[Federal Register Volume 84, Number 44 (Wednesday, March 6, 2019)]
[Notices]
[Pages 8127-8129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03983]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85224; File No. SR-EMERALD-2019-08]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Exchange Rule 503, Openings on the Exchange, and Rule 515, Execution of
Orders and Quotes, In Order To Harmonize Its Rule To the Rules of MIAX
Options
February 28, 2019.
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 February 22, 2019, MIAX Emerald, LLC (``MIAX
Emerald'' 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 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 Exchange Rule 503,
Openings on the Exchange, and MIAX Emerald Rule 515, Execution of
Orders and Quotes, in order to harmonize its rule to the rules of MIAX
Options.
The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX
Emerald'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 MIAX Emerald Rule 503, Openings on
the Exchange, and MIAX Emerald Rule 515, Execution of Orders and
Quotes, in order to harmonize its rule to the rules of MIAX Options.
Background
MIAX Emerald plans to commence operations as a national securities
exchange registered under Section 6 of the Act \3\ on March 1, 2019. As
described more fully in MIAX Emerald's Form 1 application,\4\ the
Exchange is an affiliate of MIAX Options and MIAX PEARL, LLC (``MIAX
PEARL''). MIAX Emerald Rules, in their current form, were filed as
Exhibit B to its Form 1 on August 16, 2018, and at that time, the above
mentioned rules, were substantially similar to the rules of the MIAX
Options exchange. MIAX Options has filed a proposed rule change to
amend MIAX Options Rule 503, Openings on the Exchange, and MIAX Options
Rule 515, Execution of Orders and Quotes.\5\ In order to ensure
consistent operation of both MIAX Emerald and MIAX Options through
having consistent rules, the Exchange proposes to amend MIAX Emerald
Rules as described below.
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\3\ 15 U.S.C. 78f.
\4\ See Securities Exchange Act Release No. 84891 (December 20,
2018), 83 FR 67421 (December 28, 2018) (File No. 10-233) (order
approving application of MIAX EMERALD, LLC for registration as a
national securities exchange).
\5\ See SR-MIAX-2019-06 filed on February 22, 2019 to amend
Exchange Rule 503, Openings on the Exchange, and Exchange Rule 515,
Execution of Orders and Quotes, to delete certain rule text
regarding functionality that the Exchange proposes to remove from
the System.
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Proposal
The Exchange proposes to amend Exchange Rule 503, Openings on the
Exchange, and Exchange Rule 515, Execution of Orders and Quotes, to
delete certain rule text regarding functionality that the Exchange
proposes to remove from the System \6\ and to make certain minor
clarifying changes related thereto. These changes would make MIAX
Emerald Rule 503 and Rule 515 consistent with MIAX Options Rule 503 and
Rule 515 and are identical to changes made by MIAX Options when it
modified its rule.\7\
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\6\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\7\ See supra note 5.
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First, the Exchange proposes to delete Exchange Rule 515,
Interpretations and Policies .01. Presently, this rule states that
``[r]esubmission of Orders. A Member \8\ may submit written
instructions to the Exchange designating orders the Member submits as
eligible for automatic resubmission when the order or any remaining
part of the order has been automatically cancelled by the System. The
resubmitted order will be automatically submitted as a new order. This
automatic resubmission functionality of the System will not apply to
Immediate-or-Cancel, Fill-or-Kill or Intermarket Sweep Orders.'' The
Exchange notes that this functionality was completely voluntary for
Members to use on MIAX Options and was intended to provide Members with
an automated way to resubmit certain cancelled orders. The Exchange
believes this functionality is no longer necessary as very few Members
on MIAX Options
[[Page 8128]]
ever used such functionality, and no Members on MIAX Options are
currently utilizing this functionality. Therefore, the Exchange
proposes to delete this rule text as it believes no Member of MIAX
Emerald would ever utilize this functionality because all Members of
MIAX Emerald are currently also Members of MIAX Options.
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\8\ 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.
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Second, the Exchange proposes to amend Exchange Rule 515(e) related
to handling of Immediate-or-Cancel (``IOC'') Orders. Specifically, the
Exchange proposes to delete the last sentence of Rule 515(e) which
currently states that ``[c]ontracts remaining from an IOC order will
not be eligible for automatic resubmissions as a new order for Members
who have instructed the Exchange in writing to re-enter remaining
contracts.'' The Exchange notes that, since it is proposing to delete
the order resubmission functionality, this corresponding rule text is
no longer necessary because it was intended as a carve-out for IOC
orders from the functionality the Exchange now proposes to delete from
Interpretations and Policies .01.
Third, the Exchange proposes to amend Exchange Rule 515(f) related
to handling of Fill-or-Kill (``FOK'') Orders. Specifically, the
Exchange proposes to delete the last sentence of Rule 515(f) which
currently states that ``[a]n FOK order will not be eligible for
automatic resubmissions as a new order for Members who have instructed
the Exchange in writing to re-enter remaining contracts.'' Similarly,
this corresponding rule text is no longer necessary because it was
intended as a carve-out for FOK orders from the functionality the
Exchange now proposes to delete from Interpretations and Policies .01.
Fourth, the Exchange proposes to amend Exchange Rule 515(g) related
to handling of Intermarket Sweep Orders and Intermarket Sweep eQuote
(``ISOs''). Specifically, the Exchange proposes to delete part of the
last sentence of Rule 515(g) which currently states that ``. . .and are
not eligible for automatic resubmissions as a new order for Members who
have instructed the Exchange in writing to re-enter remaining
contracts.'' Similarly, this corresponding rule text is no longer
necessary because it was intended as a carve-out for ISOs from the
functionality the Exchange now proposes to delete from Interpretations
and Policies .01.
Finally, the Exchange proposes to amend Exchange Rule
503(f)(2)(vii)(B)(5) to delete a sentence related to the automatic
resubmission of new orders as part of the opening process.
Specifically, the Exchange proposes to delete text which reads ``. .
.unless the Member that submitted the original order has instructed the
Exchange in writing to re-enter the remaining size, in which case the
remaining size will be automatically submitted as a new order. . .''
The Exchange notes that this functionality was completely voluntary for
Members of MIAX Options to use and was intended to provide Members of
MIAX Options with an automated way to resubmit certain cancelled
orders. The Exchange believes this functionality is no longer necessary
as very few Members of MIAX Options ever used such functionality, and
the Exchange believes no Members of MIAX Emerald would ever utilize
this functionality because all Members of MIAX Emerald are currently
also Members of MIAX Options. Therefore, the Exchange proposes to
delete this rule text as it no longer offers this functionality to MIAX
Options Members,\9\ and does not intend to offer this functionality to
MIAX Emerald Members. The Exchange believes that the proposed changes
will provide greater clarity to Members and the public regarding the
Exchange's Rules, and it is in the public interest for rules to be
accurate and concise so as to minimize the potential for confusion.
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\9\ See supra note 5.
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The proposed changes are scheduled to become operative March 1,
2019.
2. Statutory Basis
The Exchange 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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed changes promote just and
equitable principles of trade and remove impediments to and perfect the
mechanism of a free and open market and a national market system
because the proposed rule change deletes rule text that relates to
voluntary functionality that the Exchange believes no Member would ever
utilize and updates corresponding rules to remove carve-outs which
would no longer be applicable, to provide uniformity in the Exchange's
rulebook with respect to System functionality. The Exchange notes that
the proposed changes to Exchange Rule 515, Execution of Orders and
Quotes, and Exchange Rule 503, Openings on the Exchange, would not have
a substantive impact on Exchange Members since the Exchange believes no
Members would ever utilize such functionality because all Members of
MIAX Emerald are currently also Members of MIAX Options. As such, the
proposed amendments would foster cooperation and coordination with
persons engaged in facilitating transactions in securities and would
remove impediments to and perfect the mechanism of a free and open
market and a national exchange system, since it is proposing to remove
rule text that relates to functionality that would not be used by its
Members. The Exchange further believes that the proposed rule change is
consistent with the Act because Members will have other means of
submitting orders and the removal of the automatic order resubmission
functionality would not impact the ability of Members to transact on
the Exchange. The Exchange does not believe that removing this
functionality will negatively impact Members because very few MIAX
Options Members ever used such functionality, and the Exchange believes
no MIAX Emerald Members would ever utilize this functionality because
all Members of MIAX Emerald are currently also Members of MIAX Options.
Additionally, the Exchange believes the proposed changes promote
just and equitable principles of trade and remove impediments to and
perfect the mechanism of a free and open market and a national market
system because they seek to add additional clarity to, and improve the
accuracy of, the Exchange's rules. In particular, the Exchange believes
that the proposed rule changes will provide clarity and transparency of
the Exchange's rules to Members and the public because it would delete
rule text related to voluntary functionality that is no longer
available on MIAX Options \12\ and would not be available on MIAX
Emerald, and it is in the public interest for rules to be accurate and
concise so as to minimize the potential for confusion.
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\12\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX Emerald does not believe that the proposed rule change will
impose
[[Page 8129]]
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. The proposed rule change will have no
impact on competition as it is not designed to address any competitive
issues but rather is designed to delete rule text that relates to
voluntary functionality that is no longer used by Members of MIAX
Options and that the Exchange believes would never be utilized by
Members of MIAX Emerald because all Members of MIAX Emerald are
currently also Members of MIAX Options, and updates corresponding rules
to remove carve-outs which would no longer be applicable as a result.
The Exchange does not believe that the proposed rule change will impose
any burden on intermarket competition as the Rules apply equally to all
Exchange Members.
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). 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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days from the date of filing. However, Rule
19b-4(f)(6)(iii) \15\ permits the Commission to 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. The Exchange seeks to make the voluntary
functionality contained in Exchange Rule 515, Execution of Orders and
Quotes, and Exchange Rule 503, Openings on the Exchange no longer
available on March 1, 2019. The Commission believes that the waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest and hereby waives the 30-day
operative delay and designates the proposal operative on March 1,
2019.\16\
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 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-EMERALD-2019-08 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-EMERALD-2019-08. 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 website (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 website 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-EMERALD-2019-08 and should be submitted
on or before March 27, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-03983 Filed 3-5-19; 8:45 am]
BILLING CODE 8011-01-P