Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rules 503 and 515, 6562-6565 [2016-02334]
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
a portion of which is used to help pay
the costs of regulation. The Exchange’s
members are subject to ORF on other
options markets.11
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.12
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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:
asabaliauskas on DSK5VPTVN1PROD 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–Phlx–2016–04 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–Phlx–2016–04. 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
11 The following options exchanges assess an
ORF, Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’), C2 Options Exchange, Inc.
(‘‘C2’’), the International Securities Exchange, LLC
(‘‘ISE’’), NYSE Arca, Inc. (‘‘NYSEArca’’) and [sic]
NYSE AMEX LLC (‘‘NYSEAmex’’), BATS Exchange,
Inc. (‘‘BATS’’) and The NASDAQ Options Market
LLC (‘‘NOM’’).
12 15 U.S.C. 78s(b)(3)(A)(ii).
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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–Phlx–
2016–04 and should be submitted on or
before February 29, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–02332 Filed 2–5–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on Wednesday, February 10, 2016 at
10:00 a.m., in the Auditorium, Room
L–002.
The subject matter of the Open
Meeting will be:
• The Commission will consider
whether to adopt rules under the
Securities Exchange Act of 1934
providing for the application of the Title
VII security-based swap dealer de
minimis counting requirements to
security-based swap transactions
connected with a non-U.S. person’s
dealing activity that are arranged,
negotiated, or executed by personnel
located in a U.S. branch or office or by
personnel of an agent of such non-U.S.
person located in a U.S. branch or
office.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted, or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: February 3, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016–02490 Filed 2–4–16; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77034; File No. SR–MIAX–
2016–03]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Exchange Rules
503 and 515
February 2, 2016.
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 January 20, 2016, Miami
International Securities Exchange LLC
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I and II below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rules 503, Openings
on the Exchange, and 515, Execution of
Orders and Quotes.
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.
1 15
13 17
PO 00000
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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
asabaliauskas on DSK5VPTVN1PROD with NOTICES
1. Purpose
The purpose of the proposal is to
adopt new rule text and provide
additional clarity to MIAX participants
regarding the manner in which nonroutable, or Do Not Route (‘‘DNR’’),3
orders that are not executed during the
opening on the Exchange are handled.
First, the Exchange proposes to
amend Rule 503(f), Opening Process, to
clarify the process that occurs when (i)
the MIAX System 4 has completed the
opening imbalance process and there
are unexecuted contracts remaining
following an opening transaction, or (ii)
if there is no opening transaction and
the Exchange opens by disseminating
the Exchange’s best bid and offer among
quotes and orders that exist in the
System at that time as described in
current Rule 503(f)(1).5 In the latter
situation, non-routable orders then in
the System that cross the Away Best Bid
or Offer (‘‘ABBO’’) will be cancelled and
are not included in the Managed Interest
Process, as described in proposed Rule
515(c)(1)(ii)(B).
Additionally, the Exchange proposes
to amend current Exchange Rule
515(c)(1)(ii) to explicitly state that,
when the MIAX System opens without
3 A Do Not Route or ‘‘DNR’’ order is an order that
will never be routed outside of the Exchange
regardless of the prices displayed by away markets.
A DNR order may execute on the Exchange at a
price equal to or better than, but not inferior to, the
best away market price but, if that best away market
remains, the DNR order will be handled in
accordance with the managed interest process
described in Rule 515(c)(1)(ii). See Exchange Rule
516(g).
4 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
5 If there are no quotes or orders that lock or cross
each other, the System will open by disseminating
the Exchange’s best bid and offer among quotes and
orders that exist in the System at that time. See
Exchange Rule 503(f)(1).
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an opening transaction, and instead
opens by disseminating the Exchange’s
best bid and offer among quotes and
orders that exist in the System at that
time as described in Rule 503(f)(1), nonroutable orders then in the System that
cross the ABBO will be cancelled and
are not included in the Managed Interest
Process described below.
DNR Orders at the Opening
Exchange Rule 503(f) describes the
Opening Process on the Exchange, in
which the System goes through a
number of processes seeking an opening
price at which the greatest number of
contracts will trade. The Opening
Process also includes the routing of
orders to away markets in situations
where the Exchange cannot execute all
contracts at its opening price.6 If the
System opens with an opening
transaction after conducting the
Imbalance Process as set forth in
Exchange Rule 503(f)(2)(vii), any
unexecuted contracts from the
imbalance not traded or routed will be
cancelled back to the entering Member
if the price for those contracts crosses
the opening price, unless the Member
that submitted the original order has
instructed the Exchange in writing to reenter the remaining size, in which case
the remaining size will be automatically
submitted as a new order.7
If, however, there is no opening
transaction and instead the Exchange
opens by disseminating the Exchange’s
best bid and offer among quotes and
orders that exist in the System at that
time,8 non-routable orders then in the
System that cross the ABBO will be
cancelled and therefore, because they
are cancelled, are not included in the
Managed Interest Process.
Currently, the System executes orders
at the opening that have contingencies,
including non-routable orders (DNR
Orders) to the extent possible. Nonroutable orders are handled after the
opening in accordance with Rule 515.9
Specifically, such orders are submitted
into the Managed Interest Process, as
described below, except when the
Exchange opens by disseminating
quotations rather than executing
contracts. In this limited circumstance,
non-routable orders (DNR Orders) that
cross the ABBO are not submitted to the
6 See
Exchange Rule 503(f)(2)(vii)(B).
7 Id.
8 See
supra note 5.
System will execute orders at the opening
that have contingencies and nonroutable orders,
such as a ‘‘Do Not Route’’ or ‘‘DNR’’ Orders to the
extent possible. DNR orders together with other
nonroutable orders will be handled after the
opening in accordance with Rule 515. See Exchange
Rule 503(f)(2)(vii)(B)(6).
9 The
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Managed Interest Process, and instead
are cancelled.
Managed Interest Process
The proposed amendment to
Exchange Rule 515(c)(1)(ii) is intended
to codify existing functionality
concerning the Exchange’s Managed
Interest Process. The Managed Interest
Process is a process for non-routable
orders during which, if the limit price
locks or crosses the current opposite
side National Best Bid or Offer
(‘‘NBBO’’), the System will display the
order one Minimum Price Variation
(‘‘MPV’’) away from the current
opposite side NBBO, and book the order
at an undisplayed price that locks the
current opposite side NBBO. Should the
NBBO price change to an inferior price
level, the order’s undisplayed price will
re-price to lock the new NBBO and the
managed order’s displayed price will
continue to re-price one MPV away from
the new NBBO until (i) the order has
traded to and including its limit price,
(ii) the order has traded to and
including its price protection limit at
which any remaining contracts are
cancelled, (iii) the order is fully
executed or (iv) the order is cancelled.10
The Proposal
The proposed rule change to
Exchange Rule 503 concerning the
Opening Process is related to the
Managed Interest Process in Exchange
Rule 515 because non-routable orders
that are not executed at the opening
under certain circumstances are not
included in the Managed Interest
Process and are instead cancelled by the
System. Specifically, the proposed rule
change to Exchange Rule 503(f)(1) is
intended to clarify that, when the
Exchange opens by disseminating
quotations rather than executing
contracts after the Opening Process,
non-routable orders then in the System
that cross the ABBO will be cancelled
and are not included in the Managed
Interest Process, as described in Rule
515(c)(1)(ii)(B).
Proposed Rule 503(f)(2)(vii)(B)5 [sic]
would add language to existing rule text
to state clearly in the Exchange’s rules
that the rule applies when there is an
opening transaction. Specifically, if
there is an opening transaction, any
unexecuted contracts from the
imbalance not traded or routed will be
cancelled back to the entering Member
if the price for those contracts crosses
the opening price, unless the Member
that submitted the original order has
instructed the Exchange in writing to reenter the remaining size, in which case
10 See
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Exchange Rule 515(c)(1)(ii).
08FEN1
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
the remaining size will be automatically
submitted as a new order.
Consistent with the proposed change
to Exchange Rule 503(f)(1), proposed
Rule 515(c)(1)(ii)(B) would state
specifically that, when the System
opens without an opening transaction,
and instead opens by disseminating the
Exchange’s best bid and offer among
quotes and orders that exist in the
System at that time as described in Rule
503(f)(1), non-routable orders then in
the System that cross the ABBO will be
cancelled and are not included in the
Managed Interest Process. This
proposed amendment addresses any
perceived discrepancy between the rule
text description of how this process
works and how it is actually working in
production, and provides consistency in
the Exchange’s rules concerning the
Opening Process and how that relates to
the Managed Interest Process.
The Exchange believes that the
codification of the cancellation of nonroutable orders that cross the ABBO
when the System opens without an
opening transaction and instead opens
by disseminating the Exchange’s best
bid and offer among quotes and orders
that exist in the System at that time,
reflects the Exchange’s intention to
further protect investors that elect to
submit non-routable orders. This
existing functionality is intended to
enable participants that submit nonroutable orders that have been handled
during the opening but not executed to
make informed decisions about such
orders based upon transparent market
conditions (i.e., the ability to ascertain
the current prices on all markets)
following the opening. Such
participants are able then to determine
whether to re-submit their orders (with
or without a DNR designation) and
whether to establish a different limit
price based on then-current market
conditions. The Exchange believes that
the precise description of this existing
functionality should be included in the
Exchange’s rules in order to inform
participants that submit non-routable
orders that there are additional
opportunities to re-determine and
possibly modify the routing status and
limit price of their orders. The proposed
rule change should assist participants in
making decisions concerning such
opportunities by clarifying the
relationship between the Exchange’s
Opening Process and when non-routable
orders not executed when the Exchange
opens by disseminating its best bid and
offer are not included in the Managed
Interest Process.
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2. Statutory Basis
MIAX believes that its proposed rule
change is consistent with Section 6(b) of
the Act 11 in general, and furthers the
objectives of Section 6(b)(5) of the Act 12
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.
The existing functionality concerning
the Opening Process and the description
of the circumstances where nonroutable orders that are handled during
the Opening Process are not included in
the Managed Interest Process because
they are cancelled. This functionality
and proposed codification of it as
described herein removes impediments
to and perfects the mechanisms of a free
and open market and a national market
system and, in general, protects
investors and the public interest, by
giving participants that submit nonroutable orders that are not executed at
the opening an opportunity to make
decisions concerning their orders based
upon then-current market conditions,
which were unknown at the time they
submitted their orders. Routable orders
that cross away markets are sent to such
away markets for execution when the
Exchange cannot execute at the opening;
non-routable orders that cross away
markets are not. Absent an execution,
the Exchange believes that participants
that submitted non-routable orders that
are handled but not executed during the
opening process should have the
opportunity to make further decisions
regarding such orders based upon
current market conditions, and thus the
System cancels such orders and reports
this to the affected participants. This
benefits not only MIAX participants but
benefits the marketplace as a whole.
The inclusion of the functionality of
the System in the rules promotes
transparency and clarity in the
Exchange’s rules. The transparency and
accuracy resulting from the codification
of this functionality is consistent with
the Act because it removes impediments
to and perfects the mechanism of a free
and open market and a national market
system, and, in general, protects
investors and the public interest, by
accurately describing the steps taken by
11 15
12 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00064
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the System in the limited scenario when
the Exchange opens by disseminating
quotations rather than executing
contracts after the Opening Process, and
non-routable orders cross the NBBO.
MIAX participants should have a
better understanding of the Exchange’s
Managed Interest Process in this limited
circumstance. The codification and
clarification of the System’s
functionality is designed to promote just
and equitable principles of trade by
providing a clear and objective
description to all participants of how
opening non-routable orders will be
handled, and should assist investors in
making decisions concerning their nonroutable orders.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange believes the proposed
changes will not impose any burden on
intra-market competition because it
applies to all MIAX participants
equally. In addition, the Exchange does
not believe the proposal will impose
any burden on inter-market competition
as the proposal is intended to protect
investors by providing further
transparency regarding the Exchange’s
Managed Interest Process in the limited
scenario described above.
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 Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) 14 thereunder.
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
14 17
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 15 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 16
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay. The Exchange states
that waiver of the operative delay would
enable market participants to benefit
from the clarifying language regarding
how the Managed Interest Process
operates without undue delay. For this
reason, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposed rule change
operative upon filing.17
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
to determine whether the proposed rule
should be approved or disapproved.
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–
2016–03 and should be submitted on or
before February 29, 2016.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
asabaliauskas on DSK5VPTVN1PROD 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–2016–03 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–2016–03. This file
15 17
CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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[FR Doc. 2016–02334 Filed 2–5–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–0213.
Extension: Form F–7.
SEC File No. 270–331, OMB Control No.
3235–0383.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form F–7 (17 CFR 239.37) is a
registration statement under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.) used to register securities that are
offered for cash upon the exercise of
rights granted to a registrant’s existing
security holders to purchase or
subscribe such securities. The
information collected is intended to
ensure that the information required to
be filed by the Commission permits
verification of compliance with
securities law requirements and assures
the public availability of such
information. Form F–7 takes
approximately 4 hours per response to
prepare and is filed by approximately 5
respondents. We estimate that 25% of 4
hours per response (one hour) is
prepared by the company for a total
annual reporting burden of 5 hours (one
hour per response × 5 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: February 2, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–02338 Filed 2–5–16; 8:45 am]
BILLING CODE 8011–01–P
18 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Notices]
[Pages 6562-6565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02334]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77034; File No. SR-MIAX-2016-03]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Exchange Rules 503 and 515
February 2, 2016.
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 January 20, 2016, Miami International
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend Exchange Rules 503,
Openings on the Exchange, and 515, Execution of Orders and Quotes.
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.
[[Page 6563]]
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 purpose of the proposal is to adopt new rule text and provide
additional clarity to MIAX participants regarding the manner in which
non-routable, or Do Not Route (``DNR''),\3\ orders that are not
executed during the opening on the Exchange are handled.
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\3\ A Do Not Route or ``DNR'' order is an order that will never
be routed outside of the Exchange regardless of the prices displayed
by away markets. A DNR order may execute on the Exchange at a price
equal to or better than, but not inferior to, the best away market
price but, if that best away market remains, the DNR order will be
handled in accordance with the managed interest process described in
Rule 515(c)(1)(ii). See Exchange Rule 516(g).
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First, the Exchange proposes to amend Rule 503(f), Opening Process,
to clarify the process that occurs when (i) the MIAX System \4\ has
completed the opening imbalance process and there are unexecuted
contracts remaining following an opening transaction, or (ii) if there
is no opening transaction and the Exchange opens by disseminating the
Exchange's best bid and offer among quotes and orders that exist in the
System at that time as described in current Rule 503(f)(1).\5\ In the
latter situation, non-routable orders then in the System that cross the
Away Best Bid or Offer (``ABBO'') will be cancelled and are not
included in the Managed Interest Process, as described in proposed Rule
515(c)(1)(ii)(B).
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\4\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\5\ If there are no quotes or orders that lock or cross each
other, the System will open by disseminating the Exchange's best bid
and offer among quotes and orders that exist in the System at that
time. See Exchange Rule 503(f)(1).
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Additionally, the Exchange proposes to amend current Exchange Rule
515(c)(1)(ii) to explicitly state that, when the MIAX System opens
without an opening transaction, and instead opens by disseminating the
Exchange's best bid and offer among quotes and orders that exist in the
System at that time as described in Rule 503(f)(1), non-routable orders
then in the System that cross the ABBO will be cancelled and are not
included in the Managed Interest Process described below.
DNR Orders at the Opening
Exchange Rule 503(f) describes the Opening Process on the Exchange,
in which the System goes through a number of processes seeking an
opening price at which the greatest number of contracts will trade. The
Opening Process also includes the routing of orders to away markets in
situations where the Exchange cannot execute all contracts at its
opening price.\6\ If the System opens with an opening transaction after
conducting the Imbalance Process as set forth in Exchange Rule
503(f)(2)(vii), any unexecuted contracts from the imbalance not traded
or routed will be cancelled back to the entering Member if the price
for those contracts crosses the opening price, unless the Member that
submitted the original order has instructed the Exchange in writing to
re-enter the remaining size, in which case the remaining size will be
automatically submitted as a new order.\7\
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\6\ See Exchange Rule 503(f)(2)(vii)(B).
\7\ Id.
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If, however, there is no opening transaction and instead the
Exchange opens by disseminating the Exchange's best bid and offer among
quotes and orders that exist in the System at that time,\8\ non-
routable orders then in the System that cross the ABBO will be
cancelled and therefore, because they are cancelled, are not included
in the Managed Interest Process.
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\8\ See supra note 5.
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Currently, the System executes orders at the opening that have
contingencies, including non-routable orders (DNR Orders) to the extent
possible. Non-routable orders are handled after the opening in
accordance with Rule 515.\9\ Specifically, such orders are submitted
into the Managed Interest Process, as described below, except when the
Exchange opens by disseminating quotations rather than executing
contracts. In this limited circumstance, non-routable orders (DNR
Orders) that cross the ABBO are not submitted to the Managed Interest
Process, and instead are cancelled.
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\9\ The System will execute orders at the opening that have
contingencies and nonroutable orders, such as a ``Do Not Route'' or
``DNR'' Orders to the extent possible. DNR orders together with
other nonroutable orders will be handled after the opening in
accordance with Rule 515. See Exchange Rule 503(f)(2)(vii)(B)(6).
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Managed Interest Process
The proposed amendment to Exchange Rule 515(c)(1)(ii) is intended
to codify existing functionality concerning the Exchange's Managed
Interest Process. The Managed Interest Process is a process for non-
routable orders during which, if the limit price locks or crosses the
current opposite side National Best Bid or Offer (``NBBO''), the System
will display the order one Minimum Price Variation (``MPV'') away from
the current opposite side NBBO, and book the order at an undisplayed
price that locks the current opposite side NBBO. Should the NBBO price
change to an inferior price level, the order's undisplayed price will
re-price to lock the new NBBO and the managed order's displayed price
will continue to re-price one MPV away from the new NBBO until (i) the
order has traded to and including its limit price, (ii) the order has
traded to and including its price protection limit at which any
remaining contracts are cancelled, (iii) the order is fully executed or
(iv) the order is cancelled.\10\
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\10\ See Exchange Rule 515(c)(1)(ii).
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The Proposal
The proposed rule change to Exchange Rule 503 concerning the
Opening Process is related to the Managed Interest Process in Exchange
Rule 515 because non-routable orders that are not executed at the
opening under certain circumstances are not included in the Managed
Interest Process and are instead cancelled by the System. Specifically,
the proposed rule change to Exchange Rule 503(f)(1) is intended to
clarify that, when the Exchange opens by disseminating quotations
rather than executing contracts after the Opening Process, non-routable
orders then in the System that cross the ABBO will be cancelled and are
not included in the Managed Interest Process, as described in Rule
515(c)(1)(ii)(B).
Proposed Rule 503(f)(2)(vii)(B)5 [sic] would add language to
existing rule text to state clearly in the Exchange's rules that the
rule applies when there is an opening transaction. Specifically, if
there is an opening transaction, any unexecuted contracts from the
imbalance not traded or routed will be cancelled back to the entering
Member if the price for those contracts crosses the opening price,
unless the Member that submitted the original order has instructed the
Exchange in writing to re-enter the remaining size, in which case
[[Page 6564]]
the remaining size will be automatically submitted as a new order.
Consistent with the proposed change to Exchange Rule 503(f)(1),
proposed Rule 515(c)(1)(ii)(B) would state specifically that, when the
System opens without an opening transaction, and instead opens by
disseminating the Exchange's best bid and offer among quotes and orders
that exist in the System at that time as described in Rule 503(f)(1),
non-routable orders then in the System that cross the ABBO will be
cancelled and are not included in the Managed Interest Process. This
proposed amendment addresses any perceived discrepancy between the rule
text description of how this process works and how it is actually
working in production, and provides consistency in the Exchange's rules
concerning the Opening Process and how that relates to the Managed
Interest Process.
The Exchange believes that the codification of the cancellation of
non-routable orders that cross the ABBO when the System opens without
an opening transaction and instead opens by disseminating the
Exchange's best bid and offer among quotes and orders that exist in the
System at that time, reflects the Exchange's intention to further
protect investors that elect to submit non-routable orders. This
existing functionality is intended to enable participants that submit
non-routable orders that have been handled during the opening but not
executed to make informed decisions about such orders based upon
transparent market conditions (i.e., the ability to ascertain the
current prices on all markets) following the opening. Such participants
are able then to determine whether to re-submit their orders (with or
without a DNR designation) and whether to establish a different limit
price based on then-current market conditions. The Exchange believes
that the precise description of this existing functionality should be
included in the Exchange's rules in order to inform participants that
submit non-routable orders that there are additional opportunities to
re-determine and possibly modify the routing status and limit price of
their orders. The proposed rule change should assist participants in
making decisions concerning such opportunities by clarifying the
relationship between the Exchange's Opening Process and when non-
routable orders not executed when the Exchange opens by disseminating
its best bid and offer are not included in the Managed Interest
Process.
2. Statutory Basis
MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \11\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \12\ 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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The existing functionality concerning the Opening Process and the
description of the circumstances where non-routable orders that are
handled during the Opening Process are not included in the Managed
Interest Process because they are cancelled. This functionality and
proposed codification of it as described herein removes impediments to
and perfects the mechanisms of a free and open market and a national
market system and, in general, protects investors and the public
interest, by giving participants that submit non-routable orders that
are not executed at the opening an opportunity to make decisions
concerning their orders based upon then-current market conditions,
which were unknown at the time they submitted their orders. Routable
orders that cross away markets are sent to such away markets for
execution when the Exchange cannot execute at the opening; non-routable
orders that cross away markets are not. Absent an execution, the
Exchange believes that participants that submitted non-routable orders
that are handled but not executed during the opening process should
have the opportunity to make further decisions regarding such orders
based upon current market conditions, and thus the System cancels such
orders and reports this to the affected participants. This benefits not
only MIAX participants but benefits the marketplace as a whole.
The inclusion of the functionality of the System in the rules
promotes transparency and clarity in the Exchange's rules. The
transparency and accuracy resulting from the codification of this
functionality is consistent with the Act because it removes impediments
to and perfects the mechanism of a free and open market and a national
market system, and, in general, protects investors and the public
interest, by accurately describing the steps taken by the System in the
limited scenario when the Exchange opens by disseminating quotations
rather than executing contracts after the Opening Process, and non-
routable orders cross the NBBO.
MIAX participants should have a better understanding of the
Exchange's Managed Interest Process in this limited circumstance. The
codification and clarification of the System's functionality is
designed to promote just and equitable principles of trade by providing
a clear and objective description to all participants of how opening
non-routable orders will be handled, and should assist investors in
making decisions concerning their non-routable orders.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
believes the proposed changes will not impose any burden on intra-
market competition because it applies to all MIAX participants equally.
In addition, the Exchange does not believe the proposal will impose any
burden on inter-market competition as the proposal is intended to
protect investors by providing further transparency regarding the
Exchange's Managed Interest Process in the limited scenario described
above.
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 Section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6)
\14\ thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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[[Page 6565]]
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay. The
Exchange states that waiver of the operative delay would enable market
participants to benefit from the clarifying language regarding how the
Managed Interest Process operates without undue delay. For this reason,
the Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\17\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of 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 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-2016-03 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-2016-03. 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-2016-03 and should be
submitted on or before February 29, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02334 Filed 2-5-16; 8:45 am]
BILLING CODE 8011-01-P
