[Federal Register Volume 78, Number 4 (Monday, January 7, 2013)]
[Notices]
[Pages 973-974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31749]



[[Page 973]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68551; File No. SR-MIAX-2012-04]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Extend the Penny Pilot Program

December 31, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 21, 2012, Miami International Securities 
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') a proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. 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\ 15 U.S.C. 78a.
    \3\ 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

    The Exchange is filing a proposal to amend Rule 510, 
Interpretations and Policies .01 to extend the pilot program for the 
quoting and trading of certain options in pennies (the ``Penny Pilot 
Program'') and to adopt a procedure for replacing in the Penny Pilot 
Program option classes that have been delisted.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is a participant in an industry-wide pilot program 
that provides for the quoting and trading of certain option classes in 
penny increments (the ``Penny Pilot Program'' or ``Program''). 
Specifically, the Penny Pilot Program allows the quoting and trading of 
certain option classes in minimum increments of $0.01 for all series in 
such option classes with a price of less than $3.00; and in minimum 
increments of $0.05 for all series in such option classes with a price 
of $3.00 or higher. Options overlying the PowerShares QQQ Trust 
(``QQQQ'')[supreg], SPDR S&P 500 Exchange Traded Funds (``SPY''), and 
iShares Russell 2000 Index Funds (``IWM''), however, are quoted and 
traded in minimum increments of $0.01 for all series regardless of the 
price. The Penny Pilot Program was initiated at the then existing 
option exchanges in January 2007 and currently includes more than 300 
of the most active option classes. The Penny Pilot Program is currently 
scheduled to expire on December 31, 2012. The purpose of the proposed 
rule change is to extend the Penny Pilot Program in its current format 
through June 30, 2013.
    In addition, the Exchange proposes to amend Rule 510, 
Interpretations and Policies .01 to describe the process by which Penny 
Pilot Program option classes that have been delisted can be replaced. 
The process, which is currently in place at other option exchanges 
participating in the Penny Pilot Program, provides a date on which an 
option class in the Penny Pilot Program that has been delisted will be 
replaced by the next most actively traded, multiply-listed option class 
that is not yet in the Penny Pilot Program. The replacement classes 
will be added to the Penny Pilot Program on the second trading day 
following January 1, 2013. Determination of the next most actively 
traded option class will be based on trading activity in the previous 
six months excluding the month immediately prior to the replacement 
date. Thus, replacement issues will be selected based on trading 
activity for the six month period beginning June 1, 2012, and ending 
November 30, 2012. All classes currently participating in the Penny 
Pilot Program will remain the same and all minimum increments will 
remain unchanged. The Exchange believes its participation in the Penny 
Pilot Program will benefit public customers and other market 
participants in that they will be able to express their true prices to 
buy and sell options in those classes that are part of the Program.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \4\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \5\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to 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, and it is not designed to 
permit unfair discrimination among customers, brokers, or dealers. In 
particular, the proposed rule change, which extends the Penny Pilot 
Program for six months, allows the Exchange to participate in a program 
that has been viewed as beneficial to traders, investors and public 
customers and viewed as successful by the other options exchanges 
participating in it. In addition, the adoption of a process by which 
Penny Pilot Program option classes that have been delisted can be 
replaced, allows the Program to continue to provide for the quoting and 
trading of the most active option classes in pennies. It also provides 
an organized process, which is uniform across the options exchanges, 
for the introduction of new option classes into the Program.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in 
furtherance of the purposes of the Act. Further, by extending the Penny 
Pilot Program for six months, MIAX, as a new entrant to the market, is 
able to participate in the Penny Pilot Program as it begins to roll-out 
trading in those active option classes that are part of the Program. 
MIAX's overall participation in the Penny Pilot Program enhances 
competition in that it provides another venue for trading active option 
classes expressed by market participants at their true prices.

[[Page 974]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
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 prior to 
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 \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing.\10\ 
However, pursuant to Rule 19b-4(f)(6)(iii),\11\ 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 Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because doing so will 
allow the Pilot Program to continue without interruption in a manner 
that is consistent with the Commission's prior approval of the 
extension and expansion of the Pilot Program and will allow the 
Exchange and the Commission additional time to analyze the impact of 
the Pilot Program.\12\ Accordingly, the Commission designates the 
proposed rule change as operative upon filing with the Commission.\13\
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    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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. The 
Exchange has satisfied this pre-filing requirement.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ See Securities Exchange Act Release No. 61061 (November 24, 
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
    \13\ For purposes only of waiving the operative delay for this 
proposal, the Commission has 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.

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-MIAX-2012-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2012-04. 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 identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2012-04 and should be 
submitted on or before January 28, 2013.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-31749 Filed 1-4-13; 8:45 am]
BILLING CODE 8011-01-P