82 FR 23888 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rules 503 and 515
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 99 (May 24, 2017)
Federal Register Volume 82, Issue 99 (May 24, 2017)
| Page Range | 23888-23891 | |
| FR Document | 2017-10593 |
[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)] [Notices] [Pages 23888-23891] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-10593] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80724; File No. SR-PEARL-2017-22] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rules 503 and 515 May 18, 2017. 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 May 5, 2017, MIAX PEARL, LLC (``MIAX PEARL'' 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. --------------------------------------------------------------------------- \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 515, Execution of Orders. The text of the proposed rule change is available on the Exchange's Web site at http://www.miaxoptions.com/rule-filings/pearl at MIAX PEARL'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 [[Page 23889]] 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 rule text clarifying the treatment of orders that remain in the System \3\ after the completion of the Opening Process.\4\ Additionally, the Exchange proposes to amend Exchange Rule 515 by removing the provision which states that when the System opens a series for trading by disseminating the Exchange's best bid and offer, non-routable orders, or Do Not Route (``DNR'') orders,\5\ that are in the System and that cross the ABBO,\6\ will be cancelled and not included in the Managed Interest Process.\7\ --------------------------------------------------------------------------- \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 503(a)(1). \5\ A Do Not Route or ``DNR'' order is an order that will never be routed outside of the Exchange regardless of the prices displayed by away markets. A DNR order may execute on the Exchange at a price equal to or better than, but not inferior to, the best away market price but, if that best away market remains, the DNR order will be handled in accordance with the Managed Interest Process described in Rule 515(d)(2). See Exchange Rule 516. \6\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the best bid(s) or offer(s) disseminated by other Eligible Exchanges (defined in Rule 1400(f)) and calculated by the Exchange based on market information received by the Exchange from OPRA. See Exchange Rule 100. \7\ See Exchange Rule 515(d)(2). --------------------------------------------------------------------------- Exchange Rule 503 provides that the Opening Process may open a series for trading on the Exchange (i) where there is a possible trade on the Exchange (``opening on a trade''); and (ii) where there is no possible trade on the Exchange (``opening on a quote''). Exchange Rule 503(b)(2) discusses the Opening Process when the series opens on a trade. More specifically, Rule 503(b)(2)(iii) discusses how the Exchange handles unexecuted orders that remain in the System after the conclusion of the Opening Process, stating that, ``[s]uch orders will be handled . . . in time sequence, beginning with the order with the oldest time stamp and may, in whole or in part, be placed on the Book, cancelled, executed, managed in accordance with Rule 515, or routed in accordance with Rule 529.'' Exchange Rule 503(b)(3) discusses the Opening Process when there is no possible trade on the Exchange, or when the series opens on a quote. However, this rule is silent on how orders that remain in the System after the conclusion of the Opening Process are handled. The Exchange proposes to adopt new rule text in Rule 503(b)(3) similar to that of Rule 503(b)(2)(iii) to codify existing behavior and explicitly state that, ``[o]rders in the System will be handled at the conclusion of the Opening Process in time sequence, beginning with the order with the oldest time stamp and may, in whole or in part, be placed on the Book, cancelled, executed, managed in accordance with Rule 515, or routed in accordance with Rule 529.'' This proposed amendment provides consistency in the Exchange's rules concerning the handling of unexecuted orders at the conclusion of the Opening Process. Additionally, the Exchange proposes to eliminate paragraph (vi) in its entirety from Exchange Rule 515(d)(2) which currently states that when the System opens without an opening transaction, and instead opens by disseminating the Exchange's best bid and offer among quotes and orders that exist in the System at that time as described in Rule 503(b)(3), non-routable orders then in the System that cross the ABBO will be cancelled and are not included in the Managed Interest Process. Proposed Rule 503(b)(3) provides that when the series opens on a quote, any orders, including non-routable orders, that remain in the System at the conclusion of the Opening Process are re-introduced in time priority, oldest first. The proposed rule change provides that orders remaining in the System at the conclusion of the Opening process, including non-routable orders, will be included in the Managed Interest Process under Rule 515, as described below. Therefore, current paragraph (vi) of Exchange Rule 515(d)(2) is no longer necessary, and may be removed from the rule.\8\ --------------------------------------------------------------------------- \8\ The Commission notes that elimination of paragraph (vi) from Exchange Rule 515(d)(2) would allow non-routable orders then in the System that cross to ABBO to be placed on the Book, cancelled, executed, managed in accordance with Rule 515, or routed in accordance with Rule 529 when the system opens with a quote. --------------------------------------------------------------------------- The Exchange believes that the codification of the treatment of orders that remain in the System at the completion of the Opening Process reflects the Exchange's intention to provide uniform treatment for all non-routable orders that remain in the System after the Opening Process concludes. Additionally, the proposed treatment of non-routable orders that cross the ABBO when the series opens on a quote, aligns to the current treatment of non-routable orders that cross the ABBO when the series opens on a trade, in that these orders will be subject to the Managed Interest Process. The Exchange notes that certain MIAX PEARL Rules were based upon the rules of the Exchange's affiliate, Miami International Securities Exchange, LLC (``MIAX Options''), and that current MIAX PEARL Rule 515(d)(2)(iv) [sic] is identical (save for an internal rule reference) to MIAX Options Rule 515(c)(1)(ii)(B). However, when the MIAX Options Exchange opens on a trade, orders that cross the opening price are cancelled,\9\ whereas on MIAX PEARL, orders that cross the opening price are re-introduced in time priority, and may be included in the Managed Interest Process. The Exchange's proposal to amend its rule is designed to provide consistent treatment of non-routable orders that remain in the System after the conclusion of the Opening Process on MIAX PEARL. --------------------------------------------------------------------------- \9\ See MIAX Options Rule 503(f)(2)(vii)(B)(5). --------------------------------------------------------------------------- The Managed Interest Process for Non-Routable Orders described in Rule 515 provides that if the limit price of an order locks or crosses the current opposite side NBBO \10\ and the PBBO \11\ is inferior to the NBBO, the System will display the order one Minimum Price Variation (``MPV'') \12\ away from the current opposite side NBBO, and book the order at a price that will lock the current opposite side NBBO. Should the NBBO price change to an inferior price level, the order's Book price will continuously re-price to lock the new NBBO and the managed order's displayed price will continuously re-price one MPV away from the new NBBO until (A) the order has traded to and including its limit price, (B) the order has traded to and including its price protection price limit at which time any remaining contracts are cancelled, (C) the order is fully executed or (D) the order is cancelled.\13\ --------------------------------------------------------------------------- \10\ The term ``NBBO'' means the national best bid or offer as calculated by the Exchange based on market information received by the Exchange from OPRA. See Exchange Rule 100. \11\ The term ``PBBO'' means the best bid or offer on the PEARL Exchange. See Exchange Rule 100. \12\ See Exchange Rule 510. \13\ See Exchange Rule 515(d)(2)(ii). --------------------------------------------------------------------------- This proposal should eliminate any investor confusion arising from the cancellation of some non-routable orders versus the management of others, depending upon whether the Exchange opened on a quote or a trade respectively. The proposed rule change should also assist market participants in making decisions concerning order routing by simplifying and clarifying the relationship between the Exchange's [[Page 23890]] Opening Process and the Managed Interest Process for Non-Routable Orders. Additionally, the proposed change provides consistency in the Exchange's Rules concerning orders that remain in the System at the conclusion of the Opening Process. 2. Statutory Basis MIAX PEARL believes that its proposed rule change is consistent with Section 6(b) of the Act \14\ in general, and furthers the objectives of Section 6(b)(5) of the Act \15\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes its proposal codifying the Exchange's handling of orders after the Opening Process is complete promotes transparency and clarity in the Exchange's rules. The transparency and accuracy resulting from the codification of this functionality is consistent with the Act because it removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest, by accurately describing the steps taken by the System when a series opens on a quote and on a trade. The Exchange believes its proposal to provide equal treatment to non-routable orders that remain in the System after the conclusion of the Opening Process to be one that protects investors and the public interest by eliminating the potential for confusion that could arise as a result of non-routable orders that cross the ABBO being cancelled when the series opens on a quote, while non-routable orders that cross the ABBO remain in the System and are subject to the Managed Interest Process when the series opens on a trade. The Exchange believes it is in the interest of investors and the public to accurately describe the behavior of the Exchange's System in its rules as this information may be used by investors to make decisions concerning the submission of their orders. Transparency and clarity are consistent with the Act because it removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest by accurately describing the behavior of the Exchange's System. MIAX PEARL participants should have a better understanding of the Exchange's treatment of orders remaining in the System at the conclusion of the Opening Process. The codification and clarification of the System's functionality is designed to promote just and equitable principles of trade by providing a clear and objective description to all participants of how orders will be handled, and should assist investors in making decisions concerning their orders. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule changes will impose any burden on intra-market competition as the Rules apply equally to all Exchange Members. The Exchange does not believe that the proposed rule changes will impose any burden on intra-market competition as the proposal is one that promotes order handling efficiency on the Exchange. For the reasons stated, the Exchange does not believe the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition. 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 \16\ and Rule 19b-4(f)(6) \17\ thereunder. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(3)(A). \17\ 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. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \18\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In its filing with the Commission, the Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30- day operative delay is consistent with the protection of investors and the public interest. The Exchange states that a recent rule change to permit Post-Only Orders \20\ to participate in the Opening Process became operative on the Exchange on May 3, 2017.\21\ The Exchange represents that this change may result in an increase in the number of non-routable orders in the System at the conclusion of the Opening Process, and these orders may be cancelled under the current rule. The Exchange believes that the proposed rule change may reduce potential confusion by providing consistent treatment to non-routable orders when the Exchange opens on a trade or a quote. Accordingly, the Commission hereby waives the operative delay and designates the proposal operative upon filing.\22\ --------------------------------------------------------------------------- \18\ 17 CFR 240.19b-4(f)(6). \19\ 17 CFR 240.19b-4(f)(6)(iii). \20\ See Exchange Rule 516(j). Post-Only Orders are non- routable. Id. \21\ See Securities Exchange Act Release No. 80384 (April 6, 2017), 82 FR 17700 (April 12, 2017) (SR-PEARL-2017-16). \22\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 [[Page 23891]] 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-PEARL-2017-22 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-PEARL-2017-22. 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-PEARL-2017-22 and should be submitted on or before June 14, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-10593 Filed 5-23-17; 8:45 am] BILLING CODE 8011-01-P
![23888 Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
III. Date of Effectiveness of the public interest, for the protection of NYSEMKT–2017–27 and should be
Proposed Rule Change and Timing for investors, or otherwise in furtherance of submitted on or before June 14, 2017.
Commission Action the purposes of the Act. If the For the Commission, by the Division of
The Exchange has filed the proposed Commission takes such action, the Trading and Markets, pursuant to delegated
rule change pursuant to Section Commission will institute proceedings authority.20
to determine whether the proposed rule Eduardo A. Aleman,
19(b)(3)(A)(iii) of the Act 12 and Rule
change should be approved or Assistant Secretary.
19b–4(f)(6) thereunder.13 Because the
disapproved.
foregoing proposed rule change does [FR Doc. 2017–10592 Filed 5–23–17; 8:45 am]
not: (i) Significantly affect the IV. Solicitation of Comments BILLING CODE 8011–01–P
protection of investors or the public Interested persons are invited to
interest; (ii) impose any significant submit written data, views, and
burden on competition; and (iii) become SECURITIES AND EXCHANGE
arguments concerning the foregoing,
operative for 30 days from the date on COMMISSION
including whether the proposed rule
which it was filed, or such shorter time change is consistent with the Act. [Release No. 34–80724; File No. SR–
as the Commission may designate, it has Comments may be submitted by any of PEARL–2017–22]
become effective pursuant to Section the following methods:
19(b)(3)(A)(iii) of the Act 14 and Self-Regulatory Organizations; MIAX
subparagraph (f)(6) Rule 19b–4 Electronic Comments PEARL, LLC; Notice of Filing and
thereunder.15 • Use the Commission’s Internet Immediate Effectiveness of a Proposed
A proposed rule change filed under comment form (http://www.sec.gov/ Rule Change To Amend MIAX PEARL
Rule 19b–4(f)(6) 16 normally does not rules/sro.shtml); or Rules 503 and 515
become operative for 30 days after the • Send an email to rule-
May 18, 2017.
date of filing. However, Rule 19b– comments@sec.gov. Please include File
Number SR–NYSEMKT–2017–27 on the Pursuant to the provisions of Section
4(f)(6)(iii) 17 permits the Commission to
subject line. 19(b)(1) of the Securities Exchange Act
designate a shorter time if such action
of 1934 (‘‘Act’’) 1 and Rule 19b–4
is consistent with the protection of Paper Comments thereunder,2 notice is hereby given that
investors and the public interest. The
Exchange has requested that the • Send paper comments in triplicate on May 5, 2017, MIAX PEARL, LLC
to Brent J. Fields, Secretary, Securities (‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed
Commission waive the 30-day operative
and Exchange Commission, 100 F Street with the Securities and Exchange
delay to allow it to promptly harmonize
NE., Washington, DC 20549–1090. Commission (‘‘Commission’’) a
its rule with recently adopted changes
All submissions should refer to File proposed rule change as described in
to NYSE Rule 103B. The Commission
Number SR–NYSEMKT–2017–27. This Items I and II below, which Items have
believes that waiver of the 30-day
file number should be included on the been prepared by the Exchange. The
operative delay is consistent with the
subject line if email is used. To help the Commission is publishing this notice to
protection of investors and the public
Commission process and review your solicit comments on the proposed rule
interest because it will allow the
comments more efficiently, please use change from interested persons.
Exchange to harmonize its rules,
without undue delay, with both NYSE only one method. The Commission will I. Self-Regulatory Organization’s
Rule 103B and Exchange Rule 7.25E,18 post all comments on the Commission’s Statement of the Terms of Substance of
which should help to alleviate potential Internet Web site (http://www.sec.gov/ the Proposed Rule Change
confusion. Therefore, the Commission rules/sro.shtml). Copies of the
The Exchange is filing a proposal to
hereby waives the 30-day operative submission, all subsequent
amend Exchange Rule 503, Openings on
delay and designates the proposed rule amendments, all written statements
the Exchange, and Rule 515, Execution
change operative upon filing.19 with respect to the proposed rule
of Orders.
At any time within 60 days of the change that are filed with the The text of the proposed rule change
filing of the proposed rule change, the Commission, and all written is available on the Exchange’s Web site
Commission summarily may communications relating to the at http://www.miaxoptions.com/rule-
temporarily suspend such rule change if proposed rule change between the filings/pearl at MIAX PEARL’s principal
it appears to the Commission that such Commission and any person, other than office, and at the Commission’s Public
action is necessary or appropriate in the those that may be withheld from the Reference Room.
public in accordance with the
12 15 U.S.C. 78s(b)(3)(A)(iii). provisions of 5 U.S.C. 552, will be II. Self-Regulatory Organization’s
13 17 CFR 240.19b–4(f)(6). available for Web site viewing and Statement of the Purpose of, and
14 15 U.S.C. 78s(b)(3)(A).
printing in the Commission’s Public Statutory Basis for, the Proposed Rule
15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
Reference Room, 100 F Street NE., Change
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
Washington, DC 20549 on official In its filing with the Commission, the
to file the proposed rule change, along with a brief business days between the hours of Exchange included statements
description and text of the proposed rule change, 10:00 a.m. and 3:00 p.m. Copies of the concerning the purpose of and basis for
at least five business days prior to the date of filing filing also will be available for
of the proposed rule change, or such shorter time the proposed rule change and discussed
inspection and copying at the principal
asabaliauskas on DSK3SPTVN1PROD with NOTICES
as designated by the Commission. The Exchange any comments it received on the
has satisfied this requirement. office of the Exchange. All comments proposed rule change. The text of these
16 17 CFR 240.19b–4(f)(6). received will be posted without change; statements may be examined at the
17 17 CFR 240.19b–4(f)(6)(iii). the Commission does not edit personal places specified in Item IV below. The
18 See supra note 4 and accompanying text.
identifying information from Exchange has prepared summaries, set
19 For purposes only of waiving the 30-day
submissions. You should submit only
operative delay, the Commission also has
considered the proposed rule’s impact on
information that you wish to make 20 17 CFR 200.30–3(a)(12).
efficiency, competition, and capital formation. See available publicly. All submissions 1 15 U.S.C. 78s(b)(1).
15 U.S.C. 78c(f). should refer to File Number SR– 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices 23889
forth in sections A, B, and C below, of this rule is silent on how orders that cross the ABBO when the series opens
the most significant aspects of such remain in the System after the on a trade, in that these orders will be
statements. conclusion of the Opening Process are subject to the Managed Interest Process.
handled. The Exchange proposes to The Exchange notes that certain
A. Self-Regulatory Organization’s MIAX PEARL Rules were based upon
adopt new rule text in Rule 503(b)(3)
Statement of the Purpose of, and the rules of the Exchange’s affiliate,
similar to that of Rule 503(b)(2)(iii) to
Statutory Basis for, the Proposed Rule Miami International Securities
codify existing behavior and explicitly
Change Exchange, LLC (‘‘MIAX Options’’), and
state that, ‘‘[o]rders in the System will
1. Purpose be handled at the conclusion of the that current MIAX PEARL Rule
The Exchange proposes to amend Opening Process in time sequence, 515(d)(2)(iv) [sic] is identical (save for
Exchange Rule 503, Openings on the beginning with the order with the oldest an internal rule reference) to MIAX
Exchange, to adopt new rule text time stamp and may, in whole or in Options Rule 515(c)(1)(ii)(B). However,
clarifying the treatment of orders that part, be placed on the Book, cancelled, when the MIAX Options Exchange
remain in the System 3 after the executed, managed in accordance with opens on a trade, orders that cross the
completion of the Opening Process.4 Rule 515, or routed in accordance with opening price are cancelled,9 whereas
Additionally, the Exchange proposes to Rule 529.’’ This proposed amendment on MIAX PEARL, orders that cross the
amend Exchange Rule 515 by removing provides consistency in the Exchange’s opening price are re-introduced in time
the provision which states that when rules concerning the handling of priority, and may be included in the
the System opens a series for trading by unexecuted orders at the conclusion of Managed Interest Process. The
disseminating the Exchange’s best bid the Opening Process. Exchange’s proposal to amend its rule is
and offer, non-routable orders, or Do Additionally, the Exchange proposes designed to provide consistent
Not Route (‘‘DNR’’) orders,5 that are in to eliminate paragraph (vi) in its entirety treatment of non-routable orders that
the System and that cross the ABBO,6 from Exchange Rule 515(d)(2) which remain in the System after the
will be cancelled and not included in currently states that when the System conclusion of the Opening Process on
the Managed Interest Process.7 opens without an opening transaction, MIAX PEARL.
Exchange Rule 503 provides that the and instead opens by disseminating the The Managed Interest Process for
Opening Process may open a series for Exchange’s best bid and offer among Non-Routable Orders described in Rule
trading on the Exchange (i) where there quotes and orders that exist in the 515 provides that if the limit price of an
is a possible trade on the Exchange System at that time as described in Rule order locks or crosses the current
(‘‘opening on a trade’’); and (ii) where 503(b)(3), non-routable orders then in opposite side NBBO 10 and the PBBO 11
there is no possible trade on the the System that cross the ABBO will be is inferior to the NBBO, the System will
Exchange (‘‘opening on a quote’’). cancelled and are not included in the display the order one Minimum Price
Exchange Rule 503(b)(2) discusses the Managed Interest Process. Proposed Variation (‘‘MPV’’) 12 away from the
Opening Process when the series opens Rule 503(b)(3) provides that when the current opposite side NBBO, and book
on a trade. More specifically, Rule series opens on a quote, any orders, the order at a price that will lock the
503(b)(2)(iii) discusses how the including non-routable orders, that current opposite side NBBO. Should the
Exchange handles unexecuted orders remain in the System at the conclusion NBBO price change to an inferior price
that remain in the System after the of the Opening Process are re- level, the order’s Book price will
conclusion of the Opening Process, introduced in time priority, oldest first. continuously re-price to lock the new
stating that, ‘‘[s]uch orders will be The proposed rule change provides that NBBO and the managed order’s
handled . . . in time sequence, orders remaining in the System at the displayed price will continuously re-
beginning with the order with the oldest conclusion of the Opening process, price one MPV away from the new
time stamp and may, in whole or in including non-routable orders, will be NBBO until (A) the order has traded to
part, be placed on the Book, cancelled, included in the Managed Interest and including its limit price, (B) the
executed, managed in accordance with Process under Rule 515, as described order has traded to and including its
Rule 515, or routed in accordance with below. Therefore, current paragraph (vi) price protection price limit at which
Rule 529.’’ of Exchange Rule 515(d)(2) is no longer time any remaining contracts are
Exchange Rule 503(b)(3) discusses the necessary, and may be removed from cancelled, (C) the order is fully executed
Opening Process when there is no the rule.8 or (D) the order is cancelled.13
possible trade on the Exchange, or when The Exchange believes that the This proposal should eliminate any
the series opens on a quote. However, codification of the treatment of orders investor confusion arising from the
that remain in the System at the cancellation of some non-routable
3 The term ‘‘System’’ means the automated completion of the Opening Process orders versus the management of others,
trading system used by the Exchange for the trading reflects the Exchange’s intention to depending upon whether the Exchange
of Securities. See Exchange Rule 100. provide uniform treatment for all non- opened on a quote or a trade
4 See Exchange Rule 503(a)(1).
5 A Do Not Route or ‘‘DNR’’ order is an order that
routable orders that remain in the respectively. The proposed rule change
will never be routed outside of the Exchange System after the Opening Process should also assist market participants in
regardless of the prices displayed by away markets. concludes. Additionally, the proposed making decisions concerning order
A DNR order may execute on the Exchange at a treatment of non-routable orders that routing by simplifying and clarifying the
price equal to or better than, but not inferior to, the cross the ABBO when the series opens relationship between the Exchange’s
best away market price but, if that best away market
asabaliauskas on DSK3SPTVN1PROD with NOTICES
remains, the DNR order will be handled in on a quote, aligns to the current
accordance with the Managed Interest Process treatment of non-routable orders that 9 See MIAX Options Rule 503(f)(2)(vii)(B)(5).
10 The term ‘‘NBBO’’ means the national best bid
described in Rule 515(d)(2). See Exchange Rule 516.
6 The term ‘‘ABBO’’ or ‘‘Away Best Bid or Offer’’ 8 The Commission notes that elimination of or offer as calculated by the Exchange based on
means the best bid(s) or offer(s) disseminated by paragraph (vi) from Exchange Rule 515(d)(2) would market information received by the Exchange from
other Eligible Exchanges (defined in Rule 1400(f)) allow non-routable orders then in the System that OPRA. See Exchange Rule 100.
11 The term ‘‘PBBO’’ means the best bid or offer
and calculated by the Exchange based on market cross to ABBO to be placed on the Book, cancelled,
information received by the Exchange from OPRA. executed, managed in accordance with Rule 515, or on the PEARL Exchange. See Exchange Rule 100.
See Exchange Rule 100. routed in accordance with Rule 529 when the 12 See Exchange Rule 510.
7 See Exchange Rule 515(d)(2). system opens with a quote. 13 See Exchange Rule 515(d)(2)(ii).
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![Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices 23891
arguments concerning the foregoing, SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
including whether the proposed rule COMMISSION Statement of the Purpose of, and
change is consistent with the Act. Statutory Basis for, the Proposed Rule
Comments may be submitted by any of [Release No. 34–80722; File No. SR–GEMX–
Change
the following methods: 2017–13] 1. Purpose
Electronic Comments The Exchange proposes to amend its
Self-Regulatory Organizations; Nasdaq
• Use the Commission’s Internet Schedule of Fees to offer the historical
GEMX, LLC; Notice of Filing and
comment form (http://www.sec.gov/ GEMX Open/Close Trade Profile, which
Immediate Effectiveness of Proposed will offer historical opening and closing
rules/sro.shtml); or Rule Change To Amend the trade data for GEMX-listed options on
• Send an email to rule-comments@ Exchange’s Schedule of Fees To Offer both an intraday and end-of-day basis.
sec.gov. Please include File Number SR– the Historical GEMX Open/Close Trade The data provided with this product is
PEARL–2017–22 on the subject line. Profile similar to the historical data provided
Paper Comments May 18, 2017. with the ISE Open/Close Trade Profile
products.3 The Exchange is prepared to
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the offer this product upon filing.
to Secretary, Securities and Exchange Securities Exchange Act of 1934 The historical GEMX Open/Close
Commission, 100 F Street NE., (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Trade Profile, available to both members
Washington, DC 20549–1090. notice is hereby given that on May 5, and non-members, will provide
All submissions should refer to File 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or subscribers with the ability to analyze
Number SR–PEARL–2017–22. This file ‘‘Exchange’’) filed with the Securities trade and volume data for options and
number should be included on the and Exchange Commission (‘‘SEC’’ or create and test trading models and
subject line if email is used. To help the ‘‘Commission’’) the proposed rule analytical strategies. The service will
Commission process and review your change as described in Items I and II, provide over 80 fields of data for GEMX-
comments more efficiently, please use below, which Items have been prepared listed options, which will include an
only one method. The Commission will by the Exchange. The Commission is ‘‘Origin Code’’ 4 identifying the type of
post all comments on the Commission’s publishing this notice to solicit trader participating in a transaction;
Internet Web site (http://www.sec.gov/ comments on the proposed rule change data on opening buys and sells and
rules/sro.shtml). Copies of the from interested persons. closing buys and sells; 5 trading volume
submission, all subsequent and number of trades information
amendments, all written statements I. Self-Regulatory Organization’s summarized by day and series; a code
with respect to the proposed rule Statement of the Terms of Substance of indicating the degree to which a series
change that are filed with the the Proposed Rule Change is ‘‘in’’ or ‘‘out’’ of the ‘‘money’’; 6 the
Commission, and all written
The Exchange proposes to amend the 3 Nasdaq ISE, Schedule of Fees, Chapter VIII
communications relating to the
Exchange’s Schedule of Fees to offer the (Market Data), A (Nasdaq ISE Open/Close Trade
proposed rule change between the Profile End of Day) and B (Nasdaq ISE Open/Close
historical GEMX Open/Close Trade
Commission and any person, other than Trade Profile Intraday); see also Securities
Profile, which will offer historical
those that may be withheld from the Exchange Act Release 56254 (August 15, 2007) 72
public in accordance with the opening and closing trade data for each FR 47104 (August 22, 2007) (SR–ISE–2007–70).
provisions of 5 U.S.C. 552, will be GEMX-listed option on both an intraday 4 The ‘‘Origin Code’’ identifies the type of trader
and end-of-day basis, as described involved in a transaction: Customer, Professional
available for Web site viewing and Customer, Firm or Market Maker. ‘‘Customer’’
printing in the Commission’s Public further below. includes both retail and institutional customers. A
Reference Room, 100 F Street NE., The text of the proposed rule change ‘‘Professional Customer’’ is a high-activity customer
that enters into more than 390 orders per day over
Washington, DC 20549, on official is available on the Exchange’s Web site the course of a one-month period. A ‘‘Firm’’ is a
business days between the hours of at www.ise.com, at the principal office broker-dealer trading in its own proprietary account
10:00 a.m. and 3:00 p.m. Copies of the of the Exchange, and at the or on behalf of another broker-dealer. A ‘‘Market
filing also will be available for Commission’s Public Reference Room. Maker’’ is a broker-dealer that assumes the risk of
holding a position in a series to facilitate trading.
inspection and copying at the principal 5 An opening buy is a transaction that creates or
office of the Exchange. All comments II. Self-Regulatory Organization’s
increases a long position and an opening sell is a
received will be posted without change; Statement of the Purpose of, and transaction that creates or increases a short
the Commission does not edit personal Statutory Basis for, the Proposed Rule position. A closing buy is a transaction made to
identifying information from Change close out an existing position. A closing sell is a
transaction to reduce or eliminate a long position.
submissions. You should submit only In its filing with the Commission, the 6 The degree to which a series is ‘‘in’’ or ‘‘out’’
information that you wish to make Exchange included statements of the ‘‘money’’ will be identified according to the
available publicly. All submissions following five levels of ‘‘moneyness’’: (i) ‘‘Deep in
concerning the purpose of and basis for the Money’’ means that the strike price of this
should refer to File Number SR– the proposed rule change and discussed option is more than 12% lower than the price of
PEARL–2017–22 and should be the underlying security if it is a call or more than
any comments it received on the
submitted on or before June 14, 2017. 12% higher if it is a put; (ii) ‘‘In the Money’’ means
proposed rule change. The text of these that the strike price of this option is within the
For the Commission, by the Division of statements may be examined at the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
range of 5%–12% lower than the price of the
Trading and Markets, pursuant to delegated places specified in Item IV below. The underlying security if it is a call or within the range
authority.23 of 5%–12% higher if it is a put; (iii) ‘‘At the
Exchange has prepared summaries, set
Eduardo A. Aleman, Money’’ means that the strike price of this option
forth in sections A, B, and C below, of is within the range of 5% higher or lower than the
Assistant Secretary. the most significant aspects of such price of the underlying security; (iv) ‘‘Out of the
[FR Doc. 2017–10593 Filed 5–23–17; 8:45 am] statements. Money’’ means that the strike price of this option
BILLING CODE 8011–01–P
is within the range of 5%–12% higher than the
price of the underlying security if it is a call or 5%–
1 15 U.S.C. 78s(b)(1). 12% lower if it is a put; and (v) ‘‘Deep out of the
23 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Continued
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Document Created: 2017-05-24 01:03:18
Document Modified: 2017-05-24 01:03:18
| 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 | 82 FR 23888 |
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