Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Designation of Longer Period for Commission Action on Proposed Rule Change To Amend Exchange Rule 100, Definitions; Rule 515, Execution of Orders and Quotes; and Rule 503, Openings on the Exchange, 67394-67395 [2018-28197]
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67394
Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices
in the event of a Clearing Member
default, OCC’s operations would not be
disrupted and non-defaulting Clearing
Members would not be exposed to
losses that they cannot anticipate or
control. In this way, the Proposed Rule
Change is designed to help assure the
safeguarding of securities and funds
which are in the custody or control of
OCC, or for which it is responsible,
consistent with Section 17A(b)(3)(F) of
the Exchange Act.
Second, the Proposed Rule Change
could reduce the likelihood that OCC’s
margin requirements impose sudden
and excessive stress on Clearing
Members during times of broader
market stress. As described above, the
current Implied Volatility Model could
result in dramatic increases in Clearing
Member margin requirements in
response to a sudden, large shock in
market volatility. Based on its review of
OCC’s data comparing margin
requirements to market data on
February 5, 2018, the Commission
understands that the size of such an
increase would not necessarily be
commensurate with the risk of the
Clearing Member’s portfolio because, as
described above, the volatility of
implied volatility forecasted by the
current model on that day was 4 times
the size of a comparable market index,
resulting in margin requirements for
some Clearing Members that rose by a
factor of 10. Imposing a large,
unexpected increase in margin
requirements could impose a large,
unexpected stress on a Clearing Member
during a period of high volatility. The
Commission believes that reducing the
likelihood of unnecessarily large and
unexpected stresses on Clearing
Members could help to lessen the risk
of Clearing Member defaults. Reducing
the risk of Clearing Member defaults
could also reduce the likelihood of
contagion during times of market stress
because Clearing Members, particularly
large Clearing Members, tend to be
active participants in multiple asset
markets. Therefore, the Commission
believes that the Proposed Rule Change
provides for rules designed, in general,
to protect investors and the public
interest.
Accordingly, and for the reasons
stated above, the Commission believes
that the Proposed Rule Change is
consistent with Section 17A(b)(3)(F) of
the Exchange Act.21
B. Consistency With Rule 17Ad–22(e)(6)
Under the Exchange Act
Rule 17Ad–22(e)(6)(i) under the
Exchange Act requires that a covered
21 15
U.S.C. 78q–1(b)(3)(F).
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18:13 Dec 27, 2018
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clearing agency establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to
cover, if the covered clearing agency
provides central counterparty services,
its credit exposures to its participants by
establishing a risk-based margin system
that, among other things, considers, and
produces margin levels commensurate
with, the risks and particular attributes
of each relevant product, portfolio, and
market.22
The Proposed Rule Change is
designed to better align the margin
requirements produced by OCC’s
margin methodology with the level of
risk posed by changes in market
volatility. The component of the current
Implied Volatility Model that forecasts
the volatility of implied volatility is
very sensitive to sudden, large changes
in market volatility, as evidenced by the
model’s reaction to the large, sudden
spike in market volatility observed on
February 5, 2018 discussed above,
which produced dramatic increases in
Clearing Member margin requirements.
The Proposed Rule Change to the
Implied Volatility Model would reduce
the sensitivity of the model to sudden,
large changes in market volatility, and,
as demonstrated by OCC’s backtesting,
would be unlikely to reduce the level of
coverage.23
The Commission believes that
revising the Implied Volatility Model
could produce margin requirements that
are more precise and better reflect the
risks and particular attributes of the
products cleared by OCC. The
Commission further believes that such
changes could produce margin levels
that are commensurate with the risks of
the products being cleared. Accordingly,
based on the foregoing, the Commission
believes that the Proposed Rule Change
is consistent with Exchange Act Rule
17Ad–22(e)(6)(i).24
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the Proposed
Rule Change is consistent with the
requirements of the Exchange Act, and
in particular, the requirements of
Section 17A of the Exchange Act 25 and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,26
that the Proposed Rule Change (SR–
22 17
CFR 240.17Ad–22(e)(6)(i).
supra note 15.
24 17 CFR 240.17Ad–22(e)(6).
25 In approving this Proposed Rule Change, the
Commission has considered the proposed rules’
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
26 15 U.S.C. 78s(b)(2).
OCC–2018–014) be, and hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Brent J. Fields,
Secretary.
[FR Doc. 2018–28180 Filed 12–27–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84900; File No. SR–MIAX–
2018–35]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Designation of Longer Period
for Commission Action on Proposed
Rule Change To Amend Exchange
Rule 100, Definitions; Rule 515,
Execution of Orders and Quotes; and
Rule 503, Openings on the Exchange
December 20, 2018.
On November 9, 2018, Miami
International Securities Exchange, LLC
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend Exchange Rules 100
(Definitions), 515 (Execution of Orders
and Quotes), and 503 (Openings on the
Exchange). The proposed rule change
was published for comment in the
Federal Register on November 20,
2018.3 The Commission has received no
comments on the proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is January 4, 2019.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
23 See
PO 00000
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Fmt 4703
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27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 84589
(Nov. 14, 2018), 83 FR 58633.
4 15 U.S.C. 78s(b)(2).
1 15
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Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
19(b)(2) of the Act 5 and for the reasons
stated above, the Commission
designates February 18, 2019, as the
date by which the Commission shall
either approve or disapprove, or
institute proceedings to determine
whether to disapprove, the proposed
rule change (File No. SR–MIAX–2018–
35).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Brent J. Fields,
Secretary.
[FR Doc. 2018–28197 Filed 12–27–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84899; File No. SR–NYSE–
2018–65]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Price List Regarding Certain Bond
Trading License Fee Waivers
December 20, 2018.
amozie on DSK3GDR082PROD with NOTICES1
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
19, 2018, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. 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 its
Price List to (i) extend a fee waiver for
new firm application fees for applicants
seeking only to obtain a bond trading
license (‘‘BTL’’) for 2019; and (ii) waive
the BTL fee for 2019. The Exchange
proposes to implement the fee changes
effective January 2, 2019. The proposed
5 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(31).
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
6 17
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18:13 Dec 27, 2018
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rule change is available on the
Exchange’s website at www.nyse.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
self-regulatory organization 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 those 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 parts 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 its
Price List to (i) extend a fee waiver for
new firm application fees for applicants
seeking only to obtain a BTL for 2019; 4
and (iii) waive the BTL fee for 2019. The
Exchange proposes to implement the fee
changes effective January 2, 2019.
The Exchange currently charges a
New Firm Fee ranging from $2,500 to
$20,000, depending on the type of firm,
which is charged per application for any
broker-dealer that applies to be
approved as an Exchange member
organization. The Exchange proposes to
waive the New Firm Fee for 2019 for
new member organization applicants
that are seeking only to obtain a BTL
and not trade equities at the Exchange.
The proposed waiver of the New Firm
Fee would be available only to
applicants seeking approval as a new
member organization, including
carrying firms, introducing firms, or
non-public organizations, which would
be seeking to obtain a BTL at the
Exchange and not trade equities.
Further, if a new firm that is approved
as a member organization and has had
the New Firm Fee waived converts a
BTL to a full trading license within one
4 The Exchange initially filed to adopt the fee
waiver and waive the BTL fee in 2015. See
Securities Exchange Act Release No. 74031 (January
12, 2015), 80 FR 2462 (January 16, 2015) (SR–
NYSE–2014–78). The Exchange subsequently filed
to extend the fee waiver and waive the BTL fee in
2017 and 2018. See Securities Exchange Act Release
Nos. 79710 (December 29, 2016), 82 FR 1395
(January 5, 2017) (SR–NYSE–2016–89); and 82418
(December 28, 2017), 83 FR 568 (January 4, 2018)
(SR–NYSE–2017–70).
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Fmt 4703
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67395
year of approval, the New Firm Fee
would be charged in full retroactively.
The Exchange believes that charging the
New Firm Fee retroactively within a
year of approval is appropriate because
it would discourage applicants to claim
that they are applying for a BTL solely
to avoid New Firm Fees.
Additionally, the Exchange currently
charges a BTL fee of $1,000 per year.
The Exchange proposes to amend the
Price List to waive the BTL fee for 2019
for all member organizations.
The Exchange believes that the
proposed fee changes would provide
increased incentives for bond trading
firms that are not currently Exchange
member organizations to apply for
Exchange membership and a BTL. The
Exchange believes that having more
member organizations trading on the
Exchange’s bond platform would benefit
investors through the additional display
of liquidity and increased execution
opportunities in Exchange-traded bonds
at the Exchange.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,5 in general, and
furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,6 in
particular, because it provides for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Exchange believes that it is
reasonable to waive the New Firm Fee
and the annual BTL fee for 2019 to
provide an incentive for bond trading
firms to apply for Exchange membership
and a BTL. The Exchange believes that
providing an incentive for bond trading
firms that are not currently Exchange
member organizations to apply for
membership and a BTL would
encourage market participants to
become members of the Exchange and
bring additional liquidity to a
transparent bond market. To the extent
the existing New Firm Fees or the BTL
fee serves as a disincentive for bond
trading firms to become Exchange
member organizations, the Exchange
believes that the proposed fee change
could expand the number of firms
eligible to trade bonds on the Exchange.
The Exchange believes creating
incentives for bond trading firms to
trade bonds on the Exchange protects
investors and the public interest by
increasing the competition and liquidity
5 15
6 15
E:\FR\FM\28DEN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(4), (5).
28DEN1
]]>Agencies
[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67394-67395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28197]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84900; File No. SR-MIAX-2018-35]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Designation of Longer Period for Commission
Action on Proposed Rule Change To Amend Exchange Rule 100, Definitions;
Rule 515, Execution of Orders and Quotes; and Rule 503, Openings on the
Exchange
December 20, 2018.
On November 9, 2018, Miami International Securities Exchange, LLC
(``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Exchange Rules 100 (Definitions), 515
(Execution of Orders and Quotes), and 503 (Openings on the Exchange).
The proposed rule change was published for comment in the Federal
Register on November 20, 2018.\3\ The Commission has received no
comments on the proposal.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 84589 (Nov. 14,
2018), 83 FR 58633.
---------------------------------------------------------------------------
Section 19(b)(2) of the Act \4\ provides that within 45 days of the
publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved. The
45th day for this filing is January 4, 2019.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
The Commission is extending the 45-day time period for Commission
action on the proposed rule change. The Commission finds that it is
appropriate
[[Page 67395]]
to designate a longer period within which to take action on the
proposed rule change so that it has sufficient time to consider the
proposed rule change.
Accordingly, pursuant to Section 19(b)(2) of the Act \5\ and for
the reasons stated above, the Commission designates February 18, 2019,
as the date by which the Commission shall either approve or disapprove,
or institute proceedings to determine whether to disapprove, the
proposed rule change (File No. SR-MIAX-2018-35).
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(31).
---------------------------------------------------------------------------
Brent J. Fields,
Secretary.
[FR Doc. 2018-28197 Filed 12-27-18; 8:45 am]
BILLING CODE 8011-01-P
