80 FR 44174 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Exchange Rule 515A to Extend the Pilot Period for Certain Aspects of the PRIME Auction to July 18, 2016

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 142 (July 24, 2015)

[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Notices]
[Pages 44174-44176]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-18136]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75486; File No. SR-MIAX-2015-48]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Amend Exchange Rule 515A to Extend the Pilot 
Period for Certain Aspects of the PRIME Auction to July 18, 2016

July 20, 2015.
    Pursuant to the provisions of section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on July 16, 2015, 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 and II below, which Items have been prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rule 515A.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, 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 extend the pilot period applicable to 
certain aspects of the PRIME Auction which is currently set to expire 
on July 18, 2015, until July 18, 2016.
    The current pilot allows PRIME Agency Orders of any size to 
initiate a PRIME Auction on MIAX at a price which is at or better than 
the national best bid or offer (``NBBO'').\3\ The Exchange notes that 
other exchanges provide the same functionality.\4\ The Exchange 
implemented the pilot in order to benefit customers through the 
encouragement of the entry of more orders into the PRIME Auction, thus 
making it more likely that such orders may receive price improvement. 
The Exchange believes that the pilot attracts order flow and promotes 
competition and price improvement opportunities for Agency Orders of 
fewer than 50 contracts. The Exchange believes that extending the pilot 
period is appropriate because it would allow the Exchange and the 
Commission additional time to analyze data regarding the pilot that the 
Exchange has committed to provide.
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    \3\ The Exchange notes that prior to the pilot, for PRIME Agency 
Orders for less than 50 standard option contracts or 500 mini-option 
contracts, the Initiating Member must stop the entire PRIME Agency 
Order as principal or with a solicited order at the better of the 
NBBO price improved by a $0.01 increment or the PRIME Agency Order's 
limit price (if the order is a limit order). In addition, to 
initiate the PRIME Auction for auto-match submissions, the 
Initiating Member must stop the PRIME Agency Order for less than 50 
standard option contracts or 500 mini-option contracts at better of 
the NBBO price improved by a $0.01 increment or the PRIME Agency 
Order's limit price. See Securities Exchange Act Release No. 73590 
(November 13, 2014), 79 68919 (November 19, 2014) (SR-MIAX-2014-56). 
See also Securities Exchange Act Release Nos. 72009 (April 23, 
2014), 79 FR 24032 (April 29, 2014) (SR-MIAX-2014-20); 72418 (June 
18, 2014), 79 FR 35833 (June 24, 2014) (SR-MIAX-2014-23).
    \4\ See PHLX Rule 1080(n).
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    In the original filing, the Exchange committed to periodically 
submitting reports based on the comprehensive list of the data that the 
Exchange represented that it will collect in order to aid the 
Commission in its evaluation of the PRIME that incorporates the changes 
proposed.\5\ As of August 1, 2015, the Exchange will submit periodic 
reports based on the revised list of data detailed in Exhibit 3 of this 
proposal. Any raw data which is submitted to the Commission pursuant to 
the pilot will be provided on a confidential basis. In further support 
of this proposal, the Exchange represents that it will provide certain 
additional data requested by the Commission regarding trading in the 
PRIME Auction for the six (6) month period from January 1, 2015 to June 
30, 2015. The Exchange agrees to provide this data by January 18, 2016 
and to make the summary of the data provided to the Commission publicly 
available. The Exchange continues to believe that there remains 
meaningful competition for all size orders and that there is an active 
and liquid market functioning on the Exchange outside of the PRIME 
Auction. The Exchange also continues to believe that there are 
significant opportunities for price improvement available in the PRIME 
Auction. The Exchange believes the additional data will substantiate 
the Exchange's belief and provide further evidence in support of 
permanent approval of the pilot.
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    \5\ See Proposed Rule 515A, Interpretations and Policies .08. A 
comprehensive list of the data that the Exchange represented that it 
will collect is available in Exhibit 3 of SR-MIAX-2014-23. See also 
Securities Exchange Act Release Nos. 72009 (April 23, 2014), 79 FR 
24032 (April 29, 2014) (SR-MIAX-2014-20); 72418 (June 18, 2014), 79 
FR 35833 (June 24, 2014) (SR-MIAX-2014-23).
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2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
section 6(b) of the Act \6\ in general, and furthers the objectives of 
section 6(b)(5) of the Act \7\ 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

[[Page 44175]]

cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that extending the pilot is consistent with 
these principles because the pilot is reasonably designed to create 
tighter markets and ensure that each order receives the best possible 
price, which benefits investors by increasing competition thereby 
maximizing opportunities for price improvement. The proposed extension 
would allow the pilot to continue uninterrupted, thereby avoiding any 
potential investor confusion that could result from a temporary 
interruption in the pilot. Because the pilot is applicable to all PRIME 
Agency Orders for fewer than 50 contracts, the proposal to extend the 
pilot merely acts to maintain status quo on the Exchange, which 
promotes just and equitable principles of trade and removes impediments 
to, and perfects the mechanism of, a free and open market and a 
national market system.
    The extension of the pilot period will allow the Commission and the 
Exchange to continue to monitor the pilot to ascertain whether there is 
meaningful competition for all size orders and whether there is an 
active and liquid market functioning on the Exchange outside of the 
PRIME Auction. The extension of the pilot period would also enable 
market participants to continue to benefit from the significant 
opportunities for price improvement available in the PRIME Auction.

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 proposed rule change 
simply extends an established pilot program for an additional period 
and would allow for further analysis of the pilot. In addition, the 
proposed extension would allow the pilot to continue uninterrupted, 
thereby avoiding any potential investor confusion that could result 
from a temporary interruption in the pilot. Thus, the proposal would 
also serve to promote regulatory clarity and consistency, thereby 
reducing burdens on the marketplace and facilitating investor 
protection.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \8\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requested 
that the Commission waive the 30-day operative delay. The Exchange 
noted that waiver of the 30-day operative delay will allow the Exchange 
to extend the pilot program before it expires on July 18, 2015. The 
Exchange believes that the proposal to extend the pilot merely acts to 
maintain status quo on the Exchange and waiver of the operative delay 
would allow for the pilot to continue uninterrupted. According to the 
Exchange, the extension of the pilot period would allow the Commission 
and the Exchange to continue to assess the effect of the pilot.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the pilot program to continue uninterrupted, thereby 
avoiding any potential investor confusion that could result from a 
temporary interruption in the pilot program. Therefore, the Commission 
designates the proposed rule change to be operative on July 18, 
2015.\12\
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    \12\ For purposes only of waiving the operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MIAX-2015-48 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-2015-48. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site 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

[[Page 44176]]

10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2015-48 and should be 
submitted on or before August 14, 2015.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-18136 Filed 7-23-15; 8:45 am]
 BILLING CODE 8011-01-P