Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rules 503 and 515, 23888-23891 [2017-10593]

Download as PDF 23888 Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 12 and Rule 19b–4(f)(6) thereunder.13 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, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 14 and subparagraph (f)(6) Rule 19b–4 thereunder.15 A proposed rule change filed under Rule 19b–4(f)(6) 16 normally does not become operative for 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) 17 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 requested that the Commission waive the 30-day operative delay to allow it to promptly harmonize its rule with recently adopted changes to NYSE Rule 103B. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the Exchange to harmonize its rules, without undue delay, with both NYSE Rule 103B and Exchange Rule 7.25E,18 which should help to alleviate potential confusion. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change operative upon filing.19 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 12 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 14 15 U.S.C. 78s(b)(3)(A). 15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 16 17 CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(f)(6)(iii). 18 See supra note 4 and accompanying text. 19 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). asabaliauskas on DSK3SPTVN1PROD with NOTICES 13 17 VerDate Sep<11>2014 19:43 May 23, 2017 Jkt 241001 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 will institute proceedings to determine whether the proposed rule change 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 rulecomments@sec.gov. Please include File Number SR–NYSEMKT–2017–27 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEMKT–2017–27. 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– PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 NYSEMKT–2017–27 and should be submitted on or before June 14, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–10592 Filed 5–23–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80724; File No. SR– PEARL–2017–22] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rules 503 and 515 May 18, 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 May 5, 2017, MIAX PEARL, LLC (‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Exchange Rule 503, Openings on the Exchange, and Rule 515, Execution of Orders. The text of the proposed rule change is available on the Exchange’s Web site at https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’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 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\24MYN1.SGM 24MYN1 Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change asabaliauskas on DSK3SPTVN1PROD with NOTICES 1. Purpose The Exchange proposes to amend Exchange Rule 503, Openings on the Exchange, to adopt new rule text clarifying the treatment of orders that remain in the System 3 after the completion of the Opening Process.4 Additionally, the Exchange proposes to amend Exchange Rule 515 by removing the provision which states that when the System opens a series for trading by disseminating the Exchange’s best bid and offer, non-routable orders, or Do Not Route (‘‘DNR’’) orders,5 that are in the System and that cross the ABBO,6 will be cancelled and not included in the Managed Interest Process.7 Exchange Rule 503 provides that the Opening Process may open a series for trading on the Exchange (i) where there is a possible trade on the Exchange (‘‘opening on a trade’’); and (ii) where there is no possible trade on the Exchange (‘‘opening on a quote’’). Exchange Rule 503(b)(2) discusses the Opening Process when the series opens on a trade. More specifically, Rule 503(b)(2)(iii) discusses how the Exchange handles unexecuted orders that remain in the System after the conclusion of the Opening Process, stating that, ‘‘[s]uch orders will be handled . . . in time sequence, beginning with the order with the oldest time stamp and may, in whole or in part, be placed on the Book, cancelled, executed, managed in accordance with Rule 515, or routed in accordance with Rule 529.’’ Exchange Rule 503(b)(3) discusses the Opening Process when there is no possible trade on the Exchange, or when the series opens on a quote. However, 3 The term ‘‘System’’ means the automated trading system used by the Exchange for the trading of Securities. See Exchange Rule 100. 4 See Exchange Rule 503(a)(1). 5 A Do Not Route or ‘‘DNR’’ order is an order that will never be routed outside of the Exchange regardless of the prices displayed by away markets. A DNR order may execute on the Exchange at a price equal to or better than, but not inferior to, the best away market price but, if that best away market remains, the DNR order will be handled in accordance with the Managed Interest Process described in Rule 515(d)(2). See Exchange Rule 516. 6 The term ‘‘ABBO’’ or ‘‘Away Best Bid or Offer’’ means the best bid(s) or offer(s) disseminated by other Eligible Exchanges (defined in Rule 1400(f)) and calculated by the Exchange based on market information received by the Exchange from OPRA. See Exchange Rule 100. 7 See Exchange Rule 515(d)(2). VerDate Sep<11>2014 19:43 May 23, 2017 Jkt 241001 this rule is silent on how orders that remain in the System after the conclusion of the Opening Process are handled. The Exchange proposes to adopt new rule text in Rule 503(b)(3) similar to that of Rule 503(b)(2)(iii) to codify existing behavior and explicitly state that, ‘‘[o]rders in the System will be handled at the conclusion of the Opening Process in time sequence, beginning with the order with the oldest time stamp and may, in whole or in part, be placed on the Book, cancelled, executed, managed in accordance with Rule 515, or routed in accordance with Rule 529.’’ This proposed amendment provides consistency in the Exchange’s rules concerning the handling of unexecuted orders at the conclusion of the Opening Process. Additionally, the Exchange proposes to eliminate paragraph (vi) in its entirety from Exchange Rule 515(d)(2) which currently states that when the System opens without an opening transaction, and instead opens by disseminating the Exchange’s best bid and offer among quotes and orders that exist in the System at that time as described in Rule 503(b)(3), non-routable orders then in the System that cross the ABBO will be cancelled and are not included in the Managed Interest Process. Proposed Rule 503(b)(3) provides that when the series opens on a quote, any orders, including non-routable orders, that remain in the System at the conclusion of the Opening Process are reintroduced in time priority, oldest first. The proposed rule change provides that orders remaining in the System at the conclusion of the Opening process, including non-routable orders, will be included in the Managed Interest Process under Rule 515, as described below. Therefore, current paragraph (vi) of Exchange Rule 515(d)(2) is no longer necessary, and may be removed from the rule.8 The Exchange believes that the codification of the treatment of orders that remain in the System at the completion of the Opening Process reflects the Exchange’s intention to provide uniform treatment for all nonroutable orders that remain in the System after the Opening Process concludes. Additionally, the proposed treatment of non-routable orders that cross the ABBO when the series opens on a quote, aligns to the current treatment of non-routable orders that cross the ABBO when the series opens on a trade, in that these orders will be subject to the Managed Interest Process. The Exchange notes that certain MIAX PEARL Rules were based upon the rules of the Exchange’s affiliate, Miami International Securities Exchange, LLC (‘‘MIAX Options’’), and that current MIAX PEARL Rule 515(d)(2)(iv) [sic] is identical (save for an internal rule reference) to MIAX Options Rule 515(c)(1)(ii)(B). However, when the MIAX Options Exchange opens on a trade, orders that cross the opening price are cancelled,9 whereas on MIAX PEARL, orders that cross the opening price are re-introduced in time priority, and may be included in the Managed Interest Process. The Exchange’s proposal to amend its rule is designed to provide consistent treatment of non-routable orders that remain in the System after the conclusion of the Opening Process on MIAX PEARL. The Managed Interest Process for Non-Routable Orders described in Rule 515 provides that if the limit price of an order locks or crosses the current opposite side NBBO 10 and the PBBO 11 is inferior to the NBBO, the System will display the order one Minimum Price Variation (‘‘MPV’’) 12 away from the current opposite side NBBO, and book the order at a price that will lock the current opposite side NBBO. Should the NBBO price change to an inferior price level, the order’s Book price will continuously re-price to lock the new NBBO and the managed order’s displayed price will continuously reprice one MPV away from the new NBBO until (A) the order has traded to and including its limit price, (B) the order has traded to and including its price protection price limit at which time any remaining contracts are cancelled, (C) the order is fully executed or (D) the order is cancelled.13 This proposal should eliminate any investor confusion arising from the cancellation of some non-routable orders versus the management of others, depending upon whether the Exchange opened on a quote or a trade respectively. The proposed rule change should also assist market participants in making decisions concerning order routing by simplifying and clarifying the relationship between the Exchange’s 9 See MIAX Options Rule 503(f)(2)(vii)(B)(5). 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. 11 The term ‘‘PBBO’’ means the best bid or offer on the PEARL Exchange. See Exchange Rule 100. 12 See Exchange Rule 510. 13 See Exchange Rule 515(d)(2)(ii). 10 The 8 The Commission notes that elimination of paragraph (vi) from Exchange Rule 515(d)(2) would allow non-routable orders then in the System that cross to ABBO to be placed on the Book, cancelled, executed, managed in accordance with Rule 515, or routed in accordance with Rule 529 when the system opens with a quote. PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 23889 E:\FR\FM\24MYN1.SGM 24MYN1 23890 Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES Opening Process and the Managed Interest Process for Non-Routable Orders. Additionally, the proposed change provides consistency in the Exchange’s Rules concerning orders that remain in the System at the conclusion of the Opening Process. 2. Statutory Basis MIAX PEARL believes that its proposed rule change is consistent with Section 6(b) of the Act 14 in general, and furthers the objectives of Section 6(b)(5) of the Act 15 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes its proposal codifying the Exchange’s handling of orders after the Opening Process is complete promotes transparency and clarity in the Exchange’s rules. The transparency and accuracy resulting from the codification of this functionality is consistent with the Act because it removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest, by accurately describing the steps taken by the System when a series opens on a quote and on a trade. The Exchange believes its proposal to provide equal treatment to non-routable orders that remain in the System after the conclusion of the Opening Process to be one that protects investors and the public interest by eliminating the potential for confusion that could arise as a result of non-routable orders that cross the ABBO being cancelled when the series opens on a quote, while nonroutable orders that cross the ABBO remain in the System and are subject to the Managed Interest Process when the series opens on a trade. The Exchange believes it is in the interest of investors and the public to accurately describe the behavior of the Exchange’s System in its rules as this information may be used by investors to make decisions concerning the submission of their orders. Transparency and clarity are consistent with the Act because it removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest by accurately describing the behavior of the Exchange’s System. MIAX PEARL participants should have a better understanding of the Exchange’s treatment of orders remaining in the System at the conclusion of the Opening Process. The codification and clarification of the System’s functionality is designed to promote just and equitable principles of trade by providing a clear and objective description to all participants of how orders will be handled, and should assist investors in making decisions concerning their orders. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule changes will impose any burden on intra-market competition as the Rules apply equally to all Exchange Members. The Exchange does not believe that the proposed rule changes will impose any burden on intra-market competition as the proposal is one that promotes order handling efficiency on the Exchange. For the reasons stated, the Exchange does not believe 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act 16 and Rule 19b–4(f)(6) 17 thereunder. 16 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 19:43 May 23, 2017 17 17 Jkt 241001 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 18 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 19 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In its filing with the Commission, 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 believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Exchange states that a recent rule change to permit Post-Only Orders 20 to participate in the Opening Process became operative on the Exchange on May 3, 2017.21 The Exchange represents that this change may result in an increase in the number of non-routable orders in the System at the conclusion of the Opening Process, and these orders may be cancelled under the current rule. The Exchange believes that the proposed rule change may reduce potential confusion by providing consistent treatment to non-routable orders when the Exchange opens on a trade or a quote. Accordingly, the Commission hereby waives the operative delay and designates the proposal operative upon filing.22 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 the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 18 17 CFR 240.19b–4(f)(6). 19 17 CFR 240.19b–4(f)(6)(iii). 20 See Exchange Rule 516(j). Post-Only Orders are non-routable. Id. 21 See Securities Exchange Act Release No. 80384 (April 6, 2017), 82 FR 17700 (April 12, 2017) (SR– PEARL–2017–16). 22 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). E:\FR\FM\24MYN1.SGM 24MYN1 Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices 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 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80722; File No. SR–GEMX– 2017–13] • 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– PEARL–2017–22 on the subject line. Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Schedule of Fees To Offer the Historical GEMX Open/Close Trade Profile Paper Comments May 18, 2017. asabaliauskas on DSK3SPTVN1PROD 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–PEARL–2017–22. 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– PEARL–2017–22 and should be submitted on or before June 14, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–10593 Filed 5–23–17; 8:45 am] 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 May 5, 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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 proposes to amend the Exchange’s Schedule of Fees to offer the historical GEMX Open/Close Trade Profile, which will offer historical opening and closing trade data for each GEMX-listed option on both an intraday and end-of-day basis, as described further below. The text of the proposed rule change is available on the Exchange’s Web site at www.ise.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements 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. BILLING CODE 8011–01–P 1 15 23 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:43 May 23, 2017 2 17 Jkt 241001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00120 Fmt 4703 23891 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Schedule of Fees to offer the historical GEMX Open/Close Trade Profile, which will offer historical opening and closing trade data for GEMX-listed options on both an intraday and end-of-day basis. The data provided with this product is similar to the historical data provided with the ISE Open/Close Trade Profile products.3 The Exchange is prepared to offer this product upon filing. The historical GEMX Open/Close Trade Profile, available to both members and non-members, will provide subscribers with the ability to analyze trade and volume data for options and create and test trading models and analytical strategies. The service will provide over 80 fields of data for GEMXlisted options, which will include an ‘‘Origin Code’’ 4 identifying the type of trader participating in a transaction; data on opening buys and sells and closing buys and sells; 5 trading volume and number of trades information summarized by day and series; a code indicating the degree to which a series is ‘‘in’’ or ‘‘out’’ of the ‘‘money’’; 6 the 3 Nasdaq ISE, Schedule of Fees, Chapter VIII (Market Data), A (Nasdaq ISE Open/Close Trade Profile End of Day) and B (Nasdaq ISE Open/Close Trade Profile Intraday); see also Securities Exchange Act Release 56254 (August 15, 2007) 72 FR 47104 (August 22, 2007) (SR–ISE–2007–70). 4 The ‘‘Origin Code’’ identifies the type of trader involved in a transaction: Customer, Professional Customer, Firm or Market Maker. ‘‘Customer’’ includes both retail and institutional customers. A ‘‘Professional Customer’’ is a high-activity customer that enters into more than 390 orders per day over the course of a one-month period. A ‘‘Firm’’ is a broker-dealer trading in its own proprietary account or on behalf of another broker-dealer. A ‘‘Market Maker’’ is a broker-dealer that assumes the risk of holding a position in a series to facilitate trading. 5 An opening buy is a transaction that creates or increases a long position and an opening sell is a transaction that creates or increases a short position. A closing buy is a transaction made to close out an existing position. A closing sell is a transaction to reduce or eliminate a long position. 6 The degree to which a series is ‘‘in’’ or ‘‘out’’ of the ‘‘money’’ will be identified according to the following five levels of ‘‘moneyness’’: (i) ‘‘Deep in the Money’’ means that the strike price of this option is more than 12% lower than the price of the underlying security if it is a call or more than 12% higher if it is a put; (ii) ‘‘In the Money’’ means that the strike price of this option is within the range of 5%–12% lower than the price of the underlying security if it is a call or within the range of 5%–12% higher if it is a put; (iii) ‘‘At the Money’’ means that the strike price of this option is within the range of 5% higher or lower than the price of the underlying security; (iv) ‘‘Out of the Money’’ means that the strike price of this option is within the range of 5%–12% higher than the price of the underlying security if it is a call or 5%– 12% lower if it is a put; and (v) ‘‘Deep out of the Continued Sfmt 4703 E:\FR\FM\24MYN1.SGM 24MYN1

Agencies

[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)]
[Notices]
[Pages 23888-23891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10593]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80724; File No. SR-PEARL-2017-22]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX 
PEARL Rules 503 and 515

May 18, 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 May 5, 2017, MIAX PEARL, LLC (``MIAX PEARL'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \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 503, 
Openings on the Exchange, and Rule 515, Execution of Orders.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL'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

[[Page 23889]]

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 Exchange Rule 503, Openings on the 
Exchange, to adopt new rule text clarifying the treatment of orders 
that remain in the System \3\ after the completion of the Opening 
Process.\4\ Additionally, the Exchange proposes to amend Exchange Rule 
515 by removing the provision which states that when the System opens a 
series for trading by disseminating the Exchange's best bid and offer, 
non-routable orders, or Do Not Route (``DNR'') orders,\5\ that are in 
the System and that cross the ABBO,\6\ will be cancelled and not 
included in the Managed Interest Process.\7\
---------------------------------------------------------------------------

    \3\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of Securities. See Exchange Rule 
100.
    \4\ See Exchange Rule 503(a)(1).
    \5\ A Do Not Route or ``DNR'' order is an order that will never 
be routed outside of the Exchange regardless of the prices displayed 
by away markets. A DNR order may execute on the Exchange at a price 
equal to or better than, but not inferior to, the best away market 
price but, if that best away market remains, the DNR order will be 
handled in accordance with the Managed Interest Process described in 
Rule 515(d)(2). See Exchange Rule 516.
    \6\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the 
best bid(s) or offer(s) disseminated by other Eligible Exchanges 
(defined in Rule 1400(f)) and calculated by the Exchange based on 
market information received by the Exchange from OPRA. See Exchange 
Rule 100.
    \7\ See Exchange Rule 515(d)(2).
---------------------------------------------------------------------------

    Exchange Rule 503 provides that the Opening Process may open a 
series for trading on the Exchange (i) where there is a possible trade 
on the Exchange (``opening on a trade''); and (ii) where there is no 
possible trade on the Exchange (``opening on a quote''). Exchange Rule 
503(b)(2) discusses the Opening Process when the series opens on a 
trade. More specifically, Rule 503(b)(2)(iii) discusses how the 
Exchange handles unexecuted orders that remain in the System after the 
conclusion of the Opening Process, stating that, ``[s]uch orders will 
be handled . . . in time sequence, beginning with the order with the 
oldest time stamp and may, in whole or in part, be placed on the Book, 
cancelled, executed, managed in accordance with Rule 515, or routed in 
accordance with Rule 529.''
    Exchange Rule 503(b)(3) discusses the Opening Process when there is 
no possible trade on the Exchange, or when the series opens on a quote. 
However, this rule is silent on how orders that remain in the System 
after the conclusion of the Opening Process are handled. The Exchange 
proposes to adopt new rule text in Rule 503(b)(3) similar to that of 
Rule 503(b)(2)(iii) to codify existing behavior and explicitly state 
that, ``[o]rders in the System will be handled at the conclusion of the 
Opening Process in time sequence, beginning with the order with the 
oldest time stamp and may, in whole or in part, be placed on the Book, 
cancelled, executed, managed in accordance with Rule 515, or routed in 
accordance with Rule 529.'' This proposed amendment provides 
consistency in the Exchange's rules concerning the handling of 
unexecuted orders at the conclusion of the Opening Process.
    Additionally, the Exchange proposes to eliminate paragraph (vi) in 
its entirety from Exchange Rule 515(d)(2) which currently states that 
when the System opens without an opening transaction, and instead opens 
by disseminating the Exchange's best bid and offer among quotes and 
orders that exist in the System at that time as described in Rule 
503(b)(3), non-routable orders then in the System that cross the ABBO 
will be cancelled and are not included in the Managed Interest Process. 
Proposed Rule 503(b)(3) provides that when the series opens on a quote, 
any orders, including non-routable orders, that remain in the System at 
the conclusion of the Opening Process are re-introduced in time 
priority, oldest first. The proposed rule change provides that orders 
remaining in the System at the conclusion of the Opening process, 
including non-routable orders, will be included in the Managed Interest 
Process under Rule 515, as described below. Therefore, current 
paragraph (vi) of Exchange Rule 515(d)(2) is no longer necessary, and 
may be removed from the rule.\8\
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    \8\ The Commission notes that elimination of paragraph (vi) from 
Exchange Rule 515(d)(2) would allow non-routable orders then in the 
System that cross to ABBO to be placed on the Book, cancelled, 
executed, managed in accordance with Rule 515, or routed in 
accordance with Rule 529 when the system opens with a quote.
---------------------------------------------------------------------------

    The Exchange believes that the codification of the treatment of 
orders that remain in the System at the completion of the Opening 
Process reflects the Exchange's intention to provide uniform treatment 
for all non-routable orders that remain in the System after the Opening 
Process concludes. Additionally, the proposed treatment of non-routable 
orders that cross the ABBO when the series opens on a quote, aligns to 
the current treatment of non-routable orders that cross the ABBO when 
the series opens on a trade, in that these orders will be subject to 
the Managed Interest Process.
    The Exchange notes that certain MIAX PEARL Rules were based upon 
the rules of the Exchange's affiliate, Miami International Securities 
Exchange, LLC (``MIAX Options''), and that current MIAX PEARL Rule 
515(d)(2)(iv) [sic] is identical (save for an internal rule reference) 
to MIAX Options Rule 515(c)(1)(ii)(B). However, when the MIAX Options 
Exchange opens on a trade, orders that cross the opening price are 
cancelled,\9\ whereas on MIAX PEARL, orders that cross the opening 
price are re-introduced in time priority, and may be included in the 
Managed Interest Process. The Exchange's proposal to amend its rule is 
designed to provide consistent treatment of non-routable orders that 
remain in the System after the conclusion of the Opening Process on 
MIAX PEARL.
---------------------------------------------------------------------------

    \9\ See MIAX Options Rule 503(f)(2)(vii)(B)(5).
---------------------------------------------------------------------------

    The Managed Interest Process for Non-Routable Orders described in 
Rule 515 provides that if the limit price of an order locks or crosses 
the current opposite side NBBO \10\ and the PBBO \11\ is inferior to 
the NBBO, the System will display the order one Minimum Price Variation 
(``MPV'') \12\ away from the current opposite side NBBO, and book the 
order at a price that will lock the current opposite side NBBO. Should 
the NBBO price change to an inferior price level, the order's Book 
price will continuously re-price to lock the new NBBO and the managed 
order's displayed price will continuously re-price one MPV away from 
the new NBBO until (A) the order has traded to and including its limit 
price, (B) the order has traded to and including its price protection 
price limit at which time any remaining contracts are cancelled, (C) 
the order is fully executed or (D) the order is cancelled.\13\
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    \10\ 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.
    \11\ The term ``PBBO'' means the best bid or offer on the PEARL 
Exchange. See Exchange Rule 100.
    \12\ See Exchange Rule 510.
    \13\ See Exchange Rule 515(d)(2)(ii).
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    This proposal should eliminate any investor confusion arising from 
the cancellation of some non-routable orders versus the management of 
others, depending upon whether the Exchange opened on a quote or a 
trade respectively. The proposed rule change should also assist market 
participants in making decisions concerning order routing by 
simplifying and clarifying the relationship between the Exchange's

[[Page 23890]]

Opening Process and the Managed Interest Process for Non-Routable 
Orders. Additionally, the proposed change provides consistency in the 
Exchange's Rules concerning orders that remain in the System at the 
conclusion of the Opening Process.
2. Statutory Basis
    MIAX PEARL believes that its proposed rule change is consistent 
with Section 6(b) of the Act \14\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes its proposal codifying the Exchange's 
handling of orders after the Opening Process is complete promotes 
transparency and clarity in the Exchange's rules. The transparency and 
accuracy resulting from the codification of this functionality is 
consistent with the Act because it removes impediments to and perfects 
the mechanism of a free and open market and a national market system, 
and, in general, protects investors and the public interest, by 
accurately describing the steps taken by the System when a series opens 
on a quote and on a trade.
    The Exchange believes its proposal to provide equal treatment to 
non-routable orders that remain in the System after the conclusion of 
the Opening Process to be one that protects investors and the public 
interest by eliminating the potential for confusion that could arise as 
a result of non-routable orders that cross the ABBO being cancelled 
when the series opens on a quote, while non-routable orders that cross 
the ABBO remain in the System and are subject to the Managed Interest 
Process when the series opens on a trade.
    The Exchange believes it is in the interest of investors and the 
public to accurately describe the behavior of the Exchange's System in 
its rules as this information may be used by investors to make 
decisions concerning the submission of their orders. Transparency and 
clarity are consistent with the Act because it removes impediments to 
and perfects the mechanism of a free and open market and a national 
market system, and, in general, protects investors and the public 
interest by accurately describing the behavior of the Exchange's 
System.
    MIAX PEARL participants should have a better understanding of the 
Exchange's treatment of orders remaining in the System at the 
conclusion of the Opening Process. The codification and clarification 
of the System's functionality is designed to promote just and equitable 
principles of trade by providing a clear and objective description to 
all participants of how orders will be handled, and should assist 
investors in making decisions concerning their orders.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    The Exchange does not believe that the proposed rule changes will 
impose any burden on intra-market competition as the Rules apply 
equally to all Exchange Members.
    The Exchange does not believe that the proposed rule changes will 
impose any burden on intra-market competition as the proposal is one 
that promotes order handling efficiency on the Exchange.
    For the reasons stated, the Exchange does not believe 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) \17\ 
thereunder.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \18\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. In its filing 
with the Commission, 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 believes that waiving the 30-
day operative delay is consistent with the protection of investors and 
the public interest. The Exchange states that a recent rule change to 
permit Post-Only Orders \20\ to participate in the Opening Process 
became operative on the Exchange on May 3, 2017.\21\ The Exchange 
represents that this change may result in an increase in the number of 
non-routable orders in the System at the conclusion of the Opening 
Process, and these orders may be cancelled under the current rule. The 
Exchange believes that the proposed rule change may reduce potential 
confusion by providing consistent treatment to non-routable orders when 
the Exchange opens on a trade or a quote. Accordingly, the Commission 
hereby waives the operative delay and designates the proposal operative 
upon filing.\22\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ See Exchange Rule 516(j). Post-Only Orders are non-
routable. Id.
    \21\ See Securities Exchange Act Release No. 80384 (April 6, 
2017), 82 FR 17700 (April 12, 2017) (SR-PEARL-2017-16).
    \22\ 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).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and

[[Page 23891]]

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-PEARL-2017-22 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-PEARL-2017-22. 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-PEARL-2017-22 and should be 
submitted on or before June 14, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10593 Filed 5-23-17; 8:45 am]
 BILLING CODE 8011-01-P
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