[Federal Register Volume 78, Number 107 (Tuesday, June 4, 2013)]
[Notices]
[Pages 33454-33456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13146]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69658; File No. SR-MIAX-2013-23]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Expand the Short Term Option Series Program

May 29, 2013.
    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 May 20, 2013, Miami International Securities Exchange LLC (the 
``Exchange'' or ``MIAX'') 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. 
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

    The Exchange is filing a proposal to amend Exchange Rule 404, 
Series of Option Contracts Open for Trading, by modifying 
Interpretations and Policies .02 to the Rule to expand the number of 
expirations available under the Short Term Option Series Program 
(``STOS Program''), to allow the Exchange to delist certain series in 
STOS that do not have open interest, and to expand the number of series 
in STOS under limited circumstances.
    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 proposal is to amend Exchange Rule 404, 
Interpretations and Policies .02, to provide for the ability to open up 
to five consecutive expirations under the STOS Program for trading on 
the Exchange, to allow the Exchange to delist certain series in STOS 
that do not have open interest, and to expand the number of series in 
STOS under limited circumstances when there are no series at least 10% 
but not more than 30% away from the current price of the underlying 
security.
    Currently, the Exchange may select up to 25 currently listed option 
classes in which STOS options may be opened in the STOS Program, and 
the Exchange may also match any option classes that are selected by 
other securities exchanges that employ a similar program under their 
respective rules. For each option class eligible for participation in 
the STOS Program, the Exchange may open up to 30 Short Term Option 
Series for each expiration date in that class.\3\
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    \3\ See Exchange Rule 404, Interpretations and Policies .02(a).
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    This proposal seeks to allow the Exchange to open STOS option 
series for up to five consecutive week expirations. The Exchange 
intends to add a maximum of five consecutive week expirations under the 
STOS Program. However, it will not add an STOS expiration in the same 
week that a monthly options series expires or, in the case of Quarterly 
Option Series,\4\ on an expiration that coincides with an expiration of 
Quarterly Option Series on the same class. In other words, the total 
number of consecutive expirations will be five, including any existing 
monthly or quarterly expirations.\5\
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    \4\ See Exchange Rule 404, Interpretations and Policies .03.
    \5\ For example, if Quarterly Options expire week 1 and monthly 
options expire week 3 from now, the proposal would allow the 
following expirations: week 1 Quarterly, week 2 STOS, week 3 
monthly, week 4 STOS, and week 5 STOS.
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    The Exchange notes that the STOS Program has been well-received by 
market participants, in particular by retail investors.\6\ The Exchange 
believes that the current proposed revision to the STOS Program will 
permit the Exchange to meet increased customer demand and provide 
market participants with the ability to hedge in a greater number of 
option classes and series.
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    \6\ Since the STOS Program has been adopted, it has seen rapid 
acceptance among industry participants as evidenced by the expansion 
of the number of classes eligible for the STOS Program by various 
Exchanges. See Securities Exchange Act Release Nos. 65775 (November 
17, 2011), 76 FR 72473 (November 23, 2011) (SR-NASDAQ-2011-138); 
65776 (November 17, 2011), 76 FR 72482 (November 23, 2011) (SR-PHLX-
2011-131); 66563 (March 9, 2012), 77 FR 15426 (March 15, 2012); 
67194 (June 13, 2012), 77 FR 36597 (June 19, 2012) (SR-NYSEMKT-2012-
08); and 67178 (June 11, 2012), 77 FR 36305 (June 18, 2012) (SR-
NYSEArca-2012-60).
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    With regard to the impact of this proposal on system capacity, the 
Exchange has analyzed its capacity and represents that it and the 
Options Price Reporting Authority have the necessary systems capacity 
to handle the potential additional traffic associated with trading of 
an expanded number of expirations that participate in the STOS Program.
    In addition, to provide for circumstances where the underlying 
security has moved such that there are no series that are at least 10% 
above or below the current price of the underlying security, the 
Exchange is proposing to add new language to Interpretations and 
Policies .02 to provide that the Exchange would delist series with no 
open interest in both the call and the put series having: (i) A

[[Page 33455]]

strike higher than the highest price with open interest in the put and/
or call series for a given expiration month; and (ii) a strike lower 
than the lowest strike price with open interest in the put and/or the 
call series for a given expiration month, so as to list series that are 
at least 10% but not more than 30% above or below the current price of 
the underlying security. Further, in the event that all existing series 
have open interest and there are no series at least 10% above or below 
the current price of the underlying security, the Exchange may list 
additional series, in excess of the 30 allowed currently under 
Interpretations and Policies .02, that are at least 10% and not more 
than 30% above or below the current price of the underlying security.
    The Exchange believes that it is important to allow investors to 
roll existing option positions, and ensuring that there are always 
series at least 10% but not more than 30% above or below the current 
price of the underlying security will allow investors the flexibility 
they need to roll existing positions. This change is being proposed 
notwithstanding the current cap of 30 series per class under the STOS 
Program.
2. Statutory Basis
    The Exchange 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that expanding the STOS Program will result 
in a continuing benefit to investors by giving them more flexibility to 
closely tailor their investment decisions and hedging decisions in a 
greater number of securities. The Exchange also believes that expanding 
the STOS Program will provide the investing public and other market 
participants with additional opportunities to hedge their investment, 
thus allowing these investors to better manage their risk exposure. 
While the expansion of the STOS Program will generate additional quote 
traffic, the Exchange does not believe that this increased traffic will 
become unmanageable since the proposal remains limited to a fixed 
number of expirations.
    The Exchange believes that the ability to delist series with no 
open interest in both the call and the put series will benefit 
investors by devoting the current cap in the number of series to those 
series that are more closely tailored to the investment decisions and 
hedging decisions of investors.

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.
    The Exchange believes that the proposal enhances competition among 
exchanges by enabling market participants to use STOS in a greater 
number of series in making investment decisions. MIAX will have more 
series through which investors will be able to tailor their investment 
and hedge positions, therefore enabling MIAX to compete with other 
exchanges that have similar rules in place, as cited below.

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 significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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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)(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 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 requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to those of 
other exchanges that have been approved by the Commission and would 
provide the investing public and other market participants with greater 
flexibility to closely tailor their investment and hedging decisions in 
a greater number of series, thus allowing investors to better manage 
their risk exposure.\11\ Therefore, the Commission designates the 
proposal operative upon filing.\12\
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    \11\ See Exchange Act Release Nos. 68190 (November 8, 2012), 77 
FR 68193 (November 15, 2012) (SR-NYSEArca-2012-95); 68191 (November 
8, 2012), 77 FR 68194 (November 15, 2012) (SR-NYSEMKT-2012-42).
    \12\ For purposes only of waiving the 30-day operative delay, 
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. 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-2013-23 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-2013-23. 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

[[Page 33456]]

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-2013-23 and should be 
submitted on or before June 25, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13146 Filed 6-3-13; 8:45 am]
BILLING CODE 8011-01-P