Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rules 517A, Aggregate Risk Manager for EEMs (“ARM-E”), and 517B, Aggregate Risk Manager for Market Makers (“ARM-M”), 57799-57803 [2017-26321]

Download as PDF sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices deadline for same-day settling instructions with the deadline for other same-day settling non-ETF activity and streamline the processing of same-day settling items for NSCC and its Members. At the same time, NSCC believes that allowing instructions for same-day settlement that are received by NSCC by the designated cut-off time may impose a burden on competition because ETF agents and ETF sponsors (and third party service providers they use) may have to make coding changes; these potential coding changes would be different than the coding changes related to the enhanced input and output files described above. However, NSCC believes that any burden on competition that may result from this proposed change would be necessary and appropriate in furtherance of the Act.29 As described above, under the proposal, NSCC would be able to receive creation and redemption instructions for same-day settlement until the designated cut-off time of 11:30 a.m. ET. NSCC believes this proposed change would be necessary in furtherance of the Act because it would allow NSCC to align this deadline for same-day settling instructions with the deadline for other same-day settling non-ETF activity and would streamline the processing of same-day settling items for both NSCC and its Members.30 Furthermore, NSCC believes this proposed change would be appropriate in furtherance of the Act because any same-day settling instructions that are not received by the designated cut-off time could still be settled outside of NSCC (which is what happens today). Because same-day settling instructions that are received after the deadline would not be assigned a new settlement date under the proposal, Members would still be able to settle these sameday settling instructions that day, outside of NSCC. Therefore, NSCC believes that any burden on competition derived from the proposed change to allow instructions for same-day settlement that are received by NSCC by the designated cut-off time would be necessary and appropriate as permitted by Section 17A(b)(3)(I) of the Act.31 In addition, regarding next-day settling creates and redeems, NSCC believes that the proposed technical correction to remove the language stating that next-day settling creates and redeems are required to be submitted by such cut-off time on T would not have any impact or impose any burden on 29 15 U.S.C. 78q–1(b)(3)(I). note 10. 31 15 U.S.C. 78q–1(b)(3)(I). competition. Post-implementation of the accelerated trade guaranty,32 NSCC no longer processes next-day settling instructions differently than other instructions when they are submitted to NSCC. As such, NSCC believes that deleting this repetitive language would promote clarity and accuracy and enable Members to readily understand how such instructions are processed when submitted to NSCC. (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NSCC has not received or solicited any written comments relating to this proposal. NSCC will notify the Commission of any written comments received by NSCC. 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 up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NSCC–2017–019 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR–NSCC–2017–019. This file number should be included on the subject line if email is used. To help the Commission process and review your 30 Supra VerDate Sep<11>2014 18:50 Dec 06, 2017 comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://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 NSCC and on DTCC’s Web site (http://dtcc.com/legal/sec-rulefilings.aspx). All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NSCC– 2017–019 and should be submitted on or before December 28, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–26319 Filed 12–6–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82197; File No. SR– PEARL–2017–37] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rules 517A, Aggregate Risk Manager for EEMs (‘‘ARM–E’’), and 517B, Aggregate Risk Manager for Market Makers (‘‘ARM–M’’) December 1, 2017. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 33 17 32 Supra Jkt 244001 PO 00000 note 12. Frm 00097 Fmt 4703 1 15 Sfmt 4703 57799 E:\FR\FM\07DEN1.SGM CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 07DEN1 57800 Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices thereunder,2 notice is hereby given that on November 28, 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, 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 Rules 517A, Aggregate Risk Manager for EEMs (‘‘ARM–E’’), and 517B, Aggregate Risk Manager for Market Makers (‘‘ARM–M’’). The text of the proposed rule change is available on the Exchange’s Web site at http://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 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 sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose The Exchange proposes to amend Exchange Rule 517A, ARM–E, to add additional detail to subsection (b), and to adopt new rule text in Interpretations and Policies .01, to state that immediateor-cancel (‘‘IOC’’) Orders 3 are not EEM ARM Eligible Orders.4 The Exchange also proposes to amend Exchange Rule 517B, ARM–M, to add additional detail to subsection (b), and to adopt new rule text in Interpretations and Policies .02, to state that immediate-or-cancel 2 17 CFR 240.19b–4. immediate-or-cancel order is an order that is to be executed in whole or in part upon receipt. Any portion not so executed is cancelled. See Exchange Rule 516(e). 4 See Exchange Rule 517A(a). 3 An VerDate Sep<11>2014 18:50 Dec 06, 2017 Jkt 244001 Eligible Order during such EEM Specified Time Period triggers the ARM–E.16 ARM–E The System will engage the ARM–E in ARM–E protects MIAX PEARL a particular EEM Specified Option Class Electronic Exchange Members when the EEM Counting Program has (‘‘EEMs’’) 6 and assists them in determined that an EEM has executed managing risk by maintaining a during the EEM Specified Time Period counting program (‘‘EEM Counting a number of EEM ARM Contracts from Program’’) 7 for each participating EEM an EEM ARM Eligible Order equal to or who has submitted an order in an EEM above their EEM Allowable Engagement 8 using a Specified Option Class Percentage. ARM–E will then, until the specified market participant identifier EEM sends a notification to the System 9 of the EEM and delivered via (‘‘MPID’’) of the intent to reengage and submits a the MEO Interface 10 (an ‘‘EEM ARM new order in the EEM Specified Option Eligible Order’’). The EEM Counting Class: (i) Automatically cancel the EEM Program counts the number of contracts ARM Eligible Orders in all series of that executed by an EEM from an EEM ARM particular EEM Specified Option Class Eligible Order (the ‘‘EEM ARM and (ii) reject new orders by the EEM in Contracts’’) within a specified time all series of that particular EEM period that has been established by the Specified Option Class submitted using EEM (the ‘‘EEM Specified Time the MEO Interface.17 Period’’).11 The EEM Specified Time The Exchange now proposes to allow Period cannot exceed 15 seconds.12 The EEMs to submit orders with a time in Exchange currently provides that force of immediate-or-cancel to the contracts executed as a result of an Exchange during the time that the immediate-or-cancel (‘‘IOC’’) order ARM–E is engaged by amending submitted by such EEM are not Interpretations and Policies .01 to adopt included in a specific EEM’s EEM new rule text to state, ‘‘[i]mmediate-or13 Counting Program. Cancel (‘‘IOC’’) Orders submitted by an The EEM may also establish for each EEM using the MEO Interface are not EEM Specified Option Class an EEM EEM ARM Eligible Orders.’’ The Allowable Engagement Percentage (the Exchange also proposes to remove the ‘‘EEM Allowable Engagement existing text in Interpretations and Percentage’’),14 which is a number of Policies .01 in its entirety which states, contracts, divided by the size of the ‘‘[t]he System does not include in a orders, executed within the Specified Time Period, equal to or over which the specific EEM’s EEM Counting Program contacts executed as a result of an ARM–E will be triggered. When an immediate-or-cancel (‘‘IOC’’) order execution of an EEM ARM Contract submitted by such EEM.’’ By adopting from an EEM ARM Eligible Order occurs, the System 15 will look back over text that explicitly states that IOC orders submitted by an EEM using the MEO the EEM Specified Time Period to Interface are not EEM ARM Eligible determine whether the sum of contract Orders, there is no longer a need to executions from such EEM ARM indicate that contracts executed as a result of an IOC order submitted by an 5 See Exchange Rule 517B(a). 6 The term ‘‘Electronic Exchange Member’’ or EEM are not included in the Counting ‘‘EEM’’ means the holder of a Trading Permit who Program, as only EEM ARM Eligible is a Member representing as agent Public Customer Orders will be included in the EEM Orders or Non-Customer Orders on the Exchange Counting Program. and those non-Market Maker Members conducting Additionally, Rule 517A(b) provides proprietary trading. Electronic Exchange Members are deemed ‘‘members’’ under the Exchange Act. that when the ARM–E is engaged, the See Exchange Rule 100. System will, (i) automatically cancel the 7 See Exchange Rule 517A(a). EEM ARM Eligible Orders in all series 8 An ‘‘EEM Specified Option Class’’ is a class of that particular EEM Specified Option which the EEM has designated as a class to be Class and (ii) reject new orders by the protected via ARM–E. See Exchange Rule 517A(a). 9 The term ‘‘MPID’’ means unique market EEM in all series of that particular EEM participant identifier. See Exchange Rule 100. Specified Option Class submitted using 10 The term ‘‘MEO Interface’’ means a binary the MEO Interface. The Exchange now order interface used for submitting certain order proposes to amend subsection (b)(ii) to types (as set forth in Rule 516) to the MIAX PEARL state that the System will reject EEM System. See Exchange Rule 100. 11 See Exchange Rule 517A(a). ARM Eligible Orders submitted by the 12 Id. EEM, thereby allowing IOC orders to be 13 See Exchange Rule 517A, Interpretations and submitted to the Exchange for trading Policies .01. when ARM–E is engaged. 14 (‘‘IOC’’) Orders are not MM ARM Eligible Orders.5 See Exchange Rule 517A(c). term ‘‘System’’ means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. 15 The PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 16 See 17 See E:\FR\FM\07DEN1.SGM Exchange Rule 517A(c). Exchange Rule 517A(b). 07DEN1 Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices ARM–M sradovich on DSK3GMQ082PROD with NOTICES ARM–M protects MIAX PEARL Market Makers 18 and assists them in managing risk by maintaining a counting program (‘‘MM Counting Program’’) for each Market Maker who has submitted an order in an option class (an ‘‘MM Option Class’’) delivered via the MEO Interface (an ‘‘MM ARM Eligible Order’’).19 The MM Counting Program counts the number of contracts executed by a Market Maker from an MM ARM Eligible Order (the ‘‘MM ARM Contracts’’) within a specified time period that has been established by the Market Maker or as a default setting, as defined below (the ‘‘MM Specified Time Period’’).20 The MM Specified Time Period cannot exceed 15 seconds whether established by the Market Maker or as a default setting.21 The Exchange currently provides that contracts executed as a result of an immediate-or-cancel (‘‘IOC’’) order submitted by such MM are not included in a specific MM’s MM Counting Program.22 The Market Maker may also establish for each MM Option Class an MM Allowable Engagement Percentage. When an execution of an MM ARM Contract from an MM ARM Eligible Order occurs, the System will look back over the MM Specified Time Period to determine whether the sum of contract executions from such MM ARM Eligible Order during such MM Specified Time Period triggers the ARM–M.23 The System will engage the ARM–M in a particular MM Option Class when the MM Counting Program has determined that a Market Maker has executed during the MM Specified Time Period a number of MM ARM Contracts from an MM ARM Eligible Order equal to or above their MM Allowable Engagement Percentage. The ARM–M will then, until the Market Maker sends a notification to the System of the intent to reengage and submits a new order in the MM Option Class: (i) Automatically cancel the MM ARM Eligible Orders in all series of that particular MM Option Class and (ii) reject new orders by the Market Maker in all series of that 18 The term ‘‘Market Maker’’ or ‘‘MM’’ means a Member registered with the Exchange for the purpose of making markets in options contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of the MIAX PEARL Rules. See Exchange Rule 100. 19 See Exchange Rule 517B(a). 20 Id. 21 Id. 22 See Exchange Rule 517B, Interpretations and Policies .02. 23 See Exchange Rule 517B(c). VerDate Sep<11>2014 18:50 Dec 06, 2017 Jkt 244001 particular MM Option Class submitted using the MEO Interface.24 The Exchange now proposes to allow Market Makers to submit orders with a time in force of immediate-or-cancel to the Exchange during the time that the ARM–M is engaged by amending Interpretations and Policies .02 to state, ‘‘[i]mmediate-or-Cancel (‘‘IOC’’) Orders submitted by a Market Maker using the MEO Interface are not MM ARM Eligible Orders.’’ The Exchange also proposes to remove the existing text in Interpretations and Policies .02 in its entirety which states, ‘‘[t]he System does not include in a specific MM’s MM Counting Program contacts executed as a result of an immediate-or-cancel (‘‘IOC’’) order submitted by such MM.’’ By adopting text that explicitly states that IOC orders submitted by a Market Maker using the MEO Interface are not MM ARM Eligible Orders, there is no longer a need to indicate contracts executed as a result of an IOC order submitted by a Market Maker are not included in the Counting Program, as only MM ARM Eligible Orders will be included in the MM Counting Program. Additionally, Rule 517B(b) provides that when the ARM–M is engaged, the System will (i) automatically cancel the MM ARM Eligible Orders in all series of that particular MM Option Class and (ii) reject new orders by the Market Maker in all series of that particular MM Option Class submitted using the MEO Interface. The Exchange now proposes to amend subsection (b)(ii) to state that the System will reject new MM ARM Eligible Orders submitted by the Market Maker, thereby allowing IOC orders to be submitted to the Exchange for trading when ARM–M is engaged. ARM–E and ARM–M are designed to mitigate the exposure risk of resting orders on the Exchange. In the Exchange’s experience an IOC order is an order that is designed to target specific, identifiable liquidity resting on the Book 25 that the entering Member desires to trade with. Thus, a Member entering an IOC order does not require the risk management protection of either the ARM–E or ARM–M, as the Member entering the IOC order has made an affirmative decision to attempt to execute that transaction. The Exchange believes Members should not be prevented from submitting these types of orders to the Exchange during the time that the Aggregate Risk Manager is engaged as contracts executed using these types of orders are not included in 24 See Exchange Rule 517B(b). term ‘‘Book’’ means the electronic book of buy and sell orders and quotes maintained by the System. See Exchange Rule 100. 25 The PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 57801 either the EEM or MM Counting Program.26 The Exchange believes this proposal will allow Members to continue to be protected from the risks that the Aggregate Risk Manager is designed to mitigate, and also allow Members to continue to submit certain orders which Members desire to submit even during the time that the Aggregate Risk Manager is engaged. The Exchange believes allowing Members the ability to send IOC orders to the Exchange will improve liquidity and order execution on the Exchange. The Exchange notes that the proposed rule change is similar to a rule that is currently operative on the Exchange’s affiliate, MIAX Options Exchange (‘‘MIAX Options’’). Specifically, Interpretations and Policies .01 to MIAX Options Rule 612, Aggregate Risk Manager, states that eQuotes 27 will remain in the System available for trading when the Aggregate Risk Manager is engaged. IOC Orders on MIAX PEARL are analogous to eQuotes on MIAX Options as eQuotes also have limited time-in-force durations. For example, eQuotes on MIAX Options 28 may be Auction or Cancel (‘‘AOC’’),29 Opening Only (‘‘OPG’’),30 Immediate or Cancel (‘‘IOC’’),31 or Fill or Kill (‘‘FOK’’).32 MIAX PEARL and MIAX 26 See supra note 11 and 19. eQuote is a quote with a specific time in force that does not automatically cancel and replace a previous Standard quote or eQuote. An eQuote can be cancelled by the Market Maker at any time, or can be replaced by another eQuote that contains specific instructions to cancel an existing eQuote. See MIAX Options Exchange Rule 517(a)(2). 28 MIAX Options provides for a Day eQuote in its rules, however this type of eQuote has not yet been enabled for trading on the MIAX Options Exchange. See MIAX Options Exchange Rule 517(a)(i). 29 An Auction or Cancel or ‘‘AOC’’ eQuote is a quote submitted by a Market Maker to provide liquidity in a specific Exchange process . . . with a time in force that corresponds with the duration of that event and will automatically expire at the end of that event. See MIAX Options Exchange Rule 517(a)(2)(ii). The Exchange notes the current length of an auction on MIAX Options is 100 milliseconds and that the duration of an auction may be no less than 100 milliseconds and no more than 1 second. See MIAX Options Exchange Rule 515A(a)(2)(i)(C). 30 An opening only or ‘‘OPG’’ eQuote is a quote that can be submitted by a Market Maker only during the Opening . . . OPG eQuotes will automatically expire at the end of the Opening Process. See MIAX Options Exchange Rule 517(a)(2)(iii). 31 An immediate or cancel or ‘‘IOC’’ eQuote is an eQuote submitted by a Market Maker that must be matched with another quote or order for an execution in whole or in part upon receipt into the System. Any portion of the IOC eQuote not executed will be immediately canceled. See MIAX Options Exchange Rule 517(a)(2)(iv). 32 A fill or kill or ‘‘FOK’’ eQuote is an eQuote submitted by a Market Maker that must be matched with another quote or order for an execution in its entirety at a single price upon receipt into the 27 An E:\FR\FM\07DEN1.SGM Continued 07DEN1 57802 Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Options have a number of common Members and where feasible the Exchange strives to provide consistency between the markets so as to avoid confusion among Members. The Exchange will announce the implementation date of the proposed rule change by Regulatory Circular to be published no later than 60 days following the operative date of the proposed rule. The implementation date will be no later than 60 days following the issuance of the Regulatory Circular. 2. Statutory Basis MIAX PEARL believes that its proposed rule change is consistent with Section 6(b) of the Act 33 in general, and furthers the objectives of Section 6(b)(5) of the Act 34 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 regulating, clearing, settling, processing information with respect to, and 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 that its proposal would promote just and equitable principles of trade by permitting Members to use an order type that is not an ARM Eligible Order during the time that the ARM is engaged. Additionally, the Exchange believes this proposal will promote just and equitable principles of trade by allowing Members to continue to be protected from the risks that the Aggregate Risk Manager is designed to mitigate, and also allow Members to continue to submit certain orders which Members desire to submit even during the time the Aggregate Risk Manager is engaged. ARM–E and ARM–M are designed to mitigate the exposure risk of resting orders. An IOC order is an order that is designed to target specific, identifiable liquidity resting on the Book that the entering Member desires to trade with and thus the Member entering the IOC order does not require the risk management protection of either the ARM–E or ARM–M, as the Member entering the IOC order has made an affirmative decision to attempt to execute that transaction. Therefore, the Exchange believes Members should not be prevented from submitting these System or will be immediately cancelled. See MIAX Options Exchange Rule 517(a)(a)(v). 33 15 U.S.C. 78f(b). 34 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 18:50 Dec 06, 2017 Jkt 244001 types of Orders to the Exchange during the time that the Aggregate Risk Manager is engaged. The Exchange believes allowing Members the ability to send IOC orders to the Exchange while the Aggregate Risk Manager is engaged promotes just and equitable principles of trade by improving liquidity and order execution on the Exchange. The Exchange believes its proposal will result in increased liquidity on the Exchange which will contribute to the operation of a fair and orderly market. The proposed treatment of IOC orders during the time that the ARM is engaged is substantially similar to the treatment of eQuotes on the Exchange’s affiliate, MIAX Options.35 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 believes that the proposed rule change will foster competition on the Exchange by providing EEMs and Market Makers with the ability to submit IOC orders during the time that the ARM is engaged and compete for executions. The Exchange does not believe the proposed rule change will impact intermarket competition as the proposal is not designed to address competitive issue and is limited in scope to the behavior of Members of the Exchange. For 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 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 35 See MIAX Options Rule 612, Interpretations and Policies .01. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 become effective pursuant to 19(b)(3)(A) of the Act 36 and Rule 19b–4(f)(6) 37 thereunder. 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– PEARL–2017–37 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–2017–37. 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 (http://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 36 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 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. 37 17 E:\FR\FM\07DEN1.SGM 07DEN1 Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices 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. Persons submitting comments are cautioned that we do not react or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–PEARL–2017–37 and should be submitted on or before December 28, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.38 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–26321 Filed 12–6–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82194; File No. SR–LCH SA–2017–010] Self-Regulatory Organizations; LCH SA; Notice of Filing of Proposed Rule Change, Security-Based Swap Submission, or Advance Notice Relating to the Implementation of the Markets in Financial Instruments Regulation December 1, 2017. sradovich on DSK3GMQ082PROD with NOTICES 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 November 21, 2017, Banque Centrale de Compensation, which conducts business under the name LCH SA (‘‘LCH SA’’), filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change (‘‘Proposed Rule Change’’) described in Items I, II and III below, which Items have been primarily prepared by LCH SA. The Commission is publishing this notice to solicit comments on the Proposed Rule Change from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change LCH SA is proposing to amend its (i) CDS Clearing Rulebook (the 38 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:50 Dec 06, 2017 Jkt 244001 ‘‘Rulebook’’) and CDS Clearing Procedures (the ‘‘Procedures’’) to make conforming and clarifying changes necessary to implement certain provisions of the Markets in Financial Instruments Regulation (‘‘MiFIR’’) 3 that are applicable to central counterparties (‘‘CCPs’’) authorized under the European Markets Infrastructure Regulation (‘‘EMIR’’) 4 (each such CCP, an ‘‘authorized CCP’’). In particular, the Proposed Rule Change implements Article 29 of MiFIR, which requires authorized CCPs to establish effective systems, procedures and arrangements to ensure that transactions in cleared derivatives transactions are submitted and accepted for clearing on a straightthrough processing (‘‘STP’’) basis, and Article 30 of MiFIR, which requires authorized CCPs to establish indirect clearing arrangements with respect to exchange-traded derivatives (‘‘ETDs’’) that are of ‘‘equivalent effect’’ to the corresponding requirements under EMIR. Regulatory technical standards have also been adopted to set more specific requirements that authorized CCPs must meet to comply with MiFIR. The regulatory technical standards for straight-through processing (‘‘RTS 26’’) were adopted in late 2016.5 More recently, the European Commission adopted regulatory technical standards, which align the indirect clearing requirements under EMIR and MiFIR (‘‘Indirect Clearing RTS’’).6 II. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, LCH SA included statements concerning the purpose of and basis for the Proposed Rule Change and discussed any comments it received on the 3 Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012. 4 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade reporting. 5 Commission Delegated Regulation (EU) 2017/ 582 of 29.6.2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards specifying the obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing. 6 Commission Delegated Regulation (EU) of 22.9.2017 amending Commission Delegated Regulation (EU) No 149/2013 with regard to regulatory technical standards on indirect clearing arrangements. A separate, but identical, set of RTS apply to indirect clearing of exchange-traded derivatives. See, Commission Delegated Regulation (EU) of 22.9.2017 supplementing Regulation (EU) No 600/2014 with regard to regulatory technical standards on indirect clearing arrangements. PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 57803 Proposed Rule Change. The text of these statements may be examined at the places specified in Item IV below. LCH SA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose a. Overview As noted above, the principal purpose of the Proposed Rule Change is to amend LCH SA’s Rulebook and Procedures to implement the provisions of MiFIR applicable to authorized CCPs and the Indirect Clearing RTS. MiFIR takes effect January 3, 2018 and it is expected that the Indirect Clearing RTS will take effect on the same date. Specifically, Article 29 of MiFIR requires authorized CCPs to establish effective systems, procedures and arrangements to ensure that transactions in cleared derivatives are submitted and accepted for clearing on a straightthrough processing basis. Article 4 of EMIR and the Indirect Clearing RTS set out specific compliance requirements for entities that participate in ‘‘indirect clearing arrangements’’ in connection with OTC derivatives. As an authorized CCP, LCH SA is required to amend its rules and procedures to give effect to these provisions of MiFIR and the Indirect Clearing RTS. Set out below is an explanation of the relevant provisions of RTS 26 and the Indirect Clearing RTS followed in each case by a description of the amendments LCH SA has made to its Rulebook and Procedures to give effect to each RTS. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Rulebook. b. Straight-Through Processing RTS 26 establishes the specific requirements with which authorized CCPs, trading venues 7 and clearing 7 The term ‘‘trading venue’’ as used in RTS 26 refers to EU-based venues only (i.e., regulated markets, multilateral trading facilities and organized trading facilities). Accordingly, thirdcountry venues (e.g., U.S. swap execution facilities, security-based swap execution facilities, designated contract markets and national securities exchanges) are not required to comply with the RTS 26 provisions applicable to trading venues. Notwithstanding this definition, the STP amendments described herein will apply with respect to all derivatives transactions concluded on swap execution facilities and designated contract markets registered with the U.S. Commodity Futures Trading Commission (‘‘CFTC’’) and the definition of the term ‘‘Trading Venue’’ has been amended accordingly. See, Section 1.1.1 of the Rulebook. E:\FR\FM\07DEN1.SGM 07DEN1

Agencies

[Federal Register Volume 82, Number 234 (Thursday, December 7, 2017)]
[Notices]
[Pages 57799-57803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26321]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82197; File No. SR-PEARL-2017-37]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX 
PEARL Rules 517A, Aggregate Risk Manager for EEMs (``ARM-E''), and 
517B, Aggregate Risk Manager for Market Makers (``ARM-M'')

December 1, 2017.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4

[[Page 57800]]

thereunder,\2\ notice is hereby given that on November 28, 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, II, and III below, which Items have been prepared 
by the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 Rules 517A, 
Aggregate Risk Manager for EEMs (``ARM-E''), and 517B, Aggregate Risk 
Manager for Market Makers (``ARM-M'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://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 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 517A, ARM-E, to add 
additional detail to subsection (b), and to adopt new rule text in 
Interpretations and Policies .01, to state that immediate-or-cancel 
(``IOC'') Orders \3\ are not EEM ARM Eligible Orders.\4\ The Exchange 
also proposes to amend Exchange Rule 517B, ARM-M, to add additional 
detail to subsection (b), and to adopt new rule text in Interpretations 
and Policies .02, to state that immediate-or-cancel (``IOC'') Orders 
are not MM ARM Eligible Orders.\5\
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    \3\ An immediate-or-cancel order is an order that is to be 
executed in whole or in part upon receipt. Any portion not so 
executed is cancelled. See Exchange Rule 516(e).
    \4\ See Exchange Rule 517A(a).
    \5\ See Exchange Rule 517B(a).
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ARM-E
    ARM-E protects MIAX PEARL Electronic Exchange Members (``EEMs'') 
\6\ and assists them in managing risk by maintaining a counting program 
(``EEM Counting Program'') \7\ for each participating EEM who has 
submitted an order in an EEM Specified Option Class \8\ using a 
specified market participant identifier (``MPID'') \9\ of the EEM and 
delivered via the MEO Interface \10\ (an ``EEM ARM Eligible Order''). 
The EEM Counting Program counts the number of contracts executed by an 
EEM from an EEM ARM Eligible Order (the ``EEM ARM Contracts'') within a 
specified time period that has been established by the EEM (the ``EEM 
Specified Time Period'').\11\ The EEM Specified Time Period cannot 
exceed 15 seconds.\12\ The Exchange currently provides that contracts 
executed as a result of an immediate-or-cancel (``IOC'') order 
submitted by such EEM are not included in a specific EEM's EEM Counting 
Program.\13\
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    \6\ The term ``Electronic Exchange Member'' or ``EEM'' means the 
holder of a Trading Permit who is a Member representing as agent 
Public Customer Orders or Non-Customer Orders on the Exchange and 
those non-Market Maker Members conducting proprietary trading. 
Electronic Exchange Members are deemed ``members'' under the 
Exchange Act. See Exchange Rule 100.
    \7\ See Exchange Rule 517A(a).
    \8\ An ``EEM Specified Option Class'' is a class which the EEM 
has designated as a class to be protected via ARM-E. See Exchange 
Rule 517A(a).
    \9\ The term ``MPID'' means unique market participant 
identifier. See Exchange Rule 100.
    \10\ The term ``MEO Interface'' means a binary order interface 
used for submitting certain order types (as set forth in Rule 516) 
to the MIAX PEARL System. See Exchange Rule 100.
    \11\ See Exchange Rule 517A(a).
    \12\ Id.
    \13\ See Exchange Rule 517A, Interpretations and Policies .01.
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    The EEM may also establish for each EEM Specified Option Class an 
EEM Allowable Engagement Percentage (the ``EEM Allowable Engagement 
Percentage''),\14\ which is a number of contracts, divided by the size 
of the orders, executed within the Specified Time Period, equal to or 
over which the ARM-E will be triggered. When an execution of an EEM ARM 
Contract from an EEM ARM Eligible Order occurs, the System \15\ will 
look back over the EEM Specified Time Period to determine whether the 
sum of contract executions from such EEM ARM Eligible Order during such 
EEM Specified Time Period triggers the ARM-E.\16\
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    \14\ See Exchange Rule 517A(c).
    \15\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \16\ See Exchange Rule 517A(c).
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    The System will engage the ARM-E in a particular EEM Specified 
Option Class when the EEM Counting Program has determined that an EEM 
has executed during the EEM Specified Time Period a number of EEM ARM 
Contracts from an EEM ARM Eligible Order equal to or above their EEM 
Allowable Engagement Percentage. ARM-E will then, until the EEM sends a 
notification to the System of the intent to reengage and submits a new 
order in the EEM Specified Option Class: (i) Automatically cancel the 
EEM ARM Eligible Orders in all series of that particular EEM Specified 
Option Class and (ii) reject new orders by the EEM in all series of 
that particular EEM Specified Option Class submitted using the MEO 
Interface.\17\
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    \17\ See Exchange Rule 517A(b).
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    The Exchange now proposes to allow EEMs to submit orders with a 
time in force of immediate-or-cancel to the Exchange during the time 
that the ARM-E is engaged by amending Interpretations and Policies .01 
to adopt new rule text to state, ``[i]mmediate-or-Cancel (``IOC'') 
Orders submitted by an EEM using the MEO Interface are not EEM ARM 
Eligible Orders.'' The Exchange also proposes to remove the existing 
text in Interpretations and Policies .01 in its entirety which states, 
``[t]he System does not include in a specific EEM's EEM Counting 
Program contacts executed as a result of an immediate-or-cancel 
(``IOC'') order submitted by such EEM.'' By adopting text that 
explicitly states that IOC orders submitted by an EEM using the MEO 
Interface are not EEM ARM Eligible Orders, there is no longer a need to 
indicate that contracts executed as a result of an IOC order submitted 
by an EEM are not included in the Counting Program, as only EEM ARM 
Eligible Orders will be included in the EEM Counting Program.
    Additionally, Rule 517A(b) provides that when the ARM-E is engaged, 
the System will, (i) automatically cancel the EEM ARM Eligible Orders 
in all series of that particular EEM Specified Option Class and (ii) 
reject new orders by the EEM in all series of that particular EEM 
Specified Option Class submitted using the MEO Interface. The Exchange 
now proposes to amend subsection (b)(ii) to state that the System will 
reject EEM ARM Eligible Orders submitted by the EEM, thereby allowing 
IOC orders to be submitted to the Exchange for trading when ARM-E is 
engaged.

[[Page 57801]]

ARM-M
    ARM-M protects MIAX PEARL Market Makers \18\ and assists them in 
managing risk by maintaining a counting program (``MM Counting 
Program'') for each Market Maker who has submitted an order in an 
option class (an ``MM Option Class'') delivered via the MEO Interface 
(an ``MM ARM Eligible Order'').\19\ The MM Counting Program counts the 
number of contracts executed by a Market Maker from an MM ARM Eligible 
Order (the ``MM ARM Contracts'') within a specified time period that 
has been established by the Market Maker or as a default setting, as 
defined below (the ``MM Specified Time Period'').\20\ The MM Specified 
Time Period cannot exceed 15 seconds whether established by the Market 
Maker or as a default setting.\21\ The Exchange currently provides that 
contracts executed as a result of an immediate-or-cancel (``IOC'') 
order submitted by such MM are not included in a specific MM's MM 
Counting Program.\22\
---------------------------------------------------------------------------

    \18\ The term ``Market Maker'' or ``MM'' means a Member 
registered with the Exchange for the purpose of making markets in 
options contracts traded on the Exchange and that is vested with the 
rights and responsibilities specified in Chapter VI of the MIAX 
PEARL Rules. See Exchange Rule 100.
    \19\ See Exchange Rule 517B(a).
    \20\ Id.
    \21\ Id.
    \22\ See Exchange Rule 517B, Interpretations and Policies .02.
---------------------------------------------------------------------------

    The Market Maker may also establish for each MM Option Class an MM 
Allowable Engagement Percentage. When an execution of an MM ARM 
Contract from an MM ARM Eligible Order occurs, the System will look 
back over the MM Specified Time Period to determine whether the sum of 
contract executions from such MM ARM Eligible Order during such MM 
Specified Time Period triggers the ARM-M.\23\
---------------------------------------------------------------------------

    \23\ See Exchange Rule 517B(c).
---------------------------------------------------------------------------

    The System will engage the ARM-M in a particular MM Option Class 
when the MM Counting Program has determined that a Market Maker has 
executed during the MM Specified Time Period a number of MM ARM 
Contracts from an MM ARM Eligible Order equal to or above their MM 
Allowable Engagement Percentage. The ARM-M will then, until the Market 
Maker sends a notification to the System of the intent to reengage and 
submits a new order in the MM Option Class: (i) Automatically cancel 
the MM ARM Eligible Orders in all series of that particular MM Option 
Class and (ii) reject new orders by the Market Maker in all series of 
that particular MM Option Class submitted using the MEO Interface.\24\
---------------------------------------------------------------------------

    \24\ See Exchange Rule 517B(b).
---------------------------------------------------------------------------

    The Exchange now proposes to allow Market Makers to submit orders 
with a time in force of immediate-or-cancel to the Exchange during the 
time that the ARM-M is engaged by amending Interpretations and Policies 
.02 to state, ``[i]mmediate-or-Cancel (``IOC'') Orders submitted by a 
Market Maker using the MEO Interface are not MM ARM Eligible Orders.'' 
The Exchange also proposes to remove the existing text in 
Interpretations and Policies .02 in its entirety which states, ``[t]he 
System does not include in a specific MM's MM Counting Program contacts 
executed as a result of an immediate-or-cancel (``IOC'') order 
submitted by such MM.'' By adopting text that explicitly states that 
IOC orders submitted by a Market Maker using the MEO Interface are not 
MM ARM Eligible Orders, there is no longer a need to indicate contracts 
executed as a result of an IOC order submitted by a Market Maker are 
not included in the Counting Program, as only MM ARM Eligible Orders 
will be included in the MM Counting Program.
    Additionally, Rule 517B(b) provides that when the ARM-M is engaged, 
the System will (i) automatically cancel the MM ARM Eligible Orders in 
all series of that particular MM Option Class and (ii) reject new 
orders by the Market Maker in all series of that particular MM Option 
Class submitted using the MEO Interface. The Exchange now proposes to 
amend subsection (b)(ii) to state that the System will reject new MM 
ARM Eligible Orders submitted by the Market Maker, thereby allowing IOC 
orders to be submitted to the Exchange for trading when ARM-M is 
engaged.
    ARM-E and ARM-M are designed to mitigate the exposure risk of 
resting orders on the Exchange. In the Exchange's experience an IOC 
order is an order that is designed to target specific, identifiable 
liquidity resting on the Book \25\ that the entering Member desires to 
trade with. Thus, a Member entering an IOC order does not require the 
risk management protection of either the ARM-E or ARM-M, as the Member 
entering the IOC order has made an affirmative decision to attempt to 
execute that transaction. The Exchange believes Members should not be 
prevented from submitting these types of orders to the Exchange during 
the time that the Aggregate Risk Manager is engaged as contracts 
executed using these types of orders are not included in either the EEM 
or MM Counting Program.\26\
---------------------------------------------------------------------------

    \25\ The term ``Book'' means the electronic book of buy and sell 
orders and quotes maintained by the System. See Exchange Rule 100.
    \26\ See supra note 11 and 19.
---------------------------------------------------------------------------

    The Exchange believes this proposal will allow Members to continue 
to be protected from the risks that the Aggregate Risk Manager is 
designed to mitigate, and also allow Members to continue to submit 
certain orders which Members desire to submit even during the time that 
the Aggregate Risk Manager is engaged. The Exchange believes allowing 
Members the ability to send IOC orders to the Exchange will improve 
liquidity and order execution on the Exchange.
    The Exchange notes that the proposed rule change is similar to a 
rule that is currently operative on the Exchange's affiliate, MIAX 
Options Exchange (``MIAX Options''). Specifically, Interpretations and 
Policies .01 to MIAX Options Rule 612, Aggregate Risk Manager, states 
that eQuotes \27\ will remain in the System available for trading when 
the Aggregate Risk Manager is engaged. IOC Orders on MIAX PEARL are 
analogous to eQuotes on MIAX Options as eQuotes also have limited time-
in-force durations. For example, eQuotes on MIAX Options \28\ may be 
Auction or Cancel (``AOC''),\29\ Opening Only (``OPG''),\30\ Immediate 
or Cancel (``IOC''),\31\ or Fill or Kill (``FOK'').\32\ MIAX PEARL and 
MIAX

[[Page 57802]]

Options have a number of common Members and where feasible the Exchange 
strives to provide consistency between the markets so as to avoid 
confusion among Members.
---------------------------------------------------------------------------

    \27\ An eQuote is a quote with a specific time in force that 
does not automatically cancel and replace a previous Standard quote 
or eQuote. An eQuote can be cancelled by the Market Maker at any 
time, or can be replaced by another eQuote that contains specific 
instructions to cancel an existing eQuote. See MIAX Options Exchange 
Rule 517(a)(2).
    \28\ MIAX Options provides for a Day eQuote in its rules, 
however this type of eQuote has not yet been enabled for trading on 
the MIAX Options Exchange. See MIAX Options Exchange Rule 517(a)(i).
    \29\ An Auction or Cancel or ``AOC'' eQuote is a quote submitted 
by a Market Maker to provide liquidity in a specific Exchange 
process . . . with a time in force that corresponds with the 
duration of that event and will automatically expire at the end of 
that event. See MIAX Options Exchange Rule 517(a)(2)(ii). The 
Exchange notes the current length of an auction on MIAX Options is 
100 milliseconds and that the duration of an auction may be no less 
than 100 milliseconds and no more than 1 second. See MIAX Options 
Exchange Rule 515A(a)(2)(i)(C).
    \30\ An opening only or ``OPG'' eQuote is a quote that can be 
submitted by a Market Maker only during the Opening . . . OPG 
eQuotes will automatically expire at the end of the Opening Process. 
See MIAX Options Exchange Rule 517(a)(2)(iii).
    \31\ An immediate or cancel or ``IOC'' eQuote is an eQuote 
submitted by a Market Maker that must be matched with another quote 
or order for an execution in whole or in part upon receipt into the 
System. Any portion of the IOC eQuote not executed will be 
immediately canceled. See MIAX Options Exchange Rule 517(a)(2)(iv).
    \32\ A fill or kill or ``FOK'' eQuote is an eQuote submitted by 
a Market Maker that must be matched with another quote or order for 
an execution in its entirety at a single price upon receipt into the 
System or will be immediately cancelled. See MIAX Options Exchange 
Rule 517(a)(a)(v).
---------------------------------------------------------------------------

    The Exchange will announce the implementation date of the proposed 
rule change by Regulatory Circular to be published no later than 60 
days following the operative date of the proposed rule. The 
implementation date will be no later than 60 days following the 
issuance of the Regulatory Circular.
2. Statutory Basis
    MIAX PEARL believes that its proposed rule change is consistent 
with Section 6(b) of the Act \33\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \34\ 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 regulating, 
clearing, settling, processing information with respect to, and 
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.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f(b).
    \34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal would promote just and 
equitable principles of trade by permitting Members to use an order 
type that is not an ARM Eligible Order during the time that the ARM is 
engaged. Additionally, the Exchange believes this proposal will promote 
just and equitable principles of trade by allowing Members to continue 
to be protected from the risks that the Aggregate Risk Manager is 
designed to mitigate, and also allow Members to continue to submit 
certain orders which Members desire to submit even during the time the 
Aggregate Risk Manager is engaged. ARM-E and ARM-M are designed to 
mitigate the exposure risk of resting orders. An IOC order is an order 
that is designed to target specific, identifiable liquidity resting on 
the Book that the entering Member desires to trade with and thus the 
Member entering the IOC order does not require the risk management 
protection of either the ARM-E or ARM-M, as the Member entering the IOC 
order has made an affirmative decision to attempt to execute that 
transaction. Therefore, the Exchange believes Members should not be 
prevented from submitting these types of Orders to the Exchange during 
the time that the Aggregate Risk Manager is engaged. The Exchange 
believes allowing Members the ability to send IOC orders to the 
Exchange while the Aggregate Risk Manager is engaged promotes just and 
equitable principles of trade by improving liquidity and order 
execution on the Exchange.
    The Exchange believes its proposal will result in increased 
liquidity on the Exchange which will contribute to the operation of a 
fair and orderly market. The proposed treatment of IOC orders during 
the time that the ARM is engaged is substantially similar to the 
treatment of eQuotes on the Exchange's affiliate, MIAX Options.\35\
---------------------------------------------------------------------------

    \35\ See MIAX Options Rule 612, Interpretations and Policies 
.01.
---------------------------------------------------------------------------

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 believes that 
the proposed rule change will foster competition on the Exchange by 
providing EEMs and Market Makers with the ability to submit IOC orders 
during the time that the ARM is engaged and compete for executions.
    The Exchange does not believe the proposed rule change will impact 
inter-market competition as the proposal is not designed to address 
competitive issue and is limited in scope to the behavior of Members of 
the Exchange.
    For 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

    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 \36\ and Rule 19b-4(f)(6) \37\ 
thereunder.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78s(b)(3)(A).
    \37\ 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.
---------------------------------------------------------------------------

    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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-PEARL-2017-37 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-2017-37. 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 (http://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

[[Page 57803]]

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. Persons submitting comments are cautioned that we do 
not react or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
PEARL-2017-37 and should be submitted on or before December 28, 2017.
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    \38\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26321 Filed 12-6-17; 8:45 am]
 BILLING CODE 8011-01-P