80 FR 10194 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Order Disapproving Proposed Rule Changes To List and Trade Options on Shares of the iShares ETFs and Market Vectors ETFs
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 37 (February 25, 2015)
Federal Register Volume 80, Issue 37 (February 25, 2015)
| Page Range | 10194-10196 | |
| FR Document | 2015-03813 |
[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)] [Notices] [Pages 10194-10196] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-03813] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74304; File Nos. SR-MIAX-2014-30 and SR-MIAX-2014-39] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Order Disapproving Proposed Rule Changes To List and Trade Options on Shares of the iShares ETFs and Market Vectors ETFs February 19, 2015. I. Introduction On June 17, 2014, Miami International Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to list and trade options on shares of the iShares MSCI Brazil Capped ETF, iShares MSCI Chile Capped ETF, iShares MSCI Peru Capped ETF, and iShares MSCI Spain Capped ETF (collectively ``iShares ETFs''). The proposed rule change was published for comment in the Federal Register on July 3, 2014.\3\ On August 13, 2014, the Commission extended the time period in which to either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change, to October 1, 2014.\4\ On September 25, 2014, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.\5\ The Commission received a letter from MIAX on the proposal.\6\ On December 17, 2014, the Commission issued a notice of designation of a longer period for Commission action on proceedings to determine whether to approve or disapprove the proposed rule change.\7\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 72492 (June 27, 2014), 79 FR 38099 (SR-MIAX-2014-30) (``iShares ETFs Proposal''). \4\ See Securities Exchange Act Release No. 72835, 79 FR 49140 (August 19, 2014). \5\ See Securities Exchange Act Release No. 73211, 79 FR 59338 (October 1, 2014). \6\ See Letter to Elizabeth M. Murphy, Secretary, Commission, from Brian O'Neill, Vice President and Senior Counsel, MIAX, dated October 22, 2014 (providing comment on SR-MIAX-2014-30 and SR-MIAX- 2014-39) (``MIAX Letter''). \7\ See Securities Exchange Act Release No. 73856, 79 FR 77075 (December 23, 2014). --------------------------------------------------------------------------- In addition, on July 28, 2014, the Exchange filed with the Commission a proposed rule change to list and trade options on shares of the Market Vectors [[Page 10195]] Brazil Small-Cap ETF, Market Vectors Indonesia Index ETF, Market Vectors Poland ETF, and Market Vectors Russia ETF (collectively ``Market Vectors ETFs''). The proposed rule change was published for comment in the Federal Register on August 12, 2014.\8\ On September 25, 2014, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.\9\ The Commission received a letter from MIAX on the proposal.\10\ On January 27, 2015, the Commission issued a notice of designation of a longer period for Commission action on proceedings to determine whether to approve or disapprove the proposed rule change.\11\ This order disapproves the iShares ETFs Proposal and the Market Vectors ETFs Proposal. --------------------------------------------------------------------------- \8\ See Securities Exchange Act Release No. 72777 (August 6, 2014), 79 FR 47165 (SR-MIAX-2014-39) (``Market Vectors ETFs Proposal''). \9\ See Securities Exchange Act Release No. 73212, 79 FR 59332 (October 1, 2014). \10\ See MIAX Letter, supra note 6. \11\ See Securities Exchange Act Release No. 74150, 80 FR 5597 (February 2, 2015). --------------------------------------------------------------------------- II. Description of the Proposal The Exchange proposes to list for trading on the Exchange options on shares of the iShares and Market Vectors ETFs. According to the Exchange, the iShares ETFs are registered pursuant to the Investment Company Act of 1940 as management investment companies designed to hold a portfolio of securities that track the MSCI Brazil 25/50 Index (``Brazil Index''), which consists of stocks traded primarily on BM&FBOVESPA; MSCI Chile Investable Market Index (IMI) 25/50 (``Chile Index''), which consists of stocks traded primarily on the Santiago Stock Exchange; MSCI All Peru Capped Index (``Peru Index''), which consists of stocks traded primarily on Bolsa de Valores de Lima; and MSCI Spain 25/50 Index (``Spain Index''), which consists of stocks traded primarily on Bolsa de Madrid.\12\ --------------------------------------------------------------------------- \12\ See iShares ETFs Proposal, supra note 3. Morgan Stanley Capital International Inc. (``MSCI'') created and maintains the Brazil Index, Chile Index, Peru Index, and Spain Index. --------------------------------------------------------------------------- Similarly, according to the Exchange, the Market Vectors ETFs are registered pursuant to the Investment Company Act of 1940 as management investment companies designed to hold a portfolio of securities that track the Market Vectors Brazil Small-Cap Index (``Brazil Small-Cap Index''), which consists of stocks traded primarily on BM&FBOVESPA; the Market Vectors Indonesia Index (``Indonesia Index''), which consists of stocks traded primarily on the Indonesia Stock Exchange; the Market Vectors Poland Index (``Poland Index''), which consists of stocks traded primarily on the Warsaw Stock Exchange; and the Market Vectors Russia Index (``Russia Index''), which consists of stocks traded primarily on the Moscow Exchange.\13\ --------------------------------------------------------------------------- \13\ See Market Vectors ETFs Proposal, supra note 8. Market Vectors Index Solutions created and maintains the Brazil Small-Cap Index, Indonesia Index, Poland Index, and Russia Index. --------------------------------------------------------------------------- MIAX Rule 402 establishes the Exchange's initial listing standards for equity options (the ``Listing Standards'') pursuant to which the Exchange can list and trade options on the shares of open-end investment companies, such as the iShares ETFs and Market Vectors ETFs.\14\ According to the Exchange, options on the iShares ETFs and Market Vectors ETFs do not meet the Listing Standards. In particular, options on the iShares ETFs and Market Vectors ETFs do not meet the requirement that the component securities of an index or portfolio of securities on which the Exchange Traded Fund Shares are based, for which the primary market is in any one country that is not subject to a comprehensive surveillance sharing agreement (``CSSA''), not represent 20% or more of the weight of the index.\15\ Accordingly, the Exchange may not list and trade options on the iShares ETFs or Market Vectors ETFs without a separate proposed rule change filed with and approved by the Commission.\16\ --------------------------------------------------------------------------- \14\ MIAX Rule 402(i) provides the listing standards for options on shares or other securities (``Exchange-Traded Fund Shares'') that are traded on a national securities exchange and are defined as an ``NMS stock'' under Rule 600 of Regulation NMS. If an option on Exchange-Traded Fund Shares meets these listing standards, it can be listed without the filing of a proposed rule change with the Commission, but the Exchange must comply with the requirements of Rule 19b-4(e). See 17 CFR 240.19b-4(e). \15\ See MIAX Rule 402(i)(5)(ii)(B). The Exchange represents that each of the iShares ETFs and Market Vectors ETFs are comprised of component securities for which the primary market is a single foreign market, and that, for each ETF, MIAX does not have a CSSA with its foreign counterpart in the applicable foreign market. \16\ See supra note 14. --------------------------------------------------------------------------- According to the Exchange, it has attempted, but not entered into, CSSAs with the applicable foreign markets. In its proposals, the Exchange requested that the Commission allow it to rely on agreements between the Commission and the applicable foreign regulators, in place of the requirement to have a CSSA, with respect to the listing and trading of options on shares of the iShares ETFs and Market Vectors ETFs. Specifically, the Exchange cited to the agreements between the Commission and the Comissao de Valores Mobiliarios (``CVM''),\17\ which has responsibility for the Brazilian exchanges and over-the-counter markets; the Superintendencia de Valores y Seguros de Chile (``SVS''),\18\ which has the responsibility for the Chilean securities markets; the Comision Nacional del Mercado de Valores (``CNMV''),\19\ which has the responsibility for the Spanish stock exchanges; and the Federal Commission on Securities and the Capital Market of the Government of the Russian Federation (``FCSCM''), a forerunner of the Federal Commission on Securities Market of Russia, which has responsibility for the Russian stock exchanges.\20\ In addition, the Exchange noted that the Indonesia Financial Services Authority, which has responsibility for the Indonesian stock exchanges; the Polish Financial Supervision Authority, which has responsibility for the Polish stock exchanges; the Superintendencia del Mercado de Valores, which has responsibility for the Peruvian stock exchanges, and the Commission are signatories to the International Organization of Securities Commissions Multilateral Memorandum of Understanding.\21\ --------------------------------------------------------------------------- \17\ See iShares ETFs Proposal, supra note 3, and Market Vectors ETFs Proposal, supra note 8 (citing to Memorandum of Understanding with the CVM dated as of July 24, 2012). \18\ See iShares ETFs Proposal, supra note 3 (citing to Memorandum of Understanding with the SVS dated as of June 3, 1993). \19\ See iShares ETFs Proposal, supra note 3 (citing to Memorandum of Understanding with the CNMV dated as of July 22, 2013). \20\ See Market Vectors ETFs Proposal, supra note 8 (citing to the Memorandum of Understanding with the FCSCM dated December 6, 1995). \21\ See iShares ETFs Proposal, supra note 3, and Market Vectors ETFs Proposal, supra note 8. --------------------------------------------------------------------------- In its letter, MIAX stated its belief that the proposals were consistent with the requirements of the Act and that the Commission should approve the filings. In addition, MIAX believes that its proposals are consistent with the approach previously allowed by the Commission. Specifically, MIAX noted that the Commission has, in the past, allowed exchanges to rely on agreements between the Commission and foreign regulators in lieu of a CSSA between an exchange and the applicable foreign market.\22\ The Exchange believes [[Page 10196]] the proposed rule changes are consistent with Section 6 of the Act ``by avoiding the regulatory compliance issue of improperly listing the ETFs without CSSAs, or without Commission approval, while providing a clear mechanism to acquire surveillance and trading information when necessary from a foreign regulator via the Commission.'' \23\ --------------------------------------------------------------------------- \22\ The following agreements were at issue in the orders cited by MIAX: Memorandum of Understanding with the CVM, see Securities Exchange Act Release No. 40298 (August 3, 1998), 63 FR 43435 (August 13, 1998) (SR-Amex-98-28; SR-CBOE-98-32; and SR-Phlx-98-33) (citing a separate agreement with the CVM than the agreement relied upon by MIAX in the iShares ETFs and Market Vectors ETFs Proposals); and Memorandum of Understanding with the Mexican National Commission for Banking and Securities dated as of October 18, 1990, see Securities Exchange Act Release Nos. 53824 (May 17, 2006), 71 FR 30003 (May 24, 2006) (SR-Amex-2006-43), 56324 (August 27, 2007), 72 FR 50426 (August 31, 2007) (SR-ISE-2007-72), 56778 (November 9, 2007), 72 FR 65113 (November 19, 2007) (SR-Amex-2007-100), 57013 (December 20, 2007), 72 FR 73923 (December 28, 2007) (SR-CBOE-2007-140), and 57014 (December 20, 2007), 72 FR 73934 (December 28, 2007) (SR-ISE-2007- 111). See MIAX Letter, supra note 6, at 3 nn.7-9 and accompanying text. The Commission notes that these agreements are not at issue in the present proposed rule changes. MIAX also noted that it had previously filed another proposed rule change that was immediately effective using a similar approach to list options on shares of the iShares MSCI Mexico Index Fund. See Securities Exchange Act Release No. 72213 (May 21, 2014), 79 FR 30669 (May 28, 2014) (SR-MIAX-2014- 19). In that instance, the Exchange relied on an agreement between The National Commission for Banking and Securities and the Commission dated as of October 18, 1990. The Commission notes that the Commission had previously determined that this agreement could be used for surveillance purposes. See Securities Exchange Act Release No. 36415 (October 25, 1995), 60 FR 55620 (November 1, 1995) (SR-CBOE-95-45). \23\ See MIAX Letter, supra note 6 at 4. --------------------------------------------------------------------------- III. Discussion Under section 19(b)(2)(C) of the Act, the Commission shall approve a proposed rule change of a self-regulatory organization (``SRO'') if it finds that such proposed rule change is consistent with the requirements of the Act, and the rules and regulations thereunder that are applicable to such organization.\24\ The Commission shall disapprove a proposed rule change if it does not make such a finding.\25\ --------------------------------------------------------------------------- \24\ See 15 U.S.C. 78s(b)(2)(C)(i). \25\ See 15 U.S.C. 78s(b)(2)(C)(ii); see also 17 CFR 201.700(b)(3) (``The burden to demonstrate that a proposed rule change is consistent with the Exchange Act and the rules and regulations issued thereunder . . . is on the self-regulatory organization that proposed the rule change. . . . A mere assertion that the proposed rule change is consistent with those requirements . . . is not sufficient.''). The description of a proposed rule change, its purpose and operation, its effect, and a legal analysis of its consistency with applicable requirements must all be sufficiently detailed and specific to support an affirmative Commission finding. See 17 CFR 201.700(b)(3). Any failure of a SRO to provide the information elicited by Form 19b-4 may result in the Commission not having a sufficient basis to make an affirmative finding that a proposed rule change is consistent with the Exchange Act and the rules and regulations issued thereunder that are applicable to the SRO. Id. --------------------------------------------------------------------------- After careful consideration, the Commission does not find that the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\26\ In particular, the Commission does not find that the proposed rule changes are consistent with Section 6(b)(5) of the Act, which requires that the rules of a national securities exchange be designed, among other things, ``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.'' \27\ --------------------------------------------------------------------------- \26\ In disapproving the proposed rule changes, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \27\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- As noted by MIAX, the Commission has permitted an SRO to rely on an agreement between the Commission and the applicable foreign regulator in the absence of a CSSA only if the SRO receives an assurance from the Commission that such an agreement can be relied on for surveillance purposes and provides, at a minimum, for the exchange of transaction, clearing and customer information necessary to conduct an investigation.\28\ This assurance is necessary, because the Commission may enter into a variety of agreements with foreign regulators some of which may be unrelated to the sharing of surveillance information. After carefully and thoroughly reviewing the agreements cited by the Exchange in its proposals, the Commission is unable to provide the necessary assurance that such agreements can be relied on for surveillance purposes.\29\ Accordingly, the Commission cannot approve MIAX's request to allow the listing and trading of options on iShares ETFs and Market Vectors ETFs, upon reliance on agreements entered into between the Commission and the applicable foreign regulators in place of a CSSA, in satisfaction of the Exchange's Listing Standards.\30\ According to MIAX, such approval would be necessary to make the ETFs compliant with all of the applicable Listing Standards.\31\ --------------------------------------------------------------------------- \28\ See Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952, 70959 n.101 (December 22, 1998). \29\ The Commission also notes that the particular agreements referenced in MIAX's letter, which the Commission has previously allowed exchanges to rely on in lieu of a CSSA between an exchange and the applicable foreign market, are not at issue in the present proposed rule changes. See supra note 22. \30\ See iShares ETFs Proposal, supra note 3, and Market Vectors ETFs Proposal, supra note 8. \31\ Id. --------------------------------------------------------------------------- The Commission notes that Rule 700(b)(3) of its Rules of Practice reiterates that ``[t]he burden to demonstrate that a proposed rule change is consistent with the Exchange Act . . . is on the self- regulatory organization that proposed the rule change.'' \32\ For the reasons articulated above, the Commission does not believe that MIAX has met that burden in this case. --------------------------------------------------------------------------- \32\ 17 CFR 201.700(b)(3). --------------------------------------------------------------------------- IV. Conclusion For the foregoing reasons, the Commission does not find that the proposed rule changes are consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange, and, in particular, with Section 6(b)(5) of the Act. It is therefore ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule changes (SR-MIAX-2014-30 and SR-MIAX-2014-39) be, and hereby are, disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\33\ --------------------------------------------------------------------------- \33\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-03813 Filed 2-24-15; 8:45 am] BILLING CODE 8011-01-P
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III. Date of Effectiveness of the Comments may be submitted by any of SECURITIES AND EXCHANGE
Proposed Rule Change and Timing for the following methods: COMMISSION
Commission Action
Electronic Comments [Release No. 34–74304; File Nos. SR–MIAX–
Because the proposed rule change 2014–30 and SR–MIAX–2014–39]
does not (i) significantly affect the • Use the Commission’s Internet
protection of investors or the public comment form (http://www.sec.gov/ Self-Regulatory Organizations; Miami
interest; (ii) impose any significant rules/sro.shtml); or International Securities Exchange LLC;
burden on competition; and (iii) become Order Disapproving Proposed Rule
• Send an email to rule-comments@
operative for 30 days from the date on Changes To List and Trade Options on
sec.gov. Please include File Number SR–
which it was filed, or such shorter time Shares of the iShares ETFs and Market
as the Commission may designate if CBOE–2015–18 on the subject line. Vectors ETFs
consistent with the protection of Paper Comments
investors and the public interest, the February 19, 2015.
proposed rule change has become • Send paper comments in triplicate I. Introduction
effective pursuant to Section 19(b)(3)(A) to Secretary, Securities and Exchange
On June 17, 2014, Miami International
of the Act 6 and Rule 19b–4(f)(6)(iii) Commission, 100 F Street NE.,
Securities Exchange LLC (‘‘MIAX’’ or
thereunder.7 Washington, DC 20549–1090.
The Exchange has asked the ‘‘Exchange’’) filed with the Securities
Commission to waive the 30-day All submissions should refer to File and Exchange Commission
operative delay so that the proposal may Number SR–CBOE–2015–18. This file (‘‘Commission’’), pursuant to Section
become operative immediately upon number should be included on the 19(b)(1) of the Securities Exchange Act
filing. The Commission believes that subject line if email is used. To help the of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) 1 and
waiving the 30-day operative delay is Commission process and review your Rule 19b–4 thereunder,2 a proposed rule
consistent with the protection of comments more efficiently, please use change to list and trade options on
investors and the public interest, as it only one method. The Commission will shares of the iShares MSCI Brazil
will allow the obvious error pilot post all comments on the Commission’s Capped ETF, iShares MSCI Chile
program to continue uninterrupted Internet Web site (http://www.sec.gov/ Capped ETF, iShares MSCI Peru Capped
while the industry gains further rules/sro.shtml). Copies of the ETF, and iShares MSCI Spain Capped
experience operating under the Plan to ETF (collectively ‘‘iShares ETFs’’). The
submission, all subsequent
Address Extraordinary Market proposed rule change was published for
amendments, all written statements
Volatility, and avoid any investor comment in the Federal Register on July
with respect to the proposed rule 3, 2014.3 On August 13, 2014, the
confusion that could result from a change that are filed with the
temporary interruption in the pilot Commission extended the time period
Commission, and all written in which to either approve the proposed
program. For this reason, the communications relating to the
Commission designates the proposed rule change, disapprove the proposed
proposed rule change between the rule change, or institute proceedings to
rule change to be operative upon filing.8
At any time within 60 days of the Commission and any person, other than determine whether to approve or
filing of the proposed rule change, the those that may be withheld from the disapprove the proposed rule change, to
Commission summarily may public in accordance with the October 1, 2014.4 On September 25,
temporarily suspend such rule change if provisions of 5 U.S.C. 552, will be 2014, the Commission instituted
it appears to the Commission that such available for Web site viewing and proceedings to determine whether to
action is necessary or appropriate in the printing in the Commission’s Public approve or disapprove the proposed
public interest, for the protection of Reference Room, 100 F Street NE., rule change.5 The Commission received
investors, or otherwise in furtherance of Washington, DC 20549 on official a letter from MIAX on the proposal.6 On
the purposes of the Act. If the business days between the hours of December 17, 2014, the Commission
Commission takes such action, the 10:00 a.m. and 3:00 p.m. Copies of such issued a notice of designation of a
Commission shall institute proceedings filing also will be available for longer period for Commission action on
to determine whether the proposed rule inspection and copying at the principal proceedings to determine whether to
should be approved or disapproved. office of the Exchange. All comments approve or disapprove the proposed
received will be posted without change; rule change.7
IV. Solicitation of Comments In addition, on July 28, 2014, the
the Commission does not edit personal
Interested persons are invited to identifying information from Exchange filed with the Commission a
submit written data, views, and submissions. You should submit only proposed rule change to list and trade
arguments concerning the foregoing, information that you wish to make options on shares of the Market Vectors
including whether the proposed rule available publicly. All submissions
change is consistent with the Act. should refer to File Number SR–CBOE–
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
6 15
2015–18, and should be submitted on or 3 See Securities Exchange Act Release No. 72492
U.S.C. 78s(b)(3)(A).
7 17 CFR 240.19b–4(f)(6)(iii). As required under
before March 18, 2015. (June 27, 2014), 79 FR 38099 (SR–MIAX–2014–30)
Rule 19b–4(f)(6)(iii), the Exchange provided the (‘‘iShares ETFs Proposal’’).
For the Commission, by the Division of 4 See Securities Exchange Act Release No. 72835,
Commission with written notice of its intent to file
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Trading and Markets, pursuant to delegated 79 FR 49140 (August 19, 2014).
the proposed rule change, along with a brief
description and the text of the proposed rule authority.9 5 See Securities Exchange Act Release No. 73211,
change, at least five business days prior to the date Brent J. Fields, 79 FR 59338 (October 1, 2014).
of filing of the proposed rule change, or such 6 See Letter to Elizabeth M. Murphy, Secretary,
shorter time as designated by the Commission. Secretary. Commission, from Brian O’Neill, Vice President
8 For purposes only of waiving the 30-day [FR Doc. 2015–03820 Filed 2–24–15; 8:45 am] and Senior Counsel, MIAX, dated October 22, 2014
operative delay, the Commission has also (providing comment on SR–MIAX–2014–30 and
BILLING CODE 8011–01–P
considered the proposed rule’s impact on SR–MIAX–2014–39) (‘‘MIAX Letter’’).
efficiency, competition, and capital formation. See 7 See Securities Exchange Act Release No. 73856,
15 U.S.C. 78c(f). 9 17 CFR 200.30–3(a)(12). 79 FR 77075 (December 23, 2014).
VerDate Sep<11>2014 18:05 Feb 24, 2015 Jkt 235001 PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 E:\FR\FM\25FEN1.SGM 25FEN1](https://thefederalregister.org/doc/80_FR_10231/page/1.svg)
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the proposed rule changes are consistent with the requirements of the Act and the the ETFs compliant with all of the
with Section 6 of the Act ‘‘by avoiding rules and regulations thereunder applicable Listing Standards.31
the regulatory compliance issue of applicable to a national securities The Commission notes that Rule
improperly listing the ETFs without exchange.26 In particular, the 700(b)(3) of its Rules of Practice
CSSAs, or without Commission Commission does not find that the reiterates that ‘‘[t]he burden to
approval, while providing a clear proposed rule changes are consistent demonstrate that a proposed rule change
mechanism to acquire surveillance and with Section 6(b)(5) of the Act, which is consistent with the Exchange Act . . .
trading information when necessary requires that the rules of a national is on the self-regulatory organization
from a foreign regulator via the securities exchange be designed, among that proposed the rule change.’’ 32 For
Commission.’’ 23 other things, ‘‘to promote just and the reasons articulated above, the
equitable principles of trade, to foster Commission does not believe that MIAX
III. Discussion
cooperation and coordination with has met that burden in this case.
Under section 19(b)(2)(C) of the Act, persons engaged in regulating, clearing,
the Commission shall approve a settling, processing information with IV. Conclusion
proposed rule change of a self- respect to, and facilitating transactions For the foregoing reasons, the
regulatory organization (‘‘SRO’’) if it in securities, to remove impediments to Commission does not find that the
finds that such proposed rule change is and perfect the mechanism of a free and proposed rule changes are consistent
consistent with the requirements of the open market and a national market with the Act and the rules and
Act, and the rules and regulations system, and, in general, to protect regulations thereunder applicable to a
thereunder that are applicable to such investors and the public interest.’’ 27 national securities exchange, and, in
organization.24 The Commission shall As noted by MIAX, the Commission particular, with Section 6(b)(5) of the
disapprove a proposed rule change if it has permitted an SRO to rely on an Act.
does not make such a finding.25 agreement between the Commission and It is therefore ordered, pursuant to
After careful consideration, the the applicable foreign regulator in the section 19(b)(2) of the Act, that the
Commission does not find that the absence of a CSSA only if the SRO proposed rule changes (SR–MIAX–
proposed rule changes are consistent receives an assurance from the 2014–30 and SR–MIAX–2014–39) be,
Commission that such an agreement can and hereby are, disapproved.
National Commission for Banking and Securities
dated as of October 18, 1990, see Securities
be relied on for surveillance purposes For the Commission, by the Division of
Exchange Act Release Nos. 53824 (May 17, 2006), and provides, at a minimum, for the Trading and Markets, pursuant to delegated
71 FR 30003 (May 24, 2006) (SR–Amex–2006–43), exchange of transaction, clearing and authority.33
56324 (August 27, 2007), 72 FR 50426 (August 31, customer information necessary to
2007) (SR–ISE–2007–72), 56778 (November 9, Brent J. Fields,
2007), 72 FR 65113 (November 19, 2007) (SR– conduct an investigation.28 This Secretary.
Amex–2007–100), 57013 (December 20, 2007), 72 assurance is necessary, because the
[FR Doc. 2015–03813 Filed 2–24–15; 8:45 am]
FR 73923 (December 28, 2007) (SR–CBOE–2007– Commission may enter into a variety of
140), and 57014 (December 20, 2007), 72 FR 73934 BILLING CODE 8011–01–P
agreements with foreign regulators some
(December 28, 2007) (SR–ISE–2007–111). See MIAX
Letter, supra note 6, at 3 nn.7–9 and accompanying of which may be unrelated to the
text. The Commission notes that these agreements sharing of surveillance information. SECURITIES AND EXCHANGE
are not at issue in the present proposed rule After carefully and thoroughly COMMISSION
changes. MIAX also noted that it had previously reviewing the agreements cited by the
filed another proposed rule change that was
immediately effective using a similar approach to Exchange in its proposals, the [Release No. 34–74307; File No. SR–MIAX–
list options on shares of the iShares MSCI Mexico Commission is unable to provide the 2015–11]
Index Fund. See Securities Exchange Act Release necessary assurance that such
No. 72213 (May 21, 2014), 79 FR 30669 (May 28, Self-Regulatory Organizations; Miami
2014) (SR–MIAX–2014–19). In that instance, the
agreements can be relied on for
Exchange relied on an agreement between The surveillance purposes.29 Accordingly, International Securities Exchange LLC;
National Commission for Banking and Securities the Commission cannot approve MIAX’s Notice of Filing and Immediate
and the Commission dated as of October 18, 1990. request to allow the listing and trading Effectiveness of a Proposed Rule
The Commission notes that the Commission had
previously determined that this agreement could be
of options on iShares ETFs and Market Change To Extend the Pilot Period
used for surveillance purposes. See Securities Vectors ETFs, upon reliance on Applicable to Rule 530 Relating To
Exchange Act Release No. 36415 (October 25, 1995), agreements entered into between the Limit Up/Limit Down
60 FR 55620 (November 1, 1995) (SR–CBOE–95– Commission and the applicable foreign
45). February 19, 2015.
23 See MIAX Letter, supra note 6 at 4. regulators in place of a CSSA, in
satisfaction of the Exchange’s Listing Pursuant to Section 19(b)(1) of the
24 See 15 U.S.C. 78s(b)(2)(C)(i).
25 See 15 U.S.C. 78s(b)(2)(C)(ii); see also 17 CFR Standards.30 According to MIAX, such Securities Exchange Act of 1934 (the
201.700(b)(3) (‘‘The burden to demonstrate that a approval would be necessary to make ‘‘Act’’),1 and Rule 19b–4 thereunder,2
proposed rule change is consistent with the notice is hereby given that on February
Exchange Act and the rules and regulations issued 26 In disapproving the proposed rule changes, the 18, 2015, Miami International Securities
thereunder . . . is on the self-regulatory Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’)
Commission has considered the proposed rule’s
organization that proposed the rule change. . . . A
mere assertion that the proposed rule change is
impact on efficiency, competition, and capital filed with the Securities and Exchange
formation. See 15 U.S.C. 78c(f). Commission (‘‘Commission’’) the
consistent with those requirements . . . is not 27 15 U.S.C. 78f(b)(5).
sufficient.’’). The description of a proposed rule
28 See Securities Exchange Act Release No. 40761
proposed rule change as described in
asabaliauskas on DSK5VPTVN1PROD with NOTICES
change, its purpose and operation, its effect, and a Items I and II below, which Items have
legal analysis of its consistency with applicable (December 8, 1998), 63 FR 70952, 70959 n.101
requirements must all be sufficiently detailed and (December 22, 1998). been prepared by the Exchange. The
specific to support an affirmative Commission 29 The Commission also notes that the particular Commission is publishing this notice to
finding. See 17 CFR 201.700(b)(3). Any failure of a agreements referenced in MIAX’s letter, which the
SRO to provide the information elicited by Form Commission has previously allowed exchanges to 31 Id.
19b–4 may result in the Commission not having a rely on in lieu of a CSSA between an exchange and
32 17 CFR 201.700(b)(3).
sufficient basis to make an affirmative finding that the applicable foreign market, are not at issue in the
33 17 CFR 200.30–3(a)(12).
a proposed rule change is consistent with the present proposed rule changes. See supra note 22.
30 See iShares ETFs Proposal, supra note 3, and 1 15 U.S.C. 78s(b)(1).
Exchange Act and the rules and regulations issued
thereunder that are applicable to the SRO. Id. Market Vectors ETFs Proposal, supra note 8. 2 17 CFR 240.19b–4.
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Document Created: 2015-12-18 13:09:00
Document Modified: 2015-12-18 13:09:00
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 10194 |
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