[Federal Register Volume 78, Number 91 (Friday, May 10, 2013)]
[Notices]
[Pages 27462-27464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11141]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69518; File No. SR-MIAX-2013-18]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Priority Customer Size

May 6, 2013.
    Pursuant to the provisions of 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 April 24, 2013, 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, II, and III below, which Items have been prepared 
by the Exchange. The Commission is publishing this notice to solicit

[[Page 27463]]

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

    The Exchange is filing a proposal to amend Exchange Rule 506, 
Collection and Dissemination of Quotations, by adopting new Exchange 
Rule 506(c)(ii) to state that the Exchange will make available to 
subscribers of its MIAX Top of Market (``ToM'') data feed the quantity 
of Priority Customer (defined below) contracts included in the MIAX 
Best Bids and Offers (``MBBOs'') disseminated by the Exchange.
    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 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
    The purpose of the proposed rule change is to make available to 
subscribers of its ToM market data product \3\ the quantity of Priority 
Customer (defined below) contracts included in the MBBO disseminated by 
the Exchange in order to provide additional transparency to ToM 
subscribers regarding the disseminated MBBO. The Exchange does not 
intend to charge additional fees for the inclusion of Priority Customer 
size in the aggregate size component of ToM at this time.
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    \3\ See Securities Exchange Act Release No. 69007 (February 28, 
2013), 78 FR 14617 (March 6, 2013) (SR-MIAX-2013-05).
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    Currently, the ToM is a direct data feed that includes: the 
Exchange's best bid and offer, with aggregate size and last sale 
information on the MIAX system; opening imbalance condition 
information; opening and intra-day routing information; Expanded Quote 
Range information; Post-Halt Notification; and Liquidity Refresh 
condition information.\4\ The ToM data feed includes data that is 
identical to the data sent to the processor for the Options Price 
Reporting Authority (``OPRA''). The ToM and OPRA data leave the MIAX 
system at the same time, as required under Section 5.2(c)(iii)(B) of 
the Limited Liability Company Agreement of the Options Price Reporting 
Authority LLC (the ``OPRA Plan''), which prohibits the dissemination of 
proprietary information on any more timely basis than the same 
information is furnished to the OPRA System for inclusion in OPRA's 
consolidated dissemination of options information.
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    \4\ See id.
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    The Exchange now proposes to make available additional information 
in the ToM data feed that specifies the quantity of Priority Customer 
\5\ contracts that are included in the aggregate size of the MBBO. 
Information regarding the quantity of Priority Customer interest 
included in the size of the MBBO may provide market participants 
transparency as to how orders would be allocated when the Priority 
Customer Overlay \6\ is in effect. When the Priority Customer Overlay 
is in effect, Priority Customer Orders on the Exchange generally have 
priority over Professional Interest and all Market Maker interest at 
the same price. The Exchange believes that the additional information 
regarding the quantity of Priority Customers contracts may provide 
certain ToM subscribers an additional tool to use when making routing, 
quotation, price and size decisions regarding where they should send 
orders and quotes, and the nature of such orders and quotes (i.e., 
price and size).
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    \5\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s). See Exchange Rule 
100.
    \6\ The Exchange generally uses a pro-rata allocation model, and 
deploys certain ``Priority Overlays'' on a class-by-class basis. One 
such Priority Overlay is the Priority Customer Overlay. When the 
Priority Customer Overlay is in effect, the highest bid and lowest 
offer have priority except that Priority Customer Orders have 
priority over Professional Interest and all Market Maker interest at 
the same price. If there are two or more Priority Customer Orders 
for the same options series at the same price, priority is afforded 
to such Priority Customer Orders in the sequence in which they are 
received by the System. See Exchange Rule 514(d)(1).
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    As stated above, the Exchange is not proposing at this time to 
assess additional fees for the inclusion of Priority Customer size as a 
component of the information included in the ToM market data product. 
The Exchange notes that it would file a 19b-4 Rule Filing prior to 
assessing additional fees for the Priority Customer size component of 
the information included in the ToM market data product.
    Because of the technology changes associated with this rule 
proposal, the Exchange will announce the implementation date of the 
proposal in an Exchange Circular to be published no later than 30 days 
after the publication of the notice in the Federal Register. The 
implementation date will be no later than 30 days following publication 
of the Exchange Circular announcing publication of the notice in the 
Federal Register.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) \7\ of the Act in general, and furthers the objectives of 
Section 6(b)(5) \8\ of the Act 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The addition of Priority Customer size as a component of the 
information included in the ToM product is designed to promote just and 
equitable principles of trade by providing ToM subscribers with market 
data that should enable them to make informed decisions on trading in 
MIAX options by using the ToM data to assess current market conditions 
that directly affect such decisions. The proposal removes impediments 
to, and is designed to further perfect, the mechanisms of a free and 
open market and a national market system by making the MIAX market more 
transparent and accessible to market participants making routing 
decisions concerning their options orders, and concerning the nature of 
their quotes.
    The ToM market data product is also designed to protect investors 
and the public interest by providing market data to subscribers that 
offers market participants additional information in

[[Page 27464]]

order to make decisions concerning their orders and/or quotes.

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.
    MIAX operates within a highly competitive market in which market 
participants can readily send order flow to other competing venues if, 
among other things, they deem allocation rules at a particular venue to 
be unreasonable or disproportionate. The proposed rule change is 
intended to offer market participants additional information and 
transparency in the marketplace, and therefore enhances competition 
among exchanges by further enabling market participants to make 
informed order routing and quoting decisions.

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

    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 after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ 
thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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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    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-MIAX-2013-18 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-2013-18. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (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 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-MIAX-2013-18 and should be 
submitted on or before May 31, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11141 Filed 5-9-13; 8:45 am]
BILLING CODE 8011-01-P