Document ID: SEC-2014-1195-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ISE Gemini, LLC
Posted Date: 2014-07-16T04:00Z

[Federal Register Volume 79, Number 136 (Wednesday, July 16, 2014)]
[Notices]
[Pages 41617-41618]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16651]

[[Page 41617]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72587; File No. SR-ISEGemini-2014-20]

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

July 10, 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, 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.
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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 the 
Substance of the Proposed Rule Change

    ISE Gemini is proposing to amend its Schedule of Fees to increase 
certain network and gateway fees. 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 increase certain network and gateway fees. The Exchange charges 
an Ethernet fee for its four different Ethernet connection options, 
which is $500 per month for a 1 Gigabit (``Gb'') connection, $4,000 per 
month for a 10 Gb connection, $7,000 per month for a 10 Gb low latency 
connection, and $12,500 per month for a 40 Gb low latency 
connection.\3\ These Ethernet connectivity options provide access to 
both ISE Gemini and ISE Gemini's sister exchange, International 
Securities Exchange, LLC (``ISE'').\4\ The Exchange proposes to 
increase the fees charged for the 1 Gb connection to $750 per month. In 
addition, the Exchange offers both shared and dedicated gateways to 
facilitate member access to ISE Gemini and ISE for a single fee. The 
Exchange charges members a monthly gateway fee of $250 per gateway for 
a shared gateway or $2,000 per gateway pair for members that elect to 
use their own dedicated gateways as an alternative to using shared 
gateways.\5\ The Exchange proposes to increase the shared gateway fee 
to $500 per month.
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    \3\ See Securities Exchange Act Release No. 71149 (December 19, 
2013), 78 FR 78447 (December 26, 2014) (SR-Topaz-2013-16).
    \4\ Id. Market participants pay the same fees regardless of 
whether they choose to connect to both exchanges or solely to ISE 
Gemini.
    \5\ Id.
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    In addition, the Schedule of Fees currently notes that the network 
and gateway fees discussed above, as well as certain other non-
transaction fees, were waived until January 1, 2014.\6\ As this date 
has already passed, the Exchange proposes to delete references to this 
waiver.
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    \6\ Id.
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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,\7\ in general, and Section 
6(b)(4) of the Act,\8\ 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. The 
Exchange believes that it is reasonable and equitable to increase the 
network and gateway fees described in this filing as the Exchange has 
not increased the fees charged for these network and gateway options 
since each was introduced,\9\ and the new fees are more in line with 
the Exchange's current connectivity costs, including costs for software 
and hardware enhancements, and resources dedicated to development, 
quality assurance, and support. The Exchange also notes that these 
connectivity options now provide access to two exchanges, ISE and ISE 
Gemini, for a single fee and thus believes that the new fees are 
appropriate given the additional benefit that this provides to firms 
that choose to connect to both markets.\10\ The new fees are also well 
within the range of fees currently charged by other options exchanges. 
For example, NYSE Arca Options (``Arca'') charges a monthly fee of 
$5,000 per connection for a 1 Gb liquidity center network connection 
with a $6,000 per connection initial charge, which is significantly 
more expensive than the proposed Ethernet fee of $750 per month.\11\ 
Furthermore, the Exchange believes that the new fees are not unfairly 
discriminatory as all market participants that use these connectivity 
options will pay the same fee, and there is no differentiation among 
market participants with regard to the fees charged.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ While both of these fees were introduced on ISE Gemini in 
January 2014 as described above, the Exchange notes that the fees 
were adopted on earlier dates on the ISE, which shares these 
connectivity options with ISE Gemini. See Securities Exchange Act 
Release No. 55289 (February 13, 2007), 72 FR 8218 (February 23, 
2007) (SR-ISE-2007-04); 68324 (November 30, 2012), 77 FR 72901 
(December 6, 2012) (SR-ISE-2012-89).
    \10\ As described above, these fees were originally adopted on 
the ISE and then on ISE Gemini to allow members to connect to both 
exchanges for a single fee. The Exchange believes that the new fees 
reflect the benefit of being able to connect to multiple exchanges 
for market participants that choose to do so.
    \11\ See Arca Fees and Charges, Floor and Equipment and Co-
location Fees. There is no gateway fee listed on Arca's fee 
schedule, but the cost of obtaining a 1 Gb connection to Arca is 
considerably higher than the fees proposed in this filing even with 
the additional $500 gateway fee. There is no similar initial charge 
for setting up connectivity to ISE Gemini.
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    The Exchange also believes that is appropriate to remove obsolete 
text about the waiver of non-transaction fees prior to January 1, 2014, 
as this is a non-substantive change intended to increase the clarity of 
the Exchange's Schedule of Fees.

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 
rule change increases certain network and gateway fees to levels that 
are within the range of fees charged by other options exchanges. These 
fees will be charged to all firms that elect to use the connectivity 
options described in this filing. In addition, removing obsolete text 
from the Schedule of Fees will have no competitive impact. The

[[Page 41618]]

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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    \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

    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,\13\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\14\ because it establishes a due, fee, or other charge 
imposed by ISE Gemini.
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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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    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 rule-comments@sec.gov. Please include 
File Number SR-ISEGemini-2014-20 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-2014-20. 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-2014-20, and 
should be submitted on or before August 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16651 Filed 7-15-14; 8:45 am]
BILLING CODE 8011-01-P