81 FR 70453 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 503 Openings on the Exchange and Rule 603 Obligations of Market Makers
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 197 (October 12, 2016)
Federal Register Volume 81, Issue 197 (October 12, 2016)
| Page Range | 70453-70455 | |
| FR Document | 2016-24573 |
[Federal Register Volume 81, Number 197 (Wednesday, October 12, 2016)] [Notices] [Pages 70453-70455] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-24573] [[Page 70453]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79048; File No. SR-MIAX-2016-35] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 503 Openings on the Exchange and Rule 603 Obligations of Market Makers October 5, 2016. 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 September 23, 2016, 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. --------------------------------------------------------------------------- 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 503, Openings on the Exchange; and Rule 603, Obligations of Market Makers, to adopt new Interpretations and Policies .01 to each existing rule. 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 Exchange Rule 503, Openings on the Exchange, to adopt new Interpretations and Policies .01 to state that if the Primary Lead Market Maker (``PLMM'') \3\ assigned in a particular equity option class has not submitted valid width quotes in any series of such class within one minute following the dissemination of a quote or trade by the market for the underlying security and the affected series of such class has opened for trading within such one minute period, such failure to submit valid width quotes will not be considered a violation of Rule 503(e)(5) by the Primary Lead Market Maker, unless the PLMM demonstrates a pattern or practice of not submitting valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security, irrespective of whether the series have opened for trading. Additionally, the Exchange proposes to amend Exchange Rule 603, Obligations of Market Makers, to adopt new Interpretations and Policies .01 to state that if the Primary Lead Market Maker assigned in a particular equity option class has not submitted valid width quotes in any series of such class within one minute following the dissemination of a quote or trade by the market for the underlying security if the affected series of such class have opened for trading within such one minute period, such failure to submit valid width quotes will not be considered a violation of Rule 603(c) by the Primary Lead Market Maker, unless the PLMM demonstrates a pattern or practice of not submitting valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security, irrespective of whether the series have opened for trading. --------------------------------------------------------------------------- \3\ The term ``Market Makers'' refers to ``Lead Market Makers'', ``Primary Lead Market Makers'' and ``Registered Market Makers'' collectively. The term ``Lead Market Maker'' means a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of the Exchange's Rules with respect to Lead Market Makers. When a Lead Market Maker is appointed to act in the capacity of a Primary Lead Market Maker, the additional rights and responsibilities of a Primary Lead Market Maker specified in Chapter VI of the Exchange's Rules will apply. The term ``Primary Lead Market Maker'' means a Lead Market Maker appointed by the Exchange to act as the Primary Lead Market Maker for the purpose of making markets in securities traded on the Exchange. The Primary Lead Market Maker is vested with the rights and responsibilities specified in Chapter VI of the Exchange's Rules with respect to Primary Lead Market Makers. The term ``Registered Market Maker'' means a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange, who is not a Lead Market Maker and is vested with the rights and responsibilities specified in Chapter VI of the Exchange's Rules with respect to Registered Market Makers. See Exchange Rule 100. --------------------------------------------------------------------------- To open a series for trading the Exchange employs an automated Opening Process \4\ which begins after a pause for a period of time no longer than one half second following the dissemination of a quote or trade in the market for the underlying security when any one of three separate sets of criteria is met: The first requires that a PLMM's valid width quote \5\ has been submitted; \6\ the second requires that valid width quotes of at least two Market Makers, where at least one is a Lead Market Maker, have been submitted; \7\ the third,\8\ applicable to multiply listed option classes, requires that at least one Eligible Exchange (as defined in Rule 1400(f)) \9\ has disseminated a quote in the individual option in accordance with Rule 1402(a),\10\ there is a valid width NBBO available and the valid width quote of at least one Lead Market Maker has been submitted. If any one of these criteria can be satisfied, the opening process will begin.\11\ --------------------------------------------------------------------------- \4\ See Exchange Rule 503(e), Starting the Opening Process. \5\ A valid width quote is one where the bid and offer, comprised of a Market Maker's Standard quotes and Day eQuotes, differ by no more than the differences outlined in Exchange Rule 603(b)(4)(i). See Exchange Rule 503(e)(3). \6\ See Exchange Rule 503(e)(1)(i). \7\ See Exchange Rule 503(e)(1)(ii). \8\ See Exchange Rule 503(e)(1)(iii). \9\ The term ``Eligible Exchange'' means a national securities exchange registered with the SEC in accordance with Section 6(a) of the Exchange Act that: (1) Is a Participant Exchange in OCC (as that term is defined in Section VII of the OCC by-laws); (2) is a party to the OPRA Plan (as that term is described in Section I of the OPRA Plan); and (3) if the national securities exchange is not a party to the Options Order Protection and Locked/Crossed Markets Plan as defined below, is a participant in another plan approved by the Commission providing for comparable Trade-Through and Locked and Crossed Market protection. See Exchange Rule 1400(f). \10\ Except for quotations that fall within the provisions of paragraph (b) or this Rule, Members shall reasonably avoid displaying, and shall not engage in a pattern or practice of displaying any quotations that lock or cross a Protected Quotation. See Exchange Rule 1402(a), Prohibition. \11\ See Exchange Rule 503. --------------------------------------------------------------------------- The requirement that a PLMM enter valid width quotes not later than one minute following the dissemination of a quote or trade by the market for the underlying security is intended to ensure that the option class is opened [[Page 70454]] for trading in a timely fashion. However, there are two additional methods which the Opening Process may use to open the option class for trading which do not require the presence of a PLMM's valid width quote. If series of the option class are opened for trading within one minute following the dissemination of a quote or trade by the market for the underlying security, the requirement that a PLMM enter valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security is unnecessary. The MIAX Options Exchange became a registered national securities exchange on December 7, 2012.\12\ Two months later, in February 2013, the Exchange revised its opening quoting obligations for market makers to better align its rules to those of the other then existing option exchanges.\13\ In its rule filing the Exchange stated that, ``[w]hile MIAX agrees that eliminating its opening quoting obligations for Market Makers would be pro-competitive in that it will attract more market makers and additional liquidity to the Exchange, MIAX believes that the PLMM should still have the responsibility to assure a timely start to the opening process in each of its appointed classes and is therefore continuing to require the PLMM to submit valid width quotes not later than one minute after a trade or quote in the underlying security has been disseminated. As it builds its options marketplace, MIAX believes a consistently timely opening of its options classes is essential for attracting order flow.'' \14\ --------------------------------------------------------------------------- \12\ See Securities Exchange Act Release No. 68341 (December 3, 2012), 77 FR 73065 (December 7, 2012) (File No. 10-207). \13\ See Securities Exchange Act Release No. 68954 (February 20, 2013), 78 FR 13107 (February 26, 2013) (SR-MIAX-2013-04). \14\ See Securities Exchange Act Release No. 68954 (February 20, 2013), 78 FR 13107 (February 26, 2013) (SR-MIAX-2013-04). --------------------------------------------------------------------------- The Exchange remains committed to ensuring that its options classes open in a consistently timely manner and nothing in the current rule proposal diminishes the affirmative obligation the PLMM bears to open series in a timely fashion. The Exchange has reviewed data for the first two quarters of 2016 for series opening on the Exchange within one minute following the dissemination of a quote or trade by the market for the underlying security and found that 99.92% \15\ of all series listed on the Exchange were opened for trading within such one minute period. During this review period, the Exchange found that a valid width PLMM quote was present for 95.57% of all series which opened within one minute following the dissemination of a quote or trade by the market for the underlying security. For the remaining 4.35% of series, 98.13% were opened within one minute by an alternative method which did not require the presence of a PLMM quote. --------------------------------------------------------------------------- \15\ The Exchange determined that for Q1 2016, 99.83%, and for Q2 2016, 99.95%, of all series listed on the Exchange were opened within one minute following the dissemination of a quote or trade by the market for the underlying security. --------------------------------------------------------------------------- Under the proposed rule filing, the PLMM maintains an affirmative obligation to provide a valid width quote within one minute following the dissemination of a quote or trade by the market for the underlying security to ensure that the series are opened in a timely manner. The Exchange seeks only to eliminate unnecessary disciplinary action against a PLMM for not providing a valid width quote within such one minute period when the series is opened within that period by an alternative method. The Exchange notes that the proposed rule change will not prohibit the Exchange from taking disciplinary action against a PLMM for failing to provide valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security if the affected series do not open within such one minute period. Additionally, the proposed rule provides that a PLMM that demonstrates a pattern or practice of not submitting valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security, irrespective of whether the series have opened for trading or not, will be subject to disciplinary action by the Exchange. This ensures that the incentive for PLMMs to provide valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security remains intact, and ensures that the participation rates established by the PLMM community remain high. Further, the Exchange notes that the proposed rule change will not relieve Market Makers of their continuous quoting obligations under Exchange Rule 604 \16\ and under Reg NMS Rule 602.\17\ Nor will the proposed rule change prohibit the Exchange from taking disciplinary action against a Market Maker for failing to meet their continuous quoting obligation each trading day. --------------------------------------------------------------------------- \16\ See Exchange Rule 604(e)(1)(i) which states, ``[a] Primary Lead Market Maker must provide continuous two-sided Standard quotes and/or Day eQuotes, which for the purpose of this paragraph shall mean 90% of the time, for the options classes to which it is appointed. \17\ 17 CFR 242.602. --------------------------------------------------------------------------- The Exchange now proposes to adopt Interpretations and Policies .01 to Rule 503, which will establish that a PLMM assigned in a particular equity option class will not be in violation of subsection (e)(5) if the PLMM has not submitted valid width quotes in any series of such class within one minute following the dissemination of a quote or trade by the market for the underlying security if the affected series of such class have opened for trading within such one minute period, unless the PLMM demonstrates a pattern and practice of not submitting valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security, irrespective of whether the series have opened for trading. Additionally, the Exchange now proposes to adopt Interpretations and Policies .01 to Rule 603, which will establish that a PLMM assigned in a particular equity option class will not be in violation of subsection (c) if the PLMM has not submitted valid width quotes in any series of such class within one minute following the dissemination of a quote or trade by the market for the underlying security if the affected series of such class have opened for trading within such one minute period, unless the PLMM demonstrates a pattern and practice of not submitting valid width quotes within one minute following the dissemination of a quote or trade by the market for the underlying security, irrespective of whether the series have opened for trading. The Exchange believes that by adopting the proposed Rule it will harmonize the intent of the rule with its enforcement. 2. Statutory Basis MIAX believes that its proposed rule change is consistent with Section 6(b) of the Act \18\ in general, and furthers the objectives of Section 6(b)(5) of the Act \19\ 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. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78f(b). \19\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange notes that the proposed rule change is not a material change to either Rule 503, Openings on the [[Page 70455]] Exchange, or Rule 603, Obligations of Market Makers. The proposed rule change is designed to promote just and equitable principles of trade by better aligning the enforcement of a Market Maker's obligations on the Exchange with the objective of the Rule which is to ensure that option classes on the Exchange are opened in a consistently timely fashion. Further, the proposed rule change will foster cooperation and coordination with persons engaged in regulating and facilitating transactions in securities as the proposed rule change articulates the specific conditions under which a Market Maker has met, or has failed to meet, a quoting obligation on the Exchange. 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 is not designed to address any competitive issues. 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 \20\ and Rule 19b-4(f)(6) \21\ thereunder. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A). \21\ 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. --------------------------------------------------------------------------- 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 CommentsUse 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-2016-35 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-2016-35. 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 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-2016-35 and should be submitted on or before November 2, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-24573 Filed 10-11-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices 70453
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s not be considered a violation of Rule
COMMISSION Statement of the Purpose of, and 603(c) by the Primary Lead Market
Statutory Basis for, the Proposed Rule Maker, unless the PLMM demonstrates
[Release No. 34–79048; File No. SR–MIAX–
Change a pattern or practice of not submitting
valid width quotes within one minute
2016–35] 1. Purpose
following the dissemination of a quote
The Exchange proposes to amend or trade by the market for the
Self-Regulatory Organizations; Miami
Exchange Rule 503, Openings on the underlying security, irrespective of
International Securities Exchange LLC;
Exchange, to adopt new Interpretations whether the series have opened for
Notice of Filing and Immediate and Policies .01 to state that if the
Effectiveness of a Proposed Rule trading.
Primary Lead Market Maker (‘‘PLMM’’) 3 To open a series for trading the
Change To Amend Exchange Rule 503 assigned in a particular equity option Exchange employs an automated
Openings on the Exchange and Rule class has not submitted valid width Opening Process 4 which begins after a
603 Obligations of Market Makers quotes in any series of such class within pause for a period of time no longer
October 5, 2016. one minute following the dissemination than one half second following the
of a quote or trade by the market for the dissemination of a quote or trade in the
Pursuant to the provisions of Section underlying security and the affected market for the underlying security when
19(b)(1) of the Securities Exchange Act series of such class has opened for any one of three separate sets of criteria
of 1934 (‘‘Act’’) 1 and Rule 19b–4 trading within such one minute period, is met: The first requires that a PLMM’s
thereunder,2 notice is hereby given that such failure to submit valid width valid width quote 5 has been
on September 23, 2016, Miami quotes will not be considered a submitted; 6 the second requires that
International Securities Exchange LLC violation of Rule 503(e)(5) by the valid width quotes of at least two
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the Primary Lead Market Maker, unless the Market Makers, where at least one is a
Securities and Exchange Commission PLMM demonstrates a pattern or Lead Market Maker, have been
(‘‘Commission’’) a proposed rule change practice of not submitting valid width submitted; 7 the third,8 applicable to
as described in Items I, II, and III below, quotes within one minute following the multiply listed option classes, requires
which Items have been prepared by the dissemination of a quote or trade by the that at least one Eligible Exchange (as
Exchange. The Commission is market for the underlying security, defined in Rule 1400(f)) 9 has
publishing this notice to solicit irrespective of whether the series have disseminated a quote in the individual
comments on the proposed rule change opened for trading. Additionally, the option in accordance with Rule
from interested persons. Exchange proposes to amend Exchange 1402(a),10 there is a valid width NBBO
Rule 603, Obligations of Market Makers, available and the valid width quote of
I. Self-Regulatory Organization’s to adopt new Interpretations and at least one Lead Market Maker has been
Statement of the Terms of Substance of Policies .01 to state that if the Primary submitted. If any one of these criteria
the Proposed Rule Change Lead Market Maker assigned in a can be satisfied, the opening process
particular equity option class has not will begin.11
The Exchange is filing a proposal to submitted valid width quotes in any The requirement that a PLMM enter
amend Exchange Rule 503, Openings on series of such class within one minute valid width quotes not later than one
the Exchange; and Rule 603, Obligations following the dissemination of a quote minute following the dissemination of a
of Market Makers, to adopt new or trade by the market for the quote or trade by the market for the
Interpretations and Policies .01 to each underlying security if the affected series underlying security is intended to
existing rule. of such class have opened for trading ensure that the option class is opened
The text of the proposed rule change within such one minute period, such
is available on the Exchange’s Web site failure to submit valid width quotes will 4 See Exchange Rule 503(e), Starting the Opening
at http://www.miaxoptions.com/filter/ Process.
3 The term ‘‘Market Makers’’ refers to ‘‘Lead 5 A valid width quote is one where the bid and
wotitle/rule_filing, at MIAX’s principal offer, comprised of a Market Maker’s Standard
Market Makers’’, ‘‘Primary Lead Market Makers’’
office, and at the Commission’s Public and ‘‘Registered Market Makers’’ collectively. The quotes and Day eQuotes, differ by no more than the
Reference Room. term ‘‘Lead Market Maker’’ means a Member differences outlined in Exchange Rule 603(b)(4)(i).
registered with the Exchange for the purpose of See Exchange Rule 503(e)(3).
II. Self-Regulatory Organization’s making markets in securities traded on the 6 See Exchange Rule 503(e)(1)(i).
Statement of the Purpose of, and Exchange and that is vested with the rights and 7 See Exchange Rule 503(e)(1)(ii).
responsibilities specified in Chapter VI of the
Statutory Basis for, the Proposed Rule Exchange’s Rules with respect to Lead Market
8 See Exchange Rule 503(e)(1)(iii).
9 The term ‘‘Eligible Exchange’’ means a national
Change Makers. When a Lead Market Maker is appointed
securities exchange registered with the SEC in
to act in the capacity of a Primary Lead Market
accordance with Section 6(a) of the Exchange Act
In its filing with the Commission, the Maker, the additional rights and responsibilities of
that: (1) Is a Participant Exchange in OCC (as that
Exchange included statements a Primary Lead Market Maker specified in Chapter
term is defined in Section VII of the OCC by-laws);
VI of the Exchange’s Rules will apply. The term
concerning the purpose of and basis for ‘‘Primary Lead Market Maker’’ means a Lead Market
(2) is a party to the OPRA Plan (as that term is
the proposed rule change and discussed Maker appointed by the Exchange to act as the described in Section I of the OPRA Plan); and (3)
if the national securities exchange is not a party to
any comments it received on the Primary Lead Market Maker for the purpose of
the Options Order Protection and Locked/Crossed
making markets in securities traded on the
proposed rule change. The text of these Exchange. The Primary Lead Market Maker is Markets Plan as defined below, is a participant in
statements may be examined at the vested with the rights and responsibilities specified another plan approved by the Commission
places specified in Item IV below. The in Chapter VI of the Exchange’s Rules with respect providing for comparable Trade-Through and
mstockstill on DSK3G9T082PROD with NOTICES
to Primary Lead Market Makers. The term Locked and Crossed Market protection. See
Exchange has prepared summaries, set Exchange Rule 1400(f).
‘‘Registered Market Maker’’ means a Member
forth in sections A, B, and C below, of registered with the Exchange for the purpose of 10 Except for quotations that fall within the
the most significant aspects of such making markets in securities traded on the provisions of paragraph (b) or this Rule, Members
statements. Exchange, who is not a Lead Market Maker and is shall reasonably avoid displaying, and shall not
vested with the rights and responsibilities specified engage in a pattern or practice of displaying any
in Chapter VI of the Exchange’s Rules with respect quotations that lock or cross a Protected Quotation.
1 15 U.S.C. 78s(b)(1). See Exchange Rule 1402(a), Prohibition.
to Registered Market Makers. See Exchange Rule
2 17 CFR 240.19b–4. 100. 11 See Exchange Rule 503.
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![70454 Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices
for trading in a timely fashion. However, trading within such one minute period. continuous quoting obligation each
there are two additional methods which During this review period, the Exchange trading day.
the Opening Process may use to open found that a valid width PLMM quote The Exchange now proposes to adopt
the option class for trading which do was present for 95.57% of all series Interpretations and Policies .01 to Rule
not require the presence of a PLMM’s which opened within one minute 503, which will establish that a PLMM
valid width quote. If series of the option following the dissemination of a quote assigned in a particular equity option
class are opened for trading within one or trade by the market for the class will not be in violation of
minute following the dissemination of a underlying security. For the remaining subsection (e)(5) if the PLMM has not
quote or trade by the market for the 4.35% of series, 98.13% were opened submitted valid width quotes in any
underlying security, the requirement within one minute by an alternative series of such class within one minute
that a PLMM enter valid width quotes method which did not require the following the dissemination of a quote
within one minute following the presence of a PLMM quote. or trade by the market for the
dissemination of a quote or trade by the Under the proposed rule filing, the underlying security if the affected series
market for the underlying security is PLMM maintains an affirmative of such class have opened for trading
unnecessary. obligation to provide a valid width within such one minute period, unless
The MIAX Options Exchange became quote within one minute following the the PLMM demonstrates a pattern and
a registered national securities exchange dissemination of a quote or trade by the practice of not submitting valid width
on December 7, 2012.12 Two months market for the underlying security to quotes within one minute following the
later, in February 2013, the Exchange ensure that the series are opened in a dissemination of a quote or trade by the
revised its opening quoting obligations timely manner. The Exchange seeks market for the underlying security,
for market makers to better align its only to eliminate unnecessary irrespective of whether the series have
rules to those of the other then existing disciplinary action against a PLMM for opened for trading. Additionally, the
option exchanges.13 In its rule filing the not providing a valid width quote Exchange now proposes to adopt
Exchange stated that, ‘‘[w]hile MIAX within such one minute period when Interpretations and Policies .01 to Rule
agrees that eliminating its opening the series is opened within that period 603, which will establish that a PLMM
quoting obligations for Market Makers by an alternative method. The Exchange assigned in a particular equity option
would be pro-competitive in that it will notes that the proposed rule change will class will not be in violation of
attract more market makers and not prohibit the Exchange from taking subsection (c) if the PLMM has not
additional liquidity to the Exchange, disciplinary action against a PLMM for submitted valid width quotes in any
MIAX believes that the PLMM should failing to provide valid width quotes series of such class within one minute
still have the responsibility to assure a within one minute following the following the dissemination of a quote
timely start to the opening process in dissemination of a quote or trade by the or trade by the market for the
each of its appointed classes and is market for the underlying security if the underlying security if the affected series
therefore continuing to require the affected series do not open within such of such class have opened for trading
PLMM to submit valid width quotes not one minute period. Additionally, the within such one minute period, unless
later than one minute after a trade or proposed rule provides that a PLMM the PLMM demonstrates a pattern and
quote in the underlying security has that demonstrates a pattern or practice practice of not submitting valid width
been disseminated. As it builds its of not submitting valid width quotes quotes within one minute following the
options marketplace, MIAX believes a within one minute following the dissemination of a quote or trade by the
consistently timely opening of its dissemination of a quote or trade by the market for the underlying security,
options classes is essential for attracting market for the underlying security, irrespective of whether the series have
order flow.’’ 14 irrespective of whether the series have opened for trading. The Exchange
The Exchange remains committed to opened for trading or not, will be believes that by adopting the proposed
ensuring that its options classes open in subject to disciplinary action by the Rule it will harmonize the intent of the
a consistently timely manner and Exchange. This ensures that the rule with its enforcement.
nothing in the current rule proposal incentive for PLMMs to provide valid
diminishes the affirmative obligation width quotes within one minute 2. Statutory Basis
the PLMM bears to open series in a following the dissemination of a quote MIAX believes that its proposed rule
timely fashion. The Exchange has or trade by the market for the change is consistent with Section 6(b) of
reviewed data for the first two quarters underlying security remains intact, and the Act 18 in general, and furthers the
of 2016 for series opening on the ensures that the participation rates objectives of Section 6(b)(5) of the Act 19
Exchange within one minute following established by the PLMM community in particular, in that it is designed to
the dissemination of a quote or trade by remain high. prevent fraudulent and manipulative
the market for the underlying security Further, the Exchange notes that the acts and practices, to promote just and
and found that 99.92% 15 of all series proposed rule change will not relieve equitable principles of trade, to foster
listed on the Exchange were opened for Market Makers of their continuous cooperation and coordination with
quoting obligations under Exchange persons engaged in facilitating
12 See Securities Exchange Act Release No. 68341 Rule 604 16 and under Reg NMS Rule transactions in securities, to remove
(December 3, 2012), 77 FR 73065 (December 7, 602.17 Nor will the proposed rule impediments to and perfect the
2012) (File No. 10–207). change prohibit the Exchange from mechanisms of a free and open market
13 See Securities Exchange Act Release No. 68954
(February 20, 2013), 78 FR 13107 (February 26,
taking disciplinary action against a and a national market system and, in
mstockstill on DSK3G9T082PROD with NOTICES
2013) (SR–MIAX–2013–04). Market Maker for failing to meet their general, to protect investors and the
14 See Securities Exchange Act Release No. 68954 public interest.
(February 20, 2013), 78 FR 13107 (February 26, 16 See Exchange Rule 604(e)(1)(i) which states,
The Exchange notes that the proposed
2013) (SR–MIAX–2013–04). ‘‘[a] Primary Lead Market Maker must provide rule change is not a material change to
15 The Exchange determined that for Q1 2016, continuous two-sided Standard quotes and/or Day
99.83%, and for Q2 2016, 99.95%, of all series eQuotes, which for the purpose of this paragraph either Rule 503, Openings on the
listed on the Exchange were opened within one shall mean 90% of the time, for the options classes
minute following the dissemination of a quote or to which it is appointed. 18 15 U.S.C. 78f(b).
trade by the market for the underlying security. 17 17 CFR 242.602. 19 15 U.S.C. 78f(b)(5).
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![Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices 70455
Exchange, or Rule 603, Obligations of to determine whether the proposed rule For the Commission, by the Division of
Market Makers. The proposed rule should be approved or disapproved. Trading and Markets, pursuant to delegated
change is designed to promote just and authority.22
equitable principles of trade by better IV. Solicitation of Comments Brent J. Fields,
aligning the enforcement of a Market Interested persons are invited to Secretary.
Maker’s obligations on the Exchange submit written data, views, and [FR Doc. 2016–24573 Filed 10–11–16; 8:45 am]
with the objective of the Rule which is arguments concerning the foregoing, BILLING CODE 8011–01–P
to ensure that option classes on the
including whether the proposed rule
Exchange are opened in a consistently
change is consistent with the Act.
timely fashion. Further, the proposed SECURITIES AND EXCHANGE
rule change will foster cooperation and Comments may be submitted by any of
COMMISSION
coordination with persons engaged in the following methods:
regulating and facilitating transactions [Release No. 34–79052; File No. SR–
Electronic Comments NYSEArca–2016–82]
in securities as the proposed rule
change articulates the specific • Use the Commission’s Internet Self-Regulatory Organizations; NYSE
conditions under which a Market Maker comment form (http://www.sec.gov/ Arca, Inc.; Order Instituting
has met, or has failed to meet, a quoting rules/sro.shtml); or Proceedings To Determine Whether To
obligation on the Exchange. • Send an email to rule- Approve or Disapprove a Proposed
B. Self-Regulatory Organization’s comments@sec.gov. Please include File Rule Change, as Modified by
Statement on Burden on Competition Number SR– MIAX–2016–35 on the Amendment Nos. 1, 2, and 3 Thereto,
The Exchange does not believe that subject line. To List and Trade Shares of the
the proposed rule change will impose JPMorgan Diversified Event Driven
Paper Comments ETF Under NYSE Arca Equities Rule
any burden on competition that is not
necessary or appropriate in furtherance • Send paper comments in triplicate 8.600
of the purposes of the Act. The to Secretary, Securities and Exchange October 5, 2016.
proposed rule change is not designed to Commission, 100 F Street NE.,
address any competitive issues. Washington, DC 20549–1090. I. Introduction
C. Self-Regulatory Organization’s On June 20, 2016, NYSE Arca, Inc.
All submissions should refer to File
Statement on Comments on the (‘‘Exchange’’) filed with the Securities
Number SR–MIAX–2016–35. This file
Proposed Rule Change Received From and Exchange Commission
number should be included on the
Members, Participants, or Others (‘‘Commission’’), pursuant to Section
subject line if email is used. To help the 19(b)(1) of the Securities Exchange Act
Written comments were neither Commission process and review your of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
solicited nor received. comments more efficiently, please use Rule 19b–4 thereunder,2 a proposed rule
III. Date of Effectiveness of the only one method. The Commission will change to list and trade shares of the
Proposed Rule Change and Timing for post all comments on the Commission’s JPMorgan Diversified Event Driven ETF
Commission Action Internet Web site (http://www.sec.gov/ under NYSE Arca Equities Rule 8.600.
rules/sro.shtml). Copies of the The proposed rule change was
Because the foregoing proposed rule submission, all subsequent
change does not: (i) Significantly affect published for comment in the Federal
amendments, all written statements Register on July 7, 2016.3 On August 18,
the protection of investors or the public with respect to the proposed rule
interest; (ii) impose any significant 2016, the Exchange filed Amendment
change that are filed with the No. 1 to the proposed rule change,4 and,
burden on competition; and (iii) become
Commission, and all written
operative for 30 days after the date of
communications relating to the 22 17 CFR 200.30–3(a)(12).
the filing, or such shorter time as the
proposed rule change between the 1 15 U.S.C. 78s(b)(1).
Commission may designate, it has 2 17 CFR 240.19b–4.
become effective pursuant to 19(b)(3)(A) Commission and any person, other than
3 See Securities Exchange Act Release No. 78218
of the Act 20 and Rule 19b–4(f)(6) 21 those that may be withheld from the
(Jul. 1, 2016), 81 FR 44339 (‘‘Notice’’).
thereunder. public in accordance with the 4 In Amendment No. 1, which amended and
At any time within 60 days of the provisions of 5 U.S.C. 552, will be replaced the proposed rule change in its entirety,
filing of the proposed rule change, the available for Web site viewing and the Exchange clarified: (a) certain aspects relating
printing in the Commission’s Public to the Fund’s investment strategy, including
Commission summarily may descriptions of (i) certain return factors that the
temporarily suspend such rule change if Reference Room, 100 F Street NE., Fund seeks to utilize to achieve its investment
it appears to the Commission that such Washington, DC 20549, on official objective, (ii) the Fund’s total net long market
action is necessary or appropriate in the business days between the hours of exposure, (iii) the Fund’s use of derivative
instruments and its market exposure to such
public interest, for the protection of 10:00 a.m. and 3:00 p.m. Copies of the instruments, and (iv) the Fund’s investments in
investors, or otherwise in furtherance of filing also will be available for mutual funds; (b) that the common stock into which
the purposes of the Act. If the inspection and copying at the principal convertible securities held by the Fund can be
Commission takes such action, the office of the Exchange. All comments converted will be exchange-traded; (c) that the
Fund may invest no more than 5% of its assets, in
Commission shall institute proceedings received will be posted without change; the aggregate, in over-the-counter (‘‘OTC’’) common
the Commission does not edit personal stocks, preferred stocks, warrants, rights, and
mstockstill on DSK3G9T082PROD with NOTICES
20 15 U.S.C. 78s(b)(3)(A). identifying information from contingent value rights (‘‘CVRs’’) of U.S. and foreign
21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– submissions. You should submit only corporations (including emerging market
4(f)(6) requires a self-regulatory organization to give securities); (d) the redemption order submission
the Commission written notice of its intent to file information that you wish to make cut-off time; (e) that no more than 10% of the net
the proposed rule change at least five business days available publicly. All submissions assets of the Fund will be invested in Depositary
prior to the date of filing of the proposed rule should refer to File Number SR–MIAX– Receipts (as defined herein) that are not exchange-
change, or such shorter time as designated by the listed; and (f) the use of certain defined terms.
Commission. The Exchange has satisfied this
2016–35 and should be submitted on or Amendment No. 1 to the proposed rule change is
requirement. before November 2, 2016. Continued
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Document Created: 2016-10-12 00:55:40
Document Modified: 2016-10-12 00:55:40
| 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 | 81 FR 70453 |
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