Self-Regulatory Organizations: Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX Rule 1107 Concerning Exchange Arbitrations, 63196-63198 [2014-25148]
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Notices
filings will also be available for
inspection and copying at the principal
office of CME and on CME’s Web site at
https://www.cmegroup.com/marketregulation/rule-filings.html.
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–CME–2014–41 and should
be submitted on or before November 12,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–25076 Filed 10–21–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73382; File No. SR–MIAX–
2014–52]
Self-Regulatory Organizations: Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend MIAX Rule 1107
Concerning Exchange Arbitrations
October 17, 2014.
mstockstill on DSK4VPTVN1PROD with NOTICES
Pursuant to the provisions of 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 October 2, 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 and II below,
which Items have been substantially
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons. The
Exchange has designated the proposed
rule change as constituting a ‘‘noncontroversial’’ rule change under Rule
19b–4(f)(6) of the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules to harmonize the language of
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
MIAX Rule 1107 (Arbitration) with that
of another options exchange, the
International Securities Exchange, LLC
(‘‘ISE’’). 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 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
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
MIAX Rule 1107 (Arbitration) to
harmonize it with the rules of ISE in
order to incorporate by reference the
arbitration rules of Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’).4
The current MIAX Rule 1107 is based
on ISE Rule 1800, but incorporates by
reference the arbitration rules of the
Chicago Board Options Exchange
(‘‘CBOE’’). This was appropriate when
the Exchange maintained a Regulatory
Service Agreement (‘‘RSA’’) with CBOE.
The Exchange, however, recently
entered into a RSA with FINRA, which
became effective on October 1, 2014.
The Exchange believes the proposed
rule change to reference the arbitration
rules of FINRA is consistent with this
recent change in regulatory service
providers.
Proposed Rule Change
The Exchange proposes to replace
current references to CBOE arbitration
rules in MIAX Rule 1107 with
references to the corresponding
arbitration rules of FINRA. The
proposed rule change would align
MIAX’s arbitration rule with the
arbitration rule of ISE, which also
references FINRA’s arbitration rules.5
As proposed, the Rule 12000 Series and
1 15
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4 See
5 See
Jkt 235001
PO 00000
ISE Rule 1800.
ISE Rule 1800.
Frm 00119
Fmt 4703
Sfmt 4703
Rule 13000 Series of the FINRA Manual
(Code of Arbitration Procedures for
Customer Disputes and Code of
Arbitration Procedures for Industry
Disputes, respectively) (collectively, the
‘‘FINRA Code of Arbitration’’), as the
same may be in effect from time to time,
would govern Exchange arbitrations
except as may be specified in proposed
Rule 1107. Definitions in the FINRA
Code of Arbitration would have the
same meaning as prescribed therein,
and procedures in the FINRA Code of
Arbitration would have the same
application with respect to Exchange
arbitrations.
Under proposed Rule 1107, any
dispute, claim, or controversy arising
out of or in connection with the
business of any member of the Exchange
(‘‘Member’’), or arising out of the
employment or termination of
employment of associated person(s)
with any Member would be arbitrable,
except that: (1) A dispute, claim, or
controversy alleging employment
discrimination (including a sexual
harassment claim) in violation of a
statue may only be arbitrated if the
parties have agreed to arbitrate it after
the dispute arose; and (2) any type of
dispute, claim, or controversy that is not
permitted to be arbitrated under the
FINRA Code of Arbitration (such as
class action claims) shall not be eligible
for arbitration under proposed Rule
1107. In addition, under the proposal
the requirements of FINRA Rule 2268
(Requirements When Using Predispute
Arbitration Agreements for Customer
Accounts) would apply to predispute
arbitration agreements between
Members and their customers.
In addition, under proposed Rule
1107, if any matter comes to the
attention of an arbitrator during, and in
connection with, the arbitrator’s
participation in a proceeding, either
from the record of the proceeding or
from material or communications
related to the proceeding, that the
arbitrator has reason to believe may
constitute a violation of the Exchange’s
rules or the federal securities laws, the
arbitrator may initiate a referral of the
matter to the Exchange for disciplinary
investigation; provided, however, that
any such referral could only be initiated
by an arbitrator after the matter before
her or him has been settled or otherwise
disposed of, or after an award finally
disposing of the matter has been
rendered pursuant to FINRA Rules
12904 or 13904, as applicable.
If the proposal is approved, the
principle structure of the Exchange’s
arbitration rule would remain the same,
except that it would reference the
applicable FINRA arbitration rules in
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Notices
lieu of the CBOE arbitration rules. In
addition, the proposed rule change
would closely align the Exchange’s
arbitration rule with the arbitration rule
of another options exchange (ISE).6 The
Exchange believes that the proposed
rule change would provide detailed
guidelines and framework concerning
Exchange arbitrations in a manner that
is easily understood and enforceable not
only by Members, but also by FINRA,
with which the Exchange recently
entered into a RSA.
mstockstill on DSK4VPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act,7 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,8 in particular, because 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
that the proposed rule change would
provide a clear framework concerning
Exchange arbitrations in a manner
designed to prevent fraudulent and
manipulative acts and practices, and to
promote the protection of investors and
the public interest. Further, the
Exchange notes that the proposed rule
change would provide greater
harmonization between Exchange rules
and the rules of similar substance and
purpose of FINRA resulting in less
burdensome and more efficient
regulatory compliance for members of
both MIAX and FINRA (‘‘Dual
Members’’). As such, the Exchange
believes that the proposed rule change
would foster cooperation and
coordination with persons engaged in
facilitating transactions in securities and
would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
6 See
Proposed MIAX Rule 1107. See also ISE
Rule 1800.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
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18:22 Oct 21, 2014
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proposed rule change is not designed to
address any competitive issues but
rather is designed to provide greater
harmonization between Exchange and
FINRA rules of similar purpose,
resulting in less burdensome and more
efficient regulatory compliance for Dual
Members.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 9 and Rule 19b–
4(f)(6) thereunder.10 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b–
4(f)(6) thereunder.11
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii),12 the Commission
may designate a shorter period of time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule may become operative immediately
upon filing.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest,
because it allows the Exchange to
immediately harmonize its arbitration
rules with those of ISE and, by
extension, the FINRA Code of
Arbitration. The Commission notes that
the Exchange also recently entered into
an RSA with FINRA, which became
effective on October 1, 2014. Together,
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
11 Rule 19b–4(f)(6) also requires a self-regulatory
organization (‘‘SRO’’) to give the Commission
written notice of its intent to file the proposed rule
change at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
12 17 CFR 240.19b–4(f)(6)(iii).
10 17
PO 00000
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Fmt 4703
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63197
the Commission believes that these
steps help ensure that Dual Members
would be subject to a single set of SRO
rules governing arbitration. The
Commission also believes that this
would promote less burdensome and
more efficient regulatory compliance.
For these reasons, the Commission
designates the proposed rule change to
be operative upon filing.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) of the Act 14 to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–2014–52 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MIAX–2014–52. 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
13 For purposes of waiving the 30-day operative
delay, the Commission has considered the proposed
rule’s impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
14 15 U.S.C. 78s(b)(2)(B).
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Notices
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549–1090, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
All submissions should refer to File
Number SR–MIAX–2014–52 and should
be submitted on or before November 12,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–25148 Filed 10–21–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73376; File No. SR–BATS–
2014–026]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing of
Amendment No. 3, and Order Granting
Accelerated Approval of a Proposed
Rule Change To List and Trade Shares
of Certain Funds of the Alpha Architect
ETF Trust
mstockstill on DSK4VPTVN1PROD with NOTICES
October 16, 2014.
On July 3, 2014, BATS Exchange, Inc.
(‘‘Exchange’’ or ‘‘BATS’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares (‘‘Shares’’) of each
of the following funds: (1) ValueShares
U.S. Quantitative Value ETF; (2)
ValueShares International Quantitative
Value ETF; (3) MomentumShares U.S.
Quantitative Momentum ETF; and (4)
MomentumShares International
Quantitative Momentum ETF (each
referred to as the ‘‘Fund’’ and
collectively the ‘‘Funds’’). The proposed
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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18:22 Oct 21, 2014
Jkt 235001
rule change was published for comment
in the Federal Register on July 23,
2014.3 On August 15, 2014, the
Exchange filed Amendment No. 1 to the
proposed rule change, which amended
and replaced the proposal in its entirety.
On August 26, 2014, the Exchange filed
Amendment No. 2 to the proposed rule
change, which also amended and
replaced the proposal in its entirety.
The Commission designated a longer
period for Commission action on
September 5, 2014.4 On September 12,
2014, the Exchange filed Amendment
No. 3 to the proposed rule change,
which again amended and replaced the
proposal in its entirety.5 No comments
on the proposal have been received.
This order approves the proposed rule
change, as modified by Amendment No.
3, on an accelerated basis.
I. Description of the Proposed Rule
Change
The Exchange proposes to list and
trade the Shares under BATS Rule
14.11(i), which governs the listing and
3 See Securities Exchange Act Release No. 72636
(July 17, 2014), 79 FR 42852.
4 See Securities Exchange Act Release No. 73003,
79 FR 54307 (September 11, 2014).
5 Amendment No. 3 modified the proposed rule
change by clarifying the holdings of the Funds,
clarifying the valuation of various assets for
purposes of calculating the net asset value (‘‘NAV’’)
of each Fund, providing more information regarding
the Share creation and redemption process, and
adding information regarding its surveillance
capability. With respect to the Funds’ holdings, the
Exchange specified: (1) That the common stock,
preferred stock, international stocks, and depositary
receipts that may be held by the Funds (as
applicable) will all be exchange-listed (except that
up to 10% the portfolios of the international Funds
may be composed of unsponsored depositary
receipts); (2) the types of fixed income securities
that may be held by each of the Funds; (3) that the
debt securities held by the ValueShares U.S.
Quantitative Value ETF and the MomentumShares
U.S. Quantitative Momentum ETF would be
investment grade; (4) that the Funds would not
invest in private investment funds, vehicles or
structures; (5) that the 15% limit on illiquid assets
applicable to each Fund is an overarching
investment restriction; and (6) the depositary
receipts in which the ValueShares International
Quantitative Value ETF and MomentumShares
International Quantitative Momentum ETF
(collectively, ‘‘International Funds’’) may invest.
With respect to NAV calculation, the Exchange: (1)
Clarified the method for valuation of exchangelisted securities; (2) stated that non-exchange-listed
equity securities would be valued at their last
reported sale prices or, if no last reported sale price
is available, at the most recent bid price; and (3)
clarified that fixed income securities (with the
exception of repurchase agreements) would be
valued by pricing services. With respect to Share
creations and redemptions, the Exchange provided
additional information regarding the circumstances
in which a Fund may accept a custom fund deposit
in connection with Share creations as well as the
daily dissemination of the redemption basket.
Lastly, the Exchange stated that it is able to access,
as needed, trade information for certain fixed
income instruments reported to the Trade Reporting
and Compliance Engine (‘‘TRACE’’) of the Financial
Industry Regulatory Authority (‘‘FINRA’’).
PO 00000
Frm 00121
Fmt 4703
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trading of Managed Fund Shares on the
Exchange. The Shares will be offered by
the Alpha Architect ETF Trust
(‘‘Trust’’), which was established as a
Delaware statutory trust and is
registered with the Commission as an
open-end investment company.6
Empowered Funds, LLC is the
investment adviser (‘‘Adviser’’) to the
Funds.7 The Adviser is not a registered
broker-dealer and is not affiliated with
any broker-dealers.8 U.S. Bancorp Fund
Services, LLC is the administrator and
transfer agent for the Trust. U.S. Bank
National Association is the custodian
for the Trust. Quasar Distributors, LLC
serves as the distributor for the Trust.9
A. ValueShares U.S. Quantitative Value
ETF
The investment objective of the Fund
is to provide long-term capital
appreciation. Under normal
circumstances,10 the Fund will invest at
6 The Trust and has filed a registration statement
on behalf of the Funds on Form N–1A
(‘‘Registration Statement’’) with the Commission.
See Registration Statement on Form N–1A for the
Trust, dated April 25, 2014 (File Nos. 333–195493
and 811–22961). The Commission has issued an
order granting certain exemptive relief to the Trust
under the Investment Company Act of 1940 (15
U.S.C. 80a–1) (‘‘1940 Act’’). See Investment
Company Act Release No. 31018 (April 16, 2014)
(File No. 812–14245).
7 The Adviser is an indirect subsidiary of
Empirical Finance, LLC d/b/a Empiritrage, LLC.
8 BATS Rule 14.11(i)(7) provides that, if the
investment adviser to the investment company
issuing Managed Fund Shares is affiliated with a
broker-dealer, the investment adviser shall erect a
firewall between the investment adviser and the
broker-dealer with respect to access to information
concerning the composition of or changes to the
investment company portfolio. In addition, Rule
14.11(i)(7) further requires that personnel who
make decisions on the investment company’s
portfolio composition must be subject to procedures
designed to prevent the misuse and dissemination
of material nonpublic information regarding the
applicable investment company portfolio. The
Exchange states that, in the event that (a) the
Adviser becomes registered as a broker-dealer or
newly affiliated with a broker-dealer, or (b) any new
adviser or sub-adviser is a registered broker-dealer
or becomes affiliated with a broker-dealer, it will
implement a firewall with respect to its relevant
personnel or such broker-dealer affiliate, as
applicable, regarding access to information
concerning the composition of or changes to the
portfolio, and will be subject to procedures
designed to prevent the use and dissemination of
material non-public information regarding the
portfolio.
9 Additional information regarding the Trust, the
Funds, the Shares, investment strategies,
investment restrictions, risks, NAV calculation,
creation and redemption procedures, fees, portfolio
holdings, disclosure policies, distributions, and
taxes, among other information, is included in
Amendment No. 3 and the Registration Statement,
as applicable. See Amendment No. 3 and
Registration Statement, supra note 5 and 6,
respectively.
10 The term ‘‘under normal circumstances’’
includes, but is not limited to, the absence of
adverse market, economic, political, or other
conditions, including extreme volatility or trading
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]]>Agencies
[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Pages 63196-63198]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25148]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73382; File No. SR-MIAX-2014-52]
Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend MIAX Rule 1107 Concerning Exchange
Arbitrations
October 17, 2014.
Pursuant to the provisions of 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 October 2, 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 and II below, which Items have been
substantially prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons. The Exchange has designated the proposed rule
change as constituting a ``non-controversial'' rule change under Rule
19b-4(f)(6) of the Act,\3\ which renders the proposal effective upon
receipt of this filing by the Commission.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to harmonize the language
of MIAX Rule 1107 (Arbitration) with that of another options exchange,
the International Securities Exchange, LLC (``ISE''). 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 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 Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend MIAX Rule 1107 (Arbitration) to
harmonize it with the rules of ISE in order to incorporate by reference
the arbitration rules of Financial Industry Regulatory Authority, Inc.
(``FINRA'').\4\ The current MIAX Rule 1107 is based on ISE Rule 1800,
but incorporates by reference the arbitration rules of the Chicago
Board Options Exchange (``CBOE''). This was appropriate when the
Exchange maintained a Regulatory Service Agreement (``RSA'') with CBOE.
The Exchange, however, recently entered into a RSA with FINRA, which
became effective on October 1, 2014. The Exchange believes the proposed
rule change to reference the arbitration rules of FINRA is consistent
with this recent change in regulatory service providers.
---------------------------------------------------------------------------
\4\ See ISE Rule 1800.
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange proposes to replace current references to CBOE
arbitration rules in MIAX Rule 1107 with references to the
corresponding arbitration rules of FINRA. The proposed rule change
would align MIAX's arbitration rule with the arbitration rule of ISE,
which also references FINRA's arbitration rules.\5\ As proposed, the
Rule 12000 Series and Rule 13000 Series of the FINRA Manual (Code of
Arbitration Procedures for Customer Disputes and Code of Arbitration
Procedures for Industry Disputes, respectively) (collectively, the
``FINRA Code of Arbitration''), as the same may be in effect from time
to time, would govern Exchange arbitrations except as may be specified
in proposed Rule 1107. Definitions in the FINRA Code of Arbitration
would have the same meaning as prescribed therein, and procedures in
the FINRA Code of Arbitration would have the same application with
respect to Exchange arbitrations.
---------------------------------------------------------------------------
\5\ See ISE Rule 1800.
---------------------------------------------------------------------------
Under proposed Rule 1107, any dispute, claim, or controversy
arising out of or in connection with the business of any member of the
Exchange (``Member''), or arising out of the employment or termination
of employment of associated person(s) with any Member would be
arbitrable, except that: (1) A dispute, claim, or controversy alleging
employment discrimination (including a sexual harassment claim) in
violation of a statue may only be arbitrated if the parties have agreed
to arbitrate it after the dispute arose; and (2) any type of dispute,
claim, or controversy that is not permitted to be arbitrated under the
FINRA Code of Arbitration (such as class action claims) shall not be
eligible for arbitration under proposed Rule 1107. In addition, under
the proposal the requirements of FINRA Rule 2268 (Requirements When
Using Predispute Arbitration Agreements for Customer Accounts) would
apply to predispute arbitration agreements between Members and their
customers.
In addition, under proposed Rule 1107, if any matter comes to the
attention of an arbitrator during, and in connection with, the
arbitrator's participation in a proceeding, either from the record of
the proceeding or from material or communications related to the
proceeding, that the arbitrator has reason to believe may constitute a
violation of the Exchange's rules or the federal securities laws, the
arbitrator may initiate a referral of the matter to the Exchange for
disciplinary investigation; provided, however, that any such referral
could only be initiated by an arbitrator after the matter before her or
him has been settled or otherwise disposed of, or after an award
finally disposing of the matter has been rendered pursuant to FINRA
Rules 12904 or 13904, as applicable.
If the proposal is approved, the principle structure of the
Exchange's arbitration rule would remain the same, except that it would
reference the applicable FINRA arbitration rules in
[[Page 63197]]
lieu of the CBOE arbitration rules. In addition, the proposed rule
change would closely align the Exchange's arbitration rule with the
arbitration rule of another options exchange (ISE).\6\ The Exchange
believes that the proposed rule change would provide detailed
guidelines and framework concerning Exchange arbitrations in a manner
that is easily understood and enforceable not only by Members, but also
by FINRA, with which the Exchange recently entered into a RSA.
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\6\ See Proposed MIAX Rule 1107. See also ISE Rule 1800.
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\8\ in particular, because 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.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that the proposed rule change
would provide a clear framework concerning Exchange arbitrations in a
manner designed to prevent fraudulent and manipulative acts and
practices, and to promote the protection of investors and the public
interest. Further, the Exchange notes that the proposed rule change
would provide greater harmonization between Exchange rules and the
rules of similar substance and purpose of FINRA resulting in less
burdensome and more efficient regulatory compliance for members of both
MIAX and FINRA (``Dual Members''). As such, the Exchange believes that
the proposed rule change would foster cooperation and coordination with
persons engaged in facilitating transactions in securities and would
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change is not
designed to address any competitive issues but rather is designed to
provide greater harmonization between Exchange and FINRA rules of
similar purpose, resulting in less burdensome and more efficient
regulatory compliance for Dual Members.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ Because
the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder.\11\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ Rule 19b-4(f)(6) also requires a self-regulatory
organization (``SRO'') to give the Commission written notice of its
intent to file the proposed rule change at least five business days
prior to the date of filing of the proposed rule change, or such
shorter time as designated by the Commission. The Exchange has
satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter period of time if such action is consistent with
the protection of investors and the public interest. The Exchange has
asked the Commission to waive the 30-day operative delay so that the
proposed rule may become operative immediately upon filing.
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because it allows the Exchange to immediately harmonize its arbitration
rules with those of ISE and, by extension, the FINRA Code of
Arbitration. The Commission notes that the Exchange also recently
entered into an RSA with FINRA, which became effective on October 1,
2014. Together, the Commission believes that these steps help ensure
that Dual Members would be subject to a single set of SRO rules
governing arbitration. The Commission also believes that this would
promote less burdensome and more efficient regulatory compliance. For
these reasons, the Commission designates the proposed rule change to be
operative upon filing.\13\
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\13\ For purposes of waiving the 30-day operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) of the Act \14\ to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-MIAX-2014-52 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2014-52. 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
[[Page 63198]]
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549-1090, on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of the filing also will be available for inspection and copying
at the principal office of the Exchange. All comments received will be
posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly.
All submissions should refer to File Number SR-MIAX-2014-52 and
should be submitted on or before November 12, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-25148 Filed 10-21-14; 8:45 am]
BILLING CODE 8011-01-P
