Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 503, Openings on the Exchange, 34025-34028 [2019-15027]

Download as PDF Federal Register / Vol. 84, No. 136 / Tuesday, July 16, 2019 / Notices 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 (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 website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be available for inspection and copying at the principal office of ICE Clear Credit and on ICE Clear Credit’s website at https:// www.theice.com/clear-credit/regulation. 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–ICC–2019–008 and should be submitted on or before August 6, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–15023 Filed 7–15–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86345; File No. SR–MIAX– 2019–32] jspears on DSK30JT082PROD with NOTICES Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 503, Openings on the Exchange July 10, 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 July 3, 2019, Miami International Securities Exchange, LLC (‘‘MIAX Options’’ or the ‘‘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 Rule 503, Openings on the Exchange. The text of the proposed rule change is available on the Exchange’s website at http://www.miaxoptions.com/rulefilings/ at MIAX Options’ 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 503, Openings on the Exchange, to make minor nonsubstantive edits to harmonize the rule text to that of the Exchange’s affiliate, MIAX Emerald, LLC (‘‘MIAX Emerald’’ or ‘‘Emerald’’). Additionally, the Exchange proposes to amend subsection (f)(2)(iv)(A)2. to adopt new rule text relating to the price at which an Intermarket Sweep Order (‘‘ISO’’) is routed in order to align the rule text to the operation of the System.3 The Exchange also proposes to adopt new subsection (f)(2)(xi) related to the 2 17 CFR 240.19b–4. term ‘‘System’’ means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. 3 The 23 17 1 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate Sep<11>2014 17:33 Jul 15, 2019 Jkt 247001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 34025 operation of Route Timers and Imbalance Timers during the Opening Process.4 Finally, the Exchange proposes to amend paragraph (g) to adopt new rule text that identifies Help Desk staff authorized to take actions during Opening Process to maintain a fair and orderly market. First, the Exchange proposes to amend subsection (b) to adopt new rule text that is identical to rule text found in Emerald,5 to state that the order types that may participate in the opening process are set forth in Rule 516, Order Types Defined. The Exchange believes that this provides additional detail and clarity to the rule. Next, the Exchange proposes to amend subsection (f)(2)(iv) to insert the word ‘‘Trading’’ to provide consistency and clarity within the rule text. The rule discusses Minimum Trading Increments,6 and the last reference in the sentence is to the Minimum Increment. The Exchange now proposes to change this phrase to, ‘‘Minimum Trading Increment,’’ to align to the rest of the rule text and to the rule text of Emerald.7 Next, the Exchange proposes to amend subsection (f)(2)(iv)(A)(1.) and (2.) to correct the formatting of subsection (1.) and (2.) to remove the parentheses to make the formatting consistent with the hierarchical convention used throughout the rulebook. The Exchange also proposes to amend subsection 2. to conform the rule to the current System behavior and state that any order that is routed pursuant to this Rule will be marked as an Intermarket Sweep Order (‘‘ISO’’), as defined in Rule 1400(h), with a limit price equal to the ‘‘away market’s displayed price,’’ and not the Exchange’s ‘‘opening price’’ as currently stated in the rule.8 As described in the Exchange’s current rule, the Exchange will route to other markets disseminating prices better than the Exchange’s opening price and will also route to other markets disseminating prices equal to the Exchange’s opening price if necessary.9 Given that the order is being routed to another market center for execution the limit price of the order being routed should be equal to the away market’s displayed price rather than the Exchange’s opening price (although, in 4 See Exchange Rule 503(f). MIAX Emerald Exchange Rule 503(b). 6 See Exchange Rule 510. 7 See MIAX Emerald Exchange Rule 503(f)(2)(iv). 8 The Exchange notes that Rule 1400(h) pertains primarily to ISOs received by the Exchange, whereas in this instance the Exchange will be sending the ISO to another exchange. 9 See Exchange Rule 503(f)(2)(iv)(A). 5 See E:\FR\FM\16JYN1.SGM 16JYN1 jspears on DSK30JT082PROD with NOTICES 34026 Federal Register / Vol. 84, No. 136 / Tuesday, July 16, 2019 / Notices certain circumstances the away market’s displayed price may be equal to the Exchange’s opening price) as currently articulated in the Rule. The Exchange notes that this change was also recently made by MIAX Emerald.10 Next, the Exchange proposes to amend subsection (f)(2)(vii)(A) to update and relocate the parenthetical which currently follows the text, ‘‘Opening Orders (‘OPG Orders’)’’ so that the proposed rule texts reads, ‘‘Opening (‘OPG’) Orders’’ and is aligned to the current MIAX Emerald rule.11 Next, the Exchange proposes to reorganize subsection (f)(2)(viii) to move a parenthetical phrase closer to its subject to make the sentence easier to read. Specifically, the parenthetical, ‘‘(including limit orders that are treated as market orders except for limit orders in series with a bid of $0.00 and an offer less than $0.05, which will not be treated as market orders),’’ will be placed after the phrase market orders, making the proposed rule text read as follows, ‘‘[t]he System will give priority to market orders (including limit orders that are treated as market orders except for limit orders in series with a bid of $0.00 and an offer less than $0.05, which will not be treated as market orders) first in type, then in time priority, then to resting limit orders at the opening price.’’ The Exchange believes relocating the parenthetical phrase helps clarify the rule. Next, the Exchange proposes to adopt new paragraph (xi) to subsection (f)(2) to state that any Route Timer or Imbalance Timer in process shall terminate with respect to an option if at any time during the Opening Process there is a trading halt or trading pause in such option on the Exchange. The option may be subject to any new subsequent Route Timer or Imbalance Timer during the Opening Process upon the termination of the trading halt or trading pause for such option. The Exchange believes this adds additional detail and clarity to the rule concerning the operation of Route Timers and Imbalance Timers on the Exchange, additionally, this rule text is identical to that of MIAX Emerald.12 Finally, the Exchange proposes to amend subsection (g) to state that Senior Help Desk personnel may deviate from the standard manner of the Opening Process when necessary, including delay or compel the opening of any series in any option class, modify timers or settings described in this Rule, when necessary in the interests of commencing or maintaining a fair and orderly market, in the event of unusual market conditions or in the public interest. The Exchange will make and maintain records to document all determinations to deviate from the standard manner of the Opening Process, and periodically review these determinations for consistency with the interests of a fair and orderly market. The Exchange is amending the rule to add additional specificity by designating that only Senior Help Desk personnel may deviate from the standard manner of the Opening Process when necessary. The Exchange is also providing examples of the type of actions that Senior Help Desk personnel may take to ensure a fair and orderly market is maintained. Additionally, the Exchange is proposing to amend the rule to adopt a provision stating that the Exchange will maintain records to document all determinations to deviate from the standard manner of the Opening Process, and periodically review these determinations for consistency with the interests of a fair and orderly market. The Exchange notes that the proposed rule text is identical to that found in the MIAX Emerald Rule.13 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. MIAX Emerald and MIAX Options may have a number of Members 14 in common, and where feasible the Exchange intends to implement similar behavior to provide consistency between MIAX Options and MIAX Emerald so as to avoid confusion among Members. 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act 15 in general, and furthers the objectives of Section 6(b)(5) of the Act 16 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 13 See MIAX Emerald Exchange Rule 503(g). term ‘‘Member’’ means an individual or organization approved to exercise the trading rights associated with a Trading Permit. Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). 14 The 10 See Securities Exchange Act Release No. 85910 (May 22, 2019), 84 FR 24840 (May 29, 2019) (SR– EMERALD–2019–22). 11 See MIAX Emerald Exchange Rule 503(f)(2)(vii)(A). 12 See MIAX Emerald Exchange Rule 503(f)(2)(xi). VerDate Sep<11>2014 17:33 Jul 15, 2019 Jkt 247001 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 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 is proposing to add additional detail to the rule to provide clarity and precision in the Exchange’s rule. The Exchange proposes to provide an internal cross reference to Rule 516, Order Types, where a list of valid order types eligible to participate in the opening process may be found. Additionally, the Exchange is proposing to make a number of non-substantive changes by adding clarifying text to the rule which provides additional detail and clarity to the rule. Clarity and transparency of the Exchange’s rules benefits investors and the public by eliminating the potential for confusion. The Exchange’s proposal to correctly identify the price at which orders may be routed during the Opening Process removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest by ensuring that interest routed as a result of an imbalance on the Exchange during its Opening Process is properly priced for execution. This reduces the risk of trading through 17 other market centers and promotes just and equitable principles of trade by routing orders to market centers where they may receive an execution. The Exchange’s proposal more accurately describes how the System prices interest being routed pursuant to the Opening Process. The Exchange believes its proposal provides accuracy and clarity to the rule and protects investors and the public interest by clearly and accurately describing Exchange functionality which may influence investors’ decisions concerning the submission of their orders. The Exchange is proposing to adopt a new provision regarding the operation of Route Timers and Imbalance Timers during the Opening Process. The Exchange’s proposed rule will provide that any Route Timer or Imbalance Timer in process during the Opening Process shall terminate with respect to an option if at any time during the Opening Process there is a trading halt or a trading pause in such option. The Exchange believes this provision promotes just and equitable principles of traded [sic] and removes impediments to and perfects the 17 A trade-through occurs when one trading center executes an order at a price that is inferior to the price of a protected quotation, often representing an investor limit order, displayed by another trading center. E:\FR\FM\16JYN1.SGM 16JYN1 jspears on DSK30JT082PROD with NOTICES Federal Register / Vol. 84, No. 136 / Tuesday, July 16, 2019 / Notices mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest, and contributes to the operation of a fair and orderly market by immediately ceasing any activity in any option that is subject to a trading halt or a trading pause. This provision is identical to a provision found in MIAX Emerald.18 The Exchange believes adding this provision provides additional detail to the rule and protects investors and the public interest by clearly describing Exchange functionality which may influence investors’ decisions concerning the submission of orders. The Exchange is proposing to harmonize the MIAX Options rule to that of MIAX Emerald as the opening process is similar and wherever possible the Exchange would like to harmonize identical rules so that the only differences between the rules of the two exchanges are those that are intentional. Finally, the Exchange is proposing to amend its current provision pertaining to the actions that the Help Desk may take in the interests of maintaining a fair and orderly market to adopt a more detailed and nuanced provision from MIAX Emerald. This provision identifies which Help Desk personnel may take actions during the Opening Process (Senior Help Desk personnel) and provides examples of the type of actions which may be undertaken. Additionally, the provision provides that the Exchange will make and maintain records to document all determinations to deviate from the standard manner of the Opening Process and periodically reviewing these determinations for consistency with the interests of a fair and orderly market. The Exchange believes its proposal promotes just and equitable principles of trade, removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest by providing additional detail in the Exchange’s rules and by providing a review process for instances where there was a deviation from the standard Opening Process. The Exchange believes its proposal removes impediments to and perfects the mechanisms of a free and open market by providing clarity in the Exchange’s rules and more detail concerning the Opening Process on the Exchange. The Exchange believes clarity and transparency benefits investors and the public and allows investors and the public to make informed decisions 18 See supra note 12. VerDate Sep<11>2014 17:33 Jul 15, 2019 Jkt 247001 regarding the submission of orders to the Exchange. 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 Emerald 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 Emerald if the only differences between MIAX Options rules and MIAX Emerald rules are those that are intended. 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 not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on inter-market competition as the proposed rule change adds additional detail to the Exchange’s rules and further clarifies current Exchange functionality and is not a competitive filing. The Exchange does not believe the proposed rule regarding the price of routed orders will impose any burden on inter-market competition as exchanges routinely route orders to one another and there is no change to the Exchange’s functionality related to routing orders during the Opening Process. Additionally, the Exchange does not believe that the proposed rule change will impose any burden on intra-market competition as the Opening Process affects all Members equally, and the specific situation that the proposal addresses occurs only in the limited instance as described herein. The Exchange does not believe that the proposed rule change to adopt new rule text pertaining to the termination of Route Timers or Imbalance Timers during the Opening Process when there is a trading halt or trading pause in the option will impose any burden on intermarket competition as the change pertains only to the Exchange’s Opening Process. Additionally, the Exchange does not believe that the proposed rule change to amend the provision concerning the actions that the Help Desk may take to deviate from the standard manner of the Opening Process to maintain a fair and orderly market will impose any burden on inter-market competition as the proposed rule change is designed to identify the specific Help Desk personnel authorized to deviate from the standard manner of the Opening PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 34027 Process and to provide some examples of the type of actions that may be undertaken to ensure the operation of a fair and orderly market. The Exchange does not believe that the proposed changes impose a burden on intra-market competition as the proposed changes are designed to provide additional detail and clarity in the Exchange’s rules and are not intended to influence competition among Members. 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 19 and Rule 19b–4(f)(6) 20 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 19 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. 20 17 E:\FR\FM\16JYN1.SGM 16JYN1 34028 Federal Register / Vol. 84, No. 136 / Tuesday, July 16, 2019 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– MIAX–2019–32 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–MIAX–2019–32. 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 (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 website 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 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–MIAX–2019–32 and should be submitted on or before August 6, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–15027 Filed 7–15–19; 8:45 am] BILLING CODE 8011–01–P jspears on DSK30JT082PROD with NOTICES SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange 21 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:33 Jul 15, 2019 Jkt 247001 Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Rule 17Ad–10, SEC File No. 270–265, OMB Control No. 3235–0273 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the existing collection of information provided for in Rule 17Ad–10, (17 CFR 240.17Ad–10), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Rule 17Ad–10 generally requires registered transfer agents to: (1) Create and maintain current and accurate securityholder records; (2) promptly and accurately record all transfers, purchases, redemptions, and issuances, and notify their appropriate regulatory agency if they are unable to do so; (3) exercise diligent and continuous attention in resolving record inaccuracies; (4) disclose to the issuers for whom they perform transfer agent functions and to their appropriate regulatory agency information regarding record inaccuracies; (5) buy-in certain record inaccuracies that result in a physical over issuance of securities; and (6) communicate with other transfer agents related to the same issuer. These requirements assist in the creation and maintenance of accurate securityholder records, enhance the ability to research errors, and ensure the transfer agent is aware of the number of securities that are properly authorized by the issuer, thereby avoiding over issuance. The rule also has specific recordkeeping requirements. It requires registered transfer agents to retain certificate detail that has been deleted for six years and keep current an accurate record of the number of shares or principal dollar amount of debt securities that the issuer has authorized to be outstanding. These mandatory requirements ensure accurate securityholder records and assist the Commission and other regulatory agencies with monitoring transfer agents and ensuring compliance with the rule. This rule does not involve the collection of confidential information. There are approximately 333 registered transfer agents. We estimate that the average number of hours necessary for each transfer agent to comply with Rule 17Ad–10 is approximately 80 hours per year, which generates an industry-wide annual PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 burden of 26,640 hours (333 times 80 hours). This burden is primarily of a recordkeeping nature but also includes a small amount of third party disclosure. At an average staff cost of $50 per hour, the industry-wide internal labor cost of compliance (a monetization of the burden hours) is approximately $1,332,000 per year (26,640 × $50). In addition, we estimate that each transfer agent will incur an annual external cost burden of $18,000 resulting from the collection of information. Therefore, the total annual external cost on the entire transfer agent industry is approximately $5,994,000 ($18,000 times 333). This cost primarily reflects ongoing computer operations and maintenance associated with generating, maintaining, and disclosing or providing certain information required by the rule. The amount of time any particular transfer agent will devote to Rule 17Ad– 10 compliance will vary according to the size and scope of the transfer agent’s business activity. We note, however, that at least some of the records, processes, and communications required by Rule 17Ad–10 would likely be maintained, generated, and used for transfer agent business purposes even without the rule. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comments to: Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an email to: PRA_ Mailbox@sec.gov. E:\FR\FM\16JYN1.SGM 16JYN1

Agencies

[Federal Register Volume 84, Number 136 (Tuesday, July 16, 2019)]
[Notices]
[Pages 34025-34028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15027]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86345; File No. SR-MIAX-2019-32]


Self-Regulatory Organizations; Miami International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 503, Openings on the 
Exchange

July 10, 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 July 3, 2019, Miami International Securities 
Exchange, LLC (``MIAX Options'' or the ``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 Rule 503, 
Openings on the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/ at MIAX Options' 
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 503, Openings on the 
Exchange, to make minor non-substantive edits to harmonize the rule 
text to that of the Exchange's affiliate, MIAX Emerald, LLC (``MIAX 
Emerald'' or ``Emerald''). Additionally, the Exchange proposes to amend 
subsection (f)(2)(iv)(A)2. to adopt new rule text relating to the price 
at which an Intermarket Sweep Order (``ISO'') is routed in order to 
align the rule text to the operation of the System.\3\ The Exchange 
also proposes to adopt new subsection (f)(2)(xi) related to the 
operation of Route Timers and Imbalance Timers during the Opening 
Process.\4\ Finally, the Exchange proposes to amend paragraph (g) to 
adopt new rule text that identifies Help Desk staff authorized to take 
actions during Opening Process to maintain a fair and orderly market.
---------------------------------------------------------------------------

    \3\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \4\ See Exchange Rule 503(f).
---------------------------------------------------------------------------

    First, the Exchange proposes to amend subsection (b) to adopt new 
rule text that is identical to rule text found in Emerald,\5\ to state 
that the order types that may participate in the opening process are 
set forth in Rule 516, Order Types Defined. The Exchange believes that 
this provides additional detail and clarity to the rule.
---------------------------------------------------------------------------

    \5\ See MIAX Emerald Exchange Rule 503(b).
---------------------------------------------------------------------------

    Next, the Exchange proposes to amend subsection (f)(2)(iv) to 
insert the word ``Trading'' to provide consistency and clarity within 
the rule text. The rule discusses Minimum Trading Increments,\6\ and 
the last reference in the sentence is to the Minimum Increment. The 
Exchange now proposes to change this phrase to, ``Minimum Trading 
Increment,'' to align to the rest of the rule text and to the rule text 
of Emerald.\7\
---------------------------------------------------------------------------

    \6\ See Exchange Rule 510.
    \7\ See MIAX Emerald Exchange Rule 503(f)(2)(iv).
---------------------------------------------------------------------------

    Next, the Exchange proposes to amend subsection (f)(2)(iv)(A)(1.) 
and (2.) to correct the formatting of subsection (1.) and (2.) to 
remove the parentheses to make the formatting consistent with the 
hierarchical convention used throughout the rulebook. The Exchange also 
proposes to amend subsection 2. to conform the rule to the current 
System behavior and state that any order that is routed pursuant to 
this Rule will be marked as an Intermarket Sweep Order (``ISO''), as 
defined in Rule 1400(h), with a limit price equal to the ``away 
market's displayed price,'' and not the Exchange's ``opening price'' as 
currently stated in the rule.\8\
---------------------------------------------------------------------------

    \8\ The Exchange notes that Rule 1400(h) pertains primarily to 
ISOs received by the Exchange, whereas in this instance the Exchange 
will be sending the ISO to another exchange.
---------------------------------------------------------------------------

    As described in the Exchange's current rule, the Exchange will 
route to other markets disseminating prices better than the Exchange's 
opening price and will also route to other markets disseminating prices 
equal to the Exchange's opening price if necessary.\9\ Given that the 
order is being routed to another market center for execution the limit 
price of the order being routed should be equal to the away market's 
displayed price rather than the Exchange's opening price (although, in

[[Page 34026]]

certain circumstances the away market's displayed price may be equal to 
the Exchange's opening price) as currently articulated in the Rule. The 
Exchange notes that this change was also recently made by MIAX 
Emerald.\10\
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    \9\ See Exchange Rule 503(f)(2)(iv)(A).
    \10\ See Securities Exchange Act Release No. 85910 (May 22, 
2019), 84 FR 24840 (May 29, 2019) (SR-EMERALD-2019-22).
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    Next, the Exchange proposes to amend subsection (f)(2)(vii)(A) to 
update and relocate the parenthetical which currently follows the text, 
``Opening Orders (`OPG Orders')'' so that the proposed rule texts 
reads, ``Opening (`OPG') Orders'' and is aligned to the current MIAX 
Emerald rule.\11\
---------------------------------------------------------------------------

    \11\ See MIAX Emerald Exchange Rule 503(f)(2)(vii)(A).
---------------------------------------------------------------------------

    Next, the Exchange proposes to reorganize subsection (f)(2)(viii) 
to move a parenthetical phrase closer to its subject to make the 
sentence easier to read. Specifically, the parenthetical, ``(including 
limit orders that are treated as market orders except for limit orders 
in series with a bid of $0.00 and an offer less than $0.05, which will 
not be treated as market orders),'' will be placed after the phrase 
market orders, making the proposed rule text read as follows, ``[t]he 
System will give priority to market orders (including limit orders that 
are treated as market orders except for limit orders in series with a 
bid of $0.00 and an offer less than $0.05, which will not be treated as 
market orders) first in type, then in time priority, then to resting 
limit orders at the opening price.'' The Exchange believes relocating 
the parenthetical phrase helps clarify the rule.
    Next, the Exchange proposes to adopt new paragraph (xi) to 
subsection (f)(2) to state that any Route Timer or Imbalance Timer in 
process shall terminate with respect to an option if at any time during 
the Opening Process there is a trading halt or trading pause in such 
option on the Exchange. The option may be subject to any new subsequent 
Route Timer or Imbalance Timer during the Opening Process upon the 
termination of the trading halt or trading pause for such option. The 
Exchange believes this adds additional detail and clarity to the rule 
concerning the operation of Route Timers and Imbalance Timers on the 
Exchange, additionally, this rule text is identical to that of MIAX 
Emerald.\12\
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    \12\ See MIAX Emerald Exchange Rule 503(f)(2)(xi).
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    Finally, the Exchange proposes to amend subsection (g) to state 
that Senior Help Desk personnel may deviate from the standard manner of 
the Opening Process when necessary, including delay or compel the 
opening of any series in any option class, modify timers or settings 
described in this Rule, when necessary in the interests of commencing 
or maintaining a fair and orderly market, in the event of unusual 
market conditions or in the public interest. The Exchange will make and 
maintain records to document all determinations to deviate from the 
standard manner of the Opening Process, and periodically review these 
determinations for consistency with the interests of a fair and orderly 
market. The Exchange is amending the rule to add additional specificity 
by designating that only Senior Help Desk personnel may deviate from 
the standard manner of the Opening Process when necessary. The Exchange 
is also providing examples of the type of actions that Senior Help Desk 
personnel may take to ensure a fair and orderly market is maintained. 
Additionally, the Exchange is proposing to amend the rule to adopt a 
provision stating that the Exchange will maintain records to document 
all determinations to deviate from the standard manner of the Opening 
Process, and periodically review these determinations for consistency 
with the interests of a fair and orderly market. The Exchange notes 
that the proposed rule text is identical to that found in the MIAX 
Emerald Rule.\13\
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    \13\ See MIAX Emerald Exchange Rule 503(g).
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    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. MIAX Emerald and MIAX 
Options may have a number of Members \14\ in common, and where feasible 
the Exchange intends to implement similar behavior to provide 
consistency between MIAX Options and MIAX Emerald so as to avoid 
confusion among Members.
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    \14\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
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2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \15\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \16\ 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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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange is proposing to add additional detail to the rule to 
provide clarity and precision in the Exchange's rule. The Exchange 
proposes to provide an internal cross reference to Rule 516, Order 
Types, where a list of valid order types eligible to participate in the 
opening process may be found. Additionally, the Exchange is proposing 
to make a number of non-substantive changes by adding clarifying text 
to the rule which provides additional detail and clarity to the rule. 
Clarity and transparency of the Exchange's rules benefits investors and 
the public by eliminating the potential for confusion.
    The Exchange's proposal to correctly identify the price at which 
orders may be routed during the Opening Process removes impediments to 
and perfects the mechanisms of a free and open market and a national 
market system and, in general, protects investors and the public 
interest by ensuring that interest routed as a result of an imbalance 
on the Exchange during its Opening Process is properly priced for 
execution. This reduces the risk of trading through \17\ other market 
centers and promotes just and equitable principles of trade by routing 
orders to market centers where they may receive an execution. The 
Exchange's proposal more accurately describes how the System prices 
interest being routed pursuant to the Opening Process. The Exchange 
believes its proposal provides accuracy and clarity to the rule and 
protects investors and the public interest by clearly and accurately 
describing Exchange functionality which may influence investors' 
decisions concerning the submission of their orders.
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    \17\ A trade-through occurs when one trading center executes an 
order at a price that is inferior to the price of a protected 
quotation, often representing an investor limit order, displayed by 
another trading center.
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    The Exchange is proposing to adopt a new provision regarding the 
operation of Route Timers and Imbalance Timers during the Opening 
Process. The Exchange's proposed rule will provide that any Route Timer 
or Imbalance Timer in process during the Opening Process shall 
terminate with respect to an option if at any time during the Opening 
Process there is a trading halt or a trading pause in such option. The 
Exchange believes this provision promotes just and equitable principles 
of traded [sic] and removes impediments to and perfects the

[[Page 34027]]

mechanisms of a free and open market and a national market system and, 
in general, protects investors and the public interest, and contributes 
to the operation of a fair and orderly market by immediately ceasing 
any activity in any option that is subject to a trading halt or a 
trading pause.
    This provision is identical to a provision found in MIAX 
Emerald.\18\ The Exchange believes adding this provision provides 
additional detail to the rule and protects investors and the public 
interest by clearly describing Exchange functionality which may 
influence investors' decisions concerning the submission of orders. The 
Exchange is proposing to harmonize the MIAX Options rule to that of 
MIAX Emerald as the opening process is similar and wherever possible 
the Exchange would like to harmonize identical rules so that the only 
differences between the rules of the two exchanges are those that are 
intentional.
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    \18\ See supra note 12.
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    Finally, the Exchange is proposing to amend its current provision 
pertaining to the actions that the Help Desk may take in the interests 
of maintaining a fair and orderly market to adopt a more detailed and 
nuanced provision from MIAX Emerald. This provision identifies which 
Help Desk personnel may take actions during the Opening Process (Senior 
Help Desk personnel) and provides examples of the type of actions which 
may be undertaken. Additionally, the provision provides that the 
Exchange will make and maintain records to document all determinations 
to deviate from the standard manner of the Opening Process and 
periodically reviewing these determinations for consistency with the 
interests of a fair and orderly market. The Exchange believes its 
proposal promotes just and equitable principles of trade, removes 
impediments to and perfects the mechanisms of a free and open market 
and a national market system and, in general, protects investors and 
the public interest by providing additional detail in the Exchange's 
rules and by providing a review process for instances where there was a 
deviation from the standard Opening Process.
    The Exchange believes its proposal removes impediments to and 
perfects the mechanisms of a free and open market by providing clarity 
in the Exchange's rules and more detail concerning the Opening Process 
on the Exchange. The Exchange believes clarity and transparency 
benefits investors and the public and allows investors and the public 
to make informed decisions regarding the submission of orders to the 
Exchange.
    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 Emerald 
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 Emerald if the only differences between 
MIAX Options rules and MIAX Emerald rules are those that are intended.

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 not necessary or appropriate in 
furtherance of the purposes of the Act.
    The Exchange does not believe that the proposed rule change will 
impose any burden on inter-market competition as the proposed rule 
change adds additional detail to the Exchange's rules and further 
clarifies current Exchange functionality and is not a competitive 
filing. The Exchange does not believe the proposed rule regarding the 
price of routed orders will impose any burden on inter-market 
competition as exchanges routinely route orders to one another and 
there is no change to the Exchange's functionality related to routing 
orders during the Opening Process.
    Additionally, the Exchange does not believe that the proposed rule 
change will impose any burden on intra-market competition as the 
Opening Process affects all Members equally, and the specific situation 
that the proposal addresses occurs only in the limited instance as 
described herein.
    The Exchange does not believe that the proposed rule change to 
adopt new rule text pertaining to the termination of Route Timers or 
Imbalance Timers during the Opening Process when there is a trading 
halt or trading pause in the option will impose any burden on inter-
market competition as the change pertains only to the Exchange's 
Opening Process.
    Additionally, the Exchange does not believe that the proposed rule 
change to amend the provision concerning the actions that the Help Desk 
may take to deviate from the standard manner of the Opening Process to 
maintain a fair and orderly market will impose any burden on inter-
market competition as the proposed rule change is designed to identify 
the specific Help Desk personnel authorized to deviate from the 
standard manner of the Opening Process and to provide some examples of 
the type of actions that may be undertaken to ensure the operation of a 
fair and orderly market.
    The Exchange does not believe that the proposed changes impose a 
burden on intra-market competition as the proposed changes are designed 
to provide additional detail and clarity in the Exchange's rules and 
are not intended to influence competition among Members.

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 \19\ and Rule 19b-4(f)(6) \20\ 
thereunder.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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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    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

[[Page 34028]]

     Send an email to [email protected]. Please include 
File Number SR-MIAX-2019-32 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-MIAX-2019-32. 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 (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 website 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 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-MIAX-2019-32 and should be submitted on 
or before August 6, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15027 Filed 7-15-19; 8:45 am]
BILLING CODE 8011-01-P