Exchange. The 
Exchange believes the proposed fees and rebates 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, is providing fees and rebates for Mini 
Options that are 1/10th of those applicable to Standard Options.

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

    In accordance with Section 6(b)(8) of the Act,\7\ 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

[[Page 40830]]

of the purposes of the Act. To the contrary, the Exchange believes that 
the proposed fee change will promote competition as it is designed to 
allow ISE Gemini to better compete for order flow by offering higher 
rebates to Priority Customer orders executed by certain members that do 
not currently qualify for any of the higher rebate tiers. 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 
changes reflect this competitive environment.
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    \7\ 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

    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 \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\9\ 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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 rule-comments@sec.gov. Please include 
File No. SR-ISEGemini-2014-21 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-2014-21. 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-2014-21 and should 
be submitted on or before August 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16366 Filed 7-11-14; 8:45 am]
BILLING CODE 8011-01-P