Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Exchange Rule 1326, Transfer of Positions, 56668-56672 [2020-20130]
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of
the Act,15 the Exchange has designated
this proposal as establishing or changing
a due, fee, or other charge imposed by
the self-regulatory organization on any
person, whether or not the person is a
member of the self-regulatory
organization, which renders the
proposed rule change effective upon
filing.
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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–
NASDAQ–2020–059 on the subject line.
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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–NASDAQ–2020–059. 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
15 15
U.S.C. 78s(b)(3)(A)(ii).
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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–NASDAQ–2020–059 and
should be submitted on or before
October 5, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–20126 Filed 9–11–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89786; File No. SR–MIAX–
2020–30]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Adopt Exchange Rule 1326,
Transfer of Positions
September 8, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 4, 2020, Miami International
Securities Exchange, LLC (‘‘MIAX’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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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
adopt new Exchange Rule 1326,
Transfer of Positions.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/ at MIAX’s principal office, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to adopt new
Exchange Rule 1326, Transfer of
Positions, to provide a process by which
Members 5 may transfer option positions
in limited circumstances. This proposed
rule specifies the specific limited
circumstances under which a Member
may effect transfers of positions. This
rule would permit market participants
to move positions from one account to
another without first exposure of the
transaction on the Exchange. This rule
would permit transfers upon the
occurrence of significant, non-recurring
events. The proposed rule change is
similar to Nasdaq ISE Options 6, Section
5.
Currently, the rules of the Exchange
do not specifically address transfers of
option positions between accounts,
individuals, or entities. The Exchange,
however, plans on aligning its Rule with
its competitors by allowing transfers in
situations similar to those permitted on
other exchanges. The proposed rule will
5 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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establish Exchange policy with respect
to transfers of options positions in
certain limited circumstances.
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Permissible Transfers
The Exchange proposes to adopt new
Exchange Rule 1326, titled ‘‘Transfer of
Positions’’ to provide for the
circumstances pursuant to which
Members may transfer their options
positions without first exposing the
order. This rule states that a Member
must be on at least one side of the
transfer. This rule is similar to Nasdaq
ISE Options 6, Section 5.
The Exchange proposes to provide in
paragraph (a) that, existing positions in
options listed on the Exchange of a
Member, or non-Member, that are to be
transferred on, from, or to the books of
a Clearing Member 6 may be transferred
off the Exchange if the transfer involves
one or more of the following events:
(1) Pursuant to Rule 301, an
adjustment or transfer in connection
with the correction of a bona fide error
in the recording of a transaction or the
transferring of a position to another
account, provided that the original trade
documentation confirms the error;
(2) the transfer of positions from one
account to another account where no
change in ownership is involved (i.e.,
accounts of the same Person (as defined
in Rule 100)), provided the accounts are
not in separate aggregation units or
otherwise subject to information barrier
or account segregation requirements;
(3) the consolidation of accounts
where no change in ownership is
involved;
(4) a merger, acquisition,
consolidation, or similar non-recurring
transaction for a Person;
(5) the dissolution of a joint account
in which the remaining Member
assumes the positions of the joint
account;
(6) the dissolution of a corporation or
partnership in which a former nominee
of the corporation or partnership
assumes the positions;
(7) positions transferred as part of a
Member’s capital contribution to a new
joint account, partnership, or
corporation;
(8) the donation of positions to a notfor-profit corporation;
(9) the transfer of positions to a minor
under the Uniform Gifts to Minors Act;
or
(10) the transfer of positions through
operation of law from death,
bankruptcy, or otherwise.
6 The term ‘‘Clearing Member’’ means a Member
that has been admitted membership in the Clearing
Corporation pursuant to the provisions of the rules
of the Clearing Corporation. See Exchange Rule 100.
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The proposed rule change makes clear
that the transferred positions must be
on, from, or to the books of a Clearing
Member. The proposed rule change
states that existing positions of a
Member or a non-Member may be
subject to a transfer, except under
specified circumstances in which a
transfer may only be effected for
positions of a Member.7 The Exchange
notes transfers of positions in Exchange
listed options may also be subject to
applicable laws, rules, and regulations,
including rules of other self-regulatory
organizations.8 Except as explicitly
provided in the proposed rule text, the
proposed rule change is not intended to
exempt position transfers from any
other applicable rules or regulations,
and proposed paragraph (h) makes this
clear in the rule.
The proposed Exchange Rule 1326(b)
codifies Exchange guidance regarding
certain restrictions on permissible
transfers relating to netting of open
positions and to margin and haircut
treatment, unless otherwise permitted
by paragraph (f). No position may net
against another position (‘‘netting’’), and
no position transfer may result in
preferential margin or haircut
treatment.9 Netting occurs when long
positions and short positions in the
same series ‘‘offset’’ against each other,
leaving no position, or a reduced
position. For example, if a Member
wanted to transfer 100 long calls to
another account that contained short
calls of the same options series as well
as other positions, even if the transfer is
permitted pursuant to one of the ten
permissible events listed in the
Proposed Rule, the Member could not
transfer the offsetting series, as they
would net against each other and close
the positions.
However, netting is permitted for
transfers on behalf of a Market Maker
account for transactions in multiply
listed options series on different options
exchanges, but only if the Market Maker
nominees are trading for the same
Member, and the options transactions
on the different options exchanges clear
into separate exchange-specific accounts
because they cannot easily clear into the
same Market Maker account at the
Clearing Corporation. In such instances,
all Market Maker positions in the
exchange-specific accounts for the
multiply listed class would be
7 See
proposed paragraph (a)(5) and (7).
proposed paragraph (h).
9 For example, positions may not transfer from a
customer, joint back office, or firm account to a
Market Maker account. However, positions may
transfer from a Market Maker account to a customer,
joint back office, or firm account (assuming no
netting of positions occurs).
8 See
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automatically transferred on their trade
date into one central Market Maker
account (commonly referred to as a
‘‘universal account’’) at the Clearing
Corporation. Positions cleared into a
universal account would automatically
net against each other. Option
exchanges permit different naming
conventions with respect to Market
Maker account acronyms (for example,
lettering versus numbering and number
of characters), which are used for
accounts at the Clearing Corporation. A
Market Maker may have a nominee with
an appointment in class XYZ on the
Exchange, and have another nominee
with an appointment in class XYZ on
another exchange, but due to account
acronym naming conventions, those
nominees may need to clear their
transactions into separate accounts (one
for Exchange transactions and another
for transactions on the other exchange)
at the Clearing Corporation rather than
into a universal account (in which
account the positions may net). The
proposed rule change permits transfers
from these separate exchange-specific
accounts into the Market Maker’s
universal account in this circumstance
to achieve this purpose.
Transfer Price
The Exchange proposes to state that
the transfer price, to the extent it is
consistent with applicable laws, rules,
and regulations, including rules of other
self-regulatory organizations, and tax
and accounting rules and regulations, at
which a transfer is effected may be: (1)
The original trade prices of the positions
that appear on the books of the trading
Clearing Member, in which case the
records of the transfer must indicate the
original trade dates for the positions;
provided, transfers to correct bona fide
errors pursuant to proposed
subparagraph (a)(1) must be transferred
at the correct original trade prices; (2)
mark-to-market prices of the positions at
the close of trading on the transfer date;
(3) mark-to-market prices of the
positions at the close of trading on the
trade date prior to the transfer date; 10 or
(4) the then-current market price of the
positions at the time the transfer is
effected.11
This proposed rule change provides
market participants that effect
transactions with flexibility to select a
transfer price based on the
circumstances of the transfer and their
business. However, for corrections of
bona fide errors, because those transfers
10 For example, for a transfer that occurs on a
Tuesday, the transfer price may be based on the
closing market price on Monday.
11 See proposed paragraph (c).
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are necessary to correct processing
errors that occurred at the time of the
transaction, those transfers would occur
at the original transaction price, as the
purpose of the transfer is to create the
originally intended result of the
transaction.
Prior Written Notice
Proposed Exchange Rule 1326(d)
requires a Member and its Clearing
Member(s) (to the extent the Member is
not self-clearing) to submit to the
Exchange, in a manner determined by
the Exchange, written notice prior to
effecting a transfer from or to the
account(s) of a Member.12 The notice
must indicate: The Exchange-listed
options positions to be transferred; the
nature of the transaction; the
enumerated provision(s) under
proposed paragraph (a) pursuant to
which the positions are being
transferred; the name of the
counterparty(ies); the anticipated
transfer date; the method for
determining the transfer price; and any
other information requested by the
Exchange.13 The proposed notice will
ensure the Exchange is aware of all
transfers so that it can monitor and
review them (including the records that
must be retained pursuant to proposed
paragraph (e)) to determine whether
they are effected in accordance with the
Rules.
Additionally, requiring notice from
the Member(s) and its Clearing
Member(s) will ensure both parties are
in agreement with respect to the terms
of the transfer. As noted in proposed
subparagraph (d)(2), receipt of notice of
a transfer does not constitute a
determination by the Exchange that the
transfer was effected or reported in
conformity with the requirements of
proposed Rule 1326. Notwithstanding
submission of written notice to the
Exchange, Members and Clearing
Members that effect transfers that do not
conform to the requirements of the
proposed Rule will be subject to
appropriate disciplinary action in
accordance with the Rules.
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Records
The proposed Exchange Rule 1326(e)
requires that each Member and each
Clearing Member that is a party to a
transfer must make and retain records of
12 This notice provision applies only to transfers
involving a Member’s positions and not to positions
of non-Members parties, as they are not subject to
the Rules. In addition, no notice would be required
to effect transfers to correct bona fide errors
pursuant to proposed subparagraph (a)(1) or
transfers of positions from one account to another
where no change in ownership is involved pursuant
to proposed paragraph (a)(2).
13 See proposed paragraph (d)(1).
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the information provided in the written
notice to the Exchange pursuant to
proposed subparagraph (e), as well as
information on the actual Exchangelisted options that are ultimately
transferred, the actual transfer date, and
the actual transfer price (and the
original trade dates, if applicable), and
any other information the Exchange may
request the Member or Clearing Member
to provide.14
Presidential Exemption
Proposed paragraph 1326(f) provides
exemptions approved by the Exchange’s
Chief Executive Officer or President (or
senior-level designee). Specifically, this
provision is in addition to the
exemptions set forth in proposed
paragraph (a). The Exchange proposes
that the Exchange Chief Executive
Officer or President (or senior-level
designee) may grant an exemption from
the requirement of this proposed Rule,
on his or her own motion or upon
application of the Member (with respect
to the Member’s positions) or a Clearing
Member (with respect to positions
carried and cleared by the Clearing
Members). The Chief Executive Officer,
the President, or his or her designee,
may permit a transfer if necessary or
appropriate for the maintenance of a fair
and orderly market and the protection of
investors and is in the public interest,
including due to unusual or
extraordinary circumstances. For
example, an exemption may be granted
if the market value of the Person’s
positions would be compromised by
having to comply with the requirement
to trade on the Exchange pursuant to the
normal auction process or when, in the
judgment of the Chief Executive Officer,
President, or his or her designee, market
conditions make trading on the
Exchange impractical.15
Routine, Recurring Transfers
The Exchange proposes to state that
the transfer procedure set forth in Rule
1326 is intended to facilitate nonroutine, nonrecurring movements of
positions.16 The transfer procedure is
not to be used repeatedly or routinely in
circumvention of the normal auction
market process.
Exchange-Listed Options
Lastly, the Exchange proposes
paragraph (h) which notes that the
transfer procedure set forth in the
proposed Rule is only applicable to
positions in options listed on the
Exchange. Transfers of positions in
Exchange-listed options may also be
subject to applicable laws, rules, and
regulations, including rules of other
self-regulatory organizations. Transfers
of non-Exchange listed options and
other financial instruments are not
governed by this proposed Rule.
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 17 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 18 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
Specifically, the Exchange believes
the proposed transfer rule is consistent
with the Section 6(b)(5) 19 requirements
that the rules of an exchange be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. Additionally, the
Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 20 requirement that the rules of
an exchange not be designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that permitting
transfers in very limited circumstances
is reasonable to allow a Member to
accomplish certain goals efficiently. The
proposed rule permits transfers in
situations involving dissolutions of
entities or accounts, for purposes of
donations, mergers or by operation of
law. As noted above for example, a
Member that is undergoing a structural
change and a one-time movement of
positions may require a transfer of
positions or a Member that is leaving a
firm that will no longer be in business
17 15
14 See
proposed paragraph (e).
15 See proposed paragraph (f).
16 See proposed paragraph (g).
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
19 15 U.S.C. 78f(b)(5).
20 Id.
18 15
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may require a transfer of positions to
another firm. Also, a Member may
require a transfer of positions to make
a capital contribution. The abovereferenced circumstances are nonrecurring situations where the transferor
continues to maintain some ownership
interest or manage the positions
transferred. By contrast, repeated or
routine transfers between entities or
accounts—even if there is no change in
beneficial ownership as a result of the
transfer—is inconsistent with the
purposes for which the proposed rule
will be adopted. Accordingly, the
Exchange believes that such activity
should not be permitted under the rules
and thus, seeks to adopt language in
proposed paragraph (g) that the transfer
of positions procedures set forth in the
proposed rule are intended to facilitate
non-recurring movements of positions.
The proposed rule change will
provide market participants that
experience these limited, non-recurring
events with an efficient and effective
means to transfer positions in these
situations. The Exchange believes the
proposed rule change regarding
permissible transfer prices provides
market participants with flexibility to
determine the price appropriate for their
business, which maintain cost bases in
accordance with normal accounting
practices and removes impediments to a
free and open market.
The proposed rule change which
requires notice and maintenance of
records will ensure the Exchange is able
to review transfers for compliance with
the Rules, which prevents fraudulent
and manipulative acts and practices.
The requirement to retain records is
consistent with the requirements of Rule
17a–3 and 17a–4 under the Act.
Similar to Nasdaq ISE and Cboe
rules,21 the Exchange would permit a
presidential exemption. The Exchange
believes that this exemption is
consistent with the Act because the
Exchange’s Chief Executive Officer or
President (or senior-level designee)
would consider an exemption in very
limited circumstances. The transfer
process is intended to facilitate nonroutine, nonrecurring movements of
positions and, therefore, is not to be
used repeatedly or routinely in
circumvention of the normal auction
market process. The proposed Rule
specifically provides within the rule
text that the Exchange’s Chief Executive
Officer or President (or senior-level
designee) may in his or her judgment
allow a transfer if it is necessary or
appropriate for the maintenance of a fair
21 See Nasdaq ISE Options 6, Section 5; and Cboe
Rule 6.7.
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and orderly market and the protection of
investors and is in the public interest,
including due to unusual or
extraordinary circumstances such as the
market value of the Person’s positions
will be comprised by having to comply
with the requirement to trade on the
Exchange pursuant to the normal
auction process or, when in the
judgment of the President or his or her
designee, market conditions make
trading on the Exchange impractical.
These standards within paragraph (f) of
the proposed rule are intended to
provide guidance concerning the use of
this exemption which is intended to
provide the Exchange with the ability to
utilize the exemption for the
maintenance of a fair and orderly
market and the protection of investors
and is in the public interest. The
Exchange believes that the exemption is
consistent with the Act because it
would allow the Exchange’s Chief
Executive Officer or President (or
senior-level designee) to act in certain
situations which comply with the
guidance within paragraph (f) which is
intended to protect investors and the
general public. Although Cboe’s rule
grants an exemption to the President (or
senior-level designee),22 the Exchange
has elected to parallel the Nasdaq ISE
and grant an exemption to the
Exchange’s Chief Executive Officer or
President (or senior-level designee),
who are similarly situated within the
Exchange’s organization as senior-level
individuals.23
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange does not believe the
proposed rule change will impose an
undue burden on intra-market
competition as the transfer procedure
may be utilized by any Member and the
rule will apply uniformly to all
Members. Use of the transfer procedure
is voluntary, and all Members may use
the procedure to transfer positions as
long as the criteria in the proposed rule
are satisfied. With the establishment of
the proposed rule, a Member that
experiences limited permissible, nonrecurring events would have an efficient
and effective means to transfer positions
in these situations. The Exchange
believes the proposed rule change
regarding permissible transfer prices
provides market participants with
22 See
23 See
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Cboe Rule 6.7(f).
Nasdaq ISE Options 6, Section 5(f).
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56671
flexibility to determine the price
appropriate for their business, which
determine prices in accordance with
normal accounting practices and
removes impediments to a free and open
market. The Exchange does not believe
the proposed notice and record
requirements are unduly burdensome to
market participants. The Exchange
believes the proposed requirements are
reasonable and will ensure the
Exchange is aware of transfers and
would be able to monitor and review the
transfers to ensure the transfer falls
within the proposed rule.
Adopting an exemption, similar to
Nasdaq ISE Options 6, Section 5(f), to
permit the Exchange’s Chief Executive
Officer or President (or senior-level
designees) to grant an exemption, in
addition to the limited circumstances of
the proposed rule, in his or her
judgment, does not impose an undue
burden on competition. Such an
exemption would only be applied when
in the judgement of the Chief Executive
Officer, or President or his or her
designee, the transfer is necessary or
appropriate for the maintenance of a fair
and orderly market and the protection of
investors and is in the public interest,
including due to unusual or
extraordinary circumstances, such as
the possibility that the market value of
a Person’s positions would be
compromised by having to comply with
the requirement to trade on the
Exchange pursuant to the normal
auction process or when market
conditions make trading on the
Exchange impractical.
The Exchange does not believe the
proposed rule change will impose an
undue burden on inter-market
competition. The proposed position
transfer procedure is not intended to be
a competitive trading tool. The
proposed rule change permits, in
limited circumstances, a transfer to
facilitate non-routine, nonrecurring
movements of positions. As provided
for in proposed paragraph (g), it would
not be used repeatedly or routinely in
circumvention of the normal auction
market process. In addition, proposed
paragraph (f) provides within the rule
text that the Exchange’s Chief Executive
Officer or President (or senior-level
designee) may in his or her judgment
allow a transfer for the maintenance of
a fair and orderly market and the
protection of investors and is in the
public interest. The Exchange believes
that the exemption does not impose an
undue burden on competition as the
Exchange’s Chief Executive Officer or
President (or senior-level designee)
would apply the exemption consistent
with the guidance laid out in the
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proposed rule text. Additionally, as
discussed above, the proposed rule
change is similar to Cboe Rule 6.7 and
Nasdaq ISE Options 6, Section 5. The
Exchange believes having similar rules
related to position transfers to those of
other options exchanges will reduce the
administrative burden on market
participants of determining whether
their transfers comply with multiple
sets of rules.
As such, 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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 24 and Rule 19b–
4(f)(6) thereunder.25
A proposed rule change filed under
Rule 19b–4(f)(6) 26 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),27 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 to so
that it may adopt the proposed position
transfer rules as soon as possible which,
according to the Exchange, would
benefit investors and the general public
because it will provide Members with
the ability to request a transfer, for
limited, non-recurring types of transfers,
without the requirement for exposing
those orders on the Exchange. The
Commission believes that waiver of the
24 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
26 17 CFR 240.19b–4(f)(6).
27 17 CFR 240.19b–4(f)(6)(iii).
khammond on DSKJM1Z7X2PROD with NOTICES
25 17
VerDate Sep<11>2014
17:51 Sep 11, 2020
Jkt 250001
operative delay is consistent with the
protection of investors and the public
interest because the proposed rule
change does not present any unique or
novel regulatory issues and is
substantively identical to provisions in
Cboe Rule 6.7 and Nasdaq ISE Options
6, Section 5. Accordingly, the
Commission hereby waives the
operative delay and designates the
proposal operative upon filing.28
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 will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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–2020–30 and should
be submitted on or before October 5,
2020.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
J. Matthew DeLesDernier,
Assistant Secretary.
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
MIAX–2020–30 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–2020–30. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet 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
28 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
[FR Doc. 2020–20130 Filed 9–11–20; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–89784; File No. SR–MEMX–
2020–06]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Adopt Rule 15.3, Collection
of Exchange Fees and Other Claims
and Billing Policy
September 8, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
28, 2020, MEMX LLC (‘‘MEMX’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
29 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4.
1 15
E:\FR\FM\14SEN1.SGM
14SEN1
]]>Agencies
[Federal Register Volume 85, Number 178 (Monday, September 14, 2020)]
[Notices]
[Pages 56668-56672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20130]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89786; File No. SR-MIAX-2020-30]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Adopt Exchange Rule 1326, Transfer of Positions
September 8, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 4, 2020, Miami International Securities Exchange, LLC
(``MIAX'' or the ``Exchange'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to adopt new Exchange Rule 1326,
Transfer of Positions.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/ at MIAX's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to adopt new Exchange Rule 1326, Transfer of
Positions, to provide a process by which Members \5\ may transfer
option positions in limited circumstances. This proposed rule specifies
the specific limited circumstances under which a Member may effect
transfers of positions. This rule would permit market participants to
move positions from one account to another without first exposure of
the transaction on the Exchange. This rule would permit transfers upon
the occurrence of significant, non-recurring events. The proposed rule
change is similar to Nasdaq ISE Options 6, Section 5.
---------------------------------------------------------------------------
\5\ 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.
---------------------------------------------------------------------------
Currently, the rules of the Exchange do not specifically address
transfers of option positions between accounts, individuals, or
entities. The Exchange, however, plans on aligning its Rule with its
competitors by allowing transfers in situations similar to those
permitted on other exchanges. The proposed rule will
[[Page 56669]]
establish Exchange policy with respect to transfers of options
positions in certain limited circumstances.
Permissible Transfers
The Exchange proposes to adopt new Exchange Rule 1326, titled
``Transfer of Positions'' to provide for the circumstances pursuant to
which Members may transfer their options positions without first
exposing the order. This rule states that a Member must be on at least
one side of the transfer. This rule is similar to Nasdaq ISE Options 6,
Section 5.
The Exchange proposes to provide in paragraph (a) that, existing
positions in options listed on the Exchange of a Member, or non-Member,
that are to be transferred on, from, or to the books of a Clearing
Member \6\ may be transferred off the Exchange if the transfer involves
one or more of the following events:
---------------------------------------------------------------------------
\6\ The term ``Clearing Member'' means a Member that has been
admitted membership in the Clearing Corporation pursuant to the
provisions of the rules of the Clearing Corporation. See Exchange
Rule 100.
---------------------------------------------------------------------------
(1) Pursuant to Rule 301, an adjustment or transfer in connection
with the correction of a bona fide error in the recording of a
transaction or the transferring of a position to another account,
provided that the original trade documentation confirms the error;
(2) the transfer of positions from one account to another account
where no change in ownership is involved (i.e., accounts of the same
Person (as defined in Rule 100)), provided the accounts are not in
separate aggregation units or otherwise subject to information barrier
or account segregation requirements;
(3) the consolidation of accounts where no change in ownership is
involved;
(4) a merger, acquisition, consolidation, or similar non-recurring
transaction for a Person;
(5) the dissolution of a joint account in which the remaining
Member assumes the positions of the joint account;
(6) the dissolution of a corporation or partnership in which a
former nominee of the corporation or partnership assumes the positions;
(7) positions transferred as part of a Member's capital
contribution to a new joint account, partnership, or corporation;
(8) the donation of positions to a not-for-profit corporation;
(9) the transfer of positions to a minor under the Uniform Gifts to
Minors Act; or
(10) the transfer of positions through operation of law from death,
bankruptcy, or otherwise.
The proposed rule change makes clear that the transferred positions
must be on, from, or to the books of a Clearing Member. The proposed
rule change states that existing positions of a Member or a non-Member
may be subject to a transfer, except under specified circumstances in
which a transfer may only be effected for positions of a Member.\7\ The
Exchange notes transfers of positions in Exchange listed options may
also be subject to applicable laws, rules, and regulations, including
rules of other self-regulatory organizations.\8\ Except as explicitly
provided in the proposed rule text, the proposed rule change is not
intended to exempt position transfers from any other applicable rules
or regulations, and proposed paragraph (h) makes this clear in the
rule.
---------------------------------------------------------------------------
\7\ See proposed paragraph (a)(5) and (7).
\8\ See proposed paragraph (h).
---------------------------------------------------------------------------
The proposed Exchange Rule 1326(b) codifies Exchange guidance
regarding certain restrictions on permissible transfers relating to
netting of open positions and to margin and haircut treatment, unless
otherwise permitted by paragraph (f). No position may net against
another position (``netting''), and no position transfer may result in
preferential margin or haircut treatment.\9\ Netting occurs when long
positions and short positions in the same series ``offset'' against
each other, leaving no position, or a reduced position. For example, if
a Member wanted to transfer 100 long calls to another account that
contained short calls of the same options series as well as other
positions, even if the transfer is permitted pursuant to one of the ten
permissible events listed in the Proposed Rule, the Member could not
transfer the offsetting series, as they would net against each other
and close the positions.
---------------------------------------------------------------------------
\9\ For example, positions may not transfer from a customer,
joint back office, or firm account to a Market Maker account.
However, positions may transfer from a Market Maker account to a
customer, joint back office, or firm account (assuming no netting of
positions occurs).
---------------------------------------------------------------------------
However, netting is permitted for transfers on behalf of a Market
Maker account for transactions in multiply listed options series on
different options exchanges, but only if the Market Maker nominees are
trading for the same Member, and the options transactions on the
different options exchanges clear into separate exchange-specific
accounts because they cannot easily clear into the same Market Maker
account at the Clearing Corporation. In such instances, all Market
Maker positions in the exchange-specific accounts for the multiply
listed class would be automatically transferred on their trade date
into one central Market Maker account (commonly referred to as a
``universal account'') at the Clearing Corporation. Positions cleared
into a universal account would automatically net against each other.
Option exchanges permit different naming conventions with respect to
Market Maker account acronyms (for example, lettering versus numbering
and number of characters), which are used for accounts at the Clearing
Corporation. A Market Maker may have a nominee with an appointment in
class XYZ on the Exchange, and have another nominee with an appointment
in class XYZ on another exchange, but due to account acronym naming
conventions, those nominees may need to clear their transactions into
separate accounts (one for Exchange transactions and another for
transactions on the other exchange) at the Clearing Corporation rather
than into a universal account (in which account the positions may net).
The proposed rule change permits transfers from these separate
exchange-specific accounts into the Market Maker's universal account in
this circumstance to achieve this purpose.
Transfer Price
The Exchange proposes to state that the transfer price, to the
extent it is consistent with applicable laws, rules, and regulations,
including rules of other self-regulatory organizations, and tax and
accounting rules and regulations, at which a transfer is effected may
be: (1) The original trade prices of the positions that appear on the
books of the trading Clearing Member, in which case the records of the
transfer must indicate the original trade dates for the positions;
provided, transfers to correct bona fide errors pursuant to proposed
subparagraph (a)(1) must be transferred at the correct original trade
prices; (2) mark-to-market prices of the positions at the close of
trading on the transfer date; (3) mark-to-market prices of the
positions at the close of trading on the trade date prior to the
transfer date; \10\ or (4) the then-current market price of the
positions at the time the transfer is effected.\11\
---------------------------------------------------------------------------
\10\ For example, for a transfer that occurs on a Tuesday, the
transfer price may be based on the closing market price on Monday.
\11\ See proposed paragraph (c).
---------------------------------------------------------------------------
This proposed rule change provides market participants that effect
transactions with flexibility to select a transfer price based on the
circumstances of the transfer and their business. However, for
corrections of bona fide errors, because those transfers
[[Page 56670]]
are necessary to correct processing errors that occurred at the time of
the transaction, those transfers would occur at the original
transaction price, as the purpose of the transfer is to create the
originally intended result of the transaction.
Prior Written Notice
Proposed Exchange Rule 1326(d) requires a Member and its Clearing
Member(s) (to the extent the Member is not self-clearing) to submit to
the Exchange, in a manner determined by the Exchange, written notice
prior to effecting a transfer from or to the account(s) of a
Member.\12\ The notice must indicate: The Exchange-listed options
positions to be transferred; the nature of the transaction; the
enumerated provision(s) under proposed paragraph (a) pursuant to which
the positions are being transferred; the name of the counterparty(ies);
the anticipated transfer date; the method for determining the transfer
price; and any other information requested by the Exchange.\13\ The
proposed notice will ensure the Exchange is aware of all transfers so
that it can monitor and review them (including the records that must be
retained pursuant to proposed paragraph (e)) to determine whether they
are effected in accordance with the Rules.
---------------------------------------------------------------------------
\12\ This notice provision applies only to transfers involving a
Member's positions and not to positions of non-Members parties, as
they are not subject to the Rules. In addition, no notice would be
required to effect transfers to correct bona fide errors pursuant to
proposed subparagraph (a)(1) or transfers of positions from one
account to another where no change in ownership is involved pursuant
to proposed paragraph (a)(2).
\13\ See proposed paragraph (d)(1).
---------------------------------------------------------------------------
Additionally, requiring notice from the Member(s) and its Clearing
Member(s) will ensure both parties are in agreement with respect to the
terms of the transfer. As noted in proposed subparagraph (d)(2),
receipt of notice of a transfer does not constitute a determination by
the Exchange that the transfer was effected or reported in conformity
with the requirements of proposed Rule 1326. Notwithstanding submission
of written notice to the Exchange, Members and Clearing Members that
effect transfers that do not conform to the requirements of the
proposed Rule will be subject to appropriate disciplinary action in
accordance with the Rules.
Records
The proposed Exchange Rule 1326(e) requires that each Member and
each Clearing Member that is a party to a transfer must make and retain
records of the information provided in the written notice to the
Exchange pursuant to proposed subparagraph (e), as well as information
on the actual Exchange-listed options that are ultimately transferred,
the actual transfer date, and the actual transfer price (and the
original trade dates, if applicable), and any other information the
Exchange may request the Member or Clearing Member to provide.\14\
---------------------------------------------------------------------------
\14\ See proposed paragraph (e).
---------------------------------------------------------------------------
Presidential Exemption
Proposed paragraph 1326(f) provides exemptions approved by the
Exchange's Chief Executive Officer or President (or senior-level
designee). Specifically, this provision is in addition to the
exemptions set forth in proposed paragraph (a). The Exchange proposes
that the Exchange Chief Executive Officer or President (or senior-level
designee) may grant an exemption from the requirement of this proposed
Rule, on his or her own motion or upon application of the Member (with
respect to the Member's positions) or a Clearing Member (with respect
to positions carried and cleared by the Clearing Members). The Chief
Executive Officer, the President, or his or her designee, may permit a
transfer if necessary or appropriate for the maintenance of a fair and
orderly market and the protection of investors and is in the public
interest, including due to unusual or extraordinary circumstances. For
example, an exemption may be granted if the market value of the
Person's positions would be compromised by having to comply with the
requirement to trade on the Exchange pursuant to the normal auction
process or when, in the judgment of the Chief Executive Officer,
President, or his or her designee, market conditions make trading on
the Exchange impractical.\15\
---------------------------------------------------------------------------
\15\ See proposed paragraph (f).
---------------------------------------------------------------------------
Routine, Recurring Transfers
The Exchange proposes to state that the transfer procedure set
forth in Rule 1326 is intended to facilitate non-routine, nonrecurring
movements of positions.\16\ The transfer procedure is not to be used
repeatedly or routinely in circumvention of the normal auction market
process.
---------------------------------------------------------------------------
\16\ See proposed paragraph (g).
---------------------------------------------------------------------------
Exchange-Listed Options
Lastly, the Exchange proposes paragraph (h) which notes that the
transfer procedure set forth in the proposed Rule is only applicable to
positions in options listed on the Exchange. Transfers of positions in
Exchange-listed options may also be subject to applicable laws, rules,
and regulations, including rules of other self-regulatory
organizations. Transfers of non-Exchange listed options and other
financial instruments are not governed by this proposed Rule.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \17\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \18\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanisms of a free and open market and a national market
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Specifically, the Exchange believes the proposed transfer rule is
consistent with the Section 6(b)(5) \19\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \20\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b)(5).
\20\ Id.
---------------------------------------------------------------------------
The Exchange believes that permitting transfers in very limited
circumstances is reasonable to allow a Member to accomplish certain
goals efficiently. The proposed rule permits transfers in situations
involving dissolutions of entities or accounts, for purposes of
donations, mergers or by operation of law. As noted above for example,
a Member that is undergoing a structural change and a one-time movement
of positions may require a transfer of positions or a Member that is
leaving a firm that will no longer be in business
[[Page 56671]]
may require a transfer of positions to another firm. Also, a Member may
require a transfer of positions to make a capital contribution. The
above-referenced circumstances are non-recurring situations where the
transferor continues to maintain some ownership interest or manage the
positions transferred. By contrast, repeated or routine transfers
between entities or accounts--even if there is no change in beneficial
ownership as a result of the transfer--is inconsistent with the
purposes for which the proposed rule will be adopted. Accordingly, the
Exchange believes that such activity should not be permitted under the
rules and thus, seeks to adopt language in proposed paragraph (g) that
the transfer of positions procedures set forth in the proposed rule are
intended to facilitate non-recurring movements of positions.
The proposed rule change will provide market participants that
experience these limited, non-recurring events with an efficient and
effective means to transfer positions in these situations. The Exchange
believes the proposed rule change regarding permissible transfer prices
provides market participants with flexibility to determine the price
appropriate for their business, which maintain cost bases in accordance
with normal accounting practices and removes impediments to a free and
open market.
The proposed rule change which requires notice and maintenance of
records will ensure the Exchange is able to review transfers for
compliance with the Rules, which prevents fraudulent and manipulative
acts and practices. The requirement to retain records is consistent
with the requirements of Rule 17a-3 and 17a-4 under the Act.
Similar to Nasdaq ISE and Cboe rules,\21\ the Exchange would permit
a presidential exemption. The Exchange believes that this exemption is
consistent with the Act because the Exchange's Chief Executive Officer
or President (or senior-level designee) would consider an exemption in
very limited circumstances. The transfer process is intended to
facilitate non-routine, nonrecurring movements of positions and,
therefore, is not to be used repeatedly or routinely in circumvention
of the normal auction market process. The proposed Rule specifically
provides within the rule text that the Exchange's Chief Executive
Officer or President (or senior-level designee) may in his or her
judgment allow a transfer if it is necessary or appropriate for the
maintenance of a fair and orderly market and the protection of
investors and is in the public interest, including due to unusual or
extraordinary circumstances such as the market value of the Person's
positions will be comprised by having to comply with the requirement to
trade on the Exchange pursuant to the normal auction process or, when
in the judgment of the President or his or her designee, market
conditions make trading on the Exchange impractical. These standards
within paragraph (f) of the proposed rule are intended to provide
guidance concerning the use of this exemption which is intended to
provide the Exchange with the ability to utilize the exemption for the
maintenance of a fair and orderly market and the protection of
investors and is in the public interest. The Exchange believes that the
exemption is consistent with the Act because it would allow the
Exchange's Chief Executive Officer or President (or senior-level
designee) to act in certain situations which comply with the guidance
within paragraph (f) which is intended to protect investors and the
general public. Although Cboe's rule grants an exemption to the
President (or senior-level designee),\22\ the Exchange has elected to
parallel the Nasdaq ISE and grant an exemption to the Exchange's Chief
Executive Officer or President (or senior-level designee), who are
similarly situated within the Exchange's organization as senior-level
individuals.\23\
---------------------------------------------------------------------------
\21\ See Nasdaq ISE Options 6, Section 5; and Cboe Rule 6.7.
\22\ See Cboe Rule 6.7(f).
\23\ See Nasdaq ISE Options 6, Section 5(f).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
The Exchange does not believe the proposed rule change will impose
an undue burden on intra-market competition as the transfer procedure
may be utilized by any Member and the rule will apply uniformly to all
Members. Use of the transfer procedure is voluntary, and all Members
may use the procedure to transfer positions as long as the criteria in
the proposed rule are satisfied. With the establishment of the proposed
rule, a Member that experiences limited permissible, non-recurring
events would have an efficient and effective means to transfer
positions in these situations. The Exchange believes the proposed rule
change regarding permissible transfer prices provides market
participants with flexibility to determine the price appropriate for
their business, which determine prices in accordance with normal
accounting practices and removes impediments to a free and open market.
The Exchange does not believe the proposed notice and record
requirements are unduly burdensome to market participants. The Exchange
believes the proposed requirements are reasonable and will ensure the
Exchange is aware of transfers and would be able to monitor and review
the transfers to ensure the transfer falls within the proposed rule.
Adopting an exemption, similar to Nasdaq ISE Options 6, Section
5(f), to permit the Exchange's Chief Executive Officer or President (or
senior-level designees) to grant an exemption, in addition to the
limited circumstances of the proposed rule, in his or her judgment,
does not impose an undue burden on competition. Such an exemption would
only be applied when in the judgement of the Chief Executive Officer,
or President or his or her designee, the transfer is necessary or
appropriate for the maintenance of a fair and orderly market and the
protection of investors and is in the public interest, including due to
unusual or extraordinary circumstances, such as the possibility that
the market value of a Person's positions would be compromised by having
to comply with the requirement to trade on the Exchange pursuant to the
normal auction process or when market conditions make trading on the
Exchange impractical.
The Exchange does not believe the proposed rule change will impose
an undue burden on inter-market competition. The proposed position
transfer procedure is not intended to be a competitive trading tool.
The proposed rule change permits, in limited circumstances, a transfer
to facilitate non-routine, nonrecurring movements of positions. As
provided for in proposed paragraph (g), it would not be used repeatedly
or routinely in circumvention of the normal auction market process. In
addition, proposed paragraph (f) provides within the rule text that the
Exchange's Chief Executive Officer or President (or senior-level
designee) may in his or her judgment allow a transfer for the
maintenance of a fair and orderly market and the protection of
investors and is in the public interest. The Exchange believes that the
exemption does not impose an undue burden on competition as the
Exchange's Chief Executive Officer or President (or senior-level
designee) would apply the exemption consistent with the guidance laid
out in the
[[Page 56672]]
proposed rule text. Additionally, as discussed above, the proposed rule
change is similar to Cboe Rule 6.7 and Nasdaq ISE Options 6, Section 5.
The Exchange believes having similar rules related to position
transfers to those of other options exchanges will reduce the
administrative burden on market participants of determining whether
their transfers comply with multiple sets of rules.
As such, 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \24\ and Rule 19b-
4(f)(6) thereunder.\25\
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\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\27\ 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 to so that it may
adopt the proposed position transfer rules as soon as possible which,
according to the Exchange, would benefit investors and the general
public because it will provide Members with the ability to request a
transfer, for limited, non-recurring types of transfers, without the
requirement for exposing those orders on the Exchange. The Commission
believes that waiver of the operative delay is consistent with the
protection of investors and the public interest because the proposed
rule change does not present any unique or novel regulatory issues and
is substantively identical to provisions in Cboe Rule 6.7 and Nasdaq
ISE Options 6, Section 5. Accordingly, the Commission hereby waives the
operative delay and designates the proposal operative upon filing.\28\
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\26\ 17 CFR 240.19b-4(f)(6).
\27\ 17 CFR 240.19b-4(f)(6)(iii).
\28\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 will institute proceedings to
determine whether the proposed rule change 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 [email protected]. Please include
File Number SR-MIAX-2020-30 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-2020-30. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet 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 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-2020-30 and should be submitted on
or before October 5, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20130 Filed 9-11-20; 8:45 am]
BILLING CODE 8011-01-P
