Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX Options Rules 307, Position Limits, and 309, Exercise Limits, To Extend the SPY Pilot Program, 29951-29952 [2017-13705]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 125 (Friday, June 30, 2017)]
[Notices]
[Pages 29951-29952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13705]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81020; File No. SR-MIAX-2017-30]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend MIAX Options Rules 307, Position Limits, 
and 309, Exercise Limits, To Extend the SPY Pilot Program

June 26, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 20, 2017, Miami International Securities Exchange, LLC 
(``MIAX Options'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rules 307, 
Position Limits, and 309, Exercise Limits, to extend the pilot program 
that eliminates the position and exercise limits for physically-settled 
options on the SPDR[supreg] S&P 500[supreg] ETF Trust (``SPY Pilot 
Program'').
    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
    Exchange Rules 307, Position Limits, and 309, Exercise Limits, 
establish position and exercise limits for aggregate positions in 
option contracts traded on the Exchange. Interpretations and Policies 
.01 to Rule 307 lists specific position limits for options on specific 
underlying securities, and Interpretations and Policies .01 to Rule 309 
lists specific exercise limits for options on specific underlying 
securities. Among the listed specific underlying securities is the 
SPDR[supreg] S&P 500[supreg] ETF Trust (``SPY''). Currently, each of 
these Rules provides that there is no position limit and no exercise 
limit on options overlying SPY. The position and exercise limits for 
options overlying SPY in each of these Rules are the subject of a pilot 
program, which is scheduled to expire on July 12, 2017.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 78120 (June 22, 
2016), 81 FR 42032 (June 28, 2016) (SR-MIAX-2016-17) (extending the 
SPY Pilot Program to July 12, 2017).
---------------------------------------------------------------------------

    The Exchange proposes to amend Exchange Rule 307, Interpretations 
and Policies .01, and Exchange Rule 309, Interpretations and Policies 
.01, to extend the duration of the SPY Pilot Program through July 12, 
2018. There are no substantive changes being proposed to the SPY Pilot 
Program. The Exchange affirms its consideration of several factors that 
support the proposal to establish and extend the SPY Pilot Program, 
which include: (1) The liquidity of the option and the underlying 
security; (2) the market capitalization of the underlying security and 
the securities that make up the S&P 500 Index; (3) options reporting 
requirements; and (4) financial requirements imposed by MIAX Options 
and the Commission.
    The Exchange notes that it is not aware of any problems created by 
the current SPY Pilot Program and does not foresee any problems with 
the proposed extension. The Exchange has formally submitted a Report 
for the SPY Pilot Program as part of this filing.\4\ In addition, the 
Exchange represents that if it chooses to extend or seek permanent 
approval of the SPY Pilot Program, the Exchange will submit another SPY 
Pilot Program Report at least thirty (30) days prior to the expiration 
of the extended SPY Pilot Program time period which would cover the 
period between reports. The SPY Pilot Program Report will compare the 
impact of the pilot program, if any, on the volumes of SPY options and 
the volatility in the price of the underlying SPY contract, 
particularly at expiration. The SPY Pilot Program Report will also 
detail the size and different types of strategies employed with respect 
to positions established in SPY options; note whether any problems, in 
the underlying SPY ETF or otherwise, arose as a result of the no-limit 
approach; and include any other information that may be useful in 
evaluating the effectiveness of the SPY Pilot Program. In preparing the 
Pilot Report, the Exchange will utilize various data elements such as 
volume and open interest. In addition the Exchange would make available 
to Commission staff data elements relating to the effectiveness of the 
SPY Pilot Program.
---------------------------------------------------------------------------

    \4\ See Exhibit 3 attached hereto [sic].
---------------------------------------------------------------------------

    The Exchange proposes to extend the SPY Pilot Program in order for 
the Exchange and the Commission to have additional time to evaluate the 
Pilot and its effect on the market and to determine whether to seek 
permanent approval. Prior to the expiration of the SPY Pilot Program 
and based upon the findings of the SPY Pilot Program Report, the 
Exchange will be able to either extend the SPY Pilot Program, adopt the 
SPY Pilot Program on a permanent basis, or terminate the SPY Pilot 
Program. If the SPY Pilot Program is not extended or adopted on a 
permanent basis by the expiration of the extended SPY Pilot Program, 
the position limits for options overlying SPY would revert to limits in 
effect prior to the commencement of the SPY Pilot Program.

[[Page 29952]]

2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \5\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \6\ 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that extending the SPY Pilot 
Program promotes just and equitable principles of trade by permitting 
market participants, including market makers, institutional investors 
and retail investors, to establish greater positions when pursuing 
their investment goals and needs. The Exchange believes that the 
elimination of position limits for SPY options would not increase 
market volatility or facilitate the ability to manipulate the market.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
proposed rule change is not designed to address any aspect of 
competition, whether between the Exchange and its competitors, or among 
market participants. Instead, the proposed rule change is designed to 
allow the SPY Pilot Program to continue as the Exchange believes other 
competing options exchanges will also extend the SPY Pilot Program for 
another year.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \8\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \9\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay. The 
Exchange stated that waiver of the operative delay would allow the SPY 
Pilot Program to continue uninterrupted at the Exchange. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposed rule change operative upon filing.\10\
---------------------------------------------------------------------------

    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MIAX-2017-30 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2017-30. 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 such 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-2017-30, and should be 
submitted on or before July 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-13705 Filed 6-29-17; 8:45 am]
BILLING CODE 8011-01-P