[Federal Register Volume 81, Number 193 (Wednesday, October 5, 2016)]
[Notices]
[Pages 69090-69092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23997]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78974; File No. SR-MIAX-2016-34]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 519C, Mass Cancellation of 
Trading Interest

September 29, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on September 22, 2016, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 Exchange Rule 519C, Mass 
Cancellation of Trading Interest.
    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 proposes to amend Rule 519C, Mass Cancellation of 
Trading Interest, to adopt new section (b) to provide that Exchange 
staff, upon request from a Member,\4\ may remove all quotations \5\ and 
cancel all orders \6\ in the System \7\ and block new incoming 
quotations and orders from entering the System. The block will remain 
in effect until the Member contacts Exchange staff \8\ to have the 
block removed. The Exchange is also proposing to make technical 
amendments to the Rule as described below.
---------------------------------------------------------------------------

    \4\ The term ``Member'' means an individual or organization 
approved to exercise trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Act. See Exchange 
Rule 100.
    \5\ The term ``quotation'' or ``quote'' means a bid or offer 
entered by a Market Maker that is firm and may update the Market 
Maker's previous quote, if any. The Rules of the Exchange provide 
for the use of different types of quotes, including Standard quotes 
and eQuotes, as more fully described in Exchange Rule 517. A Market 
Maker may, at times, choose to have multiple types of quotes active 
in an individual option. See Exchange Rule 100.
    \6\ The term ``order'' means a firm commitment to buy or sell 
option contracts. See Exchange Rule 100.
    \7\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \8\ The Exchange's Help Desk would receive such communication. 
The Help Desk is the Exchange's control room consisting of Exchange 
staff authorized to make certain trading determinations on behalf of 
the Exchange. The Help Desk shall report to and be supervised by a 
senior executive officer of the Exchange. See Exchange Rule 100.
---------------------------------------------------------------------------

    The proposal would allow a Member to submit a request to remove all 
of its outstanding quotations and cancel all of its open orders and 
block all new inbound quotations and orders by firm name or Market 
Participant Identifier (``MPID''). The form of such requests includes, 
but is not limited to, email or a phone call from authorized 
individuals. The removal of quotes and the cancellation of orders as 
described herein does not disconnect Members from the Exchange's 
System.
    The Exchange is also proposing to make technical amendments to 
Exchange Rule 519C. The Exchange proposes to add a new heading entitled 
``Cancel'' to the first paragraph, and also proposes to identify the 
first paragraph with the letter ``(a)'' for clarity and ease of 
reference. Additionally, the Exchange proposes to make a clarifying 
change to the wording of the first paragraph. The paragraph currently 
states that, ``[a] Member may cancel all of its quotations and/or all 
or any subset of its orders [. . .].'' The Exchange proposes to replace 
the word ``cancel'' with ``remove'' and to insert the word ``cancel'' 
after ``and/or,'' as this language more accurately describes the 
actions being performed by the Exchange. Further, this language is 
consistent with the rule text of another exchange that offers similar 
functionality.\9\ Additionally, the Exchange is proposing to insert 
language indicating that a Member may effect the removal of its 
quotations and/or the cancellation of its orders, ``by firm name or by 
Market Participant Identifier (``MPID'')''.
---------------------------------------------------------------------------

    \9\ See BOX Options Exchange LLC (``BOX''), Rule 7280.
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to add an additional 
risk control mechanism for Members. The Exchange has a number of other 
rules covering risk management processes available to Members and it 
believes this capability will provide Members with an additional risk 
management tool and enhance transparency in the Exchange's rules. 
Additionally, the proposed technical change to the rule adds greater 
clarity and precision to the rule text.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \10\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule adds another risk protection tool for Members and

[[Page 69091]]

provides that the Exchange may take action on their behalf. The 
proposed rule protects investors and the public interest by increasing 
the number of risk protection tools available to Members on the 
Exchange. The Exchange notes that a similar rule is currently operative 
on another exchange.\12\
---------------------------------------------------------------------------

    \12\ See supra note 9.
---------------------------------------------------------------------------

    The technical amendments organize the rule text and clarify the 
actions being performed by the Exchange and are intended to remove 
impediments to and perfect the mechanisms of a free and open market by 
adding precision and ease of reference to the Exchange's rules, thus 
promoting transparency and clarity for Exchange Members. Additionally, 
harmonizing the language in the rule text to that of another exchange 
that offers similar functionality will minimize any confusion regarding 
the actions being performed by the Exchange under the proposed rule.
    The Exchange notes that the proposed rule change will not relieve 
Exchange Market Makers of their continuous quoting obligations under 
Exchange Rule 604 and under Reg NMS Rule 602.\13\ Specifically, any 
interest that is executable against a Member's quotes and orders that 
is received by the Exchange prior to the time the removal of quotes or 
cancellation of orders request is received by the System will 
automatically execute at the price up to the Member's size. Market 
Makers that request their quotes be removed will not be relieved of the 
obligation to provide continuous two-sided quotes on a daily basis, nor 
will it prohibit the Exchange from taking disciplinary action against a 
Market Maker for failing to meet their continuous quoting obligation 
each trading day.
---------------------------------------------------------------------------

    \13\ 17 CFR 242.602.
---------------------------------------------------------------------------

    The proposed rule change is intended to remove impediments to and 
perfect the mechanisms of a free and open market by introducing 
additional risk protection tools for Exchange Members and by adding 
precision and ease of reference to the Exchange's rules, thus promoting 
transparency and clarity for 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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    The Exchange believes the proposed rule change will not impose any 
burden on intra-market competition because every Member of the Exchange 
has the opportunity to benefit from the procedure described in the 
proposed rule. The proposed rule is meant to provide all Members with 
the same protection in the event the Member is experiencing an issue 
that would require the Member to withdraw its quotations and cancel its 
orders from the market and prevent new quotations and orders from being 
received in order to ensure a fair and orderly market on the Exchange.
    The Exchange believes the proposed rule change will not impose any 
burden on inter-market competition because the process of cancellation 
of quotations and orders on the Exchange is substantially similar to 
processes currently operative on other exchanges.\14\
---------------------------------------------------------------------------

    \14\ See supra note 9.
---------------------------------------------------------------------------

    For all the reasons stated, 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.

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 \15\ and Rule 19b-4(f)(6) \16\ 
thereunder.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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.
---------------------------------------------------------------------------

    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-2016-34 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2016-34. 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-2016-34 and should be 
submitted on or before October 26, 2016.


[[Page 69092]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-23997 Filed 10-4-16; 8:45 am]
 BILLING CODE 8011-01-P