[Federal Register Volume 82, Number 227 (Tuesday, November 28, 2017)]
[Notices]
[Pages 56294-56297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25605]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82137; File No. SR-MIAX-2017-46]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend the MIAX Order Feed (``MOR'')

November 21, 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 November 17, 2017, Miami International 
Securities Exchange, LLC (``MIAX Options'' or the ``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

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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 amend a proprietary options 
market data product.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/rule-filings/ at MIAX Options' 
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 the MIAX Order Feed (``MOR'') to 
reflect the addition of a new feature. The Exchange is proposing to 
indicate the Priority Customer \3\ volume represented by derived 
orders, in connection with the Exchange's upcoming launch of derived 
orders.\4\
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    \3\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s). The term 
``Priority Customer Order'' means an order for the account of a 
Priority Customer. See Exchange Rule 100.
    \4\ See Exchange Act Release No. 79072 (October 7, 2016), 81 FR 
71131 (October 14, 2016) (SR-MIAX-2016-26); see also Exchange Act 
Release No. 81967 (October 27, 2017), 82 FR 50916 (November 2, 2017) 
(SR-MIAX-2017-44).
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Background
    The Exchange established MOR in 2015.\5\ MOR is a real-time full 
order book data feed that provides information regarding all orders on 
the Exchange's order book, including both simple and complex orders, to 
enable users to keep track of the entire order book for all symbols 
listed on MIAX Options. MOR provides the following information 
regarding each order: Product ID, order price, order original volume, 
remaining volume open, and origin code (which specifies the order 
origin type as Priority Customer, Firm, Broker/Dealer, Market Maker,\6\ 
non-MIAX Market Maker, or non-Priority Customer). The Exchange amended 
the MOR in 2016 in connection with the launch of complex orders on the 
Exchange, in order to include such complex orders in MOR.\7\ The 
Exchange updates MOR upon receipt of each order or change in status to 
any order resting on the book (e.g., routing, trading, or cancelling of 
the order). The Exchange makes MOR available, for the applicable fee, 
to any user that requests this data feed product.
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    \5\ See Securities Exchange Act Release No. 74759 (April 17, 
2015), 80 FR 22749 (April 23, 2015) (SR-MIAX-2015-28) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Establish the MIAX Order Feed (``MOR'') Data Product).
    \6\ The term ``Market Makers'' refers to Lead Market Makers 
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered 
Market Makers (``RMMs'') collectively. See Exchange Rule 100.
    \7\ See Securities Exchange Act Release No. 79146 (October 24, 
2016), 81 FR 75171 (October 28, 2016) (SR-MIAX-2016-36).
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Proposal
    With the introduction of derived orders on the Exchange, the 
Exchange now proposes to add a new feature to MOR to indicate the 
Priority Customer volume represented by a derived order. A derived 
order \8\ is an Exchange-generated limit order on the simple order book 
that represents either the bid or offer of one component of a complex 
order resting on the Strategy Book.\9\ Derived orders are not routed 
outside of the Exchange regardless of the price(s) disseminated by away 
markets. The Exchange determines, on a class-by-class basis, whether to 
make available derived orders, and communicates such determination to 
Members \10\ via a Regulatory Circular. Derived orders are firm orders 
(i.e., if executed, firm for the disseminated price and size) that are 
included in the MBBO.\11\
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    \8\ See Exchange Rule 518(a)(9).
    \9\ The ``Strategy Book'' is the Exchange's electronic book of 
complex orders and complex quotes. See Exchange Rule 518(a)(17).
    \10\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \11\ The term ``MBBO'' means the best bid or offer on the Simple 
Order Book (as defined below) on the Exchange. See Exchange Rule 
518(a)(13).
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    Currently, for both simple orders and complex orders, MOR 
identifies the origin type of the order, as well as the order's 
original volume and the remaining volume open. As discussed above, one 
example of an existing origin type is Priority Customer. Also as 
discussed above, MOR currently displays the volume associated with any 
such Priority Customer order. However, with the introduction of derived 
orders on the Exchange and the inclusion of derived orders within MOR, 
the origin type of a derived order, for purposes of display on MOR, 
will simply be `derived.' However, a derived order can be created for 
and represent an order for any permissible origin type on the Exchange. 
And for purposes of display on MOR, a single derived order can 
represent multiple orders for multiple permissible origin codes on the 
Exchange (provided all such derived orders are for the same product ID 
and at the same price). For example, for purposes of display on MOR, a 
single derived order could consist of two orders (one with an origin 
code of Priority Customer and one with an origin code of Firm). The 
Exchange believes that recipients of MOR would be interested in seeing 
the Priority Customer volume associated with a derived order (as they 
are accustomed to seeing the volume associated with non-derived 
Priority Customer orders in MOR), and thus proposes to include, as a 
separate feature associated with derived orders displayed in MOR, the 
Priority Customer volume associated with such derived orders.
    The proposed new feature to MOR--including Priority Customer volume 
represented by derived orders in MOR--while a new feature, is not 
completely novel and does not raise any new regulatory issues, as the 
Exchange currently makes available Priority Customer origin code 
information and Priority Customer volume information with respect to 
all (i) simple, non-derived Priority Customer orders on the Exchange, 
and (ii) complex Priority Customer orders from which the derived orders 
are created. Thus, the Exchange believes that this new feature is not 
completely novel and is non-controversial. The Exchange believes that 
this new feature will make information that could otherwise already be 
discerned by recipients of MOR through looking at complex order 
information more easily accessible for users. Without this new feature, 
for a derived order displayed on MOR, users would only be able to 
identify the simple order as a derived order, and would not know how 
much volume of the simple order was represented by Priority Customer 
volume. To obtain that information, a user could identify the complex 
order in MOR from which

[[Page 56296]]

that derived order was created, and discern the origin type and volume 
of that complex order, thus determining the origin type (e.g., Priority 
Customer) and volume associated with the simple order. The new proposed 
feature simply makes information that could otherwise already be 
discerned by recipients of MOR through looking at complex order 
information more easily accessible for users.
    The Exchange believes that the proposed new feature of MOR will 
enhance subscribers' ability to make decisions on trading strategy, and 
provide data that should help bring about such decisions in a timely 
manner, which will benefit investors and the public interest. The 
Exchange also believes that the enhanced feature of MOR will assist 
market participants in making routing decisions concerning their 
options orders.
    The Exchange makes MOR equally available to any market participant 
that wishes to subscribe to it. MOR is designed to enhance a user's 
ability to analyze market conditions, and to create and test trading 
models and analytical strategies. The Exchange believes that MOR is a 
valuable tool that subscribers can use to gain comprehensive insight 
into the limit order book in a particular option. The inclusion of 
total Priority Customer volume included in a given derived order will 
allow subscribers to obtain more insight into order flow and permit 
them to make targeted trading decisions.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \13\ in particular, in that 
they are 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    MOR is designed to promote just and equitable principles of trade 
by providing all subscribers with limit order book data that should 
enable them to make informed decisions on trading strategy on the 
Exchange by using MOR to assess current market conditions that directly 
affect such decisions The proposed new feature to MOR facilitates 
transactions in securities, removes impediments to and perfects the 
mechanisms of a free and open market and a national market system by 
enhancing subscribers' ability to make decisions on trading strategy, 
and by providing data that should help bring about such decisions in a 
timely manner, all for the benefit of investors and the public 
interest. The proposed new feature to MOR removes impediments to, and 
is designed to further perfect, the mechanisms of a free and open 
market and a national market system by making the MIAX Options market 
more transparent and accessible to market participants making routing 
decisions concerning their options orders. Additionally, the proposed 
new feature to MOR is also designed to protect investors and the public 
interest by making information that could otherwise already be 
discerned by recipients of MOR through looking at complex order 
information more easily accessible for users. Furthermore, the Exchange 
believes that the proposed new feature to MOR is designed 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, by enhancing a user's ability to analyze market 
conditions, and to create and test trading models and analytical 
strategies. It also enables MIAX Options to compete with such other 
exchanges, thereby offering market participants with additional data in 
order to seek the market center with the best price and the most 
liquidity on which to execute their transactions, all to the benefit of 
investors and the public interest, and to the marketplace as a whole.

B. Self-Regulatory Organization's Statement on Burden on Competition

    MIAX Options 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. On the contrary, the Exchange 
believes that the proposed new feature to MOR will enhance competition 
in the U.S. options markets by providing subscribers on MIAX Options a 
market data product with an enhanced feature thereby making it more 
competitive with comparable products offered by other exchanges.
    Additionally, respecting intra-market competition, the enhanced 
feature in MOR will be available to all subscribers at no additional 
cost, thus providing all subscribers to MOR with an even playing field 
with respect to information and access to trading on MIAX Options.

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 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 from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with 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.
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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 change 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-2017-46 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-2017-46. This file

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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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2017-46 and should be 
submitted on or before December 19, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25605 Filed 11-27-17; 8:45 am]
 BILLING CODE 8011-01-P