[Federal Register Volume 86, Number 211 (Thursday, November 4, 2021)]
[Notices]
[Pages 60923-60926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24012]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93463; File No. SR-MIAX-2021-52]


Self-Regulatory Organizations; Miami International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Make a Minor Adjustment to the Calculation 
Methodology for the BRIXX\TM\ Commercial Real Estate Indexes

October 29, 2021.
    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 October 18, 2021, 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, 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 minor adjustment to the 
calculation methodology for the BRIXX\TM\ Commercial Real Estate 
Indexes (the ``BRIXX Indexes''), on which the Exchange may list and 
trade options.
    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 make a minor adjustment to the calculation 
methodology for each of the sector BRIXX Indexes--the BRIXX Office 
Index, BRIXX Retail Index, BRIXX Residential Index, and BRIXX 
Hospitality Index (collectively, the ``BRIXX Sector Indexes''), on 
which the Exchange may list and trade options.\3\ The Exchange does not 
propose to amend the methodology for the BRIXX Composite Index at this 
time.
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    \3\ On April 16, 2020, the Exchange filed a Form 19b-4(e) with 
the Commission pursuant to Rule 19b-4(e) of the Act to list and 
trade options on the Advanced Fundamentals Commercial Real Estate 
Indexes (the ``AF CRE Indexes''), which have since been rebranded as 
the BRIXX Indexes. See Securities Exchange Act Release No. 91542 
(April 13, 2021), 86 FR 20426 (April 19, 2021) (SR-MIAX-2021-09). 
The Exchange has not yet listed options for trading on the BRIXX 
Indexes for business reasons. The Exchange notes that it will file a 
new Form 19b-4(e) with the Commission pursuant to Rule 19b-4(e) of 
the Act to list and trade options on the BRIXX Indexes at the time 
the Exchange anticipates it will begin listing options for trading.
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Background
    On April 17, 2020, the Exchange filed its proposal to list and 
trade options on five AF CRE Indexes (the AF CRE Residential Index, AF 
CRE Retail Index, AF CRE Office Index, AF CRE Hospitality Index and AF 
CRE Composite Index),\4\ all of which have since been rebranded as the 
BRIXX Indexes.\5\ In the AF CRE Index Notice, the Exchange described, 
among other things, the component selection criteria in order for an 
equity real estate

[[Page 60924]]

investment trust (``REIT'') to be included in the calculation of each 
index.
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    \4\ See Securities Exchange Act Release No. 88767 (April 29, 
2020), 85 FR 26743 (May 5, 2020) (SR-MIAX-2020-08) (Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change to List and 
Trade Options That Overlie Five Advanced Fundamentals LLC Commercial 
Real Estate Indexes) (the ``AF CRE Index Notice'').
    \5\ See supra note 3.
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    In particular, the composition of each index is determined in a 
reconstitution on a quarterly basis from audited REIT company public 
filings and supplemental filings with the Commission, updated each 
quarter and intra-quarter based on 8-K, 10-Q, and 10-K filings. The 
components in each of the indexes are determined from the REITs that 
have the largest enterprise value (``Enterprise Value'') \6\ within 
each individual sector and that meet the following minimum eligibility 
requirements. To be eligible for inclusion in each of the BRIXX Sector 
Indexes, a REIT must: (i) Be classified as an equity REIT; (ii) be 
listed on a U.S. securities exchange; (iii) have a minimum Enterprise 
Value of $1 billion; (iv) have at least 85% of its revenue derived from 
the associated asset class; and (v) have issued a quarterly filing or 
annual report after its initial listing.
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    \6\ The term ``Enterprise Value'' refers to the measure of a 
company's total value, calculated by adding the company's market 
capitalization, total liabilities and preferred equity, then 
subtracting all cash and cash equivalents. See https://www.investopedia.com/terms/e/enterprisevalue.asp.
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Proposal
    The Exchange now proposes to modify the condition in romanette 
(iv), above, for an equity REIT to be eligible for inclusion in each of 
the BRIXX Sector Indexes. With the proposed change, to be eligible for 
inclusion in each of the BRIXX Sector Indexes, an equity company/REIT 
must have at least 70% of its revenue derived from the associated asset 
class. The Exchange does not propose to amend any other criteria for 
inclusion in the BRIXX Sector Indexes. The purpose of this change is to 
ensure a broad scope of REITs that may be included in the calculation 
of each BRIXX Sector Index while continuing to maintain that each 
component REIT derive substantial revenue from the associated asset 
class. The Exchange believes that with the proposed change, there will 
be a greater pool of equity REITs that may qualify for inclusion in 
each of the BRIXX Sector Index calculations, while continuing to ensure 
that the integrity of each BRIXX Sector Index will not be compromised.
    Further, with the proposed change, each BRIXX Sector Index will 
continue to be comprised of equity REITs representative of each 
particular sector of commercial real estate. The Exchange also believes 
that this proposal will continue to provide transparency regarding the 
calculation methodology for the BRIXX Sector Indexes. The Exchange 
represents that the proposed change will have no impact on the accuracy 
and dissemination of the BRIXX Sector Index values, which will continue 
to be disseminated and available to market participants in the same 
manner and in the same intervals. The proposed change will be made 
before the Exchange launches options on the BRIXX Sector Indexes.
    The Exchange intends that this filing is to provide market 
participants with an update regarding the proposed change to one 
condition of the component selection criteria, which criteria was 
included in the initial filing to list and trade options on the AF CRE 
Indexes (since rebranded as the BRIXX Indexes), as described in the AF 
CRE Index Notice.\7\ The Exchange notes that this filing does not 
propose to amend any of the Exchange's generic initial and maintenance 
listing criteria, as set forth in Exchange Rules 1802(b)-(e). Further, 
the Exchange notes that with the proposed change to modify one of the 
conditions to the component selection criteria, the BRIXX Sector 
Indexes will continue to satisfy the Exchange's initial and maintenance 
listing criteria for narrow-based indexes pursuant to the Exchange's 
current rules.\8\
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    \7\ See supra note 4, pages 10-11.
    \8\ See Exchange Rule 1802(b)-(c).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\9\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \10\ requirements that the rules of 
an exchange be 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 mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \11\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
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    The Exchange believes that the proposed rule changes remove 
impediments to and perfects the mechanism of a free and open market a 
national market system, and protects investors and the public interest 
by updating the methodology to determine which component securities are 
eligible for inclusion in each of the BRIXX Sector Indexes. The 
proposed change will have no impact on the dissemination of BRIXX 
Sector Index values; rather, the proposed change is intended to provide 
an update to market participants regarding the wider eligibility of 
certain components in the calculation of each index. The Exchange 
believes that by broadening the scope of potential equity REITs that 
may be included in each of the BRIXX Sector Indexes, this will ensure 
that no single equity REIT dominates each index. The Exchange believes 
this proposal perfects the mechanism of a free and open market a 
national market system, and protects investors and the public interest 
because, with the proposed change, there will be no change to the 
initial or maintenance listing criteria, expiration months, settlement 
or exercise style of options on the BRIXX Sector Indexes. Further, the 
Exchange believes that the proposed change will have no impact on the 
accuracy and dissemination of the BRIXX Sector Index values, which will 
continue to be disseminated and available to market participants in the 
same manner and in the same intervals. The Exchange notes that it has 
not listed options on the BRIXX Indexes at this time.
    The Exchange believes that the proposal satisfies the requirements 
of Section 6(b)(5) \12\ of the Act because, with the proposed change, 
each of the BRIXX Sector Indexes will continue to satisfy the initial 
listing criteria for narrow-based indexes pursuant to the Exchange's 
current rules.\13\ The Exchange notes that the initial listing criteria 
in Exchange Rule 1802(b) covers the following categories of 
requirements, in general, for each of the BRIXX Sector Indexes: That 
options are A.M-settled; each index is modified-market capitalization 
weighted; specified minimum market capitalizations for each component 
security; specified minimum trading volumes over certain time periods 
for each component security; specified maximum weighting for the 
combined weight of the five highest weighted component securities in 
each index;

[[Page 60925]]

specified maximum weights for each individual component security; that 
each component security is an ``NMS stock'' as defined in Rule 600 of 
Regulation NMS under the Act; and, that each index is widely 
disseminated at least once every 15 seconds by OPRA, CTA/CQ, NIDS or 
one or more major market data vendors.\14\ The Exchange also believes 
that, with the proposed modified eligibility criteria, that each of the 
BRIXX Sector Indexes will continue to satisfy the maintenance listing 
standards set forth in Exchange Rule 1802(c). The Exchange notes that 
the maintenance listing criteria in Exchange Rule 1802(c) covers the 
following categories of requirements, in general, for each of the BRIXX 
Sector Indexes: That the initial listing criteria set forth in Exchange 
Rule 1802(b)(1), (3), (6)-(12) continue to be satisfied; specified 
percentages that the total number of component securities may increase 
or decrease by from the time of initial listing; and specified trading 
volumes over six months.\15\ Notwithstanding the proposed change in 
component selection criteria, there will be no change to the current 
generic initial and maintenance listing criteria. This proposed change 
will have no impact on, or effect application and interpretation of, 
the initial and maintenance listing criteria in Exchange Rules 1802(b)-
(c). The purpose of this prosed change is to update potential market 
participants regarding the component selection criteria used for each 
of the BRIXX Sector Indexes.
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    \12\ 15 U.S.C. 78f(b)(5).
    \13\ See Exchange Rule 1802(b).
    \14\ See id.
    \15\ See Exchange Rule 1802(c).
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    The Exchange represents that it will continue to have the necessary 
systems capacity to support the new option series for each of the BRIXX 
Sector Indexes given the proposed modification once the Exchange 
determines to list options on the BRIXX Sector Indexes.

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.
Intra-Market Competition
    The Exchange does not believe that the proposed change will impose 
any burden on intra-market that is not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed change is 
not intended to address a competitive issue. Rather, the proposed 
change is to update one piece of the calculation methodology for the 
BRIXX Sector Indexes, on which the Exchange is authorized to list 
options. The proposed rule change has no impact on the dissemination of 
index values for the BRIXX Indexes. Further, the Exchange has not yet 
listed options for trading on the BRIXX Indexes at this time.
Inter-Market Competition
    The Exchange does not believe the propose change will impose any 
burden on inter-market competition because the proposed rule change 
will continue to facilitate the listing and trading of novel options 
products that will enhance competition for commercial real estate 
securities among market participants, to the benefit of investors and 
the marketplace. This proposal furthers the Exchange's goal of listing 
options on the BRIXX Indexes, which will enhance competition by 
providing investors with an additional investment vehicle, in a fully-
electronic trading environment, through which investors can gain and 
hedge exposure to various sectors of the commercial real estate market. 
Further, these products could offer a competitive alternative to other 
existing investment products that seek to allow investors to gain broad 
market exposure via equity REITs in the same individual sectors as the 
BRIXX Indexes.

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 \16\ and Rule 19b-4(f)(6) \17\ 
thereunder.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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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    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-2021-52 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-2021-52. 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

[[Page 60926]]

submissions should refer to File Number SR-MIAX-2021-52 and should be 
submitted on or before November 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-24012 Filed 11-3-21; 8:45 am]
BILLING CODE 8011-01-P