Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend the Exchange's Amended and Restated By-Laws, 20716-20718 [2016-08042]
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Federal Register / Vol. 81, No. 68 / Friday, April 8, 2016 / Notices
protection of investors and the public
interest.
FINRA has asked the Commission to
waive the 30-day operative delay. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Such waiver will allow
the proposed rule change to become
operative on or about April 4, 2016, the
date that Nasdaq has designated (and
represented to FINRA) as the date by
which it will complete the systems
development work to support the
proposed FTP file. This will ensure that
additional pricing information relating
to OTC transactions in NextShares will
be available to market participants
without delay and will supplement the
FTP file that is already available for
trades in NextShares executed on the
Nasdaq exchange. Therefore, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change to be operative on
or about April 4, 2016.12
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:
mstockstill on DSK4VPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
FINRA–2016–012 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–FINRA–2016–012. This file
12 For purposes only of waiving the operative
delay for this proposal, 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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Jkt 238001
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
offices of FINRA. 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–FINRA–
2016–012, and should be submitted on
or before April 29, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–08041 Filed 4–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77507; File No. SR–MIAX–
2016–08]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing of a Proposed Rule
Change To Amend the Exchange’s
Amended and Restated By-Laws
April 4, 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 March 29, 2016, Miami International
Securities Exchange LLC (‘‘MIAX’’ or
‘‘Exchange’’) filed with the Securities
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
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Sfmt 4703
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the Exchange’s Amended and
Restated By-Laws.
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 amend its
Amended and Restated By-Laws (‘‘ByLaws’’) to eliminate the last sentence of
Article II, Section 2.2(d),3 the last
sentence of Article II, Section 2.2(g)(ii) 4
and the last sentence of Article IV,
Section 4.2(b) 5 as well as the defined
3 Article II, Section 2.2(d) of the By-Laws reads in
relevant part: In the event a Director appointed after
the Effective Date becomes a member of the board
of directors or similar governing body of a Specified
Entity, such individual shall immediately cease to
be a Director of the Company and the resulting
vacancy shall be filled pursuant to the provisions
of Article II, Section 2.2(e).
4 Article II, Section 2.2(g)(ii) of the By-Laws reads
in relevant part: In the event an individual
designated as an Observer becomes a member of the
board of directors or similar governing body of a
Specified Entity after the Effective Date, such
individual shall immediately cease to be an
Observer and the resulting vacancy shall be filled
pursuant to the provisions of Article II, Section
2.2(e).
5 Article IV, Section 4.2(b) of the By-Laws reads
in relevant part: In the event a committee member
appointed after the Effective Date becomes a
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mstockstill on DSK4VPTVN1PROD with NOTICES
terms set forth in Article I (p) and (oo) 6
which are used only in connection with
the foregoing By-Law provisions
proposed to be eliminated. Article I of
the By-Laws will be re-lettered
accordingly. These By-Law provisions
restrict an individual who is a Director,7
Observer 8 or committee member of
MIAX from also serving as a member of
the board of directors or similar
governing body of a Specified Entity
and would cause such individual to
immediately cease being a Director,
Observer or committee member, as
applicable, of the Exchange’s Board of
Directors (‘‘Board’’) upon such
individual becoming a member of the
board of directors or similar governing
body of a Specified Entity. The term
‘‘Specified Entity’’ generally refers to
any U.S. securities option exchange (or
facility thereof) or U.S. alternative
trading system on which securities
options are traded which competes with
the Exchange, or an affiliate of the
foregoing.9
This restriction was added to the ByLaws in connection with the Equity
Rights Program (‘‘ERP’’) 10 established
by the Exchange in 2013.11 This
member of the board of directors or similar
governing body of a Specified Entity, such
individual shall immediately cease to be even a
committee member and the resulting vacancy shall
be filled pursuant to the provisions of Article IV.
6 The term ‘‘Specified Entity’’ means (i) any U.S.
securities option exchange (or facility thereof) or
U.S. alternative trading system on which securities
options are traded (other than the Company or any
of its affiliates) that lists for trading any option
contract that competes with an Exchange Contract,
(ii) any person that owns or controls such U.S.
securities option exchange or U.S. alternative
trading system, and (iii) any affiliate of a person
described in clause (i) or (ii) above. See By-Laws
Article I (oo). The term ‘‘Exchange Contract’’ means
a contract that is then listed for trading by the
Exchange or that is contemplated by the then
current business plan of the Company to be listed
for trading by the Exchange within ninety (90) days
following such date. See By-Laws Article I (p).
7 The term ‘‘Director’’ means the persons elected
or appointed to the [MIAX] Board of Directors from
time to time in accordance with the LLC Agreement
[of MIAX] and these By-Laws in their capacity as
managers of the Company. See By-Laws Article I (j).
8 The term ‘‘Observer’’ means a person invited to
attend meetings of the [MIAX] Board of Directors
in a nonvoting observer capacity as further
described in Article II, Section 2.2(g)(i)–(iii) of the
By-Laws. See By-Laws Article II, Section 2.2(g).
9 See supra note 6.
10 Pursuant to the ERP, units representing the
right to acquire equity in the Exchange’s parent
holding company, Miami International Holdings,
Inc., were issued to participating Members in
exchange for payment of an initial purchase price
or the prepayment of certain transaction fees and
the achievement of certain liquidity addition
volume thresholds on the Exchange over a fixed
period of time. The By-Laws were also then
amended to incorporate rights granted to Members
participating in the ERP to appoint representation
on the MIAX Board.
11 See Securities Exchange Act Release No. 70498
(September 25, 2013), 78 FR 60348 (October 1,
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prohibition was intended to prevent any
potential conflicts of interest that might
arise by virtue of such MIAX Director,
Observer or committee member also
serving as a member of the governing
body of a competitor. MIAX has since
learned through experience that such
prohibition is unnecessarily restrictive
because (1) any such potential conflicts
of interest are more effectively and more
efficiently addressed by other means,
and (2) it results in the unavailability to
MIAX (or to its competitors) of many
excellent Board (or other governing
body) candidates.
MIAX has found that potential
conflicts of interest are best addressed
through such vehicles as the covenant of
good faith and fair dealing and fiduciary
duties applicable to limited liability
company (‘‘LLC’’) managers under the
Delaware Limited Liability Company
Act (‘‘LLC Act’’) 12 and self-regulatory
obligations imposed upon directors of a
self-regulatory organization (‘‘SRO’’)
such as MIAX under the Act,13 which
generally apply to Directors, Observers
and committee members of MIAX, as
well as the confidentiality agreements
that MIAX generally enters into with
Directors, Observers and committee
members, By-Law provisions directly
addressing potential conflicts of
interest 14 and MIAX policies relating to
confidentiality of MIAX information
and addressing the aforementioned
fiduciary and other obligations of
company directors generally and as
directors of a SRO. MIAX has also found
that any potential benefit that could be
derived from prohibiting a MIAX
Director, Observer or committee
member from also serving as member of
a governing body of a competitor is by
far out-weighed by the loss to MIAX of
the experience, knowledge and
expertise of potential Board members
who are disqualified from such service
simply by virtue of their service as a
member of a governing body of a
competitor. The proposed rule change is
designed to enable MIAX to engage the
best suited and most qualified leaders to
serve in the capacity of Director,
Observer or committee member,
regardless of their service on the
governing body of a competitor.
2013) (SR–MIAX–2013–43) and Securities
Exchange Act Release No. 71172 (December 23,
2013), 78 FR 79530 (December 30, 2013) (SR–
MIAX–2013–58).
12 6 Del. C. § 18–101 et seq. Fiduciary duties of
LLC managers include the duty of loyalty (requires
managers to serve the best interest of the company
and avoid conflicts of interest) and the duty of care
(requires managers to act as a prudent person would
in similar circumstances).
13 15 U.S.C. 78 et seq.
14 See By-Laws Article II, Section 2.20.
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20717
Further, MIAX has reviewed the rules
of other U.S. securities option
exchanges and noted that most other
option exchanges do not restrict their
board (or other governing body)
members from sitting on the board of
directors or other governing body of
another options exchange.15
2. Statutory Basis
MIAX believes that this proposed rule
change is consistent with Section 6(b) of
the Act 16 in general, and furthers the
objectives of Sections 6(b)(1) and 6(b)(5)
of the Act 17 in particular, in that it
enables the Exchange to be so organized
as to have the capacity to carry out the
purposes of the Act and to comply, and
to enforce compliance by its Members
and persons associated with its
Members with, the provisions of the
Act, the rules and regulations
thereunder, and the rules of the
Exchange; and that it is designed 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.
MIAX is proposing to eliminate the
restriction in its By-Laws prohibiting a
Director, Observer or committee
member of the Exchange’s Board of
Directors from simultaneously serving
as a member of the governing body of
a competitor. This proposed rule change
is consistent with and will facilitate a
Board structure and composition by
MIAX that will strengthen its ability to
carry out the purposes of the Act and
comply with the provisions of the Act
and the rules and regulations
thereunder, and to enforce compliance
by Exchange Members and persons
associated with Exchange Members with
the provisions of the Act and the rules
and regulations thereunder and the
rules of the Exchange. This proposed
rule change is also consistent with the
15 None of the BATS Exchange, Inc., BOX Options
Exchange LLC, Chicago Board Options Exchange,
Incorporated, Nasdaq OMX PHLX LLC, Nasdaq
Options Market or International Securities
Exchange, LLC have such a restriction. Only one
U.S. securities options exchange restricts those of
its directors designated by its founding firm
members (i.e., investors in its strategic founding
transaction) from sitting on the board of directors
or other governing body of another options
exchange. See Amended and Restated Limited
Liability Company Agreement of NYSE Amex
Options LLC, Article VIII, 8.1(h). See also Securities
Exchange Act Release No. 71408 (January 27, 2014),
79 FR 5481 (January 31, 2014) (SR–NYSEMKT–
2014–08) (Exhibit 5A).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(1) and (b)(5).
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Federal Register / Vol. 81, No. 68 / Friday, April 8, 2016 / Notices
protection of investors and the public
interest. Specifically, the proposed rule
change will allow for the selection by
MIAX of nominees best qualified to
serve as Directors, Observers or
committee members on the Exchange’s
Board of Directors based on the overall
strategic needs of the Board, the
Exchange and its constituents,
regardless of such individuals’ service
as a member of the governing body of
a competitor. (Conversely, this proposed
rule change will also allow for the
selection by MIAX’s competitors of
nominees best qualified to serve on their
governing bodies, regardless of such
individuals’ service on the Exchange’s
Board). In addition, the proposed rule
change will alleviate the disruption that
might occur if a Director, Observer or
committee member of MIAX were to
become a member of the board of
directors or similar governing body of a
Specified Entity and thereby
immediately cease to be a Director,
Observer or committee member of
MIAX, thus resulting in the loss of a
valuable Director, Observer or
committee member and a vacancy on
the MIAX Board which the Exchange
would have to divert efforts to refill, and
potentially disrupting compliance with
MIAX’s Board composition
requirements as set forth in its By-Laws.
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. The
proposed change to the By-Laws relates
to the corporate governance of MIAX,
and as such, is not a competitive filing
and does not impose a burden on
competition.
mstockstill on DSK4VPTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) By order
approve or disapprove such proposed
rule change, or (b) institute proceedings
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17:48 Apr 07, 2016
Jkt 238001
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–
MIAX–2016–08 on the subject line.
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MIAX–2016–08. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
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–
2016–08 and should be submitted on or
before April 29, 2016.
Frm 00113
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[FR Doc. 2016–08042 Filed 4–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77512; File No. SR–
NYSEArca–2016–17]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on a Proposed Rule Change To List
and Trade Shares of the JPMorgan
Diversified Alternative ETF
April 4, 2016.
Paper Comments
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
Sfmt 4703
On February 5, 2016, NYSE Arca, Inc.
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares of the
JPMorgan Diversified Alternative ETF.
The proposed rule change was
published for comment in the Federal
Register on February 25, 2016.3 The
Commission received no comment
letters on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is April 8, 2016.
The Commission is extending this 45day time period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to Section
19(b)(2) of the Act,5 designates May 23,
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 77179
(February 19, 2016), 81 FR 9521.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2).
1 15
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]]>Agencies
[Federal Register Volume 81, Number 68 (Friday, April 8, 2016)]
[Notices]
[Pages 20716-20718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08042]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77507; File No. SR-MIAX-2016-08]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend the
Exchange's Amended and Restated By-Laws
April 4, 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 March 29, 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, 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 Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the Exchange's Amended
and Restated By-Laws.
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 amend its Amended and Restated By-Laws
(``By-Laws'') to eliminate the last sentence of Article II, Section
2.2(d),\3\ the last sentence of Article II, Section 2.2(g)(ii) \4\ and
the last sentence of Article IV, Section 4.2(b) \5\ as well as the
defined
[[Page 20717]]
terms set forth in Article I (p) and (oo) \6\ which are used only in
connection with the foregoing By-Law provisions proposed to be
eliminated. Article I of the By-Laws will be re-lettered accordingly.
These By-Law provisions restrict an individual who is a Director,\7\
Observer \8\ or committee member of MIAX from also serving as a member
of the board of directors or similar governing body of a Specified
Entity and would cause such individual to immediately cease being a
Director, Observer or committee member, as applicable, of the
Exchange's Board of Directors (``Board'') upon such individual becoming
a member of the board of directors or similar governing body of a
Specified Entity. The term ``Specified Entity'' generally refers to any
U.S. securities option exchange (or facility thereof) or U.S.
alternative trading system on which securities options are traded which
competes with the Exchange, or an affiliate of the foregoing.\9\
---------------------------------------------------------------------------
\3\ Article II, Section 2.2(d) of the By-Laws reads in relevant
part: In the event a Director appointed after the Effective Date
becomes a member of the board of directors or similar governing body
of a Specified Entity, such individual shall immediately cease to be
a Director of the Company and the resulting vacancy shall be filled
pursuant to the provisions of Article II, Section 2.2(e).
\4\ Article II, Section 2.2(g)(ii) of the By-Laws reads in
relevant part: In the event an individual designated as an Observer
becomes a member of the board of directors or similar governing body
of a Specified Entity after the Effective Date, such individual
shall immediately cease to be an Observer and the resulting vacancy
shall be filled pursuant to the provisions of Article II, Section
2.2(e).
\5\ Article IV, Section 4.2(b) of the By-Laws reads in relevant
part: In the event a committee member appointed after the Effective
Date becomes a member of the board of directors or similar governing
body of a Specified Entity, such individual shall immediately cease
to be even a committee member and the resulting vacancy shall be
filled pursuant to the provisions of Article IV.
\6\ The term ``Specified Entity'' means (i) any U.S. securities
option exchange (or facility thereof) or U.S. alternative trading
system on which securities options are traded (other than the
Company or any of its affiliates) that lists for trading any option
contract that competes with an Exchange Contract, (ii) any person
that owns or controls such U.S. securities option exchange or U.S.
alternative trading system, and (iii) any affiliate of a person
described in clause (i) or (ii) above. See By-Laws Article I (oo).
The term ``Exchange Contract'' means a contract that is then listed
for trading by the Exchange or that is contemplated by the then
current business plan of the Company to be listed for trading by the
Exchange within ninety (90) days following such date. See By-Laws
Article I (p).
\7\ The term ``Director'' means the persons elected or appointed
to the [MIAX] Board of Directors from time to time in accordance
with the LLC Agreement [of MIAX] and these By-Laws in their capacity
as managers of the Company. See By-Laws Article I (j).
\8\ The term ``Observer'' means a person invited to attend
meetings of the [MIAX] Board of Directors in a nonvoting observer
capacity as further described in Article II, Section 2.2(g)(i)-(iii)
of the By-Laws. See By-Laws Article II, Section 2.2(g).
\9\ See supra note 6.
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This restriction was added to the By-Laws in connection with the
Equity Rights Program (``ERP'') \10\ established by the Exchange in
2013.\11\ This prohibition was intended to prevent any potential
conflicts of interest that might arise by virtue of such MIAX Director,
Observer or committee member also serving as a member of the governing
body of a competitor. MIAX has since learned through experience that
such prohibition is unnecessarily restrictive because (1) any such
potential conflicts of interest are more effectively and more
efficiently addressed by other means, and (2) it results in the
unavailability to MIAX (or to its competitors) of many excellent Board
(or other governing body) candidates.
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\10\ Pursuant to the ERP, units representing the right to
acquire equity in the Exchange's parent holding company, Miami
International Holdings, Inc., were issued to participating Members
in exchange for payment of an initial purchase price or the
prepayment of certain transaction fees and the achievement of
certain liquidity addition volume thresholds on the Exchange over a
fixed period of time. The By-Laws were also then amended to
incorporate rights granted to Members participating in the ERP to
appoint representation on the MIAX Board.
\11\ See Securities Exchange Act Release No. 70498 (September
25, 2013), 78 FR 60348 (October 1, 2013) (SR-MIAX-2013-43) and
Securities Exchange Act Release No. 71172 (December 23, 2013), 78 FR
79530 (December 30, 2013) (SR-MIAX-2013-58).
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MIAX has found that potential conflicts of interest are best
addressed through such vehicles as the covenant of good faith and fair
dealing and fiduciary duties applicable to limited liability company
(``LLC'') managers under the Delaware Limited Liability Company Act
(``LLC Act'') \12\ and self-regulatory obligations imposed upon
directors of a self-regulatory organization (``SRO'') such as MIAX
under the Act,\13\ which generally apply to Directors, Observers and
committee members of MIAX, as well as the confidentiality agreements
that MIAX generally enters into with Directors, Observers and committee
members, By-Law provisions directly addressing potential conflicts of
interest \14\ and MIAX policies relating to confidentiality of MIAX
information and addressing the aforementioned fiduciary and other
obligations of company directors generally and as directors of a SRO.
MIAX has also found that any potential benefit that could be derived
from prohibiting a MIAX Director, Observer or committee member from
also serving as member of a governing body of a competitor is by far
out-weighed by the loss to MIAX of the experience, knowledge and
expertise of potential Board members who are disqualified from such
service simply by virtue of their service as a member of a governing
body of a competitor. The proposed rule change is designed to enable
MIAX to engage the best suited and most qualified leaders to serve in
the capacity of Director, Observer or committee member, regardless of
their service on the governing body of a competitor.
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\12\ 6 Del. C. Sec. 18-101 et seq. Fiduciary duties of LLC
managers include the duty of loyalty (requires managers to serve the
best interest of the company and avoid conflicts of interest) and
the duty of care (requires managers to act as a prudent person would
in similar circumstances).
\13\ 15 U.S.C. 78 et seq.
\14\ See By-Laws Article II, Section 2.20.
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Further, MIAX has reviewed the rules of other U.S. securities
option exchanges and noted that most other option exchanges do not
restrict their board (or other governing body) members from sitting on
the board of directors or other governing body of another options
exchange.\15\
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\15\ None of the BATS Exchange, Inc., BOX Options Exchange LLC,
Chicago Board Options Exchange, Incorporated, Nasdaq OMX PHLX LLC,
Nasdaq Options Market or International Securities Exchange, LLC have
such a restriction. Only one U.S. securities options exchange
restricts those of its directors designated by its founding firm
members (i.e., investors in its strategic founding transaction) from
sitting on the board of directors or other governing body of another
options exchange. See Amended and Restated Limited Liability Company
Agreement of NYSE Amex Options LLC, Article VIII, 8.1(h). See also
Securities Exchange Act Release No. 71408 (January 27, 2014), 79 FR
5481 (January 31, 2014) (SR-NYSEMKT-2014-08) (Exhibit 5A).
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2. Statutory Basis
MIAX believes that this proposed rule change is consistent with
Section 6(b) of the Act \16\ in general, and furthers the objectives of
Sections 6(b)(1) and 6(b)(5) of the Act \17\ in particular, in that it
enables the Exchange to be so organized as to have the capacity to
carry out the purposes of the Act and to comply, and to enforce
compliance by its Members and persons associated with its Members with,
the provisions of the Act, the rules and regulations thereunder, and
the rules of the Exchange; and that it is designed 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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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(1) and (b)(5).
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MIAX is proposing to eliminate the restriction in its By-Laws
prohibiting a Director, Observer or committee member of the Exchange's
Board of Directors from simultaneously serving as a member of the
governing body of a competitor. This proposed rule change is consistent
with and will facilitate a Board structure and composition by MIAX that
will strengthen its ability to carry out the purposes of the Act and
comply with the provisions of the Act and the rules and regulations
thereunder, and to enforce compliance by Exchange Members and persons
associated with Exchange Members with the provisions of the Act and the
rules and regulations thereunder and the rules of the Exchange. This
proposed rule change is also consistent with the
[[Page 20718]]
protection of investors and the public interest. Specifically, the
proposed rule change will allow for the selection by MIAX of nominees
best qualified to serve as Directors, Observers or committee members on
the Exchange's Board of Directors based on the overall strategic needs
of the Board, the Exchange and its constituents, regardless of such
individuals' service as a member of the governing body of a competitor.
(Conversely, this proposed rule change will also allow for the
selection by MIAX's competitors of nominees best qualified to serve on
their governing bodies, regardless of such individuals' service on the
Exchange's Board). In addition, the proposed rule change will alleviate
the disruption that might occur if a Director, Observer or committee
member of MIAX were to become a member of the board of directors or
similar governing body of a Specified Entity and thereby immediately
cease to be a Director, Observer or committee member of MIAX, thus
resulting in the loss of a valuable Director, Observer or committee
member and a vacancy on the MIAX Board which the Exchange would have to
divert efforts to refill, and potentially disrupting compliance with
MIAX's Board composition requirements as set forth in its By-Laws.
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. The proposed change to the
By-Laws relates to the corporate governance of MIAX, and as such, is
not a competitive filing and does not impose a burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
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-2016-08 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2016-08. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule 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-2016-08 and should be
submitted on or before April 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. 2016-08042 Filed 4-7-16; 8:45 am]
BILLING CODE 8011-01-P
