[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Notices]
[Pages 47165-47170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18978]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72777; File No. SR-MIAX-2014-39]


Self-Regulatory Organizations: Miami International Securities 
Exchange LLC; Notice of Filing of a Proposed Rule Change To List and 
Trade Options on Shares of the Market Vectors ETFs

August 6, 2014.
    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 July 28, 2014, Miami International Securities 
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``SEC'' or ``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 Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to list and trade on the Exchange 
options on shares of the Market Vectors Brazil Small-Cap ETF (``BRF''), 
Market Vectors Indonesia Index ETF (``IDX''), Market Vectors Poland ETF 
(``PLND''), and Market Vectors Russia ETF (``RSX'').
    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 list for trading on the Exchange options 
on the shares of the Market Vectors Brazil Small-Cap ETF,\3\ Market 
Vectors Indonesia Index ETF, Market Vectors Poland ETF, and Market 
Vectors Russia ETF \4\ (collectively the ``Market Vector ETFs''). MIAX 
Rule 402 establishes the Exchange's initial listing standards for 
equity options (the ``Listing Standards''). The Listing Standards 
permit the Exchange to list options on the shares of open-end 
investment companies, such as the Market Vectors ETFs, without having 
to file for approval with the Commission.\5\ The Exchange submits that 
each of the Market Vectors ETFs substantially meet all of the initial 
listing requirements. In particular, all of the requirements set forth 
in Rule 402(i) for each of the Market Vectors ETFs are met except for 
the requirement concerning the existence of a comprehensive 
surveillance sharing agreement (``CSSA''). However, as explained below, 
the Exchange submits that sufficient mechanisms exist in order to 
provide adequate surveillance and regulatory information with respect 
to the portfolio securities of each of the Market Vectors ETFs.
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    \3\ Options on Market Vectors Brazil Small-Cap ETF are currently 
listed on Chicago Board Options Exchange, Inc. (``CBOE''), 
International Securities Exchange (``ISE''), and NASDAQ OMX PHLX 
(``PHLX'').
    \4\ Options on Market Vectors Russia ETF are currently listed on 
BATS Options Exchange (``BATS''), BOX Options Exchange (``BOX''), 
CBOE, PHLX, NYSE AMEX Options (``AMEX''), NYSE ARCA Options 
(``ARCA''), ISE, and ISE Gemini.
    \5\ MIAX Rule 402(i) provides the Listing Standards for shares 
or other securities (``Exchange-Traded Fund Shares'') that are 
traded on a national securities exchange and are defined as an ``NMS 
stock'' under Rule 600 of Regulation NMS.

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[[Page 47166]]

Market Vectors Brazil Small-Cap ETF (``BRF'')
    BRF is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the Market Vectors Brazil Small-Cap Index 
(``Brazil Index'').\6\ The Brazil Index consists of stocks traded 
primarily on BM&FBOVESPA. BRF employs a ``passive'' or indexing 
approach to track the Brazil Index by investing in a portfolio of 
securities that generally replicates the Brazil Index.\7\ Van Eck 
Associates Corporation (the ``Adviser'') expects BRF to closely track 
the Brazil Index so that, over time, a tracking error of 5%, or less, 
is exhibited. BRF will normally invest at least eighty percent (80%) of 
its assets in the securities comprising the Brazil Index. The Exchange 
believes that these policies prevent BRF from being excessively 
weighted in any single security or small group of securities and 
significantly reduce concerns that trading in BRF could become a 
surrogate for trading in unregistered securities.
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    \6\ Market Vectors Index Solutions created and maintains the 
Market Vectors Brazil Small-Cap Index.
    \7\ As of March 20, 2014, BRF was comprised of 82 securities. 
CIA HERING had the greatest individual weight at 3.39%. The 
aggregate percentage weighting of the top 5 and 10 securities in the 
Fund were 15.04% and 27.66%, respectively.
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    Shares of the BRF (``BRF Shares'') are issued and redeemed, on a 
continuous basis, at net asset value (``NAV'') in aggregation size of 
50,000 shares, or multiples thereof (a ``Creation Unit''). Following 
issuance, BRF Shares are traded on an exchange like other equity 
securities. BRF Shares trade in the secondary markets in amounts less 
than a Creation Unit and the price per BRF Share may differ from its 
NAV which is calculated once daily as of the regularly scheduled close 
of business of NYSE Arca.\8\
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    \8\ The regularly scheduled close of trading on NYSE Arca is 
normally 4:00 p.m. Eastern Time (``ET'') and 4:15 p.m. for ETFs.
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    Bank of New York Mellon is the custodian, and transfer agent for 
BRF. Detailed information on BRF can be found at www.vaneck.com.
    The Exchange has reviewed BRF and determined that the BRF Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(B) which requires BRF to meet the 
following condition:
     Component securities of an index or portfolio of 
securities on which the Exchange-Traded Fund Shares are based for which 
the primary market is in any one country that is not subject to a 
comprehensive surveillance agreement do not represent 20% or more of 
the weight of the index.

The Exchange currently does not have in place a surveillance agreement 
with BOVESPA.
    The Exchange submits that the Commission, in the past, has been 
willing to allow a national securities exchange to rely on a memorandum 
of understanding entered into between regulators in the event that the 
exchanges themselves cannot enter into a CSSA. The Exchange notes that 
BM&FBOVESPA is under the regulatory oversight of the Comissao de 
Valores Mobiliarios (``CMV''), which has the responsibility for both 
Brazilian exchanges and over-the-counter markets. The Exchange further 
notes that the Commission executed a memorandum of understanding with 
the CMV dated as of July 24, 2012 (``Brazil-US MOU''), which provides a 
framework for mutual assistance in investigatory and regulatory issues. 
Based on the relationship between the SEC and CMV and the terms of the 
Brazil-US MOU, the Exchange submits that both the Commission and the 
CMV could acquire information from and provide information to the other 
similar to that which would be required in a CSSA between exchanges. 
Moreover, the Commission could make a request for information under the 
Brazil-US MOU on behalf of an SRO that needed the information for 
regulatory purposes. Thus, should MIAX need information on Brazilian 
trading in the Brazil Index component securities to investigate 
incidents involving trading of BRF options, the SEC could request such 
information from the CMV under the Brazil-US MOU. While this 
arrangement certainly would be enhanced by the existence of direct 
exchange to exchange surveillance sharing agreements, it is nonetheless 
consistent with other instances where the Commission has explored 
alternatives when the relevant foreign exchange was unwilling or unable 
to enter into a CSSA.\9\
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    \9\ See, e.g., Securities Exchange Act Release No. 36415 
(October 25, 1995), 60 FR 55620 (November 1, 1995) (SR-CBOE-95-45) 
(Order Approving Proposed Rule Change Relating to the Listing and 
Trading of Options on the CBOE Mexico 30 Index).
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    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
Commission's New Product Release (``New Product Release'').\10\ The 
Commission noted in the New Product Release that if securing a CSSA is 
not possible, an exchange should contact the Commission prior to 
listing a new derivative securities product. The Commission also noted 
that the Commission may determine instead that it is appropriate to 
rely on a memorandum of understanding between the Commission and the 
foreign regulator.
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    \10\ See Securities Exchange Act Release No. 40761 (December 8, 
1998), 63 FR 70952, 70959 at fn. 101 (December 22, 1998).
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    The Exchange has recently contacted BM&FBOVESPA with a request to 
enter into a CSSA. Until the Exchange is able to secure a CSSA with 
BM&FBOVESPA, the Exchange requests that the Commission allow the 
listing and trading of options on BRF without a CSSA, upon reliance of 
the Brazil-US MOU entered into between the Commission and the CMV. The 
Exchange believes this request is reasonable and notes that the 
Commission has provided similar relief in the past. For example, the 
Commission approved the Philadelphia Stock Exchange, Inc. (``PHLX'') to 
rely on an MOU between the Commission and the CMV instead of a direct 
CSSA with BM&FBOVESPA in order to list and trade options on Telebras 
Portoflio Certicate American Depository Receipts.\11\ Additionally, the 
Commission approved, on a pilot basis, proposals of competing exchanges 
to list and trade options on the iShares MSCI Emerging Markets Fund 
\12\ and the iShares MSCI Mexico Indext Fund.\13\
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    \11\ See Securities Exchange Act Release No. 40298 (August 3, 
1998), 63 FR 43435 (August 13, 1998) (SR-Phlx-1998-33).
    \12\ See Securities Exchange Act Release Nos. 53824 (May 17, 
2006), 71 FR 30003 (May 24, 2006) (SR-Amex-2006-43); 54081 (June 30, 
2006), 71 FR 38911 (July 10, 2006) (SR-Amex-2006-60); 54553 
(September 29, 2006), 71 FR 59561 (October 10, 2006) (SR-Amex-2006-
91); 55040 (January 3, 2007), 72 FR 1348 (January 11, 2007) (SR-
Amex-2007-01); and 55955 (June 25, 2007), 72 FR 36079 (July 2, 2007) 
(SR-Amex-2007-57); 56324 (August 27, 2007), 72 FR 50426 (August 31, 
2007) (SR-ISE-2007-72).
    \13\ See Securities Exchange Act Release Nos. 72213 (May 21, 
2014), FR 30699 (May 28, 2014) (SR-MIAX-2014-19); 56778 (November 9, 
2007), 72 FR 65113 (November 19, 2007) (SR-Amex-2007-100); 57013 
(December 20, 2007), 72 FR 73923 (December 28, 2007) (SR-CBOE-2007-
140); 57014 (December 20, 2007), 72 FR 73934 (December 28, 2007) 
(SR-ISE-2007-111).
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    The Commission's approval of this request to list and trade options 
on the BRF would otherwise render BRF compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with BM&FBOVESPA, which shall reflect the following: (1) Express 
language addressing market trading activity, clearing activity, and 
customer identity; (2) BM&FBOVESPA's reasonable ability to obtain 
access to and produce

[[Page 47167]]

requested information; and (3) based on the CSSA and other information 
provided by the BM&FBOVESPA, the absence of existing rules, law or 
practices that would impede the Exchange from obtaining foreign 
information relating to market activity, clearing activity, or customer 
identity, or in the event such rules, laws, or practices exist, they 
would not materially impede the production of customer or other 
information.
Market Vectors Indonesia Index ETF (``IDX'')
    IDX is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the Market Vectors Indonesia Index (``Indonesia 
Index'').\14\ The Indonesia Index consists of stocks traded primarily 
on the Indonesia Stock Exchange. IDX employs a ``passive'' or indexing 
approach to track the Indonesia Index by investing in a portfolio of 
securities that generally replicates the Indonesia Index.\15\ The 
Adviser expects IDX to closely track the Indonesia Index so that, over 
time, a tracking error of 5%, or less, is exhibited. IDX will normally 
invest at least eighty percent (80%) of its assets in the securities 
comprising the Indonesia Index. IDX may concentrate its investments in 
a particular industry or group of industries to the extent that the 
Indonesia Index concentrates in an industry or group of industries. The 
Exchange believes that these requirements and policies prevent the IDX 
from being excessively weighted in any single security or small group 
of securities and significantly reduce concerns that trading in IDX 
could become a surrogate for trading in unregistered securities.
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    \14\ Market Vectors Index Solutions created and maintains the 
Market Vectors Indonesia Index.
    \15\ As of June 30, 2014, IDX was comprised of 52 securities. 
ASTRA INTERNATIONAL had the greatest individual weight at 8.05%. The 
aggregate percentage weighting of the top 5 and 10 securities in the 
Fund were 35.65% and 54.01%, respectively.
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    Shares of the IDX (``IDX Shares'') are issued and redeemed, on a 
continuous basis, at NAV in aggregation size of 50,000 shares, or 
multiples thereof (a ``Creation Unit''). Following issuance, IDX Shares 
are traded on an exchange like other equity securities. IDX Shares 
trade in the secondary markets in amounts less than a Creation Unit and 
the price per IDX Share may differ from its NAV which is calculated 
once daily as of the regularly scheduled close of business of NYSE 
Arca.\16\
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    \16\ See supra note 8.
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    Bank of New York Mellon is the custodian, and transfer agent for 
IDX. Detailed information on IDX can be found at www.vaneck.com.
    The Exchange has reviewed IDX and determined that the IDX Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(B) which requires IDX to meet the 
following condition:
     Component securities of an index or portfolio of 
securities on which the Exchange-Traded Fund Shares are based for which 
the primary market is in any one country that is not subject to a 
comprehensive surveillance agreement do not represent 20% or more of 
the weight of the index.
    The Exchange currently does not have in place a surveillance 
agreement with the Indonesia Stock Exchange. The Exchange submits that 
the Commission, in the past, has been willing to allow a national 
securities exchange to rely on a memorandum of understanding entered 
into between regulators in the event that the exchanges themselves 
cannot enter into a CSSA. The Exchange notes that the Indonesia Stock 
Exchange is under the regulatory oversight of the Indonesia Financial 
Services Authority (``FSA''), which has the responsibility for 
Indonesian stock exchanges. The Exchange further notes that both the 
Commission and FSA are signatories to the International Organization of 
Securities Commissions (``IOSCO'') Multilateral Memorandum of 
Understanding (``MMOU''), which provides a framework for mutual 
assistance in investigatory and regulatory issues. Based on the 
relationship between the SEC and FSA and the terms of the MMOU, the 
Exchange submits that both the Commission and the FSA could acquire 
information from and provide information to the other similar to that 
which would be required in a CSSA between exchanges. Moreover, the 
Commission could make a request for information under the MMOU on 
behalf of an SRO that needed the information for regulatory purposes. 
Thus, should MIAX need information on Indonesian trading in the 
Indonesia Index component securities to investigate incidents involving 
trading of IDX options, the SEC could request such information from the 
FSA under the MMOU. While this arrangement certainly would be enhanced 
by the existence of direct exchange to exchange surveillance sharing 
agreements, it is nonetheless consistent with other instances where the 
Commission has explored alternatives when the relevant foreign exchange 
was unwilling or unable to enter into a CSSA.\17\
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    \17\ See supra note 9.
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    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
New Product Release.\18\ The Commission noted in the New Product 
Release that if securing a CSSA is not possible, an exchange should 
contact the Commission prior to listing a new derivative securities 
product. The Commission also noted that the Commission may determine 
instead that it is appropriate to rely on a memorandum of understanding 
between the Commission and the foreign regulator.
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    \18\ See supra note 10.
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    The Exchange has recently contacted the Indonesia Stock Exchange 
with a request to enter into a CSSA. Until the Exchange is able to 
secure a CSSA with the Indonesia Stock Exchange, the Exchange requests 
that the Commission allow the listing and trading of options on IDX 
without a CSSA, upon reliance of the MMOU entered into between the 
Commission and the FSA. The Exchange believes this request is 
reasonable and notes that the Commission has provided similar relief in 
the past. Additionally, the Commission approved, on a pilot basis, 
proposals of competing exchanges to list and trade options on the 
iShares MSCI Emerging Markets Fund \19\ and the iShares MSCI Mexico 
Index Fund.\20\
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    \19\ See supra note 12.
    \20\ See supra note 13.
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    The Commission's approval of this request to list and trade options 
on the IDX would otherwise render IDX compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with the Indonesia Stock Exchange, which shall reflect the 
following: (1) Express language addressing market trading activity, 
clearing activity, and customer identity; (2) the Indonesia Stock 
Exchange's reasonable ability to obtain access to and produce requested 
information; and (3) based on the CSSA and other information provided 
by the Indonesia Stock Exchange, the absence of existing rules, law or 
practices that would impede the Exchange from obtaining foreign 
information relating to market activity, clearing activity, or customer 
identity, or in the event such rules, laws, or practices exist, they 
would not materially impede the

[[Page 47168]]

production of customer or other information.
Market Vectors Poland Index ETF (``PLND'')
    PLND is registered pursuant to the Investment Company Act of 1940 
as a management investment company designed to hold a portfolio of 
securities which track the Market Vectors Poland Index (``Poland 
Index'').\21\ The Poland Index consists of stocks traded primarily on 
the Warsaw Stock Exchange. PLND employs a ``passive'' or indexing 
approach to track the Poland Index by investing in a portfolio of 
securities that generally replicates the Poland Index.\22\ The Adviser 
expects PLND to closely track the Poland Index so that, over time, a 
tracking error of 5%, or less, is exhibited. PLND will normally invest 
at least eighty percent (80%) of its assets in the securities 
comprising the Poland Index. PLND may concentrate its investments in a 
particular industry or group of industries to the extent that the 
Poland Index concentrates in an industry or group of industries. The 
Exchange believes that these requirements and policies prevent the PLND 
from being excessively weighted in any single security or small group 
of securities and significantly reduce concerns that trading in PLND 
could become a surrogate for trading in unregistered securities.
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    \21\ Market Vectors Index Solutions created and maintains the 
Market Vectors Poland Index.
    \22\ As of June 30, 2014, PLND was comprised of 30 securities. 
PZU had the greatest individual weight at 8.13%. The aggregate 
percentage weighting of the top 5 and 10 securities in the Fund were 
36.20% and 60.49%, respectively.
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    Shares of the PLND (``PLND Shares'') are issued and redeemed, on a 
continuous basis, at NAV in aggregation size of 50,000 shares, or 
multiples thereof (a ``Creation Unit''). Following issuance, PLND 
Shares are traded on an exchange like other equity securities. PLND 
Shares trade in the secondary markets in amounts less than a Creation 
Unit and the price per PLND Share may differ from its NAV which is 
calculated once daily as of the regularly scheduled close of business 
of NYSE Arca.\23\
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    \23\ See supra note 8.
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    Bank of New York Mellon is the custodian, and transfer agent for 
PLND. Detailed information on PLND can be found at www.vaneck.com.
    The Exchange has reviewed PLND and determined that the PLND Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(B) which requires PLND to meet the 
following condition:
     Component securities of an index or portfolio of 
securities on which the Exchange-Traded Fund Shares are based for which 
the primary market is in any one country that is not subject to a 
comprehensive surveillance agreement do not represent 20% or more of 
the weight of the index.

The Exchange currently does not have in place a surveillance agreement 
with the Warsaw Stock Exchange.
    The Exchange submits that the Commission, in the past, has been 
willing to allow a national securities exchange to rely on a memorandum 
of understanding entered into between regulators in the event that the 
exchanges themselves cannot enter into a CSSA. The Exchange notes that 
the Warsaw Stock Exchange is under the regulatory oversight of the 
Polish Financial Supervision Authority (``KNF''), which has the 
responsibility for Polish stock exchanges. The Exchange further notes 
that both the Commission and KNF are signatories to the IOSCO MMOU, 
which provides a framework for mutual assistance in investigatory and 
regulatory issues. Based on the relationship between the SEC and KNF 
and the terms of the MMOU, the Exchange submits that both the 
Commission and the KNF could acquire information from and provide 
information to the other similar to that which would be required in a 
CSSA between exchanges. Moreover, the Commission could make a request 
for information under the MMOU on behalf of an SRO that needed the 
information for regulatory purposes. Thus, should MIAX need information 
on Polish trading in the Poland Index component securities to 
investigate incidents involving trading of PLND options, the SEC could 
request such information from the KNF under the MMOU. While this 
arrangement certainly would be enhanced by the existence of direct 
exchange to exchange surveillance sharing agreements, it is nonetheless 
consistent with other instances where the Commission has explored 
alternatives when the relevant foreign exchange was unwilling or unable 
to enter into a CSSA.\24\
---------------------------------------------------------------------------

    \24\ See supra note 9.
---------------------------------------------------------------------------

    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
New Product Release.\25\ The Commission noted in the New Product 
Release that if securing a CSSA is not possible, an exchange should 
contact the Commission prior to listing a new derivative securities 
product. The Commission also noted that the Commission may determine 
instead that it is appropriate to rely on a memorandum of understanding 
between the Commission and the foreign regulator.
---------------------------------------------------------------------------

    \25\ See supra note 10.
---------------------------------------------------------------------------

    The Exchange has recently contacted the Warsaw Stock Exchange with 
a request to enter into a CSSA. Until the Exchange is able to secure a 
CSSA with the Warsaw Stock Exchange, the Exchange requests that the 
Commission allow the listing and trading of options on PLND without a 
CSSA, upon reliance of the MMOU entered into between the Commission and 
the KNF. The Exchange believes this request is reasonable and notes 
that the Commission has provided similar relief in the past. 
Additionally, the Commission approved, on a pilot basis, proposals of 
competing exchanges to list and trade options on the iShares MSCI 
Emerging Markets Fund \26\ and the iShares MSCI Mexico Index Fund.\27\
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    \26\ See supra note 12.
    \27\ See supra note 13.
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    The Commission's approval of this request to list and trade options 
on the PLND would otherwise render PLND compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with the Warsaw Stock Exchange, which shall reflect the following: 
(1) Express language addressing market trading activity, clearing 
activity, and customer identity; (2) the Warsaw Stock Exchange's 
reasonable ability to obtain access to and produce requested 
information; and (3) based on the CSSA and other information provided 
by the Warsaw Stock Exchange, the absence of existing rules, law or 
practices that would impede the Exchange from obtaining foreign 
information relating to market activity, clearing activity, or customer 
identity, or in the event such rules, laws, or practices exist, they 
would not materially impede the production of customer or other 
information.
Market Vectors Russia Index ETF (``RSX'')
    RSX is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the Market Vectors Russia Index (``Russia 
Index'').\28\ The Russia Index consists of stocks traded primarily on 
the Moscow Exchange. RSX employs

[[Page 47169]]

a ``passive'' or indexing approach to track the Russia Index by 
investing in a portfolio of securities that generally replicates the 
Russia Index.\29\ The Adviser expects RSX to closely track the Russia 
Index so that, over time, a tracking error of 5%, or less, is 
exhibited. RSX will normally invest at least eighty percent (80%) of 
its assets in the securities comprising the Russia Index. The Exchange 
believes that these requirements and policies prevent the RSX from 
being excessively weighted in any single security or small group of 
securities and significantly reduce concerns that trading in RSX could 
become a surrogate for trading in unregistered securities.
---------------------------------------------------------------------------

    \28\ Market Vectors Index Solutions created and maintains the 
Market Vectors Russia Index.
    \29\ As of June 30, 2014, RSX was comprised of 51 securities. 
GAZPROM OAO-SPON ADR had the greatest individual weight at 8.38%. 
The aggregate percentage weighting of the top 5 and 10 securities in 
the Fund were 35.90% and 60.25%, respectively.
---------------------------------------------------------------------------

    Shares of the RSX (``RSX Shares'') are issued and redeemed, on a 
continuous basis, at NAV in aggregation size of 50,000 shares, or 
multiples thereof (a ``Creation Unit''). Following issuance, RSX Shares 
are traded on an exchange like other equity securities. RSX Shares 
trade in the secondary markets in amounts less than a Creation Unit and 
the price per RSX Share may differ from its NAV which is calculated 
once daily as of the regularly scheduled close of business of NYSE 
Arca.\30\
---------------------------------------------------------------------------

    \30\ See supra note 8.
---------------------------------------------------------------------------

    Bank of New York Mellon is the custodian, and transfer agent for 
RSX. Detailed information on RSX can be found at www.vaneck.com.
    The Exchange has reviewed RSX and determined that the RSX Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(B) which requires RSX to meet the 
following condition:
     Component securities of an index or portfolio of 
securities on which the Exchange-Traded Fund Shares are based for which 
the primary market is in any one country that is not subject to a 
comprehensive surveillance agreement do not represent 20% or more of 
the weight of the index.
    The Exchange currently does not have in place a surveillance 
agreement with the Moscow Exchange. The Exchange submits that the 
Commission, in the past, has been willing to allow a national 
securities exchange to rely on a memorandum of understanding entered 
into between regulators in the event that the exchanges themselves 
cannot enter into a CSSA. The Exchange notes that the Moscow Exchange 
is under the regulatory oversight of the Federal Commission on 
Securities Market of Russia (``FCSM''), which has the responsibility 
for Russian stock exchanges. The Exchange further notes that Commission 
executed a memorandum of understanding with the Federal Commission on 
Securities and the Capital Market of the Government of the Russian 
Federation (``FCSCM''), a forerunner of the FCSM, dated as of December 
6, 1995 (``Russia-US MOU''). Based on the relationship between the SEC 
and FCSM and the terms of the Russia-US MOU, the Exchange submits that 
both the Commission and the FCSM could acquire information from and 
provide information to the other similar to that which would be 
required in a CSSA between exchanges. Moreover, the Commission could 
make a request for information under the Russia-US MOU on behalf of an 
SRO that needed the information for regulatory purposes. Thus, should 
MIAX need information on Russian trading in the Russia Index component 
securities to investigate incidents involving trading of RSX options, 
the SEC could request such information from the FCSM under the Russia-
US MOU. While this arrangement certainly would be enhanced by the 
existence of direct exchange to exchange surveillance sharing 
agreements, it is nonetheless consistent with other instances where the 
Commission has explored alternatives when the relevant foreign exchange 
was unwilling or unable to enter into a CSSA.\31\
---------------------------------------------------------------------------

    \31\ See supra note 9.
---------------------------------------------------------------------------

    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
New Product Release.\32\ The Commission noted in the New Product 
Release that if securing a CSSA is not possible, an exchange should 
contact the Commission prior to listing a new derivative securities 
product. The Commission also noted that the Commission may determine 
instead that it is appropriate to rely on a memorandum of understanding 
between the Commission and the foreign regulator.
---------------------------------------------------------------------------

    \32\ See supra note 10.
---------------------------------------------------------------------------

    The Exchange has recently contacted the Moscow Exchange with a 
request to enter into a CSSA. Until the Exchange is able to secure a 
CSSA with the Moscow Exchange, the Exchange requests that the 
Commission allow the listing and trading of options on RSX without a 
CSSA, upon reliance of the Russia-US MOU entered into between the 
Commission and the FCSM. The Exchange believes this request is 
reasonable and notes that the Commission has provided similar relief in 
the past. Additionally, the Commission approved, on a pilot basis, 
proposals of competing exchanges to list and trade options on the 
iShares MSCI Emerging Markets Fund \33\ and the iShares MSCI Mexico 
Index Fund.\34\
---------------------------------------------------------------------------

    \33\ See supra note 12.
    \34\ See supra note 13.
---------------------------------------------------------------------------

    The Commission's approval of this request to list and trade options 
on the RSX would otherwise render RSX compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with the Moscow Exchange, which shall reflect the following: (1) 
Express language addressing market trading activity, clearing activity, 
and customer identity; (2) the Moscow Exchange's reasonable ability to 
obtain access to and produce requested information; and (3) based on 
the CSSA and other information provided by the Moscow Exchange, the 
absence of existing rules, law or practices that would impede the 
Exchange from obtaining foreign information relating to market 
activity, clearing activity, or customer identity, or in the event such 
rules, laws, or practices exist, they would not materially impede the 
production of customer or other information.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \35\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \36\ 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 Exchange 
believes listing and trading of options on the Market Vectors ETFs will 
benefit investors by providing them with valuable risk management 
tools.
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    \35\ 15 U.S.C. 78f(b).
    \36\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes this proposed rule change will benefit 
investors by providing additional methods to trade options on the 
Market Vectors ETFs, and by providing them with valuable risk 
management tools. Specifically, the

[[Page 47170]]

Exchange believes that market participants on MIAX would benefit from 
the introduction and availability of options on the Market Vectors ETFs 
in a manner that is similar to other exchanges and will provide 
investors with yet another venue on which to trade these products. The 
Exchange notes that the rule change is being proposed as a competitive 
response to other competing options exchanges that already list and 
trade options on the Market Vectors ETFs and believes this proposed 
rule change is necessary to permit fair competition among the options 
exchanges. For all the reasons stated above, 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, and believes the proposed change will enhance competition.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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-2014-39 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2014-39. 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-2014-39 and should be 
submitted on or before September 2, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-18978 Filed 8-11-14; 8:45 am]
BILLING CODE 8011-01-P