[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15245-15247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07369]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85567; File No. SR-MIAX-2019-19]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Exchange Rule 530, Limit Up-Limit Down,
and Exchange Rule 521, Nullification and Adjustment of Options
Transactions Including Obvious Errors
April 9, 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 April 5, 2019, 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 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 (i) Exchange Rule 530,
Limit Up-Limit Down, and (ii) Exchange Rule 521, Nullification and
Adjustment of Options Transactions Including Obvious Errors,
Interpretations and Policies .01, to extend the pilot to the close of
business on October 18, 2019, for certain options market rules that are
linked to the equity market Plan to Address Extraordinary Market
Volatility.
The text of the proposed rule change is available on the Exchange's
website 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 purpose of the proposed rule change is to extend the pilot to
the close of business on October 18, 2019, for certain options market
rules that are linked to the equity market Plan to Address
Extraordinary Market Volatility (the ``Limit Up-Limit Down Plan'' or
the ``Plan''). This change is being proposed in connection with a
proposed amendment to the Limit Up-Limit Down Plan that would allow the
Plan to continue to operate on a permanent basis (``Amendment 18'').
In an attempt to address extraordinary market volatility in NMS
Stock, and, in particular, events like the severe volatility on May 6,
2010, U.S. national securities exchanges and the Financial Industry
Regulatory Authority, Inc. (collectively, ``Participants'') drafted the
Plan pursuant to Rule 608 of Regulation NMS and under the Act.\3\ On
May 31, 2012, the Commission approved the Plan, as amended, on a one-
year pilot basis.\4\ Though the Plan was primarily designed for equity
markets, the Exchange believed it would, indirectly, potentially impact
the options markets as well. Thus, the Exchange has previously amended
and adopted Rule 530, and Rule 521, Interpretation and Policy .01 to
ensure the option markets were not harmed as a result of the Plan's
implementation and has implemented such rules on a pilot basis that has
coincided with the pilot period for the Plan (the ``Options
Pilots'').\5\
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\3\ See Securities Exchange Act Release No. 64547 (May 25,
2011), 76 FR 31647 (June 1, 2011) (File No. 4-631).
\4\ See Securities and Exchange Act Release No. 67091 (May 31,
2012) 77 FR 33498 (June 6, 2012).
\5\ See Securities Exchange Act Release Nos. 69342 (April 8,
2013), 78 FR 22017 (April 12, 2013) (SR-MIAX-2013-12) and 74918 (May
8, 2015), 80 FR 27781 (May 14, 2015) (SR-MIAX-2015-35).
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The Commission recently published an Amendment 18, which would
allow the Plan to operate on a permanent, rather than pilot, basis.\6\
In connection with this change, the Exchange proposes to amend the
Options Pilots to expire at the close of business on October 18, 2019--
i.e., six months after the expiration of the current pilot period for
the Plan. Specifically, the Exchange proposes to amend Exchange Rule
530 and Rule 521, Interpretation and Policy .01 to untie the Options
Pilot's effectiveness from that of the Plan and to extend the Options
Pilot's effectiveness to the close of business on October 18, 2019. The
Exchange understands that the other national securities exchanges will
also file similar proposals to extend their respective pilot programs,
the substance of which are identical to the proposal.
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\6\ See Securities Exchange Act Release Nos. 84843 (December 18,
2018), 83 FR 66464 (December 26, 2018) (Amendment No. 18 Proposing
Release).
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The Exchange does not propose any additional changes to Exchange
Rules 530 or Rule 521, Interpretation and Policy .01. The Exchange
believes the benefits to market participants from the Options Pilots
should continue on a limited six month pilot basis after Commission
approves the Plan to operate on a permanent basis. Assuming the Plan is
approved by the Commission to operate on a permanent, rather than
pilot, basis the Exchange intends to assess whether additional changes
should also be made to the Options Pilots. Extending the Options Pilots
for an additional six months should provide the Exchange and other
national securities exchanges additional time to consider further
amendments to their rules in light of proposed Amendment 18.
[[Page 15246]]
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \7\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \8\ 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 and not to
permit unfair discrimination between customers, issuers, brokers, or
dealers. The Exchange believes that the proposed rule change promotes
just and equitable principles of trade in that it promotes transparency
and uniformity across markets concerning rules for options markets
adopted to coincide with the Plan. The Exchange believes that extending
the Options Pilots for an additional six months would help assure that
the rules subject to such Pilots are either similarly made permanent,
amended or removed, following additional discussion and analysis by the
Exchange and other national securities exchanges. The proposed rule
change would also help assure that such rules are not immediately
eliminated, thus furthering fair and orderly markets, the protection of
investors and the public interest. Based on the foregoing, the Exchange
believes the Options Pilots should continue to be in effect on a pilot
basis while the Exchange and the other national securities exchanges
consider and develop a permanent proposal for such rules.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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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 proposal would ensure
the continued, uninterrupted operation of the Options Pilots while the
Exchange and other national securities exchanges consider further
amendments to these rules in light of proposed Amendment 18. The
Exchange understands that the other national securities exchanges will
also file similar proposals to extend their respective pilot programs,
the substance of which are identical to this proposal. Thus, the
proposed rule change will help to ensure consistency across market
centers without implicating any competitive issues.
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 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)(iii) of the Act \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 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 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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 so that the proposed
rule change may become effective and 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, as
it will allow the current Options Pilots to continue uninterrupted,
without any changes, while the Exchange and the other national
securities exchanges consider and develop a permanent proposal for
Options Pilots. For this reason, the Commission hereby waives the 30-
day operative delay and designates the proposed rule change as
operative upon filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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-2019-19 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-2019-19. 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
[[Page 15247]]
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-2019-19 and should be
submitted on or before May 6, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07369 Filed 4-12-19; 8:45 am]
BILLING CODE 8011-01-P