82_FR_25451 82 FR 25347 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend MIAX Options Rules 515, Execution of Orders and Quotes; 515A, MIAX Price Improvement Mechanism (“PRIME”) and PRIME Solicitation Mechanism; and 518, Complex Orders

82 FR 25347 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend MIAX Options Rules 515, Execution of Orders and Quotes; 515A, MIAX Price Improvement Mechanism (“PRIME”) and PRIME Solicitation Mechanism; and 518, Complex Orders

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 104 (June 1, 2017)

Page Range25347-25358
FR Document2017-11251

Federal Register, Volume 82 Issue 104 (Thursday, June 1, 2017)
[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)]
[Notices]
[Pages 25347-25358]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11251]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80768; File No. SR-MIAX-2017-19]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend MIAX 
Options Rules 515, Execution of Orders and Quotes; 515A, MIAX Price 
Improvement Mechanism (``PRIME'') and PRIME Solicitation Mechanism; and 
518, Complex Orders

May 25, 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 12, 2017, Miami International Securities 
Exchange, LLC (``MIAX Options'' 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

[[Page 25348]]

publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rules 515, 
Execution of Orders and Quotes; 515A, MIAX Price Improvement Mechanism 
(``PRIME'') and PRIME Solicitation Mechanism; and 518, Complex Orders.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/rule-filings, 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 Rules 515, Execution of 
Orders and Quotes; 515A, MIAX Price Improvement Mechanism (``PRIME'') 
and PRIME Solicitation Mechanism; and 518, Complex Orders, to establish 
three new types of complex orders,\3\ and to adopt new provisions that 
relate to the processing of those new complex order types. In 
particular, the Exchange is proposing to modify those rules to permit 
the entry and execution of Complex Customer Cross (``cC2C'') Orders, 
Complex Qualified Contingent Cross (``cQCC'') Orders, and Complex PRIME 
(``cPRIME'') Orders, each as discussed more fully below.
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    \3\ For a description of the trading of complex orders on the 
Exchange, see Exchange Rule 518. See also, Securities Exchange Act 
Release No. 79072 (October 7, 2016), 81 FR 71131 (October 14, 2016) 
(SR-MIAX-2016-26).
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Background
    Exchange Rule 515(h) currently permits the entry and execution of 
Customer Cross Orders \4\ and Qualified Contingent Cross (``QCC'') 
Orders \5\ in the Exchange's simple market. A Customer Cross Order is 
comprised of a Priority Customer \6\ Order to buy and a Priority 
Customer Order to sell at the same price and for the same quantity. A 
Customer Cross Order is not valid during the opening rotation process 
described in Rule 503.\7\ A QCC Order is comprised of an originating 
order to buy or sell at least 1,000 contracts, or 10,000 mini-option 
contracts, that is identified as being part of a qualified contingent 
trade,\8\ as that term is defined in Rule 516, Interpretations and 
Policies .01, coupled with a contra-side order or orders totaling an 
equal number of contracts. A QCC Order is not valid during the opening 
rotation process described in Rule 503.\9\
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    \4\ See Exchange Rule 515(h)(1).
    \5\ See Exchange Rule 515(h)(2).
    \6\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100.
    \7\ See Exchange Rule 516(i).
    \8\ A ``qualified contingent trade'' is a transaction consisting 
of two or more component orders, executed as agent or principal, 
where: (a) At least one component is an NMS Stock, as defined in 
Rule 600 of Regulation NMS under the Act; (b) all components are 
effected with a product or price contingency that either has been 
agreed to by all the respective counterparties or arranged for by a 
broker-dealer as principal or agent; (c) the execution of one 
component is contingent upon the execution of all other components 
at or near the same time; (d) the specific relationship between the 
component orders (e.g., the spread between the prices of the 
component orders) is determined by the time the contingent order is 
placed; (e) the component orders bear a derivative relationship to 
one another, represent different classes of shares of the same 
issuer, or involve the securities of participants in mergers or with 
intentions to merge that have been announced or cancelled; and (f) 
the transaction is fully hedged (without regard to any prior 
existing position) as a result of other components of the contingent 
trade. See Exchange Rule 516, Interpretations and Policies .01.
    \9\ See Exchange Rule 516(j).
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    Customer Cross Orders and QCC Orders are processed in a crossing 
mechanism of the Exchange's System \10\ designed specifically for the 
execution of those order types, and Rule 515(h) contains order 
processing and execution requirements that are unique to these order 
types. The Exchange proposes to use that same crossing mechanism for 
the processing and execution of cC2C Orders and cQCC Orders. 
Accordingly, the Exchange is proposing to modify Rule 515(h) so that it 
also permits the execution of cC2C Orders and cQCC Orders, through the 
adoption of Rule 515(h)(3) (relating to cC2C Orders) and Rule 515(h)(4) 
(relating to cQCC Orders). Rules 515(h)(3) and (4) include processing 
and execution requirements for cC2C Orders and cQCC Orders that differ 
from the processing and execution requirements under 515(h)(1) and (2) 
for Customer Cross Orders and QCC Orders, respectively.
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    \10\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
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    Exchange Rule 515A currently permits the entry and execution of 
PRIME Orders \11\ and PRIME Solicitation Orders \12\ in the Exchange's 
simple market. PRIME is a price-improvement mechanism of the Exchange's 
System pursuant to which a Member \13\ (``Initiating Member'') 
electronically submits an order that it represents as agent (an 
``Agency Order'') into a PRIME Auction (``Auction''). The Initiating 
Member, in submitting an Agency Order, must be willing to either (i) 
cross the Agency Order at a single price (a ``single-price 
submission'') against principal or solicited interest, or (ii) 
automatically match (``auto-match''), against principal or solicited 
interest, the price and size of responses to a Request for Response 
(``RFR'') that is broadcast to MIAX Options participants up to an 
optional designated limit price.\14\
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    \11\ See Exchange Rule 515A(a).
    \12\ See Exchange Rule 515A(b).
    \13\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Act. See Exchange 
Rule 100.
    \14\ See Exchange Rule 515A(a)(2)(i). When the Exchange receives 
a properly designated Agency Order for auction processing, an RFR 
detailing the option, side, size, and initiating price will be sent 
to all subscribers of the Exchange's data feeds. The RFR currently 
lasts for 500 milliseconds. Members may submit responses to the RFR 
(specifying prices and sizes). RFR responses shall be an Auction or 
Cancel (``AOC'') order or an AOC eQuote. Such responses cannot cross 
the disseminated MIAX Best Bid or Offer (``MBBO'') on the opposite 
side of the market from the response.
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    PRIME Orders are processed in the PRIME mechanism of the Exchange's 
System that is designed specifically for the execution of those order 
types. Accordingly, Rule 515A contains order processing and execution 
requirements that are unique to these order types. The Exchange 
proposes to utilize that same PRIME mechanism for the processing and 
execution of cPRIME Orders. Accordingly, the Exchange is proposing to 
modify Rule 515A so that it also permits the execution of cPRIME 
Orders, through certain modifications to Rule 515A(a) and the adoption 
of Interpretations and Policies .12 (PRIME for Complex Orders). 
Interpretations and Policies .12 includes processing and execution 
requirements for cPRIME Orders that differ from the processing

[[Page 25349]]

and execution requirements under 515A(a) for simple PRIME Orders.
    The Exchange is also proposing to amend Exchange Rule 518, which 
governs the processing and execution of complex orders on the Exchange. 
In particular, Rule 518(b) lists and defines complex order types that 
are available for trading on the Exchange.\15\ Accordingly, the 
Exchange proposes to amend Rule 518(b) to list and define the three new 
complex order types: cC2C, cQCC, and cPRIME.
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    \15\ Exchange Rule 518(b), Types of Complex Orders, lists the 
various complex orders available for trading on the Exchange. The 
Exchange is proposing to add two new complex order types, cC2C and 
cQCC Orders, to this rule.
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cC2C Orders
    As discussed above, the Exchange proposes to use the same crossing 
mechanism for the processing and execution of cC2C Orders that is used 
for Customer Cross Orders in the simple market. Accordingly, proposed 
Rule 515(h)(3) shall govern the trading of cC2C Orders, as defined in 
Rule 518(b)(5), on MIAX Options.
    Proposed Rule 518(b)(5) defines a cC2C Order as a type of complex 
order which is comprised of one Priority Customer complex order to buy 
and one Priority Customer complex order to sell (the same strategy) at 
the same price (which must be better than (inside) the icMBBO \16\ or 
the best net price of the complex order on the Strategy Book \17\ for 
the strategy, whichever is more aggressive) and for the same quantity.
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    \16\ The Implied Complex MIAX Best Bid or Offer (``icMBBO'') is 
a calculation that uses the best price from the Simple Order Book 
(defined below) for each component of a complex strategy including 
displayed and non-displayed trading interest. For stock-option 
orders, the icMBBO for a complex strategy will be calculated using 
the best price (whether displayed or non-displayed) on the Simple 
Order Book (defined below) in the individual option component(s), 
and the NBBO in the stock component. See Exchange Rule 518(a)(11).
    \17\ The ``Strategy Book'' is the Exchange's electronic book of 
complex orders and complex quotes. See Exchange Rule 518(a)(17).
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    Proposed Rule 515(h)(3) describes the execution price requirements 
that are specific for cC2C Orders. Specifically, cC2C Orders are 
automatically executed upon entry provided that the execution is at 
least $0.01 better than (inside) the icMBBO (as defined in Rule 
518(a)(11)) price or the best net price of a complex order (as defined 
in Rule 518(a)(5)) on the Strategy Book (as defined in Rule 
518(a)(17)), whichever is more aggressive (i.e., the higher bid and/or 
lower offer). The purpose of the requirement that the execution be at 
the more aggressive price of either the icMBBO or the best net price of 
the complex order on the Strategy Book is to ensure that each 
participant in the complex order receives a better price than it would 
receive if submitted as a single complex order, and to ensure that 
there is no interference between the simple and complex markets.
    The System will reject a cC2C Order if, at the time of receipt of 
the cC2C Order, (i) the strategy is subject to a cPRIME Auction 
pursuant to Rule 515A proposed Interpretations and Policies .12, or to 
a Complex Auction pursuant to Rule 518(d); or (ii) any component of the 
strategy is subject to a SMAT Event as described in Rule 
518(a)(16).\18\ The purpose of this provision is to maintain an orderly 
market by avoiding the execution of cC2C Orders with components that 
are involved in other System functions (specifically a PRIME Auction, 
Route Timer, or liquidity refresh pause) that could affect the 
execution price of the cC2C Order, and by avoiding concurrent 
processing on the Exchange involving the same security. This 
methodology for the handling of cC2C Orders differs somewhat from the 
methodology for handling Customer Cross Orders, wherein the System will 
not reject a cC2C Order when a component of the strategy is subject to 
the managed interest process \19\ pursuant to Rule 515(c) (as the 
System would reject a Customer Cross Order in the simple market during 
such a condition). A cC2C Order already has a guaranteed execution 
price at the better of $0.01 inside the icMBBO price or at the best net 
price of a complex order on the Strategy Book. Therefore, it is not 
necessary or desirable to reject and thereby preclude the execution of 
a cC2C Order in this circumstance.
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    \18\ A Simple Market Auction or Timer, or ``SMAT'' Event, is 
defined as any of the following: (i) A PRIME Auction (pursuant to 
Rule 515A); (ii) a Route Timer (pursuant to Rule 529); or (iii) a 
liquidity refresh pause (pursuant to Rule 515(c)(2)). See Exchange 
Rule 518(a)(16).
    \19\ Under the managed interest process, if the limit price of a 
non-routable order locks or crosses the current opposite side NBBO, 
the System will display the order one Minimum Price Variation away 
from the current opposite side NBBO, and book the order at a price 
that will lock the current opposite side NBBO. See Exchange Rule 
515(c)(ii).
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    Proposed Rule 515(h)(3)(A) states that cC2C Orders will be 
automatically cancelled if they cannot be executed. Proposed Rule 
515(h)(3)(B) provides that cC2C Orders may only be entered in the 
minimum trading increments applicable to complex orders under Rule 
518(c)(1)(i).\20\
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    \20\ Bids and offers on complex orders and quotes may be 
expressed in $0.01 increments, and the component(s) of a complex 
order may be executed in $0.01 increments, regardless of the minimum 
increments otherwise applicable to individual components of the 
complex order. See Exchange Rule 518(c)(1)(i).
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    As a regulatory matter, proposed Rule 515(h)(3)(C) states that Rule 
520, Interpretations and Policies .01 \21\ applies to the entry and 
execution of cC2C Orders.
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    \21\ Rule 520(b) prevents an Electronic Exchange Member from 
executing agency orders to increase its economic gain from trading 
against the order without first giving other trading interest on the 
Exchange an opportunity to either trade with the agency order or to 
trade at the execution price when the Member was already bidding or 
offering on the Book. However, the Exchange recognizes that it may 
be possible for an Electronic Exchange Member to establish a 
relationship with a customer or other person (including affiliates) 
to deny agency orders the opportunity to interact on the Exchange 
and to realize similar economic benefits as it would achieve by 
executing agency orders as principal. It will be a violation of Rule 
520(b) for an Electronic Exchange Member to be a party to any 
arrangement designed to circumvent Rule 520(b) by providing an 
opportunity for a customer or other person (including affiliates) to 
regularly execute against agency orders handled by the Electronic 
Exchange Member immediately upon their entry into the System. See 
Exchange Rule 520, Interpretations and Policies .01.
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    Proposed Rule 515(h)(3)(D) states that the Exchange will determine, 
on a class-by-class basis, the option classes in which cC2C Orders are 
available for trading on the Exchange, and will announce such classes 
to Members via Regulatory Circular.
    The following example illustrates the execution of a cC2C Order:
Example 1--A cC2C Order Is Executed
MIAX-LMM Mar 50 Call 6.00-6.50 (10x10)
MIAX-LMM Mar 55 Call 3.00-3.30 (10x10)

Strategy: Buy 1 Mar 50 Call, Sell 1 Mar 55 Call

The icMBBO is 2.70 debit bid at 3.50 credit offer
The dcMBBO is 2.70 debit bid at 3.50 credit offer

    The Strategy Book contains a Priority Customer offer to sell the 
Strategy at 3.30 credit, 20 times.
    The Exchange receives a cC2C Order representing Priority Customers 
on both sides for the simultaneous purchase and sale of the strategy at 
a net price of 3.29, 500 times.
    Since the order price is at least $0.01 better than (inside) the 
icMBBO and the best net price of any order for the Strategy on the 
Strategy Book, the cC2C order is automatically executed upon entry.
cQCC Orders
    As discussed above, the Exchange proposes to use the same crossing 
mechanism for the processing and execution of cQCC Orders that is used

[[Page 25350]]

for QCC Orders in the simple market.\22\ Accordingly, proposed Rule 
515(h)(4) shall govern the trading of cQCC Orders, as defined in Rule 
518(b)(6), on MIAX Options.
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    \22\ See Exchange Rule 515(h)(2).
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    Proposed Rule 518(b)(6) defines a cQCC Order as a type of complex 
order which is comprised of a complex order to buy or sell where each 
component is at least 1,000 contracts that is identified as being part 
of a qualified contingent trade, as defined in Rule 516, 
Interpretations and Policies .01,\23\ coupled with a contra-side 
complex order or orders (for the same strategy) totaling an equal 
number of contracts.
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    \23\ See supra note 8.
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    Proposed Rule 515(h)(4) mirrors the execution price requirements 
for simple QCC Orders by providing that cQCC Orders are automatically 
executed upon entry provided that, with respect to each option leg of 
the cQCC Order, the execution (i) is not at the same price as a 
Priority Customer Order on the Exchange's Book; \24\ and (ii) is at or 
between the NBBO. The purpose of the requirement that each option leg 
be executed at or between the NBBO is to ensure that no option 
component of the cQCC Order trades through the NBBO. The purpose of the 
requirement that each option leg be executed at a price better than any 
Priority Customer on the Book is to ensure that no option component of 
the cQCC Order trades ahead of a Priority Customer Order.
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    \24\ The term ``Book'' means the electronic book of buy and sell 
orders and quotes maintained by the System. See Exchange Rule 100.
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    The Options Order Protection and Locked/Crossed Markets Plan (the 
``Plan''), provides an exception to the requirement that Participants 
establish, maintain and enforce written policies and procedures that 
are reasonably designed to prevent Trade-Throughs when the transaction 
that constituted the Trade-Through was effected as a portion of a 
``complex trade,'' as defined in the rules of a Participant.\25\
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    \25\ See Section 5(b)(viii) of the Plan. See also, Exchange Rule 
1401(b)(7).
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    The System does not consider the NBBO price for the stock component 
because the Exchange does not execute the stock component; the Exchange 
executes the option components at a net price and ensures that the 
execution price of each option component of the strategy is (i) not at 
the same price as a Priority Customer Order on the Exchange's Simple 
Order Book; \26\ and (ii) at or between the NBBO. The Exchange does 
require that the Member entering a QCC Order provide certain 
information to the Exchange regarding the execution of the stock 
component, such as the underlying price, quantity, price delta, 
execution time and executing venue.\27\ The Exchange will require this 
same information from Members with respect to cQCC Orders.
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    \26\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes, as defined in Exchange Rule 
518, Complex Orders. See Exchange Rule 518(a)(15). For purposes of 
the instant proposed rule change, the terms ``Book'' (see supra note 
24) and ``Simple Order Book'' have the same meaning and are 
interchangeable.
    \27\ See MIAX Options Regulatory Circular No. 2015-47 (October 
2, 2015), describing Regulatory Requirements when entering a 
Qualified Contingent Cross Order.
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    This complex pricing requirement aligns with the simple order 
pricing requirement for a Qualified Contingent Trade (``QCT'') to 
consider the NBBO price. In each case, the parties to a contingent 
trade are focused on the spread or ratio between the transaction prices 
for each of the component instruments (i.e., the net price of the 
entire contingent trade), rather than on the absolute price of any 
single component. Pursuant to the requirements of the NMS QCT 
Exemption, the spread or ratio between the relevant instruments must be 
determined at the time the order is placed, and this spread or ratio 
stands regardless of the market prices of the individual orders at 
their time of execution. As the Commission noted in the Original QCT 
Exemption, ``the difficulty of maintaining a hedge, and the risk of 
falling out of hedge, could dissuade participants from engaging in 
contingent trades, or at least raise the cost of such trades.'' Thus, 
the Commission found that, if each stock leg of a qualified contingent 
trade were required to meet the trade-through provisions of Rule 611 of 
Regulation NMS, such trades could become too risky and costly to be 
employed successfully and noted that the elimination or reduction of 
this trading strategy potentially could remove liquidity from the 
market.\28\ This is also true for QCC Orders in options, and thus the 
Exchange believes that its proposal is consistent with the Original QCT 
Exemption.
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    \28\ See Securities Exchange Act Release No. 54389 (August 31, 
2006), 71 FR 52829 (September 7, 2006) (``Original QCT Exemption'').
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    The System will reject a cQCC Order if, at the time of receipt of 
the cQCC Order, (i) the strategy is subject to a cPRIME Auction 
pursuant to proposed Rule 515A, Interpretations and Policies .12, or to 
a Complex Auction pursuant to Rule 518(d); or any component of the 
strategy is subject to a SMAT Event as described in Rule 
518(a)(16).\29\ This provision is intended to maintain an orderly 
market by avoiding the execution of cQCC Orders with components that 
are involved in other System functions (specifically a PRIME Auction, 
Route Timer, or liquidity refresh pause) that could affect the 
execution price of the cQCC Order, and by avoiding concurrent 
processing on the Exchange involving the same security. For the same 
reasons as described above with respect to cC2C Orders, the System will 
not reject a cQCC Order when a component of the strategy that is 
subject to the managed interest process pursuant to Rule 515(c) (as the 
System would reject a QCC Order in the simple market during such a 
condition).
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    \29\ See supra note 18.
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    Proposed Rule 515(h)(4)(A) states that cQCC Orders will be 
automatically cancelled if they cannot be executed. Proposed Rule 
515(h)(4)(B) provides that cQCC Orders may only be entered in the 
minimum trading increments applicable to complex orders under Rule 
518(c)(1)(i).\30\
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    \30\ See supra note 20.
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    Just as with cC2C Orders, proposed Rule 515(h)(4)(C)states that the 
Exchange will determine, on a class-by-class basis, the option classes 
in which cQCC Orders are available for trading on the Exchange, and 
will announce such classes to Members via Regulatory Circular.
    The following example illustrates the execution of a cQCC Order:
Example 2--A cQCC Order Is Executed
MIAX-LMM Mar 50 Call 6.00-6.50 (10x10--no Priority Customer interest)
MIAX-LMM Mar 55 Call 3.00-3.30 (10x10--no Priority Customer interest)
ABBO--Mar 50 Call 6.00-6.30 (10x10)
ABBO--Mar 55 Call 3.00-3.30 (10x10)
NBBO--Mar 50 Call 6.00-6.30 (20x10)
NBBO--Mar 55 Call 3.00-3.30 (20x20)

Strategy: Buy 1 Mar 50 Call, Sell 1 Mar 55 Call

The icMBBO is 2.70 debit bid at 3.50 credit offer
The dcMBBO is 2.70 debit bid at 3.50 credit offer
The ABBO is 2.70 debit bid at 3.30 credit offer

    The Exchange receives a cQCC Order representing Public Customers on 
both sides for the simultaneous purchase and sale of the strategy at a 
net price of 3.30, 1000 times along with information regarding the 
execution of the stock component relating to the crossing of 20,000 
shares of the underlying security (which information related to a 
separate

[[Page 25351]]

order that was sent to the stock execution venue by the Clearing Member 
previously identified to the Exchange as a Designated Give Up for the 
Member that submitted the cQCC Order in accordance with the Rule).
    Since the order can be executed at or between the NBBO for each leg 
of the Strategy, is not at the same price as a Priority Customer Order 
on the Exchange's Simple Order Book, and the order size and underlying 
security requirements have been met, the cQCC Order is automatically 
executed upon entry.
    The Exchange is proposing the same price execution requirements 
that are currently in place on other exchanges.\31\
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    \31\ See, e.g., Securities Exchange Act Release No. 69948 (July 
9, 2013), 78 FR 42132 (July 15, 2013) (SR-CBOE-2013-41). See also, 
NYSEArca Regulatory Information Bulletin no. RBO-11-04 (May 26, 
2011).
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Complex PRIME Orders
    As discussed above, the Exchange proposes to use the same PRIME 
mechanism for the processing and execution of cPRIME Orders that is 
used for PRIME Orders in the simple market. The manner in which cPRIME 
Orders will be processed and executed will be the same as the manner in 
which simple PRIME Orders are currently processed and executed, except 
as otherwise provided in proposed Interpretations and Policies .12 to 
Rule 515A. Accordingly, proposed Interpretations and Policies .12, 
PRIME for Complex Orders, states that, unless otherwise provided in 
Interpretations and Policies .12 to Rule 515A or unless the context 
otherwise requires, the provisions of Exchange Rule 515A(a) (which 
governs the processing and execution of simple PRIME orders) shall be 
applicable to the trading of complex orders on PRIME.
    Proposed Rule 518(b)(7) defines a cPRIME Order as a type of complex 
order that is submitted for participation in a cPRIME Auction. Trading 
of cPRIME Orders is governed by Rule 515A, Interpretations and Policies 
.12.
    The Exchange will determine, on a class-by-class basis, the option 
classes in which complex orders are available for trading on PRIME on 
the Exchange, and will announce such classes to Members via Regulatory 
Circular.
    The Exchange is proposing to amend Rule 515A(a)(2)(D) by stating 
clearly in the rule that the System will reject RFR responses submitted 
with a price that is not equal to or better than the initiating price. 
The purpose of this proposal is to avoid the handling of RFR responses 
by the System that could not be executed in an Auction because they are 
inferior to the initiating price, at which the Agency Order has been 
stopped. The Exchange is proposing to delete the last sentence of Rule 
515A(a)(2)(i)(D) which states simply that such RFR responses cannot 
cross the disseminated MBBO on the opposite side of the market from the 
response. Such a response would result in the conclusion of the Auction 
under current Rule 515A(2)(ii)(E), which states that the Auction will 
conclude any time an RFR response matches the NBBO on the opposite side 
of the market from the RFR responses. The Exchange is proposing to 
delete the last sentence of Rule 515A(a)(2)(i)(D), because the NBBO 
cannot be outside, or inferior to, the MBBO, and an RFR response 
therefore could not cross the MBBO without matching or crossing the 
NBBO, which stops the Auction. This provision in Rule 515A(a)(2)(i)(D) 
is unnecessary and should be deleted.
    Proposed Interpretations and Policies .12(a) to Rule 515A includes 
general rules applicable to cPRIME Orders and cPRIME Auctions. Under 
the proposal, Members may use PRIME to execute complex orders at a net 
price. In order to distinguish PRIME Auctions involving simple PRIME 
Orders from cPRIME Auctions involving cPRIME Orders, the Exchange is 
proposing to add new defined terms to Interpretations and Policies 
.12(a). Proposed Interpretations and Policies .12(a) states that 
``cPRIME'' is the process by which a Member may electronically submit a 
``cPRIME Order'' (as defined in proposed Rule 518(b)(7)) it represents 
as agent (a ``cPRIME Agency Order'') against principal or solicited 
interest for execution (a ``cPRIME Auction''). The Exchange is 
proposing to adopt these new terms for clarity and ease of reference.
    Proposed Interpretations and Policies .12(a)(i) to Rule 515A states 
that the initiating price for a cPRIME Agency Order must be better than 
(inside) the icMBBO \32\ for the strategy and any other complex orders 
on the Strategy Book. This ensures that the execution price of the 
cPRIME Agency Order improves the best price on the Exchange at the time 
of receipt, and that there is no interference between the simple and 
complex markets. The System will reject cPRIME Agency Orders submitted 
with an initiating price that is equal to or worse than (outside) the 
icMBBO or any other complex orders on the Strategy Book.
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    \32\ See supra note 16.
---------------------------------------------------------------------------

    Proposed Interpretations and Policies .12(a)(ii) to Rule 515A 
states that Members may enter RFR responses on the opposite side of the 
market from the cPRIME Agency Order at net prices, and bids and offers 
for complex orders may participate in the execution of an order as 
provided in MIAX Options Rule 515A. The purpose of this provision is to 
clarify that cPRIME Auctions, including the RFR and RFR responses, 
will, with certain exceptions described herein, be handled and executed 
in the same manner as simple PRIME Auctions.
    Proposed Interpretations and Policies .12(a)(iii) to Rule 515A 
states that, except as provided in proposed Interpretations and 
Policies .12(c) (described below), with respect to bids and offers for 
the individual legs of a complex order entered into cPRIME, the order 
allocation rules contained in Rule 514 will apply. This ensures that 
simple orders on the Exchange's Simple Order Book are allocated under 
the simple order allocation rules when they are executed against the 
legs of a complex order.
    Proposed Interpretations and Policies .12(a)(iv) to Rule 515A 
states that, if an improved net price for the complex order being 
executed can be achieved from bids and offers for the individual legs 
of the complex order in the simple market, and the complex order is 
otherwise eligible for Legging pursuant to Rule 518(c)(2)(iii),\33\ the 
Strategy being matched will receive an execution at the better net 
price. The purpose of this provision is to ensure that the Exchange 
will provide the best net price available on the Exchange, whether by 
way of matching strategies or by way of Legging with the Simple Order 
Book, as long as the complex order is eligible for Legging.
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    \33\ Complex orders up to a maximum number of legs (determined 
by the Exchange on a class-by-class basis as either two or three 
legs and communicated to Members via Regulatory Circular) may be 
automatically executed against bids and offers on the Simple Order 
Book for the individual legs of the complex order (``Legging''), 
provided the complex order can be executed in full or in a 
permissible ratio by such bids and offers, and provided that the 
execution price of each component is not executed at a price that is 
outside of the NBBO. Legging is not available for cAOC orders, 
complex Standard quotes, complex eQuotes, or stock-option orders. 
Notwithstanding the foregoing, complex orders with two option legs 
where both legs are buying or both legs are selling and both legs 
are calls or both legs are puts may only trade against other complex 
orders on the Strategy Book and will not be permitted to leg into 
the Simple Order Book. Complex orders with three option legs where 
all legs are buying or all legs are selling may only trade against 
other complex orders on the Strategy Book, regardless of whether the 
option leg is a call or a put. The System will not generate derived 
orders for these complex orders. See Exchange Rule 518(c)(2)(iii).
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    Proposed Interpretations and Policies .12(a)(v) to Rule 515A states 
that all references to the NBBO in Rule 515A

[[Page 25352]]

are inapplicable.\34\ Any of the references to the NBBO in Rule 515A 
apply to simple orders and do not apply to complex orders; proposed 
Interpretations and Policies .12 replaces references to the NBBO with 
references to the icMBBO that apply to complex orders.
---------------------------------------------------------------------------

    \34\ Complex orders and quotes are executed without 
consideration of any prices for the complex strategy that might be 
available on other exchanges trading the same options contracts. See 
Exchange Rule 518(c)(2)(ii).
---------------------------------------------------------------------------

    The following example illustrates the execution of a cPRIME Order 
with the single price submission election (no auto-match):
Example 3--A cPRIME Order Is Executed (Without Auto-Match)
MIAX-LMM Mar 50 Call 6.00-6.50 (10x10)
MIAX-LMM Mar 55 Call 3.00-3.30 (10x10)

Strategy: Buy 1 Mar 50 Call, Sell 1 Mar 55 Call

The icMBBO is 2.70 debit bid at 3.50 credit offer
The dcMBBO is 2.70 debit bid at 3.50 credit offer

    The Strategy Book contains a Priority Customer offer to sell the 
Strategy at 3.30 credit, 20 times.
    The Exchange receives a cPRIME Order with the cPRIME Agency Order 
representing the purchase of the Strategy at a net debit of 3.29, 500 
times. Auto-match is not enabled.
    Since the order price is at least $0.01 better than (inside) the 
icMBBO and the best net price of any order for the Strategy on the 
Book, a cPRIME Auction can begin.
    An RFR is broadcast to all subscribers showing price, the quantity 
of matched complex orders at that price, and the side of the cPRIME 
Agency Order, is sent and a 500 millisecond RFR period is started.
    The following responses are received:

 @50 milliseconds BD1 response, cAOC Order @3.25 credit sell of 
100 arrives
 @150 milliseconds MM1 response, cAOC eQuote @3.27 credit sell 
of 100 arrives
 @200 milliseconds MM3 response, cAOC eQuote @3.29 credit sell 
of 200 arrives
 @300 milliseconds MM4 response, cAOC eQuote @3.29 credit sell 
of 200 arrives

    The cPRIME Auction process will continue until the Response Time 
Interval ends. When the 500 millisecond Response Time Interval ends, 
the cPRIME Auction process will trade the cPRIME Agency Order with the 
best priced responses. The cPRIME Agency order will be filled as 
follows:

 The cPRIME Agency Order buys 100 from BD1 @3.25
 The cPRIME Agency Order buys 100 from MM1 @3.27
 At the final price, the cPRIME Agency Order buys:

--50 from MM3 @3.29;
--50 from MM4 @3.29; and
--200 (40%) from the cPRIME Contra Order @3.29.

    The following example illustrates the execution of a cPRIME Order 
with the auto-match election:
Example 4--A cPRIME Order Is Executed (With Auto-Match)
MIAX-LMM Mar 50 Call 6.00-6.50 (10x10)
MIAX-LMM Mar 55 Call 3.00-3.30 (10x10)
Strategy: Buy 1 Mar 50 Call, Sell 1 Mar 55 Call

The icMBBO is 2.70 debit bid at 3.50 credit offer
The dcMBBO is 2.70 debit bid at 3.50 credit offer

    The Strategy Book contains a Priority Customer offer to sell the 
Strategy at 3.30 credit, 20 times.
    The Exchange receives a cPRIME Order with the cPRIME Agency Order 
representing the purchase of the Strategy at a net debit of 3.29, 500 
times. Auto-match has been enabled with an auto-match limit price of 
3.25.
    Since the order price is at least $0.01 better than (inside) the 
icMBBO and the best net price of any order for the Strategy on the 
Book, a cPRIME Auction can begin.
    An RFR is broadcast to all subscribers showing price, the quantity 
of matched complex orders at that price, and the side of the cPRIME 
Agency Order, is sent and a 500 millisecond RFR period is started.
    The following responses are received:

 @50 milliseconds BD1 response, cAOC Order @3.25 credit sell of 
100 arrives
 @150 milliseconds MM1 response, cAOC eQuote @3.27 credit sell 
of 300 arrives

    The cPRIME Auction process will continue until the Response Time 
Interval ends. When the 500 millisecond Response Time Interval ends, 
the cPRIME Auction process will trade the Agency Order with the best 
priced responses. The Agency Order will be filled as follows:

 At the interim price, the cPRIME Agency Order buys:

--100 from BD1 @3.25; and
--100 (auto-match RFR Response) from the cPRIME Contra Order @3.25.

 At the final price, the cPRIME Agency Order buys:

--150 from MM1 @3.27; and
--150 (auto-match 50% of the remaining Agency Order size) from the 
cPRIME Contra Order @3.27

    The following example illustrates the execution of a cPRIME Order 
that legs into the simple market:
Example 5--A cPRIME Order Is Executed (by Legging Into the Simple 
Market)
MIAX-LMM Mar 50 Call 6.00-6.50 (10x10)
MIAX-LMM Mar 55 Call 3.00-3.30 (10x10)

Strategy: Buy 1 Mar 50 Call, Sell 1 Mar 55 Call

The icMBBO is 2.70 debit bid at 3.50 credit offer
The dcMBBO is 2.70 debit bid at 3.50 credit offer

    The Strategy Book contains a Priority Customer offer to sell the 
Strategy at 3.30 credit, 20 times.
    The Exchange receives a cPRIME Order with the cPRIME Agency Order 
representing the purchase of the Strategy at a net debit of 3.29, 500 
times. Auto-match is not enabled.
    Since the order price is at least $0.01 better than (inside) the 
icMBBO and the best net price of any order for the Strategy on the 
Book, a cPRIME Auction can begin.
    An RFR is broadcast to all subscribers showing price, the quantity 
of matched complex orders at that price, and the side of the cPRIME 
Agency Order, is sent and a 500 millisecond RFR period is started.
    The following responses are received:

 @150 milliseconds MM2 response, cAOC Order @3.28 credit sell 
of 100 arrives
 @200 milliseconds MM1 response, cAOC Order @3.27 credit sell 
of 300 arrives
 @300 milliseconds the MIAX LMM improves its offer to sell 10 
Mar 50 Calls to a price of 6.25

    The offer to sell 10 Mar 50 Calls @6.25 changes the icMBBO credit 
offer to 3.25, crossing the Auction Start Price and causing the cPRIME 
Auction process to be terminated immediately.
    The cPRIME Auction process will trade the Agency Order with the 
best priced liquidity opposite the Agency Order according to the 
allocation process contained in Rule 515A. The Agency Order will be 
filled as follows:

 The cPRIME Agency Order buys:

--10 from legging into the Simple market icMBBO @3.25 (buy 10 Mar 50 
Calls at 6.25, and sell 10 Mar 55 Calls at 3.00); and

[[Page 25353]]

--300 from MM1 @3.27; and
--100 from MM2 @3.28; and
--90 from the cPRIME Contra Order @3.29

    There are certain circumstances that are unique to cPRIME Orders 
(such as when a component of the cPRIME Order is in a certain state), 
where the System will reject the cPRIME Order. Accordingly, proposed 
Interpretations and Policies .12(b) describes each of these specific 
circumstances. Specifically, the System will reject a cPRIME Agency 
Order if, at the time of receipt of the cPRIME Agency Order: (i) The 
strategy is subject to a cPRIME Auction or to a Complex Auction 
pursuant to Rule 518(d); (ii) any component of the strategy is subject 
to a SMAT Event as described in Rule 518(a)(16); or (iii) any component 
of the strategy is subject to the managed interest process described in 
Rule 515(c)(1)(ii). The purpose of this provision is to maintain an 
orderly market by avoiding simultaneous multiple cPRIME Auctions and 
multiple concurrent PRIME, cPRIME and Complex Auctions, and to avoid 
executions during a Route Timer \35\ or liquidity refresh pause \36\ 
that could affect the price of the components and of the strategy.
---------------------------------------------------------------------------

    \35\ For those initiating Public Customer orders that are 
routable, but do not meet the additional criteria for Immediate 
Routing, the System will implement a Route Timer not to exceed one 
second (the duration of the Timer will be announced to Members 
through a Regulatory Circular), in order to allow Market Makers and 
other participants an opportunity to interact with the initiating 
order. See Exchange Rule 529(b)(2)(i).
    \36\ The System will pause the market for a time period not to 
exceed one second to allow additional orders or quotes refreshing 
the liquidity at the MBBO to be received (``liquidity refresh 
pause'') when at the time of receipt or reevaluation of the 
initiating order by the System: (A) Either the initiating order is a 
limit order whose limit price crosses the NBBO or the initiating 
order is a market order, and the limit order or market order could 
only be partially executed; (B) a Market Maker quote was all or part 
of the MBBO when the MBBO is alone at the NBBO; and (C) and the 
Market Maker quote was exhausted. See Exchange Rule 515(c)(2).
---------------------------------------------------------------------------

    The Exchange believes that, if the System were to accept and 
process cPRIME Agency Orders during the various circumstances described 
in proposed Interpretations and Policies .12(b) to Rule 515A, market 
participants could be faced with a number of simultaneous PRIME, cPRIME 
and/or Complex Auctions involving the same strategy or component, which 
in turn could have an impact the orderly functioning of the markets.
    Proposed Interpretations and Policies .12(c) to Rule 515A describes 
various other situations that are unique to, or otherwise apply 
specifically to, cPRIME Orders. The purpose of this provision is to 
``carve out'' rules for cPRIME Orders for which the rules for simple 
PRIME Orders do not apply and to otherwise make clear in the Exchange's 
rules the manner in which cPRIME Orders will be processed and executed 
under the proposal. Accordingly, proposed Interpretations and Policies 
.12(c) states that, notwithstanding the provisions of this Rule 515A 
with respect to PRIME, the following shall apply to cPRIME Orders only.
    Proposed Interpretations and Policies .12(c)(i) to Rule 515A states 
that the RFR period for cPRIME Auctions shall be independent from the 
RFR for PRIME Auctions and shall last for a period of time set forth in 
Rule 515A(a)(2)(i)(C). The current RFR period for PRIME Auctions is 500 
milliseconds.\37\
---------------------------------------------------------------------------

    \37\ The Exchange notes that, on April 13, 2017, it filed with 
the Commission a proposed rule change (SR-MIAX-2017-16) that would 
amend the duration of the RFR period contained in Rule 
515A(a)(2)(i)(c) so that the duration can be a period of time within 
a range of no less than 100 milliseconds and no more than 1 second, 
as determined by the Exchange and announced via Regulatory Circular. 
If approved, such provision would allow a separate and potentially 
different time period for simple PRIME Auctions and cPRIME Auctions, 
provided that each time period is within the permissible range. The 
Exchange notes that MIAX's proposed rule change to amend the 
duration of a PRIME Auction was published in the Federal Register on 
May 5, 2017 and is subject to a public comment period expiring on 
May 26, 2017. See Securities Exchange Act Release No. 80570 (May 1, 
2017), 82 FR 21288 (May 5, 2017) (SR-MIAX-2017-16) Notice of Filing 
of a Proposed Rule Change to Amend MIAX Options Rule 515A, MIAX 
Price Improvement Mechanism (``PRIME'') and PRIME Solicitation 
Mechanism.
---------------------------------------------------------------------------

    The Exchange is proposing to adopt Interpretations and Policies 
.12(c)(ii) to Rule 515A which states that participants that submit 
simple orders that are executed as individual legs of complex orders at 
the execution price point will be allocated contracts only after all 
complex interest at such price point have received allocations. cPRIME 
Orders are matched first against other complex orders and have priority 
over simple orders that are on the Book and ``legged,'' at the 
execution price, regardless of the origin code of the simple order. The 
Exchange believes that this is appropriate because the initiating price 
of the cPRIME Agency Order is always superior to the net price of 
simple orders resting on the Simple Order Book. The Agency Order is 
submitted at an improved price with an accompanying contra side order 
(principal or solicited interest) that is intended to trade with all 
components of the Agency Order at a net price at the time of 
submission. Simple orders resting on the Book do not necessarily intend 
to trade with the legs of the Agency Order, and thus the Exchange 
believes that it is equitable and not unfairly discriminatory to afford 
priority to complex interest over simple interest.
    Additionally, under the proposal, when new interest is received in 
the simple market that causes the icMBBO on the opposite side of the 
market from the cPRIME Agency Order to be equal to or better than the 
initiating price, the cPRIME Auction ends before the expiration of the 
RFR period. In this situation, the receipt of such an order simply ends 
the cPRIME Auction and the execution and allocation process is 
accelerated, prior to the end of the RFR period.
    Regardless of when the cPRIME Auction ends, contracts are first 
allocated by matching complex strategies; thereafter, contracts that 
are executed by way of Legging \38\ complex strategy components against 
the Book are allocated among the complex strategies, and then finally 
among the simple orders on the Book that are matched with components of 
the Legged strategy. Thus, the allocation process is not changed, and 
simple orders resting on the book that may be executed by way of 
Legging are still subject to complex order priority interest and are 
allocated contracts only after all complex interest has been filled at 
that price. The Exchange believes that it is consistent, equitable and 
not unfairly discriminatory to afford priority to complex interest over 
simple interest even when Complex Auction ends early.\39\
---------------------------------------------------------------------------

    \38\ See Exchange Rule 518(c)(2)(iii).
    \39\ The Exchange notes that other exchanges afford priority to 
complex interest over simple interest. See, e.g., NASDAQ PHLX, LLC 
(``PHLX'') Rule 1098(e)(vi)(A)(2); see also, PHLX Rule 
1098(e)(viii)(C)(3).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to afford priority to 
complex orders in cPRIME over simple orders is appropriate because it 
rewards participants that assume greater market risk and actively 
improves the execution price by submitting complex RFR responses in a 
cPRIME Auction. A simple order on the Book is not responding to an RFR 
for price improvement, and thus the Exchange believes that it is 
equitable and not unfairly discriminatory to afford priority to complex 
orders in a cPRIME Auction over simple orders on the MIAX Options Book. 
The Exchange believes that affording priority to complex interest over 
simple interest on the Simple Order Book is consistent with Section 
6(b) of the Act \40\ in general, and furthers the objectives of Section 
6(b)(5)

[[Page 25354]]

of the Act \41\ in particular, in that it promotes just and equitable 
principles of trade by affording priority to participants submitting 
cPRIME Orders and RFR responses that are intended to improve the then-
existing price on the Exchange. The Exchange believes that affording 
this priority encourages participants to submit more price-improving 
complex orders, and that they should be rewarded with priority over 
simple orders that are resting on the Simple Order Book that were not 
submitted or intended to be price improving orders.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78f(b).
    \41\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The following example illustrates the execution and allocation of a 
cPRIME Order (with simple interest allocated after all complex interest 
has been allocated):
Example 6--A cPRIME Order Is Executed (Simple Interest Allocated After 
Complex Interest)
MIAX-LMM Mar 50 Call 6.00-6.50 (10x10)
MIAX-LMM Mar 55 Call 3.00-3.30 (10x10)

Strategy: Buy 1 Mar 50 Call, Sell 1 Mar 55 Call

The icMBBO is 2.70 debit bid at 3.50 credit offer
The dcMBBO is 2.70 debit bid at 3.50 credit offer

    The Strategy Book contains a Priority Customer offer to sell the 
Strategy at 3.30 credit, 20 times.
    The Exchange receives a cPRIME Order with the cPRIME Agency Order 
representing the purchase of the Strategy at a net debit of 3.29, 500 
times. Auto-match is not enabled.
    Since the order price is at least $0.01 better than (inside) the 
icMBBO and the best net price of any order for the Strategy on the 
Book, a cPRIME Auction can begin.
    An RFR is broadcast to all subscribers showing price, the quantity 
of matched complex orders at that price, and the side of the cPRIME 
Agency Order, is sent and a 500 millisecond RFR period is started.
    The following responses are received:

 @250 milliseconds MM2 response, cAOC Order @3.25 credit sell 
of 500 arrives
 @300 milliseconds the MIAX LMM improves its offer to sell 10 
Mar 50 Calls to a price of 6.25

    The offer to sell 10 Mar 50 Calls @6.25 changes the icMBBO credit 
offer to 3.25, crossing the Auction Start Price and causing the cPRIME 
Auction process to be terminated immediately.
    The cPRIME Auction process will trade the Agency Order with the 
best priced liquidity opposite the Agency Order according to the 
allocation process contained in Rule 515A. The Agency Order will be 
filled as follows:

 The cPRIME Agency Order buys:

--500 from MM2 @3.25
--Simple Interest receives no allocation

    Proposed Interpretations and Policies .12(c)(iii) to Rule 515A 
states that the size and bid/ask differential provisions contained in 
Exchange Rule 515A(a)(1)(iii) \42\ shall not apply to cPRIME Orders. 
Rule 515A(a)(1) is intended to apply to simple PRIME Auctions, and not 
to apply to complex orders.\43\ Under Rule 515A(a)(1)(iii), with 
respect to Agency Orders that have a size of less than 50 contracts, if 
at the time of receipt of the Agency Order, the NBBO has a bid/ask 
differential of $0.01, the System will reject the Agency Order. This 
rule would not apply to complex orders, including cPRIME Orders, 
because the NBBO is not a consideration in determining the execution 
price of a complex order.\44\
---------------------------------------------------------------------------

    \42\ With respect to Agency Orders that have a size of less than 
50 contracts, if at the time of receipt of the Agency Order, the 
NBBO has a bid/ask differential of $0.01, the System will reject the 
Agency Order. See Exchange Rule 515A(a)(1)(iii).
    \43\ In late 2016, the Exchange filed to adopt new Rule 
515A(a)(1)(iii), upon the expiration of a Pilot, to establish on a 
permanent basis that, with respect to Agency Orders that have a size 
of less than 50 contracts, if at the time of receipt of the Agency 
Order, the NBBO has a bid/ask differential of $0.01, the System will 
reject the Agency Order. Agency Orders with a size of under 50 
contracts will be accepted and processed by the System when the NBBO 
bid/ask differential is greater than $0.01, and all Agency Orders 
with a size of 50 contracts or greater will be accepted and 
processed by the System, regardless of the NBBO bid/ask 
differential. The Pilot and Rule 515A(a)(1)(iii) do not apply to 
Complex Orders. See Securities Exchange Act Release No. 79837 
(January 18, 2017), 82 FR 8472 (January 25, 2017) (SR-MIAX-2016-46).
    \44\ See proposed Exchange Rule 515A, Interpretations and 
Policies .12(a)(v).
---------------------------------------------------------------------------

    Proposed Interpretations and Policies .12(c)(iv) to Rule 515A 
states that the conclusion of auction provisions contained in Rule 
515A(a)(2)(ii) shall not apply to cPRIME Auctions. Rather, the Exchange 
is proposing to adopt a separate set of provisions relating to the 
conclusion of auctions that apply only to cPRIME Auctions, in proposed 
Interpretations and Policies .12(d), discussed below.
    Proposed Rule 515A, Interpretations and Policies .12(c)(v), states 
that the order allocation provisions contained in Rule 515A(a)(2)(iii) 
shall apply to cPRIME Auctions, provided that (A) all references to 
contracts shall be deemed to be references to complex strategies; \45\ 
and (B) the last priority allocation option described in Rule 
515A(a)(2)(iii)(L) is not available for Initiating Members that submit 
cPRIME Agency Orders. With respect to cPRIME Auctions, the System 
allocates complex strategies, not contracts. Additionally, the last 
priority allocation option described in Rule 515A(a)(iii)(L) \46\ is 
not available for Initiating Members that submit cPRIME Agency Orders. 
The Exchange believes that there is not significant Member demand for 
the use of the last priority allocation option in cPRIME Auctions, 
which obviates the need for its inclusion in the allocation model for 
cPRIME Auctions.
---------------------------------------------------------------------------

    \45\ The term ``complex strategy'' means a particular 
combination of components and their ratios to one another. New 
complex strategies can be created as the result of the receipt of a 
complex order or by the Exchange for a complex strategy that is not 
currently in the System. The Exchange may limit the number of new 
complex strategies that may be in the System at a particular time 
and will communicate this limitation to Members via Regulatory 
Circular. See Exchange Rule 518(a)(6).
    \46\ If the Initiating Member elected to have last priority in 
allocation when submitting an Agency Order to initiate an Auction 
against a single-price submission, the Initiating Member will be 
allocated only the amount of contracts remaining, if any, after the 
Agency Order is allocated to all other responses at the single price 
specified by the Initiating Member. See Exchange Rule 
515A(a)(iii)(L).
---------------------------------------------------------------------------

    Finally, proposed Interpretations and Policies .12(c)(vi), which 
states that provisions contained in Interpretations and Policies .06 
and .07 of Rule 515A shall not apply to cPRIME Auctions. 
Interpretations and Policies .06 and .07 relate to the managed interest 
process and route timers on the same and opposite sides of the Agency 
Order in PRIME Auctions. Proposed Interpretations and Policies .12(b) 
specifically states that cPRIME Agency Orders will be rejected if 
received during these conditions. Therefore, Interpretations and 
Policies .06 and .07 will not apply to cPRIME Auctions.
Conclusion of the cPRIME Auction
    Proposed Interpretations and Policies .12(d) to Rule 515A describes 
the circumstances under which a cPRIME Auction is concluded. Proposed 
Interpretations and Policies .12(d)(i) to Rule 515A states that the 
cPRIME Auction shall conclude at the sooner to occur of the following 
events (described below) with the cPRIME Agency Order executing 
pursuant to proposed Rule 515A(2)(iii).
    First, a cPRIME Auction will conclude at the end of the RFR period. 
This completes the cPRIME Auction.
    A cPRIME Auction will conclude when an AOC eQuote \47\ or cAOC

[[Page 25355]]

Order \48\ (the permitted RFR responses \49\) on the opposite side of 
the market from the cPRIME Agency Order locks or crosses: (A) The 
icMBBO, or (B) the best net price of a complex order in the same 
strategy on the Strategy Book, whichever is more aggressive.
---------------------------------------------------------------------------

    \47\ A ``Complex Auction or Cancel eQuote'' or ``cAOC eQuote,'' 
is an eQuote submitted by a Market Maker that is used to provide 
liquidity during a specific Complex Auction with a time in force 
that corresponds with the duration of the Complex Auction. See 
Exchange Rule 518, Interpretations and Policies .02(c)(1).
    \48\ A Complex Auction-or-Cancel or ``cAOC'' order is a complex 
limit order used to provide liquidity during a specific Complex 
Auction with a time in force that corresponds with that event. See 
Exchange Rule 518(b)(3).
    \49\ Members may submit responses to the RFR (specifying prices 
and sizes). RFR responses shall be an Auction or Cancel (``AOC'') 
order or an AOC eQuote. See Exchange Rule 515A(a)(2)(i)(D). This 
applies by reference to cPRIME Auctions (and cAOC eQuotes and cAOC 
orders). See proposed Interpretations and Policies .12(a).
---------------------------------------------------------------------------

    Pursuant to proposed Interpretations and Policies .12(d)(iii) to 
Rule 515A, a cPRIME Auction will conclude when unrelated interest on 
the same side of the market as the cPRIME Agency Order locks or crosses 
the best price on the opposite side of the market.
    Proposed Interpretations and Policies .12(d)(iv) to Rule 515A 
states that a cPRIME Auction will conclude when unrelated interest on 
the opposite side of the market from the cPRIME Agency Order (A) locks 
or crosses (1) the icMBBO, or (2) the best net price of a complex order 
in the same strategy on the Strategy Book, whichever is more aggressive 
(e.g., a higher bid or lower offer); or (B) improves the price of any 
RFR response.
    Under proposed Interpretations and Policies .12(d)(v) to Rule 515A, 
a cPRIME Auction will conclude when a simple order or quote in a 
component of the strategy on the same side of the market as the cPRIME 
Agency Order locks or crosses the NBBO for such component. Proposed 
Interpretations and Policies .12(d)(vi) states that a cPRIME Auction 
will conclude when a simple order or quote in a component of the 
strategy on the opposite side of the market from the cPRIME Agency 
Order (A) locks or crosses the NBBO for such component, or (B) causes 
the icMBBO to be equal to or better than the initiating price. These 
provisions ensure that a cPRIME Agency Order will always receive the 
best price on the Exchange, while at the same time preserving the 
sanctity of the simple market.
Allocation of Contracts at the Conclusion of the cPRIME Auction
    Except as provided in proposed Interpretations and Policies .12(c) 
to Rule 515A, at the conclusion of the Auction, the cPRIME Order will 
be allocated in the same manner as simple PRIME Orders in the simple 
PRIME Auction at the best price(s) as set forth in Rule 515A. Proposed 
Interpretations and Policies .12(c)(v) states that the order allocation 
provisions contained in Rule 515A(a)(2)(iii) shall apply to cPRIME 
Auctions, provided that, as described above: All references to 
contracts shall be deemed to be references to complex strategies as 
defined in Rule 518(a)(6); and the last priority allocation option 
described in Rule 515A(a)(2)(iii)(L) is not available for Initiating 
Members that submit cPRIME Agency Orders.
    Exchange Rule 515A(a)(2)(iii) currently provides that at the 
conclusion of the PRIME Auction, the Agency Order will be allocated at 
the best price(s), subject to the following: (A) Such best prices 
include non-Auction quotes and orders; (B) Priority Customer \50\ 
orders resting on the Book before, or that are received during, the 
Response Time Interval and Priority Customer RFR responses shall, 
collectively have first priority to trade against the Agency Order. The 
allocation of an Agency Order against the Priority Customer orders 
resting in the Book, Priority Customer orders received during the 
Response Time Interval, and Priority Customer RFR responses shall be in 
the sequence in which they are received by the System; (C) Market Maker 
priority quotes and RFR responses from Market Makers \51\ with priority 
quotes will collectively have second priority. The allocation of Agency 
Orders against these contra sided quotes and RFR responses shall be on 
a size pro rata basis as defined in Rule 514(c)(2); (D) Professional 
Interest orders resting in the Book, Professional Interest orders 
placed in the Book during the Response Time Interval, Professional 
Interest quotes, and Professional Interest RFR responses will 
collectively have third priority. The allocation of Agency Orders 
against these contra sided orders and RFR Responses shall be on a size 
pro rata basis as defined in Rule 514(c)(2); (E) No participation 
entitlement shall apply to orders executed pursuant to this Rule; (F) 
If an unrelated market or marketable limit order on the opposite side 
of the market as the Agency Order was received during the Auction and 
ended the Auction, such unrelated order shall trade against the Agency 
Order at the midpoint of the best RFR response (or in the absence of a 
RFR response, the initiating price) and the NBBO on the other side of 
the market from the RFR responses (rounded towards the disseminated 
quote when necessary). (G) If an unrelated non-marketable limit order 
on the opposite side of the market as the Agency Order was received 
during the Auction and ended the Auction, such unrelated order shall 
trade against the Agency Order at the midpoint of the best RFR response 
and the unrelated order's limit price (rounded towards the unrelated 
order's limit price when necessary).
---------------------------------------------------------------------------

    \50\ See supra note 6.
    \51\ 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.
---------------------------------------------------------------------------

    Rules 515A(a)(2)(iii)(H) and (I) describe the allocation of 
contracts executed when the Initiating Member selects the single-price 
submission or the auto-match option, respectively, when submitting 
their Agency Order and there are either two or more participants at the 
execution price or when there is only one other participant on parity 
with the Initiating Member at either the single price execution price 
or at the final auto-match price point.
    Exchange Rules 515A(a)(2)(iii)(H) and (I) currently state that, 
upon conclusion of an Auction, an Initiating Member will retain certain 
priority and trade allocation privileges for a single-price submission 
and for an auto-match submission. Under current Rule 
515A(a)(2)(iii)(H), if the best price equals the Initiating Member's 
single-price submission, the Initiating Member's single-price 
submission shall be allocated the greater of one contract or a certain 
percentage of the order, which percentage will be determined by the 
Exchange and may not be larger than 40% of the Agency Order. However, 
if only one Member's response matches the Initiating Member's single 
price submission, then the Initiating Member may be allocated up to 50% 
of the Agency Order.
    Similarly, current Exchange Rule 515A(a)(2)(iii)(I) provides that 
if the Initiating Member selected the auto-match option of the Auction, 
the Initiating Member shall be allocated its

[[Page 25356]]

full size of RFR responses at each price point until the final auto-
match price point is reached. At the final auto-match price point, the 
Initiating Member shall be allocated the greater of one contract \52\ 
or a certain percentage of the remainder of the Agency Order, which 
percentage will be determined by the Exchange and may not be larger 
than 40%. However, if only one Member's response matches the Initiating 
Member's submission at the final auto-match price point, then the 
Initiating Member may be allocated up to 50% of the remainder of the 
Agency Order at the final auto-match price point.
---------------------------------------------------------------------------

    \52\ Under the proposal, with respect to order allocation, all 
references to contracts shall be deemed to be references to complex 
strategies. See Proposed Rule 515A, Interpretations and Policies 
.12(c)(v)(A).
---------------------------------------------------------------------------

    At the conclusion of the Auction, the Agency Order is allocated at 
the best price(s) pursuant to the matching algorithm in effect for the 
class.\53\ The System first must determine the number of participants 
that are entitled to receive contracts to be allocated, and whether any 
participant(s) such as Priority Customers are entitled to receive 
contracts first. Thereafter, contracts are allocated among participants 
at the execution price.
---------------------------------------------------------------------------

    \53\ See Exchange Rule 515A(a)(2)(iii).
---------------------------------------------------------------------------

    Finally, the Exchange is proposing to amend Rule 518(c) to clarify 
that the processing and execution of these three new complex order 
types is governed by Exchange Rule 515 (for cC2C Orders and cQCC 
Orders) and Exchange Rule 515A (for cPRIME Orders), as specified in the 
definition of each new complex order type under 518(b).
    As a technical numbering matter, the Exchange is proposing to mark 
Interpretations and Policies .10 and .11 to Rule 515A ``Reserved'' 
because these two numbers are being used in a separate proposed rule 
change which has not been published as of the filing date of the 
instant proposed rule change.
    The Exchange will announce the implementation date of the proposed 
rule change by Regulatory Circular to be published no later than 60 
days following the operative date of the proposed rule. The 
implementation date will be no later than 60 days following the 
issuance of the Regulatory Circular.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \54\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \55\ 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 regulating, clearing, settling, 
processing information with respect to, and 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.
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 78f(b).
    \55\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposal to amend Exchange Rules 515, 515A, and 518 to 
establish three new complex order types, and to adopt new provisions 
that relate to the processing of those new complex order types is 
consistent with Section 6(b)(5) of the Act because this proposal 
promotes just and equitable principles of trade and protects investors 
and the public interest by providing increased opportunities for the 
execution of complex orders. The Exchange believes that the new cC2C, 
cQCC, and cPRIME order types will benefit MIAX Options participants and 
the marketplace as a whole by providing more ways in which complex 
orders are able to interact with one another, and in some instances 
through Legging with the simple market. The Exchange believes the 
proposed rule change removes impediments to and perfects the mechanism 
of a free and open market and a national market system and will result 
in more efficient trading and enhance the likelihood that complex 
orders execute at the best prices by providing additional order types 
resulting in potentially greater liquidity available for trading on the 
Exchange.
    The proposed rule change will make existing functionality available 
to additional order types. Making PRIME available for complex orders 
removes impediments to and perfects the mechanisms of a free and open 
market and a national market system because Members will be given 
additional ways in which they can seek liquidity for complex orders 
with the potential for price improvement on the Exchange.
    The proposed rule change will protect investors and the public 
interest by assuring that the existing priority and allocation rules 
applicable to the processing and execution of Customer Cross Orders, 
QCC Orders, and PRIME Orders remains consistent with the processing and 
execution of these new order types, unless as otherwise specifically 
set forth in the rules.
    The Exchange believes that the requirement that the execution of 
cC2C be at least $0.01 better than (inside) either the icMBBO price or 
the best net price of a complex order on the Strategy Book, whichever 
is more aggressive, protects investors and the public interest by 
ensuring that each side of the cC2C Order receives a better price than 
it would receive if submitted as a single complex order. MIAX Options 
participants will thus receive the best prices available for both sides 
of a cC2COrder.
    The Exchange further believes that the proposed methodology for the 
execution of cQCC Orders without consideration of the NBBO of the stock 
component is consistent with the Plan. As stated above, the Plan 
provides an exception to the requirement that Participants establish, 
maintain and enforce written policies and procedures that are 
reasonably designed to prevent Trade-Throughs when the transaction that 
constituted the Trade-Through was effected as a portion of a ``complex 
trade,'' as defined in the rules of a Participant.\56\ Therefore, the 
System considers the NBBO for each option leg of the cQCC Order, and 
not the NBBO for the stock component, in calculating the pricing 
requirement for cQCC Orders.
---------------------------------------------------------------------------

    \56\ See supra note 25.
---------------------------------------------------------------------------

    The System does not consider the NBBO price for the stock component 
because the Exchange does not execute the stock component; the Exchange 
executes the option components at a net price and ensures that the 
execution price of each option component of the strategy is (i) not at 
the same price as a Priority Customer Order on the Exchange's Book; and 
(ii) at or between the NBBO. The Exchange does require that the Member 
entering the cQCC Order provide certain information to the Exchange 
regarding the execution of the stock component, such as the underlying 
price, quantity, price delta, execution time and executing venue.\57\
---------------------------------------------------------------------------

    \57\ See supra note 27.
---------------------------------------------------------------------------

    This complex pricing requirement aligns with the simple order 
pricing requirement for a Qualified Contingent Trade (``QCT'') to 
consider the NBBO price. In each case, the parties to a contingent 
trade are focused on the spread or ratio between the transaction prices 
for each of the component instruments (i.e., the net price of the 
entire contingent trade), rather than on the absolute price of any 
single component. Pursuant to the requirements of the NMS QCT 
Exemption, the spread or ratio between the relevant instruments must be 
determined at the time the order is placed, and this spread or ratio 
stands regardless of the market prices of the individual orders at 
their time of execution. As the Commission noted in the Original QCT 
Exemption, ``the

[[Page 25357]]

difficulty of maintaining a hedge, and the risk of falling out of 
hedge, could dissuade participants from engaging in contingent trades, 
or at least raise the cost of such trades.'' Thus, the Commission found 
that, if each stock leg of a qualified contingent trade were required 
to meet the trade-through provisions of Rule 611 of Regulation NMS, 
such trades could become too risky and costly to be employed 
successfully and noted that the elimination or reduction of this 
trading strategy potentially could remove liquidity from the 
market.\58\ This is also true for QCC Orders in options, and thus the 
Exchange believes that its proposal is consistent with the Original QCT 
Exemption.\59\
---------------------------------------------------------------------------

    \58\ See supra note 28.
    \59\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the proposal to reject a cC2C or cQCC 
Order at the time of receipt of the Order when any component of the 
strategy is subject to a PRIME Auction, Complex Auction, or a SMAT 
Event removes impediments to and perfects the mechanisms of a free and 
open market and a national market system by avoiding concurrent order 
processing in the same security on the Exchange.
    The Exchange believes that the rejection of cC2C Orders and cQCC 
Orders when the strategy is subject to a cPRIME or Complex Auction 
removes impediments to and perfects the mechanisms of a free and open 
market by ensuring orderly markets involving multiple complex orders 
with common components.
    Similarly, the proposed rejection of cPRIME Agency Orders when the 
strategy is subject to a cPRIME Auction or a Complex Auction, or any 
component of the strategy is subject to a SMAT Event or the managed 
interest process, protects investors and the public interest by 
ensuring that the strategy and its components are handled by the System 
in an orderly fashion without multiple simultaneous cPRIME Auctions, 
SMAT Events or the managed interest processes.
    The Exchange also believes that the pricing requirements under 
which the initiating price for a cPRIME Agency Order must be better 
than (inside) the icMBBO for the strategy and any other complex orders 
on the Strategy Book perfects the mechanisms of a free and open market 
and a national market system and, in general, protects investors and 
the public interest, by ensuring that the initiating price results in 
executions in cPRIME Auctions at an improved price or prices.
    The proposal to establish rules setting forth the various 
circumstances under which the system will conclude cPRIME Auction is 
designed to facilitate transactions, to remove impediments to and 
perfect the mechanism of a free and open market by freeing up interest 
in the cPRIME Auction when unrelated orders or other conditions cause 
the initiating price of the cPRIME Order to no longer be at the best 
price available to market participants.
    The Exchange believes that its proposal to afford priority to 
complex orders in cPRIME over simple orders is appropriate because it 
rewards participants that assume greater market risk and actively 
improve the execution price by submitting complex RFR responses in a 
cPRIME Auction. A simple order on the Book is not responding to an RFR 
for price improvement, and thus the Exchange believes that it is 
equitable and not unfairly discriminatory to afford priority to complex 
orders in a cPRIME Auction over simple orders on the Simple Order Book. 
The Exchange believes that affording priority to complex interest over 
simple interest on the Simple Order Book promotes just and equitable 
principles of trade by affording priority to participants submitting 
cPRIME Orders and RFR responses that are intended to improve the 
execution price on the Exchange. The Exchange believes that affording 
this priority encourages participants to submit more price-improving 
complex orders, and that they should be rewarded with priority over 
simple orders that are resting on the Simple Order Book that were not 
submitted or intended to be price improving orders.
    Additionally, when the cPRIME Auction ends prior to the expiration 
of the RFR period due to the receipt of new interest that causes the 
icMBBO to be equal to or better than the initiating price, the Exchange 
believes that it is equitable and not unfairly discriminatory to 
continue to afford priority at each price point to complex interest 
over simple interest resting on the Simple Order Book that is executed 
against the individual legs of a complex order. In this situation, the 
new interest is arriving after complex orders at the same price; the 
receipt of such an order simply ends the cPRIME Auction and the 
execution and allocation process is accelerated, prior to the end of 
the RFR period. The allocation process is not changed, and simple 
orders resting on the book that may be executed by way of Legging are 
still subject to complex order priority interest at each price point 
and are allocated contracts only after all complex interest at that 
price has been filled. The Exchange believes that it is consistent and 
equitable and not unfairly discriminatory to afford priority at each 
price point to complex interest over simple interest even when the 
cPRIME Auction ends early.
    The Exchange also believes that the proposed rule change removes 
impediments to and perfects the mechanisms of a free and open market 
and a national market system by attracting more order flow and by 
increasing the frequency with which Initiating Members initiate 
Auctions in complex orders through PRIME, using complex orders. 
Moreover, the proposed rule change is consistent with the rules of 
other exchanges.\60\
---------------------------------------------------------------------------

    \60\ See International Securities Exchange LLC (``ISE'') Rule 
723, Supplementary Materials .09; Chicago Board Options Exchange, 
Inc. (``CBOE'') Rule 6.74, Interpretations and Policies .07; NASDAQ 
PHLX LLC (``Phlx'') Rule 1080(n).
---------------------------------------------------------------------------

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.
    On the contrary, the proposed rule change is intended to promote 
competition by adding new order types that enable MIAX Options 
participants to execute complex orders on the Exchange. The Exchange 
believes that this enhances inter-market competition by enabling MIAX 
Options to compete for this type of order flow with other exchanges 
that have similar rules and functionalities in place.
    The Exchange further believes that adding complex orders to the 
PRIME mechanism enhances intra-market competition by adding another 
manner in which competing MIAX Options participants may submit 
competitive bids and offers into the System. This should result in 
enhanced liquidity and more competition on the Exchange.
    For all the reasons stated, the Exchange does not believe that 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 in fact 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.

[[Page 25358]]

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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-2017-19 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-2017-19. 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-2017-19 and should be 
submitted on or before June 22, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\61\
---------------------------------------------------------------------------

    \61\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11251 Filed 5-31-17; 8:45 am]
BILLING CODE 8011-01-P



                                                                                 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                 25347

                                                  designated as proprietary, pursuant to 5                of proposed ACRS reports. [Note: A                    available through the NRC Public
                                                  U.S.C. 552b(c)(4)].                                     portion of this session may be closed in              Document Room at pdr.resource@
                                                    5:15 p.m.–6:00 p.m.: Preparation of                   order to discuss and protect information              nrc.gov, or by calling the PDR at 1–800–
                                                  ACRS Reports (Open/Closed)—The                          designated as proprietary, pursuant to 5              397–4209, or from the Publicly
                                                  Committee will discuss proposed ACRS                    U.S.C. 552b(c)(4)].                                   Available Records System (PARS)
                                                  reports on matters discussed during this                   1:00 p.m.–5:30 p.m.: Preparation of                component of NRC’s document system
                                                  meeting. [Note: A portion of this session               ACRS Reports (Open/Closed)—The                        (ADAMS) which is accessible from the
                                                  may be closed in order to discuss and                   Committee will continue its discussion                NRC Web site at http://www.nrc.gov/
                                                  protect information designated as                       of proposed ACRS reports. [Note: A                    reading-rm/adams.html or http://
                                                  proprietary, pursuant to 5 U.S.C.                       portion of this session may be closed in              www.nrc.gov/reading-rm/doc-
                                                  552b(c)(4)].                                            order to discuss and protect information              collections/ACRS/.
                                                                                                          designated as proprietary, pursuant to 5                 Video teleconferencing service is
                                                  Thursday, June 8, 2017, Conference
                                                                                                          U.S.C. 552b(c)(4)].                                   available for observing open sessions of
                                                  Room T–2B1, 11545 Rockville Pike,                          5:30 p.m.–6:00 p.m.: Miscellaneous
                                                  Rockville, Maryland 20852                                                                                     ACRS meetings. Those wishing to use
                                                                                                          (Open)—The Committee will continue                    this service should contact Mr. Theron
                                                     8:30 a.m.–8:35 a.m.: Opening                         its discussion related to the conduct of              Brown, ACRS Audio Visual Technician
                                                  Remarks by the ACRS Chairman                            Committee activities and specific issues              (301–415–8066), between 7:30 a.m. and
                                                  (Open)—The ACRS Chairman will make                      that were not completed during                        3:45 p.m. (ET), at least 10 days before
                                                  opening remarks regarding the conduct                   previous meetings, as time and                        the meeting to ensure the availability of
                                                  of the meeting.                                         availability of information permit.                   this service. Individuals or
                                                     8:35 a.m.–10:30 a.m.: Proposed Rule                     Procedures for the conduct of and                  organizations requesting this service
                                                  and Draft Regulatory Guide DG–5062 on                   participation in ACRS meetings were                   will be responsible for telephone line
                                                  Cyber Security for Fuel Cycle Facilities                published in the Federal Register on                  charges and for providing the
                                                  (Open)—The Committee will hear                          October 17, 2016 (81 FR 71543). In                    equipment and facilities that they use to
                                                  briefings by and hold discussions with                  accordance with those procedures, oral                establish the video teleconferencing
                                                  representatives of the NRC staff                        or written views may be presented by                  link. The availability of video
                                                  regarding the subject activities.                       members of the public, including                      teleconferencing services is not
                                                     10:45 a.m.–12:15 p.m.: Future ACRS                   representatives of the nuclear industry.              guaranteed.
                                                  Activities/Report of the Planning and                   Persons desiring to make oral statements
                                                  Procedures Subcommittee and                             should notify Quynh Nguyen, Cognizant                   Dated at Rockville, Maryland, this 25th day
                                                  Reconciliation of ACRS Comments and                                                                           of May, 2017.
                                                                                                          ACRS Staff (Telephone: 301–415–5844,
                                                  Recommendations (Open/Closed)—The                       Email: Quynh.Nguyen@nrc.gov), 5 days                    For the Nuclear Regulatory Commission.
                                                  Committee will discuss the                              before the meeting, if possible, so that              Andrew L. Bates,
                                                  recommendations of the Planning and                     appropriate arrangements can be made                  Advisory Committee Management Officer.
                                                  Procedures Subcommittee regarding                       to allow necessary time during the                    [FR Doc. 2017–11268 Filed 5–31–17; 8:45 am]
                                                  items proposed for consideration by the                 meeting for such statements. In view of               BILLING CODE 7590–01–P
                                                  Full Committee during future ACRS                       the possibility that the schedule for
                                                  Meetings, and matters related to the                    ACRS meetings may be adjusted by the
                                                  conduct of ACRS business, including                     Chairman as necessary to facilitate the               SECURITIES AND EXCHANGE
                                                  anticipated workload and member                         conduct of the meeting, persons                       COMMISSION
                                                  assignments. The Committee will                         planning to attend should check with
                                                                                                          the Cognizant ACRS staff if such                      [Release No. 34–80768; File No. SR–MIAX–
                                                  discuss the responses from the NRC
                                                                                                                                                                2017–19]
                                                  Executive Director for Operations to                    rescheduling would result in major
                                                  comments and recommendations                            inconvenience.                                        Self-Regulatory Organizations; Miami
                                                  included in recent ACRS reports and                        Thirty-five hard copies of each                    International Securities Exchange LLC;
                                                  letters. [Note: A portion of this meeting               presentation or handout should be                     Notice of Filing of a Proposed Rule
                                                  may be closed pursuant to 5 U.S.C.                      provided 30 minutes before the meeting.               Change To Amend MIAX Options Rules
                                                  552b(c)(2) and (6) to discuss                           In addition, one electronic copy of each              515, Execution of Orders and Quotes;
                                                  organizational and personnel matters                    presentation should be emailed to the                 515A, MIAX Price Improvement
                                                  that relate solely to internal personnel                Cognizant ACRS Staff one day before                   Mechanism (‘‘PRIME’’) and PRIME
                                                  rules and practices of the ACRS, and                    meeting. If an electronic copy cannot be              Solicitation Mechanism; and 518,
                                                  information the release of which would                  provided within this timeframe,                       Complex Orders
                                                  constitute a clearly unwarranted                        presenters should provide the Cognizant
                                                  invasion of personal privacy.]                          ACRS Staff with a CD containing each                  May 25, 2017.
                                                     1:00 p.m.–6:00 p.m.: Preparation of                  presentation at least 30 minutes before                  Pursuant to the provisions of Section
                                                  ACRS Reports (Open/Closed)—The                          the meeting.                                          19(b)(1) of the Securities Exchange Act
                                                  Committee will continue its discussion                     In accordance with Subsection 10(d)                of 1934 (‘‘Act’’) 1 and Rule 19b–4
                                                  of proposed ACRS reports. [Note: A                      of Public Law 92–463 and 5 U.S.C.                     thereunder,2 notice is hereby given that
                                                  portion of this session may be closed in                552b(c), certain portions of this meeting             on May 12, 2017, Miami International
                                                  order to discuss and protect information                may be closed, as specifically noted                  Securities Exchange, LLC (‘‘MIAX
                                                  designated as proprietary, pursuant to 5                above. Use of still, motion picture, and              Options’’ or ‘‘Exchange’’) filed with the
                                                  U.S.C. 552b(c)(4)].                                     television cameras during the meeting                 Securities and Exchange Commission
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                          may be limited to selected portions of                (‘‘Commission’’) a proposed rule change
                                                  Friday, June 9, 2017, Conference Room                   the meeting as determined by the                      as described in Items I, II, and III below,
                                                  T–2B1, 11545 Rockville Pike, Rockville,                 Chairman. Electronic recordings will be               which Items have been prepared by the
                                                  Maryland 20852                                          permitted only during the open portions               Exchange. The Commission is
                                                    8:30 a.m.–12:00 p.m.: Preparation of                  of the meeting.
                                                  ACRS Reports (Open/Closed)—The                             ACRS meeting agendas, meeting                        1 15   U.S.C. 78s(b)(1).
                                                  Committee will continue its discussion                  transcripts, and letter reports are                     2 17   CFR 240.19b–4.



                                             VerDate Sep<11>2014   18:32 May 31, 2017   Jkt 241001   PO 00000   Frm 00124   Fmt 4703   Sfmt 4703   E:\FR\FM\01JNN1.SGM     01JNN1


                                                  25348                          Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  publishing this notice to solicit                       Customer Cross Orders 4 and Qualified                    Rule 515(h)(4) (relating to cQCC
                                                  comments on the proposed rule change                    Contingent Cross (‘‘QCC’’) Orders 5 in                   Orders). Rules 515(h)(3) and (4) include
                                                  from interested persons.                                the Exchange’s simple market. A                          processing and execution requirements
                                                                                                          Customer Cross Order is comprised of a                   for cC2C Orders and cQCC Orders that
                                                  I. Self-Regulatory Organization’s
                                                                                                          Priority Customer 6 Order to buy and a                   differ from the processing and execution
                                                  Statement of the Terms of Substance of                  Priority Customer Order to sell at the                   requirements under 515(h)(1) and (2) for
                                                  the Proposed Rule Change                                same price and for the same quantity. A                  Customer Cross Orders and QCC Orders,
                                                     The Exchange is filing a proposal to                 Customer Cross Order is not valid                        respectively.
                                                  amend Exchange Rules 515, Execution                     during the opening rotation process                         Exchange Rule 515A currently
                                                  of Orders and Quotes; 515A, MIAX                        described in Rule 503.7 A QCC Order is                   permits the entry and execution of
                                                  Price Improvement Mechanism                             comprised of an originating order to buy                 PRIME Orders 11 and PRIME Solicitation
                                                  (‘‘PRIME’’) and PRIME Solicitation                      or sell at least 1,000 contracts, or 10,000              Orders 12 in the Exchange’s simple
                                                  Mechanism; and 518, Complex Orders.                     mini-option contracts, that is identified                market. PRIME is a price-improvement
                                                     The text of the proposed rule change                 as being part of a qualified contingent                  mechanism of the Exchange’s System
                                                  is available on the Exchange’s Web site                 trade,8 as that term is defined in Rule                  pursuant to which a Member 13
                                                  at http://www.miaxoptions.com/rule-                     516, Interpretations and Policies .01,                   (‘‘Initiating Member’’) electronically
                                                  filings, at MIAX’s principal office, and                coupled with a contra-side order or                      submits an order that it represents as
                                                  at the Commission’s Public Reference                    orders totaling an equal number of                       agent (an ‘‘Agency Order’’) into a PRIME
                                                  Room.                                                   contracts. A QCC Order is not valid                      Auction (‘‘Auction’’). The Initiating
                                                                                                          during the opening rotation process                      Member, in submitting an Agency
                                                  II. Self-Regulatory Organization’s
                                                                                                          described in Rule 503.9                                  Order, must be willing to either (i) cross
                                                  Statement of the Purpose of, and
                                                                                                             Customer Cross Orders and QCC                         the Agency Order at a single price (a
                                                  Statutory Basis for, the Proposed Rule
                                                                                                          Orders are processed in a crossing                       ‘‘single-price submission’’) against
                                                  Change
                                                                                                          mechanism of the Exchange’s System 10                    principal or solicited interest, or (ii)
                                                    In its filing with the Commission, the                designed specifically for the execution                  automatically match (‘‘auto-match’’),
                                                  Exchange included statements                            of those order types, and Rule 515(h)                    against principal or solicited interest,
                                                  concerning the purpose of and basis for                 contains order processing and execution                  the price and size of responses to a
                                                  the proposed rule change and discussed                  requirements that are unique to these                    Request for Response (‘‘RFR’’) that is
                                                  any comments it received on the                         order types. The Exchange proposes to                    broadcast to MIAX Options participants
                                                  proposed rule change. The text of these                 use that same crossing mechanism for                     up to an optional designated limit
                                                  statements may be examined at the                       the processing and execution of cC2C                     price.14
                                                  places specified in Item IV below. The                  Orders and cQCC Orders. Accordingly,
                                                  Exchange has prepared summaries, set                    the Exchange is proposing to modify                         PRIME Orders are processed in the
                                                  forth in sections A, B, and C below, of                 Rule 515(h) so that it also permits the                  PRIME mechanism of the Exchange’s
                                                  the most significant aspects of such                    execution of cC2C Orders and cQCC                        System that is designed specifically for
                                                  statements.                                             Orders, through the adoption of Rule                     the execution of those order types.
                                                                                                          515(h)(3) (relating to cC2C Orders) and                  Accordingly, Rule 515A contains order
                                                  A. Self-Regulatory Organization’s                                                                                processing and execution requirements
                                                  Statement of the Purpose of, and                          4 See                                                  that are unique to these order types. The
                                                                                                                   Exchange Rule 515(h)(1).
                                                  Statutory Basis for, the Proposed Rule                    5 See  Exchange Rule 515(h)(2).                        Exchange proposes to utilize that same
                                                  Change                                                     6 The term ‘‘Priority Customer’’ means a person       PRIME mechanism for the processing
                                                  1. Purpose                                              or entity that (i) is not a broker or dealer in          and execution of cPRIME Orders.
                                                                                                          securities, and (ii) does not place more than 390        Accordingly, the Exchange is proposing
                                                    The Exchange proposes to amend                        orders in listed options per day on average during
                                                                                                          a calendar month for its own beneficial account(s).
                                                                                                                                                                   to modify Rule 515A so that it also
                                                  Exchange Rules 515, Execution of                        See Exchange Rule 100.                                   permits the execution of cPRIME
                                                  Orders and Quotes; 515A, MIAX Price                        7 See Exchange Rule 516(i).                           Orders, through certain modifications to
                                                  Improvement Mechanism (‘‘PRIME’’)                          8 A ‘‘qualified contingent trade’’ is a transaction   Rule 515A(a) and the adoption of
                                                  and PRIME Solicitation Mechanism; and                   consisting of two or more component orders,              Interpretations and Policies .12 (PRIME
                                                  518, Complex Orders, to establish three                 executed as agent or principal, where: (a) At least
                                                                                                          one component is an NMS Stock, as defined in Rule
                                                                                                                                                                   for Complex Orders). Interpretations
                                                  new types of complex orders,3 and to                    600 of Regulation NMS under the Act; (b) all             and Policies .12 includes processing and
                                                  adopt new provisions that relate to the                 components are effected with a product or price          execution requirements for cPRIME
                                                  processing of those new complex order                   contingency that either has been agreed to by all the    Orders that differ from the processing
                                                  types. In particular, the Exchange is                   respective counterparties or arranged for by a
                                                                                                          broker-dealer as principal or agent; (c) the execution
                                                  proposing to modify those rules to                      of one component is contingent upon the execution          11 See Exchange Rule 515A(a).
                                                  permit the entry and execution of                       of all other components at or near the same time;          12 See Exchange Rule 515A(b).
                                                  Complex Customer Cross (‘‘cC2C’’)                       (d) the specific relationship between the component        13 The term ‘‘Member’’ means an individual or

                                                  Orders, Complex Qualified Contingent                    orders (e.g., the spread between the prices of the       organization approved to exercise the trading rights
                                                                                                          component orders) is determined by the time the          associated with a Trading Permit. Members are
                                                  Cross (‘‘cQCC’’) Orders, and Complex                    contingent order is placed; (e) the component            deemed ‘‘members’’ under the Act. See Exchange
                                                  PRIME (‘‘cPRIME’’) Orders, each as                      orders bear a derivative relationship to one another,    Rule 100.
                                                  discussed more fully below.                             represent different classes of shares of the same          14 See Exchange Rule 515A(a)(2)(i). When the
                                                                                                          issuer, or involve the securities of participants in     Exchange receives a properly designated Agency
                                                  Background                                              mergers or with intentions to merge that have been       Order for auction processing, an RFR detailing the
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                                                                                                          announced or cancelled; and (f) the transaction is       option, side, size, and initiating price will be sent
                                                    Exchange Rule 515(h) currently                        fully hedged (without regard to any prior existing       to all subscribers of the Exchange’s data feeds. The
                                                  permits the entry and execution of                      position) as a result of other components of the         RFR currently lasts for 500 milliseconds. Members
                                                                                                          contingent trade. See Exchange Rule 516,                 may submit responses to the RFR (specifying prices
                                                    3 For a description of the trading of complex         Interpretations and Policies .01.                        and sizes). RFR responses shall be an Auction or
                                                                                                             9 See Exchange Rule 516(j).
                                                  orders on the Exchange, see Exchange Rule 518. See                                                               Cancel (‘‘AOC’’) order or an AOC eQuote. Such
                                                  also, Securities Exchange Act Release No. 79072            10 The term ‘‘System’’ means the automated            responses cannot cross the disseminated MIAX Best
                                                  (October 7, 2016), 81 FR 71131 (October 14, 2016)       trading system used by the Exchange for the trading      Bid or Offer (‘‘MBBO’’) on the opposite side of the
                                                  (SR–MIAX–2016–26).                                      of securities. See Exchange Rule 100.                    market from the response.



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                                                                                  Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                      25349

                                                  and execution requirements under                         to ensure that each participant in the                      As a regulatory matter, proposed Rule
                                                  515A(a) for simple PRIME Orders.                         complex order receives a better price                    515(h)(3)(C) states that Rule 520,
                                                    The Exchange is also proposing to                      than it would receive if submitted as a                  Interpretations and Policies .01 21
                                                  amend Exchange Rule 518, which                           single complex order, and to ensure that                 applies to the entry and execution of
                                                  governs the processing and execution of                  there is no interference between the                     cC2C Orders.
                                                  complex orders on the Exchange. In                       simple and complex markets.                                 Proposed Rule 515(h)(3)(D) states that
                                                  particular, Rule 518(b) lists and defines                   The System will reject a cC2C Order                   the Exchange will determine, on a class-
                                                  complex order types that are available                   if, at the time of receipt of the cC2C                   by-class basis, the option classes in
                                                  for trading on the Exchange.15                           Order, (i) the strategy is subject to a                  which cC2C Orders are available for
                                                  Accordingly, the Exchange proposes to                    cPRIME Auction pursuant to Rule 515A                     trading on the Exchange, and will
                                                  amend Rule 518(b) to list and define the                 proposed Interpretations and Policies                    announce such classes to Members via
                                                  three new complex order types: cC2C,                     .12, or to a Complex Auction pursuant                    Regulatory Circular.
                                                  cQCC, and cPRIME.                                        to Rule 518(d); or (ii) any component of                    The following example illustrates the
                                                  cC2C Orders                                              the strategy is subject to a SMAT Event                  execution of a cC2C Order:
                                                                                                           as described in Rule 518(a)(16).18 The                   Example 1—A cC2C Order Is Executed
                                                     As discussed above, the Exchange
                                                                                                           purpose of this provision is to maintain
                                                  proposes to use the same crossing                                                                                 MIAX–LMM Mar 50 Call 6.00–6.50
                                                                                                           an orderly market by avoiding the
                                                  mechanism for the processing and                                                                                    (10x10)
                                                                                                           execution of cC2C Orders with
                                                  execution of cC2C Orders that is used                                                                             MIAX–LMM Mar 55 Call 3.00–3.30
                                                                                                           components that are involved in other
                                                  for Customer Cross Orders in the simple                                                                             (10x10)
                                                                                                           System functions (specifically a PRIME
                                                  market. Accordingly, proposed Rule
                                                                                                           Auction, Route Timer, or liquidity                       Strategy: Buy 1 Mar 50 Call, Sell 1 Mar
                                                  515(h)(3) shall govern the trading of
                                                                                                           refresh pause) that could affect the                       55 Call
                                                  cC2C Orders, as defined in Rule
                                                                                                           execution price of the cC2C Order, and                   The icMBBO is 2.70 debit bid at 3.50
                                                  518(b)(5), on MIAX Options.
                                                                                                           by avoiding concurrent processing on                       credit offer
                                                     Proposed Rule 518(b)(5) defines a
                                                                                                           the Exchange involving the same                          The dcMBBO is 2.70 debit bid at 3.50
                                                  cC2C Order as a type of complex order
                                                                                                           security. This methodology for the                         credit offer
                                                  which is comprised of one Priority
                                                                                                           handling of cC2C Orders differs
                                                  Customer complex order to buy and one                                                                               The Strategy Book contains a Priority
                                                                                                           somewhat from the methodology for
                                                  Priority Customer complex order to sell                                                                           Customer offer to sell the Strategy at
                                                                                                           handling Customer Cross Orders,
                                                  (the same strategy) at the same price                                                                             3.30 credit, 20 times.
                                                                                                           wherein the System will not reject a
                                                  (which must be better than (inside) the                                                                             The Exchange receives a cC2C Order
                                                                                                           cC2C Order when a component of the
                                                  icMBBO 16 or the best net price of the                                                                            representing Priority Customers on both
                                                                                                           strategy is subject to the managed
                                                  complex order on the Strategy Book 17                                                                             sides for the simultaneous purchase and
                                                                                                           interest process 19 pursuant to Rule
                                                  for the strategy, whichever is more                                                                               sale of the strategy at a net price of 3.29,
                                                                                                           515(c) (as the System would reject a
                                                  aggressive) and for the same quantity.                                                                            500 times.
                                                     Proposed Rule 515(h)(3) describes the                 Customer Cross Order in the simple
                                                                                                           market during such a condition). A                         Since the order price is at least $0.01
                                                  execution price requirements that are                                                                             better than (inside) the icMBBO and the
                                                  specific for cC2C Orders. Specifically,                  cC2C Order already has a guaranteed
                                                                                                           execution price at the better of $0.01                   best net price of any order for the
                                                  cC2C Orders are automatically executed                                                                            Strategy on the Strategy Book, the cC2C
                                                  upon entry provided that the execution                   inside the icMBBO price or at the best
                                                                                                           net price of a complex order on the                      order is automatically executed upon
                                                  is at least $0.01 better than (inside) the                                                                        entry.
                                                  icMBBO (as defined in Rule 518(a)(11))                   Strategy Book. Therefore, it is not
                                                  price or the best net price of a complex                 necessary or desirable to reject and                     cQCC Orders
                                                  order (as defined in Rule 518(a)(5)) on                  thereby preclude the execution of a
                                                                                                                                                                      As discussed above, the Exchange
                                                  the Strategy Book (as defined in Rule                    cC2C Order in this circumstance.
                                                                                                                                                                    proposes to use the same crossing
                                                  518(a)(17)), whichever is more                              Proposed Rule 515(h)(3)(A) states that                mechanism for the processing and
                                                  aggressive (i.e., the higher bid and/or                  cC2C Orders will be automatically                        execution of cQCC Orders that is used
                                                  lower offer). The purpose of the                         cancelled if they cannot be executed.
                                                  requirement that the execution be at the                 Proposed Rule 515(h)(3)(B) provides                      components of the complex order. See Exchange
                                                  more aggressive price of either the                      that cC2C Orders may only be entered                     Rule 518(c)(1)(i).
                                                  icMBBO or the best net price of the                      in the minimum trading increments                           21 Rule 520(b) prevents an Electronic Exchange

                                                  complex order on the Strategy Book is                    applicable to complex orders under                       Member from executing agency orders to increase
                                                                                                           Rule 518(c)(1)(i).20                                     its economic gain from trading against the order
                                                                                                                                                                    without first giving other trading interest on the
                                                     15 Exchange Rule 518(b), Types of Complex
                                                                                                                                                                    Exchange an opportunity to either trade with the
                                                  Orders, lists the various complex orders available          18 A Simple Market Auction or Timer, or ‘‘SMAT’’
                                                                                                                                                                    agency order or to trade at the execution price when
                                                  for trading on the Exchange. The Exchange is             Event, is defined as any of the following: (i) A         the Member was already bidding or offering on the
                                                  proposing to add two new complex order types,            PRIME Auction (pursuant to Rule 515A); (ii) a            Book. However, the Exchange recognizes that it may
                                                  cC2C and cQCC Orders, to this rule.                      Route Timer (pursuant to Rule 529); or (iii) a           be possible for an Electronic Exchange Member to
                                                     16 The Implied Complex MIAX Best Bid or Offer         liquidity refresh pause (pursuant to Rule 515(c)(2)).    establish a relationship with a customer or other
                                                  (‘‘icMBBO’’) is a calculation that uses the best price   See Exchange Rule 518(a)(16).                            person (including affiliates) to deny agency orders
                                                  from the Simple Order Book (defined below) for              19 Under the managed interest process, if the limit
                                                                                                                                                                    the opportunity to interact on the Exchange and to
                                                  each component of a complex strategy including           price of a non-routable order locks or crosses the       realize similar economic benefits as it would
                                                  displayed and non-displayed trading interest. For        current opposite side NBBO, the System will              achieve by executing agency orders as principal. It
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                                                  stock-option orders, the icMBBO for a complex            display the order one Minimum Price Variation            will be a violation of Rule 520(b) for an Electronic
                                                  strategy will be calculated using the best price         away from the current opposite side NBBO, and            Exchange Member to be a party to any arrangement
                                                  (whether displayed or non-displayed) on the              book the order at a price that will lock the current     designed to circumvent Rule 520(b) by providing an
                                                  Simple Order Book (defined below) in the                 opposite side NBBO. See Exchange Rule 515(c)(ii).        opportunity for a customer or other person
                                                  individual option component(s), and the NBBO in             20 Bids and offers on complex orders and quotes       (including affiliates) to regularly execute against
                                                  the stock component. See Exchange Rule 518(a)(11).       may be expressed in $0.01 increments, and the            agency orders handled by the Electronic Exchange
                                                     17 The ‘‘Strategy Book’’ is the Exchange’s            component(s) of a complex order may be executed          Member immediately upon their entry into the
                                                  electronic book of complex orders and complex            in $0.01 increments, regardless of the minimum           System. See Exchange Rule 520, Interpretations and
                                                  quotes. See Exchange Rule 518(a)(17).                    increments otherwise applicable to individual            Policies .01.



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                                                  25350                          Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  for QCC Orders in the simple market.22                  (ii) at or between the NBBO. The                      provision is intended to maintain an
                                                  Accordingly, proposed Rule 515(h)(4)                    Exchange does require that the Member                 orderly market by avoiding the
                                                  shall govern the trading of cQCC Orders,                entering a QCC Order provide certain                  execution of cQCC Orders with
                                                  as defined in Rule 518(b)(6), on MIAX                   information to the Exchange regarding                 components that are involved in other
                                                  Options.                                                the execution of the stock component,                 System functions (specifically a PRIME
                                                     Proposed Rule 518(b)(6) defines a                    such as the underlying price, quantity,               Auction, Route Timer, or liquidity
                                                  cQCC Order as a type of complex order                   price delta, execution time and                       refresh pause) that could affect the
                                                  which is comprised of a complex order                   executing venue.27 The Exchange will                  execution price of the cQCC Order, and
                                                  to buy or sell where each component is                  require this same information from                    by avoiding concurrent processing on
                                                  at least 1,000 contracts that is identified             Members with respect to cQCC Orders.                  the Exchange involving the same
                                                  as being part of a qualified contingent                    This complex pricing requirement                   security. For the same reasons as
                                                  trade, as defined in Rule 516,                          aligns with the simple order pricing                  described above with respect to cC2C
                                                  Interpretations and Policies .01,23                     requirement for a Qualified Contingent                Orders, the System will not reject a
                                                  coupled with a contra-side complex                      Trade (‘‘QCT’’) to consider the NBBO                  cQCC Order when a component of the
                                                  order or orders (for the same strategy)                 price. In each case, the parties to a                 strategy that is subject to the managed
                                                  totaling an equal number of contracts.                  contingent trade are focused on the                   interest process pursuant to Rule 515(c)
                                                     Proposed Rule 515(h)(4) mirrors the                  spread or ratio between the transaction               (as the System would reject a QCC
                                                  execution price requirements for simple                 prices for each of the component                      Order in the simple market during such
                                                  QCC Orders by providing that cQCC                       instruments (i.e., the net price of the               a condition).
                                                  Orders are automatically executed upon                  entire contingent trade), rather than on                 Proposed Rule 515(h)(4)(A) states that
                                                  entry provided that, with respect to each               the absolute price of any single                      cQCC Orders will be automatically
                                                  option leg of the cQCC Order, the                       component. Pursuant to the                            cancelled if they cannot be executed.
                                                  execution (i) is not at the same price as               requirements of the NMS QCT                           Proposed Rule 515(h)(4)(B) provides
                                                  a Priority Customer Order on the                        Exemption, the spread or ratio between                that cQCC Orders may only be entered
                                                  Exchange’s Book; 24 and (ii) is at or                   the relevant instruments must be                      in the minimum trading increments
                                                  between the NBBO. The purpose of the                    determined at the time the order is                   applicable to complex orders under
                                                  requirement that each option leg be                     placed, and this spread or ratio stands               Rule 518(c)(1)(i).30
                                                  executed at or between the NBBO is to                   regardless of the market prices of the                   Just as with cC2C Orders, proposed
                                                  ensure that no option component of the                  individual orders at their time of                    Rule 515(h)(4)(C)states that the
                                                  cQCC Order trades through the NBBO.                     execution. As the Commission noted in                 Exchange will determine, on a class-by-
                                                  The purpose of the requirement that                     the Original QCT Exemption, ‘‘the                     class basis, the option classes in which
                                                  each option leg be executed at a price                  difficulty of maintaining a hedge, and                cQCC Orders are available for trading on
                                                  better than any Priority Customer on the                the risk of falling out of hedge, could               the Exchange, and will announce such
                                                  Book is to ensure that no option                        dissuade participants from engaging in                classes to Members via Regulatory
                                                  component of the cQCC Order trades                      contingent trades, or at least raise the              Circular.
                                                  ahead of a Priority Customer Order.                     cost of such trades.’’ Thus, the                         The following example illustrates the
                                                     The Options Order Protection and                     Commission found that, if each stock leg              execution of a cQCC Order:
                                                  Locked/Crossed Markets Plan (the                        of a qualified contingent trade were
                                                                                                          required to meet the trade-through                    Example 2—A cQCC Order Is Executed
                                                  ‘‘Plan’’), provides an exception to the
                                                  requirement that Participants establish,                provisions of Rule 611 of Regulation                  MIAX–LMM Mar 50 Call 6.00–6.50
                                                  maintain and enforce written policies                   NMS, such trades could become too                       (10x10—no Priority Customer
                                                  and procedures that are reasonably                      risky and costly to be employed                         interest)
                                                  designed to prevent Trade-Throughs                      successfully and noted that the                       MIAX–LMM Mar 55 Call 3.00–3.30
                                                  when the transaction that constituted                   elimination or reduction of this trading                (10x10—no Priority Customer
                                                  the Trade-Through was effected as a                     strategy potentially could remove                       interest)
                                                  portion of a ‘‘complex trade,’’ as defined              liquidity from the market.28 This is also             ABBO—Mar 50 Call 6.00–6.30 (10x10)
                                                  in the rules of a Participant.25                        true for QCC Orders in options, and thus              ABBO—Mar 55 Call 3.00–3.30 (10x10)
                                                     The System does not consider the                     the Exchange believes that its proposal               NBBO—Mar 50 Call 6.00–6.30 (20x10)
                                                  NBBO price for the stock component                      is consistent with the Original QCT                   NBBO—Mar 55 Call 3.00–3.30 (20x20)
                                                  because the Exchange does not execute                   Exemption.                                            Strategy: Buy 1 Mar 50 Call, Sell 1 Mar
                                                  the stock component; the Exchange                          The System will reject a cQCC Order                  55 Call
                                                  executes the option components at a net                 if, at the time of receipt of the cQCC                The icMBBO is 2.70 debit bid at 3.50
                                                  price and ensures that the execution                    Order, (i) the strategy is subject to a                 credit offer
                                                  price of each option component of the                   cPRIME Auction pursuant to proposed                   The dcMBBO is 2.70 debit bid at 3.50
                                                  strategy is (i) not at the same price as a              Rule 515A, Interpretations and Policies                 credit offer
                                                  Priority Customer Order on the                          .12, or to a Complex Auction pursuant                 The ABBO is 2.70 debit bid at 3.30
                                                  Exchange’s Simple Order Book; 26 and                    to Rule 518(d); or any component of the                 credit offer
                                                                                                          strategy is subject to a SMAT Event as
                                                                                                                                                                  The Exchange receives a cQCC Order
                                                    22 See Exchange Rule 515(h)(2).                       described in Rule 518(a)(16).29 This
                                                                                                                                                                representing Public Customers on both
                                                    23 See supra note 8.
                                                    24 The term ‘‘Book’’ means the electronic book of     supra note 24) and ‘‘Simple Order Book’’ have the
                                                                                                                                                                sides for the simultaneous purchase and
                                                                                                                                                                sale of the strategy at a net price of 3.30,
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                                                  buy and sell orders and quotes maintained by the        same meaning and are interchangeable.
                                                  System. See Exchange Rule 100.                             27 See MIAX Options Regulatory Circular No.        1000 times along with information
                                                    25 See Section 5(b)(viii) of the Plan. See also,      2015–47 (October 2, 2015), describing Regulatory      regarding the execution of the stock
                                                  Exchange Rule 1401(b)(7).                               Requirements when entering a Qualified Contingent     component relating to the crossing of
                                                    26 The ‘‘Simple Order Book’’ is the Exchange’s        Cross Order.
                                                                                                             28 See Securities Exchange Act Release No. 54389
                                                                                                                                                                20,000 shares of the underlying security
                                                  regular electronic book of orders and quotes, as
                                                  defined in Exchange Rule 518, Complex Orders. See       (August 31, 2006), 71 FR 52829 (September 7, 2006)    (which information related to a separate
                                                  Exchange Rule 518(a)(15). For purposes of the           (‘‘Original QCT Exemption’’).
                                                  instant proposed rule change, the terms ‘‘Book’’ (see      29 See supra note 18.                                30 See   supra note 20.



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                                                                                 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                    25351

                                                  order that was sent to the stock                        Agency Order has been stopped. The                    bids and offers for complex orders may
                                                  execution venue by the Clearing                         Exchange is proposing to delete the last              participate in the execution of an order
                                                  Member previously identified to the                     sentence of Rule 515A(a)(2)(i)(D) which               as provided in MIAX Options Rule
                                                  Exchange as a Designated Give Up for                    states simply that such RFR responses                 515A. The purpose of this provision is
                                                  the Member that submitted the cQCC                      cannot cross the disseminated MBBO on                 to clarify that cPRIME Auctions,
                                                  Order in accordance with the Rule).                     the opposite side of the market from the              including the RFR and RFR responses,
                                                    Since the order can be executed at or                 response. Such a response would result                will, with certain exceptions described
                                                  between the NBBO for each leg of the                    in the conclusion of the Auction under                herein, be handled and executed in the
                                                  Strategy, is not at the same price as a                 current Rule 515A(2)(ii)(E), which states             same manner as simple PRIME
                                                  Priority Customer Order on the                          that the Auction will conclude any time               Auctions.
                                                  Exchange’s Simple Order Book, and the                   an RFR response matches the NBBO on
                                                  order size and underlying security                                                                               Proposed Interpretations and Policies
                                                                                                          the opposite side of the market from the
                                                  requirements have been met, the cQCC                                                                          .12(a)(iii) to Rule 515A states that,
                                                                                                          RFR responses. The Exchange is
                                                  Order is automatically executed upon                    proposing to delete the last sentence of              except as provided in proposed
                                                  entry.                                                  Rule 515A(a)(2)(i)(D), because the NBBO               Interpretations and Policies .12(c)
                                                    The Exchange is proposing the same                    cannot be outside, or inferior to, the                (described below), with respect to bids
                                                  price execution requirements that are                   MBBO, and an RFR response therefore                   and offers for the individual legs of a
                                                  currently in place on other exchanges.31                could not cross the MBBO without                      complex order entered into cPRIME, the
                                                                                                          matching or crossing the NBBO, which                  order allocation rules contained in Rule
                                                  Complex PRIME Orders                                                                                          514 will apply. This ensures that simple
                                                                                                          stops the Auction. This provision in
                                                     As discussed above, the Exchange                     Rule 515A(a)(2)(i)(D) is unnecessary and              orders on the Exchange’s Simple Order
                                                  proposes to use the same PRIME                          should be deleted.                                    Book are allocated under the simple
                                                  mechanism for the processing and                           Proposed Interpretations and Policies              order allocation rules when they are
                                                  execution of cPRIME Orders that is used                 .12(a) to Rule 515A includes general                  executed against the legs of a complex
                                                  for PRIME Orders in the simple market.                  rules applicable to cPRIME Orders and                 order.
                                                  The manner in which cPRIME Orders                       cPRIME Auctions. Under the proposal,                     Proposed Interpretations and Policies
                                                  will be processed and executed will be                  Members may use PRIME to execute                      .12(a)(iv) to Rule 515A states that, if an
                                                  the same as the manner in which simple                  complex orders at a net price. In order               improved net price for the complex
                                                  PRIME Orders are currently processed                    to distinguish PRIME Auctions                         order being executed can be achieved
                                                  and executed, except as otherwise                       involving simple PRIME Orders from                    from bids and offers for the individual
                                                  provided in proposed Interpretations                    cPRIME Auctions involving cPRIME                      legs of the complex order in the simple
                                                  and Policies .12 to Rule 515A.                          Orders, the Exchange is proposing to                  market, and the complex order is
                                                  Accordingly, proposed Interpretations                   add new defined terms to                              otherwise eligible for Legging pursuant
                                                  and Policies .12, PRIME for Complex                     Interpretations and Policies .12(a).                  to Rule 518(c)(2)(iii),33 the Strategy
                                                  Orders, states that, unless otherwise                   Proposed Interpretations and Policies                 being matched will receive an execution
                                                  provided in Interpretations and Policies                .12(a) states that ‘‘cPRIME’’ is the                  at the better net price. The purpose of
                                                  .12 to Rule 515A or unless the context                  process by which a Member may                         this provision is to ensure that the
                                                  otherwise requires, the provisions of                   electronically submit a ‘‘cPRIME Order’’              Exchange will provide the best net price
                                                  Exchange Rule 515A(a) (which governs                    (as defined in proposed Rule 518(b)(7))               available on the Exchange, whether by
                                                  the processing and execution of simple                  it represents as agent (a ‘‘cPRIME                    way of matching strategies or by way of
                                                  PRIME orders) shall be applicable to the                Agency Order’’) against principal or                  Legging with the Simple Order Book, as
                                                  trading of complex orders on PRIME.                     solicited interest for execution (a
                                                     Proposed Rule 518(b)(7) defines a                                                                          long as the complex order is eligible for
                                                                                                          ‘‘cPRIME Auction’’). The Exchange is                  Legging.
                                                  cPRIME Order as a type of complex                       proposing to adopt these new terms for
                                                  order that is submitted for participation               clarity and ease of reference.                           Proposed Interpretations and Policies
                                                  in a cPRIME Auction. Trading of                            Proposed Interpretations and Policies              .12(a)(v) to Rule 515A states that all
                                                  cPRIME Orders is governed by Rule                       .12(a)(i) to Rule 515A states that the                references to the NBBO in Rule 515A
                                                  515A, Interpretations and Policies .12.                 initiating price for a cPRIME Agency
                                                     The Exchange will determine, on a                    Order must be better than (inside) the                  33 Complex orders up to a maximum number of

                                                  class-by-class basis, the option classes                icMBBO 32 for the strategy and any other              legs (determined by the Exchange on a class-by-
                                                  in which complex orders are available                                                                         class basis as either two or three legs and
                                                                                                          complex orders on the Strategy Book.                  communicated to Members via Regulatory Circular)
                                                  for trading on PRIME on the Exchange,                   This ensures that the execution price of              may be automatically executed against bids and
                                                  and will announce such classes to                       the cPRIME Agency Order improves the                  offers on the Simple Order Book for the individual
                                                  Members via Regulatory Circular.                        best price on the Exchange at the time                legs of the complex order (‘‘Legging’’), provided the
                                                     The Exchange is proposing to amend                                                                         complex order can be executed in full or in a
                                                                                                          of receipt, and that there is no                      permissible ratio by such bids and offers, and
                                                  Rule 515A(a)(2)(D) by stating clearly in                interference between the simple and                   provided that the execution price of each
                                                  the rule that the System will reject RFR                complex markets. The System will reject               component is not executed at a price that is outside
                                                  responses submitted with a price that is                cPRIME Agency Orders submitted with                   of the NBBO. Legging is not available for cAOC
                                                  not equal to or better than the initiating                                                                    orders, complex Standard quotes, complex eQuotes,
                                                                                                          an initiating price that is equal to or               or stock-option orders. Notwithstanding the
                                                  price. The purpose of this proposal is to               worse than (outside) the icMBBO or any                foregoing, complex orders with two option legs
                                                  avoid the handling of RFR responses by                  other complex orders on the Strategy                  where both legs are buying or both legs are selling
                                                  the System that could not be executed                   Book.                                                 and both legs are calls or both legs are puts may
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                                                  in an Auction because they are inferior                                                                       only trade against other complex orders on the
                                                                                                             Proposed Interpretations and Policies              Strategy Book and will not be permitted to leg into
                                                  to the initiating price, at which the                   .12(a)(ii) to Rule 515A states that                   the Simple Order Book. Complex orders with three
                                                                                                          Members may enter RFR responses on                    option legs where all legs are buying or all legs are
                                                    31 See, e.g., Securities Exchange Act Release No.                                                           selling may only trade against other complex orders
                                                                                                          the opposite side of the market from the
                                                  69948 (July 9, 2013), 78 FR 42132 (July 15, 2013)                                                             on the Strategy Book, regardless of whether the
                                                  (SR–CBOE–2013–41). See also, NYSEArca                   cPRIME Agency Order at net prices, and                option leg is a call or a put. The System will not
                                                  Regulatory Information Bulletin no. RBO–11–04                                                                 generate derived orders for these complex orders.
                                                  (May 26, 2011).                                          32 See   supra note 16.                              See Exchange Rule 518(c)(2)(iii).



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                                                  25352                          Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  are inapplicable.34 Any of the references               priced responses. The cPRIME Agency                   • At the final price, the cPRIME Agency
                                                  to the NBBO in Rule 515A apply to                       order will be filled as follows:                        Order buys:
                                                  simple orders and do not apply to                       • The cPRIME Agency Order buys 100                    —150 from MM1 @3.27; and
                                                  complex orders; proposed                                  from BD1 @3.25                                      —150 (auto-match 50% of the remaining
                                                  Interpretations and Policies .12 replaces               • The cPRIME Agency Order buys 100                      Agency Order size) from the cPRIME
                                                  references to the NBBO with references                    from MM1 @3.27                                        Contra Order @3.27
                                                  to the icMBBO that apply to complex                     • At the final price, the cPRIME Agency                 The following example illustrates the
                                                  orders.                                                   Order buys:                                         execution of a cPRIME Order that legs
                                                    The following example illustrates the                 —50 from MM3 @3.29;                                   into the simple market:
                                                  execution of a cPRIME Order with the                    —50 from MM4 @3.29; and
                                                  single price submission election (no                    —200 (40%) from the cPRIME Contra                     Example 5—A cPRIME Order Is
                                                  auto-match):                                              Order @3.29.                                        Executed (by Legging Into the Simple
                                                                                                                                                                Market)
                                                  Example 3—A cPRIME Order Is                               The following example illustrates the
                                                                                                          execution of a cPRIME Order with the                  MIAX–LMM Mar 50 Call 6.00–6.50
                                                  Executed (Without Auto-Match)
                                                                                                          auto-match election:                                     (10x10)
                                                  MIAX–LMM Mar 50 Call 6.00–6.50                                                                                MIAX–LMM Mar 55 Call 3.00–3.30
                                                     (10x10)                                              Example 4—A cPRIME Order Is                              (10x10)
                                                  MIAX–LMM Mar 55 Call 3.00–3.30                          Executed (With Auto-Match)                            Strategy: Buy 1 Mar 50 Call, Sell 1 Mar
                                                     (10x10)                                              MIAX–LMM Mar 50 Call 6.00–6.50                           55 Call
                                                  Strategy: Buy 1 Mar 50 Call, Sell 1 Mar                    (10x10)                                            The icMBBO is 2.70 debit bid at 3.50
                                                     55 Call                                              MIAX–LMM Mar 55 Call 3.00–3.30                           credit offer
                                                  The icMBBO is 2.70 debit bid at 3.50                       (10x10)                                            The dcMBBO is 2.70 debit bid at 3.50
                                                     credit offer                                         Strategy: Buy 1 Mar 50 Call, Sell 1 Mar                  credit offer
                                                  The dcMBBO is 2.70 debit bid at 3.50                       55 Call                                               The Strategy Book contains a Priority
                                                     credit offer                                         The icMBBO is 2.70 debit bid at 3.50                  Customer offer to sell the Strategy at
                                                     The Strategy Book contains a Priority                   credit offer                                       3.30 credit, 20 times.
                                                  Customer offer to sell the Strategy at                  The dcMBBO is 2.70 debit bid at 3.50                     The Exchange receives a cPRIME
                                                  3.30 credit, 20 times.                                     credit offer                                       Order with the cPRIME Agency Order
                                                     The Exchange receives a cPRIME                          The Strategy Book contains a Priority              representing the purchase of the
                                                  Order with the cPRIME Agency Order                      Customer offer to sell the Strategy at                Strategy at a net debit of 3.29, 500 times.
                                                  representing the purchase of the                        3.30 credit, 20 times.                                Auto-match is not enabled.
                                                  Strategy at a net debit of 3.29, 500 times.                The Exchange receives a cPRIME                        Since the order price is at least $0.01
                                                  Auto-match is not enabled.                              Order with the cPRIME Agency Order                    better than (inside) the icMBBO and the
                                                     Since the order price is at least $0.01              representing the purchase of the                      best net price of any order for the
                                                  better than (inside) the icMBBO and the                 Strategy at a net debit of 3.29, 500 times.           Strategy on the Book, a cPRIME Auction
                                                  best net price of any order for the                     Auto-match has been enabled with an                   can begin.
                                                  Strategy on the Book, a cPRIME Auction                  auto-match limit price of 3.25.                          An RFR is broadcast to all subscribers
                                                  can begin.                                                 Since the order price is at least $0.01            showing price, the quantity of matched
                                                     An RFR is broadcast to all subscribers               better than (inside) the icMBBO and the               complex orders at that price, and the
                                                  showing price, the quantity of matched                  best net price of any order for the                   side of the cPRIME Agency Order, is
                                                  complex orders at that price, and the                   Strategy on the Book, a cPRIME Auction                sent and a 500 millisecond RFR period
                                                  side of the cPRIME Agency Order, is                     can begin.                                            is started.
                                                  sent and a 500 millisecond RFR period                      An RFR is broadcast to all subscribers                The following responses are received:
                                                  is started.                                             showing price, the quantity of matched                • @150 milliseconds MM2 response,
                                                     The following responses are received:                complex orders at that price, and the                    cAOC Order @3.28 credit sell of 100
                                                  • @50 milliseconds BD1 response,                        side of the cPRIME Agency Order, is                      arrives
                                                     cAOC Order @3.25 credit sell of 100                  sent and a 500 millisecond RFR period                 • @200 milliseconds MM1 response,
                                                     arrives                                              is started.                                              cAOC Order @3.27 credit sell of 300
                                                  • @150 milliseconds MM1 response,                          The following responses are received:                 arrives
                                                     cAOC eQuote @3.27 credit sell of 100                 • @50 milliseconds BD1 response,                      • @300 milliseconds the MIAX LMM
                                                     arrives                                                 cAOC Order @3.25 credit sell of 100                   improves its offer to sell 10 Mar 50
                                                  • @200 milliseconds MM3 response,                          arrives                                               Calls to a price of 6.25
                                                     cAOC eQuote @3.29 credit sell of 200                 • @150 milliseconds MM1 response,                        The offer to sell 10 Mar 50 Calls @6.25
                                                     arrives                                                 cAOC eQuote @3.27 credit sell of 300               changes the icMBBO credit offer to 3.25,
                                                  • @300 milliseconds MM4 response,                          arrives                                            crossing the Auction Start Price and
                                                     cAOC eQuote @3.29 credit sell of 200                    The cPRIME Auction process will                    causing the cPRIME Auction process to
                                                     arrives                                              continue until the Response Time                      be terminated immediately.
                                                     The cPRIME Auction process will                      Interval ends. When the 500 millisecond                  The cPRIME Auction process will
                                                  continue until the Response Time                        Response Time Interval ends, the                      trade the Agency Order with the best
                                                  Interval ends. When the 500 millisecond                 cPRIME Auction process will trade the                 priced liquidity opposite the Agency
                                                  Response Time Interval ends, the                        Agency Order with the best priced                     Order according to the allocation
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                                                  cPRIME Auction process will trade the                   responses. The Agency Order will be                   process contained in Rule 515A. The
                                                  cPRIME Agency Order with the best                       filled as follows:                                    Agency Order will be filled as follows:
                                                                                                          • At the interim price, the cPRIME                    • The cPRIME Agency Order buys:
                                                     34 Complex orders and quotes are executed
                                                                                                             Agency Order buys:                                 —10 from legging into the Simple
                                                  without consideration of any prices for the complex
                                                  strategy that might be available on other exchanges     —100 from BD1 @3.25; and                                 market icMBBO @3.25 (buy 10 Mar 50
                                                  trading the same options contracts. See Exchange        —100 (auto-match RFR Response) from                      Calls at 6.25, and sell 10 Mar 55 Calls
                                                  Rule 518(c)(2)(ii).                                        the cPRIME Contra Order @3.25.                        at 3.00); and


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                                                                                  Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                     25353

                                                  —300 from MM1 @3.27; and                                 to ‘‘carve out’’ rules for cPRIME Orders                believes that it is equitable and not
                                                  —100 from MM2 @3.28; and                                 for which the rules for simple PRIME                    unfairly discriminatory to afford priority
                                                  —90 from the cPRIME Contra Order @                       Orders do not apply and to otherwise                    to complex interest over simple interest.
                                                     3.29                                                  make clear in the Exchange’s rules the                     Additionally, under the proposal,
                                                     There are certain circumstances that                  manner in which cPRIME Orders will be                   when new interest is received in the
                                                  are unique to cPRIME Orders (such as                     processed and executed under the                        simple market that causes the icMBBO
                                                  when a component of the cPRIME Order                     proposal. Accordingly, proposed                         on the opposite side of the market from
                                                  is in a certain state), where the System                 Interpretations and Policies .12(c) states              the cPRIME Agency Order to be equal to
                                                  will reject the cPRIME Order.                            that, notwithstanding the provisions of
                                                                                                                                                                   or better than the initiating price, the
                                                  Accordingly, proposed Interpretations                    this Rule 515A with respect to PRIME,
                                                                                                                                                                   cPRIME Auction ends before the
                                                  and Policies .12(b) describes each of                    the following shall apply to cPRIME
                                                                                                                                                                   expiration of the RFR period. In this
                                                  these specific circumstances.                            Orders only.
                                                                                                              Proposed Interpretations and Policies                situation, the receipt of such an order
                                                  Specifically, the System will reject a
                                                  cPRIME Agency Order if, at the time of                   .12(c)(i) to Rule 515A states that the RFR              simply ends the cPRIME Auction and
                                                  receipt of the cPRIME Agency Order: (i)                  period for cPRIME Auctions shall be                     the execution and allocation process is
                                                  The strategy is subject to a cPRIME                      independent from the RFR for PRIME                      accelerated, prior to the end of the RFR
                                                  Auction or to a Complex Auction                          Auctions and shall last for a period of                 period.
                                                  pursuant to Rule 518(d); (ii) any                        time set forth in Rule 515A(a)(2)(i)(C).                   Regardless of when the cPRIME
                                                  component of the strategy is subject to                  The current RFR period for PRIME                        Auction ends, contracts are first
                                                  a SMAT Event as described in Rule                        Auctions is 500 milliseconds.37                         allocated by matching complex
                                                  518(a)(16); or (iii) any component of the                   The Exchange is proposing to adopt                   strategies; thereafter, contracts that are
                                                  strategy is subject to the managed                       Interpretations and Policies .12(c)(ii) to              executed by way of Legging 38 complex
                                                  interest process described in Rule                       Rule 515A which states that participants                strategy components against the Book
                                                  515(c)(1)(ii). The purpose of this                       that submit simple orders that are                      are allocated among the complex
                                                  provision is to maintain an orderly                      executed as individual legs of complex                  strategies, and then finally among the
                                                  market by avoiding simultaneous                          orders at the execution price point will                simple orders on the Book that are
                                                  multiple cPRIME Auctions and multiple                    be allocated contracts only after all                   matched with components of the Legged
                                                  concurrent PRIME, cPRIME and                             complex interest at such price point                    strategy. Thus, the allocation process is
                                                  Complex Auctions, and to avoid                           have received allocations. cPRIME                       not changed, and simple orders resting
                                                  executions during a Route Timer 35 or                    Orders are matched first against other                  on the book that may be executed by
                                                  liquidity refresh pause 36 that could                    complex orders and have priority over                   way of Legging are still subject to
                                                  affect the price of the components and                   simple orders that are on the Book and                  complex order priority interest and are
                                                  of the strategy.                                         ‘‘legged,’’ at the execution price,                     allocated contracts only after all
                                                     The Exchange believes that, if the                    regardless of the origin code of the                    complex interest has been filled at that
                                                  System were to accept and process                        simple order. The Exchange believes                     price. The Exchange believes that it is
                                                  cPRIME Agency Orders during the                          that this is appropriate because the                    consistent, equitable and not unfairly
                                                  various circumstances described in                       initiating price of the cPRIME Agency                   discriminatory to afford priority to
                                                  proposed Interpretations and Policies                    Order is always superior to the net price               complex interest over simple interest
                                                  .12(b) to Rule 515A, market participants                 of simple orders resting on the Simple                  even when Complex Auction ends
                                                  could be faced with a number of                          Order Book. The Agency Order is                         early.39
                                                  simultaneous PRIME, cPRIME and/or                        submitted at an improved price with an
                                                  Complex Auctions involving the same                                                                                 The Exchange believes that its
                                                                                                           accompanying contra side order
                                                  strategy or component, which in turn                                                                             proposal to afford priority to complex
                                                                                                           (principal or solicited interest) that is
                                                  could have an impact the orderly                                                                                 orders in cPRIME over simple orders is
                                                                                                           intended to trade with all components
                                                  functioning of the markets.                                                                                      appropriate because it rewards
                                                                                                           of the Agency Order at a net price at the
                                                     Proposed Interpretations and Policies                                                                         participants that assume greater market
                                                                                                           time of submission. Simple orders
                                                  .12(c) to Rule 515A describes various                                                                            risk and actively improves the execution
                                                                                                           resting on the Book do not necessarily
                                                  other situations that are unique to, or                                                                          price by submitting complex RFR
                                                                                                           intend to trade with the legs of the
                                                  otherwise apply specifically to, cPRIME                                                                          responses in a cPRIME Auction. A
                                                                                                           Agency Order, and thus the Exchange
                                                  Orders. The purpose of this provision is                                                                         simple order on the Book is not
                                                                                                              37 The Exchange notes that, on April 13, 2017, it
                                                                                                                                                                   responding to an RFR for price
                                                    35 For those initiating Public Customer orders that    filed with the Commission a proposed rule change        improvement, and thus the Exchange
                                                  are routable, but do not meet the additional criteria    (SR–MIAX–2017–16) that would amend the                  believes that it is equitable and not
                                                  for Immediate Routing, the System will implement         duration of the RFR period contained in Rule            unfairly discriminatory to afford priority
                                                  a Route Timer not to exceed one second (the              515A(a)(2)(i)(c) so that the duration can be a period
                                                  duration of the Timer will be announced to
                                                                                                                                                                   to complex orders in a cPRIME Auction
                                                                                                           of time within a range of no less than 100
                                                  Members through a Regulatory Circular), in order to      milliseconds and no more than 1 second, as              over simple orders on the MIAX
                                                  allow Market Makers and other participants an            determined by the Exchange and announced via            Options Book. The Exchange believes
                                                  opportunity to interact with the initiating order. See   Regulatory Circular. If approved, such provision        that affording priority to complex
                                                  Exchange Rule 529(b)(2)(i).                              would allow a separate and potentially different
                                                     36 The System will pause the market for a time
                                                                                                                                                                   interest over simple interest on the
                                                                                                           time period for simple PRIME Auctions and
                                                  period not to exceed one second to allow additional      cPRIME Auctions, provided that each time period         Simple Order Book is consistent with
                                                  orders or quotes refreshing the liquidity at the         is within the permissible range. The Exchange notes     Section 6(b) of the Act 40 in general, and
                                                  MBBO to be received (‘‘liquidity refresh pause’’)        that MIAX’s proposed rule change to amend the           furthers the objectives of Section 6(b)(5)
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                                                  when at the time of receipt or reevaluation of the       duration of a PRIME Auction was published in the
                                                  initiating order by the System: (A) Either the           Federal Register on May 5, 2017 and is subject to
                                                                                                                                                                     38 See  Exchange Rule 518(c)(2)(iii).
                                                  initiating order is a limit order whose limit price      a public comment period expiring on May 26, 2017.
                                                                                                                                                                     39 The  Exchange notes that other exchanges afford
                                                  crosses the NBBO or the initiating order is a market     See Securities Exchange Act Release No. 80570
                                                  order, and the limit order or market order could         (May 1, 2017), 82 FR 21288 (May 5, 2017) (SR–           priority to complex interest over simple interest.
                                                  only be partially executed; (B) a Market Maker           MIAX–2017–16) Notice of Filing of a Proposed Rule       See, e.g., NASDAQ PHLX, LLC (‘‘PHLX’’) Rule
                                                  quote was all or part of the MBBO when the MBBO          Change to Amend MIAX Options Rule 515A, MIAX            1098(e)(vi)(A)(2); see also, PHLX Rule
                                                  is alone at the NBBO; and (C) and the Market Maker       Price Improvement Mechanism (‘‘PRIME’’) and             1098(e)(viii)(C)(3).
                                                  quote was exhausted. See Exchange Rule 515(c)(2).        PRIME Solicitation Mechanism.                             40 15 U.S.C. 78f(b).




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                                                  25354                             Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  of the Act 41 in particular, in that it                    priced liquidity opposite the Agency                    and (B) the last priority allocation
                                                  promotes just and equitable principles                     Order according to the allocation                       option described in Rule
                                                  of trade by affording priority to                          process contained in Rule 515A. The                     515A(a)(2)(iii)(L) is not available for
                                                  participants submitting cPRIME Orders                      Agency Order will be filled as follows:                 Initiating Members that submit cPRIME
                                                  and RFR responses that are intended to                     • The cPRIME Agency Order buys:                         Agency Orders. With respect to cPRIME
                                                  improve the then-existing price on the                     —500 from MM2 @3.25                                     Auctions, the System allocates complex
                                                  Exchange. The Exchange believes that                       —Simple Interest receives no allocation                 strategies, not contracts. Additionally,
                                                  affording this priority encourages                                                                                 the last priority allocation option
                                                                                                                Proposed Interpretations and Policies
                                                  participants to submit more price-                                                                                 described in Rule 515A(a)(iii)(L) 46 is
                                                                                                             .12(c)(iii) to Rule 515A states that the
                                                  improving complex orders, and that                                                                                 not available for Initiating Members that
                                                  they should be rewarded with priority                      size and bid/ask differential provisions                submit cPRIME Agency Orders. The
                                                  over simple orders that are resting on                     contained in Exchange Rule                              Exchange believes that there is not
                                                  the Simple Order Book that were not                        515A(a)(1)(iii) 42 shall not apply to                   significant Member demand for the use
                                                  submitted or intended to be price                          cPRIME Orders. Rule 515A(a)(1) is                       of the last priority allocation option in
                                                  improving orders.                                          intended to apply to simple PRIME                       cPRIME Auctions, which obviates the
                                                     The following example illustrates the                   Auctions, and not to apply to complex                   need for its inclusion in the allocation
                                                  execution and allocation of a cPRIME                       orders.43 Under Rule 515A(a)(1)(iii),                   model for cPRIME Auctions.
                                                  Order (with simple interest allocated                      with respect to Agency Orders that have                    Finally, proposed Interpretations and
                                                  after all complex interest has been                        a size of less than 50 contracts, if at the             Policies .12(c)(vi), which states that
                                                  allocated):                                                time of receipt of the Agency Order, the                provisions contained in Interpretations
                                                                                                             NBBO has a bid/ask differential of                      and Policies .06 and .07 of Rule 515A
                                                  Example 6—A cPRIME Order Is                                $0.01, the System will reject the Agency                shall not apply to cPRIME Auctions.
                                                  Executed (Simple Interest Allocated                        Order. This rule would not apply to                     Interpretations and Policies .06 and .07
                                                  After Complex Interest)                                    complex orders, including cPRIME                        relate to the managed interest process
                                                  MIAX–LMM Mar 50 Call 6.00–6.50                             Orders, because the NBBO is not a                       and route timers on the same and
                                                     (10x10)                                                 consideration in determining the                        opposite sides of the Agency Order in
                                                  MIAX–LMM Mar 55 Call 3.00–3.30                             execution price of a complex order.44                   PRIME Auctions. Proposed
                                                     (10x10)                                                    Proposed Interpretations and Policies                Interpretations and Policies .12(b)
                                                  Strategy: Buy 1 Mar 50 Call, Sell 1 Mar                    .12(c)(iv) to Rule 515A states that the                 specifically states that cPRIME Agency
                                                     55 Call                                                 conclusion of auction provisions                        Orders will be rejected if received
                                                  The icMBBO is 2.70 debit bid at 3.50                       contained in Rule 515A(a)(2)(ii) shall                  during these conditions. Therefore,
                                                     credit offer                                            not apply to cPRIME Auctions. Rather,                   Interpretations and Policies .06 and .07
                                                  The dcMBBO is 2.70 debit bid at 3.50                       the Exchange is proposing to adopt a                    will not apply to cPRIME Auctions.
                                                     credit offer                                            separate set of provisions relating to the
                                                                                                             conclusion of auctions that apply only                  Conclusion of the cPRIME Auction
                                                     The Strategy Book contains a Priority
                                                  Customer offer to sell the Strategy at                     to cPRIME Auctions, in proposed                           Proposed Interpretations and Policies
                                                  3.30 credit, 20 times.                                     Interpretations and Policies .12(d),                    .12(d) to Rule 515A describes the
                                                     The Exchange receives a cPRIME                          discussed below.                                        circumstances under which a cPRIME
                                                  Order with the cPRIME Agency Order                            Proposed Rule 515A, Interpretations                  Auction is concluded. Proposed
                                                  representing the purchase of the                           and Policies .12(c)(v), states that the                 Interpretations and Policies .12(d)(i) to
                                                  Strategy at a net debit of 3.29, 500 times.                order allocation provisions contained in                Rule 515A states that the cPRIME
                                                  Auto-match is not enabled.                                 Rule 515A(a)(2)(iii) shall apply to                     Auction shall conclude at the sooner to
                                                     Since the order price is at least $0.01                 cPRIME Auctions, provided that (A) all                  occur of the following events (described
                                                  better than (inside) the icMBBO and the                    references to contracts shall be deemed                 below) with the cPRIME Agency Order
                                                  best net price of any order for the                        to be references to complex strategies; 45              executing pursuant to proposed Rule
                                                  Strategy on the Book, a cPRIME Auction                                                                             515A(2)(iii).
                                                  can begin.                                                    42 With respect to Agency Orders that have a size      First, a cPRIME Auction will
                                                     An RFR is broadcast to all subscribers                  of less than 50 contracts, if at the time of receipt    conclude at the end of the RFR period.
                                                                                                             of the Agency Order, the NBBO has a bid/ask             This completes the cPRIME Auction.
                                                  showing price, the quantity of matched                     differential of $0.01, the System will reject the
                                                  complex orders at that price, and the                      Agency Order. See Exchange Rule 515A(a)(1)(iii).
                                                                                                                                                                       A cPRIME Auction will conclude
                                                  side of the cPRIME Agency Order, is                           43 In late 2016, the Exchange filed to adopt new     when an AOC eQuote 47 or cAOC
                                                  sent and a 500 millisecond RFR period                      Rule 515A(a)(1)(iii), upon the expiration of a Pilot,
                                                  is started.                                                to establish on a permanent basis that, with respect    order or by the Exchange for a complex strategy that
                                                                                                             to Agency Orders that have a size of less than 50       is not currently in the System. The Exchange may
                                                     The following responses are received:                   contracts, if at the time of receipt of the Agency      limit the number of new complex strategies that
                                                  • @250 milliseconds MM2 response,                          Order, the NBBO has a bid/ask differential of $0.01,    may be in the System at a particular time and will
                                                     cAOC Order @3.25 credit sell of 500                     the System will reject the Agency Order. Agency         communicate this limitation to Members via
                                                     arrives                                                 Orders with a size of under 50 contracts will be        Regulatory Circular. See Exchange Rule 518(a)(6).
                                                                                                             accepted and processed by the System when the
                                                  • @300 milliseconds the MIAX LMM
                                                                                                                                                                        46 If the Initiating Member elected to have last
                                                                                                             NBBO bid/ask differential is greater than $0.01, and    priority in allocation when submitting an Agency
                                                     improves its offer to sell 10 Mar 50                    all Agency Orders with a size of 50 contracts or        Order to initiate an Auction against a single-price
                                                     Calls to a price of 6.25                                greater will be accepted and processed by the           submission, the Initiating Member will be allocated
                                                     The offer to sell 10 Mar 50 Calls @6.25                 System, regardless of the NBBO bid/ask differential.    only the amount of contracts remaining, if any, after
                                                                                                             The Pilot and Rule 515A(a)(1)(iii) do not apply to      the Agency Order is allocated to all other responses
                                                  changes the icMBBO credit offer to 3.25,
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                                                                                                             Complex Orders. See Securities Exchange Act             at the single price specified by the Initiating
                                                  crossing the Auction Start Price and                       Release No. 79837 (January 18, 2017), 82 FR 8472        Member. See Exchange Rule 515A(a)(iii)(L).
                                                  causing the cPRIME Auction process to                      (January 25, 2017) (SR–MIAX–2016–46).                      47 A ‘‘Complex Auction or Cancel eQuote’’ or
                                                                                                                44 See proposed Exchange Rule 515A,
                                                  be terminated immediately.                                                                                         ‘‘cAOC eQuote,’’ is an eQuote submitted by a
                                                                                                             Interpretations and Policies .12(a)(v).                 Market Maker that is used to provide liquidity
                                                     The cPRIME Auction process will                            45 The term ‘‘complex strategy’’ means a             during a specific Complex Auction with a time in
                                                  trade the Agency Order with the best                       particular combination of components and their          force that corresponds with the duration of the
                                                                                                             ratios to one another. New complex strategies can       Complex Auction. See Exchange Rule 518,
                                                    41 15   U.S.C. 78f(b)(5).                                be created as the result of the receipt of a complex    Interpretations and Policies .02(c)(1).



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                                                                                 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                             25355

                                                  Order 48 (the permitted RFR                             and Policies .12(c)(v) states that the                  Professional Interest quotes, and
                                                  responses 49) on the opposite side of the               order allocation provisions contained in                Professional Interest RFR responses will
                                                  market from the cPRIME Agency Order                     Rule 515A(a)(2)(iii) shall apply to                     collectively have third priority. The
                                                  locks or crosses: (A) The icMBBO, or (B)                cPRIME Auctions, provided that, as                      allocation of Agency Orders against
                                                  the best net price of a complex order in                described above: All references to                      these contra sided orders and RFR
                                                  the same strategy on the Strategy Book,                 contracts shall be deemed to be                         Responses shall be on a size pro rata
                                                  whichever is more aggressive.                           references to complex strategies as                     basis as defined in Rule 514(c)(2); (E) No
                                                    Pursuant to proposed Interpretations                  defined in Rule 518(a)(6); and the last                 participation entitlement shall apply to
                                                  and Policies .12(d)(iii) to Rule 515A, a                priority allocation option described in                 orders executed pursuant to this Rule;
                                                  cPRIME Auction will conclude when                       Rule 515A(a)(2)(iii)(L) is not available                (F) If an unrelated market or marketable
                                                  unrelated interest on the same side of                  for Initiating Members that submit                      limit order on the opposite side of the
                                                  the market as the cPRIME Agency Order                   cPRIME Agency Orders.                                   market as the Agency Order was
                                                  locks or crosses the best price on the                     Exchange Rule 515A(a)(2)(iii)                        received during the Auction and ended
                                                  opposite side of the market.                            currently provides that at the                          the Auction, such unrelated order shall
                                                    Proposed Interpretations and Policies                 conclusion of the PRIME Auction, the                    trade against the Agency Order at the
                                                  .12(d)(iv) to Rule 515A states that a                   Agency Order will be allocated at the                   midpoint of the best RFR response (or
                                                  cPRIME Auction will conclude when                       best price(s), subject to the following:                in the absence of a RFR response, the
                                                  unrelated interest on the opposite side                 (A) Such best prices include non-                       initiating price) and the NBBO on the
                                                  of the market from the cPRIME Agency                    Auction quotes and orders; (B) Priority                 other side of the market from the RFR
                                                  Order (A) locks or crosses (1) the                      Customer 50 orders resting on the Book                  responses (rounded towards the
                                                  icMBBO, or (2) the best net price of a                  before, or that are received during, the                disseminated quote when necessary).
                                                  complex order in the same strategy on                   Response Time Interval and Priority                     (G) If an unrelated non-marketable limit
                                                  the Strategy Book, whichever is more                    Customer RFR responses shall,                           order on the opposite side of the market
                                                  aggressive (e.g., a higher bid or lower                 collectively have first priority to trade               as the Agency Order was received
                                                  offer); or (B) improves the price of any                against the Agency Order. The                           during the Auction and ended the
                                                  RFR response.                                           allocation of an Agency Order against                   Auction, such unrelated order shall
                                                    Under proposed Interpretations and                    the Priority Customer orders resting in                 trade against the Agency Order at the
                                                  Policies .12(d)(v) to Rule 515A, a                      the Book, Priority Customer orders                      midpoint of the best RFR response and
                                                  cPRIME Auction will conclude when a                     received during the Response Time                       the unrelated order’s limit price
                                                  simple order or quote in a component of                 Interval, and Priority Customer RFR                     (rounded towards the unrelated order’s
                                                  the strategy on the same side of the                    responses shall be in the sequence in                   limit price when necessary).
                                                  market as the cPRIME Agency Order                       which they are received by the System;                     Rules 515A(a)(2)(iii)(H) and (I)
                                                  locks or crosses the NBBO for such                      (C) Market Maker priority quotes and                    describe the allocation of contracts
                                                  component. Proposed Interpretations                     RFR responses from Market Makers 51                     executed when the Initiating Member
                                                  and Policies .12(d)(vi) states that a                   with priority quotes will collectively                  selects the single-price submission or
                                                  cPRIME Auction will conclude when a                     have second priority. The allocation of                 the auto-match option, respectively,
                                                  simple order or quote in a component of                 Agency Orders against these contra                      when submitting their Agency Order
                                                  the strategy on the opposite side of the                sided quotes and RFR responses shall be                 and there are either two or more
                                                  market from the cPRIME Agency Order                     on a size pro rata basis as defined in                  participants at the execution price or
                                                  (A) locks or crosses the NBBO for such                  Rule 514(c)(2); (D) Professional Interest               when there is only one other participant
                                                  component, or (B) causes the icMBBO to                  orders resting in the Book, Professional                on parity with the Initiating Member at
                                                  be equal to or better than the initiating               Interest orders placed in the Book                      either the single price execution price or
                                                  price. These provisions ensure that a                   during the Response Time Interval,                      at the final auto-match price point.
                                                  cPRIME Agency Order will always                                                                                    Exchange Rules 515A(a)(2)(iii)(H) and
                                                  receive the best price on the Exchange,                   50 See  supra note 6.                                 (I) currently state that, upon conclusion
                                                  while at the same time preserving the                     51 The  term ‘‘Market Makers’’ refers to ‘‘Lead       of an Auction, an Initiating Member will
                                                                                                          Market Makers,’’ ‘‘Primary Lead Market Makers,’’        retain certain priority and trade
                                                  sanctity of the simple market.                          and ‘‘Registered Market Makers,’’ collectively. The
                                                                                                          term ‘‘Lead Market Maker’’ means a Member               allocation privileges for a single-price
                                                  Allocation of Contracts at the                          registered with the Exchange for the purpose of         submission and for an auto-match
                                                  Conclusion of the cPRIME Auction                        making markets in securities traded on the              submission. Under current Rule
                                                     Except as provided in proposed                       Exchange and that is vested with the rights and         515A(a)(2)(iii)(H), if the best price
                                                                                                          responsibilities specified in Chapter VI of the
                                                  Interpretations and Policies .12(c) to                  Exchange’s Rules with respect to Lead Market            equals the Initiating Member’s single-
                                                  Rule 515A, at the conclusion of the                     Makers. When a Lead Market Maker is appointed           price submission, the Initiating
                                                  Auction, the cPRIME Order will be                       to act in the capacity of a Primary Lead Market         Member’s single-price submission shall
                                                                                                          Maker, the additional rights and responsibilities of    be allocated the greater of one contract
                                                  allocated in the same manner as simple                  a Primary Lead Market Maker specified in Chapter
                                                  PRIME Orders in the simple PRIME                        VI of the Exchange’s Rules will apply. The term         or a certain percentage of the order,
                                                  Auction at the best price(s) as set forth               ‘‘Primary Lead Market Maker’’ means a Lead Market       which percentage will be determined by
                                                  in Rule 515A. Proposed Interpretations                  Maker appointed by the Exchange to act as the           the Exchange and may not be larger than
                                                                                                          Primary Lead Market Maker for the purpose of
                                                                                                          making markets in securities traded on the
                                                                                                                                                                  40% of the Agency Order. However, if
                                                     48 A Complex Auction-or-Cancel or ‘‘cAOC’’ order
                                                                                                          Exchange. The Primary Lead Market Maker is              only one Member’s response matches
                                                  is a complex limit order used to provide liquidity      vested with the rights and responsibilities specified   the Initiating Member’s single price
                                                  during a specific Complex Auction with a time in        in Chapter VI of the Exchange’s Rules with respect      submission, then the Initiating Member
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                                                  force that corresponds with that event. See             to Primary Lead Market Makers. The term
                                                  Exchange Rule 518(b)(3).                                ‘‘Registered Market Maker’’ means a Member
                                                                                                                                                                  may be allocated up to 50% of the
                                                     49 Members may submit responses to the RFR
                                                                                                          registered with the Exchange for the purpose of         Agency Order.
                                                  (specifying prices and sizes). RFR responses shall      making markets in securities traded on the                 Similarly, current Exchange Rule
                                                  be an Auction or Cancel (‘‘AOC’’) order or an AOC       Exchange, who is not a Lead Market Maker and is         515A(a)(2)(iii)(I) provides that if the
                                                  eQuote. See Exchange Rule 515A(a)(2)(i)(D). This        vested with the rights and responsibilities specified
                                                  applies by reference to cPRIME Auctions (and            in Chapter VI of the Exchange’s Rules with respect
                                                                                                                                                                  Initiating Member selected the auto-
                                                  cAOC eQuotes and cAOC orders). See proposed             to Registered Market Makers. See Exchange Rule          match option of the Auction, the
                                                  Interpretations and Policies .12(a).                    100.                                                    Initiating Member shall be allocated its


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                                                  25356                          Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  full size of RFR responses at each price                prevent fraudulent and manipulative                   protects investors and the public
                                                  point until the final auto-match price                  acts and practices, to promote just and               interest by ensuring that each side of the
                                                  point is reached. At the final auto-match               equitable principles of trade, to foster              cC2C Order receives a better price than
                                                  price point, the Initiating Member shall                cooperation and coordination with                     it would receive if submitted as a single
                                                  be allocated the greater of one                         persons engaged in regulating, clearing,              complex order. MIAX Options
                                                  contract 52 or a certain percentage of the              settling, processing information with                 participants will thus receive the best
                                                  remainder of the Agency Order, which                    respect to, and facilitating transactions             prices available for both sides of a
                                                  percentage will be determined by the                    in securities, to remove impediments to               cC2COrder.
                                                  Exchange and may not be larger than                     and perfect the mechanisms of a free                     The Exchange further believes that the
                                                  40%. However, if only one Member’s                      and open market and a national market                 proposed methodology for the execution
                                                  response matches the Initiating                         system and, in general, to protect                    of cQCC Orders without consideration
                                                  Member’s submission at the final auto-                  investors and the public interest.                    of the NBBO of the stock component is
                                                  match price point, then the Initiating                     The proposal to amend Exchange                     consistent with the Plan. As stated
                                                  Member may be allocated up to 50% of                    Rules 515, 515A, and 518 to establish                 above, the Plan provides an exception to
                                                  the remainder of the Agency Order at                    three new complex order types, and to                 the requirement that Participants
                                                  the final auto-match price point.                       adopt new provisions that relate to the               establish, maintain and enforce written
                                                     At the conclusion of the Auction, the                processing of those new complex order                 policies and procedures that are
                                                  Agency Order is allocated at the best                   types is consistent with Section 6(b)(5)              reasonably designed to prevent Trade-
                                                  price(s) pursuant to the matching                       of the Act because this proposal                      Throughs when the transaction that
                                                  algorithm in effect for the class.53 The                promotes just and equitable principles                constituted the Trade-Through was
                                                  System first must determine the number                  of trade and protects investors and the               effected as a portion of a ‘‘complex
                                                  of participants that are entitled to                    public interest by providing increased                trade,’’ as defined in the rules of a
                                                  receive contracts to be allocated, and                  opportunities for the execution of                    Participant.56 Therefore, the System
                                                  whether any participant(s) such as                      complex orders. The Exchange believes                 considers the NBBO for each option leg
                                                  Priority Customers are entitled to                      that the new cC2C, cQCC, and cPRIME                   of the cQCC Order, and not the NBBO
                                                  receive contracts first. Thereafter,                    order types will benefit MIAX Options                 for the stock component, in calculating
                                                  contracts are allocated among                           participants and the marketplace as a                 the pricing requirement for cQCC
                                                  participants at the execution price.                    whole by providing more ways in which                 Orders.
                                                     Finally, the Exchange is proposing to                complex orders are able to interact with                 The System does not consider the
                                                  amend Rule 518(c) to clarify that the                   one another, and in some instances                    NBBO price for the stock component
                                                  processing and execution of these three                 through Legging with the simple market.               because the Exchange does not execute
                                                  new complex order types is governed by                  The Exchange believes the proposed                    the stock component; the Exchange
                                                  Exchange Rule 515 (for cC2C Orders and                  rule change removes impediments to                    executes the option components at a net
                                                  cQCC Orders) and Exchange Rule 515A                     and perfects the mechanism of a free                  price and ensures that the execution
                                                  (for cPRIME Orders), as specified in the                and open market and a national market                 price of each option component of the
                                                  definition of each new complex order                    system and will result in more efficient              strategy is (i) not at the same price as a
                                                  type under 518(b).                                      trading and enhance the likelihood that               Priority Customer Order on the
                                                     As a technical numbering matter, the                 complex orders execute at the best                    Exchange’s Book; and (ii) at or between
                                                  Exchange is proposing to mark                           prices by providing additional order                  the NBBO. The Exchange does require
                                                  Interpretations and Policies .10 and .11                types resulting in potentially greater                that the Member entering the cQCC
                                                  to Rule 515A ‘‘Reserved’’ because these                 liquidity available for trading on the                Order provide certain information to the
                                                  two numbers are being used in a                         Exchange.                                             Exchange regarding the execution of the
                                                  separate proposed rule change which                        The proposed rule change will make                 stock component, such as the
                                                  has not been published as of the filing                 existing functionality available to                   underlying price, quantity, price delta,
                                                  date of the instant proposed rule                       additional order types. Making PRIME                  execution time and executing venue.57
                                                  change.                                                 available for complex orders removes                     This complex pricing requirement
                                                     The Exchange will announce the                       impediments to and perfects the                       aligns with the simple order pricing
                                                  implementation date of the proposed                     mechanisms of a free and open market                  requirement for a Qualified Contingent
                                                  rule change by Regulatory Circular to be                and a national market system because                  Trade (‘‘QCT’’) to consider the NBBO
                                                  published no later than 60 days                         Members will be given additional ways                 price. In each case, the parties to a
                                                  following the operative date of the                     in which they can seek liquidity for                  contingent trade are focused on the
                                                  proposed rule. The implementation date                  complex orders with the potential for                 spread or ratio between the transaction
                                                  will be no later than 60 days following                 price improvement on the Exchange.                    prices for each of the component
                                                  the issuance of the Regulatory Circular.                   The proposed rule change will protect              instruments (i.e., the net price of the
                                                                                                          investors and the public interest by                  entire contingent trade), rather than on
                                                  2. Statutory Basis                                      assuring that the existing priority and               the absolute price of any single
                                                     MIAX believes that its proposed rule                 allocation rules applicable to the                    component. Pursuant to the
                                                  change is consistent with Section 6(b) of               processing and execution of Customer                  requirements of the NMS QCT
                                                  the Act 54 in general, and furthers the                 Cross Orders, QCC Orders, and PRIME                   Exemption, the spread or ratio between
                                                  objectives of Section 6(b)(5) of the Act 55             Orders remains consistent with the                    the relevant instruments must be
                                                  in particular, in that it is designed to                processing and execution of these new                 determined at the time the order is
                                                                                                          order types, unless as otherwise                      placed, and this spread or ratio stands
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                                                     52 Under the proposal, with respect to order         specifically set forth in the rules.                  regardless of the market prices of the
                                                  allocation, all references to contracts shall be           The Exchange believes that the                     individual orders at their time of
                                                  deemed to be references to complex strategies. See      requirement that the execution of cC2C
                                                  Proposed Rule 515A, Interpretations and Policies                                                              execution. As the Commission noted in
                                                  .12(c)(v)(A).                                           be at least $0.01 better than (inside)                the Original QCT Exemption, ‘‘the
                                                     53 See Exchange Rule 515A(a)(2)(iii).                either the icMBBO price or the best net
                                                     54 15 U.S.C. 78f(b).                                 price of a complex order on the Strategy                56 See   supra note 25.
                                                     55 15 U.S.C. 78f(b)(5).                              Book, whichever is more aggressive,                     57 See   supra note 27.



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                                                                                   Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                   25357

                                                  difficulty of maintaining a hedge, and                       The proposal to establish rules setting            has been filled. The Exchange believes
                                                  the risk of falling out of hedge, could                   forth the various circumstances under                 that it is consistent and equitable and
                                                  dissuade participants from engaging in                    which the system will conclude cPRIME                 not unfairly discriminatory to afford
                                                  contingent trades, or at least raise the                  Auction is designed to facilitate                     priority at each price point to complex
                                                  cost of such trades.’’ Thus, the                          transactions, to remove impediments to                interest over simple interest even when
                                                  Commission found that, if each stock leg                  and perfect the mechanism of a free and               the cPRIME Auction ends early.
                                                  of a qualified contingent trade were                      open market by freeing up interest in                    The Exchange also believes that the
                                                  required to meet the trade-through                        the cPRIME Auction when unrelated                     proposed rule change removes
                                                  provisions of Rule 611 of Regulation                      orders or other conditions cause the                  impediments to and perfects the
                                                  NMS, such trades could become too                         initiating price of the cPRIME Order to               mechanisms of a free and open market
                                                  risky and costly to be employed                           no longer be at the best price available              and a national market system by
                                                  successfully and noted that the                           to market participants.                               attracting more order flow and by
                                                  elimination or reduction of this trading                     The Exchange believes that its
                                                                                                                                                                  increasing the frequency with which
                                                  strategy potentially could remove                         proposal to afford priority to complex
                                                                                                                                                                  Initiating Members initiate Auctions in
                                                  liquidity from the market.58 This is also                 orders in cPRIME over simple orders is
                                                                                                            appropriate because it rewards                        complex orders through PRIME, using
                                                  true for QCC Orders in options, and thus                                                                        complex orders. Moreover, the proposed
                                                  the Exchange believes that its proposal                   participants that assume greater market
                                                                                                            risk and actively improve the execution               rule change is consistent with the rules
                                                  is consistent with the Original QCT                                                                             of other exchanges.60
                                                  Exemption.59                                              price by submitting complex RFR
                                                     The Exchange believes that the                         responses in a cPRIME Auction. A                      B. Self-Regulatory Organization’s
                                                  proposal to reject a cC2C or cQCC Order                   simple order on the Book is not                       Statement on Burden on Competition
                                                  at the time of receipt of the Order when                  responding to an RFR for price
                                                  any component of the strategy is subject                  improvement, and thus the Exchange                      The Exchange does not believe that
                                                  to a PRIME Auction, Complex Auction,                      believes that it is equitable and not                 the proposed rule change will impose
                                                  or a SMAT Event removes impediments                       unfairly discriminatory to afford priority            any burden on competition that is not
                                                  to and perfects the mechanisms of a free                  to complex orders in a cPRIME Auction                 necessary or appropriate in furtherance
                                                  and open market and a national market                     over simple orders on the Simple Order                of the purposes of the Act.
                                                  system by avoiding concurrent order                       Book. The Exchange believes that                        On the contrary, the proposed rule
                                                  processing in the same security on the                    affording priority to complex interest                change is intended to promote
                                                  Exchange.                                                 over simple interest on the Simple                    competition by adding new order types
                                                                                                            Order Book promotes just and equitable                that enable MIAX Options participants
                                                     The Exchange believes that the
                                                                                                            principles of trade by affording priority             to execute complex orders on the
                                                  rejection of cC2C Orders and cQCC
                                                                                                            to participants submitting cPRIME                     Exchange. The Exchange believes that
                                                  Orders when the strategy is subject to a
                                                                                                            Orders and RFR responses that are                     this enhances inter-market competition
                                                  cPRIME or Complex Auction removes
                                                                                                            intended to improve the execution price               by enabling MIAX Options to compete
                                                  impediments to and perfects the
                                                                                                            on the Exchange. The Exchange believes                for this type of order flow with other
                                                  mechanisms of a free and open market
                                                                                                            that affording this priority encourages               exchanges that have similar rules and
                                                  by ensuring orderly markets involving
                                                                                                            participants to submit more price-                    functionalities in place.
                                                  multiple complex orders with common                       improving complex orders, and that
                                                  components.                                               they should be rewarded with priority                   The Exchange further believes that
                                                     Similarly, the proposed rejection of                   over simple orders that are resting on                adding complex orders to the PRIME
                                                  cPRIME Agency Orders when the                             the Simple Order Book that were not                   mechanism enhances intra-market
                                                  strategy is subject to a cPRIME Auction                   submitted or intended to be price                     competition by adding another manner
                                                  or a Complex Auction, or any                              improving orders.                                     in which competing MIAX Options
                                                  component of the strategy is subject to                      Additionally, when the cPRIME                      participants may submit competitive
                                                  a SMAT Event or the managed interest                      Auction ends prior to the expiration of               bids and offers into the System. This
                                                  process, protects investors and the                       the RFR period due to the receipt of new              should result in enhanced liquidity and
                                                  public interest by ensuring that the                      interest that causes the icMBBO to be                 more competition on the Exchange.
                                                  strategy and its components are handled                   equal to or better than the initiating                  For all the reasons stated, the
                                                  by the System in an orderly fashion                       price, the Exchange believes that it is               Exchange does not believe that the
                                                  without multiple simultaneous cPRIME                      equitable and not unfairly                            proposed rule change will impose any
                                                  Auctions, SMAT Events or the managed                      discriminatory to continue to afford                  burden on competition not necessary or
                                                  interest processes.                                       priority at each price point to complex               appropriate in furtherance of the
                                                     The Exchange also believes that the                    interest over simple interest resting on              purposes of the Act, and believes the
                                                  pricing requirements under which the                      the Simple Order Book that is executed                proposed change will in fact enhance
                                                  initiating price for a cPRIME Agency                      against the individual legs of a complex              competition.
                                                  Order must be better than (inside) the                    order. In this situation, the new interest
                                                  icMBBO for the strategy and any other                     is arriving after complex orders at the               C. Self-Regulatory Organization’s
                                                  complex orders on the Strategy Book                       same price; the receipt of such an order              Statement on Comments on the
                                                  perfects the mechanisms of a free and                     simply ends the cPRIME Auction and                    Proposed Rule Change Received From
                                                  open market and a national market                         the execution and allocation process is               Members, Participants, or Others
                                                  system and, in general, protects                          accelerated, prior to the end of the RFR
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                                                  investors and the public interest, by                     period. The allocation process is not                   Written comments were neither
                                                  ensuring that the initiating price results                changed, and simple orders resting on                 solicited nor received.
                                                  in executions in cPRIME Auctions at an                    the book that may be executed by way
                                                                                                                                                                     60 See International Securities Exchange LLC
                                                  improved price or prices.                                 of Legging are still subject to complex
                                                                                                                                                                  (‘‘ISE’’) Rule 723, Supplementary Materials .09;
                                                                                                            order priority interest at each price                 Chicago Board Options Exchange, Inc. (‘‘CBOE’’)
                                                    58 See   supra note 28.                                 point and are allocated contracts only                Rule 6.74, Interpretations and Policies .07;
                                                    59 Id.                                                  after all complex interest at that price              NASDAQ PHLX LLC (‘‘Phlx’’) Rule 1080(n).



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                                                  25358                          Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  III. Date of Effectiveness of the                       office of the Exchange. All comments                  related systems by Regulatory Circular
                                                  Proposed Rule Change and Timing for                     received will be posted without change;               that will be published once the options
                                                  Commission Action                                       the Commission does not edit personal                 exchanges determine the thresholds for
                                                     Within 45 days of the date of                        identifying information from                          accuracy and reliability described below
                                                  publication of this notice in the Federal               submissions. You should submit only                   have been met and that the Plan
                                                  Register or within such longer period (i)               information that you wish to make                     Processor for CAT is sufficiently
                                                  as the Commission may designate up to                   available publicly. All submissions                   meeting all of its obligations under the
                                                  90 days of such date if it finds such                   should refer to File Number SR–MIAX–                  CAT NMS Plan.
                                                                                                          2017–19 and should be submitted on or                    The text of the proposed rule change
                                                  longer period to be appropriate and
                                                                                                          before June 22, 2017.                                 is available at the Exchange’s Web site
                                                  publishes its reasons for so finding or
                                                                                                                                                                at www.bats.com, at the principal office
                                                  (ii) as to which the Exchange consents,                   For the Commission, by the Division of
                                                                                                          Trading and Markets, pursuant to delegated            of the Exchange, and at the
                                                  the Commission shall: (a) By order                                                                            Commission’s Public Reference Room.
                                                  approve or disapprove such proposed                     authority.61
                                                  rule change, or (b) institute proceedings               Eduardo A. Aleman,                                    II. Self-Regulatory Organization’s
                                                  to determine whether the proposed rule                  Assistant Secretary.                                  Statement of the Purpose of, and
                                                  change should be disapproved.                           [FR Doc. 2017–11251 Filed 5–31–17; 8:45 am]           Statutory Basis for, the Proposed Rule
                                                                                                          BILLING CODE 8011–01–P                                Change
                                                  IV. Solicitation of Comments
                                                                                                                                                                   In its filing with the Commission, the
                                                    Interested persons are invited to                                                                           Exchange included statements
                                                  submit written data, views, and                         SECURITIES AND EXCHANGE                               concerning the purpose of and basis for
                                                  arguments concerning the foregoing,                     COMMISSION                                            the proposed rule change and discussed
                                                  including whether the proposed rule                                                                           any comments it received on the
                                                                                                          [Release No. 34–80795; File No. SR–
                                                  change is consistent with the Act.                                                                            proposed rule change. The text of these
                                                                                                          BatsEDGX–2017–23]
                                                  Comments may be submitted by any of                                                                           statements may be examined at the
                                                  the following methods:                                  Self-Regulatory Organizations; Bats                   places specified in Item IV below. The
                                                  Electronic Comments                                     EDGX Exchange, Inc.; Notice of Filing                 Exchange has prepared summaries, set
                                                                                                          of Proposed Rule Change To Eliminate                  forth in Sections A, B, and C below, of
                                                    • Use the Commission’s Internet                       Requirements That Will Be Duplicative                 the most significant parts of such
                                                  comment form (http://www.sec.gov/                       of CAT                                                statements.
                                                  rules/sro.shtml); or
                                                    • Send an email to rule-comments@                     May 26, 2017.                                         (A) Self-Regulatory Organization’s
                                                  sec.gov. Please include File Number SR–                    Pursuant to Section 19(b)(1) of the                Statement of the Purpose of, and
                                                  MIAX–2017–19 on the subject line.                       Securities Exchange Act of 1934 (the                  Statutory Basis for, the Proposed Rule
                                                                                                          ‘‘Act’’) 1 and Rule 19b–4 thereunder,2                Change
                                                  Paper Comments
                                                                                                          notice is hereby given that on May 15,                1. Purpose
                                                     • Send paper comments in triplicate                  2017, Bats EDGX Exchange, Inc. (the
                                                  to Secretary, Securities and Exchange                                                                            Bats BYX Exchange, Inc., Bats BZX
                                                                                                          ‘‘Exchange’’ or ‘‘EDGX’’) filed with the
                                                  Commission, 100 F Street NE.,                                                                                 Exchange, Inc., Bats EDGA Exchange,
                                                                                                          Securities and Exchange Commission                    Inc., Bats EDGX Exchange, Inc., BOX
                                                  Washington, DC 20549–1090.                              (‘‘Commission’’) the proposed rule                    Options Exchange LLC, C2 Options
                                                  All submissions should refer to File                    change as described in Items I, II, and               Exchange, Incorporated, Chicago Board
                                                  Number SR–MIAX–2017–19. This file                       III below, which Items have been                      Options Exchange, Incorporated,
                                                  number should be included on the                        prepared by the Exchange. The                         Chicago Stock Exchange, Inc., Financial
                                                  subject line if email is used. To help the              Commission is publishing this notice to               Industry Regulatory Authority, Inc.
                                                  Commission process and review your                      solicit comments on the proposed rule                 (‘‘FINRA’’), Investors’ Exchange LLC,
                                                  comments more efficiently, please use                   change from interested persons.                       Miami International Securities
                                                  only one method. The Commission will
                                                                                                          I. Self-Regulatory Organization’s                     Exchange, LLC, MIAX PEARL, LLC,
                                                  post all comments on the Commission’s
                                                                                                          Statement of the Terms of Substance of                NASDAQ BX, Inc., Nasdaq GEMX, LLC,
                                                  Internet Web site (http://www.sec.gov/
                                                                                                          the Proposed Rule Change                              Nasdaq ISE, LLC, Nasdaq MRX, LLC,4
                                                  rules/sro.shtml). Copies of the
                                                                                                                                                                NASDAQ PHLX LLC, The NASDAQ
                                                  submission, all subsequent                                 The Exchange filed a proposal to
                                                                                                                                                                Stock Market LLC, New York Stock
                                                  amendments, all written statements                      modify requirements for the collection
                                                                                                                                                                Exchange LLC, NYSE MKT LLC, NYSE
                                                  with respect to the proposed rule                       of information that is duplicative of
                                                                                                                                                                Arca, Inc. and NYSE National, Inc.5
                                                  change that are filed with the                          information intended to be collected for
                                                                                                                                                                (collectively, the ‘‘Participants’’) filed
                                                  Commission, and all written                             the consolidated audit trail (‘‘CAT’’)
                                                                                                                                                                with the Commission, pursuant to
                                                  communications relating to the                          adopted pursuant to the National
                                                                                                                                                                Section 11A of the Exchange Act 6 and
                                                  proposed rule change between the                        Market System Plan Governing the
                                                  Commission and any person, other than                   Consolidated Audit Trail (the ‘‘CAT                     4 ISE Gemini, LLC, ISE Mercury, LLC and
                                                  those that may be withheld from the                     NMS Plan’’ or ‘‘Plan’’).3 The Exchange                International Securities Exchange, LLC have been
                                                  public in accordance with the                           will announce the implementation date                 renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
                                                  provisions of 5 U.S.C. 552, will be                     of the proposed rule change and                       and Nasdaq ISE, LLC, respectively. See Securities
                                                                                                                                                                Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR
                                                  available for Web site viewing and                      effective date of the retirement of any
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                                                                                14547 (Mar. 21, 2017); Securities Exchange Act Rel.
                                                  printing in the Commission’s Public                                                                           No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4,
                                                  Reference Room, 100 F Street NE.,                         61 17 CFR 200.30–3(a)(12).                          2017); and Securities Exchange Act Rel. No. 80325
                                                                                                            1 15 U.S.C. 78s(b)(1).                              (Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017).
                                                  Washington, DC 20549, on official
                                                                                                            2 17 CFR 240.19b–4.                                   5 National Stock Exchange, Inc. has been renamed
                                                  business days between the hours of                        3 Unless otherwise specified, capitalized terms     NYSE National, Inc. See Securities Exchange Act
                                                  10:00 a.m. and 3:00 p.m. Copies of the                  used in this rule filing are defined as set forth     Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3,
                                                  filing also will be available for                       herein, or in the CAT Compliance Rule Series or in    2017).
                                                  inspection and copying at the principal                 the CAT NMS Plan.                                       6 15 U.S.C. 78k–1.




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Document Created: 2017-06-01 03:04:53
Document Modified: 2017-06-01 03:04:53
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 25347 

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