[Federal Register Volume 78, Number 111 (Monday, June 10, 2013)]
[Notices]
[Pages 34698-34700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13606]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69685; File No. SR-MIAX-2013-25]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend Rule 520 To Clarify the Description of the 
Operation of the Exchange's Route Timer

June 3, 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 22, 2013, Miami International Securities Exchange LLC (``MIAX'' 
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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 529(b)(2)(iii) to 
clarify the description of the operation of the Exchange's route timer 
set forth in the rule text.
    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.

[[Page 34699]]

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

1. Purpose
    The purpose of the proposed rule change is to amend Rule 
529(b)(2)(iii) to clarify the description of the operation of the 
Exchange's route timer set forth in the rule text. Specifically, the 
Exchange proposes to amend the language in Rule 529(b)(2)(iii) to more 
clearly specify that (i) at any point during the route timer the 
initiating order and all joining interest on the same side of the 
market is either traded in full or cancelled in full, the route timer 
will be terminated and normal trading will resume, and (ii) if at any 
point during the route timer a change in the ABBO would allow all or 
part of the initiating order and any joining interest on the same side 
of the market to trade on the Exchange at the revised NBBO, the route 
timer will be terminated and normal trading will resume.
    In accordance with the Options Order Protection and Locked/Crossed 
Market Plan (the ``Plan''), the Exchange provides price protection in 
options by routing intermarket sweep orders to other options exchanges. 
Intermarket sweep orders may be routed to another options exchange when 
trading interest is not available on MIAX, is of insufficient size, or 
when MIAX is not at the National Best Bid or Offer (``NBBO'') 
consistent with the Plan. Orders that are routable may either be 
eligible for immediate routing, provided the criteria for immediate 
routing are met, or may be subject to a route timer.
    Public Customer orders not eligible for immediate routing are be 
subject to a route timer. The route timer allows Market Makers and 
other market participants an opportunity to interact with an order 
before it is routed to another options exchange. At the start of the 
route timer, the Exchange's trading system broadcasts a Route 
Notification message to subscribers of its market data feeds providing 
details about the order to be routed. During the timer, which does not 
exceed one second, Market Makers and other market participants may 
submit certain order and quote types at any price level. If during the 
route timer the Exchange receives a new order or quote on the opposite 
side of the market from the initiating order that can be executed, the 
System will immediately execute the remaining contracts. Conversely, if 
during the route timer the Exchange receives orders or quotes on the 
same side of the market as the initiating order, such new orders or 
quotes will join the initiating order in the route timer. The 
Exchange's trading system will disseminate an updated MIAX Best Bid or 
Offer (``MBBO'') that includes the new order or quote size.
    If at any point during the route timer the initiating order and all 
joining interest on the same side of the market is either traded in 
full or cancelled in full, the route timer will be terminated and 
normal trading will resume. In addition, if at any point during the 
route timer a change in the Away Best Bid or Offer (``ABBO'') would 
allow the initiating order and any joining interest on the same side of 
the market to trade on the Exchange at the revised NBBO, the route 
timer will be terminated and normal trading will resume.
    At the end of the route timer any contracts that could not be 
executed and are marketable at the original NBBO on another exchange 
are marked as an intermarket sweep order and routed to the appropriate 
away market.
    The Exchange proposes to amend the description set forth in Rule 
529(b)(2)(iii) to more clearly reflect the above description of the 
trading system functionality with respect to a change in the ABBO that 
would allow all or part of the initiating order and any same side 
interest to trade on the Exchange at the revised NBBO. The Exchange is 
now proposing to revise the last sentence in Rule 529(b)(2)(iii) by 
splitting the sentence into two sentences. The Exchange believes that 
this less complicated sentence structure clarifies that if there is a 
change in the ABBO at any point during the route timer that would allow 
all or part of \3\ the initiating order and any joining interest on the 
same side of the market to trade on the Exchange at the revised NBBO, 
the route timer will be terminated and normal trading will resume. The 
Exchange believes the revised language will help eliminate potential 
confusion regarding the operation of the route timer.
---------------------------------------------------------------------------

    \3\ The Exchange amended its filing to add the term ``all or 
part of'' to this sentence; the term had been inadvertently omitted 
from the original filing. See email from Claire McGrath, Legal 
Consultant, MIAX, to Sara Gillis Hawkins, Special Counsel, 
Commission, dated May 28, 2013.
---------------------------------------------------------------------------

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. The 
proposed clarification will protect investors and the public interest 
by eliminating potential confusion that could be caused by the existing 
language used to describe trading system functionality.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. Specifically, the Exchange 
believes the proposed rule change will not impose any burden because 
the Exchange is merely amending its Rules so that they clearly reflect 
the system functionality.

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 and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if

[[Page 34700]]

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 under 
Section 19(b)(2)(B) of the Act \8\ to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 No. SR-MIAX-2013-25 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 No. SR-MIAX-2013-25. 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 No. SR-MIAX-2013-25 and should be 
submitted on or before July 1, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13606 Filed 6-7-13; 8:45 am]
BILLING CODE 8011-01-P