[Federal Register Volume 79, Number 68 (Wednesday, April 9, 2014)]
[Notices]
[Pages 19685-19687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07884]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71854; File No. SR-ISEGemini-2014-11]
Self-Regulatory Organizations; ISE Gemini Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Permit
Market Makers To Enter Opening Only Orders in Appointed Options Classes
April 3, 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 March 26, 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 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
ISE Gemini is proposing to amend Rule 805(a) to permit market
makers to enter Opening Only Orders in the options classes to which
they are appointed. The text of the proposed rule change is available
on the Exchange's Internet Web site at http://www.ise.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The self-regulatory organization has prepared summaries,
set forth in Sections A, B and C below, of the most significant aspects
of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On February 25, 2014 ISE Gemini's sister exchange, the
International Securities Exchange, LLC (``ISE''), filed an immediately
effective rule change to permit market makers on that exchange to enter
Opening Only Orders in the options classes to which they are
appointed.\3\ That ISE filing restored functionality that was
previously available to ISE market makers through the use of immediate-
or-cancel (``IOC'') orders prior to the introduction of the ISE's T7
trading system, which introduced Opening Only Orders on that exchange,
and limited IOC orders to intraday.\4\ As was previously the case on
the ISE, market makers on ISE Gemini are not presently permitted to
submit Opening Only Orders in the options classes to which they are
appointed.\5\ The Exchange therefore proposes to amend Rule 805(a),
which is based on the ISE rule amended by the filing referenced above,
to similarly permit ISE Gemini market makers to enter Opening Only
Orders in their appointed options classes.\6\ The proposed rule change
is meant to conform the rules of ISE Gemini to the rules of other
options exchanges, including the ISE, where market makers presently
have the ability to enter Opening Only Orders in their appointed
classes.\7\
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\3\ See Securities Exchange Act Release No. 71685 (March 11,
2014), 79 FR 14774 (March 17, 2014) (SR-ISE-2014-11).
\4\ Prior to the launch of the ISE's T7 trading system, ISE
market makers could submit IOC orders at any time prior to the
opening of trading, which, like Opening Only Orders, would execute
during the opening rotation, with any unexecuted portion being
cancelled.
\5\ Market makers are currently permitted to submit the
following order types in their appointed options classes: IOC
orders, market orders, fill-or-kill orders, and certain block orders
and non-displayed penny orders. See ISE Gemini Rule 805(a).
\6\ An ``Opening Only Order'' is a limit order that can be
entered for the opening rotation only. Any portion of the order that
is not executed during the opening rotation is cancelled.
\7\ See supra note 3. As another example, market makers on the
MIAX Options Exchange (``MIAX'') similarly have the ability to enter
``opening only'' orders in their appointed classes. See MIAX Rule
605(a).
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[[Page 19686]]
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Securities Exchange Act of 1934
(the ``Act''),\8\ in general, and with Section 6(b)(5) of the Act,\9\
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
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 allowing market makers to use Opening Only Orders will
give those members greater flexibility to update prices during the
opening rotation. Specifically, market makers have requested that they
be permitted to use Opening Only Orders so that they may use this order
type to update their prices in single series during the opening process
more efficiently, and thereby more readily, than relying on quoting
systems that are designed to update prices across multiple series. As
explained above, ``opening only'' orders types are available to market
makers on other exchanges, including ISE Gemini's sister exchange.
Moreover, because any portion of an Opening Only Order that is not
executed during the opening rotation is cancelled, this proposed rule
change is generally consistent with Rule 805(a), which was intended to
prevent market makers from having both standing limit orders and quotes
in the same options class.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\10\ 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. To the contrary,
the Exchange believes that the proposed rule change is pro-competitive
as it permits market makers to use functionality already available to
other ISE Gemini members, and to market makers on other exchanges, who
are currently able to submit Opening Only Orders or other similar order
types.
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\10\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 effective
pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). 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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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may 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 Exchange stated that
the proposal will allow market makers, during the opening process, to
use an order type that more efficiently update their prices. The
Exchange also stated that Opening Only Orders are presently available
to other ISE Gemini members and to market makers on competing options
exchanges. The Commission believes that the proposed rule change
presents no novel issues. Moreover, the Commission believes that the
proposed rule change is consistent with the protection of investors and
the public interest, because it allows the market makers to more
efficiently, and thereby more readily, display updated prices to the
public. Therefore, the Commission waives the 30-day operative delay
requirement and designates the proposed rule change to be operative
upon filing.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ISEGemini-2014-11 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-2014-11. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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
[[Page 19687]]
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-2014-11 and should be
submitted on or before April 30, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07884 Filed 4-8-14; 8:45 am]
BILLING CODE 8011-01-P