[Federal Register Volume 89, Number 85 (Wednesday, May 1, 2024)]
[Notices]
[Pages 35257-35260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-09334]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100028; File No. SR-MIAX-2024-21]


Self-Regulatory Organizations; Miami International Securities 
Exchange; Notice of Filing of a Proposed Rule Change To Amend Exchange 
Rule 313, Other Restrictions on Options Transactions and Exercises; and 
Rule 700, Exercise of Option Contracts

April 25, 2024
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 12, 2024, Miami International Securities Exchange, LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the 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 amend Rule 313, Other 
Restrictions on Options Transactions and Exercises; and Rule 700, 
Exercise of Option Contracts.\3\
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    \3\ The Exchange notes that MIAX Rule 313 and MIAX Rule 700 are 
incorporated by reference to the Exchange's affiliates MIAX Pearl 
and MIAX Emerald.
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    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings, at MIAX'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 313, Other 
Restrictions on Options Transactions and Exercises; and Rule 700, 
Exercise of Option Contracts.
Background
    Historically, standard expiration contracts expired at 11:59 p.m. 
Eastern Time, on the Saturday following the third Friday of the 
specified expiration month. In 2013 the Options Clearing Corporation 
(``OCC'') proposed a rule change to allow the OCC to change the 
expiration date for most option contracts to the third Friday of the 
expiration month instead of the Saturday following the third Friday.\4\

[[Page 35258]]

Since that time the industry has supplemented options that expire 
monthly by offering options that expire on Mondays and Wednesdays \5\ 
and also on Tuesdays and Thursdays.\6\
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    \4\ See Securities Exchange Act Release No. 69772 (June 17, 
2013), 78 FR 37645 (June 21, 2013) (SR-OCC-2013-04) (Order Approving 
Proposed Rule Change to Change the Expiration Date For Most Option 
Contracts to the Third Friday of the Expiration Month Instead of the 
Saturday Following the Third Friday).
    \5\ See Securities Exchange Act Release Nos. 82719 (February 15, 
2018), 83 FR 7790 (February 22, 2018) (SR-MIAX-2018-05) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change by 
Miami International Securities Exchange, LLC To Expand the Short 
Term Option Series Program); 91667 (April 23, 2021), 86 FR 22734 
(April 29, 2021) (SR-MIAX-2021-16) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Permit Monday and Wednesday 
Expirations for Options Listed Pursuant to the Short Term Option 
Series Program on the Invesco QQQ Trust\SM\ Series (``QQQ'') ETF 
Trust); and 93251 (October 4, 2021), 86 FR 56308 (October 8, 2021) 
(SR-MIAX-2021-47) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Permit Monday and Wednesday Expirations for 
Options Listed Pursuant to the Short Term Option Series Program on 
the iShares Russell 2000 ETF (``IWM'').
    \6\ See Securities Exchange Act Release No. 96342 (November 17, 
2022), 87 FR 71727 (November 23, 2022) (SR-MIAX-2022-41) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Amend Exchange Rule 404, Series of Option Contracts Open for Trading 
and the Short Term Option Series Program).
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Proposal
    While the Exchange's rule that governs the listing of options, Rule 
404, Series of Option Contracts Open for Trading, has been periodically 
amended to account for changes to the Short Term Options Series 
Program,\7\ other tangentially related rules have not been 
simultaneously updated to adequately reflect these changes. 
Specifically, the Exchange now proposes to amend Exchange Rule 313, 
Other Restrictions on Options Transactions and Exercises, to adopt 
clarifying language and Rule 700, Exercise of Option Contracts, to 
adopt clarifying language and to amend paragraph (c) to adopt 
clarifying language and to also remove unnecessary rule text to align 
to current Rule 404.
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    \7\ See Interpretations and Policies .02 of Exchange Rule 404.
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    The Exchange proposes to amend paragraph (a)(2) of Rule 313 to 
adopt rule text that will provide additional detail for options that 
expire on a business day and a non-business day. Currently, the first 
sentence of paragraph (a)(2) provides that, ``[n]otwithstanding the 
foregoing, during the ten (10) business days prior to the expiration 
date of a given series of options, other than index options, no 
restriction on exercise under this Rule may be in effect with respect 
to that series of options.'' The Exchange now proposes to amend the 
sentence to provide that, ``[n]otwithstanding the foregoing, during the 
ten (10) business days prior to the expiration date of a given series 
of options, which shall include such expiration date for an option 
contract that expires on a business day, other than index options, no 
restriction on exercise under this Rule may be in effect with respect 
to that series of options.'' The Exchange also proposes to amend the 
second sentence of paragraph (a)(2) of Rule 313. Currently, the second 
sentence provides that, ``[w]ith respect to index options, restrictions 
on exercise may be in effect until the opening of business on the last 
business day before the expiration date.'' The Exchange now proposes to 
amend the sentence to provide that, ``[w]ith respect to index options, 
restrictions on exercise that may be in effect until the opening of 
business on the business day of their expiration, or, in the case of an 
option contract expiring on a day that is not a business day, on the 
last business day before the expiration date.'' \8\
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    \8\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Rule 3170(a)(2).
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    The Exchange also proposes to amend paragraph (a)(3)(ii) of 
Exchange Rule 313. Currently, paragraph (a)(3)(ii) provides that 
``Exercises of expiring American-style, cash-settled index options 
shall not be prohibited on the last business day prior to their 
expiration.'' The Exchange now proposes to amend the sentence to 
provide that, ``[e]xercises of expiring American-style, cash-settled 
index options shall not be prohibited on the business day of their 
expiration, or, in the case of an option contract expiring on a day 
that is not a business day, on the last business day prior to their 
expiration.'' \9\
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    \9\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Exchange Rule 3170(a)(3)(ii).
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    The Exchange proposes to amend Exchange Rule 700, Exercise of 
Option Contracts, to adopt new rule text related to expiring options. 
Currently, paragraph (b) provides that, ``[s]pecial procedures apply to 
the exercise of equity options on the last business day before their 
expiration (`expiring options').'' The Exchange now proposes to amend 
the sentence to provide that, ``[s]pecial procedures apply to the 
exercise of equity options on the business day of their expiration, or, 
in the case of an option contract expiring on a day that is not a 
business day, on the last business day before their expiration 
(`expiring options').'' \10\
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    \10\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Exchange Rule 9000(b).
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    The Exchange also proposes to amend paragraph (c) of Rule 700. 
Currently, paragraph (c) provides that, ``[o]ption holders have until 
5:30 p.m. Eastern Time on the business day immediately prior to the 
expiration date or, in the case of Short Term Option Series and 
Quarterly Options Series, on the expiration date, to make a final 
decision to exercise or not exercise an expiring option.'' The Exchange 
now proposes to amend the sentence to provide that, ``[o]ption holders 
have until 5:30 p.m. Eastern Time on the business day of their 
expiration, or, in the case of an option contract expiring on a day 
that is not a business day, on the business day immediately prior to 
the expiration date, to make a final decision to exercise or not 
exercise an expiring option.'' The Exchange also proposes to remove 
unnecessary language from paragraph (c).\11\ Specifically, the Exchange 
proposes to remove the text that provides, ``[r]especting options that 
expire after February 1, 2015, option holders have until 5:30 p.m. 
Eastern Time on the expiration date to make a final decision to 
exercise or not exercise an expiring option. Members may set earlier 
cutoff times for customers submitting exercise notices,'' as this text 
is made obsolete by the proposed changes to the first sentence of 
paragraph (c).
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    \11\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Rule 9000(c).
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    The Exchange proposes to amend paragraph (d)(iii) of Rule 700. 
Currently, paragraph (d)(iii) provides that, ``Members have until 7:30 
p.m. Eastern Time on the business day immediately prior to the 
expiration date or, in the case of Short Term Option Series and 
Quarterly Options Series, on the expiration date, to submit a Contrary 
Exercise Advice to the Exchange if such Member employs an electronic 
submission procedure with time stamp for the submission of exercise 
instructions by option holders.'' The Exchange now proposes to amend 
this sentence to remove unnecessary language, such that the proposed 
sentence will provide, ``Members have until 7:30 p.m. Eastern Time to 
submit a Contrary Exercise Advice to the Exchange if such Member 
employs an electronic submission procedure with time stamp for the 
submission of exercise instructions by option holders.''
    The Exchange proposes to amend paragraph (h) of Rule 700. 
Currently, paragraph (h) provides that, ``[i]n the event the Exchange 
provides advance notice on or before 5:30 p.m. Eastern Time on the 
business day immediately prior to the last business day before the 
expiration date indicating that a modified time for the close of 
trading in equity options on such last business day

[[Page 35259]]

before expiration will occur, then the deadline to make a final 
decision to exercise or not exercise an expiring option shall be 1 hour 
30 minutes following the time announced for the close of trading on 
that day instead of the 5:30 p.m. Eastern Time deadline found in Rule 
700(c).'' The Exchange now proposes to amend the sentence to provide 
that, ``[i]n the event the Exchange provides advance notice on or 
before 5:30 p.m. Eastern Time on the business day immediately prior to 
the business day of expiration, or, in the case of an option contract 
expiring on a day that is not a business day, the business day 
immediately prior to the last business day before the expiration date 
indicating that a modified time for the close of trading in equity 
options on such business day or expiration, or, in the case of an 
option contract expiring on a day that is not a business day, such last 
business day before expiration will occur, then the deadline to make a 
final decision to exercise or not exercise an expiring option shall be 
1 hour 30 minutes following the time announced for the close of trading 
on that day instead of the 5:30 p.m. Eastern Time deadline found in 
Rule 700(c).'' \12\
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    \12\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Rule 9000(h).
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    The Exchange proposes to amend paragraph (i)(2) of Rule 700. 
Currently, the last sentence of paragraph (i)(2) provides, ``[f]or 
purposes of this subparagraph (i)(2), an `unusual circumstance' 
includes, but is not limited to, a significant news announcement 
concerning the underlying security of an option contract that is 
scheduled to be released just after the close on the business day 
immediately prior to expiration.'' The Exchange now proposes to amend 
the sentence to provide that, ``[f]or purposes of this subparagraph 
(i)(2), an `unusual circumstance' includes, but is not limited to, a 
significant news announcement concerning the underlying security of an 
option contract that is scheduled to be released just after the close 
on the business day the option contract expires, or, in the case of an 
option contract expiring on a day that is not a business day, the 
business day immediately prior to expiration.'' \13\
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    \13\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Rule 9000(i)(2).
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    Finally, the Exchange proposes to amend paragraph (l)(8)(ii) of 
Rule 700. Currently, paragraph (l)(8)(ii) provides, ``[e]xercises of 
expiring American-style, cash-settled index options shall not be 
prohibited on the last business day prior to their expiration.'' The 
Exchange now proposes to amend this sentence to provide, ``[e]xercises 
of expiring American-style, cash-settled index options shall not be 
prohibited on the business day of their expiration, or, in the case of 
option contracts expiring on a day that is not a business day, on the 
last business day prior to their expiration.'' \14\
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    \14\ The Exchange notes that the proposed rule text is 
substantively identical to BOX Rule 9000(l)(8)(ii).
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2. Statutory Basis
    The Exchange believes the proposed rule changes are 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.\15\ Specifically, the Exchange believes the proposed rule changes 
are consistent with Section 6(b)(5) \16\ 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.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes its proposal to amend Rule 313 promotes just 
and equitable principles of trade and perfects the mechanism of a free 
and open market and a national market system, and, in general, protects 
investors and the public interest as the proposal provides additional 
detail and clarity to the Exchange's rules. Clear and concise rules 
benefit investors and the public interest by clearly describing 
Exchange processes which removes the potential for confusion.
    The Exchange believes that its proposal to amend Rule 700 promotes 
just and equitable principles of trade, fosters cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, removes impediments to and perfects the mechanism of a 
free and open market and a national market system, and, in general 
protects investors and the public interest as the proposal provides 
additional detail and clarity to the Exchange's rules. Additionally, 
the proposed changes to paragraph (c) harmonizes the Exchange's 
exercise cut-off time process to that of other options exchanges \17\ 
providing consistency within the industry which benefits investors and 
the public interest. The Exchange believes that keeping its rules 
consistent with those of other option exchanges will protect all 
participants in the market by eliminating confusion. Finally, the 
proposed changes do not permit unfair discrimination between Members 
\18\ as the rules of the Exchange apply to all Members equally.
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    \17\ See, e.g., BOX Exchange Rule 9000, Nasdaq ISE Options 6B, 
Section 1, and NYSE Arca Rule 6.24-O(c).
    \18\ 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 believes that the proposed rules changes would not 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule changes 
are not intended to address a competitive issue but rather would 
calrify the interaction of the Exchange's rules with one another and 
harmonize certain rule text regarding expiring options to that of other 
option exchanges. The proposal is not designed to address any aspect of 
competition, either between the Exchange and its competitors, or among 
market participants. Therefore, the Exchange does not believe the 
proposed rule change would impose a burden on competition.

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 \19\ and Rule 19b-4(f)(6) \20\ 
thereunder.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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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[[Page 35260]]

    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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MIAX-2024-21 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-2024-21. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-MIAX-2024-21 and should be 
submitted on or before May 22, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-09334 Filed 4-30-24; 8:45 am]
BILLING CODE 8011-01-P