Self-Regulatory Organizations: Notice of Filing of a Proposed Rule Change by Miami International Securities Exchange LLC To List and Trade Options on Shares of the iShare ETFs, 38099-38105 [2014-15608]

Download as PDF Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices Number of active producers managed Band 5 ...................................................................................................... 6 ...................................................................................................... • For inquiries: $1.25 per inquiry into the portal $6,000 per month for batch service (periodic file transmissions) 2. Statutory Basis NSCC believes that the proposed rule changes are consistent with the requirements of the Act, and the rules and regulations thereunder applicable to NSCC. In particular, the proposed rule changes are consistent with (i) Section 17A(b)(3)(F) 10 of the Act because they enhance NSCC members’ ability to access and retrieve Licensing and Appointment information in a standardized and automated form, fostering cooperation and coordination with persons engaged in the clearance and settlement of insurance transactions, and (ii) Section 17A(b)(3)(D) 11 of the Act because they establish fees in connection with use of an added feature to an existing NSCC service, providing for the equitable allocation of reasonable dues, fees and other charges among NSCC members. The proposed rule changes relate solely to an information service of NSCC, and therefore, implementation of the rule changes will not affect the safeguarding of securities or funds in NSCC’s custody or control or for which NSCC is responsible. B. Clearing Agency’s Statement on Burden on Competition NSCC does not believe that the proposed rule changes will have any impact, or impose any burden on competition. C. Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others tkelley on DSK3SPTVN1PROD with NOTICES Written comments relating to the proposed rule changes have not yet been solicited or received. NSCC will notify the Commission of any written comments received by NSCC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule changes have become effective pursuant to Section 100,000–249,999 250,000 + Monthly fee 5,000. $5,000, plus $0.018 per active Producer managed. 19(b)(3)(A) of the Act 12 and paragraph (f) of Rule 19b–4 13 thereunder. At any time within 60 days of the filing of the proposed rule changes, the Commission summarily may temporarily suspend such rule changes if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule changes are 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– NSCC–2014–08 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–NSCC–2014–08. 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 changes that are filed with the Commission, and all written communications relating to the proposed rule changes between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of NSCC and on NSCC’s Web site at (https://www.dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC– 2014–08 and should be submitted on or before July 24, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–15604 Filed 7–2–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72492; File No. SR–MIAX– 2014–30] Self-Regulatory Organizations: Notice of Filing of a Proposed Rule Change by Miami International Securities Exchange LLC To List and Trade Options on Shares of the iShare ETFs June 27, 2014. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 17, 2014, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 14 17 10 15 U.S.C. 78q–1(b)(3)(F). 11 15 U.S.C. 78q–1(b)(3)(D). VerDate Mar<15>2010 16:53 Jul 02, 2014 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b–4(f). Jkt 232001 PO 00000 Frm 00095 Fmt 4703 1 15 Sfmt 4703 38099 E:\FR\FM\03JYN1.SGM 03JYN1 38100 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to list and trade on the Exchange options on shares of the iShares MSCI Brazil Capped ETF (‘‘EWZ’’), iShares MSCI Chile Capped ETF (‘‘ECH’’), iShares MSCI Peru Capped ETF (‘‘EPU’’), and iShares MSCI Spain Capped ETF (‘‘EWP’’). The text of the proposed rule change is available on the Exchange’s Web site at https://www.miaxoptions.com/filter/ wotitle/rule_filing, at MIAX’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. tkelley on DSK3SPTVN1PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list for trading on the Exchange options on the shares of the iShares MSCI Brazil Capped ETF, iShares MSCI Chile Capped ETF, iShares MSCI Peru Capped ETF, and iShares MSCI Spain Capped ETF (collectively the ‘‘iShare ETFs’’). MIAX Rule 402 establishes the Exchange’s initial listing standards for equity options (the ‘‘Listing Standards’’). The Listing Standards permit the Exchange to list options on the shares of open-end investment companies, such as the iShare ETFs, without having to file for approval with the Commission.3 The Exchange submits that each of the iShare ETFs substantially meet all of the initial listing requirements. In particular, all of the requirements set forth in Rule 402(i) for each of the iShare ETFs are met except for the requirement concerning the existence of a comprehensive 3 MIAX Rule 402(i) provides the Listing Standards for shares or other securities (‘‘ExchangeTraded Fund Shares’’) that are traded on a national securities exchange and are defined as an ‘‘NMS stock’’ under Rule 600 of Regulation NMS. VerDate Mar<15>2010 16:53 Jul 02, 2014 Jkt 232001 surveillance sharing agreement (‘‘CSSA’’). However, as explained below, the Exchange submits that sufficient mechanisms exist in order to provide adequate surveillance and regulatory information with respect to the portfolio securities of each of the iShare ETFs. iShares MSCI Brazil Capped ETF (‘‘EWZ’’) EWZ is registered pursuant to the Investment Company Act of 1940 as a management investment company designed to hold a portfolio of securities which track the MSCI Brazil 25/50 Index (‘‘Brazil Index’’).4 The Brazil Index consists of stocks traded primarily on BM&FBOVESPA. EWZ employs a ‘‘representative sampling’’ methodology to track the Brazil Index by investing in a representative sample of Brazil Index securities having a similar investment profile as the Brazil Index.5 BlackRock Fund Advisors (‘‘BFA’’ or the ‘‘Adviser’’) expects EWZ to closely track the Brazil Index so that, over time, a tracking error of 5%, or less, is exhibited. Securities selected by EWZ have aggregate investment characteristics (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures similar to those of the Brazil Index. EWZ will not concentrate its investments (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except, to the extent practicable, to reflect the concentration in the Brazil Index. EWZ will invest at least eighty percent (80%) of its assets in the securities comprising the Brazil Index and/or related American Depositary Receipts (‘‘ADRs’’). EWZ may also invest its other assets in futures contracts, options on futures contracts, other types of options and swaps related to the Brazil Index, as well as cash and cash equivalents. The Exchange believes that these requirements and policies prevent the EWZ from being excessively weighted in any single security or small group of securities and significantly reduce concerns that trading in EWZ could 4 Morgan Stanley Capital International Inc. (‘‘MSCI’’) created and maintains the Brazil 25/50 Index. 5 As of March 20, 2014, EWZ was comprised of 78 securities. ITAU UNIBANCO HOLDING SA PREF had the greatest individual weight at 8.51%. The aggregate percentage weighting of the top 5 and 10 securities in the Fund were 33.30% and 49.78%, respectively. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 become a surrogate for trading in unregistered securities. Shares of the EWZ (‘‘EWZ Shares’’) are issued and redeemed, on a continuous basis, at net asset value (‘‘NAV’’) in aggregation size of 50,000 shares, or multiples thereof (a ‘‘Creation Unit’’). Following issuance, EWZ Shares are traded on an exchange like other equity securities. EWZ Shares trade in the secondary markets in amounts less than a Creation Unit and the price per EWZ Share may differ from its NAV which is calculated once daily as of the regularly scheduled close of business of NYSE Arca.6 State Street Bank and Trust Company, the administrator, custodian, and transfer agent for EWZ. Detailed information on EWZ can be found at www.ishares.com. The Exchange has reviewed EWZ and determined that the EWZ Shares satisfy the initial listing standards, except for the requirement set forth in MIAX Rule 402(i)(5)(ii)(A) which requires EWZ to meet the following condition: • Any non-U.S. component securities of an index or portfolio of securities on which the Exchange-Traded Fund Shares are based that are not subject to comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio. The Exchange currently does not have in place a surveillance agreement with BOVESPA. The Exchange submits that the Commission, in the past, has been willing to allow a national securities exchange to rely on a memorandum of understanding entered into between regulators in the event that the exchanges themselves cannot enter into a CSSA. The Exchange notes that BM&FBOVESPA is under the regulatory oversight of the Comissao de Valores Mobiliarios (‘‘CMV’’), which has the responsibility for both Brazilian exchanges and over-the-counter markets. The Exchange further notes that the Commission executed a memorandum of understanding with the CMV dated as of July 24, 2012 (‘‘BrazilUS MOU’’), which provides a framework for mutual assistance in investigatory and regulatory issues. Based on the relationship between the SEC and CMV and the terms of the Brazil-US MOU, the Exchange submits that both the Commission and the CMV could acquire information from and provide information to the other similar to that which would be required in a 6 The regularly scheduled close of trading on NYSE Arca is normally 4:00 p.m. Eastern Time (‘‘ET’’) and 4:15 p.m. for ETFs. E:\FR\FM\03JYN1.SGM 03JYN1 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices tkelley on DSK3SPTVN1PROD with NOTICES CSSA between exchanges. Moreover, the Commission could make a request for information under the Brazil-US MOU on behalf of an SRO that needed the information for regulatory purposes. Thus, should MIAX need information on Brazilian trading in the Brazil Index component securities to investigate incidents involving trading of EWZ options, the SEC could request such information from the CMV under the Brazil-US MOU. While this arrangement certainly would be enhanced by the existence of direct exchange to exchange surveillance sharing agreements, it is nonetheless consistent with other instances where the Commission has explored alternatives when the relevant foreign exchange was unwilling or unable to enter into a CSSA.7 The practice of relying on surveillance agreements or MOUs between regulators when a foreign exchange was unable, or unwilling, to provide an information sharing agreement was affirmed by the Commission in the Commission’s New Product Release (‘‘New Product Release’’).8 The Commission noted in the New Product Release that if securing a CSSA is not possible, an exchange should contact the Commission prior to listing a new derivative securities product. The Commission also noted that the Commission may determine instead that it is appropriate to rely on a memorandum of understanding between the Commission and the foreign regulator. The Exchange has recently contacted BM&FBOVESPA with a request to enter into a CSSA. Until the Exchange is able to secure a CSSA with BM&FBOVESPA, the Exchange requests that the Commission allow the listing and trading of options on EWZ without a CSSA, upon reliance of the Brazil-US MOU entered into between the Commission and the CMV. The Exchange believes this request is reasonable and notes that the Commission has provided similar relief in the past. For example, the Commission approved the Philadelphia Stock Exchange, Inc. (‘‘PHLX’’) to rely on an MOU between the Commission and the CMV instead of a direct CSSA with BM&FBOVESPA in order to list and trade options on Telebras Portoflio Certicate American Depository 7 See, e.g., Securities Exchange Act Release No. 36415 (October 25, 1995), 60 FR 55620 (November 1, 1995) (SR–CBOE–95–45) (Order Approving Proposed Rule Change Relating to the Listing and Trading of Options on the CBOE Mexico 30 Index). 8 See Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952, 70959 at fn. 101 (December 22, 1998). VerDate Mar<15>2010 16:53 Jul 02, 2014 Jkt 232001 Receipts.9 Additionally, the Commission approved, on a pilot basis, proposals of competing exchanges to list and trade options on the iShares MSCI Emerging Markets Fund 10 and the iShares MSCI Mexico Indext Fund [sic].11 The Commission’s approval of this request to list and trade options on the EWZ would otherwise render EWZ compliant with all of the applicable Listing Standards. The Exchange shall continue to use its best efforts to obtain a CSSA with BM&FBOVESPA, which shall reflect the following: (1) Express language addressing market trading activity, clearing activity, and customer identity; (2) BM&FBOVESPA’s reasonable ability to obtain access to and produce requested information; and (3) based on the CSSA and other information provided by the BM&FBOVESPA, the absence of existing rules, law or practices that would impede the Exchange from obtaining foreign information relating to market activity, clearing activity, or customer identity, or in the event such rules, laws, or practices exist, they would not materially impede the production of customer or other information. iShares MSCI Chile Capped ETF (‘‘ECH’’) ECH is registered pursuant to the Investment Company Act of 1940 as a management investment company designed to hold a portfolio of securities which track the MSCI Chile Investable Market Index (IMI) 25/50 (‘‘Chile Index’’).12 The Chile Index consists of stocks traded primarily on the Santiago Stock Exchange (‘‘SSE’’). ECH employs a ‘‘representative sampling’’ methodology to track the Chile Index by investing in a representative sample of 9 See Securities Exchange Act Release No. 40298 (August 3, 1998), 63 FR 43435 (August 13, 1998) (SR-Phlx-1998–33). 10 See Securities Exchange Act Release Nos. 53824 (May 17, 2006), 71 FR 30003 (May 24, 2006) (SR-Amex-2006–43); 54081 (June 30, 2006), 71 FR 38911 (July 10, 2006) (SR-Amex-2006–60); 54553 (September 29, 2006), 71 FR 59561 (October 10, 2006) (SR-Amex-2006–91); 55040 (January 3, 2007), 72 FR 1348 (January 11, 2007) (SR-Amex-2007–01); and 55955 (June 25, 2007), 72 FR 36079 (July 2, 2007) (SR-Amex-2007–57); 56324 (August 27, 2007), 72 FR 50426 (August 31, 2007) (SR–ISE– 2007–72). 11 See Securities Exchange Act Release Nos. 72213 (May 21, 2014), [sic] FR 30699 (May 28, 2014) (SR–MIAX–2014–19); 56778 (November 9, 2007), 72 FR 65113 (November 19, 2007) (SR– Amex–2007–100); 57013 (December 20, 2007), 72 FR 73923 (December 28, 2007) (SR–CBOE–2007– 140); 57014 (December 20, 2007), 72 FR 73934 (December 28, 2007) (SR–ISE–2007–111). 12 Morgan Stanley Capital International Inc. (‘‘MSCI’’) created and maintains the MSCI Chile Investable Market Index (IMI) 25/50. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 38101 Chile Index securities having a similar investment profile as the Chile Index.13 BFA, ECH’s Adviser expects ECH to closely track the Chile Index so that, over time, a tracking error of 5%, or less, is exhibited. Securities selected by ECH have aggregate investment characteristics (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures similar to those of the Chile Index. ECH will not concentrate its investments (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except, to the extent practicable, to reflect the concentration in the Chile Index. ECH will invest at least ninety percent (90%) of its assets in the securities comprising the Chile Index and/or related ADRs. ECH may also invest its other assets in futures contracts, options on futures contracts, other types of options and swaps related to the Chile Index, as well as cash and cash equivalents. The Exchange believes that these requirements and policies prevent the ECH from being excessively weighted in any single security or small group of securities and significantly reduce concerns that trading in ECH could become a surrogate for trading in unregistered securities. Shares of the ECH (‘‘ECH Shares’’) are issued and redeemed, on a continuous basis, at NAV in aggregation size of 50,000 shares, or multiples thereof (a ‘‘Creation Unit’’). Following issuance, ECH Shares are traded on an exchange like other equity securities. ECH Shares trade in the secondary markets in amounts less than a Creation Unit and the price per ECH Share may differ from its NAV which is calculated once daily as of the regularly scheduled close of business of NYSE Arca.14 State Street Bank and Trust Company, the administrator, custodian, and transfer agent for ECH. Detailed information on ECH can be found at www.ishares.com. The Exchange has reviewed ECH and determined that the ECH Shares satisfy the initial listing standards, except for the requirement set forth in MIAX Rule 402(i)(5)(ii)(A) which requires ECH to meet the following condition: • Any non-U.S. component securities of an index or portfolio of securities on which the Exchange-Traded Fund Shares are based that are not subject to 13 As of March 21, 2014, ECH was comprised of 41 securities. S.A.C.I. FALABELLA had the greatest individual weight at 9.25%. The aggregate percentage weighting of the top 5 and 10 securities in the Fund were 39.92% and 62.57%, respectively. 14 See supra note 6. E:\FR\FM\03JYN1.SGM 03JYN1 tkelley on DSK3SPTVN1PROD with NOTICES 38102 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio. The Exchange currently does not have in place a surveillance agreement with SSE. The Exchange submits that the Commission, in the past, has been willing to allow a national securities exchange to rely on a memorandum of understanding entered into between regulators in the event that the exchanges themselves cannot enter into a CSSA. The Exchange notes that SSE is under the regulatory oversight of the Superintendencia de Valores y Seguros de Chile (‘‘SVS’’), which has the responsibility for Chilean securities markets. The Exchange further notes that the Commission executed a memorandum of understanding with the SVS dated as of June 3, 1993 (‘‘Chile-US MOU’’), which provides a framework for mutual assistance in investigatory and regulatory issues. Based on the relationship between the SEC and SVS and the terms of the Chile-US MOU, the Exchange submits that both the Commission and the SVS could acquire information from and provide information to the other similar to that which would be required in a CSSA between exchanges. Moreover, the Commission could make a request for information under the Chile-US MOU on behalf of an SRO that needed the information for regulatory purposes. Thus, should MIAX need information on Chilean trading in the Chile Index component securities to investigate incidents involving trading of ECH options, the SEC could request such information from the SVS under the Chile-US MOU. While this arrangement certainly would be enhanced by the existence of direct exchange to exchange surveillance sharing agreements, it is nonetheless consistent with other instances where the Commission has explored alternatives when the relevant foreign exchange was unwilling or unable to enter into a CSSA.15 The practice of relying on surveillance agreements or MOUs between regulators when a foreign exchange was unable, or unwilling, to provide an information sharing agreement was affirmed by the Commission in the Commission’s New Product Release.16 The Commission noted in the New Product Release that if securing a CSSA is not possible, an exchange should contact the Commission prior to listing a new derivative securities product. The Commission also noted that the 15 See 16 See supra note 7. supra note 8. VerDate Mar<15>2010 16:53 Jul 02, 2014 Jkt 232001 Commission may determine instead that it is appropriate to rely on a memorandum of understanding between the Commission and the foreign regulator. The Exchange has recently contacted SSE with a request to enter into a CSSA. Until the Exchange is able to secure a CSSA with SSE, the Exchange requests that the Commission allow the listing and trading of options on ECH without a CSSA, upon reliance of the MOU entered into between the Commission and the SVS. The Exchange believes this request is reasonable and notes that the Commission has provided similar relief in the past. For example, the Commission approved, on a pilot basis, proposals of competing exchanges to list and trade options on the iShares MSCI Emerging Markets Fund 17 and the iShares MSCI Mexico Index Fund.18 The Commission’s approval of this request to list and trade options on the ECH would otherwise render ECH compliant with all of the applicable Listing Standards. The Exchange shall continue to use its best efforts to obtain a CSSA with SSE, which shall reflect the following: (1) Express language addressing market trading activity, clearing activity, and customer identity; (2) SSE’s reasonable ability to obtain access to and produce requested information; and (3) based on the CSSA and other information provided by SSE, the absence of existing rules, law or practices that would impede the Exchange from obtaining foreign information relating to market activity, clearing activity, or customer identity, or in the event such rules, laws, or practices exist, they would not materially impede the production of customer or other information. iShares MSCI Peru Capped ETF (‘‘EPU’’) EPU is registered pursuant to the Investment Company Act of 1940 as a management investment company designed to hold a portfolio of securities which track the MSCI All Peru Capped Index (‘‘Peru Index’’).19 The Peru Index consists of stocks traded primarily on Bolsa de Valores de Lima (‘‘BVL’’). EPU employs a ‘‘representative sampling’’ methodology to track the Peru Index by investing in a representative sample of Peru Index securities having a similar investment profile as the Peru Index.20 supra note 10. supra note 11. 19 Morgan Stanley Capital International Inc. (‘‘MSCI’’) created and maintains the All Peru Capped Index. 20 As of March 20, 2014, EPU was comprised of 25 securities. CREDICORP LTD had the greatest individual weight at 26.72%. The aggregate percentage weighting of the top 5 and 10 securities in the Fund were 55.60% and 73.11%, respectively. PO 00000 17 See 18 See Frm 00098 Fmt 4703 Sfmt 4703 BFA expects EPU to closely track the Peru Index so that, over time, a tracking error of 5%, or less, is exhibited. Securities selected by EPU have aggregate investment characteristics (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures similar to those of the Peru Index. EPU will not concentrate its investments (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except, to the extent practicable, to reflect the concentration in the Peru Index. EPU will invest at least eighty percent (80%) of its assets in the securities comprising the Peru Index and/or related ADRs. EPU may also invest its other assets in futures contracts, options on futures contracts, other types of options and swaps related to the Peru Index, as well as cash and cash equivalents. The Exchange believes that these requirements and policies prevent the EPU from being excessively weighted in any single security or small group of securities and significantly reduce concerns that trading in EPU could become a surrogate for trading in unregistered securities. Shares of the EPU (‘‘EPU Shares’’) are issued and redeemed, on a continuous basis, at NAV in aggregation size of 50,000 shares, or multiples thereof (a ‘‘Creation Unit’’). Following issuance, EPU Shares are traded on an exchange like other equity securities. EPU Shares trade in the secondary markets in amounts less than a Creation Unit and the price per EPU Share may differ from its NAV which is calculated once daily as of the regularly scheduled close of business of NYSE Arca.21 State Street Bank and Trust Company, the administrator, custodian, and transfer agent for EPU. Detailed information on EPU can be found at www.ishares.com. The Exchange has reviewed EPU and determined that the EPU Shares satisfy the initial listing standards, except for the requirement set forth in MIAX Rule 402(i)(5)(ii)(A) which requires EPU to meet the following condition: • Any non-U.S. component securities of an index or portfolio of securities on which the Exchange-Traded Fund Shares are based that are not subject to comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio. The Exchange currently does not have in place a surveillance agreement with BVL. 21 See E:\FR\FM\03JYN1.SGM supra note 6. 03JYN1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices The Exchange submits that the Commission, in the past, has been willing to allow a national securities exchange to rely on a memorandum of understanding entered into between regulators in the event that the exchanges themselves cannot enter into a CSSA. The Exchange notes that BVL is under the regulatory oversight of the Superintendencia del Mercado de Valores (‘‘SMV’’), which has the responsibility for Peruvian stock exchanges. The Exchange further notes that both the Commission and SMV are signatories to the International Organization of Securities Commissions (‘‘IOSCO’’) Multilateral Memorandum of Understanding (‘‘MMOU’’), which provides a framework for mutual assistance in investigatory and regulatory issues. Based on the relationship between the SEC and SMV and the terms of the MMOU, the Exchange submits that both the Commission and the SMV could acquire information from and provide information to the other similar to that which would be required in a CSSA between exchanges. Moreover, the Commission could make a request for information under the MMOU on behalf of an SRO that needed the information for regulatory purposes. Thus, should MIAX need information on Peruvian trading in the Peru Index component securities to investigate incidents involving trading of EPU options, the SEC could request such information from the SMV under the MMOU. While this arrangement certainly would be enhanced by the existence of direct exchange to exchange surveillance sharing agreements, it is nonetheless consistent with other instances where the Commission has explored alternatives when the relevant foreign exchange was unwilling or unable to enter into a CSSA.22 The practice of relying on surveillance agreements or MOUs between regulators when a foreign exchange was unable, or unwilling, to provide an information sharing agreement was affirmed by the Commission in the New Product Release.23 The Commission noted in the New Product Release that if securing a CSSA is not possible, an exchange should contact the Commission prior to listing a new derivative securities product. The Commission also noted that the Commission may determine instead that it is appropriate to rely on a memorandum of understanding 22 See 23 See supra, note 7. supra, note 8. VerDate Mar<15>2010 16:53 Jul 02, 2014 Jkt 232001 between the Commission and the foreign regulator. The Exchange has recently contacted BVL with a request to enter into a CSSA. Until the Exchange is able to secure a CSSA with BVL, the Exchange requests that the Commission allow the listing and trading of options on EPU without a CSSA, upon reliance of the MMOU entered into between the Commission and the SMV. The Exchange believes this request is reasonable and notes that the Commission has provided similar relief in the past. Additionally, the Commission approved, on a pilot basis, proposals of competing exchanges to list and trade options on the iShares MSCI Emerging Markets Fund 24 and the iShares MSCI Mexico Index Fund.25 The Commission’s approval of this request to list and trade options on the EPU would otherwise render EPU compliant with all of the applicable Listing Standards. The Exchange shall continue to use its best efforts to obtain a CSSA with BVL, which shall reflect the following: (1) Express language addressing market trading activity, clearing activity, and customer identity; (2) BVL’s reasonable ability to obtain access to and produce requested information; and (3) based on the CSSA and other information provided by the BVL, the absence of existing rules, law or practices that would impede the Exchange from obtaining foreign information relating to market activity, clearing activity, or customer identity, or in the event such rules, laws, or practices exist, they would not materially impede the production of customer or other information. iShares MSCI Spain Capped ETF (‘‘EWP’’) EWP is registered pursuant to the Investment Company Act of 1940 as a management investment company designed to hold a portfolio of securities which track the MSCI Spain 25/50 Index (‘‘Spain Index’’).26 The Spain Index consists of stocks traded primarily on Bolsa de Madrid (‘‘BME’’). EWP employs a ‘‘representative sampling’’ methodology to track the Spain Index by investing in a representative sample of Spain Index securities having a similar investment profile as the Spain Index.27 supra note 10. supra note 11. 26 Morgan Stanley Capital International Inc. (‘‘MSCI’’) created and maintains the Spain 25/50 Index. 27 As of March 28, 2014, EWP was comprised of 24 securities. BANCO SANTANDER SA had the greatest individual weight at 22.37%. The aggregate percentage weighting of the top 5 and 10 securities in the Fund were 56.88% and 74.52%, respectively. PO 00000 24 See 25 See Frm 00099 Fmt 4703 Sfmt 4703 38103 BFA expects EWP to closely track the Spain Index so that, over time, a tracking error of 5%, or less, is exhibited. Securities selected by EWP have aggregate investment characteristics (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures similar to those of the Spain Index. EWP will not concentrate its investments (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except, to the extent practicable, to reflect the concentration in the Spain Index. EWP will invest at least eighty percent (80%) of its assets in the securities comprising the Spain Index and/or related ADRs. EWP may also invest its other assets in futures contracts, options on futures contracts, other types of options and swaps related to the Spain Index, as well as cash and cash equivalents. The Exchange believes that these requirements and policies prevent the EWP from being excessively weighted in any single security or small group of securities and significantly reduce concerns that trading in EWP could become a surrogate for trading in unregistered securities. Shares of the EWP (‘‘EWP Shares’’) are issued and redeemed, on a continuous basis, at NAV in aggregation size of 75,000 shares, or multiples thereof (a ‘‘Creation Unit’’). Following issuance, EWP Shares are traded on an exchange like other equity securities. EWP Shares trade in the secondary markets in amounts less than a Creation Unit and the price per EWP Share may differ from its NAV which is calculated once daily as of the regularly scheduled close of business of NYSE Arca.28 State Street Bank and Trust Company, the administrator, custodian, and transfer agent for EWP. Detailed information on EWP can be found at ww.ishares.com. The Exchange has reviewed EWP and determined that the EWP Shares satisfy the initial listing standards, except for the requirement set forth in MIAX Rule 402(i)(5)(ii)(A) which requires EWP to meet the following condition: • Any non-U.S. component securities of an index or portfolio of securities on which the Exchange-Traded Fund Shares are based that are not subject to comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio. 28 See E:\FR\FM\03JYN1.SGM supra note 6. 03JYN1 tkelley on DSK3SPTVN1PROD with NOTICES 38104 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices The Exchange currently does not have in place a surveillance agreement with BME. The Exchange submits that the Commission, in the past, has been willing to allow a national securities exchange to rely on a memorandum of understanding entered into between regulators in the event that the exchanges themselves cannot enter into a CSSA. The Exchange notes that BME is under the regulatory oversight of the Comision Nacional del Mercado de Valores (‘‘CNMV’’), which has the responsibility for Spanish stock exchanges. The Exchange further notes that the Commission executed a memorandum of understanding with the CNMV dated as of July 22, 2013 (‘‘Spain-US MOU’’), which provides a framework for mutual assistance in investigatory and regulatory issues. Based on the relationship between the SEC and CNMV and the terms of the Spain-US MOU, the Exchange submits that both the Commission and the CNMV could acquire information from and provide information to the other similar to that which would be required in a CSSA between exchanges. Moreover, the Commission could make a request for information under the Spain-US MOU on behalf of an SRO that needed the information for regulatory purposes. Thus, should MIAX need information on Spanish trading in the Spain Index component securities to investigate incidents involving trading of EWP options, the SEC could request such information from the CNMV under the Spain-US MOU. While this arrangement certainly would be enhanced by the existence of direct exchange to exchange surveillance sharing agreements, it is nonetheless consistent with other instances where the Commission has explored alternatives when the relevant foreign exchange was unwilling or unable to enter into a CSSA.29 The practice of relying on surveillance agreements or MOUs between regulators when a foreign exchange was unable, or unwilling, to provide an information sharing agreement was affirmed by the Commission in the New Product Release.30 The Commission noted in the New Product Release that if securing a CSSA is not possible, an exchange should contact the Commission prior to listing a new derivative securities product. The Commission also noted that the Commission may determine instead that it is appropriate to rely on a memorandum of understanding between the Commission and the foreign regulator. The Exchange has recently contacted BME with a request to enter into a CSSA. Until the Exchange is able to secure a CSSA with BME, the Exchange requests that the Commission allow the listing and trading of options on EWP without a CSSA, upon reliance of the Spain-US MOU entered into between the Commission and the CNMV. The Exchange believes this request is reasonable and notes that the Commission has provided similar relief in the past. Additionally, the Commission approved, on a pilot basis, proposals of competing exchanges to list and trade options on the iShares MSCI Emerging Markets Fund 31 and the iShares MSCI Mexico Index Fund.32 The Commission’s approval of this request to list and trade options on the EWP would otherwise render EWP compliant with all of the applicable Listing Standards. The Exchange shall continue to use its best efforts to obtain a CSSA with BME, which shall reflect the following: (1) Express language addressing market trading activity, clearing activity, and customer identity; (2) BME’s reasonable ability to obtain access to and produce requested information; and (3) based on the CSSA and other information provided by the BME, the absence of existing rules, law or practices that would impede the Exchange from obtaining foreign information relating to market activity, clearing activity, or customer identity, or in the event such rules, laws, or practices exist, they would not materially impede the production of customer or other information. 2. Statutory Basis MIAX believes that its proposed rule change is consistent with Section 6(b) of the Act 33 in general, and furthers the objectives of Section 6(b)(5) of the Act 34 in particular, in that it is 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 facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. In particular, the Exchange believes listing and trading of options on the iShare ETFs will benefit 31 See supra note 10. supra note 11. 33 15 U.S.C. 78f(b). 34 15 U.S.C. 78f(b)(5). 32 See 29 See 30 See supra, note 7. supra, note 8. VerDate Mar<15>2010 16:53 Jul 02, 2014 Jkt 232001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 investors by providing them with valuable risk management tools. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes this proposed rule change will benefit investors by providing additional methods to trade options on the iShares ETFs, and by providing them with valuable risk management tools. Specifically, the Exchange believes that market participants on MIAX would benefit from the introduction and availability of options on the iShares ETFs in a manner that is similar to other exchanges and will provide investors with yet another venue on which to trade these products. The Exchange notes that the rule change is being proposed as a competitive response to other competing options exchanges that already list and trade options on the iShare ETFs and believes this proposed rule change is necessary to permit fair competition among the options exchanges. For all the reasons stated above, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission shall: (a) By order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: E:\FR\FM\03JYN1.SGM 03JYN1 Federal Register / Vol. 79, No. 128 / Thursday, July 3, 2014 / Notices Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– MIAX–2014–30 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72490; File No. SR–ISE– 2014–34] Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish New Rule 720A June 27, 2014. tkelley on DSK3SPTVN1PROD with NOTICES All submissions should refer to File Number SR–MIAX–2014–30. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 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– 2014–30 and should be submitted on or before July 24, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.35 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–15608 Filed 7–2–14; 8:45 am] Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that, on June 24, 2014, the International Securities Exchange, LLC (the ‘‘Exchange’’ or the ‘‘ISE’’) filed with the Securities and Exchange Commission the proposed rule change as described in Items I, II, and III below, which items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to establish new procedures to account for erroneous trades occurring from disruptions and/ or malfunctions of Exchange systems. The changes described in this proposal would establish new ISE Rule 720A. The text of the proposed rule change is available on the Exchange’s Web site www.ise.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. BILLING CODE 8011–01–P 1 15 35 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 16:53 Jul 02, 2014 2 17 Jkt 232001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00101 Fmt 4703 Sfmt 4703 38105 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to adopt Rule 720A to provide for new procedures to account for erroneous trades occurring from disruptions and/or malfunctions of Exchange systems. Specifically, proposed new Rule 720A would provide that any transaction that arises out of a ‘‘verifiable systems disruption or malfunction’’ in the use or operation of an Exchange automated quotation, dissemination, execution, or communication system may either be nullified or adjusted by Market Control.3 Under the rule, Market Control may act, on its own motion, to review erroneous transactions. This filing is based on the rules of NYSE Arca, Inc. (‘‘NYSE Arca’’).4 The Exchange believes that it is appropriate to provide the flexibility and authority provided for in proposed Rule 720A so as not to limit the Exchange’s ability to plan for and respond to unforeseen systems problems or malfunctions. The proposed rule change would provide the Exchange with the same authority to nullify or adjust trades in the event of a ‘‘verifiable disruption or malfunction’’ in the use of operation of its systems as other exchanges have.5 For this reason, the Exchange believes that, in the interest of maintaining a fair and orderly market and for the protection of investors, authority to nullify or adjust trades in these circumstances, consistent with the authority on other exchanges, is warranted. According to the proposal, in the event of any verifiable disruption or malfunction in the use or operation of an Exchange automated quotation, dissemination, execution, or communication system, in which the nullification or modification of transactions may be necessary for the maintenance of a fair and orderly market or the protection of investors and the public interest exist, Market Control, on his or her own motion, may review such transactions and declare such transactions arising out of the use or operation of such facilities during such period null and void or modify the 3 Market Control consists of designated personnel in the Exchange’s market control center. See ISE Rule 720(a)(3)(ii). 4 See NYSE Arca Rule 6.89. The proposed rule change is also based in part on NASDAQ OMX PHLX, LLC (‘‘Phlx’’) Rule 1092(c)(ii)(A), and in addition is substantially similar to Chicago Board Options Exchange, Inc. (‘‘CBOE’’) Rule 6.25(a)(3). 5 Id. E:\FR\FM\03JYN1.SGM 03JYN1

Agencies

[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]
[Notices]
[Pages 38099-38105]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15608]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72492; File No. SR-MIAX-2014-30]


Self-Regulatory Organizations: Notice of Filing of a Proposed 
Rule Change by Miami International Securities Exchange LLC To List and 
Trade Options on Shares of the iShare ETFs

June 27, 2014.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on June 17, 2014, Miami International Securities 
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') a proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 38100]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to list and trade on the Exchange 
options on shares of the iShares MSCI Brazil Capped ETF (``EWZ''), 
iShares MSCI Chile Capped ETF (``ECH''), iShares MSCI Peru Capped ETF 
(``EPU''), and iShares MSCI Spain Capped ETF (``EWP'').
    The text of the proposed rule change is available on the Exchange's 
Web site at https://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list for trading on the Exchange options 
on the shares of the iShares MSCI Brazil Capped ETF, iShares MSCI Chile 
Capped ETF, iShares MSCI Peru Capped ETF, and iShares MSCI Spain Capped 
ETF (collectively the ``iShare ETFs''). MIAX Rule 402 establishes the 
Exchange's initial listing standards for equity options (the ``Listing 
Standards''). The Listing Standards permit the Exchange to list options 
on the shares of open-end investment companies, such as the iShare 
ETFs, without having to file for approval with the Commission.\3\ The 
Exchange submits that each of the iShare ETFs substantially meet all of 
the initial listing requirements. In particular, all of the 
requirements set forth in Rule 402(i) for each of the iShare ETFs are 
met except for the requirement concerning the existence of a 
comprehensive surveillance sharing agreement (``CSSA''). However, as 
explained below, the Exchange submits that sufficient mechanisms exist 
in order to provide adequate surveillance and regulatory information 
with respect to the portfolio securities of each of the iShare ETFs.
---------------------------------------------------------------------------

    \3\ MIAX Rule 402(i) provides the Listing Standards for shares 
or other securities (``Exchange-Traded Fund Shares'') that are 
traded on a national securities exchange and are defined as an ``NMS 
stock'' under Rule 600 of Regulation NMS.
---------------------------------------------------------------------------

iShares MSCI Brazil Capped ETF (``EWZ'')
    EWZ is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the MSCI Brazil 25/50 Index (``Brazil 
Index'').\4\ The Brazil Index consists of stocks traded primarily on 
BM&FBOVESPA. EWZ employs a ``representative sampling'' methodology to 
track the Brazil Index by investing in a representative sample of 
Brazil Index securities having a similar investment profile as the 
Brazil Index.\5\ BlackRock Fund Advisors (``BFA'' or the ``Adviser'') 
expects EWZ to closely track the Brazil Index so that, over time, a 
tracking error of 5%, or less, is exhibited. Securities selected by EWZ 
have aggregate investment characteristics (based on market 
capitalization and industry weightings), fundamental characteristics 
(such as return variability, earnings valuation and yield) and 
liquidity measures similar to those of the Brazil Index. EWZ will not 
concentrate its investments (i.e., hold 25% or more of its total assets 
in the stocks of a particular industry or group of industries), except, 
to the extent practicable, to reflect the concentration in the Brazil 
Index. EWZ will invest at least eighty percent (80%) of its assets in 
the securities comprising the Brazil Index and/or related American 
Depositary Receipts (``ADRs''). EWZ may also invest its other assets in 
futures contracts, options on futures contracts, other types of options 
and swaps related to the Brazil Index, as well as cash and cash 
equivalents. The Exchange believes that these requirements and policies 
prevent the EWZ from being excessively weighted in any single security 
or small group of securities and significantly reduce concerns that 
trading in EWZ could become a surrogate for trading in unregistered 
securities.
---------------------------------------------------------------------------

    \4\ Morgan Stanley Capital International Inc. (``MSCI'') created 
and maintains the Brazil 25/50 Index.
    \5\ As of March 20, 2014, EWZ was comprised of 78 securities. 
ITAU UNIBANCO HOLDING SA PREF had the greatest individual weight at 
8.51%. The aggregate percentage weighting of the top 5 and 10 
securities in the Fund were 33.30% and 49.78%, respectively.
---------------------------------------------------------------------------

    Shares of the EWZ (``EWZ Shares'') are issued and redeemed, on a 
continuous basis, at net asset value (``NAV'') in aggregation size of 
50,000 shares, or multiples thereof (a ``Creation Unit''). Following 
issuance, EWZ Shares are traded on an exchange like other equity 
securities. EWZ Shares trade in the secondary markets in amounts less 
than a Creation Unit and the price per EWZ Share may differ from its 
NAV which is calculated once daily as of the regularly scheduled close 
of business of NYSE Arca.\6\
---------------------------------------------------------------------------

    \6\ The regularly scheduled close of trading on NYSE Arca is 
normally 4:00 p.m. Eastern Time (``ET'') and 4:15 p.m. for ETFs.
---------------------------------------------------------------------------

    State Street Bank and Trust Company, the administrator, custodian, 
and transfer agent for EWZ. Detailed information on EWZ can be found at 
www.ishares.com.
    The Exchange has reviewed EWZ and determined that the EWZ Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(A) which requires EWZ to meet the 
following condition:
     Any non-U.S. component securities of an index or portfolio 
of securities on which the Exchange-Traded Fund Shares are based that 
are not subject to comprehensive surveillance agreements do not in the 
aggregate represent more than 50% of the weight of the index or 
portfolio.
    The Exchange currently does not have in place a surveillance 
agreement with BOVESPA.
    The Exchange submits that the Commission, in the past, has been 
willing to allow a national securities exchange to rely on a memorandum 
of understanding entered into between regulators in the event that the 
exchanges themselves cannot enter into a CSSA. The Exchange notes that 
BM&FBOVESPA is under the regulatory oversight of the Comissao de 
Valores Mobiliarios (``CMV''), which has the responsibility for both 
Brazilian exchanges and over-the-counter markets. The Exchange further 
notes that the Commission executed a memorandum of understanding with 
the CMV dated as of July 24, 2012 (``Brazil-US MOU''), which provides a 
framework for mutual assistance in investigatory and regulatory issues. 
Based on the relationship between the SEC and CMV and the terms of the 
Brazil-US MOU, the Exchange submits that both the Commission and the 
CMV could acquire information from and provide information to the other 
similar to that which would be required in a

[[Page 38101]]

CSSA between exchanges. Moreover, the Commission could make a request 
for information under the Brazil-US MOU on behalf of an SRO that needed 
the information for regulatory purposes. Thus, should MIAX need 
information on Brazilian trading in the Brazil Index component 
securities to investigate incidents involving trading of EWZ options, 
the SEC could request such information from the CMV under the Brazil-US 
MOU. While this arrangement certainly would be enhanced by the 
existence of direct exchange to exchange surveillance sharing 
agreements, it is nonetheless consistent with other instances where the 
Commission has explored alternatives when the relevant foreign exchange 
was unwilling or unable to enter into a CSSA.\7\
---------------------------------------------------------------------------

    \7\ See, e.g., Securities Exchange Act Release No. 36415 
(October 25, 1995), 60 FR 55620 (November 1, 1995) (SR-CBOE-95-45) 
(Order Approving Proposed Rule Change Relating to the Listing and 
Trading of Options on the CBOE Mexico 30 Index).
---------------------------------------------------------------------------

    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
Commission's New Product Release (``New Product Release'').\8\ The 
Commission noted in the New Product Release that if securing a CSSA is 
not possible, an exchange should contact the Commission prior to 
listing a new derivative securities product. The Commission also noted 
that the Commission may determine instead that it is appropriate to 
rely on a memorandum of understanding between the Commission and the 
foreign regulator.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 40761 (December 8, 
1998), 63 FR 70952, 70959 at fn. 101 (December 22, 1998).
---------------------------------------------------------------------------

    The Exchange has recently contacted BM&FBOVESPA with a request to 
enter into a CSSA. Until the Exchange is able to secure a CSSA with 
BM&FBOVESPA, the Exchange requests that the Commission allow the 
listing and trading of options on EWZ without a CSSA, upon reliance of 
the Brazil-US MOU entered into between the Commission and the CMV. The 
Exchange believes this request is reasonable and notes that the 
Commission has provided similar relief in the past. For example, the 
Commission approved the Philadelphia Stock Exchange, Inc. (``PHLX'') to 
rely on an MOU between the Commission and the CMV instead of a direct 
CSSA with BM&FBOVESPA in order to list and trade options on Telebras 
Portoflio Certicate American Depository Receipts.\9\ Additionally, the 
Commission approved, on a pilot basis, proposals of competing exchanges 
to list and trade options on the iShares MSCI Emerging Markets Fund 
\10\ and the iShares MSCI Mexico Indext Fund [sic].\11\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 40298 (August 3, 
1998), 63 FR 43435 (August 13, 1998) (SR-Phlx-1998-33).
    \10\ See Securities Exchange Act Release Nos. 53824 (May 17, 
2006), 71 FR 30003 (May 24, 2006) (SR-Amex-2006-43); 54081 (June 30, 
2006), 71 FR 38911 (July 10, 2006) (SR-Amex-2006-60); 54553 
(September 29, 2006), 71 FR 59561 (October 10, 2006) (SR-Amex-2006-
91); 55040 (January 3, 2007), 72 FR 1348 (January 11, 2007) (SR-
Amex-2007-01); and 55955 (June 25, 2007), 72 FR 36079 (July 2, 2007) 
(SR-Amex-2007-57); 56324 (August 27, 2007), 72 FR 50426 (August 31, 
2007) (SR-ISE-2007-72).
    \11\ See Securities Exchange Act Release Nos. 72213 (May 21, 
2014), [sic] FR 30699 (May 28, 2014) (SR-MIAX-2014-19); 56778 
(November 9, 2007), 72 FR 65113 (November 19, 2007) (SR-Amex-2007-
100); 57013 (December 20, 2007), 72 FR 73923 (December 28, 2007) 
(SR-CBOE-2007-140); 57014 (December 20, 2007), 72 FR 73934 (December 
28, 2007) (SR-ISE-2007-111).
---------------------------------------------------------------------------

    The Commission's approval of this request to list and trade options 
on the EWZ would otherwise render EWZ compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with BM&FBOVESPA, which shall reflect the following: (1) Express 
language addressing market trading activity, clearing activity, and 
customer identity; (2) BM&FBOVESPA's reasonable ability to obtain 
access to and produce requested information; and (3) based on the CSSA 
and other information provided by the BM&FBOVESPA, the absence of 
existing rules, law or practices that would impede the Exchange from 
obtaining foreign information relating to market activity, clearing 
activity, or customer identity, or in the event such rules, laws, or 
practices exist, they would not materially impede the production of 
customer or other information.
iShares MSCI Chile Capped ETF (``ECH'')
    ECH is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the MSCI Chile Investable Market Index (IMI) 25/
50 (``Chile Index'').\12\ The Chile Index consists of stocks traded 
primarily on the Santiago Stock Exchange (``SSE''). ECH employs a 
``representative sampling'' methodology to track the Chile Index by 
investing in a representative sample of Chile Index securities having a 
similar investment profile as the Chile Index.\13\ BFA, ECH's Adviser 
expects ECH to closely track the Chile Index so that, over time, a 
tracking error of 5%, or less, is exhibited. Securities selected by ECH 
have aggregate investment characteristics (based on market 
capitalization and industry weightings), fundamental characteristics 
(such as return variability, earnings valuation and yield) and 
liquidity measures similar to those of the Chile Index. ECH will not 
concentrate its investments (i.e., hold 25% or more of its total assets 
in the stocks of a particular industry or group of industries), except, 
to the extent practicable, to reflect the concentration in the Chile 
Index. ECH will invest at least ninety percent (90%) of its assets in 
the securities comprising the Chile Index and/or related ADRs. ECH may 
also invest its other assets in futures contracts, options on futures 
contracts, other types of options and swaps related to the Chile Index, 
as well as cash and cash equivalents. The Exchange believes that these 
requirements and policies prevent the ECH from being excessively 
weighted in any single security or small group of securities and 
significantly reduce concerns that trading in ECH could become a 
surrogate for trading in unregistered securities.
---------------------------------------------------------------------------

    \12\ Morgan Stanley Capital International Inc. (``MSCI'') 
created and maintains the MSCI Chile Investable Market Index (IMI) 
25/50.
    \13\ As of March 21, 2014, ECH was comprised of 41 securities. 
S.A.C.I. FALABELLA had the greatest individual weight at 9.25%. The 
aggregate percentage weighting of the top 5 and 10 securities in the 
Fund were 39.92% and 62.57%, respectively.
---------------------------------------------------------------------------

    Shares of the ECH (``ECH Shares'') are issued and redeemed, on a 
continuous basis, at NAV in aggregation size of 50,000 shares, or 
multiples thereof (a ``Creation Unit''). Following issuance, ECH Shares 
are traded on an exchange like other equity securities. ECH Shares 
trade in the secondary markets in amounts less than a Creation Unit and 
the price per ECH Share may differ from its NAV which is calculated 
once daily as of the regularly scheduled close of business of NYSE 
Arca.\14\
---------------------------------------------------------------------------

    \14\ See supra note 6.
---------------------------------------------------------------------------

    State Street Bank and Trust Company, the administrator, custodian, 
and transfer agent for ECH. Detailed information on ECH can be found at 
www.ishares.com.
    The Exchange has reviewed ECH and determined that the ECH Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(A) which requires ECH to meet the 
following condition:
     Any non-U.S. component securities of an index or portfolio 
of securities on which the Exchange-Traded Fund Shares are based that 
are not subject to

[[Page 38102]]

comprehensive surveillance agreements do not in the aggregate represent 
more than 50% of the weight of the index or portfolio. The Exchange 
currently does not have in place a surveillance agreement with SSE.
    The Exchange submits that the Commission, in the past, has been 
willing to allow a national securities exchange to rely on a memorandum 
of understanding entered into between regulators in the event that the 
exchanges themselves cannot enter into a CSSA. The Exchange notes that 
SSE is under the regulatory oversight of the Superintendencia de 
Valores y Seguros de Chile (``SVS''), which has the responsibility for 
Chilean securities markets. The Exchange further notes that the 
Commission executed a memorandum of understanding with the SVS dated as 
of June 3, 1993 (``Chile-US MOU''), which provides a framework for 
mutual assistance in investigatory and regulatory issues. Based on the 
relationship between the SEC and SVS and the terms of the Chile-US MOU, 
the Exchange submits that both the Commission and the SVS could acquire 
information from and provide information to the other similar to that 
which would be required in a CSSA between exchanges. Moreover, the 
Commission could make a request for information under the Chile-US MOU 
on behalf of an SRO that needed the information for regulatory 
purposes. Thus, should MIAX need information on Chilean trading in the 
Chile Index component securities to investigate incidents involving 
trading of ECH options, the SEC could request such information from the 
SVS under the Chile-US MOU. While this arrangement certainly would be 
enhanced by the existence of direct exchange to exchange surveillance 
sharing agreements, it is nonetheless consistent with other instances 
where the Commission has explored alternatives when the relevant 
foreign exchange was unwilling or unable to enter into a CSSA.\15\
---------------------------------------------------------------------------

    \15\ See supra note 7.
---------------------------------------------------------------------------

    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
Commission's New Product Release.\16\ The Commission noted in the New 
Product Release that if securing a CSSA is not possible, an exchange 
should contact the Commission prior to listing a new derivative 
securities product. The Commission also noted that the Commission may 
determine instead that it is appropriate to rely on a memorandum of 
understanding between the Commission and the foreign regulator.
---------------------------------------------------------------------------

    \16\ See supra note 8.
---------------------------------------------------------------------------

    The Exchange has recently contacted SSE with a request to enter 
into a CSSA. Until the Exchange is able to secure a CSSA with SSE, the 
Exchange requests that the Commission allow the listing and trading of 
options on ECH without a CSSA, upon reliance of the MOU entered into 
between the Commission and the SVS. The Exchange believes this request 
is reasonable and notes that the Commission has provided similar relief 
in the past. For example, the Commission approved, on a pilot basis, 
proposals of competing exchanges to list and trade options on the 
iShares MSCI Emerging Markets Fund \17\ and the iShares MSCI Mexico 
Index Fund.\18\
---------------------------------------------------------------------------

    \17\ See supra note 10.
    \18\ See supra note 11.
---------------------------------------------------------------------------

    The Commission's approval of this request to list and trade options 
on the ECH would otherwise render ECH compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with SSE, which shall reflect the following: (1) Express language 
addressing market trading activity, clearing activity, and customer 
identity; (2) SSE's reasonable ability to obtain access to and produce 
requested information; and (3) based on the CSSA and other information 
provided by SSE, the absence of existing rules, law or practices that 
would impede the Exchange from obtaining foreign information relating 
to market activity, clearing activity, or customer identity, or in the 
event such rules, laws, or practices exist, they would not materially 
impede the production of customer or other information.
iShares MSCI Peru Capped ETF (``EPU'')
    EPU is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the MSCI All Peru Capped Index (``Peru 
Index'').\19\ The Peru Index consists of stocks traded primarily on 
Bolsa de Valores de Lima (``BVL''). EPU employs a ``representative 
sampling'' methodology to track the Peru Index by investing in a 
representative sample of Peru Index securities having a similar 
investment profile as the Peru Index.\20\ BFA expects EPU to closely 
track the Peru Index so that, over time, a tracking error of 5%, or 
less, is exhibited. Securities selected by EPU have aggregate 
investment characteristics (based on market capitalization and industry 
weightings), fundamental characteristics (such as return variability, 
earnings valuation and yield) and liquidity measures similar to those 
of the Peru Index. EPU will not concentrate its investments (i.e., hold 
25% or more of its total assets in the stocks of a particular industry 
or group of industries), except, to the extent practicable, to reflect 
the concentration in the Peru Index. EPU will invest at least eighty 
percent (80%) of its assets in the securities comprising the Peru Index 
and/or related ADRs. EPU may also invest its other assets in futures 
contracts, options on futures contracts, other types of options and 
swaps related to the Peru Index, as well as cash and cash equivalents. 
The Exchange believes that these requirements and policies prevent the 
EPU from being excessively weighted in any single security or small 
group of securities and significantly reduce concerns that trading in 
EPU could become a surrogate for trading in unregistered securities.
---------------------------------------------------------------------------

    \19\ Morgan Stanley Capital International Inc. (``MSCI'') 
created and maintains the All Peru Capped Index.
    \20\ As of March 20, 2014, EPU was comprised of 25 securities. 
CREDICORP LTD had the greatest individual weight at 26.72%. The 
aggregate percentage weighting of the top 5 and 10 securities in the 
Fund were 55.60% and 73.11%, respectively.
---------------------------------------------------------------------------

    Shares of the EPU (``EPU Shares'') are issued and redeemed, on a 
continuous basis, at NAV in aggregation size of 50,000 shares, or 
multiples thereof (a ``Creation Unit''). Following issuance, EPU Shares 
are traded on an exchange like other equity securities. EPU Shares 
trade in the secondary markets in amounts less than a Creation Unit and 
the price per EPU Share may differ from its NAV which is calculated 
once daily as of the regularly scheduled close of business of NYSE 
Arca.\21\
---------------------------------------------------------------------------

    \21\ See supra note 6.
---------------------------------------------------------------------------

    State Street Bank and Trust Company, the administrator, custodian, 
and transfer agent for EPU. Detailed information on EPU can be found at 
www.ishares.com.
    The Exchange has reviewed EPU and determined that the EPU Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(A) which requires EPU to meet the 
following condition:
     Any non-U.S. component securities of an index or portfolio 
of securities on which the Exchange-Traded Fund Shares are based that 
are not subject to comprehensive surveillance agreements do not in the 
aggregate represent more than 50% of the weight of the index or 
portfolio.
    The Exchange currently does not have in place a surveillance 
agreement with BVL.

[[Page 38103]]

    The Exchange submits that the Commission, in the past, has been 
willing to allow a national securities exchange to rely on a memorandum 
of understanding entered into between regulators in the event that the 
exchanges themselves cannot enter into a CSSA. The Exchange notes that 
BVL is under the regulatory oversight of the Superintendencia del 
Mercado de Valores (``SMV''), which has the responsibility for Peruvian 
stock exchanges. The Exchange further notes that both the Commission 
and SMV are signatories to the International Organization of Securities 
Commissions (``IOSCO'') Multilateral Memorandum of Understanding 
(``MMOU''), which provides a framework for mutual assistance in 
investigatory and regulatory issues. Based on the relationship between 
the SEC and SMV and the terms of the MMOU, the Exchange submits that 
both the Commission and the SMV could acquire information from and 
provide information to the other similar to that which would be 
required in a CSSA between exchanges. Moreover, the Commission could 
make a request for information under the MMOU on behalf of an SRO that 
needed the information for regulatory purposes. Thus, should MIAX need 
information on Peruvian trading in the Peru Index component securities 
to investigate incidents involving trading of EPU options, the SEC 
could request such information from the SMV under the MMOU. While this 
arrangement certainly would be enhanced by the existence of direct 
exchange to exchange surveillance sharing agreements, it is nonetheless 
consistent with other instances where the Commission has explored 
alternatives when the relevant foreign exchange was unwilling or unable 
to enter into a CSSA.\22\
---------------------------------------------------------------------------

    \22\ See supra, note 7.
---------------------------------------------------------------------------

    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
New Product Release.\23\ The Commission noted in the New Product 
Release that if securing a CSSA is not possible, an exchange should 
contact the Commission prior to listing a new derivative securities 
product. The Commission also noted that the Commission may determine 
instead that it is appropriate to rely on a memorandum of understanding 
between the Commission and the foreign regulator.
---------------------------------------------------------------------------

    \23\ See supra, note 8.
---------------------------------------------------------------------------

    The Exchange has recently contacted BVL with a request to enter 
into a CSSA. Until the Exchange is able to secure a CSSA with BVL, the 
Exchange requests that the Commission allow the listing and trading of 
options on EPU without a CSSA, upon reliance of the MMOU entered into 
between the Commission and the SMV. The Exchange believes this request 
is reasonable and notes that the Commission has provided similar relief 
in the past. Additionally, the Commission approved, on a pilot basis, 
proposals of competing exchanges to list and trade options on the 
iShares MSCI Emerging Markets Fund \24\ and the iShares MSCI Mexico 
Index Fund.\25\
---------------------------------------------------------------------------

    \24\ See supra note 10.
    \25\ See supra note 11.
---------------------------------------------------------------------------

    The Commission's approval of this request to list and trade options 
on the EPU would otherwise render EPU compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with BVL, which shall reflect the following: (1) Express language 
addressing market trading activity, clearing activity, and customer 
identity; (2) BVL's reasonable ability to obtain access to and produce 
requested information; and (3) based on the CSSA and other information 
provided by the BVL, the absence of existing rules, law or practices 
that would impede the Exchange from obtaining foreign information 
relating to market activity, clearing activity, or customer identity, 
or in the event such rules, laws, or practices exist, they would not 
materially impede the production of customer or other information.
iShares MSCI Spain Capped ETF (``EWP'')
    EWP is registered pursuant to the Investment Company Act of 1940 as 
a management investment company designed to hold a portfolio of 
securities which track the MSCI Spain 25/50 Index (``Spain 
Index'').\26\ The Spain Index consists of stocks traded primarily on 
Bolsa de Madrid (``BME''). EWP employs a ``representative sampling'' 
methodology to track the Spain Index by investing in a representative 
sample of Spain Index securities having a similar investment profile as 
the Spain Index.\27\ BFA expects EWP to closely track the Spain Index 
so that, over time, a tracking error of 5%, or less, is exhibited. 
Securities selected by EWP have aggregate investment characteristics 
(based on market capitalization and industry weightings), fundamental 
characteristics (such as return variability, earnings valuation and 
yield) and liquidity measures similar to those of the Spain Index. EWP 
will not concentrate its investments (i.e., hold 25% or more of its 
total assets in the stocks of a particular industry or group of 
industries), except, to the extent practicable, to reflect the 
concentration in the Spain Index. EWP will invest at least eighty 
percent (80%) of its assets in the securities comprising the Spain 
Index and/or related ADRs. EWP may also invest its other assets in 
futures contracts, options on futures contracts, other types of options 
and swaps related to the Spain Index, as well as cash and cash 
equivalents. The Exchange believes that these requirements and policies 
prevent the EWP from being excessively weighted in any single security 
or small group of securities and significantly reduce concerns that 
trading in EWP could become a surrogate for trading in unregistered 
securities.
---------------------------------------------------------------------------

    \26\ Morgan Stanley Capital International Inc. (``MSCI'') 
created and maintains the Spain 25/50 Index.
    \27\ As of March 28, 2014, EWP was comprised of 24 securities. 
BANCO SANTANDER SA had the greatest individual weight at 22.37%. The 
aggregate percentage weighting of the top 5 and 10 securities in the 
Fund were 56.88% and 74.52%, respectively.
---------------------------------------------------------------------------

    Shares of the EWP (``EWP Shares'') are issued and redeemed, on a 
continuous basis, at NAV in aggregation size of 75,000 shares, or 
multiples thereof (a ``Creation Unit''). Following issuance, EWP Shares 
are traded on an exchange like other equity securities. EWP Shares 
trade in the secondary markets in amounts less than a Creation Unit and 
the price per EWP Share may differ from its NAV which is calculated 
once daily as of the regularly scheduled close of business of NYSE 
Arca.\28\
---------------------------------------------------------------------------

    \28\ See supra note 6.
---------------------------------------------------------------------------

    State Street Bank and Trust Company, the administrator, custodian, 
and transfer agent for EWP. Detailed information on EWP can be found at 
ww.ishares.com.
    The Exchange has reviewed EWP and determined that the EWP Shares 
satisfy the initial listing standards, except for the requirement set 
forth in MIAX Rule 402(i)(5)(ii)(A) which requires EWP to meet the 
following condition:
     Any non-U.S. component securities of an index or portfolio 
of securities on which the Exchange-Traded Fund Shares are based that 
are not subject to comprehensive surveillance agreements do not in the 
aggregate represent more than 50% of the weight of the index or 
portfolio.

[[Page 38104]]

    The Exchange currently does not have in place a surveillance 
agreement with BME.
    The Exchange submits that the Commission, in the past, has been 
willing to allow a national securities exchange to rely on a memorandum 
of understanding entered into between regulators in the event that the 
exchanges themselves cannot enter into a CSSA. The Exchange notes that 
BME is under the regulatory oversight of the Comision Nacional del 
Mercado de Valores (``CNMV''), which has the responsibility for Spanish 
stock exchanges. The Exchange further notes that the Commission 
executed a memorandum of understanding with the CNMV dated as of July 
22, 2013 (``Spain-US MOU''), which provides a framework for mutual 
assistance in investigatory and regulatory issues. Based on the 
relationship between the SEC and CNMV and the terms of the Spain-US 
MOU, the Exchange submits that both the Commission and the CNMV could 
acquire information from and provide information to the other similar 
to that which would be required in a CSSA between exchanges. Moreover, 
the Commission could make a request for information under the Spain-US 
MOU on behalf of an SRO that needed the information for regulatory 
purposes. Thus, should MIAX need information on Spanish trading in the 
Spain Index component securities to investigate incidents involving 
trading of EWP options, the SEC could request such information from the 
CNMV under the Spain-US MOU. While this arrangement certainly would be 
enhanced by the existence of direct exchange to exchange surveillance 
sharing agreements, it is nonetheless consistent with other instances 
where the Commission has explored alternatives when the relevant 
foreign exchange was unwilling or unable to enter into a CSSA.\29\
---------------------------------------------------------------------------

    \29\ See supra, note 7.
---------------------------------------------------------------------------

    The practice of relying on surveillance agreements or MOUs between 
regulators when a foreign exchange was unable, or unwilling, to provide 
an information sharing agreement was affirmed by the Commission in the 
New Product Release.\30\ The Commission noted in the New Product 
Release that if securing a CSSA is not possible, an exchange should 
contact the Commission prior to listing a new derivative securities 
product. The Commission also noted that the Commission may determine 
instead that it is appropriate to rely on a memorandum of understanding 
between the Commission and the foreign regulator.
---------------------------------------------------------------------------

    \30\ See supra, note 8.
---------------------------------------------------------------------------

    The Exchange has recently contacted BME with a request to enter 
into a CSSA. Until the Exchange is able to secure a CSSA with BME, the 
Exchange requests that the Commission allow the listing and trading of 
options on EWP without a CSSA, upon reliance of the Spain-US MOU 
entered into between the Commission and the CNMV. The Exchange believes 
this request is reasonable and notes that the Commission has provided 
similar relief in the past. Additionally, the Commission approved, on a 
pilot basis, proposals of competing exchanges to list and trade options 
on the iShares MSCI Emerging Markets Fund \31\ and the iShares MSCI 
Mexico Index Fund.\32\
---------------------------------------------------------------------------

    \31\ See supra note 10.
    \32\ See supra note 11.
---------------------------------------------------------------------------

    The Commission's approval of this request to list and trade options 
on the EWP would otherwise render EWP compliant with all of the 
applicable Listing Standards.
    The Exchange shall continue to use its best efforts to obtain a 
CSSA with BME, which shall reflect the following: (1) Express language 
addressing market trading activity, clearing activity, and customer 
identity; (2) BME's reasonable ability to obtain access to and produce 
requested information; and (3) based on the CSSA and other information 
provided by the BME, the absence of existing rules, law or practices 
that would impede the Exchange from obtaining foreign information 
relating to market activity, clearing activity, or customer identity, 
or in the event such rules, laws, or practices exist, they would not 
materially impede the production of customer or other information.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \33\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \34\ in particular, in that it is 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 facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. In particular, the Exchange 
believes listing and trading of options on the iShare ETFs will benefit 
investors by providing them with valuable risk management tools.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f(b).
    \34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes this proposed rule change will benefit 
investors by providing additional methods to trade options on the 
iShares ETFs, and by providing them with valuable risk management 
tools. Specifically, the Exchange believes that market participants on 
MIAX would benefit from the introduction and availability of options on 
the iShares ETFs in a manner that is similar to other exchanges and 
will provide investors with yet another venue on which to trade these 
products. The Exchange notes that the rule change is being proposed as 
a competitive response to other competing options exchanges that 
already list and trade options on the iShare ETFs and believes this 
proposed rule change is necessary to permit fair competition among the 
options exchanges. For all the reasons stated above, the Exchange does 
not believe that the proposed rule change will impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act, and believes the proposed change will enhance competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 38105]]

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-2014-30 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-2014-30. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of 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-2014-30 and should be 
submitted on or before July 24, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-15608 Filed 7-2-14; 8:45 am]
BILLING CODE 8011-01-P
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