Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 307, Position Limits, 29725-29729 [2023-09684]
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Federal Register / Vol. 88, No. 88 / Monday, May 8, 2023 / Notices
by the Commission through rule
making, or Congress, more holistically
and not through an individual exchange
fee filing. Among other things, the
commenter is requesting additional data
and information that is both opaque and
a moving target and would constitute a
level of disclosure materially over and
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,172 and Rule
19b–4(f)(2) 173 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
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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:
ddrumheller on DSK120RN23PROD with NOTICES1
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172 15
173 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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and should be submitted on or before
May 30, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.174
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–09683 Filed 5–5–23; 8:45 am]
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TIME AND DATE:
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing of a Proposed Rule
Change To Amend Exchange Rule 307,
Position Limits
May 2, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 21,
2023, Miami International Securities
Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
1 15
174 17
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CFR 200.30–3(a)(12).
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2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 88 / Monday, May 8, 2023 / Notices
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 307, Position
Limits.
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
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1. Purpose
The Exchange proposes to amend
Exchange Rule 307, Position Limits, to
adopt new paragraph (g) to codify the
process for adjusting position limits as
a result of a stock split 3 or reverse stock
split 4 in the underlying security.
3 A stock split is a corporate action in which a
company issues additional shares to shareholders,
increasing the total by the specified ratio based on
the shares they held previously. A stock split
happens when a company increase the number of
its shares to boost the stock’s liquidity. Although
the number of shares outstanding increases by a
specific multiple, the total dollar value of all shares
outstanding remains the same because a split does
not fundamentally change the company’s value.
The most common split ratios are 2-for-1 or 3-for1 (sometimes denoted as 2:1 or 3:1). This means
that for every share held before the split, each
stockholder will have two or three shares,
respectively, after the split. Example of a stock split,
in August 2020, Apple (AAPL) split its shares 4-for1. Right before the split, each share was trading
around $540. After the split, the price per share at
the market open was $135 (approximately $540/4).
An investor who owned 1,000 share of the stock
pre-split would have owned 4,000 shares post-split.
Apple’s outstanding shares increased from 3.4
billion to approximately 13.6 billion, while the
market capitalization remained largely unchanged
at $2 trillion. Adam Hayes, What a Stock Split Is
and How It Works, With an Example, Investopedia
(June 7, 2022), https://www.investopedia.com/
terms/s/stocksplit.asp (last visited 4/17/2023).
4 A reverse stock split is a type of corporate action
that consolidates the number of existing shares of
stock into fewer (higher-priced) shares. A reverse
stock split divides the existing total quantity of
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Background
Currently, Exchange Rule 307(d)
provides that position limits shall be
determined in the following manner: (1)
a 25,000 contract limit applies to those
to those options having an underlying
security that does not meet the
requirements for a higher option
contract limit; (2) To be eligible for the
50,000 contract limit, either the most
recent six (6) month trading volume of
the underlying security must have
totaled at least twenty (20) million
shares, or the most recent six (6) month
trading volume of the underlying
security must have totaled at least
fifteen (15) million shares and the
underlying security must have at least
forty (40) million shares currently
outstanding; (3) To be eligible for the
75,000 contract limit, either the most
recent six (6) month trading volume of
the underlying security must have
totaled at least forty (40) million shares
or the most recent six (6) month trading
volume of the underlying security must
have totaled at least thirty (30) million
shares and the underlying security must
have at least 120 million shares
currently outstanding; (4) To be eligible
for the 200,000 contract limit, either the
most recent six (6) month trading
volume of the underlying security must
have totaled at least eighty (80) million
shares or the most recent six (6) month
trading volume of the underlying
security must have totaled at least sixty
(60) million shares and the underlying
security must have at least 240 million
shares currently outstanding; (5) To be
eligible for the 250,000 contract limit,
either the most recent six (6) month
trading volume of the underlying
security must have totaled at least 100
million shares or the most recent six (6)
month trading volume of the underlying
security must have totaled at least
seventy-five (75) million shares and the
underlying security must have at least
300 million shares currently
outstanding.
shares by a number such as five or ten, which
would then be called a 1-for-5 or 1-for-10 reverse
split, respectively. A reverse stock split is also
known as stock consolidation, stock merge, or share
rollback and is the opposite of a stock split, where
a share is divided (split) into multiple parts. Say a
pharmaceutical company has ten million
outstanding shares in the market, which are trading
for $5 per share. As the share price is lower, the
company management may wish to artificially
inflate the per-share price. They decide to go for the
1-for-5 reverse stock split, which essentially means
merging five existing share into one new share.
Once the corporate action exercise is over, the
company will have 2 million new shares (10
million/5), with each share now costing $25 each
($5 × 5). Akhilesh Ganti, Reverse Stock Split: What
It Is, How It Works, Examples, Investopedia (July
11, 2022), https://www.investopedia.com/terms/r/
reversesplit.asp (last visited 4/17/2023).
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The Rule also provides that, every six
(6) months, the Exchange will review
the status of underlying securities to
determine which limit should apply. A
higher limit will be effective on the date
set by the Exchange, while any change
to a lower limit will take effect after the
last expiration then trading, unless the
requirement for the same or a higher
limit is met at the time of the
intervening six (6) month review. If,
however, subsequent to a six (6) month
review, an increase in volume and/or
outstanding shares would make a stock
eligible for a higher position limit prior
to the next review, the Exchange in its
discretion may immediately increase
such position limit.5 Additionally,
Interpretations and Policies .01 of the
Rule establishes position limits that
exceed the highest limit (250,000
contracts) available by Rule for certain
underlying securities.
The Securities and Exchange
Commission (the ‘‘Commission’’) has
recognized that position limits (and
exercise limits) serve as a regulatory tool
designed to address potential
manipulative schemes and adverse
market impact surround [sic] the use of
options. In the past, the Commission has
stated that: 6
Since the inception of standardized
options trading, the options exchanges
have had rules limiting the aggregate
number of options contracts that a
member or customer may hold or
exercise. These position and exercise
limits are intended to prevent the
establishment of options positions that
can be used or might create incentives
to manipulate the underlying market so
as to benefit the option position, or that
might contribute to disruptions in the
underlying market. In addition, such
limits serve to reduce the possibility of
disruption in the options market itself,
especially in illiquid options classes.7
Proposal
The Exchange now proposes to amend
its position limit rule, Exchange Rule
307, to codify and make permanent the
position limit changes that currently
5 See
Exchange Rule 307(e).
Securities Exchange Act Release No. 47346
(February 11, 2003), 68 FR 8316 (February 20, 2003)
(SR–CBOE–2002–26) (Order Granting Approval to
Proposed Rule Change and Notice of Filing and
Order Granting Accelerated Approval to
Amendment No. 1 to the Proposed Rule Change
Increasing Position and Exercise Limits for Options
on the DIAMONDS Trust).
7 See Securities Exchange Act Release No. 93525
(November 4, 2021), 86 FR 62584 (November 10,
2021) (SR–CBOE–2021–029) (Notice of Filing of
Amendment Nos. 2 and 3 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendments Nos. 1, 2, and 3, To
Increase Position Limits for Options on Two
Exchange-Traded Funds).
6 See
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Federal Register / Vol. 88, No. 88 / Monday, May 8, 2023 / Notices
occur when an underlying security
undergoes a corporate stock split.
Currently, when an underlying
undergoes a stock split, its position
limit is adjusted by the Options Clearing
Corporation by the factor of the split.8
For example, an underlying that has a
position limit of 250,000 contracts that
undergoes a four-for-one stock split will
have a new position limit of 1,000,000
contracts. However, while the stock
split is a permanent corporate action in
the underlying, the position limit
adjustment is temporary and lasts only
until the time that the last option listed
at the time the stock split occurred
expires.9
To address this issue, the Exchange
proposes to similarly apply the
adjustment factor to the current position
limit, by adopting paragraph (g),
Corporate Actions, to Exchange Rule
307, and new subparagraph (g)(1) to
describe the Exchange’s process for
handling stock splits. Additionally, the
Exchange proposes to adopt new
subparagraph (g)(2) to describe the
Exchange’s process for handling reverse
stock splits.
Specifically, new subparagraph (g)(1)
will provide that the position limit that
was in effect at the time of the stock
split shall be adjusted by multiplying
the current position limit value in effect
for the underlying by the stock split
ratio.10 The Exchange also proposes to
include an example in its rule text to
illustrate the operation of the rule by
stating, if the current position limit is
250,000 contracts and there is a four-forone (4:1) stock split in the underlying,
the new position limit would be
1,000,000 contracts (4 × 250,000).
Similarly, new subparagraph (g)(2)
will provide that the position limit that
was in effect at the time of the reverse
stock split shall be adjusted by dividing
the current position limit value in effect
for the underlying by the reverse stock
split ratio.11 The Exchange also
proposes to include an example in its
rule text to illustrate the operation of the
rule by stating, if the current position
limit is 250,000 contracts and there is
one-for-two (1:2) reverse stock split in
the underlying, the new position limit
would be 125,000 contracts (250,000/2).
The Exchange also proposes to adopt
rule text to provide that the new
position limit will be the greater of the
8 The Exchange does not believe that the OCC
immediately adjusts position limits for reverse
stock splits.
9 It is the Exchange’s understanding and belief
that this is the OCC’s process.
10 See proposed Exchange Rule 307(g)(1).
11 See proposed Exchange Rule 307(g)(2).
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adjusted position limit or the lowest
position limit defined in paragraph (d).
The Exchange believes that its
proposal presents a logical approach to
addressing stock splits in underlying
securities as it maintains the integrity of
the position limit to shares outstanding
ratio, both pre and post-split, and
promotes consistency and stability in
the marketplace. For example, a
position limit of 250,000 contracts on an
underlying security that has
4,000,000,000 shares outstanding
represents control of 25,000,000 shares
or 0.625% of the total shares
outstanding. If the underlying security
has a four-for-one stock split, the
number of shares outstanding would
increase to 16,000,000,000. Therefore, to
maintain the same position limit to
shares outstanding ratio the position
limit should accordingly increase
fourfold to 1,000,000 contracts, where
control of 100,000,000 shares would
represent control of 0.625% of the total
shares outstanding.
Currently, the scenario described
above occurs when there is a stock split,
however, when the last option listed at
the time of the stock split expires, the
position limit is re-evaluated in
accordance to the criteria described in
Exchange Rule 307(d)(1)–(5), (where the
maximum contract limit is 250,000),12
and the position limit is permanently readjusted in accordance to the Rule.
However, the reversion of the position
limit, even to the maximum limit of
250,000 contracts, unnecessarily
restricts trading by imposing a stricter
position limit relative to the number of
shares outstanding post-stock split than
existed pre-stock split. The Exchange’s
proposal will maintain the position
limit ratio to shares outstanding so that
the pre-split ratio and post-split ratio are
identical, and will eliminate any market
disruptions that may occur as a result of
the current process for handling stock
splits.
Additionally, the Exchange proposes
to amend 307(e) to facilitate the six
month reevaluation process on
underlyings that have undergone a split.
Specifically, the Exchange proposes that
the split factor be used for analysis
purposes under paragraph (d) of Rule
307. The Exchange proposes to adopt
rule text that will provide that, for
underlying securities whose position
limit has been adjusted pursuant to
proposed paragraph (g), the split factor
shall be used for analysis under
paragraph (d). For example, under
Exchange Rule 307(d)(5) to be eligible
for the 250,000 contract limit, either the
most recent six (6) month trading
volume of the underlying security must
have totaled at least 100 million shares
or the most recent six (6) month trading
volume of the underlying security must
have totaled at least seventy-five (75)
million shares and the underlying
security must have at least 300 million
shares currently outstanding. Under the
Exchange’s proposal to use the split
factor for analysis under paragraph (d),
in the event of a four-for-one split in the
underlying each threshold would be
increased by the split factor and
increased fourfold. Therefore the first
test would require a six month trading
volume of 400 million shares
(100,000,000 × 4), and the second test
would require a six month trading
volume of 300 million shares
(75,000,000 × 4) and the underlying
security would be required to have at
least 1,200,000,000 shares currently
outstanding (300,000,000 × 4). The
Exchange proposes to take a similar
approach with reverse stock splits, and
proposes to adopt rule text to provide
that, for reverse stock splits, the split
factor would be similarly applied and
used as a divisor in the calculations
rather than as a multiplier.
Additionally, the Exchange proposes
to adopt new subparagraph (3) to
paragraph (g) to state that, for the
purposes of paragraph (g), the term
‘‘stock’’ shall pertain solely to equity
securities and not be inclusive of
Exchange Traded Funds. Rule 307
provides position limits for both equity
securities and Exchange Traded
Funds,13 and the Exchange’s believes
that adopting this rule text provides
specificity regarding the scope of the
Exchange’s proposal.
The Exchange believes its proposal
provides a uniform and consistent
approach for reevaluating position
limits for underlyings that were subject
to a stock split, as the split factor is
properly applied (multiplied for share
splits and divided for reverse share
splits) to each threshold value under
paragraph (d) to establish the proper
position limit.
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 14 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 15 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
13 See
Interpretations and Policies .01 of Rule 307.
U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(5).
14 15
12 See
PO 00000
Exchange Rule 307(d)(5).
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regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange believes that its
proposal would remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general protect investors
and the public interest because it
provides a method for addressing
position limit changes as a result of
stock splits occurring in the underlying
instrument. Currently, position limits
are adjusted at the time of the stock split
but revert back to the original position
limit when the last listed option at the
time of the split expires, which does not
benefit investors or the public interest,
as the original position limit is no
longer meaningfully related to the
current shares outstanding. The
Exchange also believes that clarifying
that its proposal applies only to equity
stocks and not to Exchange Traded
Funds will avoid investor confusion.
The Exchange believes that its
proposal is designed to prevent
fraudulent and manipulative acts and
practices as the proposal maintains the
established position limit relative to
shares outstanding pre and post stock
split. The Exchange believes its
proposal promotes just and equitable
principles of trade, fosters cooperation
and coordination with persons engaged
in regulating, clearing, settling, and
processing information with respect to
transactions in securities, as the
proposal provides a defined calculation
in the Exchange’s rule to account for
stock splits in underlying securities.
Additionally, the Exchange proposes a
corollary method for handling reverse
stock split that employs similar logic.
The Exchange notes that the industry
recently experienced an issue with a
stock split in Apple Inc. (‘‘AAPL’’) that
this proposal is tangentially designed to
address. In August of 2020, AAPL
underwent a four-for-one stock split.
Prior to the stock split there were
approximately 4,000,000,000 shares of
AAPL outstanding 16 and the position
limit for AAPL was 250,000 contracts
(25,000,000 shares). On August 28,
2020, the Options Clearing Corporation
(the ‘‘OCC’’) published a Memo
indicating that effective August 31,
2020, a contract multiplier of 4 and a
16 Apple Inc. Form 10–Q for the Quarterly Period
Ended June 27, 2020 states that 4,275,634,000
shares of common stock were issued and
outstanding as of July 17, 2020.
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strike divisor of 4 would be applied to
AAPL contracts and strikes.17 The OCC
also adjusted the position limit for
AAPL by the same factor, setting the
equity position limit to 100,000,000
shares (1,000,000 contracts). Position
limits are published daily by the OCC
on its website.18 However, when the last
AAPL option listed at the time of the
stock split in 2020 expired in 2022, the
OCC reverted back to the original equity
position limit for AAPL of 25,000,000
shares (250,000 contracts). Although
this position limit technically adheres to
Exchange rules,19 it is more restrictive
than the original position limit. Prior to
the stock split AAPL had approximately
4,000,000,000 shares outstanding and
the position limit of 250,000 contracts
represented control of 25,000,000 shares
or 0.625% of the shares outstanding.
After the stock split AAPL had
approximately 16,000,000,000 shares
outstanding.20 The immediate
adjustment of the position limit from
250,000 contracts to 1,000,000 contracts
reflects control of 100,000,000 shares or
0.625% of the shares outstanding which
retains the pre-stock split ratio. Readjusting the position limit back to
25,000,000 shares (250,000 contracts)
when there are 16,000,000,000 shares
outstanding reduces the position limit
to 0.156% of the shares outstanding,
making the post-stock split position
limit more restrictive than the pre-stock
split position limit.
This reversion to the pre-stock split
position disrupts the market in a
number of ways. First, it prevents
market participants from effectively
pursuing their trading and investment
strategies in the same fashion as they
had pre-stock split as the position limit
relative to shares outstanding becomes
more restrictive. Secondly, the reversion
to the pre-stock split position limit
introduces an element of risk as market
participants must unwind their poststock split positions prior to the
occurrence of the reversion back to the
pre-stock split position limit level to
remain compliant with position limit
rules. Finally, the reversion of the
position limit may negatively impact
trading volumes, as market participants
that use option contracts to hedge their
17 See OCC Memo #47509, Apple Inc.—4 for 1
Stock Split (August 28, 2020) available on its public
website at https://infomemo.theocc.com/
infomemos?number=47509.
18 See https://www.theocc.com/market-data/
market-data-reports/series-and-trading-data/
position-limits.
19 See Exchange Rule 307(e).
20 Apple Inc. Form 10–Q for the Quarterly Period
Ended June 25, 2022, states that 16,070,752,000
shares of common stock were issued and
outstanding as of July 15, 2022.
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risks will not be able to maintain the
same levels of market exposure.
Using AAPL as an example, pre-split,
a market participant could have had an
options position of 250,000 contracts
that represented 0.0625% of the total
shares outstanding. Post-split, the
market participant could have an
options position of 1,000,000 contracts,
which would still represent 0.0625% of
the total shares outstanding. When the
reversion back to the pre-split position
limit occurs (250,000 contracts) the
market participant is forced to reduce its
trading activity as the maximum
position limit now represents 0.1563%
of the total shares outstanding. This
reduction in trading volume also
represents a reduction in available
liquidity. Robust liquidity facilitates
price discovery and benefits
competition by improving bid/ask
spreads, tighter bid/ask spreads lead to
better execution prices. Therefore, the
reversion to the pre-split position limit
negatively impacts liquidity, trading
volume, and possibly execution prices.
The Exchange believes that its
proposed formula for reevaluating
position limits for underlyings that have
undergone a stock split or reverse stock
split would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general protect investors
and the public interest because it
provides a uniform and consistent
approach for re-evaluating position
limits.
Each option exchange has a similar
position limit rule,21 and the minimum
position limit value is used by the OCC.
The Exchange believes its proposal will
allow each exchange to adopt a similar
provision to their position limit rule to
harmonize position limit adjustments as
a result of stock splits in underlying
securities. The Exchange believes this
will foster cooperation and coordination
with persons engaged in regulating and
processing information with respect to
transactions in securities by
standardizing the calculation of position
limits for underlying securities that
undergo a stock split. All market
participants are able to determine
position limits on a daily basis as each
day the Options Clearing Corporation
publishes a Position Limit file.
Additionally, the OCC publishes a
Position Limit Change file which
reflects position limit adjustments and
provides the Start Date and Starting
Position Limit coupled with the End
21 See e.g., Cboe Exchange Rule 8.30; Box
Exchange Rule 3120, Nasdaq Phlx, Options 9,
Section 13; Nasdaq ISE, Options 9, Section 13;
NYSE Arca 6.8–O; and NYSE American Rule 904.
E:\FR\FM\08MYN1.SGM
08MYN1
Federal Register / Vol. 88, No. 88 / Monday, May 8, 2023 / Notices
Date and Ending Position Limit, to alert
the industry participants to position
limit changes. Therefore, the Exchange
believes that its proposal is designed to
promote just and equitable principles of
trade and to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, and
processing information with respect to
transactions in securities.
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 that
the proposed rule change will impose
any burden on intra-market competition
as the rules of the Exchange apply
equally to all Members of the Exchange
and all Members of the Exchange are
required to adhere to the position limits
established by the Exchange’s rules.
The Exchange does not believe that
the proposed rule change will impose
any burden on inter-market competition
as the proposal is not competitive in
nature. The Exchange believes that all
option exchanges will adopt
substantively similar proposals for
establishing position limits for
underlying securities that undergo a
stock split or reverse stock split, such
that the Exchange’s proposal would
benefit competition.
For these reasons, 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.
ddrumheller on DSK120RN23PROD with NOTICES1
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) by order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be disapproved.
VerDate Sep<11>2014
21:48 May 05, 2023
Jkt 259001
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–
MIAX–2023–19 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–2023–19. 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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–MIAX–2023–19 and
should be submitted on or before May
30, 2023.
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–09684 Filed 5–5–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–481, OMB Control No.
3235–0538]
Submission for OMB Review;
Comment Request; Extension: Form
ADV–H
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension of the
previously approved collection of
information discussed below.
The title for the collection of
information is ‘‘Form ADV–H under the
Investment Advisers Act of 1940.’’ Form
ADV–H (17 CFR 279.3) under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’) is the application that
investment advisers use to request a
hardship exemption from making
Advisers Act filings electronically with
the Investment Adviser Registration
Depository (‘‘IARD’’).
There are two types of hardship
exemptions from making Advisers Act
filings through IARD: a temporary
hardship exemption and a continuing
hardship exemption. Advisers Act rule
203–3 (17 CFR 275.203–3) sets forth
requirements for both temporary
hardship exemptions and continuing
hardship exemptions for advisers
registered or registering with the
Commission. Advisers Act rule 204–4(e)
(17 CFR 275.204–4(e)) sets forth
requirements for temporary hardship
exemptions for exempt reporting
advisers.
A temporary hardship exemption is
available to advisers registered or
registering with the Commission, as
well as exempt reporting advisers, if the
adviser has unanticipated technical
difficulties that prevent it from
submitting a filing to the IARD system.
To apply for a temporary hardship
exemption, the adviser must file Form
22 17
Frm 00109
Fmt 4703
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08MYN1
]]>Agencies
[Federal Register Volume 88, Number 88 (Monday, May 8, 2023)]
[Notices]
[Pages 29725-29729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09684]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97421; File No. SR-MIAX-2023-19]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend
Exchange Rule 307, Position Limits
May 2, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 21, 2023, Miami International Securities Exchange LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 29726]]
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 307,
Position Limits.
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 amend Exchange Rule 307, Position Limits,
to adopt new paragraph (g) to codify the process for adjusting position
limits as a result of a stock split \3\ or reverse stock split \4\ in
the underlying security.
---------------------------------------------------------------------------
\3\ A stock split is a corporate action in which a company
issues additional shares to shareholders, increasing the total by
the specified ratio based on the shares they held previously. A
stock split happens when a company increase the number of its shares
to boost the stock's liquidity. Although the number of shares
outstanding increases by a specific multiple, the total dollar value
of all shares outstanding remains the same because a split does not
fundamentally change the company's value. The most common split
ratios are 2-for-1 or 3-for-1 (sometimes denoted as 2:1 or 3:1).
This means that for every share held before the split, each
stockholder will have two or three shares, respectively, after the
split. Example of a stock split, in August 2020, Apple (AAPL) split
its shares 4-for-1. Right before the split, each share was trading
around $540. After the split, the price per share at the market open
was $135 (approximately $540/4). An investor who owned 1,000 share
of the stock pre-split would have owned 4,000 shares post-split.
Apple's outstanding shares increased from 3.4 billion to
approximately 13.6 billion, while the market capitalization remained
largely unchanged at $2 trillion. Adam Hayes, What a Stock Split Is
and How It Works, With an Example, Investopedia (June 7, 2022),
https://www.investopedia.com/terms/s/stocksplit.asp (last visited 4/
17/2023).
\4\ A reverse stock split is a type of corporate action that
consolidates the number of existing shares of stock into fewer
(higher-priced) shares. A reverse stock split divides the existing
total quantity of shares by a number such as five or ten, which
would then be called a 1-for-5 or 1-for-10 reverse split,
respectively. A reverse stock split is also known as stock
consolidation, stock merge, or share rollback and is the opposite of
a stock split, where a share is divided (split) into multiple parts.
Say a pharmaceutical company has ten million outstanding shares in
the market, which are trading for $5 per share. As the share price
is lower, the company management may wish to artificially inflate
the per-share price. They decide to go for the 1-for-5 reverse stock
split, which essentially means merging five existing share into one
new share. Once the corporate action exercise is over, the company
will have 2 million new shares (10 million/5), with each share now
costing $25 each ($5 x 5). Akhilesh Ganti, Reverse Stock Split: What
It Is, How It Works, Examples, Investopedia (July 11, 2022), https://www.investopedia.com/terms/r/reversesplit.asp (last visited 4/17/
2023).
---------------------------------------------------------------------------
Background
Currently, Exchange Rule 307(d) provides that position limits shall
be determined in the following manner: (1) a 25,000 contract limit
applies to those to those options having an underlying security that
does not meet the requirements for a higher option contract limit; (2)
To be eligible for the 50,000 contract limit, either the most recent
six (6) month trading volume of the underlying security must have
totaled at least twenty (20) million shares, or the most recent six (6)
month trading volume of the underlying security must have totaled at
least fifteen (15) million shares and the underlying security must have
at least forty (40) million shares currently outstanding; (3) To be
eligible for the 75,000 contract limit, either the most recent six (6)
month trading volume of the underlying security must have totaled at
least forty (40) million shares or the most recent six (6) month
trading volume of the underlying security must have totaled at least
thirty (30) million shares and the underlying security must have at
least 120 million shares currently outstanding; (4) To be eligible for
the 200,000 contract limit, either the most recent six (6) month
trading volume of the underlying security must have totaled at least
eighty (80) million shares or the most recent six (6) month trading
volume of the underlying security must have totaled at least sixty (60)
million shares and the underlying security must have at least 240
million shares currently outstanding; (5) To be eligible for the
250,000 contract limit, either the most recent six (6) month trading
volume of the underlying security must have totaled at least 100
million shares or the most recent six (6) month trading volume of the
underlying security must have totaled at least seventy-five (75)
million shares and the underlying security must have at least 300
million shares currently outstanding.
The Rule also provides that, every six (6) months, the Exchange
will review the status of underlying securities to determine which
limit should apply. A higher limit will be effective on the date set by
the Exchange, while any change to a lower limit will take effect after
the last expiration then trading, unless the requirement for the same
or a higher limit is met at the time of the intervening six (6) month
review. If, however, subsequent to a six (6) month review, an increase
in volume and/or outstanding shares would make a stock eligible for a
higher position limit prior to the next review, the Exchange in its
discretion may immediately increase such position limit.\5\
Additionally, Interpretations and Policies .01 of the Rule establishes
position limits that exceed the highest limit (250,000 contracts)
available by Rule for certain underlying securities.
---------------------------------------------------------------------------
\5\ See Exchange Rule 307(e).
---------------------------------------------------------------------------
The Securities and Exchange Commission (the ``Commission'') has
recognized that position limits (and exercise limits) serve as a
regulatory tool designed to address potential manipulative schemes and
adverse market impact surround [sic] the use of options. In the past,
the Commission has stated that: \6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 47346 (February 11,
2003), 68 FR 8316 (February 20, 2003) (SR-CBOE-2002-26) (Order
Granting Approval to Proposed Rule Change and Notice of Filing and
Order Granting Accelerated Approval to Amendment No. 1 to the
Proposed Rule Change Increasing Position and Exercise Limits for
Options on the DIAMONDS Trust).
---------------------------------------------------------------------------
Since the inception of standardized options trading, the options
exchanges have had rules limiting the aggregate number of options
contracts that a member or customer may hold or exercise. These
position and exercise limits are intended to prevent the establishment
of options positions that can be used or might create incentives to
manipulate the underlying market so as to benefit the option position,
or that might contribute to disruptions in the underlying market. In
addition, such limits serve to reduce the possibility of disruption in
the options market itself, especially in illiquid options classes.\7\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 93525 (November 4,
2021), 86 FR 62584 (November 10, 2021) (SR-CBOE-2021-029) (Notice of
Filing of Amendment Nos. 2 and 3 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendments Nos.
1, 2, and 3, To Increase Position Limits for Options on Two
Exchange-Traded Funds).
---------------------------------------------------------------------------
Proposal
The Exchange now proposes to amend its position limit rule,
Exchange Rule 307, to codify and make permanent the position limit
changes that currently
[[Page 29727]]
occur when an underlying security undergoes a corporate stock split.
Currently, when an underlying undergoes a stock split, its position
limit is adjusted by the Options Clearing Corporation by the factor of
the split.\8\ For example, an underlying that has a position limit of
250,000 contracts that undergoes a four-for-one stock split will have a
new position limit of 1,000,000 contracts. However, while the stock
split is a permanent corporate action in the underlying, the position
limit adjustment is temporary and lasts only until the time that the
last option listed at the time the stock split occurred expires.\9\
---------------------------------------------------------------------------
\8\ The Exchange does not believe that the OCC immediately
adjusts position limits for reverse stock splits.
\9\ It is the Exchange's understanding and belief that this is
the OCC's process.
---------------------------------------------------------------------------
To address this issue, the Exchange proposes to similarly apply the
adjustment factor to the current position limit, by adopting paragraph
(g), Corporate Actions, to Exchange Rule 307, and new subparagraph
(g)(1) to describe the Exchange's process for handling stock splits.
Additionally, the Exchange proposes to adopt new subparagraph (g)(2) to
describe the Exchange's process for handling reverse stock splits.
Specifically, new subparagraph (g)(1) will provide that the
position limit that was in effect at the time of the stock split shall
be adjusted by multiplying the current position limit value in effect
for the underlying by the stock split ratio.\10\ The Exchange also
proposes to include an example in its rule text to illustrate the
operation of the rule by stating, if the current position limit is
250,000 contracts and there is a four-for-one (4:1) stock split in the
underlying, the new position limit would be 1,000,000 contracts (4 x
250,000).
---------------------------------------------------------------------------
\10\ See proposed Exchange Rule 307(g)(1).
---------------------------------------------------------------------------
Similarly, new subparagraph (g)(2) will provide that the position
limit that was in effect at the time of the reverse stock split shall
be adjusted by dividing the current position limit value in effect for
the underlying by the reverse stock split ratio.\11\ The Exchange also
proposes to include an example in its rule text to illustrate the
operation of the rule by stating, if the current position limit is
250,000 contracts and there is one-for-two (1:2) reverse stock split in
the underlying, the new position limit would be 125,000 contracts
(250,000/2). The Exchange also proposes to adopt rule text to provide
that the new position limit will be the greater of the adjusted
position limit or the lowest position limit defined in paragraph (d).
---------------------------------------------------------------------------
\11\ See proposed Exchange Rule 307(g)(2).
---------------------------------------------------------------------------
The Exchange believes that its proposal presents a logical approach
to addressing stock splits in underlying securities as it maintains the
integrity of the position limit to shares outstanding ratio, both pre
and post-split, and promotes consistency and stability in the
marketplace. For example, a position limit of 250,000 contracts on an
underlying security that has 4,000,000,000 shares outstanding
represents control of 25,000,000 shares or 0.625% of the total shares
outstanding. If the underlying security has a four-for-one stock split,
the number of shares outstanding would increase to 16,000,000,000.
Therefore, to maintain the same position limit to shares outstanding
ratio the position limit should accordingly increase fourfold to
1,000,000 contracts, where control of 100,000,000 shares would
represent control of 0.625% of the total shares outstanding.
Currently, the scenario described above occurs when there is a
stock split, however, when the last option listed at the time of the
stock split expires, the position limit is re-evaluated in accordance
to the criteria described in Exchange Rule 307(d)(1)-(5), (where the
maximum contract limit is 250,000),\12\ and the position limit is
permanently re-adjusted in accordance to the Rule. However, the
reversion of the position limit, even to the maximum limit of 250,000
contracts, unnecessarily restricts trading by imposing a stricter
position limit relative to the number of shares outstanding post-stock
split than existed pre-stock split. The Exchange's proposal will
maintain the position limit ratio to shares outstanding so that the
pre-split ratio and post-split ratio are identical, and will eliminate
any market disruptions that may occur as a result of the current
process for handling stock splits.
---------------------------------------------------------------------------
\12\ See Exchange Rule 307(d)(5).
---------------------------------------------------------------------------
Additionally, the Exchange proposes to amend 307(e) to facilitate
the six month reevaluation process on underlyings that have undergone a
split. Specifically, the Exchange proposes that the split factor be
used for analysis purposes under paragraph (d) of Rule 307. The
Exchange proposes to adopt rule text that will provide that, for
underlying securities whose position limit has been adjusted pursuant
to proposed paragraph (g), the split factor shall be used for analysis
under paragraph (d). For example, under Exchange Rule 307(d)(5) to be
eligible for the 250,000 contract limit, either the most recent six (6)
month trading volume of the underlying security must have totaled at
least 100 million shares or the most recent six (6) month trading
volume of the underlying security must have totaled at least seventy-
five (75) million shares and the underlying security must have at least
300 million shares currently outstanding. Under the Exchange's proposal
to use the split factor for analysis under paragraph (d), in the event
of a four-for-one split in the underlying each threshold would be
increased by the split factor and increased fourfold. Therefore the
first test would require a six month trading volume of 400 million
shares (100,000,000 x 4), and the second test would require a six month
trading volume of 300 million shares (75,000,000 x 4) and the
underlying security would be required to have at least 1,200,000,000
shares currently outstanding (300,000,000 x 4). The Exchange proposes
to take a similar approach with reverse stock splits, and proposes to
adopt rule text to provide that, for reverse stock splits, the split
factor would be similarly applied and used as a divisor in the
calculations rather than as a multiplier.
Additionally, the Exchange proposes to adopt new subparagraph (3)
to paragraph (g) to state that, for the purposes of paragraph (g), the
term ``stock'' shall pertain solely to equity securities and not be
inclusive of Exchange Traded Funds. Rule 307 provides position limits
for both equity securities and Exchange Traded Funds,\13\ and the
Exchange's believes that adopting this rule text provides specificity
regarding the scope of the Exchange's proposal.
---------------------------------------------------------------------------
\13\ See Interpretations and Policies .01 of Rule 307.
---------------------------------------------------------------------------
The Exchange believes its proposal provides a uniform and
consistent approach for reevaluating position limits for underlyings
that were subject to a stock split, as the split factor is properly
applied (multiplied for share splits and divided for reverse share
splits) to each threshold value under paragraph (d) to establish the
proper position limit.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \14\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \15\ 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
[[Page 29728]]
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.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that its proposal would remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general protect investors and the public
interest because it provides a method for addressing position limit
changes as a result of stock splits occurring in the underlying
instrument. Currently, position limits are adjusted at the time of the
stock split but revert back to the original position limit when the
last listed option at the time of the split expires, which does not
benefit investors or the public interest, as the original position
limit is no longer meaningfully related to the current shares
outstanding. The Exchange also believes that clarifying that its
proposal applies only to equity stocks and not to Exchange Traded Funds
will avoid investor confusion.
The Exchange believes that its proposal is designed to prevent
fraudulent and manipulative acts and practices as the proposal
maintains the established position limit relative to shares outstanding
pre and post stock split. The Exchange believes its proposal promotes
just and equitable principles of trade, fosters cooperation and
coordination with persons engaged in regulating, clearing, settling,
and processing information with respect to transactions in securities,
as the proposal provides a defined calculation in the Exchange's rule
to account for stock splits in underlying securities. Additionally, the
Exchange proposes a corollary method for handling reverse stock split
that employs similar logic.
The Exchange notes that the industry recently experienced an issue
with a stock split in Apple Inc. (``AAPL'') that this proposal is
tangentially designed to address. In August of 2020, AAPL underwent a
four-for-one stock split. Prior to the stock split there were
approximately 4,000,000,000 shares of AAPL outstanding \16\ and the
position limit for AAPL was 250,000 contracts (25,000,000 shares). On
August 28, 2020, the Options Clearing Corporation (the ``OCC'')
published a Memo indicating that effective August 31, 2020, a contract
multiplier of 4 and a strike divisor of 4 would be applied to AAPL
contracts and strikes.\17\ The OCC also adjusted the position limit for
AAPL by the same factor, setting the equity position limit to
100,000,000 shares (1,000,000 contracts). Position limits are published
daily by the OCC on its website.\18\ However, when the last AAPL option
listed at the time of the stock split in 2020 expired in 2022, the OCC
reverted back to the original equity position limit for AAPL of
25,000,000 shares (250,000 contracts). Although this position limit
technically adheres to Exchange rules,\19\ it is more restrictive than
the original position limit. Prior to the stock split AAPL had
approximately 4,000,000,000 shares outstanding and the position limit
of 250,000 contracts represented control of 25,000,000 shares or 0.625%
of the shares outstanding. After the stock split AAPL had approximately
16,000,000,000 shares outstanding.\20\ The immediate adjustment of the
position limit from 250,000 contracts to 1,000,000 contracts reflects
control of 100,000,000 shares or 0.625% of the shares outstanding which
retains the pre-stock split ratio. Re-adjusting the position limit back
to 25,000,000 shares (250,000 contracts) when there are 16,000,000,000
shares outstanding reduces the position limit to 0.156% of the shares
outstanding, making the post-stock split position limit more
restrictive than the pre-stock split position limit.
---------------------------------------------------------------------------
\16\ Apple Inc. Form 10-Q for the Quarterly Period Ended June
27, 2020 states that 4,275,634,000 shares of common stock were
issued and outstanding as of July 17, 2020.
\17\ See OCC Memo #47509, Apple Inc.--4 for 1 Stock Split
(August 28, 2020) available on its public website at https://infomemo.theocc.com/infomemos?number=47509.
\18\ See https://www.theocc.com/market-data/market-data-reports/series-and-trading-data/position-limits.
\19\ See Exchange Rule 307(e).
\20\ Apple Inc. Form 10-Q for the Quarterly Period Ended June
25, 2022, states that 16,070,752,000 shares of common stock were
issued and outstanding as of July 15, 2022.
---------------------------------------------------------------------------
This reversion to the pre-stock split position disrupts the market
in a number of ways. First, it prevents market participants from
effectively pursuing their trading and investment strategies in the
same fashion as they had pre-stock split as the position limit relative
to shares outstanding becomes more restrictive. Secondly, the reversion
to the pre-stock split position limit introduces an element of risk as
market participants must unwind their post-stock split positions prior
to the occurrence of the reversion back to the pre-stock split position
limit level to remain compliant with position limit rules. Finally, the
reversion of the position limit may negatively impact trading volumes,
as market participants that use option contracts to hedge their risks
will not be able to maintain the same levels of market exposure.
Using AAPL as an example, pre-split, a market participant could
have had an options position of 250,000 contracts that represented
0.0625% of the total shares outstanding. Post-split, the market
participant could have an options position of 1,000,000 contracts,
which would still represent 0.0625% of the total shares outstanding.
When the reversion back to the pre-split position limit occurs (250,000
contracts) the market participant is forced to reduce its trading
activity as the maximum position limit now represents 0.1563% of the
total shares outstanding. This reduction in trading volume also
represents a reduction in available liquidity. Robust liquidity
facilitates price discovery and benefits competition by improving bid/
ask spreads, tighter bid/ask spreads lead to better execution prices.
Therefore, the reversion to the pre-split position limit negatively
impacts liquidity, trading volume, and possibly execution prices.
The Exchange believes that its proposed formula for reevaluating
position limits for underlyings that have undergone a stock split or
reverse stock split would remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general protect investors and the public interest because it
provides a uniform and consistent approach for re-evaluating position
limits.
Each option exchange has a similar position limit rule,\21\ and the
minimum position limit value is used by the OCC. The Exchange believes
its proposal will allow each exchange to adopt a similar provision to
their position limit rule to harmonize position limit adjustments as a
result of stock splits in underlying securities. The Exchange believes
this will foster cooperation and coordination with persons engaged in
regulating and processing information with respect to transactions in
securities by standardizing the calculation of position limits for
underlying securities that undergo a stock split. All market
participants are able to determine position limits on a daily basis as
each day the Options Clearing Corporation publishes a Position Limit
file. Additionally, the OCC publishes a Position Limit Change file
which reflects position limit adjustments and provides the Start Date
and Starting Position Limit coupled with the End
[[Page 29729]]
Date and Ending Position Limit, to alert the industry participants to
position limit changes. Therefore, the Exchange believes that its
proposal is designed to promote just and equitable principles of trade
and to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, and processing information with respect
to transactions in securities.
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\21\ See e.g., Cboe Exchange Rule 8.30; Box Exchange Rule 3120,
Nasdaq Phlx, Options 9, Section 13; Nasdaq ISE, Options 9, Section
13; NYSE Arca 6.8-O; and NYSE American Rule 904.
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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 that the proposed rule change will
impose any burden on intra-market competition as the rules of the
Exchange apply equally to all Members of the Exchange and all Members
of the Exchange are required to adhere to the position limits
established by the Exchange's rules.
The Exchange does not believe that the proposed rule change will
impose any burden on inter-market competition as the proposal is not
competitive in nature. The Exchange believes that all option exchanges
will adopt substantively similar proposals for establishing position
limits for underlying securities that undergo a stock split or reverse
stock split, such that the Exchange's proposal would benefit
competition.
For these reasons, 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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MIAX-2023-19 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-2023-19. 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. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-MIAX-2023-19 and should
be submitted on or before May 30, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09684 Filed 5-5-23; 8:45 am]
BILLING CODE 8011-01-P
