[Federal Register Volume 78, Number 121 (Monday, June 24, 2013)]
[Notices]
[Pages 37856-37858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-14963]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69785; File No. SR-MIAX-2013-28]


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

June 18, 2013.
    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 June 12, 2013, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (the ``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 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 revise the provision describing how the Exchange 
specifies which option classes trade in the Penny Pilot Program.
    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 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 June 30, 2013. The purpose of the proposed rule 
change is to extend the Penny Pilot Program in its current format 
through December 31, 2013.
    In addition to the extension of the Penny Pilot Program through 
December 31, 2013, the Exchange will replace any Penny Pilot issues 
that have been delisted with the next most actively traded multiply 
listed option classes that are not yet included in the Penny Pilot 
Program. The replacement issues will be selected based on trading 
activity in the previous six months and

[[Page 37857]]

will be added to the Penny Pilot Program on the second trading day 
following July 1, 2013. Please note, the month immediately preceding a 
replacement class's addition to the Pilot program (i.e., June) will not 
be used for purposes of the six-month analysis. Thus, a replacement 
added on the second trading day following July 1, 2013 will be 
identified based on trading activity from December 1, 2012 through May 
31, 2013. Rule 510 has been updated to reflect the new date replacement 
issues will be added to the Penny Pilot Program.
    Finally, the Exchange proposes to revise the provision describing 
how the Exchange specifies which option classes trade in the Penny 
Pilot Program. Currently, the rule provides that the Exchange specifies 
which option classes trade in the Penny Pilot Program and in what 
increments in a Regulatory Circular that has been filed with the 
Commission pursuant to Rule 19b-4 under the Exchange Act and 
distributed to its Members. The Exchange now proposes to revise that 
provision to indicate information regarding the option classes trading 
in the Penny Pilot Program will be communicated to Members through a 
Listings Alert and posted on the Exchange's Web site.\3\ By revising 
this provision, the Exchange will eliminate the requirement to file a 
Regulatory Circular with the Commission pursuant to Rule 19b-4.
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    \3\ This revision is consistent with rules at most of the other 
options exchanges participating in the Penny Pilot Program: BATS 
Exchange, Inc. (``BATS'') Rule 21.5, Interpretations and Policies 
.01; NASDAQ OMX BX, Inc. (``BX'') Chapter VI, Section 5(3); NASDAQ 
OMX PHLX, Inc. (``PHLX'') Rule 1034(a)(i)(B); The NASDAQ Stock 
Market LLC (``NOM'') Chapter VI, Section 5; NYSE MKT LLC Rule 960NY, 
Commentary .02; and NYSE Arca, Inc. Rule 6.72, Commentary .02.
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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. In particular, the proposed 
rule change, which extends the Penny Pilot Program for six months, 
allows the Exchange to continue 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 revision to how the Exchange will specify which 
options participate in the Penny Pilot Program promotes just and 
equitable principles of trade since it clarifies how Members and other 
market participants will be made aware of which options classes are 
trading in the Penny Pilot Program and eliminates an unnecessary 
requirement that the Exchange specify which option classes are in the 
Penny Pilot Program through a Regulatory Circular that has been filed 
with Commission pursuant to Rule 19b-4 under the Act. The requirement 
to file the Regulatory Circular with the Commission is unnecessary 
because most (i.e., all but two option exchanges \6\) do not require 
such a submission to the Commission.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Only BOX Options Exchange LLC (at Rule 7050(b)) and 
International Securities Exchange, LLC (at Rule 710, Supplementary 
Materials .01) require that the Regulatory Information Circulars 
specifying which options trade in the Penny Pilot Program be 
submitted to the Commission.
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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. Specifically, the Exchange 
believes that, by extending the expiration of the Pilot Program, the 
proposed rule change will allow for further analysis of the Penny Pilot 
Program and a determination of how the Program should be structured in 
the future. In doing so, the proposed rule change will also serve to 
promote regulatory clarity and consistency, thereby reducing burdens on 
the marketplace and facilitating investor protection. In addition, 
consistent with previous practices, the Exchange believes the other 
options exchanges will be filing similar extensions of the Penny Pilot 
Program.

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 \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
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 \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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.\11\ 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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. Accordingly, the Commission designates the proposed 
rule change as operative upon filing with the Commission.\13\
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    \11\ 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.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \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.

[[Page 37858]]

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-2013-28 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-2013-28. 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-2013-28 and should be 
submitted on or before July 15, 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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14963 Filed 6-21-13; 8:45 am]
BILLING CODE 8011-01-P