Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt the MIAX PRIME Price Improvement Mechanism and the MIAX PRIME Solicitation Mechanism, 24032-24040 [2014-09680]
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24032
Federal Register / Vol. 79, No. 82 / Tuesday, April 29, 2014 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09677 Filed 4–28–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72000; File No. SR–
NYSEArca–2014–20]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on Proposed Rule Change, as Modified
by Amendment No. 2, To List and
Trade Shares of Reality Shares
Isolated Dividend Growth ETF Under
NYSE Arca Equities Rule 8.600
April 23, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09674 Filed 4–28–14; 8:45 am]
On February 25, 2014, NYSE Arca,
Inc. (‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares of Reality Shares
Isolated Dividend Growth ETF under
NYSE Arca Equities Rule 8.600. On
March 7, 2014, the Exchange filed
Amendment No. 2 to the proposed rule
change, which amended and replaced
the proposed rule change in its
entirety.3 The proposed rule change, as
modified by Amendment No. 2, was
published for comment in the Federal
Register on March 17, 2014.4 The
Commission received no comments on
this proposal.
Section 19(b)(2) of the Act 5 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
sroberts on DSK5SPTVN1PROD with NOTICES
is May 1, 2014. The Commission is
extending this 45-day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider this proposed rule change,
which would allow the listing of a new
exchange-traded product.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,6
designates June 13, 2014 as the date by
which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change,
as modified by Amendment No. 2 (File
No. SR–NYSEArca–2014–20).
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 was filed on March 6, 2014
and withdrawn on March 7, 2014.
4 See Securities Exchange Act Release No. 71686
(March 11, 2014), 79 FR 14761.
5 15 U.S.C. 78s(b)(2).
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72008; File No. SR–CBOE–
2014–017]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Designation of
a Longer Period for Commission
Action on a Proposed Rule Change, as
Modified by Amendment 1 Thereto, to
Amend Its Rules Related to Complex
Orders
16:56 Apr 28, 2014
Jkt 232001
On February 19, 2014, Chicago Board
Options Exchange, Incorporated (the
‘‘Exchange’’ or ‘‘CBOE’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’), pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend its rules relating to
complex orders. On March 3, 2014, the
Exchange filed Amendment No. 1 to the
proposed rule change. The proposed
rule change, as modified by Amendment
No. 1 thereto, was published for
comment in the Federal Register on
March 10, 2014.3 The Commission
received no comments on the proposed
rule change.
6 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 71648
(March 5, 2014), 79 FR 13359.
7 17
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09679 Filed 4–28–14; 8:45 am]
BILLING CODE 8011–01–P
April 23, 2014.
1 15
VerDate Mar<15>2010
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is April 24, 2014. The Commission is
extending this 45-day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider this proposed rule change.
The proposed rule change, if approved,
would require any complex order with
three or more legs to participate in the
Exchange’s complex order auction prior
to entering the Exchange’s complex
order book.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,5
designates June 6, 2014, as the date by
which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–CBOE–2014–017).
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72009; File No. SR–MIAX–
2014–09]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing of Amendment
No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, To
Adopt the MIAX PRIME Price
Improvement Mechanism and the MIAX
PRIME Solicitation Mechanism
April 23, 2014.
I. Introduction
On February 18, 2014, Miami
International Securities Exchange LLC
4 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
6 17 CFR 200.30–3(a)(31).
5 15
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29APN1
Federal Register / Vol. 79, No. 82 / Tuesday, April 29, 2014 / Notices
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt MIAX Rule 515A to implement
the MIAX Price Improvement
Mechanism (‘‘PRIME’’) and the PRIME
Solicitation Mechanism. The proposed
rule change was published for comment
in the Federal Register on March 10,
2014.3 On April 17, 2014, MIAX filed
Amendment No. 1 to the proposal.4 The
Commission received no comments
regarding the proposal.5 The
Commission is publishing this notice to
solicit comment on Amendment No. 1
from interested persons and is
approving the proposed rule change, as
modified by Amendment No. 1, on an
accelerated basis.
II. Description of the Proposal
The Exchange proposes to adopt
MIAX Rule 515A to establish the PRIME
and PRIME Solicitation Mechanism.6
The PRIME is a process by which a
Member (‘‘Initiating Member’’) may
electronically submit for execution an
order it represents as agent (‘‘Agency
Order’’) against principal interest and/or
solicited interest. The PRIME
Solicitation Mechanism is a separate
process by which a Member that
represents agency orders of not less than
500 standard option contracts (or 5,000
mini-option contracts) may
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 71640
(March 10, 2014), 79 FR 13334 (‘‘Notice’’).
4 See Letter from Brian O’Neill, Vice President
and Senior Counsel, MIAX, to Elizabeth M.
Murphy, Secretary, Commission, dated April 17,
2014. In Amendment No. 1, MIAX amended its
filing to clarify that its analysis of its proposed
mechanisms’ compliance with Section 11(a) of the
Act, which referred to both proposed mechanisms
collectively as ‘‘PRIME,’’ was applicable to both the
PRIME price improvement mechanism as well as
the PRIME Solicitation Mechanism.
5 To promote the public availability and
transparency of its post-notice amendment, MIAX
submitted a copy of Amendment No. 1 through the
Commission’s electronic public comment letter
mechanism. Accordingly, since the Commission
received Amendment No. 1 from MIAX, it has been
publicly available on the Commission’s Web site at
https://www.sec.gov/rules/sro/miax.shtml.
6 As MIAX explained in its Notice, because of the
technology changes associated with this rule
proposal, if approved by the Commission, MIAX
noted that it would announce the implementation
date of the proposal in a Regulatory Circular to be
published no later than 90 days after the
Commission’s publication of an approval order in
the Federal Register. In addition, MIAX represented
that the implementation date will be no later than
90 days following publication of the Regulatory
Circular announcing publication of the approval
order in the Federal Register. See Notice, supra
note 3, 79 FR at 13347.
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electronically execute such orders
against solicited orders.
A. PRIME Price Improvement Auction
The Exchange proposes to implement
an electronic auction system called
‘‘PRIME’’ that would expose certain
orders electronically in an auction to
provide such orders with the
opportunity to receive an execution at
an improved price.7 The Commission
notes that MIAX’s proposed price
improvement mechanism is similar to
the Automated Improvement
Mechanism (‘‘AIM’’) offered by the
Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’).8
Eligibility and Auction Process
To be eligible, the Agency Order must
be in a class designated as eligible for
PRIME as determined by the Exchange
and within the designated auction order
eligibility size parameters as such size
parameters are determined by the
Exchange.9 In addition, if the Agency
Order is for 50 standard option contracts
(or 500 mini-option contracts) or more,
the Initiating Member must stop the
entire Agency Order as principal or with
a solicited order at the better of the
National Best Bid or Offer (‘‘NBBO’’) or
the Agency Order’s limit price (if the
order is a limit order).10 However, if the
Agency Order is for less than 50
standard option contracts (or less than
500 mini-option contracts), the
Initiating Member must stop the entire
Agency Order as principal or with a
solicited order at the better of (i) the
NBBO price improved by a $0.01
increment; or (ii) the Agency Order’s
limit price (if the order is a limit
order).11
7 Proposed MIAX Rule 515A, Interpretations and
Policy .02 provides that the PRIME and PRIME
Solicitation Mechanism may only be used to
execute bona fide crossing transactions. Using the
PRIME and PRIME Solicitation Mechanism for any
other means, including but not limited to, market
or price manipulation, shall be considered conduct
inconsistent with just and equitable principles of
trade in accordance with MIAX Rule 301.
8 See CBOE Rule 6.74A.
9 See proposed MIAX Rule 515A(a)(1)(i).
Proposed MIAX Rule 515A, Interpretation and
Policy .05 provides that any determinations made
by the Exchange pursuant to this MIAX Rule 515A,
such as eligible classes and order size parameters,
will be communicated in a Regulatory Circular.
10 See proposed MIAX Rule 515A(a)(1)(ii).
11 See proposed MIAX Rule 515A(a)(1)(iii). The
Exchange states that since the Initiating Member is
stopping the entire Agency Order at the NBBO price
or better at the beginning of the PRIME auction, the
execution at the conclusion of the PRIME auction
would qualify as an exception to the general
prohibition against trade-throughs, pursuant to
MIAX Rule 1401(b)(9). See MIAX Rule 1401(b)(9)
(providing an exception from trade-through liability
in the circumstance when a transaction that
constituted the trade-through was the execution of
an order that was stopped at a price that did not
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24033
To initiate the PRIME auction, the
Initiating Member must mark the
Agency Order for PRIME processing,
and specify either: (i) A single price at
which it seeks to cross the Agency
Order (with principal interest and/or a
solicited order) (‘‘single-price
submission’’), including whether the
Initiating Member elects to have last
priority in allocation, or (ii) that it is
willing to automatically match (‘‘automatch’’) as principal the price and size
of all PRIME responses up to an
optional designated limit price. If the
Initiating Member chooses to automatch PRIME responses, the Agency
Order will be stopped at the better of the
NBBO (if 50 standard option contracts
(or 500 mini-option contracts) or
greater), $0.01 increment better than the
NBBO (if less than 50 standard option
contracts or 500 mini-option contracts),
or the Agency Order’s limit price.12 For
both single price submissions and automatch, in order to protect resting
interest on MIAX’s system (‘‘Book’’),
whenever the disseminated best bid or
offer on the Exchange (‘‘MBBO’’) 13 on
the same side of the market as the
Agency Order represents a limit order
on the Book, the stop price must be at
least $0.01 increment better than the
booked order’s limit price.14
For both a single price submission
and auto-match, the stop price specified
by the Initiating Member on the Agency
Order will be the ‘‘initiating price’’ for
the PRIME auction.15 The Initiating
Member may not modify or cancel the
submission after it has submitted an
Agency Order to the PRIME auction for
processing.16 Only one PRIME auction
may be running at any given time in an
option, and PRIME auctions in the same
option may not queue or overlap in any
manner.17
trade through an Eligible Exchange at the time of
the stop).
12 See proposed MIAX Rule 515A(a)(2)(i)(A).
13 See MIAX Rule 100.
14 See proposed MIAX Rule 515A(a)(2)(i)(A).
15 See id. See also Notice, supra note 3, 79 FR at
13336 (for examples illustrating the initiating price
for various potential Agency Orders).
16 See proposed MIAX Rule 515A(a)(2)(i)(A).
17 See proposed MIAX Rule 515A(a)(2). In
addition, if managed interest exists on the
Exchange’s Book pursuant to MIAX Rule 515(c) for
the option on the same side of the market as the
Agency Order, the Agency Order will be rejected by
the System prior to initiating a PRIME or PRIME
Solicitation Mechanism auction. See proposed
MIAX Rule 515A, Interpretation and Policy .07. If
managed interest exists on the MIAX Book pursuant
to MIAX Rule 515(c) for the option on the opposite
side of the market as the Agency Order and when
the MBBO is equal to the NBBO, the Agency Order
will be automatically executed against the managed
interest, if the execution would be at a price equal
to the initiating price of the Agency Order. If the
Agency Order is not fully executed after the
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Federal Register / Vol. 79, No. 82 / Tuesday, April 29, 2014 / Notices
sroberts on DSK5SPTVN1PROD with NOTICES
When the Exchange receives a
properly designated Agency Order for
PRIME auction processing, a request for
responses (‘‘RFR’’) detailing the option,
side, size, and initiating price will be
sent to all subscribers of the Exchange’s
data feeds.18 The RFR response period
for each PRIME auction will last for 500
milliseconds.19 During the RFR
response period, Members may submit
responses to the RFR (specifying prices
and sizes).20 RFR responses must be
submitted as either an auction or cancel
(‘‘AOC’’) order or an AOC eQuote.21
Responses cannot cross the MBBO on
the opposite side of the market from the
response.22 RFR responses shall not be
visible to other auction participants, and
MIAX will not disseminate them to the
Options Price Reporting Authority
(‘‘OPRA’’).23 The minimum price
managed interest is fully exhausted and is no longer
at a price equal to or better than the initiating price
of the Agency Order, a PRIME auction will be
initiated for the balance of the order. See proposed
MIAX Rule 515A, Interpretations and Policies .06.
18 See proposed MIAX Rule 515A(a)(2)(i)(B). The
Exchange will include the RFR from the auction
mechanisms in the Exchange’s data feeds at no
incremental cost to subscribers. Thus, any
subscriber that chooses to receive options data,
including any Member subscriber, has the ability to
respond to those RFRs.
19 See proposed MIAX Rule 515A(a)(2)(i)(C). In
February 2014, to determine whether the proposed
duration of the RFR would provide sufficient time
to enter an RFR response, the Exchange asked
Members, including Market Makers, whether their
firms ‘‘could respond to an Auction with a duration
of 500 milliseconds.’’ Of the 8 Members that
responded to the question, 100% indicated that
their firm could respond in this time frame. See
Notice, supra note 3, 79 FR at 13337, n.19.
20 See proposed MIAX Rule 515A(a)(2)(i)(D). The
Exchange states that any MIAX Member, and any
MIAX Member acting as agent for orders, may
respond to an RFR in a PRIME auction.
21 See id. An AOC order is a limit order used to
provide liquidity during a specific Exchange
process (such as the Opening Imbalance process
described in MIAX Rule 503) with a time in force
that corresponds with that event. AOC orders are
not displayed to any market participant, are not
included in the MBBO and therefore are not eligible
for trading outside of the event, may not be routed,
and may not trade at a price inferior to the away
markets. See MIAX Rule 516(b)(4). An AOC eQuote
is a quote submitted by a Market Maker to provide
liquidity in a specific Exchange process (such as the
Opening Imbalance Process described in MIAX
Rule 503) with a time in force that corresponds with
the duration of that event and will automatically
expire at the end of that event. AOC eQuotes are
not displayed to any market participant, are not
included in the MBBO and therefore are not eligible
for trading outside of the event. An AOC eQuote
does not automatically cancel or replace the Market
Maker’s previous Standard quote or eQuote. See
MIAX Rule 517(a)(2)(ii). The Exchange notes that
any orders or quotes received by the System during
the Auction that are not AOC orders or AOC
eQuotes will be treated as unrelated trading
interest. In addition, the Exchange notes that an
AOC order or an AOC eQuote could trade at a price
inferior to the away market if it is a part of an
exempt transaction. See MIAX Rule 1402.
22 See proposed MIAX Rule 515A(a)(2)(i)(D).
23 See proposed MIAX Rule 515A(a)(2)(i)(E).
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16:56 Apr 28, 2014
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increment for RFR responses and for the
Initiating Member’s submission is a
$0.01 increment, regardless of whether
the class otherwise trades in a larger
price increment.24 MIAX will cap an
RFR response with a size greater than
the size of the Agency Order at the size
of the Agency Order for allocation
purposes.25 RFR responses may be
cancelled by the Member submitting
them.26
before the end of the RFR period and
engaging in a pattern of conduct where
the Member submitting the Agency
Order into the PRIME breaks up the
Agency Order into separate orders for
two (2) or fewer contracts for the
purpose of gaining a higher allocation
percentage than the Member would
have otherwise received in accordance
with the allocation procedures
contained in MIAX Rule 515A.29
1. Conclusion of the PRIME Auction
3. Priority and Allocation of Orders and
Quotes
The PRIME auction will end early,
before the end of the RFR response
period, under certain enumerated
circumstances.27 Specifically, the
PRIME will conclude at the sooner of
the following: (i) The end of the RFR
response period; (ii) upon receipt by
MIAX of an unrelated order (in the same
option as the Agency Order) on the
same side or opposite side of the market
from the RFR responses, that is
marketable against either the MBBO
(when such quote is the NBBO) or the
RFR responses; (iii) upon receipt by
MIAX of an unrelated limit order (in the
same option as the Agency Order and on
the opposite side of the market from the
Agency Order) that improves any RFR
response; (iv) any time an RFR response
matches the MBBO on the opposite side
of the market from the RFR responses;
(v) any time there is a quote lock in the
subject option on the Exchange
pursuant to MIAX Rule 1402; or (vi) any
time there is a trading halt in the option
on the Exchange.28
MIAX will consider it to be conduct
inconsistent with just and equitable
principles of trade, in accordance with
MIAX Rule 301, for any Member to
enter orders, quotes, Agency Orders, or
other responses for the purpose of
disrupting or manipulating a PRIME
auction. Such conduct includes, but is
not limited to, engaging in a pattern or
practice of submitting unrelated orders
that cause a PRIME auction to conclude
proposed MIAX Rule 515A(a)(2)(i)(F).
proposed MIAX Rule 515A(a)(2)(i)(G). The
Exchange states that RFR response sizes are capped
at the same size of the Agency Order in order to
prevent manipulation and gaming of the pro rata
allocation within each origin type and price point.
The Commission understands that unrelated trading
interest including unrelated orders, quotes, or
orders on the Exchange’s Book will not be subject
to such a cap, since they are not considered
responses to the Auction.
26 See proposed MIAX Rule 515A(a)(2)(i)(H).
27 The Exchange states that the PRIME is designed
to maintain priority of all resting quotes and orders
and any RFR responses received before the end of
the PRIME auction. Thus the PRIME will end early,
before the end of the RFR period, as a result of
certain events that would otherwise disrupt the
priority of the PRIME auction with the Exchange’s
Book. See Notice, supra note 3, 79 FR at 13338.
28 See proposed MIAX Rule 515A(a)(2)(ii).
In its Notice, MIAX represented that
the priority of allocation at the
conclusion of a PRIME auction,
described below, will be similar to the
standard allocation of orders and quotes
on MIAX.30 MIAX Rule 514 describes
the priority of allocation of orders and
quotes on the Exchange. According to
the Exchange, under the pro-rata
allocation method, resting quotes and
orders on the Book are prioritized
according to price. If there are two or
more quotes or orders at the best price,
then the contracts are allocated
proportionally according to size (in a
pro-rata fashion) within each origin
type. If the executed quantity cannot be
evenly allocated, the remaining
contracts will be distributed one at a
time based upon size-time priority.31
When the Priority Customer Overlay is
in effect, the highest bid and lowest
offer has priority, except that Priority
Customer Orders have priority over
Professional Interest and all Market
Maker interest at the same price. If there
are two or more Priority Customer
Orders for the same options at the same
price, priority is afforded to such
Priority Customer Orders in the
sequence in which they are received by
the System.32 If there is other interest at
the NBBO, after all Priority Customer
Orders (if any) at that price have been
filled, executions at that price will be
first allocated to other remaining Market
24 See
25 See
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Frm 00107
Fmt 4703
Sfmt 4703
29 See proposed MIAX Rule 515A, Interpretations
and Policies .01.
30 See Notice, supra note 3, 79 FR at 13338.
According to the Exchange, the allocation of orders
and quotes at the conclusion of a PRIME auction
will be in priority ranked by price/origin type/prorata/time, which is the standard allocation of orders
and quotes on MIAX when the pro-rata allocation
method and the Priority Customer Overlay is in
effect. The key differences between the standard
allocation and PRIME allocation are that in PRIME:
RFR responses are capped at the total size of the
Agency Order which changes the pro-rata
calculation when allocating within the same origin
type; no participation entitlement will apply to
orders executed in the PRIME; and the Initiating
Member’s facilitating or solicitation order may
receive a participation guarantee at the stop price.
31 See MIAX Rule 514(c)(2).
32 See MIAX Rule 514(d)(1).
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Federal Register / Vol. 79, No. 82 / Tuesday, April 29, 2014 / Notices
sroberts on DSK5SPTVN1PROD with NOTICES
Maker priority quotes,33 which have not
received a participation entitlement,
and have precedence over Professional
Interest.34 If, after all Market Maker
priority quotes have been filled in
accordance with MIAX Rule 514(d)(1),
there remains interest at the NBBO,
executions will be allocated to all
Professional Interest at that price.35
At each price point, orders and quotes
will be given priority by type—first to
Priority Customers, then Market Makers
with priority quotes, and then to
Professional Interest. If unrelated orders
are received by the Exchange during the
period when a PRIME auction is
occurring, such orders will be eligible to
participate in the auction, subject to the
process above. If orders received are not
executed in the PRIME auction, the time
stamps they received will be used to
determine time priority for their
execution outside of the auction.
Thus, at the conclusion of the PRIME
auction, the Agency Order will be
allocated at the best price(s) pursuant to
the matching algorithm in effect for the
class. Such best prices include nonauction quotes and orders.36 With
respect to order execution priority,
Priority Customer orders resting on the
Book before the auction or that are
received during the RFR response
period, as well as Priority Customer RFR
responses, will collectively have first
priority to trade against the Agency
Order. The allocation of an Agency
Order against any Priority Customer
orders resting in the Book, Priority
Customer orders received during the
RFR response period, and Priority
Customer RFR responses shall be in the
33 To be considered a priority quote, at the time
of execution, each of the following standards must
be met: (i) The bid/ask differential of a Market
Maker’s two-sided quote pair must be valid width
(no wider than the bid/ask differentials outlined in
MIAX Rule 603(b)(4)); (ii) the initial size of both of
the Market Maker’s bid and the offer must be in
compliance with the requirements of MIAX Rule
604(b)(2); (iii) the bid/ask differential of a Market
Maker’s two-sided quote pair must meet the priority
quote width requirements defined in MIAX Rule
517(b)(1)(ii) for each option; and (iv) either of the
following are true: (1) At the time a locking or
crossing quote or order enters the System, the
Market Maker’s two-sided quote pair must be valid
width for that option and must have been resting
on the Book; or (2) immediately prior to the time
the Market Maker enters a new quote that locks or
crosses the MBBO, the Market Maker must have had
a valid width quote already existing (i.e., exclusive
of the Market Maker’s new marketable quote or
update) among his two-sided quotes for that option.
See MIAX Rule 517(b)(1)(i).
34 See MIAX Rule 514(e)(1). The term
‘‘Professional Interest’’ means (i) an order that is for
the account of a person or entity that is not a
Priority Customer, or (ii) an order or non-priority
quote for the account of a Market Maker. See MIAX
Rule 100.
35 See MIAX Rule 514(e)(2).
36 See proposed MIAX Rule 515A(a)(2)(iii)(A).
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sequence in which they are received by
the System.37
After the execution of Priority
Customer orders and responses, if the
best price equals the Initiating Member’s
single-price submission, then the
Initiating Member’s single-price
submission will be eligible for a
‘‘participation guarantee’’ under which
the Initiating Member will receive an
allocation of the greater of one contract
or a certain percentage of the order,
which percentage will be determined by
the Exchange and may not be larger than
40% of the Agency Order in total.38 If
only one Member’s response matches
the Initiating Member’s single price
submission, then the Initiating Member
may be allocated up to 50% of the
Agency Order.39 If the Initiating
Member selected the auto-match option,
the Initiating Member will receive an
allocation at each auto-matched RFR
response price point up to any
designated limit price, or until a price
point is reached where the balance of
the order can be fully executed.40 At
such final price point, the Initiating
Member will be entitled to a
‘‘participation guarantee’’ that will
result in the Initiating Member being
allocated the greater of one contract or
a certain percentage of the remainder of
the order, which percentage will be
determined by the Exchange and may
not be larger than 40% of the contracts
remaining at the final price point.41
However, if the Initiating Member
elected to have last priority in allocation
when submitting an Agency Order to
initiate a PRIME auction against a
single-price submission, the Initiating
Member will be allocated only the
amount of contracts remaining, if any,
after the Agency Order is allocated to all
37 See proposed MIAX Rule 515A(a)(2)(iii)(B).
The Exchange represents that the priority allocation
in PRIME is consistent with the standard priority
rules for Priority Customers in MIAX Rule
514(d)(1). The Exchange gives priority to Priority
Customer orders whether they were on the Book or
received during the RFR response period.
38 See proposed MIAX Rule 515A(a)(2)(iii)(H).
39 See proposed MIAX Rule 515A(a)(2)(iii)(H). It
is the Commission’s understanding that the
Initiating Member would retain a 50% allocation
only where the Initiating Member is matched by
only one response at the best price. See also Notice,
supra note 3, 79 FR at 13340 (for examples
illustrating the allocation at the end of the PRIME).
40 The Exchange notes that the auto-match
functionality will only allocate the full size of RFR
responses (AOC orders and AOC eQuotes). See
proposed MIAX Rule 515A(a)(2)(iii)(I). As noted
above, any orders or quotes received by the System
during the PRIME that are not AOC orders or AOC
eQuotes will be treated as unrelated trading
interest; the auto-match functionality will not
allocate against such unrelated trading interest. See
proposed MIAX Rule 515A(a)(2)(i)(D).
41 See proposed MIAX Rule 515A(a)(2)(iii)(I).
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24035
other responses at the single price
specified by the Initiating Member.42
Following allocation to any Priority
Customer interest and any allocation to
the Initiating Member pursuant to its
participation guarantee and auto-match
(if applicable), Market Maker priority
quotes and RFR responses from Market
Makers with priority quotes will
collectively have the next level of
priority. The allocation of Agency
Orders against these contra sided quotes
and RFR responses will be on a size pro
rata basis as defined in MIAX Rule
514(c)(2).43
Next, Professional Interest orders
resting in the Book, Professional Interest
orders placed in the Book during the
RFR response period, Professional
Interest quotes, and Professional Interest
RFR responses will collectively have
last priority.44 The allocation of Agency
Orders against these contra sided orders
and RFR responses will be on a size pro
rata basis as defined in MIAX Rule
514(c)(2).45
When allocating the Agency Order,
the market maker ‘‘participation
entitlements’’ shall not apply to orders
executed pursuant to the PRIME rule.46
If an unrelated market or marketable
limit order on the opposite side of the
market as the Agency Order is received
during the PRIME auction and ended
the auction, such unrelated order will
trade against the Agency Order at the
midpoint of the best RFR response (or
in the absence of an RFR response, the
initiating price) and the NBBO on the
other side of the market from the RFR
responses (rounded towards the
disseminated quote when necessary).47
If an unrelated non-marketable limit
order on the opposite side of the market
as the Agency Order is received during
the PRIME auction and ended the
auction, such unrelated order will trade
against the Agency Order at the
midpoint of the best RFR response and
the unrelated order’s limit price
(rounded towards the unrelated order’s
limit price when necessary).48
42 See
proposed MIAX Rule 515A(a)(2)(iii)(L).
proposed MIAX Rule 515A(a)(2)(iii)(C).
44 See MIAX Rule 514(e)(2).
45 See proposed MIAX Rule 515A(a)(2)(iii)(D).
46 See proposed MIAX Rule 515A(a)(2)(iii)(E).
See, e.g., MIAX Rule 514(g) (Primary Lead Market
Maker Participation Entitlements), for an example
of a market maker ‘‘participation entitlement.’’
These market maker ‘‘entitlements’’ are separate
and apart from, and do not relate to, the
‘‘participation guarantee’’ that is part of the
proposed PRIME mechanism.
47 See proposed MIAX Rule 515A(a)(2)(iii)(F). See
also Notice, supra note 3, 79 FR at 13341 (for
examples illustrating the allocation when the
PRIME concludes early).
48 See proposed MIAX Rule 515A(a)(2)(iii)(G). An
unrelated non-marketable limit order on the
43 See
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If the final auction price locks a
Priority Customer order on the Book on
the same side of the market as the
Agency Order, then the Agency Order
will execute against the RFR responses
at $0.01 increment worse than the final
PRIME auction price (towards the
opposite side of the Agency Order)
against the PRIME auction participants
that submitted the final price, unless
there is sufficient size in the PRIME
responses to execute both the Agency
Order and the booked Priority Customer
order (in which case they will both
execute at the final PRIME auction
price). Any balance shall trade against
the Priority Customer order in the Book
at such order’s limit price.49
Notwithstanding the priority for
Market Makers and Professional Interest
pursuant to proposed MIAX Rule
515A(a)(2)(iii)(C) and (D), if the PRIME
auction does not result in price
improvement over the Exchange’s
disseminated price at the time the
PRIME auction began, resting
unchanged quotes or orders that were
disseminated at the best price before the
PRIME auction began will have priority
after any Priority Customer order
priority and the Initiating Member’s
participation guarantee have been
satisfied.50 Any unexecuted balance on
the Agency Order will be allocated to
RFR responses, provided that those RFR
responses will be capped to the size of
the original order and that the Initiating
Member may not participate on any
such balance, unless the Agency Order
would otherwise go unfilled.51
If an unexecuted balance remains on
the PRIME auction responses after the
Agency Order has been executed in full
and such balance in the RFR responses
could trade against any unrelated
order(s) that caused the PRIME auction
to conclude, then the RFR balance will
trade against the unrelated order(s) on a
size pro rata basis as defined in MIAX
Rule 514(c)(2).52
It shall be considered conduct
inconsistent with just and equitable
opposite side of the market as the Agency Order
would end the PRIME in the situation when that
unrelated non-marketable limit order improves any
RFR response.
49 See proposed MIAX Rule 515A(a)(2)(iii)(K).
Thus, the execution price will be $0.01 increment
higher than the final PRIME auction price if the
Agency Order is to buy or $0.01 increment lower
than the final PRIME auction price if the Agency
Order is to sell.
50 See proposed MIAX Rule 515A(a)(2)(iii)(J). The
Exchange notes that the priority of such resting
unchanged quotes or orders that were disseminated
at the best price before the PRIME began will still
be subject to the standard priority allocation in
effect pursuant to MIAX Rule 514. See Notice,
supra note 3, 79 FR at 13343.
51 See proposed MIAX Rule 515A(a)(2)(iii)(J).
52 See proposed MIAX Rule 515A(a)(2)(iii)(M).
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principles of trade, in accordance with
MIAX Rule 301, for any Member to
enter orders, quotes, Agency Orders, or
other responses for the purpose of
disrupting or manipulating the auction.
Such conduct includes, but is not
limited to, engaging in a pattern of
conduct where the Member submitting
the Agency Order into the PRIME breaks
up the Agency Order into separate
orders for two (2) or fewer contracts for
the purpose of gaining a higher
allocation percentage than the Member
would have otherwise received in
accordance with the allocation
procedures contained in MIAX Rule
515A(a)(2)(iii).53
Finally, in proposed MIAX Rule
515A, Interpretation and Policy .08, the
Exchange obligates itself to submit
certain data, as requested by the
Commission staff, on the operation of
the PRIME auction. This data will be
used to assist the Exchange as well as
the Commission in assessing activity in
PRIME auctions including, among other
things, the degree of meaningful
competition for all size orders within
the PRIME auction, whether there is
material price improvement for orders
executed through the PRIME
mechanism, and whether there is an
active and liquid market functioning on
the Exchange outside of the PRIME
mechanism.54
B. PRIME Solicitation Mechanism
MIAX also is proposing to adopt a
solicitation mechanism that is similar to
CBOE’s Solicitation Auction
Mechanism.55 Through this proposed
mechanism, a Member that represents
Agency Orders may electronically
execute them against solicited orders
provided that it submits both the
Agency Order and solicited orders for
electronic execution into the PRIME
Solicitation Mechanism pursuant to
proposed MIAX Rule 515A(b).56
53 See proposed MIAX Rule 515A, Interpretations
and Policies .01.
54 See proposed MIAX Rule 515A, Interpretation
and Policy .08. For the list of the data that the
Exchange agreed to provide to the Commission
relating to the PRIME, see Exhibit 3 to SR–MIAX–
2014–09, which is publicly available on the
Exchange’s Web site at https://
www.miaxoptions.com.
55 See CBOE Rule 6.74B.
56 For executions pursuant to the PRIME
Solicitation Mechanism, prior to entering Agency
Orders into the PRIME on behalf of customers,
Initiating Members must deliver to the customer a
written notification informing the customer that his
order may be executed using the PRIME. The
written notification must disclose the terms and
conditions contained in MIAX Rule 515A and be in
a form that is approved by the Exchange. See
proposed MIAX Rule 515A, Interpretations and
Policy .03. In addition, Members may not use the
PRIME Solicitation Mechanism to circumvent
MIAX Rule 520 limiting principal transactions. This
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1. Eligibility and PRIME Solicitation
Mechanism Process
The Initiating Member may initiate a
PRIME Solicitation Mechanism
provided that the Agency Order is in a
class designated as eligible for PRIME
Solicitation Mechanisms as determined
by the Exchange and within the
designated PRIME Solicitation
Mechanism order eligibility size
parameters as such size parameters are
determined by the Exchange. The
eligible order size may not be less than
500 standard option contracts or 5,000
mini-option contracts.57 Also, each
order entered into the PRIME
Solicitation Mechanism must be
designated as all-or-none, and the
minimum price increment for an
Initiating Member’s single price
submission will be a $0.01 increment.58
To initiate the PRIME Solicitation
Mechanism, the Initiating Member must
mark the Agency Order for PRIME
Solicitation Mechanism processing and
specify a single price at which it seeks
to cross the Agency Order with a
solicited order, which shall be the
initiating price for the PRIME
Solicitation Mechanism.59 When the
Exchange receives a properly designated
Agency Order for PRIME Solicitation
Mechanism processing, an RFR message
indicating the option, side, size, and
initiating price 60 will be sent to all
subscribers of the Exchange’s data
feeds.61 Any Member may submit
responses to the RFR (specifying prices
and sizes) during the RFR response
period (which, like the PRIME auction,
may include, but is not limited to, Members
entering contra orders that are solicited from (i)
affiliated broker-dealers or (ii) broker-dealers with
which the Member has an arrangement that allows
the Member to realize similar economic benefits
from the solicited transaction as it would achieve
by executing the customer order in whole or in part
as principal. Additionally, solicited contra orders
entered by Members to trade against Agency Orders
may not be for the account of a MIAX Market Maker
assigned to the options class. See proposed MIAX
Rule 515A, Interpretations and Policies .04.
57 Proposed MIAX Rule 515A, Interpretation and
Policy .05 provides that any determinations made
by the Exchange pursuant to MIAX Rule 515A, such
as eligible classes and order size parameters, will
be communicated in a Regulatory Circular.
58 See proposed MIAX Rule 515A(b)(1).
59 See proposed MIAX Rule 515A(b)(2)(i)(A).
60 The initiating price for the PRIME Solicitation
Mechanism is the single price specified by the
Initiating Member at which it seeks to cross the
Agency Order with a solicited order. See proposed
MIAX Rule 515A(b)(2)(i)(A).
61 See proposed MIAX Rule 515A(b)(2)(i)(B). As
noted above with respect to the PRIME, the
Exchange will include the RFR from the auction
mechanisms in the Exchange’s data feeds at no
incremental costs to subscribers. Thus, any
subscriber that chooses to receive options data,
including any Member subscriber, has the ability to
respond to those RFRs.
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will be 500 milliseconds).62 RFR
responses must be either an AOC order
or an AOC eQuote.63 The minimum
price increment for responses will be
$0.01 increment.64 A response with a
size greater than the size of the Agency
Order will be capped at the size of the
Agency Order.65 Responses will not be
visible to other Solicitation Auction
participants, and MIAX will not
disseminate them to OPRA.66 Members
may cancel RFR responses.67
2. Conclusion of the PRIME Solicitation
Mechanism
The PRIME Solicitation Mechanism
will end early, before the end of the RFR
response period, under certain
circumstances. Specifically, the PRIME
Solicitation Mechanism will conclude at
the sooner of the following: (i) The end
of the RFR response period; (ii) upon
receipt by MIAX of an unrelated order
(in the same option as the Agency
Order) on the same side or opposite side
of the market from the RFR responses,
that is marketable against either the
MBBO (when such quote is the NBBO)
or the RFR responses; (iii) upon receipt
by MIAX of an unrelated limit order (in
the same option as the Agency Order
and on the opposite side of the market
as the Agency Order) that improves any
RFR response; (iv) any time an RFR
response matches the MBBO on the
opposite side of the market from the
RFR responses; (v) any time there is a
quote lock on the Exchange pursuant to
MIAX Rule 1402; or (vi) any time there
is a trading halt in the option on the
Exchange.68
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3. Priority and Allocation
At the conclusion of the Solicitation
Auction, the Agency Order will either
be automatically executed in full and
allocated subject to the following
provisions, or will be cancelled. The
62 See proposed MIAX Rule 515A(b)(2)(i)(C). In
February 2014, to determine whether the proposed
duration of the RFR would provide sufficient time
to enter an RFR response, the Exchange asked
Members, including Market Makers, whether their
firms ‘‘could respond to an Auction with a duration
of 500 milliseconds.’’ Of the 8 Members that
responded to the question, 100% indicated that
their firm could respond in this time frame. Thus,
the Exchange notes its belief that the proposed
duration for the RFR of 500 milliseconds, would
provide a meaningful opportunity for participants
on MIAX to respond to an RFR while at the same
time facilitating the prompt execution of orders. See
Notice, supra note 3, 79 FR at 13343, n. 62.
63 See proposed MIAX Rule 515A(b)(2)(i)(C). Any
MIAX Member may respond to the RFR in the
PRIME Solicitation Mechanism. See Notice, supra
note 3, 79 FR at 13344, n.63.
64 See proposed MIAX Rule 515A(b)(2)(i)(E).
65 See proposed MIAX Rule 515A(b)(2)(i)(F).
66 See proposed MIAX Rule 515A(b)(2)(i)(D).
67 See proposed MIAX Rule 515A(b)(2)(i)(G).
68 See proposed MIAX Rule 515A(b)(2)(ii).
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Agency Order will be executed against
the solicited order at the proposed
execution price, provided that:
• The execution price must be equal
to or better than the NBBO; 69
• There are no Priority Customer
orders resting in the Book on the
opposite side of the Agency Order at the
proposed execution price; 70 and
• There is insufficient size to execute
the Agency Order at an improved
price.71
If the execution would otherwise take
place outside the NBBO, the Agency
Order and solicited order will be
cancelled.72
If there are Priority Customer orders
resting in the Book on the opposite side
as the Agency Order and there is
sufficient size (considering all resting
orders, quotes, and RFR responses) to
execute the Agency Order, then the
Agency Order will be executed against
this interest, and the solicited order will
be cancelled. In such case, the Agency
Order will be allocated at the best
price(s) pursuant to the matching
algorithm in effect for the class.73
However, if there are Priority Customer
orders resting in the Book on the
opposite side as the Agency Order and
there is not sufficient size (considering
all resting orders, quotes, and RFR
responses) to fill the entire Agency
Order, then both the Agency Order and
the solicited order will be cancelled.74
If there is sufficient size (considering
all resting orders, quotes, and RFR
responses) to execute the Agency Order
in full at an improved price or prices
that is equal or better than the NBBO,
then the Agency Order will execute at
such improved price(s) and the solicited
order will be cancelled. In such case,
the Agency Order will be allocated at
the best price(s) pursuant to the
matching algorithm in effect for the
class.75
69 See
proposed MIAX Rule 515A(b)(2)(iii)(A).
proposed MIAX Rule 515A(b)(2)(iii)(B)(1).
71 See proposed MIAX Rule 515A(b)(2)(iii)(C). See
also Notice, supra note 3, 79 FR at 13344 (for
examples illustrating the allocation at the end of the
PRIME Solicitation Mechanism).
72 See proposed MIAX Rule 515A(b)(2)(iii)(A).
73 See proposed MIAX Rule 515A(b)(2)(iii)(B)(1).
The Agency Order will be allocated at the best
price(s) pursuant to the matching algorithm in effect
for the class. The Exchange states that this will
ensure that the Agency Order is allocated in a
manner consistent with the standard priority of
allocation of the Exchange rules that distinguish
between Priority Customers, Market Makers with
priority quotes, and Professional Interest.
74 See proposed MIAX Rule 515A(b)(2)(iii)(B)(2).
75 See proposed MIAX Rule 515A(b)(2)(iii)(C)(1).
The Exchange proposes to specify that the Agency
Order will be allocated pursuant to the matching
algorithm in effect for the class. This will ensure
that the Agency Order is allocated in a manner
consistent with the standard priority of allocation
of the Exchange rules that distinguish between
70 See
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24037
C. Order Exposure Rule
MIAX Rule 520 prohibits Members
from acting as principal on any orders
they represent as agent unless (i) agency
orders are first exposed on the Exchange
for at least one (1) second, and (ii) the
Member has been bidding or offering on
the Exchange for at least one (1) second
prior to receiving an agency order that
is executable against such bid or offer.
In addition, Members may not execute
orders they represent as agent on the
Exchange against orders solicited from
Members and non-member brokerdealers to transact with such orders
unless the unsolicited order is first
exposed on the Exchange for at least one
(1) second.
The Exchange proposes to amend
MIAX Rule 520 to permit a Member to
execute against as principal orders it
represents as agent if the Member
utilizes the PRIME price improvement
mechanism. Similarly, the Exchange
proposes to amend MIAX Rule 520 to
permit a Member to execute orders it
represents as agent against orders it has
solicited if the Member utilizes the
PRIME price improvement mechanism
or PRIME Solicitation Mechanism.
Accordingly if those mechanisms were
used, such Agency Orders submitted
into them would not be subject to the
one second order exposure requirement
of MIAX Rule 520.
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange and, in particular,
with Section 6(b) of the Act.76 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,77 which
requires, among other things, that the
rules of a national securities 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
Priority Customers, Market Makers with priority
quotes, and Professional Interest.
76 15 U.S.C. 78f(b). In approving this proposed
rule change, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
77 15 U.S.C. 78f(b)(5).
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general, to protect customers, issuers,
brokers and dealers. The Commission
believes that approving the Exchange’s
proposal to establish the PRIME price
improvement mechanism and the
PRIME Solicitation Mechanism may
increase competition among those
options exchanges that offer similar
mechanisms. The Commission further
believes that allowing MIAX Members
to enter orders into the PRIME price
improvement mechanism and the
PRIME Solicitation Mechanism could
provide additional opportunities for
such orders, notably orders from
Priority Customers, to receive price
improvement over the NBBO.
MIAX’s proposed PRIME price
improvement mechanism is similar to
existing functionality at other options
exchanges and does not raise any novel
issues.78 In particular, for orders of
fewer than 50 standard options
contracts or 500 mini-option contracts,
the PRIME price improvement
mechanism requires the Initiating
Member to stop the Agency Order at the
better of the NBBO price improved by
a $0.01 increment or the Agency Order’s
limit price.79 Once an Agency Order has
been submitted, the submission may not
be modified or cancelled. The
Commission notes that such smaller
orders are thus effectively guaranteed
some level of price improvement if they
are submitted into the PRIME price
improvement mechanism. Orders of 50
or greater contracts are guaranteed an
execution price of at least the NBBO
and, moreover, are given the
opportunity for price improvement
beyond the NBBO by being exposed to
Members during the PRIME auction. In
addition, MIAX’s proposal protects
resting interest on its Book as the stop
price must be at least $0.01 increment
better than any booked order’s limit
price on the same side of the market as
the Agency Order.
The PRIME price improvement
mechanism also permits members to
submit responses to the RFR on behalf
of all types of interest.80 The
Commission believes that this
requirement provides the potential for
an Agency Order to be exposed to a
competitive auction. Further, when the
Exchange receives a properly designated
78 See
CBOE Rule 6.74A (CBOE’s AIM).
Commission notes that this aspect of
MIAX’s proposal (i.e., to stop an Agency Order of
fewer than 50 contracts at a price-improved price)
is similar to requirements set forth in CBOE’s AIM.
See CBOE Rule 6.74A(a)(3).
80 Cf. CBOE Rule 6.74A(b)(1)(D)–(E) (only CBOE
Market Makers with an appointment in the relevant
option class, and CBOE Members acting as agent for
orders resting at the top of the CBOE book opposite
the Agency Order, may submit responses to the
AIM RFR).
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79 The
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Agency Order for PRIME auction
processing, it will send to all
subscribers of its data feeds an RFR
detailing the option, side, size, and
initiating price. This message, available
to any subscriber, is designed to help
attract responses to a PRIME auction
and may result in competitive PRIME
auctions and ultimately better prices for
the Agency Order to the extent it is
successful in attracting competitive
responses to a PRIME auction.
The RFR (for both the PRIME auction
and PRIME Solicitation Mechanism)
will last for 500 milliseconds. In
February 2014, to determine whether
the proposed duration of the RFR would
provide sufficient time to enter an RFR
response, the Exchange asked its
Members, including Market Makers,
whether their firms ‘‘could respond to
an Auction with a duration of 500
milliseconds.’’ Of the 8 Members that
responded to the question, 100%
indicated that their firm could respond
in this time frame.81 Based on MIAX’s
statements, the Commission believes
that 500 milliseconds could facilitate
the prompt execution of Agency Orders
in the PRIME auction (and PRIME
Solicitation Mechanism), while
providing market participants with an
opportunity to compete for exposed bids
and offers. The Commission notes that
another exchange’s price improvement
mechanism also provides a 500
millisecond auction response period.82
At the conclusion of a PRIME auction,
Priority Customer orders and RFR
responses representing Priority
Customer interest have first priority to
trade against the Agency Order. After
execution of Priority Customer
responses and orders, the Initiating
Member may be allocated a limited
percentage of the Agency Order, not to
exceed 40% of the contracts at the
applicable price point (however, if only
one response matches the Initiating
Member’s single price submission at the
best price, then the Initiating Member
may be allocated up to 50% of the
order). Market Maker priority quotes
and RFR responses from Market Makers
with priority quotes have next priority.
Quotes, orders, and RFR responses
representing Professional Interest have
final priority. The Commission believes
that the proposed matching algorithm
set forth in MIAX’s PRIME rule is
sufficiently clear regarding how orders
are to be allocated in the PRIME auction
and does not raise any novel issues.
The Exchange has represented its
commitment to submit certain data on
PRIME auctions at the request of
Commission staff. The Commission
expects such data to be used, by both
the Exchange and the Commission staff,
to assess the performance of PRIME
auctions, including, among other things,
to study whether there is meaningful
competition for all size orders with the
PRIME, the degree of price improvement
for all orders executed through the
PRIME mechanism, whether there is an
active and liquid market functioning on
the Exchange outside of the PRIME, and
the situations in which a PRIME auction
is terminated before the end of the RFR
response period. The data provided will
enable the Commission, as well as the
Exchange itself, to evaluate the PRIME
auction to determine its performance
and impact on options market structure
and the degree to which it is beneficial
to customers and to the options market
as a whole.
The Commission further believes that
the proposal to establish the PRIME
Solicitation Mechanism may allow for
greater flexibility in executing largesized orders, and is not novel or
otherwise raise any issues of first
impression.83 The Commission believes
that the proposal includes appropriate
conditions to assure that the Agency
Order is exposed to Members for the
possibility of price improvement over
the NBBO and that Priority Customer
orders on the Exchange are protected. At
the conclusion of a PRIME Solicitation
Mechanism auction, the Agency Order
would either be executed in full or
cancelled. The Agency Order will be
executed against the solicited order at
the proposed executed price if (i) the
execution price is equal to or better than
the NBBO; (ii) there are no Priority
Customer Orders resting in the book on
the opposite side of the Agency Order
at the proposed execution price; and
(iii) there is insufficient size to execute
the Agency Order at an improved price.
If there are Priority Customer orders and
there is sufficient size to execute the
Agency Order (considering all eligible
interest), the Agency Order will be
executed against these interests and the
solicited order will be cancelled. If,
however, there are Priority Customer
Orders but there is not sufficient size to
execute the Agency Order in full, then
both the Agency Order and the solicited
order will be cancelled. Finally, if there
is sufficient size to execute the Agency
Order in full at an improved price equal
81 See Notice, supra note 3, 79 FR at 13337, n. 19
and 13343, n. 62.
82 See International Securities Exchange Rule
723(c)(5).
83 The Commission also notes that the proposal is
similar to requirements set forth in the CBOE
Solicitation Auction Mechanism. See CBOE Rule
6.74B.
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Federal Register / Vol. 79, No. 82 / Tuesday, April 29, 2014 / Notices
to or better than the NBBO, the Agency
Order will execute at the improved
price and the solicited order will be
cancelled. The Commission believes
that the priority and allocation rules for
the PRIME Solicitation Mechanism,
which are based on a similar
mechanism on another exchange, are
reasonable and consistent with the Act.
IV. Section 11(a) of the Act
Section 11(a)(1) of the Act 84 prohibits
a member of a national securities
exchange from effecting transactions on
that exchange for its own account, the
account of an associated person, or an
account over which it or its associated
person exercises discretion (collectively,
‘‘covered accounts’’) unless an
exception applies. Rule 11a2–2(T) under
the Act,85 known as the ‘‘effect versus
execute’’ rule, provides exchange
members with an exemption from the
Section 11(a)(1) prohibition. Rule 11a2–
2(T) permits an exchange member,
subject to certain conditions, to effect
transactions for covered accounts by
arranging for an unaffiliated member to
execute transactions on the exchange.
To comply with Rule 11a2–2(T)’s
conditions, a member: (i) Must transmit
the order from off the exchange floor;
(ii) may not participate in the execution
of the transaction once it has been
transmitted to the member performing
the execution;86 (iii) may not be
affiliated with the executing member;
and (iv) with respect to an account over
which the member has investment
discretion, neither the member nor its
associated person may retain any
compensation in connection with
effecting the transaction except as
provided in the Rule. For the reasons set
forth below, the Commission believes
that Exchange members entering orders
into the PRIME and PRIME Solicitation
Mechanism would satisfy the
requirements of Rule 11a2–2(T).
The Rule’s first condition is that
orders for covered accounts be
transmitted from off the exchange floor.
In the context of automated trading
systems, the Commission has found that
the off-floor transmission requirement is
met if a covered account order is
transmitted from a remote location
directly to an exchange’s floor by
electronic means.87 MIAX has
sroberts on DSK5SPTVN1PROD with NOTICES
84 15
U.S.C. 78k(a)(1).
CFR 240.11a2–2(T).
86 The member may, however, participate in
clearing and settling the transaction.
87 See, e.g., Securities Exchange Act Release Nos.
61419 (January 26, 2010), 75 FR 5157 (February 1,
2010) (SR–BATS–2009–031) (approving BATS
options trading); 59154 (December 23, 2008), 73 FR
80468 (December 31, 2008) (SR–BSE–2008–48)
(approving equity securities listing and trading on
85 17
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16:56 Apr 28, 2014
Jkt 232001
represented that the MIAX trading
system and the proposed PRIME and
PRIME Solicitation Mechanism receive
all orders electronically through remote
terminals or computer-to-computer
interfaces. The Exchange also represents
that orders for covered accounts from
Members will be transmitted from a
remote location directly to the proposed
PRIME and PRIME Solicitation
Mechanism by electronic means.
Because no Exchange members may
submit orders into the PRIME and
PRIME Solicitation Mechanism from on
the floor of the Exchange, the
Commission believes that the PRIME
and PRIME Solicitation Mechanism
satisfy the off-floor transmission
requirement.
Second, the Rule requires that the
member not participate in the execution
of its order. The Exchange represents
that at no time following the submission
of an order is a member organization
able to acquire control or influence over
the result or timing of an order’s
execution.88 According to the Exchange,
the execution of an order is determined
by what other orders are present and the
priority of those orders.89 Accordingly,
the Commission believes that a member
does not participate in the execution of
an order submitted to the PRIME and
PRIME Solicitation Mechanism.
Third, Rule 11a2–2(T) requires that
the order be executed by an exchange
member who is unaffiliated with the
member initiating the order. The
Commission has stated that this
requirement is satisfied when
BSE); 57478 (March 12, 2008), 73 FR 14521 (March
18, 2008) (SR–NASDAQ–2007–004 and SR–
NASDAQ–2007–080) (approving NOM options
trading); 53128 (January 13, 2006), 71 FR 3550
(January 23, 2006) (File No. 10–131) (approving The
Nasdaq Stock Market LLC); 44983 (October 25,
2001), 66 FR 55225 (November 1, 2001) (SR–PCX–
00–25) (approving Archipelago Exchange); 29237
(May 24, 1991), 56 FR 24853 (May 31, 1991) (SR–
NYSE–90–52 and SR–NYSE–90–53) (approving
NYSE’s Off-Hours Trading Facility); and 15533
(January 29, 1979), 44 FR 6084 (January 31, 1979)
(‘‘1979 Release’’).
88 See Notice, supra note 3, 79 FR at 13347. See
also Amendment No. 1, supra note 4 and
accompanying text.
89 See id. The Exchange notes that a Member may
cancel or modify the order, or modify the
instructions for executing the order, but that such
instructions would be transmitted from off the floor
of the Exchange. The Commission has stated that
the non-participation requirement is satisfied under
such circumstances so long as such modifications
or cancellations are also transmitted from off the
floor. See Securities Exchange Act Release No.
14563 (March 14, 1978), 43 FR 11542 (March 17,
1978) (‘‘1978 Release’’) (stating that the ‘‘nonparticipation requirement does not prevent
initiating members from canceling or modifying
orders (or the instructions pursuant to which the
initiating member wishes to be executed) after the
orders have been transmitted to the executing
member, provided that any such instructions are
also transmitted from off the floor’’).
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24039
automated systems, such as the PRIME
and PRIME Solicitation Mechanism, are
used, as long as the design of these
systems ensures that members do not
possess any special or unique trading
advantages in handling their orders after
transmitting them to the exchange.90
MIAX has represented that the PRIME
and PRIME Solicitation Mechanism are
designed so that no Member has any
special or unique trading advantage in
the handling of its orders after
transmitting its orders to the
mechanisms.91 Based on the Exchange’s
representation, the Commission believes
that PRIME and PRIME Solicitation
Mechanism satisfy this requirement.
Fourth, in the case of a transaction
effected for an account with respect to
which the initiating member or an
associated person thereof exercises
investment discretion, neither the
initiating member nor any associated
person thereof may retain any
compensation in connection with
effecting the transaction, unless the
person authorized to transact business
for the account has expressly provided
otherwise by written contract referring
to Section 11(a) of the Act and Rule
11a2–2(T) thereunder.92 MIAX
represents that Members relying on Rule
11a2–2(T) for transactions effected
through the PRIME and PRIME
Solicitation Mechanism must comply
with this condition of the Rule.93
90 In considering the operation of automated
execution systems operated by an exchange, the
Commission noted that, while there is not an
independent executing exchange member, the
execution of an order is automatic once it has been
transmitted into the system. Because the design of
these systems ensures that members do not possess
any special or unique trading advantages in
handling their orders after transmitting them to the
exchange, the Commission has stated that
executions obtained through these systems satisfy
the independent execution requirement of Rule
11a2–2(T). See 1979 Release, supra note 87.
91 See Notice, supra note 3, 79 FR at 13347. See
also Amendment No. 1, supra note 4 and
accompanying text.
92 See 17 CFR 240.11a2–2(T)(a)(2)(iv). In addition,
Rule 11a2–2(T)(d) requires a member or associated
person authorized by written contract to retain
compensation, in connection with effecting
transactions for covered accounts over which such
member or associated persons thereof exercises
investment discretion, to furnish at least annually
to the person authorized to transact business for the
account a statement setting forth the total amount
of compensation retained by the member in
connection with effecting transactions for the
account during the period covered by the statement.
See 17 CFR 240.11a2–2(T)(d). See also 1978
Release, supra note 89 (stating ‘‘[t]he contractual
and disclosure requirements are designed to assure
that accounts electing to permit transaction-related
compensation do so only after deciding that such
arrangements are suitable to their interests’’).
93 See Notice, supra note 3, 79 FR at 13347. See
also Amendment No. 1, supra note 4 and
accompanying text.
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V. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 1 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–2014–09 on the subject line.
sroberts on DSK5SPTVN1PROD with NOTICES
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–2014–09. 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 20549–1090, 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–
2014–09 and should be submitted on or
before May 20, 2014.
VI. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 1
As discussed above, the Exchange
submitted Amendment No. 1 to clarify
representations it made in its original
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filing concerning the applicability of
and compliance of its proposed PRIME
mechanisms with Section 11(a) of the
Act.94 Specifically, MIAX clarified that
it intended its references to ‘‘PRIME’’ in
its Section 11(a) analysis to apply to
both the PRIME price improvement
mechanism as well as the PRIME
Solicitation Mechanism. Thus, the
content of Amendment No. 1, which
merely clarifies a potential ambiguity in
the filing, does not raise any novel
issues and instead provides additional
clarifying information to support
MIAX’s analysis of how its proposal is
consistent with the Act and thus
facilitates the Commission’s ability to
make the requisite findings set forth
above and ultimately approve the
proposal. In addition, the Commission
notes that it published the original
proposal in the Federal Register and did
not receive any comments on MIAX’s
Section 11(a) analysis or any other parts
of the proposal.95 Accordingly, the
Commission finds good cause, pursuant
to Section 19(b)(2) of the Act,96 to
approve the filing, as modified by
Amendment No. 1, on an accelerated
basis prior to the 30th day after the date
of the publication in the Federal
Register of notice of Amendment No. 1
to the filing.
VII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,97 that the
proposed rule change (SR–MIAX–2014–
09), as modified by Amendment No. 1,
be and hereby is approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.98
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09680 Filed 4–28–14; 8:45 am]
BILLING CODE 8011–01–P
94 See
Amendment No. 1, supra note 4.
Commission also notes that, in order to
promote the public availability and transparency of
MIAX’s post-notice amendment, MIAX submitted a
copy of Amendment No. 1 through the
Commission’s electronic public comment letter
mechanism on the same day that it filed
Amendment No. 1 with the Commission. See supra
note 5.
96 15 U.S.C. 78s(b)(2).
97 15 U.S.C. 78s(b)(2).
98 17 CFR 200.30–3(a)(12).
95 The
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71999; File No. SR–
NYSEArca-2014–19]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of
Amendment No. 3 and Order Granting
Accelerated Approval of a Proposed
Rule Change, as Modified by
Amendment Nos. 2 and 3, to List and
Trade Shares of the iShares Core
Allocation Conservative ETF, iShares
Core Allocation Moderate ETF, iShares
Core Allocation Moderate Growth ETF,
and iShares Core Allocation Growth
ETF Under NYSE Arca Equities Rule
8.600
April 23, 2014.
I. Introduction
On February 25, 2014, NYSE Arca,
Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares (‘‘Shares’’) of the
iShares Core Allocation Conservative
ETF, iShares Core Allocation Moderate
ETF, iShares Core Allocation Moderate
Growth ETF, and iShares Core
Allocation Growth ETF (each a ‘‘Fund,’’
and collectively ‘‘Funds’’) under NYSE
Arca Equities Rule 8.600. On March 10,
2014, the Exchange filed Amendment
No. 2 to the proposed rule change,
which amended and replaced the
proposed rule change in its entirety.3
The proposed rule change was
published for comment in the Federal
Register on March 18, 2014.4 On March
19, 2014, the Exchange filed
Amendment No. 3 to the proposed rule
change.5 The Commission received no
comments on the proposed rule change.
The Commission is publishing this
notice to solicit comments on
Amendment No. 3 from interested
persons, and is approving the proposed
rule change, as modified by Amendment
Nos. 2 and 3, on an accelerated basis.
II. Description of the Proposed Rule
Change
The Exchange proposes to list and
trade the Shares under NYSE Arca
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Exchange filed Amendment No. 1 on March
7, 2014 and withdrew it on March 11, 2014.
4 See Securities Exchange Act Release No. 71702
(March 12, 2014), 79 FR 15191 (‘‘Notice’’).
5 In Amendment No. 3, the Exchange describes
more clearly and specifically the ‘‘short-term
instruments’’ in which the Funds may invest.
2 17
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]]>Agencies
[Federal Register Volume 79, Number 82 (Tuesday, April 29, 2014)]
[Notices]
[Pages 24032-24040]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09680]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72009; File No. SR-MIAX-2014-09]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Adopt the MIAX PRIME Price Improvement Mechanism
and the MIAX PRIME Solicitation Mechanism
April 23, 2014.
I. Introduction
On February 18, 2014, Miami International Securities Exchange LLC
[[Page 24033]]
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to adopt MIAX Rule 515A to
implement the MIAX Price Improvement Mechanism (``PRIME'') and the
PRIME Solicitation Mechanism. The proposed rule change was published
for comment in the Federal Register on March 10, 2014.\3\ On April 17,
2014, MIAX filed Amendment No. 1 to the proposal.\4\ The Commission
received no comments regarding the proposal.\5\ The Commission is
publishing this notice to solicit comment on Amendment No. 1 from
interested persons and is approving the proposed rule change, as
modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 71640 (March 10,
2014), 79 FR 13334 (``Notice'').
\4\ See Letter from Brian O'Neill, Vice President and Senior
Counsel, MIAX, to Elizabeth M. Murphy, Secretary, Commission, dated
April 17, 2014. In Amendment No. 1, MIAX amended its filing to
clarify that its analysis of its proposed mechanisms' compliance
with Section 11(a) of the Act, which referred to both proposed
mechanisms collectively as ``PRIME,'' was applicable to both the
PRIME price improvement mechanism as well as the PRIME Solicitation
Mechanism.
\5\ To promote the public availability and transparency of its
post-notice amendment, MIAX submitted a copy of Amendment No. 1
through the Commission's electronic public comment letter mechanism.
Accordingly, since the Commission received Amendment No. 1 from
MIAX, it has been publicly available on the Commission's Web site at
https://www.sec.gov/rules/sro/miax.shtml.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to adopt MIAX Rule 515A to establish the
PRIME and PRIME Solicitation Mechanism.\6\ The PRIME is a process by
which a Member (``Initiating Member'') may electronically submit for
execution an order it represents as agent (``Agency Order'') against
principal interest and/or solicited interest. The PRIME Solicitation
Mechanism is a separate process by which a Member that represents
agency orders of not less than 500 standard option contracts (or 5,000
mini-option contracts) may electronically execute such orders against
solicited orders.
---------------------------------------------------------------------------
\6\ As MIAX explained in its Notice, because of the technology
changes associated with this rule proposal, if approved by the
Commission, MIAX noted that it would announce the implementation
date of the proposal in a Regulatory Circular to be published no
later than 90 days after the Commission's publication of an approval
order in the Federal Register. In addition, MIAX represented that
the implementation date will be no later than 90 days following
publication of the Regulatory Circular announcing publication of the
approval order in the Federal Register. See Notice, supra note 3, 79
FR at 13347.
---------------------------------------------------------------------------
A. PRIME Price Improvement Auction
The Exchange proposes to implement an electronic auction system
called ``PRIME'' that would expose certain orders electronically in an
auction to provide such orders with the opportunity to receive an
execution at an improved price.\7\ The Commission notes that MIAX's
proposed price improvement mechanism is similar to the Automated
Improvement Mechanism (``AIM'') offered by the Chicago Board Options
Exchange, Incorporated (``CBOE'').\8\
---------------------------------------------------------------------------
\7\ Proposed MIAX Rule 515A, Interpretations and Policy .02
provides that the PRIME and PRIME Solicitation Mechanism may only be
used to execute bona fide crossing transactions. Using the PRIME and
PRIME Solicitation Mechanism for any other means, including but not
limited to, market or price manipulation, shall be considered
conduct inconsistent with just and equitable principles of trade in
accordance with MIAX Rule 301.
\8\ See CBOE Rule 6.74A.
---------------------------------------------------------------------------
Eligibility and Auction Process
To be eligible, the Agency Order must be in a class designated as
eligible for PRIME as determined by the Exchange and within the
designated auction order eligibility size parameters as such size
parameters are determined by the Exchange.\9\ In addition, if the
Agency Order is for 50 standard option contracts (or 500 mini-option
contracts) or more, the Initiating Member must stop the entire Agency
Order as principal or with a solicited order at the better of the
National Best Bid or Offer (``NBBO'') or the Agency Order's limit price
(if the order is a limit order).\10\ However, if the Agency Order is
for less than 50 standard option contracts (or less than 500 mini-
option contracts), the Initiating Member must stop the entire Agency
Order as principal or with a solicited order at the better of (i) the
NBBO price improved by a $0.01 increment; or (ii) the Agency Order's
limit price (if the order is a limit order).\11\
---------------------------------------------------------------------------
\9\ See proposed MIAX Rule 515A(a)(1)(i). Proposed MIAX Rule
515A, Interpretation and Policy .05 provides that any determinations
made by the Exchange pursuant to this MIAX Rule 515A, such as
eligible classes and order size parameters, will be communicated in
a Regulatory Circular.
\10\ See proposed MIAX Rule 515A(a)(1)(ii).
\11\ See proposed MIAX Rule 515A(a)(1)(iii). The Exchange states
that since the Initiating Member is stopping the entire Agency Order
at the NBBO price or better at the beginning of the PRIME auction,
the execution at the conclusion of the PRIME auction would qualify
as an exception to the general prohibition against trade-throughs,
pursuant to MIAX Rule 1401(b)(9). See MIAX Rule 1401(b)(9)
(providing an exception from trade-through liability in the
circumstance when a transaction that constituted the trade-through
was the execution of an order that was stopped at a price that did
not trade through an Eligible Exchange at the time of the stop).
---------------------------------------------------------------------------
To initiate the PRIME auction, the Initiating Member must mark the
Agency Order for PRIME processing, and specify either: (i) A single
price at which it seeks to cross the Agency Order (with principal
interest and/or a solicited order) (``single-price submission''),
including whether the Initiating Member elects to have last priority in
allocation, or (ii) that it is willing to automatically match (``auto-
match'') as principal the price and size of all PRIME responses up to
an optional designated limit price. If the Initiating Member chooses to
auto-match PRIME responses, the Agency Order will be stopped at the
better of the NBBO (if 50 standard option contracts (or 500 mini-option
contracts) or greater), $0.01 increment better than the NBBO (if less
than 50 standard option contracts or 500 mini-option contracts), or the
Agency Order's limit price.\12\ For both single price submissions and
auto-match, in order to protect resting interest on MIAX's system
(``Book''), whenever the disseminated best bid or offer on the Exchange
(``MBBO'') \13\ on the same side of the market as the Agency Order
represents a limit order on the Book, the stop price must be at least
$0.01 increment better than the booked order's limit price.\14\
---------------------------------------------------------------------------
\12\ See proposed MIAX Rule 515A(a)(2)(i)(A).
\13\ See MIAX Rule 100.
\14\ See proposed MIAX Rule 515A(a)(2)(i)(A).
---------------------------------------------------------------------------
For both a single price submission and auto-match, the stop price
specified by the Initiating Member on the Agency Order will be the
``initiating price'' for the PRIME auction.\15\ The Initiating Member
may not modify or cancel the submission after it has submitted an
Agency Order to the PRIME auction for processing.\16\ Only one PRIME
auction may be running at any given time in an option, and PRIME
auctions in the same option may not queue or overlap in any manner.\17\
---------------------------------------------------------------------------
\15\ See id. See also Notice, supra note 3, 79 FR at 13336 (for
examples illustrating the initiating price for various potential
Agency Orders).
\16\ See proposed MIAX Rule 515A(a)(2)(i)(A).
\17\ See proposed MIAX Rule 515A(a)(2). In addition, if managed
interest exists on the Exchange's Book pursuant to MIAX Rule 515(c)
for the option on the same side of the market as the Agency Order,
the Agency Order will be rejected by the System prior to initiating
a PRIME or PRIME Solicitation Mechanism auction. See proposed MIAX
Rule 515A, Interpretation and Policy .07. If managed interest exists
on the MIAX Book pursuant to MIAX Rule 515(c) for the option on the
opposite side of the market as the Agency Order and when the MBBO is
equal to the NBBO, the Agency Order will be automatically executed
against the managed interest, if the execution would be at a price
equal to the initiating price of the Agency Order. If the Agency
Order is not fully executed after the managed interest is fully
exhausted and is no longer at a price equal to or better than the
initiating price of the Agency Order, a PRIME auction will be
initiated for the balance of the order. See proposed MIAX Rule 515A,
Interpretations and Policies .06.
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[[Page 24034]]
When the Exchange receives a properly designated Agency Order for
PRIME auction processing, a request for responses (``RFR'') detailing
the option, side, size, and initiating price will be sent to all
subscribers of the Exchange's data feeds.\18\ The RFR response period
for each PRIME auction will last for 500 milliseconds.\19\ During the
RFR response period, Members may submit responses to the RFR
(specifying prices and sizes).\20\ RFR responses must be submitted as
either an auction or cancel (``AOC'') order or an AOC eQuote.\21\
Responses cannot cross the MBBO on the opposite side of the market from
the response.\22\ RFR responses shall not be visible to other auction
participants, and MIAX will not disseminate them to the Options Price
Reporting Authority (``OPRA'').\23\ The minimum price increment for RFR
responses and for the Initiating Member's submission is a $0.01
increment, regardless of whether the class otherwise trades in a larger
price increment.\24\ MIAX will cap an RFR response with a size greater
than the size of the Agency Order at the size of the Agency Order for
allocation purposes.\25\ RFR responses may be cancelled by the Member
submitting them.\26\
---------------------------------------------------------------------------
\18\ See proposed MIAX Rule 515A(a)(2)(i)(B). The Exchange will
include the RFR from the auction mechanisms in the Exchange's data
feeds at no incremental cost to subscribers. Thus, any subscriber
that chooses to receive options data, including any Member
subscriber, has the ability to respond to those RFRs.
\19\ See proposed MIAX Rule 515A(a)(2)(i)(C). In February 2014,
to determine whether the proposed duration of the RFR would provide
sufficient time to enter an RFR response, the Exchange asked
Members, including Market Makers, whether their firms ``could
respond to an Auction with a duration of 500 milliseconds.'' Of the
8 Members that responded to the question, 100% indicated that their
firm could respond in this time frame. See Notice, supra note 3, 79
FR at 13337, n.19.
\20\ See proposed MIAX Rule 515A(a)(2)(i)(D). The Exchange
states that any MIAX Member, and any MIAX Member acting as agent for
orders, may respond to an RFR in a PRIME auction.
\21\ See id. An AOC order is a limit order used to provide
liquidity during a specific Exchange process (such as the Opening
Imbalance process described in MIAX Rule 503) with a time in force
that corresponds with that event. AOC orders are not displayed to
any market participant, are not included in the MBBO and therefore
are not eligible for trading outside of the event, may not be
routed, and may not trade at a price inferior to the away markets.
See MIAX Rule 516(b)(4). An AOC eQuote is a quote submitted by a
Market Maker to provide liquidity in a specific Exchange process
(such as the Opening Imbalance Process described in MIAX Rule 503)
with a time in force that corresponds with the duration of that
event and will automatically expire at the end of that event. AOC
eQuotes are not displayed to any market participant, are not
included in the MBBO and therefore are not eligible for trading
outside of the event. An AOC eQuote does not automatically cancel or
replace the Market Maker's previous Standard quote or eQuote. See
MIAX Rule 517(a)(2)(ii). The Exchange notes that any orders or
quotes received by the System during the Auction that are not AOC
orders or AOC eQuotes will be treated as unrelated trading interest.
In addition, the Exchange notes that an AOC order or an AOC eQuote
could trade at a price inferior to the away market if it is a part
of an exempt transaction. See MIAX Rule 1402.
\22\ See proposed MIAX Rule 515A(a)(2)(i)(D).
\23\ See proposed MIAX Rule 515A(a)(2)(i)(E).
\24\ See proposed MIAX Rule 515A(a)(2)(i)(F).
\25\ See proposed MIAX Rule 515A(a)(2)(i)(G). The Exchange
states that RFR response sizes are capped at the same size of the
Agency Order in order to prevent manipulation and gaming of the pro
rata allocation within each origin type and price point. The
Commission understands that unrelated trading interest including
unrelated orders, quotes, or orders on the Exchange's Book will not
be subject to such a cap, since they are not considered responses to
the Auction.
\26\ See proposed MIAX Rule 515A(a)(2)(i)(H).
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1. Conclusion of the PRIME Auction
The PRIME auction will end early, before the end of the RFR
response period, under certain enumerated circumstances.\27\
Specifically, the PRIME will conclude at the sooner of the following:
(i) The end of the RFR response period; (ii) upon receipt by MIAX of an
unrelated order (in the same option as the Agency Order) on the same
side or opposite side of the market from the RFR responses, that is
marketable against either the MBBO (when such quote is the NBBO) or the
RFR responses; (iii) upon receipt by MIAX of an unrelated limit order
(in the same option as the Agency Order and on the opposite side of the
market from the Agency Order) that improves any RFR response; (iv) any
time an RFR response matches the MBBO on the opposite side of the
market from the RFR responses; (v) any time there is a quote lock in
the subject option on the Exchange pursuant to MIAX Rule 1402; or (vi)
any time there is a trading halt in the option on the Exchange.\28\
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\27\ The Exchange states that the PRIME is designed to maintain
priority of all resting quotes and orders and any RFR responses
received before the end of the PRIME auction. Thus the PRIME will
end early, before the end of the RFR period, as a result of certain
events that would otherwise disrupt the priority of the PRIME
auction with the Exchange's Book. See Notice, supra note 3, 79 FR at
13338.
\28\ See proposed MIAX Rule 515A(a)(2)(ii).
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MIAX will consider it to be conduct inconsistent with just and
equitable principles of trade, in accordance with MIAX Rule 301, for
any Member to enter orders, quotes, Agency Orders, or other responses
for the purpose of disrupting or manipulating a PRIME auction. Such
conduct includes, but is not limited to, engaging in a pattern or
practice of submitting unrelated orders that cause a PRIME auction to
conclude before the end of the RFR period and engaging in a pattern of
conduct where the Member submitting the Agency Order into the PRIME
breaks up the Agency Order into separate orders for two (2) or fewer
contracts for the purpose of gaining a higher allocation percentage
than the Member would have otherwise received in accordance with the
allocation procedures contained in MIAX Rule 515A.\29\
---------------------------------------------------------------------------
\29\ See proposed MIAX Rule 515A, Interpretations and Policies
.01.
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3. Priority and Allocation of Orders and Quotes
In its Notice, MIAX represented that the priority of allocation at
the conclusion of a PRIME auction, described below, will be similar to
the standard allocation of orders and quotes on MIAX.\30\ MIAX Rule 514
describes the priority of allocation of orders and quotes on the
Exchange. According to the Exchange, under the pro-rata allocation
method, resting quotes and orders on the Book are prioritized according
to price. If there are two or more quotes or orders at the best price,
then the contracts are allocated proportionally according to size (in a
pro-rata fashion) within each origin type. If the executed quantity
cannot be evenly allocated, the remaining contracts will be distributed
one at a time based upon size-time priority.\31\ When the Priority
Customer Overlay is in effect, the highest bid and lowest offer has
priority, except that Priority Customer Orders have priority over
Professional Interest and all Market Maker interest at the same price.
If there are two or more Priority Customer Orders for the same options
at the same price, priority is afforded to such Priority Customer
Orders in the sequence in which they are received by the System.\32\ If
there is other interest at the NBBO, after all Priority Customer Orders
(if any) at that price have been filled, executions at that price will
be first allocated to other remaining Market
[[Page 24035]]
Maker priority quotes,\33\ which have not received a participation
entitlement, and have precedence over Professional Interest.\34\ If,
after all Market Maker priority quotes have been filled in accordance
with MIAX Rule 514(d)(1), there remains interest at the NBBO,
executions will be allocated to all Professional Interest at that
price.\35\
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\30\ See Notice, supra note 3, 79 FR at 13338. According to the
Exchange, the allocation of orders and quotes at the conclusion of a
PRIME auction will be in priority ranked by price/origin type/pro-
rata/time, which is the standard allocation of orders and quotes on
MIAX when the pro-rata allocation method and the Priority Customer
Overlay is in effect. The key differences between the standard
allocation and PRIME allocation are that in PRIME: RFR responses are
capped at the total size of the Agency Order which changes the pro-
rata calculation when allocating within the same origin type; no
participation entitlement will apply to orders executed in the
PRIME; and the Initiating Member's facilitating or solicitation
order may receive a participation guarantee at the stop price.
\31\ See MIAX Rule 514(c)(2).
\32\ See MIAX Rule 514(d)(1).
\33\ To be considered a priority quote, at the time of
execution, each of the following standards must be met: (i) The bid/
ask differential of a Market Maker's two-sided quote pair must be
valid width (no wider than the bid/ask differentials outlined in
MIAX Rule 603(b)(4)); (ii) the initial size of both of the Market
Maker's bid and the offer must be in compliance with the
requirements of MIAX Rule 604(b)(2); (iii) the bid/ask differential
of a Market Maker's two-sided quote pair must meet the priority
quote width requirements defined in MIAX Rule 517(b)(1)(ii) for each
option; and (iv) either of the following are true: (1) At the time a
locking or crossing quote or order enters the System, the Market
Maker's two-sided quote pair must be valid width for that option and
must have been resting on the Book; or (2) immediately prior to the
time the Market Maker enters a new quote that locks or crosses the
MBBO, the Market Maker must have had a valid width quote already
existing (i.e., exclusive of the Market Maker's new marketable quote
or update) among his two-sided quotes for that option. See MIAX Rule
517(b)(1)(i).
\34\ See MIAX Rule 514(e)(1). The term ``Professional Interest''
means (i) an order that is for the account of a person or entity
that is not a Priority Customer, or (ii) an order or non-priority
quote for the account of a Market Maker. See MIAX Rule 100.
\35\ See MIAX Rule 514(e)(2).
---------------------------------------------------------------------------
At each price point, orders and quotes will be given priority by
type--first to Priority Customers, then Market Makers with priority
quotes, and then to Professional Interest. If unrelated orders are
received by the Exchange during the period when a PRIME auction is
occurring, such orders will be eligible to participate in the auction,
subject to the process above. If orders received are not executed in
the PRIME auction, the time stamps they received will be used to
determine time priority for their execution outside of the auction.
Thus, at the conclusion of the PRIME auction, the Agency Order will
be allocated at the best price(s) pursuant to the matching algorithm in
effect for the class. Such best prices include non-auction quotes and
orders.\36\ With respect to order execution priority, Priority Customer
orders resting on the Book before the auction or that are received
during the RFR response period, as well as Priority Customer RFR
responses, will collectively have first priority to trade against the
Agency Order. The allocation of an Agency Order against any Priority
Customer orders resting in the Book, Priority Customer orders received
during the RFR response period, and Priority Customer RFR responses
shall be in the sequence in which they are received by the System.\37\
---------------------------------------------------------------------------
\36\ See proposed MIAX Rule 515A(a)(2)(iii)(A).
\37\ See proposed MIAX Rule 515A(a)(2)(iii)(B). The Exchange
represents that the priority allocation in PRIME is consistent with
the standard priority rules for Priority Customers in MIAX Rule
514(d)(1). The Exchange gives priority to Priority Customer orders
whether they were on the Book or received during the RFR response
period.
---------------------------------------------------------------------------
After the execution of Priority Customer orders and responses, if
the best price equals the Initiating Member's single-price submission,
then the Initiating Member's single-price submission will be eligible
for a ``participation guarantee'' under which the Initiating Member
will receive an allocation of the greater of one contract or a certain
percentage of the order, which percentage will be determined by the
Exchange and may not be larger than 40% of the Agency Order in
total.\38\ If only one Member's response matches the Initiating
Member's single price submission, then the Initiating Member may be
allocated up to 50% of the Agency Order.\39\ If the Initiating Member
selected the auto-match option, the Initiating Member will receive an
allocation at each auto-matched RFR response price point up to any
designated limit price, or until a price point is reached where the
balance of the order can be fully executed.\40\ At such final price
point, the Initiating Member will be entitled to a ``participation
guarantee'' that will result in the Initiating Member being allocated
the greater of one contract or a certain percentage of the remainder of
the order, which percentage will be determined by the Exchange and may
not be larger than 40% of the contracts remaining at the final price
point.\41\ However, if the Initiating Member elected to have last
priority in allocation when submitting an Agency Order to initiate a
PRIME auction against a single-price submission, the Initiating Member
will be allocated only the amount of contracts remaining, if any, after
the Agency Order is allocated to all other responses at the single
price specified by the Initiating Member.\42\
---------------------------------------------------------------------------
\38\ See proposed MIAX Rule 515A(a)(2)(iii)(H).
\39\ See proposed MIAX Rule 515A(a)(2)(iii)(H). It is the
Commission's understanding that the Initiating Member would retain a
50% allocation only where the Initiating Member is matched by only
one response at the best price. See also Notice, supra note 3, 79 FR
at 13340 (for examples illustrating the allocation at the end of the
PRIME).
\40\ The Exchange notes that the auto-match functionality will
only allocate the full size of RFR responses (AOC orders and AOC
eQuotes). See proposed MIAX Rule 515A(a)(2)(iii)(I). As noted above,
any orders or quotes received by the System during the PRIME that
are not AOC orders or AOC eQuotes will be treated as unrelated
trading interest; the auto-match functionality will not allocate
against such unrelated trading interest. See proposed MIAX Rule
515A(a)(2)(i)(D).
\41\ See proposed MIAX Rule 515A(a)(2)(iii)(I).
\42\ See proposed MIAX Rule 515A(a)(2)(iii)(L).
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Following allocation to any Priority Customer interest and any
allocation to the Initiating Member pursuant to its participation
guarantee and auto-match (if applicable), Market Maker priority quotes
and RFR responses from Market Makers with priority quotes will
collectively have the next level of priority. The allocation of Agency
Orders against these contra sided quotes and RFR responses will be on a
size pro rata basis as defined in MIAX Rule 514(c)(2).\43\
---------------------------------------------------------------------------
\43\ See proposed MIAX Rule 515A(a)(2)(iii)(C).
---------------------------------------------------------------------------
Next, Professional Interest orders resting in the Book,
Professional Interest orders placed in the Book during the RFR response
period, Professional Interest quotes, and Professional Interest RFR
responses will collectively have last priority.\44\ The allocation of
Agency Orders against these contra sided orders and RFR responses will
be on a size pro rata basis as defined in MIAX Rule 514(c)(2).\45\
---------------------------------------------------------------------------
\44\ See MIAX Rule 514(e)(2).
\45\ See proposed MIAX Rule 515A(a)(2)(iii)(D).
---------------------------------------------------------------------------
When allocating the Agency Order, the market maker ``participation
entitlements'' shall not apply to orders executed pursuant to the PRIME
rule.\46\ If an unrelated market or marketable limit order on the
opposite side of the market as the Agency Order is received during the
PRIME auction and ended the auction, such unrelated order will trade
against the Agency Order at the midpoint of the best RFR response (or
in the absence of an RFR response, the initiating price) and the NBBO
on the other side of the market from the RFR responses (rounded towards
the disseminated quote when necessary).\47\ If an unrelated non-
marketable limit order on the opposite side of the market as the Agency
Order is received during the PRIME auction and ended the auction, such
unrelated order will trade against the Agency Order at the midpoint of
the best RFR response and the unrelated order's limit price (rounded
towards the unrelated order's limit price when necessary).\48\
---------------------------------------------------------------------------
\46\ See proposed MIAX Rule 515A(a)(2)(iii)(E). See, e.g., MIAX
Rule 514(g) (Primary Lead Market Maker Participation Entitlements),
for an example of a market maker ``participation entitlement.''
These market maker ``entitlements'' are separate and apart from, and
do not relate to, the ``participation guarantee'' that is part of
the proposed PRIME mechanism.
\47\ See proposed MIAX Rule 515A(a)(2)(iii)(F). See also Notice,
supra note 3, 79 FR at 13341 (for examples illustrating the
allocation when the PRIME concludes early).
\48\ See proposed MIAX Rule 515A(a)(2)(iii)(G). An unrelated
non-marketable limit order on the opposite side of the market as the
Agency Order would end the PRIME in the situation when that
unrelated non-marketable limit order improves any RFR response.
---------------------------------------------------------------------------
[[Page 24036]]
If the final auction price locks a Priority Customer order on the
Book on the same side of the market as the Agency Order, then the
Agency Order will execute against the RFR responses at $0.01 increment
worse than the final PRIME auction price (towards the opposite side of
the Agency Order) against the PRIME auction participants that submitted
the final price, unless there is sufficient size in the PRIME responses
to execute both the Agency Order and the booked Priority Customer order
(in which case they will both execute at the final PRIME auction
price). Any balance shall trade against the Priority Customer order in
the Book at such order's limit price.\49\
---------------------------------------------------------------------------
\49\ See proposed MIAX Rule 515A(a)(2)(iii)(K). Thus, the
execution price will be $0.01 increment higher than the final PRIME
auction price if the Agency Order is to buy or $0.01 increment lower
than the final PRIME auction price if the Agency Order is to sell.
---------------------------------------------------------------------------
Notwithstanding the priority for Market Makers and Professional
Interest pursuant to proposed MIAX Rule 515A(a)(2)(iii)(C) and (D), if
the PRIME auction does not result in price improvement over the
Exchange's disseminated price at the time the PRIME auction began,
resting unchanged quotes or orders that were disseminated at the best
price before the PRIME auction began will have priority after any
Priority Customer order priority and the Initiating Member's
participation guarantee have been satisfied.\50\ Any unexecuted balance
on the Agency Order will be allocated to RFR responses, provided that
those RFR responses will be capped to the size of the original order
and that the Initiating Member may not participate on any such balance,
unless the Agency Order would otherwise go unfilled.\51\
---------------------------------------------------------------------------
\50\ See proposed MIAX Rule 515A(a)(2)(iii)(J). The Exchange
notes that the priority of such resting unchanged quotes or orders
that were disseminated at the best price before the PRIME began will
still be subject to the standard priority allocation in effect
pursuant to MIAX Rule 514. See Notice, supra note 3, 79 FR at 13343.
\51\ See proposed MIAX Rule 515A(a)(2)(iii)(J).
---------------------------------------------------------------------------
If an unexecuted balance remains on the PRIME auction responses
after the Agency Order has been executed in full and such balance in
the RFR responses could trade against any unrelated order(s) that
caused the PRIME auction to conclude, then the RFR balance will trade
against the unrelated order(s) on a size pro rata basis as defined in
MIAX Rule 514(c)(2).\52\
---------------------------------------------------------------------------
\52\ See proposed MIAX Rule 515A(a)(2)(iii)(M).
---------------------------------------------------------------------------
It shall be considered conduct inconsistent with just and equitable
principles of trade, in accordance with MIAX Rule 301, for any Member
to enter orders, quotes, Agency Orders, or other responses for the
purpose of disrupting or manipulating the auction. Such conduct
includes, but is not limited to, engaging in a pattern of conduct where
the Member submitting the Agency Order into the PRIME breaks up the
Agency Order into separate orders for two (2) or fewer contracts for
the purpose of gaining a higher allocation percentage than the Member
would have otherwise received in accordance with the allocation
procedures contained in MIAX Rule 515A(a)(2)(iii).\53\
---------------------------------------------------------------------------
\53\ See proposed MIAX Rule 515A, Interpretations and Policies
.01.
---------------------------------------------------------------------------
Finally, in proposed MIAX Rule 515A, Interpretation and Policy .08,
the Exchange obligates itself to submit certain data, as requested by
the Commission staff, on the operation of the PRIME auction. This data
will be used to assist the Exchange as well as the Commission in
assessing activity in PRIME auctions including, among other things, the
degree of meaningful competition for all size orders within the PRIME
auction, whether there is material price improvement for orders
executed through the PRIME mechanism, and whether there is an active
and liquid market functioning on the Exchange outside of the PRIME
mechanism.\54\
---------------------------------------------------------------------------
\54\ See proposed MIAX Rule 515A, Interpretation and Policy .08.
For the list of the data that the Exchange agreed to provide to the
Commission relating to the PRIME, see Exhibit 3 to SR-MIAX-2014-09,
which is publicly available on the Exchange's Web site at https://www.miaxoptions.com.
---------------------------------------------------------------------------
B. PRIME Solicitation Mechanism
MIAX also is proposing to adopt a solicitation mechanism that is
similar to CBOE's Solicitation Auction Mechanism.\55\ Through this
proposed mechanism, a Member that represents Agency Orders may
electronically execute them against solicited orders provided that it
submits both the Agency Order and solicited orders for electronic
execution into the PRIME Solicitation Mechanism pursuant to proposed
MIAX Rule 515A(b).\56\
---------------------------------------------------------------------------
\55\ See CBOE Rule 6.74B.
\56\ For executions pursuant to the PRIME Solicitation
Mechanism, prior to entering Agency Orders into the PRIME on behalf
of customers, Initiating Members must deliver to the customer a
written notification informing the customer that his order may be
executed using the PRIME. The written notification must disclose the
terms and conditions contained in MIAX Rule 515A and be in a form
that is approved by the Exchange. See proposed MIAX Rule 515A,
Interpretations and Policy .03. In addition, Members may not use the
PRIME Solicitation Mechanism to circumvent MIAX Rule 520 limiting
principal transactions. This may include, but is not limited to,
Members entering contra orders that are solicited from (i)
affiliated broker-dealers or (ii) broker-dealers with which the
Member has an arrangement that allows the Member to realize similar
economic benefits from the solicited transaction as it would achieve
by executing the customer order in whole or in part as principal.
Additionally, solicited contra orders entered by Members to trade
against Agency Orders may not be for the account of a MIAX Market
Maker assigned to the options class. See proposed MIAX Rule 515A,
Interpretations and Policies .04.
---------------------------------------------------------------------------
1. Eligibility and PRIME Solicitation Mechanism Process
The Initiating Member may initiate a PRIME Solicitation Mechanism
provided that the Agency Order is in a class designated as eligible for
PRIME Solicitation Mechanisms as determined by the Exchange and within
the designated PRIME Solicitation Mechanism order eligibility size
parameters as such size parameters are determined by the Exchange. The
eligible order size may not be less than 500 standard option contracts
or 5,000 mini-option contracts.\57\ Also, each order entered into the
PRIME Solicitation Mechanism must be designated as all-or-none, and the
minimum price increment for an Initiating Member's single price
submission will be a $0.01 increment.\58\
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\57\ Proposed MIAX Rule 515A, Interpretation and Policy .05
provides that any determinations made by the Exchange pursuant to
MIAX Rule 515A, such as eligible classes and order size parameters,
will be communicated in a Regulatory Circular.
\58\ See proposed MIAX Rule 515A(b)(1).
---------------------------------------------------------------------------
To initiate the PRIME Solicitation Mechanism, the Initiating Member
must mark the Agency Order for PRIME Solicitation Mechanism processing
and specify a single price at which it seeks to cross the Agency Order
with a solicited order, which shall be the initiating price for the
PRIME Solicitation Mechanism.\59\ When the Exchange receives a properly
designated Agency Order for PRIME Solicitation Mechanism processing, an
RFR message indicating the option, side, size, and initiating price
\60\ will be sent to all subscribers of the Exchange's data feeds.\61\
Any Member may submit responses to the RFR (specifying prices and
sizes) during the RFR response period (which, like the PRIME auction,
[[Page 24037]]
will be 500 milliseconds).\62\ RFR responses must be either an AOC
order or an AOC eQuote.\63\ The minimum price increment for responses
will be $0.01 increment.\64\ A response with a size greater than the
size of the Agency Order will be capped at the size of the Agency
Order.\65\ Responses will not be visible to other Solicitation Auction
participants, and MIAX will not disseminate them to OPRA.\66\ Members
may cancel RFR responses.\67\
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\59\ See proposed MIAX Rule 515A(b)(2)(i)(A).
\60\ The initiating price for the PRIME Solicitation Mechanism
is the single price specified by the Initiating Member at which it
seeks to cross the Agency Order with a solicited order. See proposed
MIAX Rule 515A(b)(2)(i)(A).
\61\ See proposed MIAX Rule 515A(b)(2)(i)(B). As noted above
with respect to the PRIME, the Exchange will include the RFR from
the auction mechanisms in the Exchange's data feeds at no
incremental costs to subscribers. Thus, any subscriber that chooses
to receive options data, including any Member subscriber, has the
ability to respond to those RFRs.
\62\ See proposed MIAX Rule 515A(b)(2)(i)(C). In February 2014,
to determine whether the proposed duration of the RFR would provide
sufficient time to enter an RFR response, the Exchange asked
Members, including Market Makers, whether their firms ``could
respond to an Auction with a duration of 500 milliseconds.'' Of the
8 Members that responded to the question, 100% indicated that their
firm could respond in this time frame. Thus, the Exchange notes its
belief that the proposed duration for the RFR of 500 milliseconds,
would provide a meaningful opportunity for participants on MIAX to
respond to an RFR while at the same time facilitating the prompt
execution of orders. See Notice, supra note 3, 79 FR at 13343, n.
62.
\63\ See proposed MIAX Rule 515A(b)(2)(i)(C). Any MIAX Member
may respond to the RFR in the PRIME Solicitation Mechanism. See
Notice, supra note 3, 79 FR at 13344, n.63.
\64\ See proposed MIAX Rule 515A(b)(2)(i)(E).
\65\ See proposed MIAX Rule 515A(b)(2)(i)(F).
\66\ See proposed MIAX Rule 515A(b)(2)(i)(D).
\67\ See proposed MIAX Rule 515A(b)(2)(i)(G).
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2. Conclusion of the PRIME Solicitation Mechanism
The PRIME Solicitation Mechanism will end early, before the end of
the RFR response period, under certain circumstances. Specifically, the
PRIME Solicitation Mechanism will conclude at the sooner of the
following: (i) The end of the RFR response period; (ii) upon receipt by
MIAX of an unrelated order (in the same option as the Agency Order) on
the same side or opposite side of the market from the RFR responses,
that is marketable against either the MBBO (when such quote is the
NBBO) or the RFR responses; (iii) upon receipt by MIAX of an unrelated
limit order (in the same option as the Agency Order and on the opposite
side of the market as the Agency Order) that improves any RFR response;
(iv) any time an RFR response matches the MBBO on the opposite side of
the market from the RFR responses; (v) any time there is a quote lock
on the Exchange pursuant to MIAX Rule 1402; or (vi) any time there is a
trading halt in the option on the Exchange.\68\
---------------------------------------------------------------------------
\68\ See proposed MIAX Rule 515A(b)(2)(ii).
---------------------------------------------------------------------------
3. Priority and Allocation
At the conclusion of the Solicitation Auction, the Agency Order
will either be automatically executed in full and allocated subject to
the following provisions, or will be cancelled. The Agency Order will
be executed against the solicited order at the proposed execution
price, provided that:
The execution price must be equal to or better than the
NBBO; \69\
---------------------------------------------------------------------------
\69\ See proposed MIAX Rule 515A(b)(2)(iii)(A).
---------------------------------------------------------------------------
There are no Priority Customer orders resting in the Book
on the opposite side of the Agency Order at the proposed execution
price; \70\ and
---------------------------------------------------------------------------
\70\ See proposed MIAX Rule 515A(b)(2)(iii)(B)(1).
---------------------------------------------------------------------------
There is insufficient size to execute the Agency Order at
an improved price.\71\
---------------------------------------------------------------------------
\71\ See proposed MIAX Rule 515A(b)(2)(iii)(C). See also Notice,
supra note 3, 79 FR at 13344 (for examples illustrating the
allocation at the end of the PRIME Solicitation Mechanism).
---------------------------------------------------------------------------
If the execution would otherwise take place outside the NBBO, the
Agency Order and solicited order will be cancelled.\72\
---------------------------------------------------------------------------
\72\ See proposed MIAX Rule 515A(b)(2)(iii)(A).
---------------------------------------------------------------------------
If there are Priority Customer orders resting in the Book on the
opposite side as the Agency Order and there is sufficient size
(considering all resting orders, quotes, and RFR responses) to execute
the Agency Order, then the Agency Order will be executed against this
interest, and the solicited order will be cancelled. In such case, the
Agency Order will be allocated at the best price(s) pursuant to the
matching algorithm in effect for the class.\73\ However, if there are
Priority Customer orders resting in the Book on the opposite side as
the Agency Order and there is not sufficient size (considering all
resting orders, quotes, and RFR responses) to fill the entire Agency
Order, then both the Agency Order and the solicited order will be
cancelled.\74\
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\73\ See proposed MIAX Rule 515A(b)(2)(iii)(B)(1). The Agency
Order will be allocated at the best price(s) pursuant to the
matching algorithm in effect for the class. The Exchange states that
this will ensure that the Agency Order is allocated in a manner
consistent with the standard priority of allocation of the Exchange
rules that distinguish between Priority Customers, Market Makers
with priority quotes, and Professional Interest.
\74\ See proposed MIAX Rule 515A(b)(2)(iii)(B)(2).
---------------------------------------------------------------------------
If there is sufficient size (considering all resting orders,
quotes, and RFR responses) to execute the Agency Order in full at an
improved price or prices that is equal or better than the NBBO, then
the Agency Order will execute at such improved price(s) and the
solicited order will be cancelled. In such case, the Agency Order will
be allocated at the best price(s) pursuant to the matching algorithm in
effect for the class.\75\
---------------------------------------------------------------------------
\75\ See proposed MIAX Rule 515A(b)(2)(iii)(C)(1). The Exchange
proposes to specify that the Agency Order will be allocated pursuant
to the matching algorithm in effect for the class. This will ensure
that the Agency Order is allocated in a manner consistent with the
standard priority of allocation of the Exchange rules that
distinguish between Priority Customers, Market Makers with priority
quotes, and Professional Interest.
---------------------------------------------------------------------------
C. Order Exposure Rule
MIAX Rule 520 prohibits Members from acting as principal on any
orders they represent as agent unless (i) agency orders are first
exposed on the Exchange for at least one (1) second, and (ii) the
Member has been bidding or offering on the Exchange for at least one
(1) second prior to receiving an agency order that is executable
against such bid or offer. In addition, Members may not execute orders
they represent as agent on the Exchange against orders solicited from
Members and non-member broker-dealers to transact with such orders
unless the unsolicited order is first exposed on the Exchange for at
least one (1) second.
The Exchange proposes to amend MIAX Rule 520 to permit a Member to
execute against as principal orders it represents as agent if the
Member utilizes the PRIME price improvement mechanism. Similarly, the
Exchange proposes to amend MIAX Rule 520 to permit a Member to execute
orders it represents as agent against orders it has solicited if the
Member utilizes the PRIME price improvement mechanism or PRIME
Solicitation Mechanism. Accordingly if those mechanisms were used, such
Agency Orders submitted into them would not be subject to the one
second order exposure requirement of MIAX Rule 520.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange
and, in particular, with Section 6(b) of the Act.\76\ In particular,
the Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\77\ which requires, among other things,
that the rules of a national securities 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
[[Page 24038]]
general, to protect customers, issuers, brokers and dealers. The
Commission believes that approving the Exchange's proposal to establish
the PRIME price improvement mechanism and the PRIME Solicitation
Mechanism may increase competition among those options exchanges that
offer similar mechanisms. The Commission further believes that allowing
MIAX Members to enter orders into the PRIME price improvement mechanism
and the PRIME Solicitation Mechanism could provide additional
opportunities for such orders, notably orders from Priority Customers,
to receive price improvement over the NBBO.
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\76\ 15 U.S.C. 78f(b). In approving this proposed rule change,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\77\ 15 U.S.C. 78f(b)(5).
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MIAX's proposed PRIME price improvement mechanism is similar to
existing functionality at other options exchanges and does not raise
any novel issues.\78\ In particular, for orders of fewer than 50
standard options contracts or 500 mini-option contracts, the PRIME
price improvement mechanism requires the Initiating Member to stop the
Agency Order at the better of the NBBO price improved by a $0.01
increment or the Agency Order's limit price.\79\ Once an Agency Order
has been submitted, the submission may not be modified or cancelled.
The Commission notes that such smaller orders are thus effectively
guaranteed some level of price improvement if they are submitted into
the PRIME price improvement mechanism. Orders of 50 or greater
contracts are guaranteed an execution price of at least the NBBO and,
moreover, are given the opportunity for price improvement beyond the
NBBO by being exposed to Members during the PRIME auction. In addition,
MIAX's proposal protects resting interest on its Book as the stop price
must be at least $0.01 increment better than any booked order's limit
price on the same side of the market as the Agency Order.
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\78\ See CBOE Rule 6.74A (CBOE's AIM).
\79\ The Commission notes that this aspect of MIAX's proposal
(i.e., to stop an Agency Order of fewer than 50 contracts at a
price-improved price) is similar to requirements set forth in CBOE's
AIM. See CBOE Rule 6.74A(a)(3).
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The PRIME price improvement mechanism also permits members to
submit responses to the RFR on behalf of all types of interest.\80\ The
Commission believes that this requirement provides the potential for an
Agency Order to be exposed to a competitive auction. Further, when the
Exchange receives a properly designated Agency Order for PRIME auction
processing, it will send to all subscribers of its data feeds an RFR
detailing the option, side, size, and initiating price. This message,
available to any subscriber, is designed to help attract responses to a
PRIME auction and may result in competitive PRIME auctions and
ultimately better prices for the Agency Order to the extent it is
successful in attracting competitive responses to a PRIME auction.
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\80\ Cf. CBOE Rule 6.74A(b)(1)(D)-(E) (only CBOE Market Makers
with an appointment in the relevant option class, and CBOE Members
acting as agent for orders resting at the top of the CBOE book
opposite the Agency Order, may submit responses to the AIM RFR).
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The RFR (for both the PRIME auction and PRIME Solicitation
Mechanism) will last for 500 milliseconds. In February 2014, to
determine whether the proposed duration of the RFR would provide
sufficient time to enter an RFR response, the Exchange asked its
Members, including Market Makers, whether their firms ``could respond
to an Auction with a duration of 500 milliseconds.'' Of the 8 Members
that responded to the question, 100% indicated that their firm could
respond in this time frame.\81\ Based on MIAX's statements, the
Commission believes that 500 milliseconds could facilitate the prompt
execution of Agency Orders in the PRIME auction (and PRIME Solicitation
Mechanism), while providing market participants with an opportunity to
compete for exposed bids and offers. The Commission notes that another
exchange's price improvement mechanism also provides a 500 millisecond
auction response period.\82\
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\81\ See Notice, supra note 3, 79 FR at 13337, n. 19 and 13343,
n. 62.
\82\ See International Securities Exchange Rule 723(c)(5).
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At the conclusion of a PRIME auction, Priority Customer orders and
RFR responses representing Priority Customer interest have first
priority to trade against the Agency Order. After execution of Priority
Customer responses and orders, the Initiating Member may be allocated a
limited percentage of the Agency Order, not to exceed 40% of the
contracts at the applicable price point (however, if only one response
matches the Initiating Member's single price submission at the best
price, then the Initiating Member may be allocated up to 50% of the
order). Market Maker priority quotes and RFR responses from Market
Makers with priority quotes have next priority. Quotes, orders, and RFR
responses representing Professional Interest have final priority. The
Commission believes that the proposed matching algorithm set forth in
MIAX's PRIME rule is sufficiently clear regarding how orders are to be
allocated in the PRIME auction and does not raise any novel issues.
The Exchange has represented its commitment to submit certain data
on PRIME auctions at the request of Commission staff. The Commission
expects such data to be used, by both the Exchange and the Commission
staff, to assess the performance of PRIME auctions, including, among
other things, to study whether there is meaningful competition for all
size orders with the PRIME, the degree of price improvement for all
orders executed through the PRIME mechanism, whether there is an active
and liquid market functioning on the Exchange outside of the PRIME, and
the situations in which a PRIME auction is terminated before the end of
the RFR response period. The data provided will enable the Commission,
as well as the Exchange itself, to evaluate the PRIME auction to
determine its performance and impact on options market structure and
the degree to which it is beneficial to customers and to the options
market as a whole.
The Commission further believes that the proposal to establish the
PRIME Solicitation Mechanism may allow for greater flexibility in
executing large-sized orders, and is not novel or otherwise raise any
issues of first impression.\83\ The Commission believes that the
proposal includes appropriate conditions to assure that the Agency
Order is exposed to Members for the possibility of price improvement
over the NBBO and that Priority Customer orders on the Exchange are
protected. At the conclusion of a PRIME Solicitation Mechanism auction,
the Agency Order would either be executed in full or cancelled. The
Agency Order will be executed against the solicited order at the
proposed executed price if (i) the execution price is equal to or
better than the NBBO; (ii) there are no Priority Customer Orders
resting in the book on the opposite side of the Agency Order at the
proposed execution price; and (iii) there is insufficient size to
execute the Agency Order at an improved price. If there are Priority
Customer orders and there is sufficient size to execute the Agency
Order (considering all eligible interest), the Agency Order will be
executed against these interests and the solicited order will be
cancelled. If, however, there are Priority Customer Orders but there is
not sufficient size to execute the Agency Order in full, then both the
Agency Order and the solicited order will be cancelled. Finally, if
there is sufficient size to execute the Agency Order in full at an
improved price equal
[[Page 24039]]
to or better than the NBBO, the Agency Order will execute at the
improved price and the solicited order will be cancelled. The
Commission believes that the priority and allocation rules for the
PRIME Solicitation Mechanism, which are based on a similar mechanism on
another exchange, are reasonable and consistent with the Act.
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\83\ The Commission also notes that the proposal is similar to
requirements set forth in the CBOE Solicitation Auction Mechanism.
See CBOE Rule 6.74B.
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IV. Section 11(a) of the Act
Section 11(a)(1) of the Act \84\ prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises discretion
(collectively, ``covered accounts'') unless an exception applies. Rule
11a2-2(T) under the Act,\85\ known as the ``effect versus execute''
rule, provides exchange members with an exemption from the Section
11(a)(1) prohibition. Rule 11a2-2(T) permits an exchange member,
subject to certain conditions, to effect transactions for covered
accounts by arranging for an unaffiliated member to execute
transactions on the exchange. To comply with Rule 11a2-2(T)'s
conditions, a member: (i) Must transmit the order from off the exchange
floor; (ii) may not participate in the execution of the transaction
once it has been transmitted to the member performing the
execution;\86\ (iii) may not be affiliated with the executing member;
and (iv) with respect to an account over which the member has
investment discretion, neither the member nor its associated person may
retain any compensation in connection with effecting the transaction
except as provided in the Rule. For the reasons set forth below, the
Commission believes that Exchange members entering orders into the
PRIME and PRIME Solicitation Mechanism would satisfy the requirements
of Rule 11a2-2(T).
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\84\ 15 U.S.C. 78k(a)(1).
\85\ 17 CFR 240.11a2-2(T).
\86\ The member may, however, participate in clearing and
settling the transaction.
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The Rule's first condition is that orders for covered accounts be
transmitted from off the exchange floor. In the context of automated
trading systems, the Commission has found that the off-floor
transmission requirement is met if a covered account order is
transmitted from a remote location directly to an exchange's floor by
electronic means.\87\ MIAX has represented that the MIAX trading system
and the proposed PRIME and PRIME Solicitation Mechanism receive all
orders electronically through remote terminals or computer-to-computer
interfaces. The Exchange also represents that orders for covered
accounts from Members will be transmitted from a remote location
directly to the proposed PRIME and PRIME Solicitation Mechanism by
electronic means. Because no Exchange members may submit orders into
the PRIME and PRIME Solicitation Mechanism from on the floor of the
Exchange, the Commission believes that the PRIME and PRIME Solicitation
Mechanism satisfy the off-floor transmission requirement.
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\87\ See, e.g., Securities Exchange Act Release Nos. 61419
(January 26, 2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-031)
(approving BATS options trading); 59154 (December 23, 2008), 73 FR
80468 (December 31, 2008) (SR-BSE-2008-48) (approving equity
securities listing and trading on BSE); 57478 (March 12, 2008), 73
FR 14521 (March 18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-
080) (approving NOM options trading); 53128 (January 13, 2006), 71
FR 3550 (January 23, 2006) (File No. 10-131) (approving The Nasdaq
Stock Market LLC); 44983 (October 25, 2001), 66 FR 55225 (November
1, 2001) (SR-PCX-00-25) (approving Archipelago Exchange); 29237 (May
24, 1991), 56 FR 24853 (May 31, 1991) (SR-NYSE-90-52 and SR-NYSE-90-
53) (approving NYSE's Off-Hours Trading Facility); and 15533
(January 29, 1979), 44 FR 6084 (January 31, 1979) (``1979
Release'').
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Second, the Rule requires that the member not participate in the
execution of its order. The Exchange represents that at no time
following the submission of an order is a member organization able to
acquire control or influence over the result or timing of an order's
execution.\88\ According to the Exchange, the execution of an order is
determined by what other orders are present and the priority of those
orders.\89\ Accordingly, the Commission believes that a member does not
participate in the execution of an order submitted to the PRIME and
PRIME Solicitation Mechanism.
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\88\ See Notice, supra note 3, 79 FR at 13347. See also
Amendment No. 1, supra note 4 and accompanying text.
\89\ See id. The Exchange notes that a Member may cancel or
modify the order, or modify the instructions for executing the
order, but that such instructions would be transmitted from off the
floor of the Exchange. The Commission has stated that the non-
participation requirement is satisfied under such circumstances so
long as such modifications or cancellations are also transmitted
from off the floor. See Securities Exchange Act Release No. 14563
(March 14, 1978), 43 FR 11542 (March 17, 1978) (``1978 Release'')
(stating that the ``non-participation requirement does not prevent
initiating members from canceling or modifying orders (or the
instructions pursuant to which the initiating member wishes to be
executed) after the orders have been transmitted to the executing
member, provided that any such instructions are also transmitted
from off the floor'').
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Third, Rule 11a2-2(T) requires that the order be executed by an
exchange member who is unaffiliated with the member initiating the
order. The Commission has stated that this requirement is satisfied
when automated systems, such as the PRIME and PRIME Solicitation
Mechanism, are used, as long as the design of these systems ensures
that members do not possess any special or unique trading advantages in
handling their orders after transmitting them to the exchange.\90\ MIAX
has represented that the PRIME and PRIME Solicitation Mechanism are
designed so that no Member has any special or unique trading advantage
in the handling of its orders after transmitting its orders to the
mechanisms.\91\ Based on the Exchange's representation, the Commission
believes that PRIME and PRIME Solicitation Mechanism satisfy this
requirement.
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\90\ In considering the operation of automated execution systems
operated by an exchange, the Commission noted that, while there is
not an independent executing exchange member, the execution of an
order is automatic once it has been transmitted into the system.
Because the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange, the Commission has
stated that executions obtained through these systems satisfy the
independent execution requirement of Rule 11a2-2(T). See 1979
Release, supra note 87.
\91\ See Notice, supra note 3, 79 FR at 13347. See also
Amendment No. 1, supra note 4 and accompanying text.
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Fourth, in the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof may retain any compensation in connection
with effecting the transaction, unless the person authorized to
transact business for the account has expressly provided otherwise by
written contract referring to Section 11(a) of the Act and Rule 11a2-
2(T) thereunder.\92\ MIAX represents that Members relying on Rule 11a2-
2(T) for transactions effected through the PRIME and PRIME Solicitation
Mechanism must comply with this condition of the Rule.\93\
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\92\ See 17 CFR 240.11a2-2(T)(a)(2)(iv). In addition, Rule 11a2-
2(T)(d) requires a member or associated person authorized by written
contract to retain compensation, in connection with effecting
transactions for covered accounts over which such member or
associated persons thereof exercises investment discretion, to
furnish at least annually to the person authorized to transact
business for the account a statement setting forth the total amount
of compensation retained by the member in connection with effecting
transactions for the account during the period covered by the
statement. See 17 CFR 240.11a2-2(T)(d). See also 1978 Release, supra
note 89 (stating ``[t]he contractual and disclosure requirements are
designed to assure that accounts electing to permit transaction-
related compensation do so only after deciding that such
arrangements are suitable to their interests'').
\93\ See Notice, supra note 3, 79 FR at 13347. See also
Amendment No. 1, supra note 4 and accompanying text.
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[[Page 24040]]
V. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
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-2014-09 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-2014-09. 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 20549-1090, 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-2014-09 and should be
submitted on or before May 20, 2014.
VI. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1
As discussed above, the Exchange submitted Amendment No. 1 to
clarify representations it made in its original filing concerning the
applicability of and compliance of its proposed PRIME mechanisms with
Section 11(a) of the Act.\94\ Specifically, MIAX clarified that it
intended its references to ``PRIME'' in its Section 11(a) analysis to
apply to both the PRIME price improvement mechanism as well as the
PRIME Solicitation Mechanism. Thus, the content of Amendment No. 1,
which merely clarifies a potential ambiguity in the filing, does not
raise any novel issues and instead provides additional clarifying
information to support MIAX's analysis of how its proposal is
consistent with the Act and thus facilitates the Commission's ability
to make the requisite findings set forth above and ultimately approve
the proposal. In addition, the Commission notes that it published the
original proposal in the Federal Register and did not receive any
comments on MIAX's Section 11(a) analysis or any other parts of the
proposal.\95\ Accordingly, the Commission finds good cause, pursuant to
Section 19(b)(2) of the Act,\96\ to approve the filing, as modified by
Amendment No. 1, on an accelerated basis prior to the 30th day after
the date of the publication in the Federal Register of notice of
Amendment No. 1 to the filing.
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\94\ See Amendment No. 1, supra note 4.
\95\ The Commission also notes that, in order to promote the
public availability and transparency of MIAX's post-notice
amendment, MIAX submitted a copy of Amendment No. 1 through the
Commission's electronic public comment letter mechanism on the same
day that it filed Amendment No. 1 with the Commission. See supra
note 5.
\96\ 15 U.S.C. 78s(b)(2).
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VII. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\97\ that the proposed rule change (SR-MIAX-2014-09), as modified
by Amendment No. 1, be and hereby is approved on an accelerated basis.
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\97\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\98\
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\98\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09680 Filed 4-28-14; 8:45 am]
BILLING CODE 8011-01-P
