[Federal Register Volume 84, Number 240 (Friday, December 13, 2019)]
[Notices]
[Pages 68264-68266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26842]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87693; File No. SR-MIAX-2019-48]


Self-Regulatory Organizations; Miami International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 1400, Definitions

December 9, 2019.
    Pursuant to 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 3, 2019, Miami International Securities Exchange, LLC 
(``MIAX Options'' 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 515, 
Execution of Orders and Quotes; Exchange Rule 516, Order Types Defined; 
Exchange Rule 517, Quote Types Defined; Exchange Rule 518, Complex 
Orders; Exchange Rule 521, Nullification and Adjustment of Options 
Transactions Including Obvious Errors; and Exchange Rule 1400, 
Definitions.
    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 Exchange proposes to amend Exchange Rule 1400, Definitions, to 
adopt a definition for a Complex Trade, which will mean, ``(i) the 
execution of an order in an option series in conjunction with the 
execution of one or more related order(s) in different option series in 
the same underlying security occurring at or near the same time in a 
ratio that is equal to or greater than one-to-three (.333) and less 
than or equal to three-to-one (3.0) and for the purpose of executing a 
particular investment strategy; or (ii) the execution of a stock-option 
order to buy or sell a stated number of units of an underlying stock or 
a security convertible into the underlying stock (``convertible 
security'') coupled with the purchase or sale of option contract(s) on 
the opposite side of the market representing either (A) the same number 
of units of the underlying stock or convertible security, or (B) the 
number of units of the underlying stock or convertible security 
necessary to create a delta neutral position, but in no case in a ratio 
greater than eight (8) option contracts per unit of trading of the 
underlying stock or convertible security established for that series by 
The Options Clearing Corporation.''
    The Exchange is a Participant \3\ in the Options Order Protection 
and Locked/Crossed Market Plan (``Plan''), along with all other option 
exchanges.\4\ All

[[Page 68265]]

participating exchanges have adopted substantially similar definitions 
of a Complex Trade for purposes of the Plan.\5\ However, when the rules 
relating to the Plan were adopted by the Exchange, the definition of a 
Complex Trade was inadvertently omitted. The Exchange now proposes to 
remedy this unintentional oversight.
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    \3\ The term ``Participant'' is defined as an Eligible Exchange 
whose participation in the Plan has become effective pursuant to 
Section 3(c) of the Plan.
    \4\ On July 30, 2009, the Commission approved the Plan, which 
was proposed by Chicago Board Options Exchange, Incorporated 
(``CBOE''), International Securities Exchange, LLC (``ISE''), The 
NASDAQ Stock Market LLC (``Nasdaq''), NASDAQ OMX BX, Inc. (``BX''), 
NASDAQ OMX PHLX, Inc. (``Phlx''), NYSE Amex, LLC (``NYSE Amex''), 
and NYSE Arca, Inc. (``NYSE Arca''). See Securities Exchange Act 
Release No. 60405 (July 30, 2009), 74 FR 39362 (August 6, 2009). See 
also Securities Exchange Act Release No. 61546 (February 19, 2010), 
75 FR 8762 (February 25, 2010) (adding BATS Exchange, Inc. 
(``BATS'') as a Participant); 63119 (October 15, 2010), 75 FR 65536 
(October 25, 2010)(adding C2 Options Exchange, Incorporated (``C2'') 
as a Participant); 66969 (May 11, 2012), 77 FR 29396 (May 17, 2012) 
(adding BOX Options Exchange LLC (``BOX Options'') as a 
Participant); 70763 (October 28, 2013), 78 FR 65740 (November 1, 
2013) (adding Topaz Exchange, LLC (``Topaz'') as a 
Participant);70762 (October 28, 2013), 78 FR 65743 (November 1, 
2013) (adding MIAX International Securities Exchange, LLC (``MIAX'') 
as a Participant); 76823 (January 5, 2016), 81 FR 1260 (January 11, 
2016) (adding EDGX Exchange, Inc. (``EDGX'') as a Participant); 
77324 (March 8, 2016), 81 FR 13425 (March 14, 2016) (adding ISE 
MERCURY, LLC (``ISE Mercury'') as a Participant); 79896 (January 30, 
2017), 82 FR 9264 (February 3, 2017) (adding MIAX Pearl (``Pearl'') 
as a Participant); and 85229 (March 1, 2019), 84 FR 8347 (March 7, 
2019) (adding MIAX Emerald, LLC (``MIAX Emerald'') as a 
Participant).
    \5\ See Cboe Exchange Rule 5.65(d); Cboe BZX Exchange Rule 
27.1(a)(4); Cboe EDGX Exchange Rule 27.1(a)(4); Nasdaq ISE Exchange 
Rule, Options 5, Section 1(d); Nasdaq BX Exchange Rule, Options 5, 
Section 1(d); Nasdaq Phlx Exchange Rule 1083(d); Nasdaq Options 
Market (``NOM'') Chapter XII, Section 1(4); NYSE American Exchange 
Rule 990NY(4); NYSE Arca Exchange Rule 6.92-O(a)(4); and BOX 
Exchange Rule 1500(e).
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    Additionally, the Exchange proposes to make non-substantive changes 
to Rule 1400 to renumber existing definitions to allow the Exchange to 
insert the proposed definition for ``Complex Trade'' into the proper 
alphabetically ordered position among currently existing definitions.
    As a result of the proposed amendment to Exchange Rule 1400, a 
number of non-substantive amendments must be made to correct internal 
cross-references in other rules within the Exchange's rulebook. 
Specifically, the internal cross-reference to Eligible Exchanges in the 
definition of ABBO or Away Best Bid or Offer, in Exchange Rule 100, 
must be updated from Rule 1400(f) to Rule 1400(g). The internal cross-
reference to Eligible Exchanges in Exchange Rule 503(e)(1)(iii) must be 
updated from Rule 1400(f) to Rule 1400(g). The internal cross-reference 
to Intermarket Sweep Orders in Rule 503(f)(2)(iv)(A)2. must be updated 
from Rule 1400(h) to Rule 1400(i). The internal cross-reference to the 
NBBO in Exchange Rule 515(a) must be updated from Rule 1400(j) to Rule 
1400(k). The internal cross-reference to Intermarket Sweep Orders in 
Exchange Rule 516(f) must be updated from Rule 1400(h) to Rule 1400(i). 
Similarly in Rule 516(f) the internal cross-references to Protected 
Quotes and Eligible Exchanges must be updated from 1400(p) and (f) to 
1400(q) and (g) respectively. Lastly, in Rule 516(f), the internal 
cross-reference to Protected Bid or Protected Offer must be updated 
from 1400(o) to 1400(p). The internal cross-references to Protected Bid 
and Protected Offer in Exchange Rule 517(a)(2)(vi) must be updated from 
1400(o) to 1400(p). The internal cross-reference to Eligible Exchanges 
in Exchange Rule 518(a)(1) must be updated from Rule 1400(f) to Rule 
1400(g). Finally, the internal cross-reference to the Options Order 
Protection and Locked/Crossed Market Plan in Exchange Rule 521(j) must 
be updated from Rule 1400(n) to Rule 1400(o).
    The Exchange believes these changes add clarity and precision to 
the Exchange's rules.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \6\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \7\ 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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes its proposal to adopt a definition of a 
Complex Trade 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 is a Participant in the Options Order Protection and 
Locked/Crossed Market Plan along with all other option exchanges.\8\ 
The Exchange believes using common definitions promotes the protection 
of investors and the public interest as using consistent terms across 
exchanges promotes consistency in rule interpretation and application 
under the Plan. The Exchange notes that its proposed definition of a 
Complex Trade is identical to that of Nasdaq Phlx,\9\ and substantially 
similar to the definition of a Complex Trade used on other 
exchanges.\10\ Further, the Exchange believes that its proposal removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system, as the proposal harmonizes the Exchange's 
rules to those of other Participants in the Plan and promotes the 
objectives of the Plan to enable the Participants to act jointly in 
establishing a framework for providing order protection and addressing 
Locked \11\ and Crossed Markets.\12\
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    \8\ See supra note 4.
    \9\ See Nasdaq Phlx Exchange Rule 1083(d).
    \10\ See supra note 5.
    \11\ A ``Locked Market'' means a quoted market in which a 
Protected Bid is equal to a Protected Offer in a series of an 
Eligible Options Class. See Exchange Rule 1400(i).
    \12\ A ``Crossed Market'' means a quoted market in which a 
Protected Bid is higher than a Protected Offer in a series of an 
Eligible Class. See Exchange Rule 1400(d).
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    The Exchange believes that the proposed non-substantive rule 
changes to update internal cross-references within the Exchange's Rules 
will provide greater clarity to Members \13\ and the public regarding 
the Exchange's Rules, and it is in the public interest for rules to be 
accurate and precise so as to eliminate the potential for confusion.
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    \13\ 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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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 Exchange does not believe that its proposal will impose any 
burden on intermarket competition as the proposed definition of a 
Complex Trade serves to harmonize the Exchange's definition of a 
Complex Trade to that used by other Plan participants.\14\ 
Additionally, the minor non-substantive edits to update internal cross-
references in the Exchange's rulebook provides precision and accuracy 
in the Exchange's rules.
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    \14\ See supra note 5.
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    The Exchange does not believe that its proposal to adopt a 
definition for a Complex Trade will impose any burden on intramarket 
competition as the definition is intended to harmonize the Exchange's 
rules with those of other Plan Participants. Additionally, the non-
substantive changes to update internal cross-references in the 
Exchange's rulebook proposed by the Exchange

[[Page 68266]]

provide additional clarity and detail in the Exchange's rules. The 
Exchange does not believe that its proposal to make non-substantive 
changes to update internal cross-references in the Exchange's rulebook 
imposes any burden on intramarket competition as the rules of the 
Exchange 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, the proposed rule change 
has become effective pursuant to 19(b)(3)(A) of the Act \15\ and Rule 
19b-4(f)(6) \16\ thereunder.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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 pursuant to Rule 19b-4(f)(6) under the 
Act \17\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) under the Act \18\ 
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 proposal may become operative immediately upon 
filing. The Exchange states that waiver of the operative delay would 
allow the Exchange to immediately harmonize its rules with the rules of 
the other Plan Participants, which would promote consistency in the 
interpretation and application of rules under the Plan and further the 
objectives of the Plan to enable Participants to act jointly in 
establishing a framework for providing order protection and addressing 
Locked and Crossed markets. The Commission finds that it is consistent 
with the protection of investors and the public interest to waive the 
30-day operative delay to allow the Exchange to adopt a definition of 
Complex Trade, which the Exchange inadvertently omitted when it adopted 
rules relating to the Plan. The Commission notes that the proposed 
change does not raise new or novel regulatory issues because the 
Exchange's proposed definition of Complex Trade is identical to the 
definition of Complex Trade adopted by one exchange \19\ and 
substantially similar to the definition of Complex Trade adopted by 
other exchanges.\20\ Accordingly, the Commission hereby waives the 
operative delay and designates the proposal operative upon filing.\21\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ See supra note 9.
    \20\ See supra note 5.
    \21\ 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-MIAX-2019-48 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-2019-48. 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-MIAX-2019-48 and should be submitted on 
or before January 3, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-26842 Filed 12-12-19; 8:45 am]
 BILLING CODE 8011-01-P