Document ID: SEC-2017-0088-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ISE Gemini, LLC
Posted Date: 2017-01-23T05:00Z

[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Notices]
[Pages 7906-7907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01299]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79800; File No. SR-ISEGemini-2017-01]

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

January 13, 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 January 3, 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 eliminate 
the Performance Routing Program.
    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
    Currently, the Exchange offers Performance Routing Program (``PRP) 
rebates to Non-ISE Gemini Market Maker,\3\ Firm Proprietary,\4\ Broker-
Dealer,\5\ and Professional Customer \6\ orders based on the member's 
maker average daily volume (``ADV'') in Non-ISE Gemini Market Maker, 
Firm Proprietary, Broker-Dealer, and Professional Customer orders that 
improve the national best bid or offer (``NBBO'') in a series at the 
time of order entry (``PRP eligible contracts'').\7\ Specifically, 
members that execute an ADV of 9,999 PRP eligible contracts or fewer 
are entitled to a maker rebate of $0.25 per contract in both Penny 
Symbols and Non-Penny Symbols for their Non-ISE Gemini Market Maker, 
Firm Proprietary, Broker-Dealer, and Professional Customer orders. 
Members that execute an ADV of 10,000 or more PRP eligible contracts 
are entitled to a maker rebate of $0.40 per contract in Penny Symbols 
and $0.65 per contract in Non-Penny Symbols for the above market 
participant types if the order does not improve the NBBO at the time of 
order entry. In addition, members that qualify for the higher tier of 
PRP rebates are entitled to a maker rebate of $0.47 per contract in 
Penny Symbols and $0.71 per contract in Non-Penny Symbols for the above 
market participant types if the order improves the NBBO in the series 
at the time it is entered.\8\
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    \3\ A ``Non-ISE Gemini Market Maker'' is a market maker as 
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, 
as amended, registered in the same options class on another options 
exchange.
    \4\ A ``Firm Proprietary'' order is an order submitted by a 
member for its own proprietary account.
    \5\ A ``Broker-Dealer'' order is an order submitted by a member 
for a broker-dealer account that is not its own proprietary account.
    \6\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer.
    \7\ All eligible volume from affiliated members is 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.
    \8\ See Schedule of Fees, Section I., Regular Order Fees and 
Rebates, footnotes 14 and 15.
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    The Exchange now proposes to eliminate the PRP as this program has 
not been successful in attracting order flow that improves the NBBO. As 
proposed, members will receive a maker rebate of $0.25 per contract in 
Penny Symbols and Non-Penny Symbols for their Non-ISE Gemini Market 
Maker, Firm Proprietary, Broker-Dealer, and Professional Customer 
orders (i.e., the current Tier 1 maker rebate). Members will no longer 
be able to achieve higher maker rebates based on their maker ADV in 
Non-ISE Gemini Market Maker, Firm Proprietary, Broker-Dealer, and 
Professional Customer orders that improve the NBBO in a series at the 
time of order entry.\9\
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    \9\ This includes both the regular rebate for orders that do not 
improve the NBBO at the time of order entry, and the enhanced 
rebates provided in footnotes 14 and 15 of the Schedule of Fees for 
orders that improve the NBBO at the time of order entry. The regular 
rebates will now be marked ``n/a'' since there will no longer be any 
PRP tiers, and the associated footnotes for enhanced rebates will be 
eliminated.
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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,\10\ in general, and 
Section 6(b)(4) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to 
eliminate the PRP as this rebate program was not successful in 
attracting the type of order flow that it was designed to incentivize. 
The Exchange adopted the PRP to encourage members enter orders that 
improve the NBBO in order to create more trading opportunities at 
better prices for all market participants that trade on the Exchange. 
The Exchange does not believe that the PRP has met this goal, and is 
therefore proposing to eliminate the program. With the proposed 
elimination of the PRP, Non-ISE Gemini Market Maker, Firm Proprietary, 
Broker-Dealer, and Professional Customer orders will continue to be 
entitled to a maker rebate in Penny and Non-Penny Symbols that is the 
same as the current Tier 1 maker rebate. The current Tier 2 maker 
rebates for these market participant types will be removed as this tier 
is being eliminated with the elimination of the PRP program. The 
Exchange believes

[[Page 7907]]

that the Tier 1 maker rebate remains competitive and will continue to 
incentivize members to send order flow to the Exchange. The Exchange 
further believes that the proposed fee change is not unfairly 
discriminatory as it provides equal rebates to Non-ISE Gemini Market 
Maker, Firm Proprietary, Broker-Dealer, and Professional Customer 
orders. In addition, although Priority Customer \12\ and Market Maker 
\13\ orders will be entitled to more favorable maker rebates, the 
Exchange does not believe that this is unfairly discriminatory. As has 
historically been the case, Priority Customer orders remain entitled to 
more favorable maker rebates in order to encourage this order flow. 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, who will generally submit a higher 
number of orders than Priority Customers. Similarly, the Exchange 
believes that it is not unfairly discriminatory to offer higher maker 
rebates to Market Makers as Market Makers are subject to additional 
requirements and obligations (such as quoting requirements) that other 
market participants are not.
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    \12\ 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), as defined in Rule 100(a)(37A).
    \13\ The term Market Maker refers to ``Competitive Market 
Makers'' and ``Primary Market Makers'' collectively. See Rule 
100(a)(25).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ 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 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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    \14\ 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,\15\ and Rule 19b-4(f)(2) \16\ 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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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 Number SR-ISEGemini-2017-01 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-2017-01. 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-2017-01 and should 
be submitted on or before February 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01299 Filed 1-19-17; 8:45 am]
 BILLING CODE 8011-01-P