80 FR 74167 - Self-Regulatory Organizations: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange LLC To Amend Exchange Rule 519

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 228 (November 27, 2015)

[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Notices]
[Pages 74167-74168]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30081]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76491; File No. SR-MIAX-2015-64]


Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by Miami International 
Securities Exchange LLC To Amend Exchange Rule 519

November 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 November 13, 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, 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.
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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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rule 519, MIAX Order 
Monitor (``MOM'') to codify the Open Order and Open Contract Protection 
features included in MOM.
    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 amend Rule 519, MIAX Order Monitor, to 
provide details regarding Open Order and Open Contract protections. The 
proposal codifies existing functionality applicable to orders on the 
Exchange. The Exchange is also proposing a clarifying amendment to 
current Rule 519(b) to provide consistency in that Rule with the 
proposed new rules.
    The MOM is a risk management feature of the Exchange's System \3\ 
that prevents certain orders from executing or being placed on the Book 
at prices outside pre-set standard limits \4\ and if the size of the 
order exceeds the order size protection designated by the Member 
submitting the order.\5\
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    \3\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \4\ See Exchange Rule 519(a).
    \5\ See Exchange Rule 519(b).
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    Additionally, the System currently rejects any orders that exceed 
the maximum number of open orders held in the System on behalf of a 
particular Member (the ``Open Order Protection''). The System also 
currently rejects any orders that cause the number of open contracts 
represented by orders held in the System on behalf of a particular 
Member (the ``Open Contract Protection'') to exceed a specified maximum 
number of contracts. For each of these protections, the maximum number 
(of open orders and open contracts) is designated (or may be disabled) 
by the Member. The Exchange is proposing to codify the Open Order and 
Open Contract Protections in Rule 519.
    Currently, Rule 519 only provides details regarding the System's 
Order Price Protections and Order Size Protections. However, in 
addition to order protections based on price and order size, the System 
also employs order protections based on the number of open orders held 
in the System and on the number of contracts represented by open orders 
held in the System. The Exchange now proposes to codify these existing 
order protections into Rule 519.
    Members may designate or disable the Open Order and/or the Open 
Contract Protections on a firm wide basis. If the maximum number of 
open orders or contracts is not designated by the Member, the Exchange 
will set a maximum number of open orders or contracts on behalf of the 
Member by default. The default maximum number of open orders and open 
contracts are determined by the Exchange and announced to Members 
through a Regulatory Circular.\6\ The Open Order and Open Contract 
Protections provide market participants the flexibility to designate 
the level of protection they need to help prevent the potential 
submission of a number of orders and/or a number of contracts to the 
Exchange that would cause them to be at unintended risk levels.
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    \6\ The Exchange notes that the current default maximum number 
of open orders is 30,000 and the default number of open contracts is 
1,000,000.
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    The Exchange is also proposing a clarifying amendment to current 
Rule 519(b), Order Size Protections, to state that if the maximum size 
of orders is not designated by the Member, the Exchange will set a 
maximum size of orders on behalf of the Member by default. This is 
consistent with proposed new Rules 519(c) and (d), and

[[Page 74168]]

is intended to provide clarity, consistency and ease of reference 
regarding MOM protections available to users of the System.
    The proposed rule change is designed to protect investors and the 
public interest by codifying the protections that apply to orders that 
help market participants avoid the potential submission of orders that 
would place them at unwanted risk on the Exchange. In addition, the 
Exchange believes that the proposed rule change removes impediments to 
and perfects the mechanisms of a free and open market and a national 
market system and, in general, protects investors and the public 
interest by helping to eliminate potential confusion on behalf of 
market participants by clearly stating the System's functionality with 
regard to orders that trigger Open Order and Open Contract Protections.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \7\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \8\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is designed to protect investors and the 
public interest by codifying the Open Order and Open Contract 
Protections that help market participants avoid the potential 
submission of a number of orders and/or a number of contracts to the 
Exchange that would cause them to be at unintended risk levels.
    In addition, the Exchange believes that the proposed amendment 
removes impediments to and perfects the mechanisms of a free and open 
market and a national market system and, in general, protects investors 
and the public interest by helping to eliminate potential confusion on 
behalf of market participants by clearly stating the System's 
functionality with regard to Open Order and Open Contract Protections.

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. Specifically, the Exchange 
believes the proposed changes will not impose any burden on intra-
market competition because it applies to all MIAX participants equally. 
In addition, the Exchange does not believe the proposal will impose any 
burden on inter-market competition as the proposal is intended to 
protect investors by providing further transparency regarding the MOM 
feature.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ 
thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MIAX-2015-64 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-2015-64. 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 
10:00 a.m. and 3:00 p.m. Copies of such 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-2015-64, and should be 
submitted on or before December 18, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30081 Filed 11-25-15; 8:45 am]
 BILLING CODE 8011-01-P