Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Short Term Option Series Program, 62784-62787 [2016-21801]

Download as PDF 62784 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices from a comprehensive or even a representative survey or study of the costs of Commission rules. Compliance with the collection of information requirements of the rule is mandatory and is necessary to comply with the requirements of the rule in general. 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. The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: September 6, 2016. Robert W. Errett, Deputy Secretary. [FR Doc. 2016–21795 Filed 9–9–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736. sradovich on DSK3GMQ082PROD with NOTICES Extension: Rule 17a–7, SEC File No. 270–147, OMB Control No. 3235–0131 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in Rule 17a–7 (17 CFR 240.17a–7) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). Rule 17a–7 requires a non-resident broker-dealer (generally, a broker-dealer with its principal place of business in a place not subject to the jurisdiction of VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 the United States) registered or applying for registration pursuant to Section 15 of the Exchange Act to maintain—in the United States—complete and current copies of books and records required to be maintained under any rule adopted under the Exchange Act and furnish to the Commission a written notice specifying the address where the copies are located. Alternatively, Rule 17a–7 provides that non-resident brokerdealers may file with the Commission a written undertaking to furnish the requisite books and records to the Commission upon demand within 14 days of the demand. There are approximately 45 nonresident brokers and dealers. Based on the Commission’s experience, the Commission estimates that the average amount of time necessary to comply with Rule 17a–7 is one hour per year. Accordingly, the total industry-wide reporting burden is approximately 45 hours per year. Assuming an average cost per hour of approximately $291 for a compliance manager, the total internal cost of compliance for the respondents is approximately $13,095 per year.1 An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site: www.reginfo.gov. Comments should be directed to (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or by sending an email to: PRA_ Mailbox@sec.gov. Comments must be submitted within 30 days of this notice. Dated: September 6, 2016. Robert W. Errett, Deputy Secretary. [FR Doc. 2016–21798 Filed 9–9–16; 8:45 am] BILLING CODE P 1 $291 per hour for a compliance manager is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff for an 1800-hour work-year, multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead, and adjusted for inflation. PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78772; File No. SR–MIAX– 2016–31] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Short Term Option Series Program September 6, 2016. Pursuant to 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 September 2, 2016, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the 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 Rule 404, Series of Option Contracts Open for Trading, Interpretations and Policies .02, to expand the Short Term Option Series Program to allow Wednesday expirations for SPDR S&P 500 ETF Trust (‘‘SPY’’) options. Additionally, the Exchange proposes to amend the definition of Short Term Option Series in Rule 100. 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. 1 15 2 17 E:\FR\FM\12SEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 12SEN1 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to expand the Short Term Option Series Program outlined in Rule 404, Interpretations and Policies .02, to allow the listing and trading of SPY options with Wednesday expirations. This is a competitive filing based on a filing submitted by the BOX Options Exchange, LLC (‘‘BOX’’), which the Commission recently approved.3 Currently, under the Short Term Option Series Program the Exchange may open for trading on any Thursday or Friday that is a business day (‘‘Short Term Option Opening Date’’) series of options on that class that expire at the close of business on each of the next five Fridays that are business days, and are not Fridays in which monthly option series or Quarterly Options Series expire (‘‘Short Term Option Expiration Dates’’). The Exchange is now proposing to amend Rule 404, Interpretations and Policies .02, to permit the listing of SPY options expiring on Wednesdays. Specifically, the Exchange is proposing that it may open for trading on any Tuesday or Wednesday that is a business day, series of SPY options that expire on any Wednesday of the month that is a business day, and is not a Wednesday on which Quarterly Options Series expire (‘‘Wednesday SPY Expirations’’). The proposed Wednesday SPY Expiration series would be similar to the current Short Term Option Series, with certain exceptions, as explained in greater detail below. The Exchange notes that Wednesday expirations are not a novel proposal. Specifically, the U.S. Securities and Exchange Commission (‘‘Commission’’) approved a CBOE proposal to list Wednesday expirations for broad-based indexes.4 Additionally, BOX recently received approval to list Wednesday SPY Expirations.5 In regards to Wednesday SPY Expirations, the Exchange is proposing to remove the current restriction preventing MIAX from listing Short Term Option Series that expire in the same week in which monthly option series in the same class expire. Specifically, the Exchange would be allowed to list Wednesday SPY 3 See Securities Exchange Act Release No. 78668 (August 24, 2016), 81 FR 59696 (August 30, 2016) (order approving SR–BOX–2016–28). 4 See Securities Exchange Act Release No. 76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (Order approving SR–CBOE–2015–106). 5 See supra note 3. VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 Expirations in the same week in which monthly option series in SPY expire. The current restriction to prohibit the expiration of monthly and Short Term Option Series from expiring on the same trading day is reasonable to avoid investor confusion. This confusion would not apply with Wednesday SPY Expirations and standard monthly options because they would not expire on the same trading day, as standard monthly options do not expire on Wednesdays. Additionally, it would lead to investor confusion if Wednesday SPY Expirations were not listed for one week every month because there was a monthly SPY expiration on the Friday of that week. The existing restriction that a Short Term Option Series may not expire on the same day that a Quarterly Option Series expires would apply to Wednesday SPY Expirations. Under the proposal, the Exchange may open for trading on any Tuesday or Wednesday that is a business day, series of SPY options that expire at the close of business on each of the next five Wednesdays that are business days and are not Wednesdays on which Quarterly Options Series expire. The Exchange may have no more than a total of five Wednesday SPY Expirations listed. This is similar to the listing procedures for Short Term Option Series that expire on Fridays. If the Exchange is not open for business on the respective Tuesday or Wednesday, the Wednesday SPY Expiration Opening Date will be the first business day immediately prior to that respective Tuesday or Wednesday. Similarly, if the Exchange is not open for business on a Wednesday, the expiration date for a Wednesday SPY Expiration will be the first business day immediately prior to that Wednesday. This is also similar to the procedures for Short Term Option Series that expire on Fridays. The Exchange is also proposing to clarify that the five expirations limit in the current Short Term Option Series Program Rule would not include any Wednesday SPY Expirations and vice versa.6 This means, under the proposal, the Exchange would be allowed to list five Short Term Option Series expirations for SPY expiring on Friday under the current rule and five Wednesday SPY Expirations. The interval between strike prices for the proposed Wednesday SPY Expirations 6 Specifically, the Exchange proposes to add the following text to Rule 404, Interpretations and Policies .02, in the appropriate paragraph, ‘‘Wednesday SPY expirations (described in the paragraph below) are not included as part of this count [ ]’’ and ‘‘Non-Wednesday SPY Expirations (described in the paragraph above) are not included as part of this count.’’ PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 62785 would be the same as those for the current Short Term Option Series. Specifically, the Wednesday SPY Expirations would have $0.50 strike intervals.7 Currently, for each Short Term Option Expiration Date, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.8 The thirty (30) series restriction does not include series that are opened by other securities exchanges under their respective short term option rules; MIAX may list these additional series that are listed by other exchanges.9 The thirty (30) series restriction would apply to Wednesday SPY Expiration series as well. In addition, the Exchange would be able to list series that are listed by other exchanges, assuming they file similar rules with the Commission to list SPY options expiring on Wednesdays. As is the case with current Short Term Option Series, the Wednesday SPY Expiration series would be P.M.settled. The Exchange does not believe that any market disruptions would be encountered with the introduction of P.M.-settled Wednesday SPY Expirations. The Exchange currently trades P.M.-settled Short Term Option Series that expire almost every Friday, which provide market participants a tool to hedge special events and to reduce the premium cost of buying protection. The Exchange seeks to introduce Wednesday SPY Expirations to, among other things, expand hedging tools available to market participants and to continue the reduction of the premium cost of buying protection. The Exchange believes that Wednesday expirations, similar to Friday expirations, would allow market participants to purchase an option based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. The Exchange is also proposing to amend Rule 100, which sets forth the definition of Short Term Option Series. The definition set forth in Rule 100 is redundant to the terms for Short Term Option Series set forth in Rule 404, Interpretations and Policies .02. As a result, the Exchange believes that amending Rule 100 by including an 7 This is because SPY options have $1 strike price intervals for non-Short Term Option series. See Exchange Rule 404, Interpretations and Policies .10. Pursuant to Rule 404, Interpretations and Policies .02(e), the strike price interval for Short Term Option Series may be $0.50 or greater for option classes that trade in $1 strike price intervals and are in the Short Term Option Series Program. 8 See Exchange Rule 404, Interpretations and Policies .02(a). 9 See Exchange Rule 404, Interpretations and Policies .02(a). E:\FR\FM\12SEN1.SGM 12SEN1 62786 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES internal cross reference to Rule 404, Interpretations and Policies .02 and by deleting redundant language would result in a clearer definition and would make the Rulebook more precise and user friendly. The Exchange is taking this opportunity to amend Rule 404, Interpretations and Policies .02 with respect to Exchange closures on Fridays that would otherwise be eligible as Short Term Option Expiration Dates. Specifically, the Exchange is cleaning up outdated language that previously tied listings to Fridays in the following business week, i.e., ‘‘if the Exchange is not open for business on the Friday of the following business week. . . .’’ Since Short Term Option Series may be listed out over five consecutive Fridays, the existing language is unnecessarily restrictive. Also, this proposed change harmonizes the Exchange’s rule text with existing BOX rule text, i.e., ‘‘if the [Exchange] is not open for business on a Friday . . .’’ The Exchange proposes to add the new rule text language regarding Wednesday SPY Expirations at the beginning of Rule 404, Interpretations and Policies .02, before the provisions governing classes, expiration, initial series, additional series, and strike interval. The Exchange believes that placement of Wednesday SPY Expirations at the start of Rule 404, Interpretations and Policies .02, would make it apparent that the rest of Rule 404, Interpretations and Policies .02 applies to Wednesday SPY Expirations. To make this point clear, the Exchange proposes to add the sentence, ‘‘References to ‘Short Term Option Series’ below shall be read to include ‘Wednesday SPY Expirations,’ except where indicated otherwise[ ]’’ before the alphabetically listed paragraphs set forth in Rule 404, Interpretations and Policies .02. The Exchange believes that the introduction of Wednesday SPY Expirations would provide investors with a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the industry. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of section 6(b) of the Act.10 Specifically, the Exchange believes the proposed rule change is consistent with the section 10 15 U.S.C. 78f(b). VerDate Sep<11>2014 18:40 Sep 09, 2016 6(b)(5) 11 requirements that the rules of an exchange be 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, the Exchange believes the Short Term Option Series Program has been successful to date and that Wednesday SPY Expirations simply expand the ability of investors to hedge risk against market movements stemming from economic releases or market events that occur throughout the month in the same way that the Short Term Option Series Program has expanded the landscape of hedging. Similarly, the Exchange believes Wednesday SPY Expirations should create greater trading and hedging opportunities and flexibility, and provide customers with the ability to more closely tailor their investment objectives. The Exchange believes that allowing Wednesday SPY Expirations and monthly SPY expirations in the same week would benefit investors and minimize investor confusion by providing Wednesday SPY Expirations in a continuous and uniform manner. In addition to the substantive proposal to permit Wednesday SPY Expirations, the Exchange is proposing to make a minor change to the text of Rule 404, Interpretations and Policies .02, that would benefit investors and the public by providing clarity and accuracy in the Exchange’s Rules. It is in the public interest for rules to be accurate and concise so as to eliminate the potential for confusion. The Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in Wednesday SPY Expirations in the same way it monitors trading in the current Short Term Option Series. Finally, the Exchange also represents that it has the necessary systems capacity to support the new options series. 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 Exchange notes that having Wednesday 11 16 Jkt 238001 PO 00000 U.S.C. 78f(b)(5). Frm 00086 Fmt 4703 Sfmt 4703 expirations is not a novel proposal.12 The Exchange does not believe the proposal will impose any burden on intramarket competition, as all market participants will be treated in the same manner as they are with respect to existing Short Term Option Series. Additionally, the Exchange does not believe the proposal will impose any burden on intermarket competition, as nothing prevents the other options exchanges from proposing similar rules to those that the Exchange is currently proposing. 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 from the date on which it was filed, or such shorter time as the Commission may designate, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f)(6) thereunder.14 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days from the date of filing. However, Rule 19b– 4(f)(6)(iii) 15 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 so that the proposal may become operative immediately upon filing. The Commission notes that it recently approved BOX’s substantially similar proposal to list and trade Wednesday SPY Expirations.16 The Exchange has stated that waiver of the operative delay will allow the Exchange to list and trade Wednesday SPY Expirations as soon as possible, and therefore, promote competition among the option 12 See supra note 4. U.S.C. 78s(b)(3)(A). 14 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 intention 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. 15 17 CFR 240.19b–4(f)(6)(iii). 16 See supra note 3. 13 15 E:\FR\FM\12SEN1.SGM 12SEN1 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices exchanges. For these reasons, the Commission believes that the proposed rule change presents no novel issues and that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest, and will allow the Exchange to remain competitive with other exchanges. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal effective 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. 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–2016–31 on the subject line. Paper Comments sradovich on DSK3GMQ082PROD with NOTICES • 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–2016–31. 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 17 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 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– 2016–31 and should be submitted on or before October 3, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–21801 Filed 9–9–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736 Extension: Rule 17a–1, SEC File No. 270–244, OMB Control No. 3235–0208 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’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in Rule 17a–1 (17 CFR 240.17a–1) under the Securities Exchange Act of 1934, as amended (the ‘‘Act’’) (15 U.S.C. 78a et seq.). Rule 17a–1 requires that every national securities exchange, national securities association, registered clearing agency, and the Municipal Securities Rulemaking Board keep on file for a period of not less than five years, the first two years in an easily accessible place, at least one copy of all 18 17 PO 00000 CFR 200.30–3(a)(12). Frm 00087 Fmt 4703 Sfmt 4703 62787 documents, including all correspondence, memoranda, papers, books, notices, accounts, and other such records made or received by it in the course of its business as such and in the conduct of its self-regulatory activity, and that such documents be available for examination by the Commission. There are 29 entities required to comply with the rule: 19 national securities exchanges, 1 national securities association, 8 registered clearing agencies, and the Municipal Securities Rulemaking Board. The Commission staff estimates that the average number of hours necessary for compliance with the requirements of Rule 17a–1 is 52 hours per year. In addition, 4 national securities exchanges notice-registered pursuant to Section 6(g) of the Act (15 U.S.C. 78f(g)) are required to preserve records of determinations made under Rule 3a55– 1 under the Act (17 CFR 240.3a55–1), which the Commission staff estimates will take 1 hour per exchange, for a total of 4 hours. Accordingly, the Commission staff estimates that the total number of hours necessary to comply with the requirements of Rule 17a–1 is 1,512 hours. The total internal cost of compliance for all respondents is $98,280, based on an average cost per hour of $65. Compliance with Rule 17a–1 is mandatory. Rule 17a–1 does not assure confidentiality for the records maintained pursuant to the rule. The records required by Rule 17a–1 are available only for examination by the Commission staff, state securities authorities, and the self-regulatory organizations. Subject to the provisions of the Freedom of Information Act, 5 U.S.C. 522, and the Commission’s rules thereunder (17 CFR 200.80(b)(4)(iii)), the Commission does not generally publish or make available information contained in any reports, summaries, analyses, letters, or memoranda arising out of, in anticipation of, or in connection with an examination or inspection of the books and records of any person or any other investigation. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, E:\FR\FM\12SEN1.SGM 12SEN1

Agencies

[Federal Register Volume 81, Number 176 (Monday, September 12, 2016)]
[Notices]
[Pages 62784-62787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21801]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78772; File No. SR-MIAX-2016-31]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Expand the Short Term Option Series Program

September 6, 2016.
    Pursuant to 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 September 2, 2016, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the 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.
---------------------------------------------------------------------------

    \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 Rule 404, Series of 
Option Contracts Open for Trading, Interpretations and Policies .02, to 
expand the Short Term Option Series Program to allow Wednesday 
expirations for SPDR S&P 500 ETF Trust (``SPY'') options. Additionally, 
the Exchange proposes to amend the definition of Short Term Option 
Series in Rule 100.
    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.

[[Page 62785]]

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

1. Purpose
    The Exchange proposes to expand the Short Term Option Series 
Program outlined in Rule 404, Interpretations and Policies .02, to 
allow the listing and trading of SPY options with Wednesday 
expirations. This is a competitive filing based on a filing submitted 
by the BOX Options Exchange, LLC (``BOX''), which the Commission 
recently approved.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 78668 (August 24, 
2016), 81 FR 59696 (August 30, 2016) (order approving SR-BOX-2016-
28).
---------------------------------------------------------------------------

    Currently, under the Short Term Option Series Program the Exchange 
may open for trading on any Thursday or Friday that is a business day 
(``Short Term Option Opening Date'') series of options on that class 
that expire at the close of business on each of the next five Fridays 
that are business days, and are not Fridays in which monthly option 
series or Quarterly Options Series expire (``Short Term Option 
Expiration Dates''). The Exchange is now proposing to amend Rule 404, 
Interpretations and Policies .02, to permit the listing of SPY options 
expiring on Wednesdays. Specifically, the Exchange is proposing that it 
may open for trading on any Tuesday or Wednesday that is a business 
day, series of SPY options that expire on any Wednesday of the month 
that is a business day, and is not a Wednesday on which Quarterly 
Options Series expire (``Wednesday SPY Expirations''). The proposed 
Wednesday SPY Expiration series would be similar to the current Short 
Term Option Series, with certain exceptions, as explained in greater 
detail below. The Exchange notes that Wednesday expirations are not a 
novel proposal. Specifically, the U.S. Securities and Exchange 
Commission (``Commission'') approved a CBOE proposal to list Wednesday 
expirations for broad-based indexes.\4\ Additionally, BOX recently 
received approval to list Wednesday SPY Expirations.\5\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 76909 (January 14, 
2016), 81 FR 3512 (January 21, 2016) (Order approving SR-CBOE-2015-
106).
    \5\ See supra note 3.
---------------------------------------------------------------------------

    In regards to Wednesday SPY Expirations, the Exchange is proposing 
to remove the current restriction preventing MIAX from listing Short 
Term Option Series that expire in the same week in which monthly option 
series in the same class expire. Specifically, the Exchange would be 
allowed to list Wednesday SPY Expirations in the same week in which 
monthly option series in SPY expire. The current restriction to 
prohibit the expiration of monthly and Short Term Option Series from 
expiring on the same trading day is reasonable to avoid investor 
confusion. This confusion would not apply with Wednesday SPY 
Expirations and standard monthly options because they would not expire 
on the same trading day, as standard monthly options do not expire on 
Wednesdays. Additionally, it would lead to investor confusion if 
Wednesday SPY Expirations were not listed for one week every month 
because there was a monthly SPY expiration on the Friday of that week. 
The existing restriction that a Short Term Option Series may not expire 
on the same day that a Quarterly Option Series expires would apply to 
Wednesday SPY Expirations.
    Under the proposal, the Exchange may open for trading on any 
Tuesday or Wednesday that is a business day, series of SPY options that 
expire at the close of business on each of the next five Wednesdays 
that are business days and are not Wednesdays on which Quarterly 
Options Series expire. The Exchange may have no more than a total of 
five Wednesday SPY Expirations listed. This is similar to the listing 
procedures for Short Term Option Series that expire on Fridays. If the 
Exchange is not open for business on the respective Tuesday or 
Wednesday, the Wednesday SPY Expiration Opening Date will be the first 
business day immediately prior to that respective Tuesday or Wednesday. 
Similarly, if the Exchange is not open for business on a Wednesday, the 
expiration date for a Wednesday SPY Expiration will be the first 
business day immediately prior to that Wednesday. This is also similar 
to the procedures for Short Term Option Series that expire on Fridays.
    The Exchange is also proposing to clarify that the five expirations 
limit in the current Short Term Option Series Program Rule would not 
include any Wednesday SPY Expirations and vice versa.\6\ This means, 
under the proposal, the Exchange would be allowed to list five Short 
Term Option Series expirations for SPY expiring on Friday under the 
current rule and five Wednesday SPY Expirations. The interval between 
strike prices for the proposed Wednesday SPY Expirations would be the 
same as those for the current Short Term Option Series. Specifically, 
the Wednesday SPY Expirations would have $0.50 strike intervals.\7\
---------------------------------------------------------------------------

    \6\ Specifically, the Exchange proposes to add the following 
text to Rule 404, Interpretations and Policies .02, in the 
appropriate paragraph, ``Wednesday SPY expirations (described in the 
paragraph below) are not included as part of this count [ ]'' and 
``Non-Wednesday SPY Expirations (described in the paragraph above) 
are not included as part of this count.''
    \7\ This is because SPY options have $1 strike price intervals 
for non-Short Term Option series. See Exchange Rule 404, 
Interpretations and Policies .10. Pursuant to Rule 404, 
Interpretations and Policies .02(e), the strike price interval for 
Short Term Option Series may be $0.50 or greater for option classes 
that trade in $1 strike price intervals and are in the Short Term 
Option Series Program.
---------------------------------------------------------------------------

    Currently, for each Short Term Option Expiration Date, the Exchange 
is limited to opening thirty (30) series for each expiration date for 
the specific class.\8\ The thirty (30) series restriction does not 
include series that are opened by other securities exchanges under 
their respective short term option rules; MIAX may list these 
additional series that are listed by other exchanges.\9\ The thirty 
(30) series restriction would apply to Wednesday SPY Expiration series 
as well. In addition, the Exchange would be able to list series that 
are listed by other exchanges, assuming they file similar rules with 
the Commission to list SPY options expiring on Wednesdays.
---------------------------------------------------------------------------

    \8\ See Exchange Rule 404, Interpretations and Policies .02(a).
    \9\ See Exchange Rule 404, Interpretations and Policies .02(a).
---------------------------------------------------------------------------

    As is the case with current Short Term Option Series, the Wednesday 
SPY Expiration series would be P.M.-settled. The Exchange does not 
believe that any market disruptions would be encountered with the 
introduction of P.M.-settled Wednesday SPY Expirations. The Exchange 
currently trades P.M.-settled Short Term Option Series that expire 
almost every Friday, which provide market participants a tool to hedge 
special events and to reduce the premium cost of buying protection. The 
Exchange seeks to introduce Wednesday SPY Expirations to, among other 
things, expand hedging tools available to market participants and to 
continue the reduction of the premium cost of buying protection. The 
Exchange believes that Wednesday expirations, similar to Friday 
expirations, would allow market participants to purchase an option 
based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively.
    The Exchange is also proposing to amend Rule 100, which sets forth 
the definition of Short Term Option Series. The definition set forth in 
Rule 100 is redundant to the terms for Short Term Option Series set 
forth in Rule 404, Interpretations and Policies .02. As a result, the 
Exchange believes that amending Rule 100 by including an

[[Page 62786]]

internal cross reference to Rule 404, Interpretations and Policies .02 
and by deleting redundant language would result in a clearer definition 
and would make the Rulebook more precise and user friendly.
    The Exchange is taking this opportunity to amend Rule 404, 
Interpretations and Policies .02 with respect to Exchange closures on 
Fridays that would otherwise be eligible as Short Term Option 
Expiration Dates. Specifically, the Exchange is cleaning up outdated 
language that previously tied listings to Fridays in the following 
business week, i.e., ``if the Exchange is not open for business on the 
Friday of the following business week. . . .'' Since Short Term Option 
Series may be listed out over five consecutive Fridays, the existing 
language is unnecessarily restrictive. Also, this proposed change 
harmonizes the Exchange's rule text with existing BOX rule text, i.e., 
``if the [Exchange] is not open for business on a Friday . . .''
    The Exchange proposes to add the new rule text language regarding 
Wednesday SPY Expirations at the beginning of Rule 404, Interpretations 
and Policies .02, before the provisions governing classes, expiration, 
initial series, additional series, and strike interval. The Exchange 
believes that placement of Wednesday SPY Expirations at the start of 
Rule 404, Interpretations and Policies .02, would make it apparent that 
the rest of Rule 404, Interpretations and Policies .02 applies to 
Wednesday SPY Expirations. To make this point clear, the Exchange 
proposes to add the sentence, ``References to `Short Term Option 
Series' below shall be read to include `Wednesday SPY Expirations,' 
except where indicated otherwise[ ]'' before the alphabetically listed 
paragraphs set forth in Rule 404, Interpretations and Policies .02.
    The Exchange believes that the introduction of Wednesday SPY 
Expirations would provide investors with a flexible and valuable tool 
to manage risk exposure, minimize capital outlays, and be more 
responsive to the timing of events affecting the industry.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of section 6(b) of the Act.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \11\ requirements that the rules of an exchange be 
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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 16 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes the Short Term Option Series 
Program has been successful to date and that Wednesday SPY Expirations 
simply expand the ability of investors to hedge risk against market 
movements stemming from economic releases or market events that occur 
throughout the month in the same way that the Short Term Option Series 
Program has expanded the landscape of hedging. Similarly, the Exchange 
believes Wednesday SPY Expirations should create greater trading and 
hedging opportunities and flexibility, and provide customers with the 
ability to more closely tailor their investment objectives. The 
Exchange believes that allowing Wednesday SPY Expirations and monthly 
SPY expirations in the same week would benefit investors and minimize 
investor confusion by providing Wednesday SPY Expirations in a 
continuous and uniform manner.
    In addition to the substantive proposal to permit Wednesday SPY 
Expirations, the Exchange is proposing to make a minor change to the 
text of Rule 404, Interpretations and Policies .02, that would benefit 
investors and the public by providing clarity and accuracy in the 
Exchange's Rules. It is in the public interest for rules to be accurate 
and concise so as to eliminate the potential for confusion.
    The Exchange represents that it has an adequate surveillance 
program in place to detect manipulative trading in Wednesday SPY 
Expirations in the same way it monitors trading in the current Short 
Term Option Series. Finally, the Exchange also represents that it has 
the necessary systems capacity to support the new options series.

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 Exchange notes that 
having Wednesday expirations is not a novel proposal.\12\ The Exchange 
does not believe the proposal will impose any burden on intramarket 
competition, as all market participants will be treated in the same 
manner as they are with respect to existing Short Term Option Series. 
Additionally, the Exchange does not believe the proposal will impose 
any burden on intermarket competition, as nothing prevents the other 
options exchanges from proposing similar rules to those that the 
Exchange is currently proposing.
---------------------------------------------------------------------------

    \12\ See supra note 4.
---------------------------------------------------------------------------

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 from the date on which it was filed, or 
such shorter time as the Commission may designate, the proposed rule 
change has become effective pursuant to section 19(b)(3)(A) of the Act 
\13\ and Rule 19b-4(f)(6) thereunder.\14\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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 intention 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days from the date of filing. However, Rule 
19b-4(f)(6)(iii) \15\ 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 so that the proposal may become operative 
immediately upon filing. The Commission notes that it recently approved 
BOX's substantially similar proposal to list and trade Wednesday SPY 
Expirations.\16\ The Exchange has stated that waiver of the operative 
delay will allow the Exchange to list and trade Wednesday SPY 
Expirations as soon as possible, and therefore, promote competition 
among the option

[[Page 62787]]

exchanges. For these reasons, the Commission believes that the proposed 
rule change presents no novel issues and that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, and will allow the Exchange to remain competitive with 
other exchanges. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal effective 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.
---------------------------------------------------------------------------

    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 3.
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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-2016-31 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-2016-31. 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-2016-31 and should be 
submitted on or before October 3, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-21801 Filed 9-9-16; 8:45 am]
 BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.