Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange LLC To Amend Exchange Rule 604 in Connection With Market Maker Continuous Quoting Obligations, 60352-60356 [2013-23903]

Download as PDF 60352 Federal Register / Vol. 78, No. 190 / Tuesday, October 1, 2013 / Notices 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: [FR Doc. 2013–23826 Filed 9–30–13; 8:45 am] Electronic Comments BILLING CODE 8011–01–P • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–MIAX–2013–43 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. emcdonald on DSK67QTVN1PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. All submissions should refer to File Number SR–MIAX–2013–43. 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 Web site (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 Web site 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–MIAX– 2013–43 and should be submitted on or before October 22, 2013. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70505; File No. SR–MIAX– 2013–44] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange LLC To Amend Exchange Rule 604 in Connection With Market Maker Continuous Quoting Obligations September 25, 2013. 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 September 17, 2013, 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 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. 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 604 in connection with Market Maker continuous quoting obligations. The text of the proposed rule change is available on the Exchange’s Web site at https://www.miaxoptions.com/filter/ wotitle/rule_filing, 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 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 14:45 Sep 30, 2013 Jkt 232001 PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 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 Rule 604 to exclude intra-day add-on series (‘‘Intra-day Adds’’) from the Market Makers’ continuous quoting obligations on the day such series are added for trading. Additionally, the proposed rule change clarifies in the Interpretations and Policies to Rule 604 that: (1) Lead Market Makers (‘‘LMMs’’) 3 may still receive directed orders and participation entitlements in all Intra-day Adds on the day such series are added for trading provided the LMM is quoting the Intra-day Add and meets all other directed order and participation entitlement requirements set forth in Rules 514(h) and (i); and (2) Primary Lead Market Makers (‘‘PLMMs’’) 4 may still receive participation entitlements in all Intraday Adds on the day such series are added for trading provided the PLMM is quoting the Intra-day Add and meets all other participation entitlement requirements set forth in Rules 514(g) and (i). The proposal is based on the recently approved change by Chicago Board Options Exchange, Incorporated (‘‘CBOE’’).5 Intra-day Adds are series that can be added to the System after the opening of trading on the Exchange. These series may be added at any time during the trading day and differ from other newly added series, which are added prior to the opening of trading. In the event a series is added after the opening of trading, the Exchange will disseminate 3 Exchange Rule 100 defines a Lead Market Maker as a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of these Rules with respect to Lead Market Makers. When a Lead Market Maker is appointed to act in the capacity of a Primary Lead Market Maker, the additional rights and responsibilities of a Primary Lead Market Maker specified in Chapter VI of these Rules will apply. 4 Exchange Rule 100 defines a Primary Lead Market Maker as a Lead Market Maker appointed by the Exchange to act as the Primary Lead Market Maker for the purpose of making markets in securities traded on the Exchange. The Primary Lead Market Maker is vested with the rights and responsibilities specified in Chapter VI of these Rules with respect to Primary Lead Market Makers. 5 See Securities Exchange Act Release Nos. 69338 (April 8, 2013), 78 FR 21981 (April 12, 2013) (SR– CBOE–2013–019) (Order approving); 68944 (February 15, 2013), 78 FR 12377 (February 22, 2013) (SR–CBOE–2013–019). E:\FR\FM\01OCN1.SGM 01OCN1 emcdonald on DSK67QTVN1PROD with NOTICES Federal Register / Vol. 78, No. 190 / Tuesday, October 1, 2013 / Notices a Listings Alert to Members and anyone else subscribing to MIAX notices and publications advising that a new series has been listed. Listing Alerts are also publically available on the Exchange’s Web site. Any Market Maker with an appointment in the class in which the series is added will be permitted to quote in the new series. Currently, Exchange Rule 604 imposes certain obligations on Market Makers, including obligations to provide continuous quotes. Specifically, Rule 604(e)(1) requires a PLMM to provide continuous two-sided quotes (i.e., 90% of the time) in the lesser of 99% of the non-adjusted option series, or 100% of the non-adjusted option series minus one put-call pair, in each class in which the PLMM is assigned. Rule 604(e)(2) requires an LMM to provide continuous two-sided quotes (i.e., 90% of the time) in at least 90% of the non-adjusted option series in each of the LMM’s appointed classes. And, Rule 604(e)(3) requires a Registered Market Maker (‘‘RMM’’) 6 to provide continuous twosided quotes throughout the trading day (i.e., 90% of the time) in 60% of the non-adjusted series that have a time to expiration of less than nine months in each of the RMM’s appointed classes. The proposed rule change seeks to exclude Intra-day Adds from these continuous quoting obligations. In order to comply with their continuous quoting obligations, Market Makers have automated quoting systems in place that use complex calculations based on a variety of market factors to compute quotes in their appointed classes and transmit these quotes to the Exchange’s trading System. The Market Maker quoting system computations also factor in their market risk models. It is the Exchange’s understanding that for some Market Makers their quoting systems will not automatically produce continuous quotes in Intra-day Adds on the trading day during which those series are added. These Market Makers have indicated that the only way they could quote in series on the trading day during which they are added would be to completely shut down and restart their systems. As a result, the Exchange further understands that several Market Makers would not be able to quote Intraday Adds during the trading day on which such series are added (although the Market Makers generally would be able to quote these series upon the 6 Exchange Rule 100 defines a Registered Market Maker as a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange, who is not a Lead Market Maker and is vested with the rights and responsibilities specified in Chapter VI of these Rules with respect to Registered Market Makers. VerDate Mar<15>2010 14:45 Sep 30, 2013 Jkt 232001 opening of the next trading day, assuming those series continue to be listed on the Exchange). The required work on Market Makers’ systems to allow them to quote Intra-day Adds, would be significant and costly. The inability to quote Intra-day Adds makes it extremely difficult for Market Makers to comply with their obligation to quote in a substantial percentage of series in their appointed classes during a trading day on which Intra-day Adds are added in those classes. For example, if there are 1,000 series listed in an LMM’s appointed class and the LMM is quoting in 900 of these series, the LMM is in compliance with the current minimum requirement to quote in 90% of series in its appointed class (assuming the LMM quotes in this number of series 90% of the trading day). However, if an Intra-day Add is added in the LMM’s appointed class during the trading day, and the LMM’s system does not automatically quote in this series, then the LMM would not comply, as it would be quoting in 900 of 1,001 series. This noncompliance would be compounded if more than one Intra-day Add is listed in a class during the same trading day. Further, if in an effort to be in compliance, Market Makers turned their systems off to quote in Intra-day Adds on the trading day during which those series are added, then the Market Makers could satisfy the standard to quote in a minimum percentage of series in their appointed classes but would risk violating their obligation to quote for minimum percentage of the trading day. Theoretically, Market Makers might also need to repeatedly turn their systems off to accommodate multiple Intra-day Adds. The Exchange believes that it would be impracticable, particularly given that a number of Market Makers who use their systems to quote on multiple markets and not solely on the Exchange, for Market Makers to turn off their systems to accommodate quoting in Intra-day Adds on the day during which those series are added on the Exchange. In addition, the Exchange believes this would interfere with the continuity of its market and reduce liquidity, which would ultimately harm investors and contradicts the purpose of the Market Maker continuous quoting obligation. This proposed rule change excludes Intra-day Adds from these continuous quoting obligations to address this conflict. The Exchange believes this proposed relief would result in a minimal reduction, if any, in liquidity in these series. Market Makers’ quoting systems would add these series the next trading PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 60353 day, so if there is any slight reduction in liquidity in these few series, it would only last for a short period of time (until the following trading day). Additionally, this potential small reduction in liquidity would be far outweighed by the reduction in liquidity that the Exchange believes would result from the withdrawals from and reductions in applications for Market Maker appointments if the Exchange did not provide this relief. The current quoting obligation in Intra-day Adds is a minor part of a Market Maker’s overall obligations. Market Makers will still be obligated to provide continuous two-sided markets in a substantial number of series in their appointed classes. Further, Market Makers would still be obligated to quote the Intra-day Adds the following day, and, thus, their quoting relief is very short lived and could, potentially, only last a few hours or until the opening of trading the following day. The Exchange believes that the burden of continuous electronic quoting in the extremely small number of series Intra-day Adds represent is counter to the Exchange’s efforts to continuously increase liquidity in its listed option classes. The Exchange believes the proposed rule change will continue to ensure that Market Makers create a fair and orderly market in the option classes to which they are assigned, as it does not absolve Market Makers from providing continuous electronic quotes in a significant percentage of series of each class for a substantial portion of the trading day. Market Makers must engage in activities that constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, including (1) competing with other Market Makers to improve markets in all series of options classes comprising their appointments; (2) making markets that, absent changed market conditions, will be honored in accordance with firm quote rules; and (3) updating market quotations in response to changed market conditions in their appointed options classes and to assure that any market quote it causes to be disseminated is accurate. The proposed rule change also clarifies that while PLMMs and LMMs will not be required to provide continuous quotes in Intra-day Adds on the day during which such series are added for trading, PLMMs and LMMs may still receive a participation entitlement in such series if they elect to quote in that series and otherwise satisfy the entitlement requirements set forth in Rule 514. Specifically, the Exchange is proposing to revise the Interpretations and Policies to Rule 604 E:\FR\FM\01OCN1.SGM 01OCN1 emcdonald on DSK67QTVN1PROD with NOTICES 60354 Federal Register / Vol. 78, No. 190 / Tuesday, October 1, 2013 / Notices to provide that (1) LMMs may still receive directed orders and participation entitlements in all Intraday Adds on the day during which such series are added for trading in which they are quoting provided the LMM meets all other entitlement requirements set forth in Rules 514(h) and (i); and (2) PLMMs may still receive participation entitlements in all Intra-day Adds on the day during which such series are added for trading in which they are quoting provided the PLMM meets all other entitlement requirements set forth in Rules 514(g) and (i). LMMs already receive directed orders and participation entitlements in series they are not required to quote. For example, the continuous quoting requirement of Rule 604 currently does not apply to LMMs quoting option series with a time to expiration of nine months or greater. Interpretations and Policies .01 currently provides that LMMs may receive directed orders and participation entitlements when quoting such long-term series, provided the LMM meets all other entitlement requirements as set forth in Rules 514(h) and (i). In addition, an LMM is currently required to provide continuous electronic quotes in at least 90% of the non-adjusted option series of each multiply listed option class allocated to it for 90% of the trading day. If the LMM elects to quote in 100% of the non-adjusted series in an option class allocated to it, it can receive directed orders and participation entitlements in all of those series when quoting at the best price, including the 10% of the series in which it is not required to quote. Finally, with respect to PLMMs, the continuous quoting requirement of Rule 604 currently does not apply to PLMMs quoting adjusted option series; if a PLMM elects to quote an adjusted option series, it can receive the participation entitlement provided the PLMM meets all other entitlement requirements as set forth in Rules 514(g) and (i). Thus, under the proposed rule change, the market would continue to function as it does now. The Exchange believes this benefit is appropriate, as it provides incentives for PLMMs and LMMs to quote in as many series as possible in their appointed classes, even those series in which the Rules do not require them to continuously quote. The Exchange does not believe that the proposed rule change would adversely affect the quality of the Exchange’s markets or lead to a material decrease in liquidity. Rather, the Exchange believes that its current market structure, with its high rate of participation by Market Makers, permits VerDate Mar<15>2010 14:45 Sep 30, 2013 Jkt 232001 the proposed rule change without fear of losing liquidity. The Exchange also believes that market-making activity and liquidity could materially decrease without the proposed rule change to exclude Intra-day Adds from Market Maker continuous quoting obligations on the trading day during which they are added for trading. The Exchange believes that this proposed relief will encourage Market Makers to continue appointments and other Members to request Market Maker appointments, and, as a result, expand liquidity in options classes listed on the Exchange to the benefit of the Exchange, its Members and public customers. The Exchange believes that its Market Makers would be disadvantaged without this proposed relief. Other Members and public customers would also be disadvantaged if Market Makers withdrew from appointments in options classes, resulting in reduced liquidity and volume in those classes. Additionally, the Exchange believes that the proposed rule change to clarify that PLMMs and LMMs may receive participation entitlements in Intra-day Adds on the day during which such series are added for trading if they satisfy the other entitlement requirements as set forth in Exchange Rules, even if the Rules do not require the Market Makers to continuously quote in those series, will incent Market Makers to quote in series in which they are not required to quote, which may increase liquidity in their appointed classes. 2. Statutory Basis The Exchange believes that its 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) 7 of the Act. 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 facilitation [sic] 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 7 15 8 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00112 Fmt 4703 Sfmt 4703 proposed rule change is consistent with the Section 6(b)(5) requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the Exchange believes the proposed rule change to exclude Intra-day Adds during the day that such series are added for trading from Market Makers’ quoting obligations promotes just and equitable principles of trade because it promotes liquidity and continuity in the marketplace and would prevent interruptions in quoting or reduced liquidity that may otherwise result. The Exchange also believes that the proposed rule change supports the quality of the Exchange’s markets because it does not significantly change the current quoting obligations of Market Makers. Market Makers must still provide continuous electronic quotes for a significant part of the trading day in a substantial number of series of each appointed class. The proposed relief is offset by a MarketMaker’s obligation to quote in these series beginning the next trading day. With respect to RMMs, even if the RMM does not quote Intra-day Adds on the trading day during which they are added, this would be further offset by the RMM’s continued obligation to quote in these series when requested by an Exchange Official. Accordingly, the proposed rule change supports the quality of the Exchange’s trading markets by helping to ensure that Market Makers will continue to be obligated to quote in Intra-day Adds if, and when, the need arises and on an ongoing basis following the trading day during which the series are added. The Exchange believes this proposed change is reasonable and is offset by MarketMakers’ continued responsibilities to provide significant liquidity to the market to the benefit of market participants. The Exchange believes this proposed rule change, on balance, is a minor change and should not impact the quality of the Exchange’s trading markets. Among other things, Intra-day Adds represent an insignificant percentage of series listed on the Exchange each day. The Exchange further believes that the potential small reduction in liquidity in Intra-day Adds that may result from the proposed relief would be far outweighed by the significant reduction in liquidity in appointed classes that the Exchange believes could occur from withdrawals from and reductions in applications for Market-Maker appointments without the proposed relief. The proposed rule change also removes impediments to and allows for a free and open market, E:\FR\FM\01OCN1.SGM 01OCN1 Federal Register / Vol. 78, No. 190 / Tuesday, October 1, 2013 / Notices emcdonald on DSK67QTVN1PROD with NOTICES while protecting investors, by promoting additional transparency regarding Market-Makers’ obligations and benefits in the Exchange Rules. In addition, the Exchange believes that the proposed rule change is designed to not permit unfair discrimination among Market Makers, as the proposed rule change provides the proposed relief for all Market Makers. The proposed rule change to clarify that LMMs may receive directed orders and participation entitlements, and PLMMs may receive participation entitlements in Intra-day Adds in their appointed classes in which they are quoting, even though they are not required to quote such series, further supports the quality of the Exchange’s trading markets because it encourages LMMs and PLMMs to quote in as many series as possible, which ultimately benefits all investors. This benefit is offset by the LMMs’ and PLMMs’ continued quoting obligations and the fact that their quotes in these ‘‘nonrequired’’ series must still satisfy all of their other obligations under the Rules. The Exchange also believes that this proposed change is consistent with its current practice, pursuant to which (1) LMMs receive directed orders and participation entitlements in long-term series, adjusted series and additional series in which they elect to quote above the minimum percentage of series in which they are required to continuously quote under the Rules; and (2) PLMMs receive participation entitlements in adjusted series. For the foregoing reasons, the Exchange believes that the proposed rule change is appropriate and consistent with the Act. 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 Exchange does not believe the proposed rule change to exclude Intra-day Adds during the day which such series are added for trading from Market Makers’ quoting obligations will cause any unnecessary burden on intra-market competition because it provides the same relief to a group of similarly situated market participants, that is, Market Makers. The Exchange does not believe the proposed change will cause any unnecessary burden on inter-market competition because Intra-day Adds are a very small portion of series on the Exchange. The Exchange further believes that the potential small reduction in liquidity in Intra-day Adds VerDate Mar<15>2010 14:45 Sep 30, 2013 Jkt 232001 that may result from the proposed relief would be far outweighed by the significant reduction in liquidity in appointed classes that the Exchange believes could occur from withdrawals from and reductions in applications for Market-Maker appointments without the proposed relief. In addition, the Exchange believes that the proposed rule change will in fact relieve any burden on, or otherwise promote, competition. The Exchange believes that excluding Intra-day Adds on the day during which they are added for trading from Market-Maker obligations will promote trading activity on the Exchange to the benefit of the Exchange, its Members, and market participants. The Exchange does not believe the proposed rule change to clarify that LMMs and PLMMs may receive participation entitlements in Intra-day Adds in their appointed classes in which they are quoting, even though they are not required to quote, provided the other requirements set forth in the Rules are satisfied, will cause any unnecessary burden on intra-market competition because it too provides the same relief to a group of similarly situated market participants, that is all LMMs and PLMMs. The Exchange does not believe the proposed change will cause any unnecessary burden on intermarket competition because LMMs are currently entitled to receive directed orders and participation entitlements, and PLMMs are currently entitled to receive participation entitlements on series they are not obligated to quote in under the Rules. In addition, the Exchange believes that the proposed rule change will in fact promote competition. The Exchange believes allowing LMMs to receive directed orders and participation entitlements, and PLMMs to receive participation entitlements in Intra-day Adds will promote trading activity on the Exchange because it will provide incentives to LMMs and PLMMs to quote in such series though not obligated to do so, to the benefit of the Exchange, its Members, and market participants. 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 The Exchange has filed the proposed rule change pursuant to Section PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 60355 19(b)(3)(A)(iii) of the Act 9 and Rule 19b–4(f)(6) thereunder.10 Because the 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder.11 A proposed rule change filed under Rule 19b–4(f)(6) 12 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),13 the Commission may 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 Commission notes that waiver of the operative delay would permit the Exchange to implement the changes proposed herein immediately. Under the proposal, the Exchange would amend certain of its rules pertaining to the trading of options in order to exclude Intra-day Adds from Market Makers’ continuous quoting obligations on the day such series are added for trading. If, and only if, they are in fact quoting them, LMMs and PLMMs will be eligible to receive directed orders and participation entitlements in all Intra-day Adds on the day such series are added for trading, provided the LMM or PLMM meets all other directed order and participation entitlement requirements. The Exchange notes that eliminating the continuous quoting obligations for Intraday Adds will ensure fair competition among the exchanges and encourage greater liquidity on the Exchange to the benefit of investors. Further, the Exchange represents that the proposed rule change also will promote consistency among the competing options exchanges that have Intra-day 9 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange to give the Commission written notice of the Exchange’s 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. 11 17 CFR 240.19b–4(f)(6)(iii). 12 17 CFR 240.19b–4(f)(6). 13 17 CFR 240.19b–4(f)(6)(iii). 10 17 E:\FR\FM\01OCN1.SGM 01OCN1 60356 Federal Register / Vol. 78, No. 190 / Tuesday, October 1, 2013 / Notices Adds and reduce the current compliance burdens imposed on Market Makers by the application of different continuous quoting standards. The Commission notes that MIAX’s proposal is based on a proposal submitted by another exchange that the Commission approved,14 and it raises no novel regulatory issues. Accordingly, the Commission hereby waives the 30day operative delay and designates the proposed rule change as operative upon filing.15 At any time within 60 days of the filing of such 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 under Section 19(b)(2)(B) 16 of the Act to determine whether the proposed rule change 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: emcdonald on DSK67QTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– MIAX–2013–44 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–MIAX–2013–44. 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 Web site (https://www.sec.gov/ 14 See supra note 5. The Commission notes that it did not receive any comments on CBOE–2013– 019. 15 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 16 15 U.S.C. 78s(b)(2)(B). VerDate Mar<15>2010 14:45 Sep 30, 2013 Jkt 232001 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 Web site viewing and printing in the Commission’s Public Reference Room at 100 F Street NE., Washington, DC 20549–1090 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; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MIAX– 2013–44 and should be submitted on or before October 22, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–23903 Filed 9–30–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70502; File No. SR–OCC– 2013–13] Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change Relating to the Use of Manual Signatures, Reduction of Segregated Long Positions in Accounts With Aggregated Long Positions, Requirements To Be Physically Present, and Other Technical Changes to OCC’s By-Laws and Rules To Better Reflect Current Operational Practices September 25, 2013. I. Introduction On August 5, 2013, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–OCC–2013–13 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 17 17 PO 00000 CFR 200.30–3(a)(12). Frm 00114 Fmt 4703 Sfmt 4703 (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 The proposed rule change was published for comment in the Federal Register on August 22, 2013.3 The Commission received no comment letters. For the reasons discussed below, the Commission is granting approval of the proposed rule change. II. Description OCC is amending a number of provisions in its By-Laws and Rules to update and better reflect OCC’s current operational practices. First, OCC is amending certain rules to remove references to manual signatures. OCC is removing references to manual signatures within Rule 201 because OCC has adopted and implemented electronic processes and controls within its clearance and settlement systems to allow authorized individuals to electronically verify and validate information such as trade data and banking instructions.4 Similarly, OCC is amending Rule 202 to remove certain references to manual signatures on certain documents (e.g. certificates, checks, receipts, and orders) but will continue to require clearing members to provide OCC with a list of individuals authorized to act on behalf of a clearing member, who will in turn be provided with appropriate electronic access to its clearance and settlement systems.5 Second, OCC is amending Rule 611(c) to better reflect the current practice that, in the event of a closing transaction or exercise in an account with aggregate long positions, segregated long positions are reduced before unsegregated long positions, and that clearing members may not choose an alternative reduction method. Third, in order to better reflect technological advancements as well as the decentralized operational structures and remote access adopted to address business continuity and disaster recovery, OCC is amending Rule 201 which currently requires that an authorized representative of a clearing member be present in such clearing member’s office during specific hours each day. Instead, OCC will require an authorized representative of a clearing member to be available during such times as OCC may specify from time to 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Exchange Act Release No. 34–70225 (August 16, 2013), 78 FR 52227 (August 22, 2013). 4 See OCC Rule 205, which requires clearing members to electronically submit items to OCC, and Rule 212, which allows OCC to assign clearing members access codes for electronic data entry. 5 OCC will also make conforming changes to the forms required by OCC to list the individuals authorized to act on behalf of a clearing member. 2 17 E:\FR\FM\01OCN1.SGM 01OCN1

Agencies

[Federal Register Volume 78, Number 190 (Tuesday, October 1, 2013)]
[Notices]
[Pages 60352-60356]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23903]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70505; File No. SR-MIAX-2013-44]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by Miami International 
Securities Exchange LLC To Amend Exchange Rule 604 in Connection With 
Market Maker Continuous Quoting Obligations

September 25, 2013.
    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 September 17, 2013, 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 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 Rule 604 in connection 
with Market Maker continuous quoting obligations.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://www.miaxoptions.com/filter/wotitle/rule_filing, 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 Rule 604 to exclude intra-day add-on 
series (``Intra-day Adds'') from the Market Makers' continuous quoting 
obligations on the day such series are added for trading. Additionally, 
the proposed rule change clarifies in the Interpretations and Policies 
to Rule 604 that: (1) Lead Market Makers (``LMMs'') \3\ may still 
receive directed orders and participation entitlements in all Intra-day 
Adds on the day such series are added for trading provided the LMM is 
quoting the Intra-day Add and meets all other directed order and 
participation entitlement requirements set forth in Rules 514(h) and 
(i); and (2) Primary Lead Market Makers (``PLMMs'') \4\ may still 
receive participation entitlements in all Intra-day Adds on the day 
such series are added for trading provided the PLMM is quoting the 
Intra-day Add and meets all other participation entitlement 
requirements set forth in Rules 514(g) and (i). The proposal is based 
on the recently approved change by Chicago Board Options Exchange, 
Incorporated (``CBOE'').\5\
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    \3\ Exchange Rule 100 defines a Lead Market Maker as a Member 
registered with the Exchange for the purpose of making markets in 
securities traded on the Exchange and that is vested with the rights 
and responsibilities specified in Chapter VI of these Rules with 
respect to Lead Market Makers. When a Lead Market Maker is appointed 
to act in the capacity of a Primary Lead Market Maker, the 
additional rights and responsibilities of a Primary Lead Market 
Maker specified in Chapter VI of these Rules will apply.
    \4\ Exchange Rule 100 defines a Primary Lead Market Maker as a 
Lead Market Maker appointed by the Exchange to act as the Primary 
Lead Market Maker for the purpose of making markets in securities 
traded on the Exchange. The Primary Lead Market Maker is vested with 
the rights and responsibilities specified in Chapter VI of these 
Rules with respect to Primary Lead Market Makers.
    \5\ See Securities Exchange Act Release Nos. 69338 (April 8, 
2013), 78 FR 21981 (April 12, 2013) (SR-CBOE-2013-019) (Order 
approving); 68944 (February 15, 2013), 78 FR 12377 (February 22, 
2013) (SR-CBOE-2013-019).
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    Intra-day Adds are series that can be added to the System after the 
opening of trading on the Exchange. These series may be added at any 
time during the trading day and differ from other newly added series, 
which are added prior to the opening of trading. In the event a series 
is added after the opening of trading, the Exchange will disseminate

[[Page 60353]]

a Listings Alert to Members and anyone else subscribing to MIAX notices 
and publications advising that a new series has been listed. Listing 
Alerts are also publically available on the Exchange's Web site. Any 
Market Maker with an appointment in the class in which the series is 
added will be permitted to quote in the new series.
    Currently, Exchange Rule 604 imposes certain obligations on Market 
Makers, including obligations to provide continuous quotes. 
Specifically, Rule 604(e)(1) requires a PLMM to provide continuous two-
sided quotes (i.e., 90% of the time) in the lesser of 99% of the non-
adjusted option series, or 100% of the non-adjusted option series minus 
one put-call pair, in each class in which the PLMM is assigned. Rule 
604(e)(2) requires an LMM to provide continuous two-sided quotes (i.e., 
90% of the time) in at least 90% of the non-adjusted option series in 
each of the LMM's appointed classes. And, Rule 604(e)(3) requires a 
Registered Market Maker (``RMM'') \6\ to provide continuous two-sided 
quotes throughout the trading day (i.e., 90% of the time) in 60% of the 
non-adjusted series that have a time to expiration of less than nine 
months in each of the RMM's appointed classes. The proposed rule change 
seeks to exclude Intra-day Adds from these continuous quoting 
obligations.
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    \6\ Exchange Rule 100 defines a Registered Market Maker as a 
Member registered with the Exchange for the purpose of making 
markets in securities traded on the Exchange, who is not a Lead 
Market Maker and is vested with the rights and responsibilities 
specified in Chapter VI of these Rules with respect to Registered 
Market Makers.
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    In order to comply with their continuous quoting obligations, 
Market Makers have automated quoting systems in place that use complex 
calculations based on a variety of market factors to compute quotes in 
their appointed classes and transmit these quotes to the Exchange's 
trading System. The Market Maker quoting system computations also 
factor in their market risk models. It is the Exchange's understanding 
that for some Market Makers their quoting systems will not 
automatically produce continuous quotes in Intra-day Adds on the 
trading day during which those series are added. These Market Makers 
have indicated that the only way they could quote in series on the 
trading day during which they are added would be to completely shut 
down and restart their systems. As a result, the Exchange further 
understands that several Market Makers would not be able to quote 
Intra-day Adds during the trading day on which such series are added 
(although the Market Makers generally would be able to quote these 
series upon the opening of the next trading day, assuming those series 
continue to be listed on the Exchange). The required work on Market 
Makers' systems to allow them to quote Intra-day Adds, would be 
significant and costly.
    The inability to quote Intra-day Adds makes it extremely difficult 
for Market Makers to comply with their obligation to quote in a 
substantial percentage of series in their appointed classes during a 
trading day on which Intra-day Adds are added in those classes. For 
example, if there are 1,000 series listed in an LMM's appointed class 
and the LMM is quoting in 900 of these series, the LMM is in compliance 
with the current minimum requirement to quote in 90% of series in its 
appointed class (assuming the LMM quotes in this number of series 90% 
of the trading day). However, if an Intra-day Add is added in the LMM's 
appointed class during the trading day, and the LMM's system does not 
automatically quote in this series, then the LMM would not comply, as 
it would be quoting in 900 of 1,001 series. This noncompliance would be 
compounded if more than one Intra-day Add is listed in a class during 
the same trading day. Further, if in an effort to be in compliance, 
Market Makers turned their systems off to quote in Intra-day Adds on 
the trading day during which those series are added, then the Market 
Makers could satisfy the standard to quote in a minimum percentage of 
series in their appointed classes but would risk violating their 
obligation to quote for minimum percentage of the trading day. 
Theoretically, Market Makers might also need to repeatedly turn their 
systems off to accommodate multiple Intra-day Adds.
    The Exchange believes that it would be impracticable, particularly 
given that a number of Market Makers who use their systems to quote on 
multiple markets and not solely on the Exchange, for Market Makers to 
turn off their systems to accommodate quoting in Intra-day Adds on the 
day during which those series are added on the Exchange. In addition, 
the Exchange believes this would interfere with the continuity of its 
market and reduce liquidity, which would ultimately harm investors and 
contradicts the purpose of the Market Maker continuous quoting 
obligation. This proposed rule change excludes Intra-day Adds from 
these continuous quoting obligations to address this conflict.
    The Exchange believes this proposed relief would result in a 
minimal reduction, if any, in liquidity in these series. Market Makers' 
quoting systems would add these series the next trading day, so if 
there is any slight reduction in liquidity in these few series, it 
would only last for a short period of time (until the following trading 
day). Additionally, this potential small reduction in liquidity would 
be far outweighed by the reduction in liquidity that the Exchange 
believes would result from the withdrawals from and reductions in 
applications for Market Maker appointments if the Exchange did not 
provide this relief.
    The current quoting obligation in Intra-day Adds is a minor part of 
a Market Maker's overall obligations. Market Makers will still be 
obligated to provide continuous two-sided markets in a substantial 
number of series in their appointed classes. Further, Market Makers 
would still be obligated to quote the Intra-day Adds the following day, 
and, thus, their quoting relief is very short lived and could, 
potentially, only last a few hours or until the opening of trading the 
following day. The Exchange believes that the burden of continuous 
electronic quoting in the extremely small number of series Intra-day 
Adds represent is counter to the Exchange's efforts to continuously 
increase liquidity in its listed option classes. The Exchange believes 
the proposed rule change will continue to ensure that Market Makers 
create a fair and orderly market in the option classes to which they 
are assigned, as it does not absolve Market Makers from providing 
continuous electronic quotes in a significant percentage of series of 
each class for a substantial portion of the trading day. Market Makers 
must engage in activities that constitute a course of dealings 
reasonably calculated to contribute to the maintenance of a fair and 
orderly market, including (1) competing with other Market Makers to 
improve markets in all series of options classes comprising their 
appointments; (2) making markets that, absent changed market 
conditions, will be honored in accordance with firm quote rules; and 
(3) updating market quotations in response to changed market conditions 
in their appointed options classes and to assure that any market quote 
it causes to be disseminated is accurate.
    The proposed rule change also clarifies that while PLMMs and LMMs 
will not be required to provide continuous quotes in Intra-day Adds on 
the day during which such series are added for trading, PLMMs and LMMs 
may still receive a participation entitlement in such series if they 
elect to quote in that series and otherwise satisfy the entitlement 
requirements set forth in Rule 514. Specifically, the Exchange is 
proposing to revise the Interpretations and Policies to Rule 604

[[Page 60354]]

to provide that (1) LMMs may still receive directed orders and 
participation entitlements in all Intra-day Adds on the day during 
which such series are added for trading in which they are quoting 
provided the LMM meets all other entitlement requirements set forth in 
Rules 514(h) and (i); and (2) PLMMs may still receive participation 
entitlements in all Intra-day Adds on the day during which such series 
are added for trading in which they are quoting provided the PLMM meets 
all other entitlement requirements set forth in Rules 514(g) and (i). 
LMMs already receive directed orders and participation entitlements in 
series they are not required to quote. For example, the continuous 
quoting requirement of Rule 604 currently does not apply to LMMs 
quoting option series with a time to expiration of nine months or 
greater. Interpretations and Policies .01 currently provides that LMMs 
may receive directed orders and participation entitlements when quoting 
such long-term series, provided the LMM meets all other entitlement 
requirements as set forth in Rules 514(h) and (i). In addition, an LMM 
is currently required to provide continuous electronic quotes in at 
least 90% of the non-adjusted option series of each multiply listed 
option class allocated to it for 90% of the trading day. If the LMM 
elects to quote in 100% of the non-adjusted series in an option class 
allocated to it, it can receive directed orders and participation 
entitlements in all of those series when quoting at the best price, 
including the 10% of the series in which it is not required to quote. 
Finally, with respect to PLMMs, the continuous quoting requirement of 
Rule 604 currently does not apply to PLMMs quoting adjusted option 
series; if a PLMM elects to quote an adjusted option series, it can 
receive the participation entitlement provided the PLMM meets all other 
entitlement requirements as set forth in Rules 514(g) and (i). Thus, 
under the proposed rule change, the market would continue to function 
as it does now. The Exchange believes this benefit is appropriate, as 
it provides incentives for PLMMs and LMMs to quote in as many series as 
possible in their appointed classes, even those series in which the 
Rules do not require them to continuously quote.
    The Exchange does not believe that the proposed rule change would 
adversely affect the quality of the Exchange's markets or lead to a 
material decrease in liquidity. Rather, the Exchange believes that its 
current market structure, with its high rate of participation by Market 
Makers, permits the proposed rule change without fear of losing 
liquidity. The Exchange also believes that market-making activity and 
liquidity could materially decrease without the proposed rule change to 
exclude Intra-day Adds from Market Maker continuous quoting obligations 
on the trading day during which they are added for trading. The 
Exchange believes that this proposed relief will encourage Market 
Makers to continue appointments and other Members to request Market 
Maker appointments, and, as a result, expand liquidity in options 
classes listed on the Exchange to the benefit of the Exchange, its 
Members and public customers. The Exchange believes that its Market 
Makers would be disadvantaged without this proposed relief. Other 
Members and public customers would also be disadvantaged if Market 
Makers withdrew from appointments in options classes, resulting in 
reduced liquidity and volume in those classes. Additionally, the 
Exchange believes that the proposed rule change to clarify that PLMMs 
and LMMs may receive participation entitlements in Intra-day Adds on 
the day during which such series are added for trading if they satisfy 
the other entitlement requirements as set forth in Exchange Rules, even 
if the Rules do not require the Market Makers to continuously quote in 
those series, will incent Market Makers to quote in series in which 
they are not required to quote, which may increase liquidity in their 
appointed classes.
2. Statutory Basis
    The Exchange believes that its 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) \7\ of the Act. 
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 
facilitation [sic] 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) requirement that the rules of an 
exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes the proposed rule change to 
exclude Intra-day Adds during the day that such series are added for 
trading from Market Makers' quoting obligations promotes just and 
equitable principles of trade because it promotes liquidity and 
continuity in the marketplace and would prevent interruptions in 
quoting or reduced liquidity that may otherwise result. The Exchange 
also believes that the proposed rule change supports the quality of the 
Exchange's markets because it does not significantly change the current 
quoting obligations of Market Makers. Market Makers must still provide 
continuous electronic quotes for a significant part of the trading day 
in a substantial number of series of each appointed class. The proposed 
relief is offset by a Market-Maker's obligation to quote in these 
series beginning the next trading day. With respect to RMMs, even if 
the RMM does not quote Intra-day Adds on the trading day during which 
they are added, this would be further offset by the RMM's continued 
obligation to quote in these series when requested by an Exchange 
Official. Accordingly, the proposed rule change supports the quality of 
the Exchange's trading markets by helping to ensure that Market Makers 
will continue to be obligated to quote in Intra-day Adds if, and when, 
the need arises and on an ongoing basis following the trading day 
during which the series are added. The Exchange believes this proposed 
change is reasonable and is offset by Market-Makers' continued 
responsibilities to provide significant liquidity to the market to the 
benefit of market participants.
    The Exchange believes this proposed rule change, on balance, is a 
minor change and should not impact the quality of the Exchange's 
trading markets. Among other things, Intra-day Adds represent an 
insignificant percentage of series listed on the Exchange each day. The 
Exchange further believes that the potential small reduction in 
liquidity in Intra-day Adds that may result from the proposed relief 
would be far outweighed by the significant reduction in liquidity in 
appointed classes that the Exchange believes could occur from 
withdrawals from and reductions in applications for Market-Maker 
appointments without the proposed relief. The proposed rule change also 
removes impediments to and allows for a free and open market,

[[Page 60355]]

while protecting investors, by promoting additional transparency 
regarding Market-Makers' obligations and benefits in the Exchange 
Rules. In addition, the Exchange believes that the proposed rule change 
is designed to not permit unfair discrimination among Market Makers, as 
the proposed rule change provides the proposed relief for all Market 
Makers.
    The proposed rule change to clarify that LMMs may receive directed 
orders and participation entitlements, and PLMMs may receive 
participation entitlements in Intra-day Adds in their appointed classes 
in which they are quoting, even though they are not required to quote 
such series, further supports the quality of the Exchange's trading 
markets because it encourages LMMs and PLMMs to quote in as many series 
as possible, which ultimately benefits all investors. This benefit is 
offset by the LMMs' and PLMMs' continued quoting obligations and the 
fact that their quotes in these ``non-required'' series must still 
satisfy all of their other obligations under the Rules. The Exchange 
also believes that this proposed change is consistent with its current 
practice, pursuant to which (1) LMMs receive directed orders and 
participation entitlements in long-term series, adjusted series and 
additional series in which they elect to quote above the minimum 
percentage of series in which they are required to continuously quote 
under the Rules; and (2) PLMMs receive participation entitlements in 
adjusted series.
    For the foregoing reasons, the Exchange believes that the proposed 
rule change is appropriate and consistent with the Act.

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 Exchange does not believe 
the proposed rule change to exclude Intra-day Adds during the day which 
such series are added for trading from Market Makers' quoting 
obligations will cause any unnecessary burden on intra-market 
competition because it provides the same relief to a group of similarly 
situated market participants, that is, Market Makers. The Exchange does 
not believe the proposed change will cause any unnecessary burden on 
inter-market competition because Intra-day Adds are a very small 
portion of series on the Exchange. The Exchange further believes that 
the potential small reduction in liquidity in Intra-day Adds that may 
result from the proposed relief would be far outweighed by the 
significant reduction in liquidity in appointed classes that the 
Exchange believes could occur from withdrawals from and reductions in 
applications for Market-Maker appointments without the proposed relief. 
In addition, the Exchange believes that the proposed rule change will 
in fact relieve any burden on, or otherwise promote, competition. The 
Exchange believes that excluding Intra-day Adds on the day during which 
they are added for trading from Market-Maker obligations will promote 
trading activity on the Exchange to the benefit of the Exchange, its 
Members, and market participants.
    The Exchange does not believe the proposed rule change to clarify 
that LMMs and PLMMs may receive participation entitlements in Intra-day 
Adds in their appointed classes in which they are quoting, even though 
they are not required to quote, provided the other requirements set 
forth in the Rules are satisfied, will cause any unnecessary burden on 
intra-market competition because it too provides the same relief to a 
group of similarly situated market participants, that is all LMMs and 
PLMMs. The Exchange does not believe the proposed change will cause any 
unnecessary burden on inter-market competition because LMMs are 
currently entitled to receive directed orders and participation 
entitlements, and PLMMs are currently entitled to receive participation 
entitlements on series they are not obligated to quote in under the 
Rules. In addition, the Exchange believes that the proposed rule change 
will in fact promote competition. The Exchange believes allowing LMMs 
to receive directed orders and participation entitlements, and PLMMs to 
receive participation entitlements in Intra-day Adds will promote 
trading activity on the Exchange because it will provide incentives to 
LMMs and PLMMs to quote in such series though not obligated to do so, 
to the benefit of the Exchange, its Members, and market participants.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may 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 Commission notes that 
waiver of the operative delay would permit the Exchange to implement 
the changes proposed herein immediately.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    Under the proposal, the Exchange would amend certain of its rules 
pertaining to the trading of options in order to exclude Intra-day Adds 
from Market Makers' continuous quoting obligations on the day such 
series are added for trading. If, and only if, they are in fact quoting 
them, LMMs and PLMMs will be eligible to receive directed orders and 
participation entitlements in all Intra-day Adds on the day such series 
are added for trading, provided the LMM or PLMM meets all other 
directed order and participation entitlement requirements. The Exchange 
notes that eliminating the continuous quoting obligations for Intra-day 
Adds will ensure fair competition among the exchanges and encourage 
greater liquidity on the Exchange to the benefit of investors. Further, 
the Exchange represents that the proposed rule change also will promote 
consistency among the competing options exchanges that have Intra-day

[[Page 60356]]

Adds and reduce the current compliance burdens imposed on Market Makers 
by the application of different continuous quoting standards.
    The Commission notes that MIAX's proposal is based on a proposal 
submitted by another exchange that the Commission approved,\14\ and it 
raises no novel regulatory issues. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the proposed rule 
change as operative upon filing.\15\
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    \14\ See supra note 5. The Commission notes that it did not 
receive any comments on CBOE-2013-019.
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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 such 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 under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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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 rule-comments@sec.gov. Please include 
File Number SR-MIAX-2013-44 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2013-44. 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 Web site (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 Web site viewing and 
printing in the Commission's Public Reference Room at 100 F Street NE., 
Washington, DC 20549-1090 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2013-44 and should be 
submitted on or before October 22, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-23903 Filed 9-30-13; 8:45 am]
BILLING CODE 8011-01-P