Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 510, Minimum Price Variations and Minimum Trading Increments To Extend the Penny Pilot Program, 8353-8355 [2019-04087]
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Federal Register / Vol. 84, No. 45 / Thursday, March 7, 2019 / Notices
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act, and in particular, with the
requirements of Section 17A(b)(3)(F) of
the Act 37 and Rules 17Ad–22(e)(2)(i)
and (v), (e)(4)(vi), and (e)(6)(vi)
thereunder.38
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 39 that the
proposed rule change (SR–ICEEU–2018–
010) be, and hereby is, approved.40
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.41
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–04085 Filed 3–6–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85225; File No. SR–
EMERALD–2019–06]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 510, Minimum Price Variations
and Minimum Trading Increments To
Extend the Penny Pilot Program
March 1, 2019.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on February 19, 2019, MIAX Emerald,
LLC (‘‘MIAX Emerald’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I and II below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rule 510, Minimum
Price Variations and Minimum Trading
37 15
U.S.C. 78q–1(b)(3)(F).
CFR 240.17Ad–22(e)(2)(i) and (v), (e)(4)(vi),
and (e)(6)(vi).
39 15 U.S.C. 78s(b)(2).
40 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
41 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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38 17
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Increments, Interpretations and Policies
.01 to change the date on which the
pilot program for the quoting and
trading of certain options in pennies is
scheduled to expire.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald, at MIAX Emerald’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
Background
MIAX Emerald plans to commence
operations as a national securities
exchange registered under Section 6 of
the Act 3 on March 1, 2019. As
described more fully in MIAX Emerald’s
Form 1 application,4 the Exchange is an
affiliate of Miami International
Securities Exchange, LLC (‘‘MIAX
Options’’) and MIAX PEARL, LLC
(‘‘MIAX PEARL’’). MIAX Emerald Rules,
in their current form, were filed as
Exhibit B to its Form 1 on August 16,
2018, and at that time, the above
mentioned rules, were substantially
similar to the rules of the MIAX Options
exchange. In the time between when the
Exchange filed its Form 1 and the time
the Exchange received its approval
order, MIAX Options made changes to
its rule book. In order to ensure
consistent operation of both MIAX
Emerald and MIAX Options by having
consistent rules, the Exchange proposes
to amend MIAX Emerald Rule 510, as
described below.
3 15
U.S.C. 78f.
Securities Exchange Act Release No. 84891
(December 20, 2018), 83 FR 67421 (December 28,
2018) (File No. 10–233) (order approving
application of MIAX EMERALD, LLC for
registration as a national securities exchange).
4 See
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8353
Proposal
Once operational, the Exchange will
be a participant in an industry-wide
pilot program that provides for the
quoting and trading of certain option
classes in penny increments (the
‘‘Penny Pilot Program’’ or ‘‘Program’’).
The Penny Pilot Program allows the
quoting and trading of certain option
classes in minimum increments of $0.01
for all series in such option classes with
a price of less than $3.00; and in
minimum increments of $0.05 for all
series in such option classes with a
price of $3.00 or higher. Options
overlying the PowerShares QQQTM
(‘‘QQQ’’), SPDR® S&P 500® ETF
(‘‘SPY’’), and iShares® Russell 2000 ETF
(‘‘IWM’’), however, are quoted and
traded in minimum increments of $0.01
for all series regardless of the price. The
Penny Pilot Program was initiated at the
then existing option exchanges in
January 2007 5 and currently includes
more than 300 of the most active option
classes. Rule 510, Interpretations and
Policies .01, currently states that the
Penny Pilot Program is scheduled to
expire on December 31, 2018. The
purpose of the proposed rule change is
to modify the expiration date set forth
in Rule 510, to match the most recent
expiration date, as updated by the other
options exchanges, including MIAX
Options.6
In addition to changing the date on
which the Penny Pilot Program will
expire, which will be June 30, 2019, the
Exchange proposes to make one
additional change to the Rule.
Currently, Interpretations and Policies
.01, states that the Exchange will replace
any Penny Pilot issues that have been
delisted with the next most actively
traded multiply listed option classes
that are not yet included in the Penny
Pilot Program, and that the replacement
issues will be selected based on trading
activity in the previous six months.
Such option classes will be added to the
Penny Pilot Program on the second
trading day following July 1, 2018.7
5 See Securities Exchange Act Release Nos. 55154
(January 23, 2007), 72 FR 4743 (February 1, 2007)
(SR–CBOE–2006–92); 55161 (January 24, 2007), 72
FR 4754 (February 1, 2007) (SR–ISE–2006–62);
54886 (December 6, 2006), 71 FR 74979 (December
13, 2006) (SR–Phlx–2006–74); 54590 (October 12,
2006), 71 FR 61525 (October 18, 2006) (SR–
NYSEArca–2006–73); and 54741 (November 9,
2006), 71 FR 67176 (November 20, 2006) (SR–
Amex–2006–106).
6 See Securities Exchange Act Release No. 84864
(December 19, 2018), 83 FR 66778 (December 27,
2018) (SR–MIAX–2018–38) (extending the Penny
Pilot Program from December 31, 2018 to June 30,
2019).
7 The month immediately preceding a
replacement class’s addition to the Pilot Program
(i.e., December) is not used for purposes of the six-
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Federal Register / Vol. 84, No. 45 / Thursday, March 7, 2019 / Notices
However, this date has expired and
although the Exchange intends to
adhere to this practice for the duration
of the Penny Pilot Program, the new
date on which replacement issues may
be added to the Penny Pilot Program
would have been the second trading day
following January 1, 2019, which has
already passed. Therefore, the Exchange
proposes to delete the sentence which
currently states that ‘‘[t]he replacement
classes may be added to the penny pilot
on the second trading day following July
1, 2018,’’ and not replace the current
date of July 1, 2018 with the date of
January 1, 2019. The Exchange notes
that this would create a difference
between the rule text of MIAX Emerald
and that of MIAX Options,8 however, in
practice there would be no difference as
the second trading day following
January 1, 2019 has already passed.
2. Statutory Basis
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The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 10 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
In particular, the proposed rule
change, which modifies the expiration
date of the Penny Pilot Program set forth
in Rule 510, to match the most recent
expiration date, as updated by the other
options exchanges, will allow the
Exchange to participate in a program
that has been viewed as beneficial to
traders, investors and public customers
and viewed as successful by the other
options exchanges participating in it.
Additionally, the Exchange believes
that although MIAX Emerald rules may,
in certain instances, intentionally differ
from MIAX Options rules, the proposed
changes will promote uniformity with
MIAX Options with respect to rules that
are intended to be identical. The
Exchange believes that it will reduce the
potential for confusion by its members
that are also members of MIAX Options
with respect to rules that are intended
to be identical.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
MIAX Emerald 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. Specifically,
the Exchange believes that, by
modifying the expiration date of the
Penny Pilot Program to match the most
recent expiration date, as updated by
the other options exchanges, the
proposed rule change will allow for
analysis of the Penny Pilot Program and
a determination of how the Program
should be structured in the future. The
Exchange believes that the proposed
rule change, which harmonizes its rules
with recent rule changes adopted by
MIAX Options will reduce the
regulatory burden placed on market
participants engaged in trading
activities across different markets. In
doing so, the proposed rule change will
also serve to promote regulatory clarity
and consistency, thereby reducing
burdens on the marketplace, facilitating
investor protection, and fostering a
competitive environment.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) 12 thereunder. 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, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to 19(b)(3)(A) of the
Act 13 and Rule 19b–4(f)(6) 14
thereunder.
11 15
month analysis. For example, a replacement added
on the second trading day following January 1,
2019, will be identified based on trading activity
from June 1, 2018, through November 30, 2018.
8 See supra note 6.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
13 15 U.S.C. 78s(b)(3)(A).
14 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
12 17
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A proposed rule change filed under
Rule 19b–4(f)(6) 15 normally does not
become operative prior to 30 days after
the date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii),16 the Commission
may 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 so that
the proposal may become operative
immediately upon filing. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because doing so will
allow the Pilot Program to continue
without interruption in a manner that is
consistent with the Commission’s prior
approval of the extension and expansion
of the Pilot Program.17 Accordingly, the
Commission designates the proposed
rule change as operative upon filing
with the Commission.18
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–
EMERALD–2019–06 on the subject line.
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 See Securities Exchange Release No. 61061
(November 24, 2009), 74 FR 62857 (December 1,
2009) (SR–NYSEArca–2009–44).
18 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 84, No. 45 / Thursday, March 7, 2019 / Notices
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–EMERALD–2019–06. 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 website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549–1090, 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 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–EMERALD–2019–06 and
should be submitted on or before March
28, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–04087 Filed 3–6–19; 8:45 am]
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BILLING CODE 8011–01–P
19 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85228; File No. 4–443]
Joint Industry Plan; Notice of Filing
and Immediate Effectiveness of
Amendment to the Plan for the
Purpose of Developing and
Implementing Procedures Designed To
Facilitate the Listing and Trading of
Standardized Options To Add MIAX
Emerald, LLC as a Plan Sponsor
March 1, 2019.
Pursuant to Section 11A(a)(3) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2
notice is hereby given that on February
13, 2019, MIAX Emerald, LLC (‘‘MIAX
Emerald’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) an amendment to the
Plan for the Purpose of Developing and
Implementing Procedures Designed to
Facilitate the Listing and Trading of
Standardized Options (‘‘OLPP’’).3 The
Commission approved the application
of MIAX Emerald to register as a
national securities exchange on
December 20, 2019.4 One of the
conditions of the Commission’s
approval was the requirement for MIAX
1 15
U.S.C. 78k–1(a)(3).
CFR 242.608.
3 On July 6, 2001, the Commission approved the
OLPP, which was proposed by the American Stock
Exchange LLC (‘‘Amex’’), Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’), International
Securities Exchange LLC (‘‘ISE’’), Options Clearing
Corporation (‘‘OCC’’), Philadelphia Stock Exchange,
Inc. (‘‘Phlx’’), and Pacific Exchange, Inc. (‘‘PCX’’)
(n/k/a NYSE Arca). See Securities Exchange Act
Release No. 44521, 66 FR 36809 (July 13, 2001). See
also Securities Exchange Act Release Nos. 49199
(February 5, 2004), 69 FR 7030 (February 12, 2004)
(adding Boston Stock Exchange, Inc. as a Sponsor
to the OLPP); 57546 (March 21, 2008), 73 FR 16393
(March 27, 2008) (adding Nasdaq Stock Market, LLC
(‘‘Nasdaq’’) as a Sponsor to the OLPP); 61528
(February 17, 2010), 75 FR 8415 (February 24, 2010)
(adding BATS Exchange, Inc. (‘‘BATS’’) as a
Sponsor to the OLPP); 63162 (October 22, 2010), 75
FR 66401 (October 28, 2010) (adding C2 Options
Exchange Incorporated (‘‘C2’’) as a sponsor to the
OLPP); 66952 (May 9, 2012), 77 FR 28641 (May 15,
2012) (adding BOX Options Exchange LLC (‘‘BOX’’)
as a Sponsor to the OLPP); 67327 (June 29, 2012),
77 FR 40125 (July 6, 2012) (adding Nasdaq OMX
BX, Inc. (‘‘BX’’) as a Sponsor to the OLPP); 70765
(October 28, 2013), 78 FR 65739 (November 1, 2013)
(adding Topaz Exchange, LLC as a Sponsor to the
OLPP (‘‘Topaz’’); 70764 (October 28, 2013), 78 FR
65733 (November 1, 2013) (adding Miami
International Securities Exchange, LLC (‘‘MIAX’’) as
a Sponsor to the OLPP); 76822 (January 1, 2016),
81 FR 1251 (January 11, 2016) (adding EDGX
Exchange, Inc. (‘‘EDGX’’) as a Sponsor to the OLPP);
77323 (March 8, 2016), 81 FR 13433 (March 14,
2016) (adding ISE Mercury, LLC (‘‘ISE Mercury’’) as
a Sponsor to the OLPP) and 79897 (January 30,
2017), 82 FR 9263 (February 3, 2017) (adding MIAX
PEARL, LLC (‘‘MIAX PEARL’’) as a Sponsor to the
OLPP).
4 See Securities and Exchange Act Release No.
84891 (December 20, 2018), 83 FR 67421 (December
28, 2018) (File No. 10–233).
2 17
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8355
Emerald to join the OLLP. The
amendment adds MIAX Emerald as a
Sponsor 5 of the OLPP.6 The
Commission is publishing this notice to
solicit comments on the amendment
from interested persons.
I. Description and Purpose of the
Amendment
The OLPP establishes procedures
designed to facilitate the listing and
trading of standardized options
contracts on the options exchanges. The
amendment to the OLPP adds MIAX
Emerald as a Sponsor. The other OLPP
Sponsors are Amex, BATS, BOX, BX,
CBOE, C2, EDGX, ISE, ISE Mercury,
MIAX, MIAX PEARL, Nasdaq, NYSE
Arca, OCC, Phlx, and Topaz. MIAX
Emerald has submitted an executed
copy of the OLPP to the Commission in
accordance with the procedures set
forth in the OLPP regarding new
Sponsors. Section 7 of the OLPP
provides for the entry of new Sponsors
to the OLPP. Specifically, Section 7 of
the OLPP provides that an Eligible
Exchange 7 may become a Sponsor of
the OLPP by: (i) Executing a copy of the
OLPP, as then in effect; (ii) providing
each current Sponsor with a copy of
such executed OLPP; and (iii) effecting
an amendment to the OLPP, as specified
in Section 7(ii) of the OLPP.8
Section 7(ii) of the OLPP sets forth the
process by which an Eligible Exchange
may effect an amendment to the OLPP.
Specifically, an Eligible Exchange must:
(a) execute a copy of the OLPP with the
only change being the addition of the
new Sponsor’s name in Section 8 of the
OLPP; 9 and (b) submit the executed
OLPP to the Commission. The OLPP
then provides that such an amendment
will be effective when the amendment
is approved by the Commission or
5 A ‘‘Sponsor’’ is an Eligible Exchange whose
participation in the OLPP has become effective
pursuant to Section 7 of the OLPP.
6 See Letter from Barbara J. Comly, EVP, General
Counsel and Corporate Secretary, MIAX Emerald, to
Brent J. Fields, Secretary, Commission, dated
February 12, 2019 (‘‘Amendment’’).
7 The OLPP defines an ‘‘Eligible Exchange’’ as a
national securities exchange registered with the
Commission pursuant to Section 6(a) of the Act, 15
U.S.C. 78f(a), that (1) has effective rules for the
trading of options contracts issued and cleared by
the OCC approved in accordance with the
provisions of the Act and the rules and regulations
thereunder and (2) is a party to the Plan for
Reporting Consolidated Options Last Sale Reports
and Quotation Information (the ‘‘OPRA Plan’’).
MIAX Emerald has represented that it has met both
the requirements for being considered an Eligible
Exchange. See Amendment, supra note 6.
8 MIAX Emerald has represented that it has
executed a copy of the current Plan, amended to
include MIAX Emerald as a Participant and has sent
each current Participant a copy of the executed
Plan. See Amendment, supra note 6.
9 The Commission notes that the list of plan
sponsors is set forth in Section 9 of the OLPP.
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]]>Agencies
[Federal Register Volume 84, Number 45 (Thursday, March 7, 2019)]
[Notices]
[Pages 8353-8355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04087]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85225; File No. SR-EMERALD-2019-06]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Exchange Rule 510, Minimum Price Variations and Minimum Trading
Increments To Extend the Penny Pilot Program
March 1, 2019.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on February 19, 2019, MIAX Emerald, LLC (``MIAX
Emerald'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend Exchange Rule 510,
Minimum Price Variations and Minimum Trading Increments,
Interpretations and Policies .01 to change the date on which the pilot
program for the quoting and trading of certain options in pennies is
scheduled to expire.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/emerald, at MIAX
Emerald'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
Background
MIAX Emerald plans to commence operations as a national securities
exchange registered under Section 6 of the Act \3\ on March 1, 2019. As
described more fully in MIAX Emerald's Form 1 application,\4\ the
Exchange is an affiliate of Miami International Securities Exchange,
LLC (``MIAX Options'') and MIAX PEARL, LLC (``MIAX PEARL''). MIAX
Emerald Rules, in their current form, were filed as Exhibit B to its
Form 1 on August 16, 2018, and at that time, the above mentioned rules,
were substantially similar to the rules of the MIAX Options exchange.
In the time between when the Exchange filed its Form 1 and the time the
Exchange received its approval order, MIAX Options made changes to its
rule book. In order to ensure consistent operation of both MIAX Emerald
and MIAX Options by having consistent rules, the Exchange proposes to
amend MIAX Emerald Rule 510, as described below.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78f.
\4\ See Securities Exchange Act Release No. 84891 (December 20,
2018), 83 FR 67421 (December 28, 2018) (File No. 10-233) (order
approving application of MIAX EMERALD, LLC for registration as a
national securities exchange).
---------------------------------------------------------------------------
Proposal
Once operational, the Exchange will be a participant in an
industry-wide pilot program that provides for the quoting and trading
of certain option classes in penny increments (the ``Penny Pilot
Program'' or ``Program''). The Penny Pilot Program allows the quoting
and trading of certain option classes in minimum increments of $0.01
for all series in such option classes with a price of less than $3.00;
and in minimum increments of $0.05 for all series in such option
classes with a price of $3.00 or higher. Options overlying the
PowerShares QQQTM (``QQQ''), SPDR[supreg] S&P 500[supreg]
ETF (``SPY''), and iShares[supreg] Russell 2000 ETF (``IWM''), however,
are quoted and traded in minimum increments of $0.01 for all series
regardless of the price. The Penny Pilot Program was initiated at the
then existing option exchanges in January 2007 \5\ and currently
includes more than 300 of the most active option classes. Rule 510,
Interpretations and Policies .01, currently states that the Penny Pilot
Program is scheduled to expire on December 31, 2018. The purpose of the
proposed rule change is to modify the expiration date set forth in Rule
510, to match the most recent expiration date, as updated by the other
options exchanges, including MIAX Options.\6\
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\5\ See Securities Exchange Act Release Nos. 55154 (January 23,
2007), 72 FR 4743 (February 1, 2007) (SR-CBOE-2006-92); 55161
(January 24, 2007), 72 FR 4754 (February 1, 2007) (SR-ISE-2006-62);
54886 (December 6, 2006), 71 FR 74979 (December 13, 2006) (SR-Phlx-
2006-74); 54590 (October 12, 2006), 71 FR 61525 (October 18, 2006)
(SR-NYSEArca-2006-73); and 54741 (November 9, 2006), 71 FR 67176
(November 20, 2006) (SR-Amex-2006-106).
\6\ See Securities Exchange Act Release No. 84864 (December 19,
2018), 83 FR 66778 (December 27, 2018) (SR-MIAX-2018-38) (extending
the Penny Pilot Program from December 31, 2018 to June 30, 2019).
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In addition to changing the date on which the Penny Pilot Program
will expire, which will be June 30, 2019, the Exchange proposes to make
one additional change to the Rule. Currently, Interpretations and
Policies .01, states that the Exchange will replace any Penny Pilot
issues that have been delisted with the next most actively traded
multiply listed option classes that are not yet included in the Penny
Pilot Program, and that the replacement issues will be selected based
on trading activity in the previous six months. Such option classes
will be added to the Penny Pilot Program on the second trading day
following July 1, 2018.\7\
[[Page 8354]]
However, this date has expired and although the Exchange intends to
adhere to this practice for the duration of the Penny Pilot Program,
the new date on which replacement issues may be added to the Penny
Pilot Program would have been the second trading day following January
1, 2019, which has already passed. Therefore, the Exchange proposes to
delete the sentence which currently states that ``[t]he replacement
classes may be added to the penny pilot on the second trading day
following July 1, 2018,'' and not replace the current date of July 1,
2018 with the date of January 1, 2019. The Exchange notes that this
would create a difference between the rule text of MIAX Emerald and
that of MIAX Options,\8\ however, in practice there would be no
difference as the second trading day following January 1, 2019 has
already passed.
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\7\ The month immediately preceding a replacement class's
addition to the Pilot Program (i.e., December) is not used for
purposes of the six-month analysis. For example, a replacement added
on the second trading day following January 1, 2019, will be
identified based on trading activity from June 1, 2018, through
November 30, 2018.
\8\ See supra note 6.
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \10\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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In particular, the proposed rule change, which modifies the
expiration date of the Penny Pilot Program set forth in Rule 510, to
match the most recent expiration date, as updated by the other options
exchanges, will allow the Exchange to participate in a program that has
been viewed as beneficial to traders, investors and public customers
and viewed as successful by the other options exchanges participating
in it.
Additionally, the Exchange believes that although MIAX Emerald
rules may, in certain instances, intentionally differ from MIAX Options
rules, the proposed changes will promote uniformity with MIAX Options
with respect to rules that are intended to be identical. The Exchange
believes that it will reduce the potential for confusion by its members
that are also members of MIAX Options with respect to rules that are
intended to be identical.
B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX Emerald 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. Specifically, the Exchange
believes that, by modifying the expiration date of the Penny Pilot
Program to match the most recent expiration date, as updated by the
other options exchanges, the proposed rule change will allow for
analysis of the Penny Pilot Program and a determination of how the
Program should be structured in the future. The Exchange believes that
the proposed rule change, which harmonizes its rules with recent rule
changes adopted by MIAX Options will reduce the regulatory burden
placed on market participants engaged in trading activities across
different markets. In doing so, the proposed rule change will also
serve to promote regulatory clarity and consistency, thereby reducing
burdens on the marketplace, facilitating investor protection, and
fostering a competitive environment.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder.
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, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6)
\14\ thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission may
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 so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because doing so will
allow the Pilot Program to continue without interruption in a manner
that is consistent with the Commission's prior approval of the
extension and expansion of the Pilot Program.\17\ Accordingly, the
Commission designates the proposed rule change as operative upon filing
with the Commission.\18\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ See Securities Exchange Release No. 61061 (November 24,
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
\18\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
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-EMERALD-2019-06 on the subject line.
[[Page 8355]]
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-EMERALD-2019-06. 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 website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549-1090, 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 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-EMERALD-2019-06 and should
be submitted on or before March 28, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04087 Filed 3-6-19; 8:45 am]
BILLING CODE 8011-01-P
