Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees, 21340-21343 [2014-08418]
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Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices
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–
NYSEArca–2014–28 and should be
submitted on or before May 6, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–08412 Filed 4–14–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71915; File No. SR–ISE
Gemini-2014–12]
Self-Regulatory Organizations; ISE
Gemini, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Schedule
of Fees
April 9, 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 April 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 selfregulatory 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. The text of the
proposed rule change is available on the
Exchange’s Internet Web site at https://
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. 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.
1. Qualifying Tier Thresholds
ISE Gemini currently provides
volume-based maker rebates and
charges volume-based taker fees to
Market Maker 3 and Priority Customer 4
orders in four tiers based on a member’s
average daily volume (‘‘ADV’’) in the
following categories: (i) Total Affiliated
Member ADV,5 (ii) Priority Customer
Maker ADV,6 and (iii) Total Affiliated
Member ADV with a Minimum Priority
Customer Maker ADV, as shown in the
table below. The highest tier threshold
attained by any method below applies
retroactively in a given month to all
eligible traded contracts and applies to
all eligible market participants.
TABLE 1—CURRENT
Tier
Total affiliated
member ADV
Priority customer
maker ADV
Total affiliated member
ADV/minimum priority
customer maker ADV
Tier 1 ..................................................................................................................
Tier 2 ..................................................................................................................
Tier 3 ..................................................................................................................
0–64,999
65,000–149,999
150,000–
274,999
275,000+
0–19,999
20,000–64,999
65,000–114,999
0–39,999/0+
40,000–114,999/15,000+
115,000–224,999/45,000+
115,000+
225,000+/65,000+
Tier 4 ..................................................................................................................
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As outlined in the following table, the
Exchange now proposes to decrease the
thresholds for achieving the four current
volume tiers, and to add an additional
fifth tier for members that execute either
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 The term Market Maker refers to ‘‘Competitive
Market Makers’’ and ‘‘Primary Market Makers’’
collectively. Market Maker orders sent to the
Exchange by an Electronic Access Member are
assessed fees and rebates at the same level as
Market Maker orders. See footnote 2, Schedule of
Fees, Section I and II.
1 15
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(i) a Total Affiliated Member ADV of at
least 350,000 contracts, (ii) a Priority
Customer Maker ADV of at least 125,000
contracts, or (iii) a Total Affiliated
Member ADV of at least 250,000
contracts with a Minimum Priority
Customer Maker ADV of at least 85,000
contracts.7
4 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).
5 The Total Affiliated Member ADV category
includes all volume in all symbols and order types,
including both maker and taker volume and volume
executed in the PIM, Facilitation, Solicitation, and
QCC mechanisms.
6 The Priority Customer Maker ADV category
includes all Priority Customer volume that adds
liquidity in all symbols.
7 New maker rebates and taker fees for members
that achieve Tier 5 are described in Sections 2 and
3 below. Where not otherwise noted in this
proposed rule change, Tier 5 fees will be introduced
at the applicable Tier 4 rate.
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Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices
TABLE 1—PROPOSED
Tier
Total affiliated
member ADV
Tier 1 ..................................................................................................................
Tier 2 ..................................................................................................................
Tier 3 ..................................................................................................................
0–49,999
50,000–124,999
125,000–
249,999
250,000–
349,999
350,000+
Tier 4 ..................................................................................................................
Tier 5 ..................................................................................................................
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In addition, the Exchange proposes to
apply these tiers to fees for all market
participants when taking liquidity on
ISE Gemini. Maker rebates will continue
to be based on Table 1 for Market Maker
or Priority Customer orders, and Table
2 for Firm Proprietary/Broker-Dealer or
Professional Customer orders.
2. Maker Rebates for Market Maker and
Priority Customer Orders
Currently, the Exchange provides
maker rebates in Penny Symbols and
SPY to Market Maker orders as follows:
$0.30 per contract (Tier 1), $0.32 per
contract (Tier 2), $0.34 per contract
(Tier 3), and $0.38 per contract (Tier 4).8
The Exchange now proposes to decrease
the Tier 4 maker rebate for Market
Maker orders in these symbols to $0.37
per contract. Market Makers that meet
the proposed volume requirements for
the new Tier 5 will receive the higher
$0.38 per contract rebate currently
offered for Tier 4 Market Maker orders
in Penny Symbols. The Exchange will
no longer offer an increased rebate for
SPY to Market Makers that achieve the
highest volume tier.
For Non-Penny Symbols the maker
rebate for Market Maker orders is
currently $0.40 per contract (Tier 1),
$0.42 per contract (Tier 2), $0.44 per
contract (Tier 3), and $0.47 per contract
(Tier 4). As proposed, these rates will
remain unchanged. Market Makers that
achieve the new Tier 5 described above,
however, will be entitled to a higher
maker rebate of $0.49 per contract for
orders in Non-Penny Symbols.
The Exchange also provides maker
rebates in Penny Symbols and SPY to
Priority Customer orders as follows:
$0.25 per contract (Tier 1), $0.40 per
contract (Tier 2), $0.45 per contract
(Tier 3), and $0.48 per contract (Tier 4).
The Exchange now proposes to increase
the Tier 3 maker rebate for Priority
Customer orders in these symbols to
$0.46 per contract. In addition, Priority
Customer orders executed by members
that achieve the new Tier 5 will receive
8 This rebate is presently $0.40 per contract for
SPY.
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18:06 Apr 14, 2014
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a higher maker rebate of $0.50 per
contract.
For Non-Penny Symbols the maker
rebate for Priority Customer orders is
currently $0.75 per contract (Tier 1),
$0.80 per contract (Tier 2), $0.82 per
contract (Tier 3), and $0.85 per contract
(Tier 4). The Exchange now proposes to
offer the higher maker rebate of $0.85
per contract to Priority Customer orders
in Non-Penny Symbols for members that
achieve Tier 3, Tier 4, or Tier 5.
3. Taker and Response Fees for Penny
Symbols and SPY
Currently, all Market Maker, Non-ISE
Gemini Market Maker,9 Firm
Proprietary/Broker-Dealer,10 and
Professional Customer 11 orders in
Penny Symbols and SPY pay a taker fee
and a fee for responses to Crossing
Orders of $0.48 per contract. The
Exchange proposes to increase the taker
fee for each of these market participants
to $0.49 per contract for current Tiers 1
through 4. For members that meet the
volume requirements for the new Tier 5,
Market Maker and Non-ISE Gemini
Market Maker orders will pay a
discounted rate of $0.48 per contract.
The Exchange also proposes to increase
the response fee, which is not based on
tiers, to $0.49 per contract for all nonPriority Customer orders. As will
remain the case, Priority Customer
orders in these symbols pay a taker fee
of $0.45 per contract for Tier 1 and
$0.44 per contract for Tier 2 or higher,
and a flat response fee of $0.45 per
contract.
9 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.
10 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account. This proposed rule change modifies the
definition of a ‘‘Broker-Dealer’’ order as discussed
in subsection 5 below.
11 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer.
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Priority customer
maker ADV
Total affiliated member
ADV/minimum priority
customer maker ADV
0–19,999
20,000–49,999
50,000–84,999
0–39,999/0+
40,000–99,999/15,000+
100,000–174,999/40,000+
85,000–124,999
175,000–249,999/65,000+
125,000+
250,000+/85,000+
4. Non-Substantive Layout Changes
Currently the Schedule of Fees has a
single taker fee column for Tiers 2, 3,
and 4. In order to make the fee schedule
easier to read with the addition of new
tier 5 for Market Maker, Non-ISE Gemini
Market Maker, and Priority Customer
orders, the Exchange proposes to break
this into three separate columns for each
tier as is currently done for maker
rebates.12 The Exchange is not
introducing any differentiation between
taker fees charged for Tiers 2 through 4
at this time.
5. Broker Dealer Definition
A ‘‘Broker-Dealer’’ order is presently
defined as an order submitted by a
member for a non-member broker-dealer
account. In some instances, however, a
member may submit orders for the
account of another broker-dealer that is
also an ISE Gemini member. Currently
these orders would not fall into any of
the market participant categories on the
fee schedule. The Exchange believes
that these orders should also be marked
as Broker-Dealer orders, and therefore
proposes to amend the definition of a
Broker-Dealer order to include all orders
submitted by a member for a brokerdealer account that is not its own
proprietary account.
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.
1. Qualifying Tier Thresholds
The Exchange believes that it is
reasonable, equitable, and not unfairly
12 In addition, the Exchange notes that its maker
rebate columns are each labeled ‘‘maker rebate/fee.’’
The Exchange proposes to take out the reference to
fees from the header to these columns, which
indicate only applicable rebate numbers.
13 15 U.S.C. 78f.
14 15 U.S.C. 78f(b)(4).
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Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices
discriminatory to decrease the volume
thresholds for achieving the four current
tiers for Market Maker and Priority
Customer orders as this proposed
change is designed to attract additional
volume to ISE Gemini. The Exchange
already provides volume-based tiered
maker rebates and taker fees for these
orders, and believes that lowering the
applicable volume thresholds to more
attainable levels will incentivize
members to send additional order flow
to ISE Gemini in order to receive higher
rebates and lower fees. In addition, the
Exchange believes that it is reasonable,
equitable, and not unfairly
discriminatory to introduce a new
volume tier, and to apply the volume
tiers described in this filing to taker fees
for all market participants, as the
Exchange is providing additional
incentives for members that bring
substantial volume to ISE Gemini.
mstockstill on DSK4VPTVN1PROD with NOTICES
2. Maker Rebates for Market Maker and
Priority Customer Orders
The Exchange believes that the
proposed changes to the maker rebates
provided to Market Maker and Priority
Customer orders are reasonable,
equitable, and not unfairly
discriminatory as the proposed rebates
are still within the range of rebates
provided by other maker/taker options
exchanges. The Exchange believes that
providing higher rebates for Priority
Customer orders, and for Priority
Customer and Market Maker orders for
members that meet the volume
requirements for the new Tier 5, attracts
that order flow to ISE Gemini and
thereby creates liquidity to the benefit of
all market participants who trade on the
Exchange. Furthermore, while the
Exchange is decreasing the maker rebate
currently provided to certain Market
Maker orders, it is also decreasing the
volume thresholds required to achieve
those rebates as described above. The
Exchange believes that the combination
of maker rebate rate changes, lower
volume thresholds, and the addition of
a fifth tier will encourage greater
participation from Market Makers and
Priority Customers on ISE Gemini.
3. Taker and Response Fees for Penny
Symbols and SPY
The Exchange believes that it is
reasonable, equitable, and not unfairly
discriminatory to increase the taker and
response fees for Market Maker, NonISE Gemini Market Maker, Firm
Proprietary/Broker-Dealer, and
Professional Customer orders in Penny
Symbols and SPY as these fees are
within the range of fees currently
charged by other maker/taker options
exchanges. The Exchange further
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18:06 Apr 14, 2014
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believes that it is reasonable, equitable,
and not unfairly discriminatory to offer
members that achieve new Tier 5 lower
taker fees for their Market Maker and
Non-ISE Gemini Market Maker orders.
As described above, this filing
introduces a new tier that applies to
orders executed by members that bring
substantial volume to ISE Gemini. By
offering discounted taker fees in these
symbols for members that achieve the
new tier, the Exchange is providing an
incentive for these members to bring
additional order flow to ISE Gemini,
which will ultimately create liquidity to
the benefit of all market participants
who trade on the Exchange. The
Exchange also notes that while it is not
proposing similar fee discounts for
Priority Customer orders, these orders
are entitled to a rate that is lower than
the rate charged to other market
participants, and are already subject to
a tiered discount for members that
achieve Tier 2 or higher. The Exchange
does not believe that it is unfairly
discriminatory to limit the proposed
taker fee discount to Market Maker and
Non-ISE Gemini Market Maker orders as
volume from other market participants
is already sufficiently incented by the
current fees and rebates offered.
Moreover, with the introduction of
tiered pricing that extends to Non-ISE
Gemini Market Maker orders all market
participants that trade on ISE Gemini
will now be eligible for some form of
volume based fees or rebates.
4. Non-Substantive Layout Changes
The Exchange believes that the taker
fee layout changes are reasonable,
equitable, and not unfairly
discriminatory as these are nonsubstantive changes intended to make
the Schedule of Fees more transparent
to members and investors.
5. Broker Dealer Definition
The Exchange believes that the
proposed amendment to the definition
of a Broker-Dealer order is reasonable,
equitable, and not unfairly
discriminatory as this is a technical
change intended to clarify how
members should mark their orders. With
this clarification, orders from a member
broker-dealer executed through another
member will be properly marked as
Broker-Dealer orders, while orders
submitted by a member for its own
proprietary account will continue to be
marked Firm Proprietary. This change is
necessary to eliminate member
confusion, as the current definitions of
market participant types do not account
for the scenario described above.
The Exchange notes that it has
determined to charge fees and provide
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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,15 the Exchange does not believe
that the proposed rule change will
impose any burden on inter-market or
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange believes that the
proposed changes will promote
competition as they are designed to
allow ISE Gemini to better compete for
order flow. 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.
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,16 and
subparagraph (f)(2) of Rule 19b–4
thereunder,17 because it establishes a
15 15
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A)(ii).
17 17 CFR 240.19b–4(f)(2).
16 15
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Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices
due, fee, or other charge imposed by ISE
Gemini.
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:
mstockstill on DSK4VPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an Email to rule-comments@
sec.gov. Please include File No. SR–ISE
Gemini-2014–12 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 Gemini-2014–12. 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 (https://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 inspection and copying 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
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18:06 Apr 14, 2014
Jkt 232001
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 Gemini-2014–12 and
should be submitted by May 6, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Kevin M. O’Neill,
Deputy Secretary.
21343
SOCIAL SECURITY ADMINISTRATION
[Docket No. SSA–2014–0002]
Privacy Act of 1974, as Amended;
Computer Matching Program (SSA/Law
Enforcement Agency (Source
Jurisdiction))—Match Number 5001
AGENCY:
Social Security Administration
(SSA).
[FR Doc. 2014–08418 Filed 4–14–14; 8:45 am]
Notice of a renewal of an
existing computer matching program
that will expire on October 9, 2014.
BILLING CODE 8011–01–P
SUMMARY:
SMALL BUSINESS ADMINISTRATION
Public Availability of U.S. Small
Business Administration FY 2013
Service Contract Inventory
U.S. Small Business
Administration.
ACTION: Notice of Public Availability of
FY 2013 Service Contract Inventories.
AGENCY:
In accordance with Section
743 of Division C of the Consolidated
Appropriations Act of 2010 (Pub. L.
111–117), the Small Business
Administration is publishing this notice
to advise the public of the availability
of the FY 2013 Service Contract
inventory. This inventory provides
information on service contract actions
over $25,000 that were awarded in FY
2013. The information is organized by
function to show how contracted
resources are distributed throughout the
agency. The inventory has been
developed in accordance with guidance
issued on November 5, 2010 and
December 19, 2011 by the Office of
Management and Budget’s Office of
Federal Procurement Policy (OFPP). The
Small Business Administration has
posted its inventory and a summary of
the inventory on the Small Business
Administration homepage at the
following link: https://www.sba.gov/
content/service-contract-inventory.
FOR FURTHER INFORMATION CONTACT:
Questions regarding the service contract
inventory should be directed to William
Cody in the Procurement Division at
(303) 844–3499 or William.Cody@
sba.gov.
SUMMARY:
Dated: April 9, 2014.
Tami Perriello,
Chief Financial Officer/Associate
Administrator for Performance Management,
(Acting), Office of the Chief Financial Officer.
[FR Doc. 2014–08530 Filed 4–14–14; 8:45 am]
BILLING CODE P
18 17
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Frm 00141
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ACTION:
In accordance with the
provisions of the Privacy Act, as
amended, this notice announces a
renewal of an existing computer
matching program that we are currently
conducting with the Source Jurisdiction.
DATES: We will file a report of the
subject matching program with the
Committee on Homeland Security and
Governmental Affairs of the Senate; the
Committee on Oversight and
Government Reform of the House of
Representatives; and the Office of
Information and Regulatory Affairs,
Office of Management and Budget
(OMB). The matching program will be
effective as indicated below.
ADDRESSES: Interested parties may
comment on this notice by either
telefaxing to (410) 966–0869 or writing
to the Executive Director, Office of
Privacy and Disclosure, Office of the
General Counsel, Social Security
Administration, 617 Altmeyer Building,
6401 Security Boulevard, Baltimore, MD
21235–6401. All comments received
will be available for public inspection at
this address.
FOR FURTHER INFORMATION CONTACT: The
Executive Director, Office of Privacy
and Disclosure, Office of the General
Counsel, as shown above.
SUPPLEMENTARY INFORMATION:
A. General
The Computer Matching and Privacy
Protection Act of 1988 (Public Law
(Pub. L.) 100–503), amended the Privacy
Act (5 U.S.C. 552a) by describing the
conditions under which computer
matching involving the Federal
government could be performed and
adding certain protections for persons
applying for, and receiving, Federal
benefits. Section 7201 of the Omnibus
Budget Reconciliation Act of 1990 (Pub.
L. 101–508) further amended the
Privacy Act regarding protections for
such persons.
The Privacy Act, as amended,
regulates the use of computer matching
by Federal agencies when records in a
system of records are matched with
other Federal, State, or local government
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]]>Agencies
[Federal Register Volume 79, Number 72 (Tuesday, April 15, 2014)]
[Notices]
[Pages 21340-21343]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08418]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71915; File No. SR-ISE Gemini-2014-12]
Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Schedule of Fees
April 9, 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 April 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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. The text of
the proposed rule change is available on the Exchange's Internet Web
site at https://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. 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.
1. Qualifying Tier Thresholds
ISE Gemini currently provides volume-based maker rebates and
charges volume-based taker fees to Market Maker \3\ and Priority
Customer \4\ orders in four tiers based on a member's average daily
volume (``ADV'') in the following categories: (i) Total Affiliated
Member ADV,\5\ (ii) Priority Customer Maker ADV,\6\ and (iii) Total
Affiliated Member ADV with a Minimum Priority Customer Maker ADV, as
shown in the table below. The highest tier threshold attained by any
method below applies retroactively in a given month to all eligible
traded contracts and applies to all eligible market participants.
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\3\ The term Market Maker refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. Market Maker
orders sent to the Exchange by an Electronic Access Member are
assessed fees and rebates at the same level as Market Maker orders.
See footnote 2, Schedule of Fees, Section I and II.
\4\ 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).
\5\ The Total Affiliated Member ADV category includes all volume
in all symbols and order types, including both maker and taker
volume and volume executed in the PIM, Facilitation, Solicitation,
and QCC mechanisms.
\6\ The Priority Customer Maker ADV category includes all
Priority Customer volume that adds liquidity in all symbols.
Table 1--Current
----------------------------------------------------------------------------------------------------------------
Total affiliated member ADV/
Tier Total affiliated Priority customer minimum priority customer maker
member ADV maker ADV ADV
----------------------------------------------------------------------------------------------------------------
Tier 1........................ 0-64,999 0-19,999 0-39,999/0+
Tier 2........................ 65,000-149,999 20,000-64,999 40,000-114,999/15,000+
Tier 3........................ 150,000-274,999 65,000-114,999 115,000-224,999/45,000+
Tier 4........................ 275,000+ 115,000+ 225,000+/65,000+
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As outlined in the following table, the Exchange now proposes to
decrease the thresholds for achieving the four current volume tiers,
and to add an additional fifth tier for members that execute either (i)
a Total Affiliated Member ADV of at least 350,000 contracts, (ii) a
Priority Customer Maker ADV of at least 125,000 contracts, or (iii) a
Total Affiliated Member ADV of at least 250,000 contracts with a
Minimum Priority Customer Maker ADV of at least 85,000 contracts.\7\
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\7\ New maker rebates and taker fees for members that achieve
Tier 5 are described in Sections 2 and 3 below. Where not otherwise
noted in this proposed rule change, Tier 5 fees will be introduced
at the applicable Tier 4 rate.
[[Page 21341]]
Table 1--Proposed
----------------------------------------------------------------------------------------------------------------
Total affiliated member ADV/
Tier Total affiliated Priority customer minimum priority customer maker
member ADV maker ADV ADV
----------------------------------------------------------------------------------------------------------------
Tier 1........................ 0-49,999 0-19,999 0-39,999/0+
Tier 2........................ 50,000-124,999 20,000-49,999 40,000-99,999/15,000+
Tier 3........................ 125,000-249,999 50,000-84,999 100,000-174,999/40,000+
Tier 4........................ 250,000-349,999 85,000-124,999 175,000-249,999/65,000+
Tier 5........................ 350,000+ 125,000+ 250,000+/85,000+
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In addition, the Exchange proposes to apply these tiers to fees for
all market participants when taking liquidity on ISE Gemini. Maker
rebates will continue to be based on Table 1 for Market Maker or
Priority Customer orders, and Table 2 for Firm Proprietary/Broker-
Dealer or Professional Customer orders.
2. Maker Rebates for Market Maker and Priority Customer Orders
Currently, the Exchange provides maker rebates in Penny Symbols and
SPY to Market Maker orders as follows: $0.30 per contract (Tier 1),
$0.32 per contract (Tier 2), $0.34 per contract (Tier 3), and $0.38 per
contract (Tier 4).\8\ The Exchange now proposes to decrease the Tier 4
maker rebate for Market Maker orders in these symbols to $0.37 per
contract. Market Makers that meet the proposed volume requirements for
the new Tier 5 will receive the higher $0.38 per contract rebate
currently offered for Tier 4 Market Maker orders in Penny Symbols. The
Exchange will no longer offer an increased rebate for SPY to Market
Makers that achieve the highest volume tier.
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\8\ This rebate is presently $0.40 per contract for SPY.
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For Non-Penny Symbols the maker rebate for Market Maker orders is
currently $0.40 per contract (Tier 1), $0.42 per contract (Tier 2),
$0.44 per contract (Tier 3), and $0.47 per contract (Tier 4). As
proposed, these rates will remain unchanged. Market Makers that achieve
the new Tier 5 described above, however, will be entitled to a higher
maker rebate of $0.49 per contract for orders in Non-Penny Symbols.
The Exchange also provides maker rebates in Penny Symbols and SPY
to Priority Customer orders as follows: $0.25 per contract (Tier 1),
$0.40 per contract (Tier 2), $0.45 per contract (Tier 3), and $0.48 per
contract (Tier 4). The Exchange now proposes to increase the Tier 3
maker rebate for Priority Customer orders in these symbols to $0.46 per
contract. In addition, Priority Customer orders executed by members
that achieve the new Tier 5 will receive a higher maker rebate of $0.50
per contract.
For Non-Penny Symbols the maker rebate for Priority Customer orders
is currently $0.75 per contract (Tier 1), $0.80 per contract (Tier 2),
$0.82 per contract (Tier 3), and $0.85 per contract (Tier 4). The
Exchange now proposes to offer the higher maker rebate of $0.85 per
contract to Priority Customer orders in Non-Penny Symbols for members
that achieve Tier 3, Tier 4, or Tier 5.
3. Taker and Response Fees for Penny Symbols and SPY
Currently, all Market Maker, Non-ISE Gemini Market Maker,\9\ Firm
Proprietary/Broker-Dealer,\10\ and Professional Customer \11\ orders in
Penny Symbols and SPY pay a taker fee and a fee for responses to
Crossing Orders of $0.48 per contract. The Exchange proposes to
increase the taker fee for each of these market participants to $0.49
per contract for current Tiers 1 through 4. For members that meet the
volume requirements for the new Tier 5, Market Maker and Non-ISE Gemini
Market Maker orders will pay a discounted rate of $0.48 per contract.
The Exchange also proposes to increase the response fee, which is not
based on tiers, to $0.49 per contract for all non-Priority Customer
orders. As will remain the case, Priority Customer orders in these
symbols pay a taker fee of $0.45 per contract for Tier 1 and $0.44 per
contract for Tier 2 or higher, and a flat response fee of $0.45 per
contract.
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\9\ 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.
\10\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account. This proposed rule change
modifies the definition of a ``Broker-Dealer'' order as discussed in
subsection 5 below.
\11\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer.
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4. Non-Substantive Layout Changes
Currently the Schedule of Fees has a single taker fee column for
Tiers 2, 3, and 4. In order to make the fee schedule easier to read
with the addition of new tier 5 for Market Maker, Non-ISE Gemini Market
Maker, and Priority Customer orders, the Exchange proposes to break
this into three separate columns for each tier as is currently done for
maker rebates.\12\ The Exchange is not introducing any differentiation
between taker fees charged for Tiers 2 through 4 at this time.
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\12\ In addition, the Exchange notes that its maker rebate
columns are each labeled ``maker rebate/fee.'' The Exchange proposes
to take out the reference to fees from the header to these columns,
which indicate only applicable rebate numbers.
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5. Broker Dealer Definition
A ``Broker-Dealer'' order is presently defined as an order
submitted by a member for a non-member broker-dealer account. In some
instances, however, a member may submit orders for the account of
another broker-dealer that is also an ISE Gemini member. Currently
these orders would not fall into any of the market participant
categories on the fee schedule. The Exchange believes that these orders
should also be marked as Broker-Dealer orders, and therefore proposes
to amend the definition of a Broker-Dealer order to include all orders
submitted by a member for a broker-dealer account that is not its own
proprietary account.
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.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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1. Qualifying Tier Thresholds
The Exchange believes that it is reasonable, equitable, and not
unfairly
[[Page 21342]]
discriminatory to decrease the volume thresholds for achieving the four
current tiers for Market Maker and Priority Customer orders as this
proposed change is designed to attract additional volume to ISE Gemini.
The Exchange already provides volume-based tiered maker rebates and
taker fees for these orders, and believes that lowering the applicable
volume thresholds to more attainable levels will incentivize members to
send additional order flow to ISE Gemini in order to receive higher
rebates and lower fees. In addition, the Exchange believes that it is
reasonable, equitable, and not unfairly discriminatory to introduce a
new volume tier, and to apply the volume tiers described in this filing
to taker fees for all market participants, as the Exchange is providing
additional incentives for members that bring substantial volume to ISE
Gemini.
2. Maker Rebates for Market Maker and Priority Customer Orders
The Exchange believes that the proposed changes to the maker
rebates provided to Market Maker and Priority Customer orders are
reasonable, equitable, and not unfairly discriminatory as the proposed
rebates are still within the range of rebates provided by other maker/
taker options exchanges. The Exchange believes that providing higher
rebates for Priority Customer orders, and for Priority Customer and
Market Maker orders for members that meet the volume requirements for
the new Tier 5, attracts that order flow to ISE Gemini and thereby
creates liquidity to the benefit of all market participants who trade
on the Exchange. Furthermore, while the Exchange is decreasing the
maker rebate currently provided to certain Market Maker orders, it is
also decreasing the volume thresholds required to achieve those rebates
as described above. The Exchange believes that the combination of maker
rebate rate changes, lower volume thresholds, and the addition of a
fifth tier will encourage greater participation from Market Makers and
Priority Customers on ISE Gemini.
3. Taker and Response Fees for Penny Symbols and SPY
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to increase the taker and response fees for
Market Maker, Non-ISE Gemini Market Maker, Firm Proprietary/Broker-
Dealer, and Professional Customer orders in Penny Symbols and SPY as
these fees are within the range of fees currently charged by other
maker/taker options exchanges. The Exchange further believes that it is
reasonable, equitable, and not unfairly discriminatory to offer members
that achieve new Tier 5 lower taker fees for their Market Maker and
Non-ISE Gemini Market Maker orders. As described above, this filing
introduces a new tier that applies to orders executed by members that
bring substantial volume to ISE Gemini. By offering discounted taker
fees in these symbols for members that achieve the new tier, the
Exchange is providing an incentive for these members to bring
additional order flow to ISE Gemini, which will ultimately create
liquidity to the benefit of all market participants who trade on the
Exchange. The Exchange also notes that while it is not proposing
similar fee discounts for Priority Customer orders, these orders are
entitled to a rate that is lower than the rate charged to other market
participants, and are already subject to a tiered discount for members
that achieve Tier 2 or higher. The Exchange does not believe that it is
unfairly discriminatory to limit the proposed taker fee discount to
Market Maker and Non-ISE Gemini Market Maker orders as volume from
other market participants is already sufficiently incented by the
current fees and rebates offered. Moreover, with the introduction of
tiered pricing that extends to Non-ISE Gemini Market Maker orders all
market participants that trade on ISE Gemini will now be eligible for
some form of volume based fees or rebates.
4. Non-Substantive Layout Changes
The Exchange believes that the taker fee layout changes are
reasonable, equitable, and not unfairly discriminatory as these are
non-substantive changes intended to make the Schedule of Fees more
transparent to members and investors.
5. Broker Dealer Definition
The Exchange believes that the proposed amendment to the definition
of a Broker-Dealer order is reasonable, equitable, and not unfairly
discriminatory as this is a technical change intended to clarify how
members should mark their orders. With this clarification, orders from
a member broker-dealer executed through another member will be properly
marked as Broker-Dealer orders, while orders submitted by a member for
its own proprietary account will continue to be marked Firm
Proprietary. This change is necessary to eliminate member confusion, as
the current definitions of market participant types do not account for
the scenario described above.
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,\15\ the Exchange
does not believe that the proposed rule change will impose any burden
on inter-market or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
the Exchange believes that the proposed changes will promote
competition as they are designed to allow ISE Gemini to better compete
for order flow. 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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\15\ 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,\16\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\17\ because it establishes a
[[Page 21343]]
due, fee, or other charge imposed by ISE Gemini.
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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
\17\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an Email to rule-comments@sec.gov. Please include
File No. SR-ISE Gemini-2014-12 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 Gemini-2014-12. 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 (https://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 inspection and
copying 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-ISE Gemini-2014-12 and
should be submitted by May 6, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-08418 Filed 4-14-14; 8:45 am]
BILLING CODE 8011-01-P
