[Federal Register Volume 90, Number 60 (Monday, March 31, 2025)]
[Notices]
[Pages 14290-14292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-05447]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102722; File No. SR-MIAX-2025-12]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Exchange Rule 1308, Supervision of
Accounts
March 25, 2025.
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 March 18, 2025, Miami International Securities
Exchange, LLC (``MIAX'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 1308, Supervision of
Accounts, pertaining to the production of an annual report from Members
\3\ to the Exchange.
---------------------------------------------------------------------------
\3\ 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.
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-options/all-options-exchanges/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.
[[Page 14291]]
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 1308 to align the
annual obligations for Members with industry standard approaches.\4\ By
doing so, the Exchange aligns itself with FINRA and the New York Stock
Exchange (``NYSE'') in relevant part for the benefit of both the
Exchange and its Members. The Exchange notes that Exchange Rule 1308 as
proposed to be amended by this filing, is incorporated by reference
into the rulebooks of the Exchange's affiliates, MIAX PEARL, LLC
(``MIAX Pearl''), MIAX Emerald, LLC (``MIAX Emerald''), and MIAX
Sapphire, LLC (``MIAX Sapphire''). As such, the amendment to Exchange
Rule 1308 proposed herein will also apply to MIAX Pearl, MIAX Emerald,
and MIAX Sapphire members.
---------------------------------------------------------------------------
\4\ See FINRA Rule 3120(a)(2) and NYSE Rule 3120(a)(2).
---------------------------------------------------------------------------
Currently, Exchange Rule 1308(g) requires that each Member that
conducts a non-member customer business shall submit to the Exchange a
written report on the Member's supervision and compliance effort during
the preceding year and on the adequacy of the Member's ongoing
compliance processes and procedures by April 1st of each year. The
Exchange proposes to amend this Rule to instead require that the
designated supervisory personnel must submit to the Member's senior
management no less than annually, a report detailing each Member's
system of supervisory controls, the summary of the test results \5\ and
significant identified exceptions, and any additional or amended
supervisory procedures created in response to the test results.
---------------------------------------------------------------------------
\5\ Exchange Rule 1308(c) requires that Members must develop and
maintain adequate controls over each of its business activities.
Such controls must provide for the establishment of procedures for
verification and testing of those business activities. An ongoing
analysis, based upon appropriate criteria, may be employed to assess
and prioritize those business activities requiring independent
verification and testing. A review of each Member's efforts with
respect to internal controls, including a summary of tests conducted
and significant exceptions identified, must be included in the
annual report required by Rule 1308(g).
---------------------------------------------------------------------------
Currently, Exchange Rule 1308(g)(5)(iii) requires that the report
should also include a certification signed by the Member's Chief
Executive Officer (or equivalent) that the processes described in Rule
1308(g)(5)(i) are evidenced in a report reviewed by the Chief Executive
Officer (or equivalent officer), Chief Compliance Officer and such
other officers as the organization may deem necessary to make this
certification, and submitted to the organization's board of directors
and audit committee (if such committee exists) on or before April 1st
of each year. The Exchange now proposes to reflect the aforementioned
proposed change in Exchange Rule 1308(g)(5)(iii) as well by removing
the requirement of completion of review and submission on or before
April 1st, and instead, amend the rule to only require that it is done
on an annual basis, no later than one year from the previous year's
certification.
Currently, Exchange Rule 1308(h) requires that each Member shall
submit a copy of the report that Rule 1308(g) requires the Member to
prepare to its one or more control persons or, if the Member has no
control person, to the audit committee of its board of directors or its
equivalent committee or group by April 1st of each year. The Exchange
proposes to align Rule 1308(h) with the aforementioned proposed change
by removing the requirement that each Member submit such report by
April 1st of each year, and instead, require that this is done on an
annual basis.
The proposed language to replace the prior deadlines of April 1st
is substantially similar to both FINRA and NYSE rules requiring that
Members submit supervisory reports internally only on an annual basis
and not set out specific dates for compliance.\6\
---------------------------------------------------------------------------
\6\ See supra note 4.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes the proposed rule change
benefits Members that may also be members of FINRA or other exchanges,
such as NYSE, that have substantially similar rules regarding annual
supervisory obligations. Currently, the Exchange requires Members to
submit a detailed report to the Exchange by a specific annual date.
Instead, FINRA's and NYSE's rules allow flexibility for the participant
to conduct this review on an annual basis and do not set forth a
specific date.\10\ This gives participants further flexibility in their
own compliance procedures to conduct their internal review as they best
see fit within the year. By aligning the Exchange rules in relevant
part regarding annual supervisory obligations itself with those of
FINRA and NYSE, it will be more efficient for Members that are also
members of FINRA and NYSE.
---------------------------------------------------------------------------
\10\ See supra note 4.
---------------------------------------------------------------------------
By aligning itself with the rules of FINRA and NYSE in relevant
part as discussed herein, the Exchange does not require a separate work
stream for its Members that may be members of FINRA or NYSE. The
Exchange believes this contributes to a free and open national market
by providing this consistency among members of FINRA and NYSE and the
Exchange's rules with this respect. Moreover, the Exchange will still
have the ability to readily receive and review the annual report as
Exchange Rule 1308(k) requires that documentation evidencing the annual
written report required by Rule 1308(g) must be maintained in a place
that is easily accessible and shall be provided to the Exchange upon
request.
The proposed changes also apply uniformly to all Members. As such,
the proposed rule change 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 market system.
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. This proposal does not
create an unnecessary
[[Page 14292]]
or inappropriate intra-market burden on competition because the
proposed change will apply uniformly to all Members. Further, the
proposed change is not designed to address any competitive issues.
Indeed, this proposal does not create an unnecessary or inappropriate
inter-market burden on competition because it merely amends the annual
supervisory reporting requirements for Members to align with FINRA and
NYSE rules as discussed herein.\11\
---------------------------------------------------------------------------
\11\ See supra note 4.
---------------------------------------------------------------------------
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
Pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) \13\ thereunder, the Exchange has designated this proposal as
one that effects a change that: (i) does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
At any time within 60 days of the filing of this 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.
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-2025-12 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-2025-12. 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-2025-12 and should be
submitted on or before April 21, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-05447 Filed 3-28-25; 8:45 am]
BILLING CODE 8011-01-P