[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Notices]
[Pages 6662-6664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01150]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79778; File No. SR-PEARL-2016-01]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 510 To Extend the Penny Pilot Program

January 12, 2017.
    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 December 30, 2016, MIAX PEARL, LLC (``MIAX 
PEARL'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a 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

[[Page 6663]]

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'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/content/miax-pearl, at MIAX 
PEARL'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
    MIAX PEARL plans to commence operations as a national securities 
exchange registered under Section 6 of the Act \3\ on February 6, 
2017.\4\ The Exchange will be 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''). 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 QQQTM 
(``QQQ''), SPDR[supreg] S&P 500[supreg] ETF (``SPY''), and 
iShares[supreg] Russell 2000 ETF (``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 \5\ and currently includes more than 
300 of the most active option classes. The Penny Pilot Program is set 
to expire on December 31, 2016.\6\ The purpose of the proposed rule 
change is to implement the Penny Pilot Program in its current format 
through June 30, 2017, to match the most recent extension date of all 
the other option exchanges.\7\
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    \3\ 15 U.S.C. 78f.
    \4\ See Securities Exchange Act Release No. 79543 (December 13, 
2016), 81 FR 92901 (December 20, 2016) (File No. 10-227) (order 
approving application of MIAX PEARL, LLC for registration as a 
national securities exchange.)
    \5\ See Securities Exchange Act Release Nos. 55154 (January 23, 
2007), 72 FR 4743 (February 1, 2007) (SR-CBOE-2006-92); 55161 
(January 24, 2007), 72 FR 4754 (February 1, 2007) (SR-ISE-2006-62); 
54886 (December 6, 2006), 71 FR 74979 (December 13, 2006) (SR-Phlx-
2006-74); 54590 (October 12, 2006), 71 FR 61525 (October 18, 2006) 
(SR-NYSEArca-2006-73); and 54741 (November 9, 2006), 71 FR 67176 
(November 20, 2006) (SR-Amex-2006-106).
    \6\ See Exchange Rule 510, Interpretations and Policies .01.
    \7\ See Securities Exchange Act Release Nos. 79425 (November 29, 
2016), 81 FR 87633 (December 5, 2016) (SR-Phlx-2016-115); 79429 
(November 30, 2016), 81 FR 87991 (December 6, 2016) (SR-BOX-2016-
55); 79432 (November 30, 2016), 81 FR 87990 (December 6, 2016) (SR-
MIAX-2016-45); 79523 (December 9, 2016), 81 FR 90895 (December 15, 
2016) (SR-BatsBZX-2016-84); 79526 (December 12, 2016), 81 FR 91235 
(December 16, 2016) (SR-BatsEDGX-2016-71);79442 (December 1, 2016), 
81 FR 88293 (December 7, 2016) (SR-CBOE-2016-083); 79441 (December 
1, 2016), 81 FR 88282 (December 7, 2016) (SR-C2-2016-023); 79420 
(November 29, 2016), 81 FR 87639 (December 5, 2016) (SR-BX-2016-
062); and 79525 (December 12, 2016), 81 FR 91230 (December 16, 2016) 
(SR-NYSEMKT-2016-111).
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    In addition to the extension of the Penny Pilot Program through 
June 30, 2017, the Exchange proposes to extend one other date in the 
Rule. Currently, Interpretations and Policies .01 states that 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, and that the 
replacement issues will be selected based on trading activity in the 
previous six months. Such option classes will be added to the Penny 
Pilot Program on the second trading day following December 31, 2016.\8\ 
The Exchange intends to continue this practice for the duration of the 
Penny Pilot Program and is proposing to amend the Rule to reflect that 
such option classes will be added to the Penny Pilot Program on the 
second trading day following January 1, 2017.\9\
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    \8\ The Exchange notes that the current rule text reflected 
December 31, 2016, whereas the date additional series would have 
been added during the prior pilot period was July 31, 2016.
    \9\ The month immediately preceding a replacement class's 
addition to the Pilot Program (i.e., December) is not used for 
purposes of the six-month analysis. For example, a replacement added 
on the second trading day following January 1, 2017, will be 
identified based on trading activity from June 1, 2016, through 
November 30, 2016.
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    The purpose of this provision is to reflect the new date on which 
replacement issues may be added to the Penny Pilot Program. The 
Exchange notes that this filing is based upon and, in all material 
respects, substantially similar to a recent filing of Miami 
International Securities Exchange, Inc. (``MIAX Options'') regarding 
the extension of the Penny Pilot Program.\10\
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    \10\ See Securities Exchange Act Release No. 79432 (November 30, 
2016), 81 FR 87990 (December 6, 2016) (SR-MIAX-2016-45).
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2. Statutory Basis
    MIAX PEARL believes that its proposed rule change is consistent 
with Section 6(b) of the Act \11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \12\ 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.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    In particular, the proposed rule change, which extends the Penny 
Pilot Program for six months, allows the Exchange 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.

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. Specifically, the Exchange 
believes that, by extending the expiration of the Pilot Program, the 
proposed rule change will enable the Exchange to participate in the 
Pilot Program and provide additional data for further analysis of the 
Penny Pilot Program and allow for 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, facilitating investor 
protection, and fostering a competitive environment.

[[Page 6664]]

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 \13\ and Rule 19b-4(f)(6) \14\ 
thereunder.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing.\16\ However, pursuant to Rule 19b-4(f)(6)(iii),\17\ 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.\18\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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 requirement.
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) of the Act \19\ to determine whether the proposed 
rule should be approved or disapproved.
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    \19\ 15 U.S.C. 78s(b)(2)(B).
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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-PEARL-2016-01 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-PEARL-2016-01. 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 20549-1090, 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-PEARL-2016-01 and should be 
submitted on or before February 9, 2017.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01150 Filed 1-18-17; 8:45 am]
 BILLING CODE 8011-01-P