Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend MIAX Options Rule 515A, MIAX Price Improvement Mechanism (“PRIME”) and PRIME Solicitation Mechanism, 21288-21291 [2017-09062]
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Federal Register / Vol. 82, No. 86 / Friday, May 5, 2017 / Notices
2017.3 The Commission received no
comments regarding the proposed
changes.
Section 19(b)(2) of the Act provides
that within 45 days of the publication of
the notice of the filing or 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.4 The 45th day
from the publication of the Notice is
May 7, 2017.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. ICE Clear
Europe proposes to revise its CDS Endof-Day Price Discovery Policy to
implement a new Clearing Member
price submission process to remove the
intermediary agent through which
Clearing Members currently submit
required prices, and replace it with a
process through which Clearing
Members submit prices directly to ICE
Clear Europe. 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
ICE Clear Europe’s proposed rule
change and the associated operational
risks.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,
extends the period by which the
Commission shall either approve or
disapprove, or institute proceedings to
determine whether to disapprove, the
proposed rule change (File No. SR–
ICEEU–2017–003) to no later than June
21, 2017.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.5
Eduardo A. Aleman,
Assistant Secretary.
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[FR Doc. 2017–09060 Filed 5–4–17; 8:45 am]
BILLING CODE 8011–01–P
3 Securities Exchange Act Release No. 34–80269
(March 17, 2017), 82 FR 14925 (March 23, 2017)
(SR–ICEEU–2017–003) (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80570; File No. SR–MIAX–
2017–16]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing of a Proposed Rule
Change To Amend MIAX Options Rule
515A, MIAX Price Improvement
Mechanism (‘‘PRIME’’) and PRIME
Solicitation Mechanism
May 1, 2017.
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 April 25, 2017, Miami International
Securities Exchange LLC (‘‘MIAX
Options’’ 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rule 515A, MIAX
Price Improvement Mechanism
(‘‘PRIME’’) and PRIME Solicitation
Mechanism.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.miaxoptions.com/rulefilings, 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
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CFR 240.19b–4.
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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
Rule 515A, MIAX Price Improvement
Mechanism (‘‘PRIME’’) and PRIME
Solicitation Mechanism, to amend the
duration of a PRIME Auction. PRIME is
a process by which a Member 3 may
electronically submit for execution
(‘‘Auction’’) an order 4 it represents as
agent (‘‘Agency Order’’) against
principal interest, and/or an Agency
Order against solicited interest
(‘‘Solicitation Auction’’). When the
Exchange receives a properly designated
Agency Order for auction processing, a
Request for Responses (‘‘RFR’’) detailing
the option, side, size, and initiating
price is sent to all subscribers of the
Exchange’s data feeds. Currently, the
Auction and Solicitation Auction period
lasts for 500 milliseconds, unless it is
concluded early.5 The Exchange
proposes to amend Rule 515A(a)(2)(i)(C)
so that the duration of the Auction and
Solicitation Auction shall be a time
period designated by the Exchange,
which shall be no less than 100
milliseconds and no more than 1
second, consistent with the rule of other
exchanges, such as the International
Securities Exchange (‘‘ISE’’), NASDAQ
BX (‘‘BX’’), NASDAQ PHLX (‘‘PHLX’’),
and Chicago Board Options Exchange
(‘‘CBOE’’).6 When approving the change
3 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
4 The term ‘‘order’’ means a firm commitment to
buy or sell option contracts. See Exchange Rule 100.
5 A PRIME and PRIME Solicitation Auction will
conclude at the sooner of (1) Upon receipt by the
System of an unrelated order (in the same option
as the Agency Order) on the opposite side of the
market from the RFR responses, that is marketable
against either the NBBO, the initiating price, or the
RFR responses; (2) Upon receipt by the System of
an unrelated order (in the same option as the
Agency Order) on the same side of the market as
the RFR responses, that is marketable against the
NBBO; (3) Upon receipt by the System of an
unrelated limit order (in the same option as the
Agency Order) on the opposite of the market from
the Agency Order that improves any RFR response;
(4) Any time an RFR response matches the NBBO
on the opposite side of the market from the RFR
responses; (5) Any time there is a quote lock in the
subject option on the Exchange pursuant to Rule
1402; or (6) Any time there is a trading halt in the
option on the Exchange. See Exchange Rule 515A.
6 See Securities Exchange Act Release Nos. 79733
(January 4, 2017), 82 FR 3055 (January 10, 2017)
(SR–ISE–2016–26); 76301 (October 29, 2015), 80 FR
68347 (November 4, 2015) (SR–BX–2015–032);
77557 (April 7, 2016), 81 FR 21935 (April 13, 2016)
(SR–PHLX–2016–40); and 80421 (April 10, 2017),
82 FR 18048 (April 14, 2017) (SR–CBOE–2017–
029). The Commission notes that CBOE’s proposed
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to exposure periods in these
mechanisms, the Securities and
Exchange Commission (‘‘SEC’’)
concluded that reducing the time
periods was consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’).7
The Exchange believes that moving to
a range structure provides the Exchange
with greater flexibility in establishing
the optimal duration for Auctions and
Solicitation Auctions. The Exchange
believes that permitting a shorter
duration of as low as 100 milliseconds
will reduce market risk for all Members
executing trades on the Exchange via
the PRIME and PRIME Solicitation
Mechanism. Initiating participants are
required to guarantee an execution at
the NBBO 8 or at a better price, and are
subject to market risk as their PRIME
order is exposed to other Members of
the Exchange. While other participants
are also subject to market risk, those
providing responses may cancel their
responses. The Exchange believes that
the initiating participant plays a critical
role in the Auction and Solicitation
Auction processes. Their willingness to
guarantee the orders entered into the
PRIME and PRIME Solicitation
Mechanism an execution at the NBBO
or, in some cases, a better price, is the
catalyst for an order gaining the
opportunity for price improvement. The
Exchange believes that allowing an
Auction period of no less than 100
milliseconds and no more than 1 second
will benefit Members utilizing the
PRIME and PRIME Solicitation
Mechanism. The Exchange believes it is
in these Members’ best interests to
minimize the Auction and Solicitation
Auction duration while continuing to
allow Members adequate time to
respond. The Exchange notes the
Commission previously approved other
exchanges’ rules that provide for an
auction response time as low as 100
milliseconds 9 and that the Exchange is
not proposing to go lower than the
lowest previously approved timer range.
Accordingly, the Exchange proposes
to amend Rule 515A(b)(2)(i)(C) to
remove the reference to the duration of
the current timer setting. Currently the
rule states that, ‘‘[m]embers may submit
responses to the RFR (specifying prices
and sizes) during the response period
rule change to amend its auction response period
was published in the Federal Register on April 14,
2017 and is subject to a public comment period
expiring on May 5, 2017.
7 Id.
8 The term ‘‘NBBO’’ means the national best bid
or offer as calculated by the Exchange based on
market information received by the Exchange from
OPRA. See Exchange Rule 100.
9 See supra note 6.
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17:43 May 04, 2017
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(which shall be 500 milliseconds).’’ The
Exchange proposes to replace this
sentence with the proposed language
used in 515A(a)(2)(i)(C) which provides
that ‘‘[t]he RFR will last for a period of
time, as determined by the Exchange
and announced through a Regulatory
Circular. The RFR will be no less than
100 milliseconds and no more than 1
second.’’
The Exchange does not believe that
requiring the Auction and Solicitation
Auction to run for 500 milliseconds is
necessary in today’s market where,
generally, Members’ systems have the
capability to respond within 100
milliseconds or less. As such, reducing
the response time in the PRIME and
PRIME Solicitation Mechanism is
appropriate as Members no longer need
up to 500 milliseconds to respond to an
Auction or Solicitation Auction.
Reducing the response time will allow
Members the opportunity to seek out
liquidity in an expedient manner that is
consistent with today’s system
capabilities.
The Exchange’s Members operate
electronic systems that enable them to
react and respond to orders in a
meaningful way in fractions of a second.
The Exchange anticipates that its
Members will continue to compete
within the proposed response times
designated by the Exchange. In
particular, the Exchange believes that
the proposed response times—which
will be no less than 100 milliseconds
and no more than 1 second—will
continue to provide Members with
sufficient time to respond to, compete
for, and provide price improvement for
orders, and will provide investors and
other market participants with more
timely executions, and reduce their
market risk.
Reducing the duration of Auctions
and Solicitation Auctions from 500
milliseconds to as low as 100
milliseconds will benefit Members
trading in the PRIME and PRIME
Solicitation Mechanism. The Exchange
believes that it is in these Members’ best
interest to minimize the response time
while continuing to allow Members
adequate time to electronically respond.
Both the order being exposed and the
Members’ responses are subject to
market risk during the Auction or
Solicitation Auction. While a limited
number of Members wait to respond
until later in the Auction or Solicitation
Auction, presumably to minimize their
market risk, the majority of Members
respond within the first 100
milliseconds. The Exchange believes
that a response time as low as 100
milliseconds will continue to provide
market participants with sufficient time
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21289
to respond, compete, and provide price
improvement for orders and will
provide investors and other market
participants with more timely
executions, thereby reducing their
market risk.
To substantiate that Members can
receive, process, and communicate a
response to an auction broadcast within
100 milliseconds, the Exchange
surveyed all Members that responded to
an auction broadcast in the period
beginning November 2016 and ending
January 2017 (the ‘‘review period’’). The
Exchange received responses from all of
the Members surveyed, and each
Member confirmed that they can
receive, process, and communicate a
response back to the Exchange within
100 milliseconds.
Also, in consideration with this
proposed rule change, the Exchange
reviewed all responses received in
PRIME and PRIME Solicitation Auctions
from its Members for the review period.
During the review period, on average,
approximately 60% of responses were
submitted within the first 50
milliseconds, and approximately 90% of
responses were submitted within 100
milliseconds.10
Accordingly, the Exchange believes
that a response time as low as 100
milliseconds will continue to provide
Members with sufficient time to
respond to, compete for, and provide
price improvement for orders, and will
provide investors and other market
participants with more timely
executions, and reduce their market
risk. The Exchange also believes it is
likely that the number of PRIME
transactions will increase, thereby
providing customers a greater
opportunity to benefit from price
improvement.
The Exchange believes that the
information outlined above regarding
price improving transactions in the
PRIME and PRIME Solicitation
Mechanism provides substantial
support for its assertion that reducing
the response time from 500 milliseconds
to as low as 100 milliseconds will
continue to provide Members with
sufficient time to ensure competition for
orders entered into the PRIME and
PRIME Solicitation Mechanism, and
could provide customer orders with
additional opportunities for price
improvement.
With regard to the impact of this
proposal on system capacity, the
Exchange has analyzed its capacity and
10 The Exchange notes that the average
percentages for responses within 50 milliseconds
and 100 milliseconds were 61.03% and 88.19%
respectively.
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SRADOVICH on DSK3GMQ082PROD with NOTICES
represents that it has the necessary
systems capacity to handle the potential
additional traffic associated with the
additional transactions that may occur
with the implementation of the
proposed reduction in the response time
duration to no less than 100
milliseconds. Additionally, the
Exchange represents that its System will
be able to sufficiently maintain an audit
trail for order and trade information
with the reduction in the response
timer.
2. Statutory Basis
MIAX Options believes that its
proposed rule change is consistent with
Section 6(b) of the Act 11 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 12 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
In particular, the proposed rule
change will provide investors with more
timely execution of their option orders,
while ensuring that there is an adequate
exposure of orders in the mechanisms.
Additionally, the proposed change will
allow more investors the opportunity to
receive price improvement through the
PRIME and PRIME Solicitation
Mechanism and will reduce market risk
for Members using these mechanisms.
Finally, as mentioned above, other
exchanges such as ISE, BX, PHLX, and
CBOE [sic],13 have already amended
their rules to permit response times
consistent with the instant proposal—
i.e., no less than 100 milliseconds and
no more than 1 second.14 As such, the
Exchange believes the proposed rule
change would help perfect the
mechanism for a free and open national
market system, and generally help
protect investors and the public’s
interest.
The Exchange believes the proposed
rule change is not unfairly
discriminatory because the response
time duration would be the same for all
Members. All Members in the PRIME
and PRIME Solicitation Mechanism
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
13 The Commission notes that CBOE’s proposed
rule change to amend its auction response period
was published in the Federal Register on April 14,
2017 and is subject to a public comment period
expiring on May 5, 2017.
14 See supra note 6.
12 15
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17:43 May 04, 2017
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have today, and will continue to have,
an equal opportunity to receive the
broadcast and respond with their best
prices during the auction. Additionally,
the Exchange believes the reduction of
the response time for an auction reduces
the market risk for all Members. The
reduction of the time period reduces the
market risk for the initiating member as
well as any Members providing orders
in response to an RFR.
appropriate in furtherance of the
purposes of the Act, and believes the
proposed change will enhance
competition.
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 rule change to provide
the Exchange flexibility in determining
potentially shorter durations for
Auctions and Solicitation Auctions does
not impose an undue burden on intramarket competition as the Exchange
believes that allowing for an auction
period of no less than 100 milliseconds
and no more than 1 second will benefit
Members utilizing the PRIME and
PRIME Solicitation Mechanism. The
Exchange believes it is in these
Members’ best interest to minimize the
Auction and Solicitation Auction
duration while continuing to allow
Members adequate time to respond
electronically.
The proposed rule allows Members to
respond quickly at the most favorable
price while reducing the risk that the
market will move against the response.
The Exchange believes that its Members
will be able to compete within a timer
range of no less than 100 milliseconds
and no more than 1 second, and that
any specific duration within this range
is a sufficient amount of time to respond
to, compete for, and provide price
improvement for orders, and will
provide investors and other market
participants more timely executions,
and reduce their market risk.
The Exchange does not believe its
proposed rule change will impose an
undue burden on inter-market
competition as the Exchange notes other
exchanges offer similar functionality
with similar auction duration lengths.15
For all the reasons stated, the
Exchange does not believe that the
proposed rule change will impose any
burden on competition not necessary or
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.
15 See NASDAQ BX Rules, Chapter VI, Section
9(ii)(A)(3), CBOE Rule 6.74A and 6.74B, ISE Rule
723(c)(1), and NASDAQ PHLX Rule
1080(n)(ii)(A)(4). The Commission notes that
CBOE’s proposed rule change to amend its auction
response period was published in the Federal
Register on April 14, 2017 and is subject to a public
comment period expiring on May 5, 2017.
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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.
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–2017–16 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–2017–16. 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
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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–
2017–16 and should be submitted on or
before May 26, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–09062 Filed 5–4–17; 8:45 am]
BILLING CODE 8011–01–P
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Payette, Washington
Contiguous Counties:
Idaho: Adams, Canyon, Gem
Oregon: Baker, Malheur
The Interest Rates are:
Percent
Businesses and Small Agricultural
Cooperatives without Credit
Available Elsewhere ..................
Non Profit Organizations without
Credit Available Elsewhere .......
3.125
The number assigned to this disaster
for economic injury is 151230.
The States which received an EIDL
Declaration # are IDAHO, OREGON.
(Catalog of Federal Domestic Assistance
Number 59008)
Dated: April 27, 2017.
Linda E. McMahon,
Administrator.
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #15123]
SMALL BUSINESS ADMINISTRATION
Idaho Disaster #ID–00064 Declaration
of Economic Injury
[Disaster Declaration #14856]
Small Business Administration.
ACTION: Notice.
This is a notice of an
Economic Injury Disaster Loan (EIDL)
declaration for the State of IDAHO,
dated 04/27/2017.
Incident: Severe Winter Storms.
Incident Period: 12/22/2016 through
01/19/2017.
DATES: Effective 04/27/2017.
EIDL Loan Application Deadline Date:
01/29/2018.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Assistance, U.S. Small Business
Administration, 409 3rd Street SW.,
Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
Administrator’s EIDL declaration,
applications for economic injury
disaster loans may be filed at the
SRADOVICH on DSK3GMQ082PROD with NOTICES
SUMMARY:
16 17
CFR 200.30–3(a)(12).
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17:43 May 04, 2017
Jkt 241001
Montana Disaster #MT–00099
Declaration of Economic Injury
U.S. Small Business
Administration.
ACTION: Amendment 1.
AGENCY:
This is an amendment of the
Economic Injury Disaster Loan (EIDL)
declaration for the State of Montana,
dated 09/20/2016.
Incident: River Conditions Resulting
in the Closure of the Yellowstone River.
Incident Period: 08/19/2016 through
09/22/2016.
Effective Date: 04/28/2017.
EIDL Loan Application Deadline Date:
06/20/2017.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: The notice
of an Economic Injury declaration for
the State of MONTANA dated 09/20/
2016 is hereby amended to establish the
incident period for this disaster as
SUMMARY:
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Frm 00106
Fmt 4703
Sfmt 4703
beginning 08/19/2016 and continuing
through 09/22/2016.
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Number 59008)
Dated: April 28, 2017.
Linda E. McMahon,
Administrator.
[FR Doc. 2017–09064 Filed 5–4–17; 8:45 am]
BILLING CODE 8025–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No: SSA–2017–0023]
2.500
[FR Doc. 2017–09066 Filed 5–4–17; 8:45 am]
AGENCY:
21291
Agency Information Collection
Activities: Proposed Request and
Comment Request
The Social Security Administration
(SSA) publishes a list of information
collection packages requiring clearance
by the Office of Management and
Budget (OMB) in compliance with
Public Law 104–13, the Paperwork
Reduction Act of 1995, effective October
1, 1995. This notice includes revisions
of OMB-approved information
collections.
SSA is soliciting comments on the
accuracy of the agency’s burden
estimate; the need for the information;
its practical utility; ways to enhance its
quality, utility, and clarity; and ways to
minimize burden on respondents,
including the use of automated
collection techniques or other forms of
information technology. Mail, email, or
fax your comments and
recommendations on the information
collection(s) to the OMB Desk Officer
and SSA Reports Clearance Officer at
the following addresses or fax numbers.
(OMB), Office of Management and
Budget, Attn: Desk Officer for SSA,
Fax: 202–395–6974, Email address:
OIRA_Submission@omb.eop.gov
(SSA), Social Security Administration,
OLCA, Attn: Reports Clearance
Director, 3100 West High Rise, 6401
Security Blvd., Baltimore, MD 21235,
Fax: 410–966–2830, Email address:
OR.Reports.Clearance@ssa.gov
Or you may submit your comments
online through www.regulations.gov,
referencing Docket ID Number [SSA–
2017–0023].
I. The information collection below is
pending at SSA. SSA will submit it to
OMB within 60 days from the date of
this notice. To be sure we consider your
comments, we must receive them no
later than July 5, 2017. Individuals can
obtain copies of the collection
instruments by writing to the above
email address.
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05MYN1
Agencies
[Federal Register Volume 82, Number 86 (Friday, May 5, 2017)]
[Notices]
[Pages 21288-21291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09062]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80570; File No. SR-MIAX-2017-16]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend MIAX
Options Rule 515A, MIAX Price Improvement Mechanism (``PRIME'') and
PRIME Solicitation Mechanism
May 1, 2017.
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 April 25, 2017, Miami International Securities
Exchange LLC (``MIAX Options'' 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend Exchange Rule 515A, MIAX
Price Improvement Mechanism (``PRIME'') and PRIME Solicitation
Mechanism.
The text of the proposed rule change is available on the Exchange's
Web site at https://www.miaxoptions.com/rule-filings, 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 Rule 515A, MIAX Price Improvement
Mechanism (``PRIME'') and PRIME Solicitation Mechanism, to amend the
duration of a PRIME Auction. PRIME is a process by which a Member \3\
may electronically submit for execution (``Auction'') an order \4\ it
represents as agent (``Agency Order'') against principal interest, and/
or an Agency Order against solicited interest (``Solicitation
Auction''). When the Exchange receives a properly designated Agency
Order for auction processing, a Request for Responses (``RFR'')
detailing the option, side, size, and initiating price is sent to all
subscribers of the Exchange's data feeds. Currently, the Auction and
Solicitation Auction period lasts for 500 milliseconds, unless it is
concluded early.\5\ The Exchange proposes to amend Rule
515A(a)(2)(i)(C) so that the duration of the Auction and Solicitation
Auction shall be a time period designated by the Exchange, which shall
be no less than 100 milliseconds and no more than 1 second, consistent
with the rule of other exchanges, such as the International Securities
Exchange (``ISE''), NASDAQ BX (``BX''), NASDAQ PHLX (``PHLX''), and
Chicago Board Options Exchange (``CBOE'').\6\ When approving the change
[[Page 21289]]
to exposure periods in these mechanisms, the Securities and Exchange
Commission (``SEC'') concluded that reducing the time periods was
consistent with the Securities Exchange Act of 1934 (the ``Act'').\7\
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\3\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\4\ The term ``order'' means a firm commitment to buy or sell
option contracts. See Exchange Rule 100.
\5\ A PRIME and PRIME Solicitation Auction will conclude at the
sooner of (1) Upon receipt by the System of an unrelated order (in
the same option as the Agency Order) on the opposite side of the
market from the RFR responses, that is marketable against either the
NBBO, the initiating price, or the RFR responses; (2) Upon receipt
by the System of an unrelated order (in the same option as the
Agency Order) on the same side of the market as the RFR responses,
that is marketable against the NBBO; (3) Upon receipt by the System
of an unrelated limit order (in the same option as the Agency Order)
on the opposite of the market from the Agency Order that improves
any RFR response; (4) Any time an RFR response matches the NBBO on
the opposite side of the market from the RFR responses; (5) Any time
there is a quote lock in the subject option on the Exchange pursuant
to Rule 1402; or (6) Any time there is a trading halt in the option
on the Exchange. See Exchange Rule 515A.
\6\ See Securities Exchange Act Release Nos. 79733 (January 4,
2017), 82 FR 3055 (January 10, 2017) (SR-ISE-2016-26); 76301
(October 29, 2015), 80 FR 68347 (November 4, 2015) (SR-BX-2015-032);
77557 (April 7, 2016), 81 FR 21935 (April 13, 2016) (SR-PHLX-2016-
40); and 80421 (April 10, 2017), 82 FR 18048 (April 14, 2017) (SR-
CBOE-2017-029). The Commission notes that CBOE's proposed rule
change to amend its auction response period was published in the
Federal Register on April 14, 2017 and is subject to a public
comment period expiring on May 5, 2017.
\7\ Id.
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The Exchange believes that moving to a range structure provides the
Exchange with greater flexibility in establishing the optimal duration
for Auctions and Solicitation Auctions. The Exchange believes that
permitting a shorter duration of as low as 100 milliseconds will reduce
market risk for all Members executing trades on the Exchange via the
PRIME and PRIME Solicitation Mechanism. Initiating participants are
required to guarantee an execution at the NBBO \8\ or at a better
price, and are subject to market risk as their PRIME order is exposed
to other Members of the Exchange. While other participants are also
subject to market risk, those providing responses may cancel their
responses. The Exchange believes that the initiating participant plays
a critical role in the Auction and Solicitation Auction processes.
Their willingness to guarantee the orders entered into the PRIME and
PRIME Solicitation Mechanism an execution at the NBBO or, in some
cases, a better price, is the catalyst for an order gaining the
opportunity for price improvement. The Exchange believes that allowing
an Auction period of no less than 100 milliseconds and no more than 1
second will benefit Members utilizing the PRIME and PRIME Solicitation
Mechanism. The Exchange believes it is in these Members' best interests
to minimize the Auction and Solicitation Auction duration while
continuing to allow Members adequate time to respond. The Exchange
notes the Commission previously approved other exchanges' rules that
provide for an auction response time as low as 100 milliseconds \9\ and
that the Exchange is not proposing to go lower than the lowest
previously approved timer range.
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\8\ The term ``NBBO'' means the national best bid or offer as
calculated by the Exchange based on market information received by
the Exchange from OPRA. See Exchange Rule 100.
\9\ See supra note 6.
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Accordingly, the Exchange proposes to amend Rule 515A(b)(2)(i)(C)
to remove the reference to the duration of the current timer setting.
Currently the rule states that, ``[m]embers may submit responses to the
RFR (specifying prices and sizes) during the response period (which
shall be 500 milliseconds).'' The Exchange proposes to replace this
sentence with the proposed language used in 515A(a)(2)(i)(C) which
provides that ``[t]he RFR will last for a period of time, as determined
by the Exchange and announced through a Regulatory Circular. The RFR
will be no less than 100 milliseconds and no more than 1 second.''
The Exchange does not believe that requiring the Auction and
Solicitation Auction to run for 500 milliseconds is necessary in
today's market where, generally, Members' systems have the capability
to respond within 100 milliseconds or less. As such, reducing the
response time in the PRIME and PRIME Solicitation Mechanism is
appropriate as Members no longer need up to 500 milliseconds to respond
to an Auction or Solicitation Auction. Reducing the response time will
allow Members the opportunity to seek out liquidity in an expedient
manner that is consistent with today's system capabilities.
The Exchange's Members operate electronic systems that enable them
to react and respond to orders in a meaningful way in fractions of a
second. The Exchange anticipates that its Members will continue to
compete within the proposed response times designated by the Exchange.
In particular, the Exchange believes that the proposed response times--
which will be no less than 100 milliseconds and no more than 1 second--
will continue to provide Members with sufficient time to respond to,
compete for, and provide price improvement for orders, and will provide
investors and other market participants with more timely executions,
and reduce their market risk.
Reducing the duration of Auctions and Solicitation Auctions from
500 milliseconds to as low as 100 milliseconds will benefit Members
trading in the PRIME and PRIME Solicitation Mechanism. The Exchange
believes that it is in these Members' best interest to minimize the
response time while continuing to allow Members adequate time to
electronically respond. Both the order being exposed and the Members'
responses are subject to market risk during the Auction or Solicitation
Auction. While a limited number of Members wait to respond until later
in the Auction or Solicitation Auction, presumably to minimize their
market risk, the majority of Members respond within the first 100
milliseconds. The Exchange believes that a response time as low as 100
milliseconds will continue to provide market participants with
sufficient time to respond, compete, and provide price improvement for
orders and will provide investors and other market participants with
more timely executions, thereby reducing their market risk.
To substantiate that Members can receive, process, and communicate
a response to an auction broadcast within 100 milliseconds, the
Exchange surveyed all Members that responded to an auction broadcast in
the period beginning November 2016 and ending January 2017 (the
``review period''). The Exchange received responses from all of the
Members surveyed, and each Member confirmed that they can receive,
process, and communicate a response back to the Exchange within 100
milliseconds.
Also, in consideration with this proposed rule change, the Exchange
reviewed all responses received in PRIME and PRIME Solicitation
Auctions from its Members for the review period. During the review
period, on average, approximately 60% of responses were submitted
within the first 50 milliseconds, and approximately 90% of responses
were submitted within 100 milliseconds.\10\
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\10\ The Exchange notes that the average percentages for
responses within 50 milliseconds and 100 milliseconds were 61.03%
and 88.19% respectively.
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Accordingly, the Exchange believes that a response time as low as
100 milliseconds will continue to provide Members with sufficient time
to respond to, compete for, and provide price improvement for orders,
and will provide investors and other market participants with more
timely executions, and reduce their market risk. The Exchange also
believes it is likely that the number of PRIME transactions will
increase, thereby providing customers a greater opportunity to benefit
from price improvement.
The Exchange believes that the information outlined above regarding
price improving transactions in the PRIME and PRIME Solicitation
Mechanism provides substantial support for its assertion that reducing
the response time from 500 milliseconds to as low as 100 milliseconds
will continue to provide Members with sufficient time to ensure
competition for orders entered into the PRIME and PRIME Solicitation
Mechanism, and could provide customer orders with additional
opportunities for price improvement.
With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and
[[Page 21290]]
represents that it has the necessary systems capacity to handle the
potential additional traffic associated with the additional
transactions that may occur with the implementation of the proposed
reduction in the response time duration to no less than 100
milliseconds. Additionally, the Exchange represents that its System
will be able to sufficiently maintain an audit trail for order and
trade information with the reduction in the response timer.
2. Statutory Basis
MIAX Options believes that its proposed rule change is consistent
with Section 6(b) of the Act \11\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \12\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the proposed rule change will provide investors with
more timely execution of their option orders, while ensuring that there
is an adequate exposure of orders in the mechanisms. Additionally, the
proposed change will allow more investors the opportunity to receive
price improvement through the PRIME and PRIME Solicitation Mechanism
and will reduce market risk for Members using these mechanisms.
Finally, as mentioned above, other exchanges such as ISE, BX, PHLX, and
CBOE [sic],\13\ have already amended their rules to permit response
times consistent with the instant proposal--i.e., no less than 100
milliseconds and no more than 1 second.\14\ As such, the Exchange
believes the proposed rule change would help perfect the mechanism for
a free and open national market system, and generally help protect
investors and the public's interest.
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\13\ The Commission notes that CBOE's proposed rule change to
amend its auction response period was published in the Federal
Register on April 14, 2017 and is subject to a public comment period
expiring on May 5, 2017.
\14\ See supra note 6.
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The Exchange believes the proposed rule change is not unfairly
discriminatory because the response time duration would be the same for
all Members. All Members in the PRIME and PRIME Solicitation Mechanism
have today, and will continue to have, an equal opportunity to receive
the broadcast and respond with their best prices during the auction.
Additionally, the Exchange believes the reduction of the response time
for an auction reduces the market risk for all Members. The reduction
of the time period reduces the market risk for the initiating member as
well as any Members providing orders in response to an RFR.
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 rule change to provide the Exchange flexibility in
determining potentially shorter durations for Auctions and Solicitation
Auctions does not impose an undue burden on intra-market competition as
the Exchange believes that allowing for an auction period of no less
than 100 milliseconds and no more than 1 second will benefit Members
utilizing the PRIME and PRIME Solicitation Mechanism. The Exchange
believes it is in these Members' best interest to minimize the Auction
and Solicitation Auction duration while continuing to allow Members
adequate time to respond electronically.
The proposed rule allows Members to respond quickly at the most
favorable price while reducing the risk that the market will move
against the response. The Exchange believes that its Members will be
able to compete within a timer range of no less than 100 milliseconds
and no more than 1 second, and that any specific duration within this
range is a sufficient amount of time to respond to, compete for, and
provide price improvement for orders, and will provide investors and
other market participants more timely executions, and reduce their
market risk.
The Exchange does not believe its proposed rule change will impose
an undue burden on inter-market competition as the Exchange notes other
exchanges offer similar functionality with similar auction duration
lengths.\15\
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\15\ See NASDAQ BX Rules, Chapter VI, Section 9(ii)(A)(3), CBOE
Rule 6.74A and 6.74B, ISE Rule 723(c)(1), and NASDAQ PHLX Rule
1080(n)(ii)(A)(4). The Commission notes that CBOE's proposed rule
change to amend its auction response period was published in the
Federal Register on April 14, 2017 and is subject to a public
comment period expiring on May 5, 2017.
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For all the reasons stated, the Exchange does not believe that the
proposed rule change will impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act, and
believes the proposed change will enhance 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-2017-16 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-2017-16. 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
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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-2017-16 and should be
submitted on or before May 26, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
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\16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-09062 Filed 5-4-17; 8:45 am]
BILLING CODE 8011-01-P