[Federal Register Volume 84, Number 90 (Thursday, May 9, 2019)]
[Notices]
[Pages 20445-20448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09507]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85771; File No. SR-PEARL-2019-16]
Self-Regulatory Organizations; Miami PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 100, Definitions, Rule 200, Trading Permits, Chapter III, Business
Conduct, Rule 506, Collection and Dissemination of Quotations, Chapter
VII, Exercises and Deliveries, Chapter VIII, Records, Reports and
Audits, Chapter IX, Summary Suspension, Chapter XI, Hearings, Review
and Arbitration, Chapter XIII, Doing Business With The Public, Chapter
XIV, Order Protection, Locked and Crossed Markets, Chapter XV, Margins,
Chapter XVI, Net Capital Requirements, Chapter XVII, Consolidated Audit
Trail Compliance Rule and Chapter XVIII, Index Options
May 3, 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 24, 2019, Miami PEARL, LLC (``MIAX
PEARL'' or the ``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.
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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 make a number of minor, non-
substantive edits to Exchange Rule 100, Definitions, Rule 200, Trading
Permits, Chapter III, Business Conduct, Rule 506, Collection and
Dissemination of Quotations, Chapter VII, Exercises and Deliveries,
Chapter VIII, Records, Reports and Audits, Chapter IX, Summary
Suspension, Chapter XI, Hearings, Review and Arbitration, Chapter XIII,
Doing Business With The Public, Chapter XIV, Order Protection, Locked
and Crossed Markets, Chapter XV, Margins, Chapter XVI, Net Capital
Requirements, Chapter XVII, Consolidated Audit Trail Compliance Rule
and Chapter XVIII, Index Options for purposes of clarification and
uniformity.
The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings/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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Exchange Rule 100, Definitions, to
make minor non-substantive edits to harmonize the rule text to that of
the Exchange's affiliate, MIAX Emerald, LLC (``MIAX Emerald'').
Currently, Exchange Rule 100 does not include a definition for the
Exchange's affiliate, MIAX Emerald. In order to ensure conformity, the
Exchange proposes to amend Exchange Rule 100 to adopt the definition
for MIAX Emerald that is nearly identical to rule text found in
[[Page 20446]]
MIAX Emerald Rule 100. Accordingly, MIAX PEARL proposes to adopt the
following definition for MIAX Emerald to be included in Exchange Rule
100: ``The term `MIAX Emerald' means MIAX Emerald, LLC.'' The Exchange
believes that adopting the definition of the Exchange's affiliate, MIAX
Emerald, in Exchange Rule 100 creates consistency between MIAX PEARL
and MIAX Emerald.
The Exchange also proposes to amend Exchange Rule 100 to make a
minor non-substantive edit by deleting the term ``PEARL'' and its
definition for purposes of clarification and uniformity throughout the
Exchange's rulebook as well as to conform the term ``MIAX PEARL'' to
how it is defined by the Exchange's affiliates, Miami International
Securities Exchange, LLC (``MIAX'') and MIAX Emerald. Currently, the
Exchange's rulebook makes references to ``MIAX PEARL'' as well as
``PEARL.'' All references to MIAX PEARL in the rule text of the
Exchange, as well as the rule text of MIAX and MIAX Emerald, should be
to ``MIAX PEARL,'' and not the single term ``PEARL.'' Accordingly, the
Exchange proposes to delete the singular term ``PEARL'' and its
definition in Exchange Rule 100.
The Exchange also proposes to amend the definitions for
``Exchange'' and ``MIAX PEARL'' in Exchange Rule 100 in order to delete
the part of the definition for ``Exchange'' and ``MIAX PEARL'' which
currently provide that the singular term ``PEARL'' is a reference to
MIAX PEARL. Exchange Rule 100 currently defines Exchange as follows:
``The term `Exchange' means the national securities exchange known as
MIAX PEARL, LLC, MIAX PEARL or PEARL.'' Pursuant to this proposal, the
definition for Exchange would be as follows: ``The term `Exchange'
means the national securities exchange known as MIAX PEARL, LLC, or
MIAX PEARL.'' Exchange Rule 100 currently defines MIAX PEARL as
follows: ``The term `MIAX PEARL' means the MIAX PEARL, LLC, the
Exchange or PEARL.'' Pursuant to this proposal, the definition for MIAX
PEARL would be as follows: ``The term `MIAX PEARL' means the MIAX
PEARL, LLC, or the Exchange.''
Next, the Exchange proposes to amend several rules and chapters to
make minor non-substantive edits to harmonize the rule text to that of
the Exchange's affiliates, MIAX and MIAX Emerald. Presently, MIAX is
referred to in the Exchange's rulebook as ``MIAX Options Exchange.''
The Exchange proposes to delete the words ``Options Exchange'' from all
references to MIAX throughout the Exchange's rulebook. Exchange Rule
100 currently defines MIAX as follows: ``The term `MIAX Options
Exchange' means Miami International Securities Exchange, LLC.''
Pursuant to this proposal, the definition for MIAX would be as follows:
``The term `MIAX' means Miami International Securities Exchange, LLC.''
The Exchange also proposes that all other references throughout the
Exchange's rulebook to ``MIAX Options Exchange'' would be amended to
delete the words ``Options Exchange,'' such that all references will be
to the singular word ``MIAX.'' The proposed amendments would be to
``MIAX Options Exchange'' references in Rule 200, Trading Permits,
Chapter III, Business Conduct, Chapter VII, Exercises and Deliveries,
Chapter VIII, Records, Reports and Audits, Chapter IX, Summary
Suspension, Chapter XI, Hearings, Review and Arbitration, Chapter XIII,
Doing Business With The Public, Chapter XIV, Order Protection, Locked
and Crossed Markets, Chapter XV, Margins, Chapter XVI, Net Capital
Requirements, Chapter XVII, Consolidated Audit Trail Compliance Rule
and Chapter XVIII, Index Options. This proposal is for purposes of
clarification and uniformity throughout the Exchange's rulebook as well
as to conform the term ``MIAX'' to how it is defined by the Exchange's
affiliates, MIAX and MIAX Emerald.\3\
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\3\ See MIAX Rule 100 and MIAX Emerald Rule 100.
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Next, the Exchange proposes to amend Exchange Rule 200, Trading
Permits, to adopt similar rule text for the waive-in application
process to obtain a trading permit for MIAX PEARL that is currently in
place on MIAX Emerald for applicants holding a MIAX or MIAX Emerald
trading permit. MIAX Emerald Rule 200 provides that a holder of a MIAX
or MIAX PEARL trading permit in good standing is eligible to receive
one MIAX Emerald trading permit in the same Membership category to
trade on MIAX Emerald.\4\ Member \5\ applicants of MIAX and MIAX PEARL
are not required to submit a full application for membership on MIAX
Emerald, but rather only need to complete selected MIAX Emerald forms
concerning their election to trade on MIAX Emerald, consent to MIAX
Emerald's jurisdiction, and other operational matters.\6\ This waive-in
application process is similar to arrangements in place at other
exchanges.\7\ The Exchange believes that its affiliate, MIAX, would
also make a nearly identical change to MIAX Rule 200.\8\
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\4\ See MIAX Emerald Rule 100.
\5\ 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.
\6\ See MIAX Emerald Rule 100.
\7\ See, e.g., Nasdaq MRX, LLC Rule 302(a) (containing similar
expedited waive-in membership process for members of the Nasdaq ISE,
LLC and Nasdaq GEMX, LLC); MIAX Emerald Rule 200(c) (containing
similar expedited waive-in membership process for members of MIAX);
and Cboe C2 Exchange, Inc. Rule 3.1(c)(1) (containing similar
expedited waive-in membership process for members of Cboe).
\8\ See SR-MIAX-2019-21.
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MIAX PEARL Rule 200(c)(1) currently has in place the waive-in
application process for holders of MIAX trading permits who want to
apply for a trading permit on MIAX PEARL. Exchange Rule 200(c)(1)
currently provides as follows:
Holders of MIAX Options Exchange trading permits. A holder of a
MIAX Options Exchange trading permit in good standing is eligible to
receive one MIAX PEARL Trading Permit. A holder of a MIAX Options
Exchange trading permit who wishes to apply to the Exchange is not
required to complete and submit an Exchange application. Instead
only Exchange forms concerning election to trade on the Exchange,
submitting to Exchange jurisdiction, and operational matters need be
completed and tendered.
The Exchange proposes to amend Exchange Rule 200(c)(1) to provide
that holders of MIAX Emerald trading permits may also utilize the
waive-in application process to obtain a MIAX PEARL trading permit as
MIAX Emerald is an affiliate of the Exchange. This proposal also
includes adopting explanatory rule text in parenthesis similar to rule
text adopted by MIAX Emerald. Accordingly, the Exchange proposes to
amend Exchange Rule 200(c)(1) to provide as follows:
Holders of MIAX or MIAX Emerald Trading Permits. A holder of a
MIAX or MIAX Emerald trading permit in good standing is eligible to
receive one MIAX PEARL Trading Permit in the same Membership
category to trade on MIAX PEARL (i.e., a MIAX Registered Market
Maker or a MIAX Emerald Registered Market Maker is eligible to
become a MIAX PEARL Market Maker and a MIAX Electronic Exchange
Member or a MIAX Emerald Electronic Exchange Member is eligible to
become a MIAX PEARL Electronic Exchange Member). A holder of a MIAX
or MIAX Emerald trading permit who wishes to apply to the Exchange
is not required to complete and submit an Exchange application.
Instead only Exchange forms concerning election to trade on the
Exchange, submitting to Exchange jurisdiction, and operational
matters need be completed and tendered.
The Exchange also proposes to amend the rule text of Exchange Rule
200(c)(2) for applicants of a MIAX PEARL trading
[[Page 20447]]
permit who do not already hold a MIAX or MIAX Emerald trading permit.
Exchange Rule 200(c)(2) currently provides as follows:
Applicants Not Holding MIAX Options Exchange trading permits. An
applicant not holding a MIAX Options Exchange trading permit seeking
to hold a MIAX PEARL Trading Permit (``Applicant'') must submit an
application to the Exchange in accordance with such procedures as
shall be established by the Exchange. In addition, the following
shall apply:
The Exchange proposes to amend Exchange Rule 200(c)(2) to include a
provision for applicants of a MIAX PEARL trading permit who do not
already hold a MIAX Emerald trading permit to conform to the rule text
of MIAX Emerald. Accordingly, the Exchange proposes to amend Exchange
Rule 200(c)(2) as follows:
Applicants Not Holding MIAX Trading Permits. An applicant not
holding a MIAX or MIAX Emerald trading permit seeking to hold a MIAX
PEARL Trading Permit (``Applicant'') must submit an application to
the Exchange in accordance with such procedures as shall be
established by the Exchange. In addition, the following shall apply:
Next, the Exchange proposes to amend the rule text of Exchange Rule
200(d) to make a minor non-substantive corrective edit. Exchange Rule
200(d) currently provides as follows:
Every Trading Permit holder must have and maintain membership in
another registered options exchange other than the MIAX Options
Exchange (that is not registered solely under Section 6(g) of the
Exchange Act). If such other registered options exchange has not
been designated by the Commission, pursuant to Rule 17d-1 under the
Exchange Act, to examine Members for compliance with financial
responsibility rules, then such Applicant must have and maintain a
membership in FINRA.
The Exchange proposes to amend Exchange Rule 200(d) to adopt rule
text to provide that every trading permit holder of MIAX PEARL must
have and maintain membership in another options exchange other than
MIAX or MIAX Emerald to conform to the rule text of the Exchange's
affiliate, MIAX Emerald. Accordingly, the Exchange proposes to amend
Exchange Rule 200(d) as follows:
Membership in Another Registered Options Exchange. Every Trading
Permit holder must have and maintain membership in another
registered options exchange other than the MIAX or MIAX Emerald
(that is not registered solely under Section 6(g) of the Exchange
Act). If such other registered options exchange has not been
designated by the Commission, pursuant to Rule 17d-1 under the
Exchange Act, to examine Members for compliance with financial
responsibility rules, then such Applicant must have and maintain a
membership in FINRA.
Finally, MIAX PEARL proposes to amend Exchange Rule 506, Collection
and Dissemination of Quotations, to make minor corrective changes to
the numerical and alphabetical list item identifiers to properly
conform to the hierarchical heading scheme used throughout the
Exchange's rulebook. Accordingly, Exchange Rule 506 sub-paragraphs
(d)(i) through (d)(ii) will be renumbered as (d)(1) through (d)(2).
2. Statutory Basis
MIAX PEARL believes that its proposed rule change is consistent
with Section 6(b) of the Act \9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \10\ 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 regulating,
clearing, settling, processing information with respect to, and
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.
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 changes make a number of minor, non-
substantive corrective changes for purposes of clarification and
uniformity.
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\9\ 15 U.S.C. 78f(b).
\10\ 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 changes correct errors in the hierarchical
heading scheme to provide uniformity in the Exchange's rulebook. The
Exchange notes that the proposed changes to Rule 100, Chapter III, Rule
506, Chapter VII, Chapter VIII, Chapter IX, Chapter XI, Chapter XIII,
Chapter XIV, Chapter XV, Chapter XVI, Chapter XVII and Chapter XVIII do
not alter the application of each rule. 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. In particular, the Exchange believes that
the proposed changes will provide greater clarity to Members and the
public regarding the Exchange's Rules. It is in the public interest for
rules to be accurate and concise so as to eliminate the potential for
confusion.
The Exchange believes the proposed changes to Exchange Rule 200
promotes just and equitable principles of trade and removes impediments
to and perfects the mechanism of a free and open market and a national
market system because the proposed changes will align MIAX PEARL Rule
200 with MIAX Emerald Rule 200 regarding trading permits. The Exchange
believes this consistency across exchanges would remove impediments to
and perfect the mechanism of a free and open market by ensuring that
members, regulators and the public can more easily navigate the
Exchange's rulebook and better understand the application process for
trading permits. The Exchange also believes that although MIAX Emerald
rules may, in certain instances, intentionally differ from MIAX PEARL
rules, the proposed changes will promote uniformity with MIAX PEARL
with respect to rules that are intended to be identical. The Exchange
believes that this proposal will reduce the potential for confusion by
its Members that are also Members of MIAX Emerald if the only
differences between MIAX Emerald rules and MIAX PEARL rules are those
that are specific to each exchange.
The Exchange also believes the proposed changes to Exchange Rule
200 promote just and equitable principles of trade and removes
impediments to and perfects the mechanism of a free and open market and
a national market system because MIAX PEARL and its affiliates, MIAX
and MIAX Emerald, have substantially the same Members, and by adopting
the waive-in application process for those Members already holding
trading permits on MIAX and/or MIAX Emerald, promotes the more
effective utilization of time and resources of the Exchange.
Furthermore, because MIAX and MIAX Emerald trading permit holders have
already been vetted, the Exchange's proposal to amend the waive-in
application process in Exchange Rule 200 aligns the trading permit
application process with that of the Exchange's affiliate, MIAX
Emerald, preventing unnecessary regulatory burdens and promoting the
efficient administration of the Exchange's rules.
[[Page 20448]]
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 not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule changes will
have no impact on competition as they are not designed to address any
competitive issues but rather are designed to add additional clarity to
existing rules and to remedy minor non-substantive issues in the text
of various rules identified in this proposal.
The Exchange does not believe that the proposed rule changes to
Exchange Rule 200 will impose any burden on intermarket competition not
necessary or appropriate in furtherance of the purposes of the Act
because MIAX PEARL and its affiliates, MIAX and MIAX Emerald, have
substantially the same Members, and by adopting the waive-in
application process for those Members already holding trading permits
on MIAX and/or MIAX Emerald promotes the more effective utilization of
time and resources of the Exchange. Furthermore, because MIAX and MIAX
Emerald trading permit holders have already been vetted, the Exchange's
proposal to amend the waive-in application process in Exchange Rule 200
aligns the trading permit application process with that of the
Exchange's affiliate, MIAX Emerald, preventing unnecessary regulatory
burdens and promoting the efficient administration of the Exchange's
rules.
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 \11\ and Rule 19b-4(f)(6) \12\
thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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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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-PEARL-2019-16 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-2019-16. 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-PEARL-2019-16, and should be submitted
on or before May 30, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09507 Filed 5-8-19; 8:45 am]
BILLING CODE 8011-01-P