Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add Exchange Rule 531, Trade Nullification and Price Adjustment Procedure, 65445-65447 [2014-26124]
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Federal Register / Vol. 79, No. 213 / Tuesday, November 4, 2014 / Notices
clearance of the Additional WE
Sovereign Contracts will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments relating to the
acceptance of the Additional WE
Sovereign Contracts for clearing have
not been solicited or received. ICE Clear
Europe will notify the Commission of
any written comments received by ICE
Clear Europe.
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
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the 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:
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–
ICEEU–2014–18 on the subject line.
rmajette on DSK3VPTVN1PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ICEEU–2014–18. 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
VerDate Sep<11>2014
15:39 Nov 03, 2014
Jkt 235001
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filings will also be available for
inspection and copying at the principal
office of ICE Clear Europe and on ICE
Clear Europe’s Web site at https://
www.theice.com/notices/
Notices.shtml?regulatoryFilings.
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–ICEEU–2014–18 and
should be submitted on or before
November 25, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–26120 Filed 11–3–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73463; File No. SR–MIAX–
2014–54]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Add Exchange Rule 531,
Trade Nullification and Price
Adjustment Procedure
October 29, 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 October 20, 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,
16 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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65445
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange is filing a proposal to
add Rule 531, Trade Nullification and
Price Adjustment Procedure.
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 add Rule
531, Trade Nullification and Price
Adjustment Procedure.3 As proposed,
Rule 531 will allow for transactions to
be nullified if both parties to the
transaction agree to the nullification and
allow the price of transaction [sic] and
authorized by the Exchange.4 The
proposal is based upon a recent filing of
another options exchange.5
The Exchange proposes to add Rule
531, ‘‘Trade Nullification and Price
Adjustment Procedure,’’ which would:
(a) Allow for any trades on the Exchange
3 The Exchange notes that this proposal is only
intended to be effective until the joint efforts by the
exchanges to create uniform trade nullification and
adjustment rules are approved and in effect. Once
the uniform rule has been approved and is effective,
the Exchange will amend its rules appropriately.
4 The Exchange notes that, as proposed, Rule 6.19
[sic] will only apply to trades that were executed
on the Exchange and, as such, any orders that were
either fully or partially routed to, or executed, on
another Exchange will not be subject to the
Proposed Rule 531.
5 See Securities Exchange Act Release No. 72970
(September 3, 2014), 79 FR 53498 (September 9,
2014) (SR–CBOE–2014–066).
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Federal Register / Vol. 79, No. 213 / Tuesday, November 4, 2014 / Notices
to be nullified if both parties to the trade
agree to such nullification, and (b) allow
for prices of executions to be adjusted
if the price adjustment is agreed upon
by both parties of the trade and
authorized by the Exchange.6
The Exchange is also proposing to add
a provision to allow Members to
mutually agree to adjust a price of an
execution. The Exchange believes this
provision is necessary given the benefits
of adjusting a trade price rather than
nullifying the trade completely. Because
options trades are used to hedge
transactions in other markets, including
securities and futures, many Members,
and their customers, would rather adjust
prices of executions rather than nullify
the transactions and, thus, lose a hedge
altogether. As such, the Exchange
believes it is in the best interest of
investors to allow for price adjustments
as well as nullifications. In addition, the
Exchange believes it is in the nature of
a fair and orderly market to allow for
price adjustments rather than only
cancellations because an adjustment
will result in the least amount of
disruption to the overall market. The
Exchange also notes that current
Exchange Rules allow for prices of
trades to be adjusted at the consent of
both parties if such transactions are
within the current obvious error
provisions.7 The Exchange is now
proposing to merely allow this practice
for any trade.
As proposed, Rule 531 expressly
states that trades may be subject to
nullification or price adjustment only if
such trades are authorized by the
Exchange. As part of the authorization
process, in the case of a mutual
6 See
supra note 4.
Exchange notes that no changes are being
proposed to the procedures for nullification or
adjustment of a trade by mutual agreement in the
Exchange’s obvious error rules. See MIAX Rule
521(c)(3). MIAX Rule 521(c)(3) provides that the
‘‘determination as to whether a trade was
automatically executed at an erroneous price may
be made by mutual agreement of the affected parties
to a particular transaction within the time periods
specified in subparagraphs (e)(1) or (2) [of Rule 531
[sic]] below. A trade may be nullified or adjusted
on the terms that all parties to a particular
transaction agree. In the absence of mutual
agreement by the parties, a particular trade may
only be nullified or adjusted when the transaction
results from an Obvious Error as provided in this
Rule.’’ With the effectiveness of Proposed Rule 531,
members will have two options to choose from in
order to have the their trades nullified or adjusted
by mutual agreement: (i) request under the
procedures of MIAX Rule 521(c)(3) including the
timeframes in Rule 521(e)(1), (2); or (ii) request
under the procedures of Proposed Rule 531 which
requires the authorization of the Exchange prior to
the nullification or adjustment. The Exchange
believes both provisions are complimentary [sic] in
that they provide protections in different situations
under procedures that are correspondingly
appropriate based on the situation in which a
nullification or an adjustment is requested.
rmajette on DSK3VPTVN1PROD with NOTICES
7 The
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nullification or mutual price
adjustment, the Exchange will only
authorize if the Exchange received
verification from both parties to the
trade that a mutual agreement has been
made. In addition, prior to an
authorization for a mutual price
adjustment, the Exchange will ensure
the agreed upon price would have been
permissible and in compliance with all
Exchange and Securities and Exchange
Commission Rules, as amended, at the
time the original transaction was
executed.8 Finally, the proposed rule
will state that the format and
information required by the Exchange
for this submission will be released by
the Exchange via Regulatory Circular.
As such, prior to Rule 531 becoming
operative, the Exchange will provide
Members with specific requirements via
an Exchange Regulatory Circular. The
circular will, among other things, state
specific timeframes required for
requests and the format in which the
requests will be accepted by the
Exchange.
To conclude, the Exchange believes
that the proposed changes are in
furtherance of the Act because the
proposed Rule 531 will allow Members
to agree to nullify transactions or adjust
prices of transactions to maintain a fair
and orderly market. As stated above, the
Exchange intends to release a
Regulatory Circular to announce the
implementation of the Rule and other
specifics surrounding the procedures of
the implementation. In addition, prior
to implementation, the Exchange will
ensure it has proper policies and
procedures in place to correctly
administer the Rule.
consistent with the Act as they are
designed to promote just and equitable
principles and protect investors and the
public interest. Because options trades
are used to hedge transactions in other
markets, including securities and
futures, many market participants
would rather adjust prices of executions
rather than nullify the transactions and,
thus, lose a hedge altogether. As such,
the Exchange believes it is in the best
interest of investors to allow for price
adjustments as well as nullifications. In
addition, the Exchange believes it is in
the nature of a fair and orderly market
to allow for price adjustments rather
than only cancellations because an
adjustment will result in the least
amount of disruption to the overall
market. Finally, the Exchange does not
believe that the proposed changes are
unfairly discriminatory because they
will be applied to all Members equally.
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) 9 of the Act in general, and
furthers the objectives of Section
6(b)(5) 10 of the Act 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.
More specifically, the Exchange
believes that the proposed changes are
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6) 12
thereunder.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
8 For example, the Exchange would ensure that
the mutually agreed upon price would not have
traded through resting interest at the time of the
initial execution.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00075
Fmt 4703
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. In fact, the
Exchange believes that the proposed
rule change will foster competition as it
will allow for less overall disruption to
the market and encourage participation
on the Exchange.
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.
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization 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
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Federal Register / Vol. 79, No. 213 / Tuesday, November 4, 2014 / Notices
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
to determine whether the proposed rule
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:
rmajette on DSK3VPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–MIAX–2014–54 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–2014–54. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
VerDate Sep<11>2014
15:39 Nov 03, 2014
Jkt 235001
available publicly. All submissions
should refer to File Number SR–MIAX–
2014–54, and should be submitted on or
before November 25, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–26124 Filed 11–3–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73462; File No. SR–BATS–
2014–053]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Related to Fees for Use
of BATS Exchange, Inc.
October 29, 2014.
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 October
24, 2014, BATS Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BATS’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange filed a proposal to
amend the fee schedule applicable to
Members 3 and non-members of the
Exchange pursuant to BATS Rules
15.1(a) and (c). Changes to the fee
schedule pursuant to this proposal are
effective upon filing.
The text of the proposed rule change
is available at the Exchange’s Web site
at https://www.batstrading.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
Exchange included statements
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 A Member is defined as ‘‘any registered broker
or dealer that has been admitted to membership in
the Exchange.’’ See Exchange Rule 1.5(n).
1 15
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65447
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 parts 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 modify its
fee schedule effective immediately in
order to adopt pricing charged by the
Exchange for Supplemental Peg Orders
and several new routing strategies, as
described below.
Supplemental Peg Orders
The Exchange recently adopted a new
order type, the Supplemental Peg Order,
which is a non-displayed limit order
described in Rule 11.9(c)(19). The
Exchange proposes to modify its fee
schedule to make clear that standard
pricing for all other types of NonDisplayed Liquidity, as defined in the
fee schedule, applies to Supplemental
Peg Orders. Thus, the Exchange
proposes to provide a rebate of $0.0017
per share for all Supplemental Peg
Orders executed on the Exchange that
add liquidity in securities priced $1.00
and above. As with all orders adding
liquidity to the Exchange, Supplemental
Peg Orders in securities priced below
$1.00 would not receive a liquidity
rebate.
Routing Strategies
The Exchange recently filed a
proposed rule change to adopt several
new routing options in connection with
the Exchange’s technology integration
with EDGA Exchange, Inc. (‘‘EDGA’’)
and EDGX Exchange, Inc. (‘‘EDGX’’).4
The Exchange proposes to adopt pricing
for the new routing options, as set forth
below, and also proposes various
structural changes to the fee schedule.
First, the Exchange adopted two new
routing strategies that are similar to the
Exchange’s existing standard best
execution routing strategies.
Specifically, the Exchange adopted
ROUT and ROUX, which are similar to
Parallel D and Parallel 2D. Accordingly,
the Exchange proposes to charge the
same fee for ROUT and ROUX routed
executions as it does for Parallel D and
4 See Securities Exchange Act Release No. 73412
(October 23, 2014) (SR–BATS–2014–052), available
at https://www.sec.gov/rules/sro/bats.shtml.
E:\FR\FM\04NON1.SGM
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]]>Agencies
[Federal Register Volume 79, Number 213 (Tuesday, November 4, 2014)]
[Notices]
[Pages 65445-65447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26124]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73463; File No. SR-MIAX-2014-54]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Add Exchange Rule 531, Trade Nullification and
Price Adjustment Procedure
October 29, 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 October 20, 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing a proposal to add Rule 531, Trade
Nullification and Price Adjustment Procedure.
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 add Rule 531, Trade Nullification and
Price Adjustment Procedure.\3\ As proposed, Rule 531 will allow for
transactions to be nullified if both parties to the transaction agree
to the nullification and allow the price of transaction [sic] and
authorized by the Exchange.\4\ The proposal is based upon a recent
filing of another options exchange.\5\
---------------------------------------------------------------------------
\3\ The Exchange notes that this proposal is only intended to be
effective until the joint efforts by the exchanges to create uniform
trade nullification and adjustment rules are approved and in effect.
Once the uniform rule has been approved and is effective, the
Exchange will amend its rules appropriately.
\4\ The Exchange notes that, as proposed, Rule 6.19 [sic] will
only apply to trades that were executed on the Exchange and, as
such, any orders that were either fully or partially routed to, or
executed, on another Exchange will not be subject to the Proposed
Rule 531.
\5\ See Securities Exchange Act Release No. 72970 (September 3,
2014), 79 FR 53498 (September 9, 2014) (SR-CBOE-2014-066).
---------------------------------------------------------------------------
The Exchange proposes to add Rule 531, ``Trade Nullification and
Price Adjustment Procedure,'' which would: (a) Allow for any trades on
the Exchange
[[Page 65446]]
to be nullified if both parties to the trade agree to such
nullification, and (b) allow for prices of executions to be adjusted if
the price adjustment is agreed upon by both parties of the trade and
authorized by the Exchange.\6\
---------------------------------------------------------------------------
\6\ See supra note 4.
---------------------------------------------------------------------------
The Exchange is also proposing to add a provision to allow Members
to mutually agree to adjust a price of an execution. The Exchange
believes this provision is necessary given the benefits of adjusting a
trade price rather than nullifying the trade completely. Because
options trades are used to hedge transactions in other markets,
including securities and futures, many Members, and their customers,
would rather adjust prices of executions rather than nullify the
transactions and, thus, lose a hedge altogether. As such, the Exchange
believes it is in the best interest of investors to allow for price
adjustments as well as nullifications. In addition, the Exchange
believes it is in the nature of a fair and orderly market to allow for
price adjustments rather than only cancellations because an adjustment
will result in the least amount of disruption to the overall market.
The Exchange also notes that current Exchange Rules allow for prices of
trades to be adjusted at the consent of both parties if such
transactions are within the current obvious error provisions.\7\ The
Exchange is now proposing to merely allow this practice for any trade.
---------------------------------------------------------------------------
\7\ The Exchange notes that no changes are being proposed to the
procedures for nullification or adjustment of a trade by mutual
agreement in the Exchange's obvious error rules. See MIAX Rule
521(c)(3). MIAX Rule 521(c)(3) provides that the ``determination as
to whether a trade was automatically executed at an erroneous price
may be made by mutual agreement of the affected parties to a
particular transaction within the time periods specified in
subparagraphs (e)(1) or (2) [of Rule 531 [sic]] below. A trade may
be nullified or adjusted on the terms that all parties to a
particular transaction agree. In the absence of mutual agreement by
the parties, a particular trade may only be nullified or adjusted
when the transaction results from an Obvious Error as provided in
this Rule.'' With the effectiveness of Proposed Rule 531, members
will have two options to choose from in order to have the their
trades nullified or adjusted by mutual agreement: (i) request under
the procedures of MIAX Rule 521(c)(3) including the timeframes in
Rule 521(e)(1), (2); or (ii) request under the procedures of
Proposed Rule 531 which requires the authorization of the Exchange
prior to the nullification or adjustment. The Exchange believes both
provisions are complimentary [sic] in that they provide protections
in different situations under procedures that are correspondingly
appropriate based on the situation in which a nullification or an
adjustment is requested.
---------------------------------------------------------------------------
As proposed, Rule 531 expressly states that trades may be subject
to nullification or price adjustment only if such trades are authorized
by the Exchange. As part of the authorization process, in the case of a
mutual nullification or mutual price adjustment, the Exchange will only
authorize if the Exchange received verification from both parties to
the trade that a mutual agreement has been made. In addition, prior to
an authorization for a mutual price adjustment, the Exchange will
ensure the agreed upon price would have been permissible and in
compliance with all Exchange and Securities and Exchange Commission
Rules, as amended, at the time the original transaction was
executed.\8\ Finally, the proposed rule will state that the format and
information required by the Exchange for this submission will be
released by the Exchange via Regulatory Circular. As such, prior to
Rule 531 becoming operative, the Exchange will provide Members with
specific requirements via an Exchange Regulatory Circular. The circular
will, among other things, state specific timeframes required for
requests and the format in which the requests will be accepted by the
Exchange.
---------------------------------------------------------------------------
\8\ For example, the Exchange would ensure that the mutually
agreed upon price would not have traded through resting interest at
the time of the initial execution.
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To conclude, the Exchange believes that the proposed changes are in
furtherance of the Act because the proposed Rule 531 will allow Members
to agree to nullify transactions or adjust prices of transactions to
maintain a fair and orderly market. As stated above, the Exchange
intends to release a Regulatory Circular to announce the implementation
of the Rule and other specifics surrounding the procedures of the
implementation. In addition, prior to implementation, the Exchange will
ensure it has proper policies and procedures in place to correctly
administer the Rule.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) \9\ of the Act in general, and furthers the
objectives of Section 6(b)(5) \10\ of the Act 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.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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More specifically, the Exchange believes that the proposed changes
are consistent with the Act as they are designed to promote just and
equitable principles and protect investors and the public interest.
Because options trades are used to hedge transactions in other markets,
including securities and futures, many market participants would rather
adjust prices of executions rather than nullify the transactions and,
thus, lose a hedge altogether. As such, the Exchange believes it is in
the best interest of investors to allow for price adjustments as well
as nullifications. In addition, the Exchange believes it is in the
nature of a fair and orderly market to allow for price adjustments
rather than only cancellations because an adjustment will result in the
least amount of disruption to the overall market. Finally, the Exchange
does not believe that the proposed changes are unfairly discriminatory
because they will be applied to all Members equally.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In fact, the Exchange believes
that the proposed rule change will foster competition as it will allow
for less overall disruption to the market and encourage participation
on the Exchange.
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
Because the foregoing 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 after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\
thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization 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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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may
[[Page 65447]]
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 to determine whether the
proposed rule 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-2014-54 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-2014-54. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-MIAX-2014-54, and should be
submitted on or before November 25, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26124 Filed 11-3-14; 8:45 am]
BILLING CODE 8011-01-P
