Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Supplementary Material .03 to Rule 713, 14413-14415 [2017-05405]

Download as PDF Federal Register / Vol. 82, No. 52 / Monday, March 20, 2017 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80239; File No. SR– ISEGemini–2017–14] 1. Purpose Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Supplementary Material .03 to Rule 713 March 14, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 9, 2017, ISE Gemini, LLC (‘‘ISE Gemini’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. On March 13, 2017, 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 The Exchange proposes to amend Supplementary Material .03 to Rule 713 to change the allocation entitlement for Preferred PMMs. The text of the proposed rule change is available on the Exchange’s Web site at www.ise.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. sradovich on DSK3GMQ082PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. Supplementary Material .03 to Rule 713 allows an Electronic Access Member (‘‘EAM’’) to designate a ‘‘Preferred Market Maker’’ on orders it enters into the System (‘‘Preferenced Orders’’). A Preferred Market Maker may be the Primary Market Maker (‘‘PMM’’) appointed to the options class or any Competitive Market Maker (‘‘CMM’’) appointed to the options class.4 The purpose of the proposed rule change is to amend Supplementary Material .03 to Rule 713 to change the allocation entitlement for PMMs that receive Preferenced Orders (i.e., ‘‘Preferred PMMs’’), consistent with allocation entitlements for PMM equivalents on another options exchange. Currently, a Preferred Market Maker that is quoting at the national best bid of offer (‘‘NBBO’’) at the time the Preferenced Order is received,5 is entitled to participation rights equal to the greater of: (i) The proportion of the total size at the best price represented by the size of its quote, or (ii) sixty percent (60%) of the contracts to be allocated if there is only one (1) other Professional Order or market maker quotation at the best price and forty percent (40%) if there are two (2) or more other Professional Orders and/or market maker quotes at the best price.6 This allocation entitlement is in lieu of the regular allocation provided in Supplementary Material .01 to Rule 713, and applies regardless of whether the Preferred Market Maker is a PMM or CMM. In some instances where the Preferred Market Maker is the PMM appointed to the options class this results in a preferenced allocation that is worse than the market maker’s regular allocation entitlement. Specifically, Supplementary Material .01(c) to Rule 713 provides a small order entitlement whereby orders of five contracts or fewer are executed first by the PMM. A PMM that normally receives an allocation entitlement for orders of five contracts or fewer,7 would not receive this allocation entitlement if it were 4 See Supplementary Material .03(a) to Rule 713. the Preferred Market Maker is not quoting at a price equal to the NBBO at the time the Preferenced Order is received, the Exchange’s regular allocation procedure applies to the execution of the Preferenced Order. See Supplementary Material .03(b) to Rule 713. 6 See Supplementary Material .03(c) to Rule 713. 7 See Supplementary Material .01(c) to Rule 713. 5 If 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In Amendment No. 1, the Exchange represented that the proposed allocation entitlement for Preferred PMMs will be implemented on the INET trading system on or subsequent to the effective date of this proposed rule change. 2 17 VerDate Sep<11>2014 18:36 Mar 17, 2017 Jkt 241001 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 14413 designated as the Preferred Market Maker. The Exchange now proposes to amend the participation rights of Preferred PMMs such that the PMM appointed in an option class will receive participation rights that are consistent with the higher allocation entitlement given to PMM equivalents on the MIAX Options Exchange (‘‘MIAX’’). In particular, the Exchange proposes to amend Supplementary Material .03(c) to Rule 713 to provide that, the Preferred Market Maker has participation rights equal to the greater of: (i) The proportion of the total size at the best price represented by the size of its quote, (ii) sixty percent (60%) of the contracts to be allocated if there is only one (1) other Professional Order or market maker quotation at the best price and forty percent (40%) if there are two (2) or more other Professional Orders and/or market maker quotes at the best price, or (iii) the full size of a Preferenced Order for five (5) contracts or fewer if the Primary Market Maker appointed to the options class is designated as the Preferred Market Maker—i.e., the small order allocation entitlement contained in Supplementary Material .01(c) to Rule 713. Thus, the PMM appointed to an options class would receive an allocation entitlement for orders of five contracts or fewer, regardless of whether that order is submitted as a Preferenced Order. The Exchange believes that this is appropriate since the PMMs obligations to the market are the same regardless of whether an order happens to be submitted with a preference instruction. PMM equivalents on MIAX currently receive this participation right when preferenced, in addition to the regular 60% or 40% preferenced allocation currently provided in the rule.8 Preferred CMMs will continue to receive the same allocation entitlement that they receive today. Pursuant to Supplementary Material .01(c) to Rule 713 the Exchange evaluates on a quarterly basis what percentage of the volume executed on the Exchange is comprised of orders for five (5) contracts or fewer executed by PMMs. The Exchange represents that this review will extend to the small order entitlement for Preferred PMMs. Thus, consistent with Supplementary Material .01(c) to Rule 713, the Exchange will reduce the size of the orders included in the small order entitlement if such percentage is over forty percent (40%). 8 See E:\FR\FM\20MRN1.SGM MIAX Rule 514(g), (i). 20MRN1 14414 Federal Register / Vol. 82, No. 52 / Monday, March 20, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Implementation The proposed rule change will be implemented on the Exchange’s new INET trading system, which launched on February 27, 2017,9 provided that the Exchange will provide notice of this change in a circular to be distributed to members prior to implementing the new allocation entitlement on INET. The INET migration is taking place on a symbol by symbol basis as specified by the Exchange in a notice to Members. The Exchange is proposing to implement this rule change on the INET platform as the symbols migrate to that platform. As such, PMMs will begin receiving the small order entitlement in symbols as they migrate to the INET platform. For symbols which migrated to INET prior to the approval of this rule change, the small order entitlement will be applied to such symbols starting on the implementation date noted in the circular distributed to members. The proposed allocation entitlement for Preferred PMMs will be implemented on the INET trading system on or subsequent to the effective date of this proposed rule change. 2. Statutory Basis The Exchange believes that the proposed rule change 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.10 In particular, the proposal is consistent with Section 6(b)(5) of the Act,11 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. The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest as it will allow EAMs to send Preferenced Orders to the PMM appointed in an options class without inadvertently disadvantaging the PMM compared to if the order was not preferenced. The regular allocation entitlements for PMMs, including the small order entitlement, are designed to balance the obligations that the PMM has to the market with corresponding benefits. The Exchange believes that it is appropriate to provide the small order entitlement also when the PMM is 9 See Securities Exchange Act Release No. 80011 (February 10, 2017), 82 FR 10927 (February 16, 2017) (SR–ISEGemini–2016–17). 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 18:36 Mar 17, 2017 Jkt 241001 designated as a Preferred Market Maker as the obligations that the PMM has to the market are not diminished when it receives a Preferenced Order. MIAX similarly provides the small order entitlement to the PMM regardless of whether the order is submitted as a Preferenced Order.12 At the same time, the proposed rule change does not amend the current participation rights for Preferred CMMs, which is also consistent with allocation rules of MIAX. While the Exchange believes that it is appropriate to grant PMMs an allocation entitlement for small sized orders preferenced to them in recognition of the obligations that PMMs have to maintain fair and orderly markets, the Exchange does not believe that it is appropriate at this time to extend this entitlement to CMMs, preferenced or otherwise. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,13 the Exchange does not believe that the proposed rule change will impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is designed to allow EAMs to send Preferenced Orders to the PMM appointed in an options class without inadvertently disadvantaging the PMM by reducing its participation rights. The proposed allocation entitlements are equivalent to those currently in effect on another options exchange.14 The proposed rule change is therefore not designed to impose any significant burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing 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, it has become effective pursuant to Section 12 See supra note 7. U.S.C. 78f(b)(8). 14 See supra note 7. 13 15 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 19(b)(3)(A)(iii) of the Act 15 and subparagraph (f)(6) of Rule 19b–4 thereunder.16 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 17 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 18 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. 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. The Exchange represents that waiver of the operative delay would allow the Exchange to implement this proposed rule change prior to a significant symbol rollout to the INET technology. The Exchange states that symbols that account for approximately 35% of industry volume are scheduled to be migrated to the new INET trading system on March 27, 2017, with additional symbols accounting for roughly 62% of industry volume scheduled to be migrated on April 3, 2017. Further, for symbols that have already migrated to INET, the Exchange represents that the small order entitlement will be applied to such symbols starting on the implementation date to be announced to the members in a circular. Accordingly, the Commission hereby waives the operative delay and designates the proposal operative upon filing.19 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings 15 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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. The Exchange has satisfied this requirement. 17 17 CFR 240.19b–4(f)(6). 18 17 CFR 240.19b–4(f)(6)(iii). 19 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). 16 17 E:\FR\FM\20MRN1.SGM 20MRN1 Federal Register / Vol. 82, No. 52 / Monday, March 20, 2017 / Notices 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, as modified by Amendment No. 1, 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–2017–14 on the subject line. Paper Comments sradovich on DSK3GMQ082PROD with NOTICES • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISEGemini–2017–14. 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–2017–14 and should be submitted on or before April 10, 2017. VerDate Sep<11>2014 18:36 Mar 17, 2017 Jkt 241001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–05405 Filed 3–17–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting Notice is hereby given that, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, the Securities and Exchange Commission will hold an Open Meeting on Wednesday, March 22, 2017, at 10:00 a.m., in the Auditorium, Room L–002. The subject matter of the Open Meeting will be: • The Commission will consider whether to adopt an amendment to Rule 15c6–1 under the Securities Exchange Act of 1934 to shorten the standard settlement cycle for most broker-dealer transactions from three business days after the trade date to two business days after the trade date. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted, or postponed, please contact Brent J. Fields in the Office of the Secretary at (202) 551–5400. Dated: March 15, 2017. Brent J. Fields, Secretary. [FR Doc. 2017–05508 Filed 3–16–17; 11:15 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #15043 and #15044] Georgia Disaster Number GA–00092 U.S. Small Business Administration. ACTION: Amendment 3. AGENCY: This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of GEORGIA (FEMA–4297– DR), dated 02/07/2017. Incident: Severe Storms, Tornadoes, Straight-line Winds, and Flooding. Incident Period: 01/21/2017 through 01/22/2017. Effective Date: 03/06/2017. Physical Loan Application Deadline Date: 04/10/2017. SUMMARY: 20 17 PO 00000 CFR 200.30–3(a)(12). Frm 00073 Fmt 4703 Sfmt 4703 14415 Economic Injury (EIDL) Loan Application Deadline Date: 11/07/2017. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President’s major disaster declaration for Private Non-Profit organizations in the State of Georgia, dated 02/07/2017, is hereby amended to include the following areas as adversely affected by the disaster. Primary Counties: Putnam. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Number 59008) James E. Rivera, Associate Administrator for Disaster Assistance. [FR Doc. 2017–05411 Filed 3–17–17; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #15039 and #15040] South Dakota Disaster #SD–00073 U.S. Small Business Administration. ACTION: Amendment 1. AGENCY: This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of South Dakota (FEMA–4298– DR), dated 02/01/2017. Incident: Severe Winter Storm. Incident Period: 12/24/2016 through 12/26/2016. Effective Date: 03/06/2017. Physical Loan Application Deadline Date: 04/03/2017. Economic Injury (Eidl) Loan Application Deadline Date: 11/01/2017. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President’s major disaster declaration for Private Non-Profit SUMMARY: E:\FR\FM\20MRN1.SGM 20MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 52 (Monday, March 20, 2017)]
[Notices]
[Pages 14413-14415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05405]

[[Page 14413]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80239; File No. SR-ISEGemini-2017-14]

Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change, as Modified by
Amendment No. 1, To Amend Supplementary Material .03 to Rule 713

March 14, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 9, 2017, ISE Gemini, LLC (``ISE Gemini'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. On March 13, 2017, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange represented that the
proposed allocation entitlement for Preferred PMMs will be
implemented on the INET trading system on or subsequent to the
effective date of this proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange proposes to amend Supplementary Material .03 to Rule
713 to change the allocation entitlement for Preferred PMMs.
The text of the proposed rule change is available on the Exchange's
Web site at www.ise.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
Supplementary Material .03 to Rule 713 allows an Electronic Access
Member (``EAM'') to designate a ``Preferred Market Maker'' on orders it
enters into the System (``Preferenced Orders''). A Preferred Market
Maker may be the Primary Market Maker (``PMM'') appointed to the
options class or any Competitive Market Maker (``CMM'') appointed to
the options class.\4\ The purpose of the proposed rule change is to
amend Supplementary Material .03 to Rule 713 to change the allocation
entitlement for PMMs that receive Preferenced Orders (i.e., ``Preferred
PMMs''), consistent with allocation entitlements for PMM equivalents on
another options exchange.
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\4\ See Supplementary Material .03(a) to Rule 713.
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Currently, a Preferred Market Maker that is quoting at the national
best bid of offer (``NBBO'') at the time the Preferenced Order is
received,\5\ is entitled to participation rights equal to the greater
of: (i) The proportion of the total size at the best price represented
by the size of its quote, or (ii) sixty percent (60%) of the contracts
to be allocated if there is only one (1) other Professional Order or
market maker quotation at the best price and forty percent (40%) if
there are two (2) or more other Professional Orders and/or market maker
quotes at the best price.\6\ This allocation entitlement is in lieu of
the regular allocation provided in Supplementary Material .01 to Rule
713, and applies regardless of whether the Preferred Market Maker is a
PMM or CMM. In some instances where the Preferred Market Maker is the
PMM appointed to the options class this results in a preferenced
allocation that is worse than the market maker's regular allocation
entitlement. Specifically, Supplementary Material .01(c) to Rule 713
provides a small order entitlement whereby orders of five contracts or
fewer are executed first by the PMM. A PMM that normally receives an
allocation entitlement for orders of five contracts or fewer,\7\ would
not receive this allocation entitlement if it were designated as the
Preferred Market Maker.
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\5\ If the Preferred Market Maker is not quoting at a price
equal to the NBBO at the time the Preferenced Order is received, the
Exchange's regular allocation procedure applies to the execution of
the Preferenced Order. See Supplementary Material .03(b) to Rule
713.
\6\ See Supplementary Material .03(c) to Rule 713.
\7\ See Supplementary Material .01(c) to Rule 713.
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The Exchange now proposes to amend the participation rights of
Preferred PMMs such that the PMM appointed in an option class will
receive participation rights that are consistent with the higher
allocation entitlement given to PMM equivalents on the MIAX Options
Exchange (``MIAX''). In particular, the Exchange proposes to amend
Supplementary Material .03(c) to Rule 713 to provide that, the
Preferred Market Maker has participation rights equal to the greater
of: (i) The proportion of the total size at the best price represented
by the size of its quote, (ii) sixty percent (60%) of the contracts to
be allocated if there is only one (1) other Professional Order or
market maker quotation at the best price and forty percent (40%) if
there are two (2) or more other Professional Orders and/or market maker
quotes at the best price, or (iii) the full size of a Preferenced Order
for five (5) contracts or fewer if the Primary Market Maker appointed
to the options class is designated as the Preferred Market Maker--i.e.,
the small order allocation entitlement contained in Supplementary
Material .01(c) to Rule 713. Thus, the PMM appointed to an options
class would receive an allocation entitlement for orders of five
contracts or fewer, regardless of whether that order is submitted as a
Preferenced Order. The Exchange believes that this is appropriate since
the PMMs obligations to the market are the same regardless of whether
an order happens to be submitted with a preference instruction. PMM
equivalents on MIAX currently receive this participation right when
preferenced, in addition to the regular 60% or 40% preferenced
allocation currently provided in the rule.\8\ Preferred CMMs will
continue to receive the same allocation entitlement that they receive
today.
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\8\ See MIAX Rule 514(g), (i).
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Pursuant to Supplementary Material .01(c) to Rule 713 the Exchange
evaluates on a quarterly basis what percentage of the volume executed
on the Exchange is comprised of orders for five (5) contracts or fewer
executed by PMMs. The Exchange represents that this review will extend
to the small order entitlement for Preferred PMMs. Thus, consistent
with Supplementary Material .01(c) to Rule 713, the Exchange will
reduce the size of the orders included in the small order entitlement
if such percentage is over forty percent (40%).

[[Page 14414]]

Implementation
The proposed rule change will be implemented on the Exchange's new
INET trading system, which launched on February 27, 2017,\9\ provided
that the Exchange will provide notice of this change in a circular to
be distributed to members prior to implementing the new allocation
entitlement on INET. The INET migration is taking place on a symbol by
symbol basis as specified by the Exchange in a notice to Members. The
Exchange is proposing to implement this rule change on the INET
platform as the symbols migrate to that platform. As such, PMMs will
begin receiving the small order entitlement in symbols as they migrate
to the INET platform. For symbols which migrated to INET prior to the
approval of this rule change, the small order entitlement will be
applied to such symbols starting on the implementation date noted in
the circular distributed to members. The proposed allocation
entitlement for Preferred PMMs will be implemented on the INET trading
system on or subsequent to the effective date of this proposed rule
change.
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\9\ See Securities Exchange Act Release No. 80011 (February 10,
2017), 82 FR 10927 (February 16, 2017) (SR-ISEGemini-2016-17).
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2. Statutory Basis
The Exchange believes that the proposed rule change 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.\10\ In
particular, the proposal is consistent with Section 6(b)(5) of the
Act,\11\ 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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is consistent
with the protection of investors and the public interest as it will
allow EAMs to send Preferenced Orders to the PMM appointed in an
options class without inadvertently disadvantaging the PMM compared to
if the order was not preferenced. The regular allocation entitlements
for PMMs, including the small order entitlement, are designed to
balance the obligations that the PMM has to the market with
corresponding benefits. The Exchange believes that it is appropriate to
provide the small order entitlement also when the PMM is designated as
a Preferred Market Maker as the obligations that the PMM has to the
market are not diminished when it receives a Preferenced Order. MIAX
similarly provides the small order entitlement to the PMM regardless of
whether the order is submitted as a Preferenced Order.\12\ At the same
time, the proposed rule change does not amend the current participation
rights for Preferred CMMs, which is also consistent with allocation
rules of MIAX. While the Exchange believes that it is appropriate to
grant PMMs an allocation entitlement for small sized orders preferenced
to them in recognition of the obligations that PMMs have to maintain
fair and orderly markets, the Exchange does not believe that it is
appropriate at this time to extend this entitlement to CMMs,
preferenced or otherwise.
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\12\ See supra note 7.
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B. Self-Regulatory Organization's Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,\13\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
rule change is designed to allow EAMs to send Preferenced Orders to the
PMM appointed in an options class without inadvertently disadvantaging
the PMM by reducing its participation rights. The proposed allocation
entitlements are equivalent to those currently in effect on another
options exchange.\14\ The proposed rule change is therefore not
designed to impose any significant burden on competition.
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\13\ 15 U.S.C. 78f(b)(8).
\14\ See supra note 7.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

No written comments were either solicited or received.

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

Because the foregoing 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, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \17\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \18\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. 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.
The Exchange represents that waiver of the operative delay would allow
the Exchange to implement this proposed rule change prior to a
significant symbol rollout to the INET technology. The Exchange states
that symbols that account for approximately 35% of industry volume are
scheduled to be migrated to the new INET trading system on March 27,
2017, with additional symbols accounting for roughly 62% of industry
volume scheduled to be migrated on April 3, 2017. Further, for symbols
that have already migrated to INET, the Exchange represents that the
small order entitlement will be applied to such symbols starting on the
implementation date to be announced to the members in a circular.
Accordingly, the Commission hereby waives the operative delay and
designates the proposal operative upon filing.\19\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings

[[Page 14415]]

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, as modified by Amendment No. 1, 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-2017-14 on the subject line.

Paper Comments

Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISEGemini-2017-14. 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-2017-14 and should
be submitted on or before April 10, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-05405 Filed 3-17-17; 8:45 am]
BILLING CODE 8011-01-P

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