[Federal Register Volume 78, Number 192 (Thursday, October 3, 2013)]
[Notices]
[Pages 61416-61418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24161]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70543; File No. SR-MIAX-2013-45]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 503

September 27, 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 September 19, 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 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 the 
Substance of the Proposed Rule Change

    The Exchange is filing a proposal to amend Rule 503.
    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 Exchange proposes to amend Rule 503 to provide details 
regarding the treatment of market orders to sell in two specific 
scenarios during the Exchange's Opening Process--when market sell 
interest outweighs buy interests and (i) the highest quote bid is 
either zero or the lowest Minimum Trading Increment or (ii) the 
Expanded Quote Range has been calculated as zero. The proposal codifies 
existing functionality during the Exchange's Opening Process. 
Specifically, the Exchange proposes adding the following to Rule 
503(f)(3):

    In series where the highest quote bid is either zero or the 
lowest Minimum Trading Increment and market order sell interest has 
a quantity greater than all of the buy interest, the System will 
treat the market order(s) like a limit order to sell at the lowest 
Minimum Trading Increment and the Opening Process will be satisfied 
with an opening price at the lowest Minimum Increment with any 
remaining balance of the sell order(s) being placed on the Book in 
time priority and made available for execution following the Opening 
Process.

    The Exchange believes that this amendment will prevent any 
confusion on the part of its members on how such orders will be treated 
during the Exchange's Opening Process. For instance, in the absence of 
the proposed amendment to Rule 503(f)(3), a member could believe that a 
market order to sell could be priced at zero in a no bid series. 
However, the Exchange System avoids this theoretical outcome by 
converting the sell market order to a limit order with a limit price of 
the lowest Minimum Trading Increment. This is very similar to how the 
MIAX Order Monitor, which applies after the Opening Process, converts 
market orders to sell in certain circumstances to

[[Page 61417]]

limit orders to sell with a limit price of one Minimum Trading 
Increment pursuant to Rule 519.\3\
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    \3\ See Exchange Rule 519(a)(1).
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    Additionally, the Exchange proposes adding the following to Rule 
503(f)(8)(ii)(E):

    However, in a series where the EQR has been calculated to be 
zero on the bid side and market order sell interest has a quantity 
greater than all of the buy interest, the System will treat the 
market order(s) like a limit order(s) to sell at the lowest Minimum 
Trading Increment and the Opening Process will be satisfied with an 
opening price at the lowest Minimum Increment with any remaining 
balance of the sell order(s) being placed on the Book in time 
priority and made available for execution following the Opening 
Process.

    The Exchange believes that this amendment, similar to the amendment 
to Rule 503(f)(3) discussed above, will prevent any confusion on the 
part of its members on how such orders will be treated during the 
Exchange's Opening Process. For instance, in the absence of the 
proposed amendment to Rule 503(f)(8)(ii)(E), a member could believe 
that a market order to sell could be priced at zero in a series where 
the Expanded Quote Range has been calculated to be zero on the bid 
side. However, the Exchange System avoids this theoretical outcome by 
converting the sell market order to a limit order with a limit price of 
the lowest Minimum Trading Increment. This is also very similar to how 
the MIAX Order Monitor, which applies after the Opening Process, 
converts market orders to sell in certain circumstances to limit orders 
to sell with a limit price of one Minimum Trading Increment pursuant to 
Rule 519.
    The Exchange notes that neither the proposed language of Rule 
519(f)(3) or 519(f)(8)(E) supersedes the functionality of the Opening 
(``OPG'') Order as defined in Rule 516(h). Therefore, the remaining 
balance of any OPG market order to sell that has been converted to a 
limit order to sell at the Minimum Trading Increment shall be cancelled 
rather than placed on the Book following the Opening Process.
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, because 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, and to remove impediments to and perfect 
the mechanism 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The proposed amendments to Exchange Rule 503 removes impediments to 
and perfects the mechanisms of a free and open market and a national 
market system and, in general, protects investors and the public 
interest by providing additional details to the mechanics of the 
Exchange's Opening Process in order to align the Rule text to existing 
functionality. Such additional details provide further clarity and 
transparency around the Opening Process, which, in turn, benefits 
members by allowing them to better understand how the Exchange System 
will treat market orders to sell in two specific situations--when 
market sell interest outweighs buy interests and (i) the highest quote 
bid is either zero or the lowest Minimum Trading Increment or (ii) the 
Expanded Quote Range has been calculated as zero. With this 
information, members can better choose the type of order, such as a 
market or limit order, to send during the Opening Process.
    Additionally, the underlying design of the Exchange System to 
prevent trades from occurring at a price of zero protects investors and 
the public interest and promotes just and equitable principles by 
avoiding trades from occurring at a potentially harmful price, 
especially for investors entering market orders to sell who would most 
likely not want to sell a position for no value.

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 changes will not impose any burden on intra-
market competition because it applies to all MIAX participants equally. 
In addition, the Exchange does not believe the proposal will impose any 
burden on inter-market competition as the proposal is intended to 
protect investors by providing further transparency regarding the 
Exchange's Opening Process. The proposed amendment will place the 
investing public in a better position when selecting which of the 
various option exchanges to send an order to be including during the 
respective opening transaction.

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 \6\ and Rule 19b-4(f)(6) \7\ 
thereunder.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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-2013-45 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-2013-45. This file

[[Page 61418]]

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 offices 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-2013-45, 
and should be submitted on or before October 24, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24161 Filed 10-2-13; 8:45 am]
BILLING CODE 8011-01-P