[Federal Register Volume 78, Number 174 (Monday, September 9, 2013)]
[Notices]
[Pages 55131-55133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21813]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70299; File No. SR-MIAX-2013-40]


Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by Miami International 
Securities Exchange LLC To Amend MIAX Rule 1322, Options Communications

September 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 August 19, 2013, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange

[[Page 55132]]

Commission (the ``Commission'') a proposed rule change as described in 
Items I, and II below, which Items have been substantially prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule 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 proposes to amend MIAX Rule 1322, Options 
Communications. The text of the proposed rule change is available from 
the principal office of the Exchange, at the Commission's Public 
Reference Room and also on the Exchange's Internet Web site at http://www.miaxoptions.com/.

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 Exchange proposes to amend Rule 1322, Options Communications, 
to conform the rule to changes recently made by the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') to its corresponding rule.\3\ 
The proposed changes are designed to alert Members to their 
requirements with respect to Options Communications while further 
regulating all communications for compliance with Exchange Rules and 
the Act. In addition, the Exchange believes that the proposed rule 
change will help ensure that investors are protected from potentially 
false or misleading communications with the public distributed by 
Exchange Members.
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    \3\ See Securities Exchange Act Release No. 68650 (January 14, 
2013), 78 FR 4182 (January 18, 2013) (SR-FINRA-2013-001) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Update 
Cross-References and Make Other Non-Substantive Changes Within FINRA 
Rules and By-Laws). See also Securities Exchange Act Release 69807 
(June 20, 2013), 78 FR 38423 (June 26, 2013) (SR-CBOE-2013-043) 
(Order Approving a Proposed Rule Change Relating to Exchange Rule 
9.21) and Securities Exchange Act Release No. 70070 (July 30, 2013), 
78 FR 47476 (August 5, 2013) (SR-BOX-2013-037) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule 
4170 (Options Communications)).
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    First, the Exchange proposes to amend Exchange Rule 1322(a) by 
reducing the number of defined categories of communication in current 
Rule 1322(a) from six to three. The proposed three categories of 
communications are: Retail communications, correspondence, and 
institutional communications. The current definitions of ``sales 
literature,'' ``advertisement,'' and ``independently prepared reprint'' 
would be combined into a single category of ``retail communications.'' 
The Exchange proposes to define ``retail communication'' as any written 
(including electronic) communication that is distributed or made 
available to more than 25 retail investors within any 30 calendar-day 
period. The Exchange also proposes to amend the current definition of 
``correspondence'' to mean any written (including electronic) 
communication distributed or made available by a Member to 25 or fewer 
retail customers within any 30 calendar-day period. Additionally, the 
Exchange proposes to delete the current term, ``institutional sales 
material'' and replace that definition with the term ``institutional 
communication,'' which would include written (including electronic) 
communications that are distributed or made available only to 
institutional investors.
    Second, the Exchange proposes to amend Rule 1322(b), Approval by 
Registered Options Principal, by replacing the phrase ``advertisements, 
sales literature, and independently prepared reprints'' in Rule 
1322(b)(1) with the new proposed term, ``retail communications.''
    Under proposed Rule 1322(b)(2), correspondence would need not need 
to be approved by a Registered Options Principal prior to use but would 
be subject to the supervision and review requirements of Rule 1308. The 
Exchange proposes to delete the provision requiring principal approval 
of correspondence that is distributed to 25 or more existing retail 
customers within a 30 calendar-day period that makes any financial or 
investment recommendation or otherwise promotes the product or service 
of a Member. Under proposed Rule 1322(b), such communications would be 
considered ``retail communications'' and therefore remain subject to 
the principal approval requirement under the proposed new definition. 
As such, the proposed rule change would not substantively change the 
scope of options communications that would require principal approval.
    Third, the Exchange proposes to establish the required approvals of 
institutional communications, currently known as institutional sales 
material. Specifically, the Exchange proposes to delete the current 
requirements for institutional sales material and add that Members 
shall establish written procedures that are appropriate to its 
business, size, structure, and customers for review by a Registered 
Options Principal of institutional communications used by the Member.
    Fourth, the Exchange proposes to amend Rule 1322(c) by replacing 
the phrase ``advertisements, sales literature, and independently 
prepared reprints'' with the new proposed term, ``retail 
communications.'' The Exchange also proposes to further exempt the 
options disclosure document (``ODD'') and prospectuses from Exchange 
review as other requirements apply to these documents under the 
Securities Act of 1933.
    Fifth, the Exchange proposes to specify in Rule 1322(d) that no 
Member or associated person may use any options communications that 
``constitute a prospectus'' unless the communications meet the 
requirements of the Securities Act, and further specifying that any 
statement in any options communications referring to the potential 
opportunities or advantages presented by options shall be balanced by a 
statement of the corresponding risks. The risk statement shall reflect 
the same degree of specificity as the statement of opportunities, and 
broad generalities must be avoided. This language is identical to 
language contained in current Rule 1322(d)(5), which is proposed to be 
deleted.
2. Statutory Basis
    The Exchange believes that the 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

[[Page 55133]]

general, to protect investors and the public interest.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes the proposed rule changes will 
provide greater clarity to Members and the public regarding the 
Exchange's Rules. In addition, the Exchange believes that the proposed 
rule change will help ensure that investors are protected from 
potentially false or misleading communications with the public 
distributed by Exchange Members.

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. In this regard and as indicated 
above, the Exchange notes that the rule change being proposed is 
substantially similar to filings submitted by other options exchanges 
and recently approved by the Commission.\6\ The Exchange believes this 
proposed rule change is necessary to establish uniform rules regarding 
Options Communications.\7\
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    \6\ See supra note 3.
    \7\ Id.
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    Specifically, the proposed rule change will bring clarity and 
consistency to Exchange Rules. The Exchange does not believe the 
proposed rule change will impose any burden on intramarket competition 
as it applies to all Members. In addition, the Exchange does not 
believe the proposed rule change will bring any unnecessary burden on 
intermarket competition as it is consistent with the FINRA Options 
Communications rule.

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

    MIAX has filed the proposed rule change pursuant to Section 
19(b)(3)(A) \8\ of the Act and Rule 19b-4(f)(6) thereunder.\9\ 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 Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to provide the Commission with written notice 
of its 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.
    \10\ 15 U.S.C. 78s(b)(3)(A).
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
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. MIAX has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will it will ensure fair competition among the exchanges by allowing 
the Exchange to conform with changes recently made by FINRA. For these 
reasons, the Commission designates the proposed rule change to be 
operative upon filing.\13\
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    \13\ For purposes 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-2013-40 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-2013-40. 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-2013-40 and 
should be submitted on or before September 30, 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).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21813 Filed 9-6-13; 8:45 am]
BILLING CODE 8011-01-P