Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish New Rule 720A, 38086-38088 [2014-15605]

Download as PDF 38086 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices off periods in the proposed public arbitrator definition would help ensure that potential arbitrators have sufficient separation from their financial industry affiliations before FINRA permits them to serve as public arbitrators. B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) by order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments 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 Number SR– FINRA–2014–028 on the subject line. tkelley on DSK3SPTVN1PROD with NOTICES 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–FINRA–2014–028. This file number should be included on the subject line if email is used. To help the Commission process and review your 16:53 Jul 02, 2014 Jkt 232001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.41 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–15607 Filed 7–2–14; 8:45 am] BILLING CODE 8011–01–P 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: VerDate Mar<15>2010 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 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 FINRA. 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–FINRA–2014–028 and should be submitted on or before July 24, 2014. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72489; File No. SR– ISEGemini–2014–18] Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish New Rule 720A June 27, 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 June 24, 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 PO 00000 41 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00082 Fmt 4703 Sfmt 4703 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 proposes to establish new procedures to account for erroneous trades occurring from disruptions and/ or malfunctions of Exchange systems. The changes described in this proposal would establish new ISE Gemini Rule 720A. The text of the proposed rule change is available on the Exchange’s Web site 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 Exchange proposes to adopt Rule 720A to provide for new procedures to account for erroneous trades occurring from disruptions and/or malfunctions of Exchange systems. Specifically, proposed new Rule 720A would provide that any transaction that arises out of a ‘‘verifiable systems disruption or malfunction’’ in the use or operation of an Exchange automated quotation, dissemination, execution, or communication system may either be nullified or adjusted by Market Control.3 Under the rule, Market Control may act, on its own motion, to review erroneous transactions. This filing is based on the rules of NYSE Arca, Inc. (‘‘NYSE Arca’’).4 3 Market Control consists of designated personnel in the Exchange’s market control center. See ISE Gemini Rule 720(a)(3)(ii). 4 See NYSE Arca Rule 6.89. The proposed rule change is also based in part on NASDAQ OMX PHLX, LLC (‘‘Phlx’’) Rule 1092(c)(ii)(A), and in addition is substantially similar to Chicago Board Options Exchange, Inc. (‘‘CBOE’’) Rule 6.25(a)(3). E:\FR\FM\03JYN1.SGM 03JYN1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices The Exchange believes that it is appropriate to provide the flexibility and authority provided for in proposed Rule 720A so as not to limit the Exchange’s ability to plan for and respond to unforeseen systems problems or malfunctions. The proposed rule change would provide the Exchange with the same authority to nullify or adjust trades in the event of a ‘‘verifiable disruption or malfunction’’ in the use of operation of its systems as other exchanges have.5 For this reason, the Exchange believes that, in the interest of maintaining a fair and orderly market and for the protection of investors, authority to nullify or adjust trades in these circumstances, consistent with the authority on other exchanges, is warranted. According to the proposal, in the event of any verifiable disruption or malfunction in the use or operation of an Exchange automated quotation, dissemination, execution, or communication system, in which the nullification or modification of transactions may be necessary for the maintenance of a fair and orderly market or the protection of investors and the public interest exist, Market Control, on his or her own motion, may review such transactions and declare such transactions arising out of the use or operation of such facilities during such period null and void or modify the terms of the transactions, in accordance with the guidelines contained in Rule 720(b)(2)(i)(A) and (B). Pursuant to the proposal, Market Control, absent extraordinary circumstances, must initiate action under this authority within sixty (60) minutes of the occurrence of the erroneous transaction that was a result of the verifiable disruption or malfunction. Each Member involved in the transaction shall be notified as soon as practicable, and any Member aggrieved by the action may appeal such action in accordance with the provisions of subsection (b) of Rule 720A. If Market Control determines that a transaction(s) is erroneous pursuant to Rule 720A(a) as described above, any Member aggrieved by the action may appeal such action in accordance with the provisions provided in Rule 720(b). The Exchange plans to utilize a Review Panel (‘‘Panel’’) to review decisions made by Market Control under this Rule. Once a Member has properly notified the Exchange that it wishes to appeal the decision of Market Control, a four person Panel will review and make a determination as to the appeal. The 5 Id. VerDate Mar<15>2010 16:53 Jul 02, 2014 Jkt 232001 Panel as described in proposed Rule 720A(b)(1)(i) will be comprised of representatives from four (4) Members. Two (2) of the representatives must be directly engaged in market making activity and two (2) of the representatives must be employed by an Electronic Access Member (‘‘EAM’’).6 The Exchange feels that by having a four person panel will help to ensure that determinations regarding erroneous transactions resulting from system malfunctions or extraordinary market conditions are made by a diverse representative group in a manner that will help to ensure fairness and impartiality. To qualify as a representative of an Electronic Access Member on a Review Panel, a person must (i) be employed by a Member whose revenues from options market making activity do not exceed ten percent (10%) of its total revenues; or (ii) have as his or her primary responsibility the handling of Public Customer orders or supervisory responsibility over persons with such responsibility, and not have any responsibilities with respect to market making activities.7 The Exchange shall designate at least five (5) market maker representatives and at least five (5) EAM representatives to be called upon to serve on the Panel as needed. In no case shall a Panel include a person related to a party to the trade in question. To the extent reasonably possible, the Exchange shall call upon the designated representatives to participate in a Panel on an equally frequent basis. The Exchange notes that the options markets are currently in the process of identifying how to harmonize their respective obvious and catastrophic error rules, including a rule specifying the circumstances in which an options exchange may nullify or adjust trades because of a systems problem or malfunction. Because it is uncertain when this harmonized rule will be filed with and approved by the Commission, the Exchange believes it is critical to its current ability to maintain a fair and orderly market and to protect investors to propose an amendment to its current rules. The proposed rule would be superseded by a future proposed harmonized rule. 6 The composition of the Review Panel is similar to that of the ISE Gemini Obvious and Catastrophic Errors Panel, as defined in ISE Gemini Rule 720(d). 7 The qualification requirements of the Review Panel are identical to those of the ISE Gemini Obvious and Catastrophic Errors Panel, as provided in Supplementary Material .02 to ISE Gemini Rule 720. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 38087 2. Statutory Basis The Exchange believes that the proposed rule change will allow the Exchange, in extraordinary market conditions, to maintain a fair and orderly market. The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder and, in particular, the requirements of section 6(b) of the Act. Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) 8 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and national market system and promote a fair and orderly market because it would provide authority for the Exchange to nullify or adjust trades that may have resulted from a verifiable systems disruption or malfunction. The Exchange believes that it is appropriate to provide the flexibility and authority provided for in proposed Rule 720A so as not to limit the Exchange’s ability to plan for and respond to unforeseen systems problems or malfunctions that may result in harm to the public. Allowing for the nullification or modification of transactions that result from verifiable disruptions and/or malfunctions of Exchanges systems will offer market participants on ISE Gemini a level of relief presently not available. The Exchange further notes that when acting under its own motion to nullify or adjust trades pursuant to proposed Rule 720A, the Exchange must consider whether taking such action would be in the interest of maintaining a fair and orderly market and for the protection of investors. The Exchange notes that the proposed rule change is based on NYSE Arca rules and is substantially similar to rules of other markets.9 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposed rule change is pro-competitive because 8 15 U.S.C. 78(f)(b)(5). supra note 4. 9 See E:\FR\FM\03JYN1.SGM 03JYN1 38088 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices it will align the Exchange’s rules with the rules of other markets, including CBOE, NYSE Arca, and Phlx. By adopting proposed Rule 720A, the Exchange will be in a position to treat transactions that are a result of a verifiable systems issue or malfunction in a manner similar to other exchanges. Electronic Comments C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Paper Comments The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b– 4(f)(6) thereunder.11 The Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing the proposed rule change as required by Rule 19b– 4(f)(6). 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. tkelley on DSK3SPTVN1PROD with NOTICES 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: 10 15 11 17 • 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 Number SR– ISEGemini–2014–18 on the subject line. • 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–2014–18. 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 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–2014–18 and should be submitted on or before July 24, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–15605 Filed 7–2–14; 8:45 am] BILLING CODE 8011–01–P U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). VerDate Mar<15>2010 16:53 Jul 02, 2014 12 17 Jkt 232001 PO 00000 CFR 200.30–3(a)(12). Frm 00084 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72493; File No. SR– NASDAQ–2014–063] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Listing and Trading of the Shares of the Arrow DWA Balanced ETF, Arrow DWA Tactical ETF and Arrow DWA Tactical Yield ETF of Arrow Investments Trust June 27, 2014. 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 June 23, 2014, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in in Items I and II below, which Items have been prepared by Nasdaq. On June 26, 2014, the Exchange filed Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to list and trade the shares of the Arrow DWA Balanced ETF, Arrow DWA Tactical ETF and Arrow DWA Tactical Yield ETF (each a ‘‘Fund’’ and, collectively, the ‘‘Funds’’) of Arrow Investments Trust (the ‘‘Trust’’) under Nasdaq Rule 5735 (‘‘Managed Fund Shares’’).4 The shares 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In Amendment No. 1, the Exchange clarifies that the Arrow Investments Trust will issue and sell shares of the Arrow DWA Balanced ETF, Arrow DWA Tactical ETF and Arrow DWA Tactical Yield ETF only in aggregations of 100,000 shares. 4 The Commission approved Nasdaq Rule 5735 in Securities Exchange Act Release No. 57962 (June 13, 2008), 73 FR 35175 (June 20, 2008) (SR– NASDAQ–2008–039). The Funds would not be the first actively-managed fund listed on the Exchange; see Securities Exchange Act Release No. 66489 (February 29, 2012), 77 FR 13379 (March 6, 2012) (SR–NASDAQ–2012–004) (order approving listing and trading of WisdomTree Emerging Markets Corporate Bond Fund). Additionally, the Commission has previously approved the listing and trading of a number of actively managed WisdomTree funds on NYSE Arca, Inc. pursuant to Rule 8.600 of that exchange. See, e.g., Securities Exchange Act Release No. 64643 (June 10, 2011), 76 FR 35062 (June 15, 2011) (SR–NYSE Arca–2011–21) (order approving listing and trading of WisdomTree Global Real Return Fund). The Exchange believes the proposed rule change raises no significant issues not previously addressed in those prior Commission orders. 2 17 E:\FR\FM\03JYN1.SGM 03JYN1

Agencies

[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]
[Notices]
[Pages 38086-38088]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15605]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72489; File No. SR-ISEGemini-2014-18]


Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Establish New 
Rule 720A

June 27, 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 June 24, 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    ISE Gemini proposes to establish new procedures to account for 
erroneous trades occurring from disruptions and/or malfunctions of 
Exchange systems. The changes described in this proposal would 
establish new ISE Gemini Rule 720A. The text of the proposed rule 
change is available on the Exchange's Web site 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 Exchange proposes to adopt Rule 720A to provide for new 
procedures to account for erroneous trades occurring from disruptions 
and/or malfunctions of Exchange systems. Specifically, proposed new 
Rule 720A would provide that any transaction that arises out of a 
``verifiable systems disruption or malfunction'' in the use or 
operation of an Exchange automated quotation, dissemination, execution, 
or communication system may either be nullified or adjusted by Market 
Control.\3\ Under the rule, Market Control may act, on its own motion, 
to review erroneous transactions. This filing is based on the rules of 
NYSE Arca, Inc. (``NYSE Arca'').\4\
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    \3\ Market Control consists of designated personnel in the 
Exchange's market control center. See ISE Gemini Rule 720(a)(3)(ii).
    \4\ See NYSE Arca Rule 6.89. The proposed rule change is also 
based in part on NASDAQ OMX PHLX, LLC (``Phlx'') Rule 
1092(c)(ii)(A), and in addition is substantially similar to Chicago 
Board Options Exchange, Inc. (``CBOE'') Rule 6.25(a)(3).

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[[Page 38087]]

    The Exchange believes that it is appropriate to provide the 
flexibility and authority provided for in proposed Rule 720A so as not 
to limit the Exchange's ability to plan for and respond to unforeseen 
systems problems or malfunctions. The proposed rule change would 
provide the Exchange with the same authority to nullify or adjust 
trades in the event of a ``verifiable disruption or malfunction'' in 
the use of operation of its systems as other exchanges have.\5\ For 
this reason, the Exchange believes that, in the interest of maintaining 
a fair and orderly market and for the protection of investors, 
authority to nullify or adjust trades in these circumstances, 
consistent with the authority on other exchanges, is warranted.
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    \5\ Id.
---------------------------------------------------------------------------

    According to the proposal, in the event of any verifiable 
disruption or malfunction in the use or operation of an Exchange 
automated quotation, dissemination, execution, or communication system, 
in which the nullification or modification of transactions may be 
necessary for the maintenance of a fair and orderly market or the 
protection of investors and the public interest exist, Market Control, 
on his or her own motion, may review such transactions and declare such 
transactions arising out of the use or operation of such facilities 
during such period null and void or modify the terms of the 
transactions, in accordance with the guidelines contained in Rule 
720(b)(2)(i)(A) and (B). Pursuant to the proposal, Market Control, 
absent extraordinary circumstances, must initiate action under this 
authority within sixty (60) minutes of the occurrence of the erroneous 
transaction that was a result of the verifiable disruption or 
malfunction. Each Member involved in the transaction shall be notified 
as soon as practicable, and any Member aggrieved by the action may 
appeal such action in accordance with the provisions of subsection (b) 
of Rule 720A.
    If Market Control determines that a transaction(s) is erroneous 
pursuant to Rule 720A(a) as described above, any Member aggrieved by 
the action may appeal such action in accordance with the provisions 
provided in Rule 720(b). The Exchange plans to utilize a Review Panel 
(``Panel'') to review decisions made by Market Control under this Rule.
    Once a Member has properly notified the Exchange that it wishes to 
appeal the decision of Market Control, a four person Panel will review 
and make a determination as to the appeal. The Panel as described in 
proposed Rule 720A(b)(1)(i) will be comprised of representatives from 
four (4) Members. Two (2) of the representatives must be directly 
engaged in market making activity and two (2) of the representatives 
must be employed by an Electronic Access Member (``EAM'').\6\ The 
Exchange feels that by having a four person panel will help to ensure 
that determinations regarding erroneous transactions resulting from 
system malfunctions or extraordinary market conditions are made by a 
diverse representative group in a manner that will help to ensure 
fairness and impartiality. To qualify as a representative of an 
Electronic Access Member on a Review Panel, a person must (i) be 
employed by a Member whose revenues from options market making activity 
do not exceed ten percent (10%) of its total revenues; or (ii) have as 
his or her primary responsibility the handling of Public Customer 
orders or supervisory responsibility over persons with such 
responsibility, and not have any responsibilities with respect to 
market making activities.\7\
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    \6\ The composition of the Review Panel is similar to that of 
the ISE Gemini Obvious and Catastrophic Errors Panel, as defined in 
ISE Gemini Rule 720(d).
    \7\ The qualification requirements of the Review Panel are 
identical to those of the ISE Gemini Obvious and Catastrophic Errors 
Panel, as provided in Supplementary Material .02 to ISE Gemini Rule 
720.
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    The Exchange shall designate at least five (5) market maker 
representatives and at least five (5) EAM representatives to be called 
upon to serve on the Panel as needed. In no case shall a Panel include 
a person related to a party to the trade in question. To the extent 
reasonably possible, the Exchange shall call upon the designated 
representatives to participate in a Panel on an equally frequent basis.
    The Exchange notes that the options markets are currently in the 
process of identifying how to harmonize their respective obvious and 
catastrophic error rules, including a rule specifying the circumstances 
in which an options exchange may nullify or adjust trades because of a 
systems problem or malfunction. Because it is uncertain when this 
harmonized rule will be filed with and approved by the Commission, the 
Exchange believes it is critical to its current ability to maintain a 
fair and orderly market and to protect investors to propose an 
amendment to its current rules. The proposed rule would be superseded 
by a future proposed harmonized rule.
2. Statutory Basis
    The Exchange believes that the proposed rule change will allow the 
Exchange, in extraordinary market conditions, to maintain a fair and 
orderly market. The Exchange believes the proposed rule change is 
consistent with the Act and the rules and regulations thereunder and, 
in particular, the requirements of section 6(b) of the Act. 
Specifically, the Exchange believes the proposed rule change is 
consistent with the section 6(b)(5) \8\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts, to remove 
impediments to and perfect the mechanism for a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78(f)(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
national market system and promote a fair and orderly market because it 
would provide authority for the Exchange to nullify or adjust trades 
that may have resulted from a verifiable systems disruption or 
malfunction. The Exchange believes that it is appropriate to provide 
the flexibility and authority provided for in proposed Rule 720A so as 
not to limit the Exchange's ability to plan for and respond to 
unforeseen systems problems or malfunctions that may result in harm to 
the public. Allowing for the nullification or modification of 
transactions that result from verifiable disruptions and/or 
malfunctions of Exchanges systems will offer market participants on ISE 
Gemini a level of relief presently not available. The Exchange further 
notes that when acting under its own motion to nullify or adjust trades 
pursuant to proposed Rule 720A, the Exchange must consider whether 
taking such action would be in the interest of maintaining a fair and 
orderly market and for the protection of investors. The Exchange notes 
that the proposed rule change is based on NYSE Arca rules and is 
substantially similar to rules of other markets.\9\
---------------------------------------------------------------------------

    \9\ See supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, the Exchange 
believes that the proposed rule change is pro-competitive because

[[Page 38088]]

it will align the Exchange's rules with the rules of other markets, 
including CBOE, NYSE Arca, and Phlx. By adopting proposed Rule 720A, 
the Exchange will be in a position to treat transactions that are a 
result of a verifiable systems issue or malfunction in a manner similar 
to other exchanges.

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 written comments from members or other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\ The Exchange provided the Commission with 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing the proposed rule change 
as required by Rule 19b-4(f)(6).
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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 Number SR-ISEGemini-2014-18 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-2014-18. 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 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-2014-18 and should 
be submitted on or before July 24, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-15605 Filed 7-2-14; 8:45 am]
BILLING CODE 8011-01-P
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