Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Extend the Limit Up-Limit Down Obvious Error Pilot, 66083-66085 [2015-27348]
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Federal Register / Vol. 80, No. 208 / Wednesday, October 28, 2015 / Notices
exceeds the limit of section
12(d)(1)(A)(i) of the Act, setting forth
from whom the securities were
acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase, and the
information or materials upon which
the determinations of the Board of the
Underlying Fund were made.
9. Before investing in an Underlying
Fund in excess of the limit in section
12(d)(1)(A), a Fund of Funds and the
Trust will execute a FOF Participation
Agreement stating without limitation
that their respective boards of directors
or trustees and their investment
advisers, or trustee and Sponsor, as
applicable, understand the terms and
conditions of the order, and agree to
fulfill their responsibilities under the
order. At the time of its investment in
Underlying Fund Shares in excess of the
limit in section 12(d)(1)(A)(i), a Fund of
Funds will notify the Underlying Fund
of the investment. At such time, the
Fund of Funds will also transmit to the
Underlying Fund a list of the names of
each Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Underlying Fund
of any changes to the list of the names
as soon as reasonably practicable after a
change occurs. The Underlying Fund
and the Fund of Funds will maintain
and preserve a copy of the order, the
FOF Participation Agreement, and the
list with any updated information for
the duration of the investment and for
a period of not less than six years
thereafter, the first two years in an
easily accessible place.
10. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company
including a majority of the disinterested
directors or trustees, will find that the
advisory fees charged under such
contract are based on services provided
that will be in addition to, rather than
duplicative of, the services provided
under the advisory contract(s) of any
Underlying Fund in which the Investing
Management Company may invest.
These findings and their basis will be
fully recorded in the minute books of
the appropriate Investing Management
Company.
11. Any sales charges and/or service
fees charged with respect to shares of a
Fund of Funds will not exceed the
limits applicable to a fund of funds as
set forth in NASD Conduct Rule 2830.
12. No Underlying Fund will acquire
securities of an investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
Act, except to the extent the Underlying
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Fund acquires securities of another
investment company pursuant to
exemptive relief from the Commission
permitting the Underlying Fund to
acquire securities of one or more
investment companies for short term
cash management purposes.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–27372 Filed 10–27–15; 8:45 am]
BILLING CODE 8011–01–P
66083
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
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76228; File No. SR–
ISEGemini–2015–22]
Self-Regulatory Organizations; ISE
Gemini, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Extend the Limit UpLimit Down Obvious Error Pilot
October 22, 2015.
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 October
20, 2015, ISE Gemini, LLC (the
‘‘Exchange’’ or ‘‘ISE Gemini’’) filed with
the Securities and Exchange
Commission the proposed rule change,
as described in Items I and II below,
which items have been prepared by the
self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
ISE Gemini proposes to extend a pilot
program under .01 of Supplementary
Material to Rule 720 regarding obvious
errors during Limit and Straddle States
in securities that underlie options
traded on the Exchange and proposes to
further harmonize a related provision in
its rulebook. The text of the proposed
rule change is available on the
Exchange’s Web site (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
self-regulatory organization included
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00101
Fmt 4703
Sfmt 4703
On July 26, 2013,3 the Commission
approved the Exchange’s Form 1
application for registration as a national
securities exchange. The Form 1
application included a rule designed to
address certain issues related to the Plan
to Address Extraordinary Market
Volatility Pursuant to Rule 608 of
Regulation NMS under the Act (the
‘‘Limit Up-Limit Down Plan’’ or the
‘‘Plan’’).4 The rules adopted in that
application established a pilot program
to exclude transactions executed during
a Limit State 5 or Straddle State 6 from
the obvious error provisions of Rule
720. On February 19, 2015, the
Exchange filed to extend this pilot
program to its current end date of
October 23, 2015.7 The purpose of this
filing is to extend the effectiveness of
the pilot program to coincide with the
proposed extension of the Limit UpLimit Down Plan, including any
extensions to the pilot period for the
Plan.8 The Exchange notes that nothing
in .01 of Supplementary Material to
Rule 720 prevents such execution from
3 The Securities and Exchange Commission
granted the Exchange’s application for registration
as a national securities exchange on July 26, 2013.
See Securities Exchange Act Release No. Release
No. 70050 (July 26, 2013), 78 FR 46622 (Aug. 1,
2013).
4 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012) (the
‘‘Limit Up-Limit Down Release’’).
5 The term ‘‘Limit State’’ means the condition
when the national best bid or national best offer for
an underlying security equals an applicable price
band, as determined by the primary listing
exchange for the underlying security. See Rule
703A.
6 The term ‘‘Straddle State’’ means the condition
when the national best bid or national best offer for
an underlying security is non-executable, as
determined by the primary listing exchange for the
underlying security, but the security is not in a
Limit State. See Rule 703A.
7 Securities Exchange Act Release No. 74311
(February 19, 2015), 80 FR 10175 (February 25,
2015) (SR–ISE Gemini–2015–05).
8 Currently, the pilot period for the Plan is
proposed to be extended to April 22, 2016. See
Exchange Act Release No. 75917 (September 14,
2015), 80 FR 56515 (September 18, 2015) (Ninth
Amendment to the Limit-Up Limit-Down Plan).
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being reviewed on an Official’s 9 own
motion pursuant to sub-paragraph (c)(3)
of this Rule, or a bust or adjust pursuant
to paragraphs (e) through (j) of this Rule.
The Exchange believes the benefits to
market participants from this provision
should continue on a pilot basis. The
Exchange continues to believe that
adding certainty to the execution of
orders in Limit or Straddle States will
encourage market participants to
continue to provide liquidity to the
Exchange, and, thus, promote a fair and
orderly market during these periods.
Barring this provision, the obvious error
provisions of Rule 720 would likely
apply in many instances during Limit
and Straddle States. The Exchange
believes that continuing the pilot will
protect against any unanticipated
consequences in the options markets
during a Limit or Straddle State. Thus,
the Exchange believes that the
protections of current rule should
continue while the industry gains
further experience operating the Plan.
In connection with this proposed
extension, each month the Exchange
shall provide to the Commission, and
the public, a dataset containing the data
for each Straddle and Limit State in
optionable stocks that had at least one
trade on the Exchange. For each trade
on the Exchange, the Exchange will
provide (a) the stock symbol, option
symbol, time at the start of the Straddle
or Limit State, an indicator for whether
it is a Straddle or Limit State, and (b)
for the trades on the Exchange, the
executed volume, time-weighted quoted
bid-ask spread, time-weighted average
quoted depth at the bid, time-weighted
average quoted depth at the offer, high
execution price, low execution price,
number of trades for which a request for
review for error was received during
Straddle and Limit States, an indicator
variable for whether those options
outlined above have a price change
exceeding 30% during the underlying
stock’s Limit or Straddle State compared
to the last available option price as
reported by OPRA before the start of the
Limit or Straddle State (1 if observe
30% and 0 otherwise), and another
indicator variable for whether the
option price within five minutes of the
underlying stock leaving the Limit or
Straddle State (or halt if applicable) is
30% away from the price before the start
of the Limit or Straddle State.
In addition, the Exchange will
provide to the Commission, and the
public, no later than five months prior
9 For purposes of Rule 720, an Official is an
Officer of the Exchange or such other employee
designee of the Exchange that is trained in the
application of this Rule.
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to the pilot expiration, including any
extension, assessments relating to the
impact of the operation of the obvious
error rules during Limit and Straddle
States including: (1) An evaluation of
the statistical and economic impact of
Limit and Straddle States on liquidity
and market quality in the options
markets, and (2) an assessment of
whether the lack of obvious error rules
in effect during the Straddle and Limit
States are problematic. This means that,
if the Plan extension is approved, the
next data assessment will be due no
later than December 18, 2015.
Finally, the Exchange proposes to
delete section (d) of Rule 703A to
harmonize its rulebook. Earlier this
year, the options exchanges harmonized
their rules relating to the adjustment
and nullification of erroneous options
transactions as well as a specific
provision related to coordination in
connection with large-scale events
involving erroneous options
transactions.10 The Exchange
inadvertently did not remove section (d)
to Rule 703A from its rulebook in this
filing. This section (d) duplicates .01 of
Supplementary Material to Rule 720,
and as such, the Exchange proposes to
delete it.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the
Act.11 In particular, the proposal is
consistent with Section 6(b)(5) of the
Act,12 because it is designed to promote
just and equitable principles of trade,
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. Additionally, the
Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 13 requirement that the rules of
an exchange not be designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange further
believes that it is necessary and
appropriate in the interest of promoting
fair and orderly markets to exclude
transactions executed during a Limit or
Straddle State from certain aspects of
Rule 720. The Exchange believes the
10 Securities Exchange Act Release No. 74897
(May 7, 2015), 80 FR 27415 (May 13, 2015) (SR–
ISE Gemini–2015–11).
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
13 Id.
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
application of the current rule will be
impracticable given the lack of a reliable
national best bid or offer in the options
market during Limit and Straddle
States, and that the resulting actions
(i.e., nullified trades or adjusted prices)
may not be appropriate given market
conditions. Extending this pilot to
coincide with the Limit Up-Limit Down
Plan would ensure that limit orders that
are filled during a Limit or Straddle
State would have certainty of execution
in a manner that promotes just and
equitable principles of trade, removes
impediments to, and perfects the
mechanism of a free and open market
and a national market system. Thus, the
Exchange believes that the protections
of the pilot should continue while the
industry gains further experience
operating the Plan. Finally, the
Exchange proposes to delete section (d)
of Rule 703A to harmonize its rulebook
to prevent investor confusion.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange believes that, by extending
the expiration of the pilot, the proposed
rule change will allow for further
analysis of the pilot and a determination
of how the pilot shall be structured in
the future. In doing so, the proposed
rule change will also serve to promote
regulatory clarity and consistency,
thereby reducing burdens on the
marketplace and facilitating investor
protection.
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
Because the proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
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effective pursuant to Section 19(b)(3)(A)
of the Act 14 and Rule 19b–4(f)(6)(iii)
thereunder.15
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest, as it
will allow the obvious error pilot
program to continue uninterrupted
while the industry gains further
experience operating under the Plan,
and avoid any investor confusion that
could result from a temporary
interruption in the pilot program. For
this reason, the Commission designates
the proposed rule change to be operative
upon filing.16
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. 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–2015–22 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.
14 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). As required under
Rule 19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
16 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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15 17
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All submissions should refer to File
Number SR–ISEGemini–2015–22. 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 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–2015–22, and should be
submitted on or before November 18,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Brent J. Fields,
Secretary.
[FR Doc. 2015–27348 Filed 10–27–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76224; File No. SR–
NYSEArca–2015–94]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Regarding the
AdvisorShares WCM/BNY Mellon
Focused Growth ADR ETF’s Holdings
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
Frm 00103
Fmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to change a
representation regarding the
AdvisorShares WCM/BNY Mellon
Focused Growth ADR ETF’s holdings.
Shares of the WCM/BNY Mellon
Focused Growth ADR ETF have been
approved for listing and trading on the
Exchange under NYSE Arca Equities
Rule 8.600. The text of the proposed
rule change is available on the
Exchange’s Web site at www.nyse.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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Commission has approved a
proposed rule change relating to listing
and trading on the Exchange of shares
(‘‘Shares’’) of the AdvisorShares WCM/
BNY Mellon Focused Growth ADR ETF
(the ‘‘Fund’’) under NYSE Arca Equities
Rule 8.600,4 which governs the listing
U.S.C. 78a.
CFR 240.19b–4.
4 See Securities Exchange Act Release No. 62502
(July 15, 2010), 75 FR 42471 (July 21, 2010) (SR–
NYSEArca–2010–57) (the ‘‘Prior Order’’). The
notice with respect to the Prior Order was
published in Securities Exchange Act Release No.
3 17
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
PO 00000
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
8, 2015, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
2 15
October 22, 2015.
1 15
66085
Sfmt 4703
Continued
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]]>Agencies
[Federal Register Volume 80, Number 208 (Wednesday, October 28, 2015)]
[Notices]
[Pages 66083-66085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27348]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76228; File No. SR-ISEGemini-2015-22]
Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Extend the Limit
Up-Limit Down Obvious Error Pilot
October 22, 2015.
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 October 20, 2015, ISE Gemini, LLC (the ``Exchange'' or ``ISE
Gemini'') filed with the Securities and Exchange Commission the
proposed rule change, as described in Items I and II below, which items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
ISE Gemini proposes to extend a pilot program under .01 of
Supplementary Material to Rule 720 regarding obvious errors during
Limit and Straddle States in securities that underlie options traded on
the Exchange and proposes to further harmonize a related provision in
its rulebook. The text of the proposed rule change is available on the
Exchange's Web site (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 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
On July 26, 2013,\3\ the Commission approved the Exchange's Form 1
application for registration as a national securities exchange. The
Form 1 application included a rule designed to address certain issues
related to the Plan to Address Extraordinary Market Volatility Pursuant
to Rule 608 of Regulation NMS under the Act (the ``Limit Up-Limit Down
Plan'' or the ``Plan'').\4\ The rules adopted in that application
established a pilot program to exclude transactions executed during a
Limit State \5\ or Straddle State \6\ from the obvious error provisions
of Rule 720. On February 19, 2015, the Exchange filed to extend this
pilot program to its current end date of October 23, 2015.\7\ The
purpose of this filing is to extend the effectiveness of the pilot
program to coincide with the proposed extension of the Limit Up-Limit
Down Plan, including any extensions to the pilot period for the
Plan.\8\ The Exchange notes that nothing in .01 of Supplementary
Material to Rule 720 prevents such execution from
[[Page 66084]]
being reviewed on an Official's \9\ own motion pursuant to sub-
paragraph (c)(3) of this Rule, or a bust or adjust pursuant to
paragraphs (e) through (j) of this Rule.
---------------------------------------------------------------------------
\3\ The Securities and Exchange Commission granted the
Exchange's application for registration as a national securities
exchange on July 26, 2013. See Securities Exchange Act Release No.
Release No. 70050 (July 26, 2013), 78 FR 46622 (Aug. 1, 2013).
\4\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release'').
\5\ The term ``Limit State'' means the condition when the
national best bid or national best offer for an underlying security
equals an applicable price band, as determined by the primary
listing exchange for the underlying security. See Rule 703A.
\6\ The term ``Straddle State'' means the condition when the
national best bid or national best offer for an underlying security
is non-executable, as determined by the primary listing exchange for
the underlying security, but the security is not in a Limit State.
See Rule 703A.
\7\ Securities Exchange Act Release No. 74311 (February 19,
2015), 80 FR 10175 (February 25, 2015) (SR-ISE Gemini-2015-05).
\8\ Currently, the pilot period for the Plan is proposed to be
extended to April 22, 2016. See Exchange Act Release No. 75917
(September 14, 2015), 80 FR 56515 (September 18, 2015) (Ninth
Amendment to the Limit-Up Limit-Down Plan).
\9\ For purposes of Rule 720, an Official is an Officer of the
Exchange or such other employee designee of the Exchange that is
trained in the application of this Rule.
---------------------------------------------------------------------------
The Exchange believes the benefits to market participants from this
provision should continue on a pilot basis. The Exchange continues to
believe that adding certainty to the execution of orders in Limit or
Straddle States will encourage market participants to continue to
provide liquidity to the Exchange, and, thus, promote a fair and
orderly market during these periods. Barring this provision, the
obvious error provisions of Rule 720 would likely apply in many
instances during Limit and Straddle States. The Exchange believes that
continuing the pilot will protect against any unanticipated
consequences in the options markets during a Limit or Straddle State.
Thus, the Exchange believes that the protections of current rule should
continue while the industry gains further experience operating the
Plan.
In connection with this proposed extension, each month the Exchange
shall provide to the Commission, and the public, a dataset containing
the data for each Straddle and Limit State in optionable stocks that
had at least one trade on the Exchange. For each trade on the Exchange,
the Exchange will provide (a) the stock symbol, option symbol, time at
the start of the Straddle or Limit State, an indicator for whether it
is a Straddle or Limit State, and (b) for the trades on the Exchange,
the executed volume, time-weighted quoted bid-ask spread, time-weighted
average quoted depth at the bid, time-weighted average quoted depth at
the offer, high execution price, low execution price, number of trades
for which a request for review for error was received during Straddle
and Limit States, an indicator variable for whether those options
outlined above have a price change exceeding 30% during the underlying
stock's Limit or Straddle State compared to the last available option
price as reported by OPRA before the start of the Limit or Straddle
State (1 if observe 30% and 0 otherwise), and another indicator
variable for whether the option price within five minutes of the
underlying stock leaving the Limit or Straddle State (or halt if
applicable) is 30% away from the price before the start of the Limit or
Straddle State.
In addition, the Exchange will provide to the Commission, and the
public, no later than five months prior to the pilot expiration,
including any extension, assessments relating to the impact of the
operation of the obvious error rules during Limit and Straddle States
including: (1) An evaluation of the statistical and economic impact of
Limit and Straddle States on liquidity and market quality in the
options markets, and (2) an assessment of whether the lack of obvious
error rules in effect during the Straddle and Limit States are
problematic. This means that, if the Plan extension is approved, the
next data assessment will be due no later than December 18, 2015.
Finally, the Exchange proposes to delete section (d) of Rule 703A
to harmonize its rulebook. Earlier this year, the options exchanges
harmonized their rules relating to the adjustment and nullification of
erroneous options transactions as well as a specific provision related
to coordination in connection with large-scale events involving
erroneous options transactions.\10\ The Exchange inadvertently did not
remove section (d) to Rule 703A from its rulebook in this filing. This
section (d) duplicates .01 of Supplementary Material to Rule 720, and
as such, the Exchange proposes to delete it.
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\10\ Securities Exchange Act Release No. 74897 (May 7, 2015), 80
FR 27415 (May 13, 2015) (SR-ISE Gemini-2015-11).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\11\ In particular,
the proposal is consistent with Section 6(b)(5) of the Act,\12\ because
it is designed to promote just and equitable principles of trade,
remove impediments to and perfect the mechanisms of a free and open
market and a national market system and, in general, to protect
investors and the public interest. Additionally, the Exchange believes
the proposed rule change is consistent with the Section 6(b)(5) \13\
requirement that the rules of an exchange not be designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
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In particular, the Exchange further believes that it is necessary
and appropriate in the interest of promoting fair and orderly markets
to exclude transactions executed during a Limit or Straddle State from
certain aspects of Rule 720. The Exchange believes the application of
the current rule will be impracticable given the lack of a reliable
national best bid or offer in the options market during Limit and
Straddle States, and that the resulting actions (i.e., nullified trades
or adjusted prices) may not be appropriate given market conditions.
Extending this pilot to coincide with the Limit Up-Limit Down Plan
would ensure that limit orders that are filled during a Limit or
Straddle State would have certainty of execution in a manner that
promotes just and equitable principles of trade, removes impediments
to, and perfects the mechanism of a free and open market and a national
market system. Thus, the Exchange believes that the protections of the
pilot should continue while the industry gains further experience
operating the Plan. Finally, the Exchange proposes to delete section
(d) of Rule 703A to harmonize its rulebook to prevent investor
confusion.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
believes that, by extending the expiration of the pilot, the proposed
rule change will allow for further analysis of the pilot and a
determination of how the pilot shall be structured in the future. In
doing so, the proposed rule change will also serve to promote
regulatory clarity and consistency, thereby reducing burdens on the
marketplace and facilitating investor protection.
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
Because the proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, the proposed rule change has become
[[Page 66085]]
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6)(iii) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Commission believes that waiving the 30-day operative delay
is consistent with the protection of investors and the public interest,
as it will allow the obvious error pilot program to continue
uninterrupted while the industry gains further experience operating
under the Plan, and avoid any investor confusion that could result from
a temporary interruption in the pilot program. For this reason, the
Commission designates the proposed rule change to be operative upon
filing.\16\
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\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. 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-2015-22 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-2015-22. 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 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-2015-22, and
should be submitted on or before November 18, 2015.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Brent J. Fields,
Secretary.
[FR Doc. 2015-27348 Filed 10-27-15; 8:45 am]
BILLING CODE 8011-01-P
