82 FR 25366 - Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Eliminate Requirements That Will Be Duplicative of CAT
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 104 (June 1, 2017)
Federal Register Volume 82, Issue 104 (June 1, 2017)
| Page Range | 25366-25369 | |
| FR Document | 2017-11366 |
[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)] [Notices] [Pages 25366-25369] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-11366] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80790; File No. SR-MIAX-2017-20] Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Eliminate Requirements That Will Be Duplicative of CAT May 26, 2017. Pursuant to 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 15, 2017, Miami International Securities Exchange, LLC (``MIAX Options'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend MIAX Options Rule 607, Securities Accounts and Orders of Market Makers (``Rule 607'' or the ``Position Reporting Rule'') by adding new Interpretation and Policy .01 to Rule 607, and MIAX Options Rule 804, Automated Submission of Trade Data (``Rule 804'' or the ``EBS Rule'' and together with the Position Reporting Rule, the ``CAT Duplicative Rules'') by adding new Interpretation and Policy .01 to Rule 804, as the CAT Duplicative Rules provide for the collection of information that is duplicative of the data collection requirements of the consolidated audit trail (``CAT'') adopted pursuant to the National Market System Plan Governing the Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan'').\3\ --------------------------------------------------------------------------- \3\ Unless otherwise specified, capitalized terms used in this rule filing are defined as set forth herein, or in the CAT Compliance Rule Series or in the CAT NMS Plan. --------------------------------------------------------------------------- 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,\4\ NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE MKT LLC, NYSE Arca, Inc. and NYSE National, Inc.\5\ (collectively, the ``Participants'') filed with the Commission, pursuant to Section 11A of the Exchange Act \6\ and Rule 608 of Regulation NMS thereunder,\7\ the CAT NMS Plan.\8\ The Participants filed the Plan to comply with Rule 613 of Regulation NMS under the Exchange Act. The Plan was published for comment in the Federal Register on May 17, 2016,\9\ and approved by the Commission, as modified, on November 15, 2016.\10\ The Plan is designed to create, implement and maintain a CAT that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Pursuant to Appendix C of the CAT NMS Plan, each Participant is [[Page 25367]] required to conduct analyses of which of its existing trade and order data rules and systems require the collection of information that is duplicative of information collected for the CAT.\11\ In addition, among other things, Section C.9 of Appendix C to the Plan, as modified by the Commission, requires each Participant to ``file with the SEC the relevant rule change filing to eliminate or modify its duplicative rules within six (6) months of the SEC's approval of the CAT NMS Plan.'' \12\ The Plan notes that ``the elimination of such rules and the retirement of such systems [will] be effective at such time as CAT Data meets minimum standards of accuracy and reliability.'' \13\ The Exchange has determined that the Position Reporting Rule and the EBS Rule is affected by the implementation of the CAT and, therefore, is filing this proposed rule change. --------------------------------------------------------------------------- \4\ ISE Gemini, LLC, ISE Mercury, LLC and International Securities Exchange, LLC have been renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC, and Nasdaq ISE, LLC, respectively. See Securities Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR 14547 (Mar. 21, 2017); Securities Exchange Act Rel. No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4, 2017); and Securities Exchange Act Rel. No. 80325 (Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017). \5\ National Stock Exchange, Inc. has been renamed NYSE National, Inc. See Securities Exchange Act Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3, 2017). \6\ 15 U.S.C. 78k-1. \7\ 17 CFR 242.608. \8\ See Letter from the Participants to Brent J. Fields, Secretary, Commission, dated September 30, 2014; and Letter from Participants to Brent J. Fields, Secretary, Commission, dated February 27, 2015. On December 24, 2015, the Participants submitted an amendment to the CAT NMS Plan. See Letter from Participants to Brent J. Fields, Secretary, Commission, dated December 23, 2015. \9\ See Securities Exchange Act Release No. 77724 (Apr. 27, 2016), 81 FR 30614 (May 17, 2016). \10\ See Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016) (``Approval Order''). \11\ Appendix C of CAT NMS Plan, Approval Order at 85010. \12\ Id. \13\ Id. --------------------------------------------------------------------------- (1) The CAT Duplicative Rules MIAX Options Rule 607, the Position Reporting Rule, is the Exchange's rule requiring Market Makers to (a) keep current and file with the Exchange a list identifying specified accounts in which it may engage in trading activities or over which it exercises investment discretion (``MM account information'') and (b) report to the Exchange every order entered by the Market Maker for the purchase or sale of a security underlying options traded on the Exchange or convertible into or exercisable for such underlying security (``MM order information''), as well as opening and closing positions in all such securities held in each of the aforementioned specified accounts (``MM position information''), in each case in a manner prescribed by the Exchange. MIAX Options Rule 804, the EBS Rule, is the Exchange's rule requiring Members to submit requested trade data elements (``Member trade data'') to the Exchange in such automated format as may be prescribed by the Exchange from time to time, in regard to a transaction(s) that is the subject of a particular request for information. Rule 804 contemplates using the Electronic Blue Sheet (``EBS'') system for the automated submission of Member trade data as requested by the Exchange, including, among other information, clearing house number or alpha symbol, identifying symbol assigned to the security, options month and/or series, transaction execution date, number of option contracts for transaction and whether opening or closing purchase or sale, transaction price, account number and/or market center where executed. Once broker-dealer reporting to the CAT has begun, the CAT will contain certain of the data the Participants would otherwise have requested via the Position Reporting Rule or via the EBS system for purposes of NMS Securities and OTC Equity Securities. Consequently, the Exchange will not need to use the Position Reporting Rule to obtain MM account information or MM order information (although Exchange still anticipates the need to obtain MM position information pursuant to Rule 607 because the CAT does not currently address position reporting) or use the EBS system to obtain Member trade data or request information pursuant to the CAT Duplicative Rules for NMS Securities or OTC Equity Securities for time periods after CAT reporting has begun if the appropriate accuracy and reliability thresholds are achieved, including an acceptable accuracy rate for customer and account information. However, the Position Reporting Rule cannot be completely eliminated immediately upon the CAT achieving the appropriate thresholds because Exchange staff will still need to request information pursuant to the Position Reporting Rule regarding MM position information (because the CAT does not currently address position reporting), and Exchange staff may still need to request information pursuant to the Position Reporting Rule for MM account information and MM order information before a Market Maker was reporting to the CAT. Further, the EBS Rule cannot be completely eliminated immediately upon the CAT achieving the appropriate thresholds because Exchange staff may still need to request information pursuant to the EBS Rule for trading activity occurring before a Member was reporting to the CAT.\14\ --------------------------------------------------------------------------- \14\ Firms are required to maintain the trade information for pre-CAT transactions in equities and options pursuant to applicable rules, such as books and records retention requirements, for the relevant time period, which is generally three or six years depending upon the record. See 17 CFR 240.17a-3(a), 240.17a-4. --------------------------------------------------------------------------- The proposed rule change proposes to: (1) Add new Interpretation and Policy .01 to the Position Reporting Rule to clarify how the Exchange will request Market Maker account, order and position data under Rule 607 after MIAX Options Market Makers are reporting to the CAT, and (2) add new Interpretation and Policy .01 to the EBS Rule to clarify how the Exchange will request trade data under Rule 804 after MIAX Options Members are reporting to the CAT. With respect to the Position Reporting Rule, proposed Interpretation and Policy .01 to Rule 607 will specifically permit the Exchange to request information under such rule only if the information is not available in the CAT because, for example, the transactions in question occurred before the Market Maker was reporting information to the CAT or relates to position information because the CAT does not currently address position reporting. In essence, under the new Interpretation and Policy .01 to Rule 607, the Exchange will make requests under Rule 607 if and only if the information is not otherwise available through the CAT. With respect to the EBS Rule, proposed Interpretation and Policy .01 to Rule 804 will specifically permit the Exchange to request information under such rule only if the information is not available in the CAT because, for example, the transactions in question occurred before the Member was reporting information to the CAT. In essence, under the new Interpretation and Policy .01 to Rule 804, the Exchange will make requests under Rule 804 if and only if the information is not otherwise available through the CAT. The CAT NMS Plan states, however, that the elimination of rules that are duplicative of the requirements of the CAT and the retirement of the related systems should be effective at such time as CAT Data meets minimum standards of accuracy and reliability.\15\ Accordingly, as discussed in more detail below, the Exchange believes that MM account information and MM order information (but not MM position information) may be replaced by CAT Data at a date after all Industry Members are reporting to the CAT when the proposed error rate thresholds have been met, and MIAX Options has determined that its usage of the CAT Data has not revealed material issues that have not been corrected, confirmed that the CAT includes all data necessary to allow MIAX Options to continue to meet its surveillance obligations, and confirmed that the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. --------------------------------------------------------------------------- \15\ Id. [sic]. --------------------------------------------------------------------------- The Exchange further believes, as discussed in more detail below, that the EBS data may be replaced by CAT Data at a date after all Industry Members are reporting to the CAT when the proposed error rate thresholds have been met, and MIAX Options has determined that its usage of the CAT Data has not revealed material issues that have not been [[Page 25368]] corrected, confirmed that the CAT includes all data necessary to allow MIAX Options to continue to meet its surveillance obligations, and confirmed that the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. MIAX Options believes CAT Data should not be used in place of MM account information and MM order information or EBS data until all Participants and Industry Members are reporting data to CAT. In this way, MIAX Options will continue to have access to the necessary data to perform its regulatory duties. The CAT NMS Plan requires that a rule filing to eliminate a duplicative rule address whether ``the availability of certain data from Small Industry Members two years after the Effective Date would facilitate a more expeditious retirement of duplicative systems.'' \16\ The Exchange believes that MM account information and MM order information reporting should not be eliminated until all Participants and Industry Members that report such information are reporting comparable data to the CAT. The Exchange further believes that the EBS system should not be retired until all Participants and Industry Members that report EBS data to the EBS system are reporting comparable data to the CAT. While the early submission of data to the CAT by Small Industry Members could expedite the replacement of MM account information, MM order information and EBS data with CAT Data, the Exchange believes that it is premature to consider such a change and that additional analysis would be necessary to determine whether such early reporting by Small Industry Members would be feasible. --------------------------------------------------------------------------- \16\ Id. --------------------------------------------------------------------------- The CAT NMS Plan requires that this rule filing address ``whether individual Industry Members can be exempted from reporting to duplicative systems once their CAT reporting meets specified accuracy and reliability standards, including, but not limited to, ways in which establishing cross-system regulatory functionality or integrating data from existing systems and the CAT would facilitate such Individual Industry Member exemptions.'' \17\ The Exchange believes that a single cut-over from current reporting systems to CAT is highly preferable to a firm-by-firm approach and is not proposing to exempt Members from the Position Reporting Rule or EBS Rule requirements on a firm-by-firm basis. The Exchange believes that providing such individual exemptions to Industry Members would be inefficient, more costly, and less reliable than the single cut-over. Providing individual exemptions would require the exchanges to create, for a brief temporary period, a cross-system regulatory function and to integrate data from current reporting systems and the CAT to avoid creating any regulatory gaps as a result of such exemptions. Such a function would be costly to create and would give rise to a greater likelihood of data errors or other issues. Given the limited time in which such exemptions would be necessary, the Exchange does not believe that such exemptions would be an appropriate use of limited resources. --------------------------------------------------------------------------- \17\ Id. --------------------------------------------------------------------------- The CAT NMS Plan also requires that a rule filing to eliminate a duplicative rule to provide ``specific accuracy and reliability standards that will determine when duplicative systems will be retired, including, but not limited to, whether the attainment of a certain Error Rate should determine when a system duplicative of the CAT can be retired.'' \18\ The Exchange believes that it is critical that the CAT Data be sufficiently accurate and reliable for the Exchange to perform the regulatory functions that it now performs via current reporting systems. Accordingly, the Exchange believes that the CAT Data should meet specific quantitative error rates, as well as certain qualitative requirements. --------------------------------------------------------------------------- \18\ Id. --------------------------------------------------------------------------- The Exchange believes that, before CAT Data may be used in place of MM account information and MM order information or EBS data, the CAT would need to achieve a sustained error rate for a period of at least 180 days of 5% or lower measured on a pre-correction or as-submitted basis, and 2% or lower on a post-correction basis (measured at T+5).\19\ The Exchange proposes to measure the 5% pre-correction and 2% post-correction thresholds by averaging the error rate across the period, not require a 5% pre-correction and 2% post-correction maximum each day for 180 consecutive days. The Exchange believes that measuring each of the thresholds over the course of 180 days will ensure that the CAT consistently meets minimum accuracy and reliability thresholds while also ensuring that single-day measurements do not unduly affect the overall measurements. The Exchange proposes to measure the appropriate error rates in the aggregate, rather than firm-by-firm. The 2% and 5% error rates are in line with the proposed retirement threshold for other systems, such as FINRA's Order Audit Trail System (``OATS'') and the consolidated options audit trail system (``COATS''). --------------------------------------------------------------------------- \19\ The Plan requires that the Plan Processor must ensure that regulators have access to corrected and linked order and Customer data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, at C-15. --------------------------------------------------------------------------- In addition to these minimum error rates before using CAT Data instead of MM account information and MM order information or EBS data, the Exchange believes that during the minimum 180-day period during which the thresholds are calculated, the Exchange's use of the data in the CAT must confirm that (i) usage over that time period has not revealed material issues that have not been corrected, (ii) the CAT includes all data necessary to allow the Exchange to continue to meet its surveillance obligations, and (iii) the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. The Exchange believes this time period to use the CAT Data is necessary to reveal any errors that may manifest themselves only after surveillance patterns and other queries have been run and to confirm that the Plan Processor is meeting its obligations and performing its functions adequately. If the Commission approves the proposed rule change, the Exchange will announce the implementation date for the proposed rule change in a Regulatory Circular that will be published once the Exchange concludes the thresholds for accuracy and reliability described above have been met and that the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Exchange Act,\20\ which require, among other things, that the Exchange rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest, and not designed to permit unfair discrimination between customers, issuers, brokers and dealers. The Exchange believes that this proposal is consistent with the Exchange Act because it fulfills the obligation in the CAT NMS Plan for the Exchange to submit a proposed rule change to eliminate or modify duplicative rules. In approving the Plan, the SEC noted that the Plan ``is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove [[Page 25369]] impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.'' \21\ As this proposal implements the Plan, the Exchange believes that this proposal furthers the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Exchange Act. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78f(b)(5). \21\ Approval Order at 84697. --------------------------------------------------------------------------- Moreover, the purpose of the proposed rule change is to amend rules that require the submission of duplicative data to the Exchange. The elimination of such duplicative requirements will reduce unnecessary costs and other compliance burdens for the Exchange and its Members, and therefore, will enhance the efficiency of the securities markets. Furthermore, the Exchange believes that the approach set forth in the proposed rule change strikes the appropriate balance between ensuring that the Exchange is able to continue to fulfill its statutory obligation to protect investors and the public interest by ensuring its surveillance of market activity remains accurate and effective while also establishing a reasonable timeframe for elimination or modification of its rules that will be rendered duplicative after implementation of the CAT. B. Self-Regulatory Organization's Statement on Burden on Competition Section 6(b)(8) of the Exchange Act \22\ requires that Exchange rules not impose any burden on competition that is not necessary or appropriate. The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. The Exchange notes that the proposed rule change implements the requirements of the CAT NMS Plan approved by the Commission regarding the elimination of rules and systems that are duplicative the CAT, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. Similarly, all exchanges and FINRA are proposing the elimination of their EBS and other CAT duplicative rules to implement the requirements of the CAT NMS Plan. Therefore, this is not a competitive rule filing and, therefore, it does not raise competition issues between and among the self-regulatory organizations and/or their members. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78f(b)(8) --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-MIAX-2017-20 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-MIAX-2017-20. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-MIAX-2017-20, and should be submitted on or before June 22, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-11366 Filed 5-31-17; 8:45 am] BILLING CODE 8011-01-P
![25366 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices
All submissions should refer to File Exchange, LLC (‘‘MIAX Options’’ or A. Self-Regulatory Organization’s
Number SR–NYSEArca–2017–59. This ‘‘Exchange’’) filed with the Securities Statement of the Purpose of, and the
file number should be included on the and Exchange Commission (‘‘SEC’’ or Statutory Basis for, the Proposed Rule
subject line if email is used. To help the ‘‘Commission’’) the proposed rule Change
Commission process and review your change as described in Items I, II, and 1. Purpose
comments more efficiently, please use III below, which Items have been
only one method. The Commission will Bats BYX Exchange, Inc., Bats BZX
prepared by the Exchange. The
post all comments on the Commission’s Exchange, Inc., Bats EDGA Exchange,
Commission is publishing this notice to
Internet Web site (http://www.sec.gov/ Inc., Bats EDGX Exchange, Inc., BOX
solicit comments on the proposed rule Options Exchange LLC, C2 Options
rules/sro.shtml). Copies of the
change from interested persons. Exchange, Incorporated, Chicago Board
submission, all subsequent
amendments, all written statements I. Self-Regulatory Organization’s Options Exchange, Incorporated,
with respect to the proposed rule Statement of the Terms of Substance of Chicago Stock Exchange, Inc., Financial
change that are filed with the the Proposed Rule Change Industry Regulatory Authority, Inc.
Commission, and all written (‘‘FINRA’’), Investors’ Exchange LLC,
communications relating to the The Exchange is filing a proposal to Miami International Securities
proposed rule change between the amend MIAX Options Rule 607, Exchange, LLC, MIAX PEARL, LLC,
Commission and any person, other than Securities Accounts and Orders of NASDAQ BX, Inc., Nasdaq GEMX, LLC,
those that may be withheld from the Market Makers (‘‘Rule 607’’ or the Nasdaq ISE, LLC, Nasdaq MRX, LLC,4
public in accordance with the ‘‘Position Reporting Rule’’) by adding NASDAQ PHLX LLC, The NASDAQ
provisions of 5 U.S.C. 552, will be new Interpretation and Policy .01 to Stock Market LLC, New York Stock
available for Web site viewing and Rule 607, and MIAX Options Rule 804, Exchange LLC, NYSE MKT LLC, NYSE
printing in the Commission’s Public Automated Submission of Trade Data Arca, Inc. and NYSE National, Inc.5
Reference Room, 100 F Street NE., (collectively, the ‘‘Participants’’) filed
(‘‘Rule 804’’ or the ‘‘EBS Rule’’ and
Washington, DC 20549 on official with the Commission, pursuant to
together with the Position Reporting
business days between the hours of Section 11A of the Exchange Act 6 and
Rule, the ‘‘CAT Duplicative Rules’’) by Rule 608 of Regulation NMS
10:00 a.m. and 3:00 p.m. Copies of such adding new Interpretation and Policy
filing also will be available for thereunder,7 the CAT NMS Plan.8 The
.01 to Rule 804, as the CAT Duplicative Participants filed the Plan to comply
inspection and copying at the principal
office of the Exchange. All comments Rules provide for the collection of with Rule 613 of Regulation NMS under
received will be posted without change; information that is duplicative of the the Exchange Act. The Plan was
the Commission does not edit personal data collection requirements of the published for comment in the Federal
identifying information from consolidated audit trail (‘‘CAT’’) Register on May 17, 2016,9 and
submissions. You should submit only adopted pursuant to the National approved by the Commission, as
information that you wish to make Market System Plan Governing the modified, on November 15, 2016.10 The
available publicly. All submissions Consolidated Audit Trail (the ‘‘CAT Plan is designed to create, implement
should refer to File Number SR– NMS Plan’’ or ‘‘Plan’’).3 and maintain a CAT that would capture
NYSEArca–2017–59, and should be The text of the proposed rule change customer and order event information
submitted on or before June 22, 2017. for orders in NMS Securities and OTC
is available on the Exchange’s Web site
Equity Securities, across all markets,
For the Commission, by the Division of at http://www.miaxoptions.com/rule-
Trading and Markets, pursuant to delegated from the time of order inception through
filings, at MIAX’s principal office, and routing, cancellation, modification, or
authority.35 at the Commission’s Public Reference
Eduardo A. Aleman, execution in a single consolidated data
Room. source. Pursuant to Appendix C of the
Assistant Secretary.
II. Self-Regulatory Organization’s CAT NMS Plan, each Participant is
[FR Doc. 2017–11367 Filed 5–31–17; 8:45 am]
BILLING CODE 8011–01–P
Statement of the Purpose of, and
4 ISE Gemini, LLC, ISE Mercury, LLC and
Statutory Basis for, the Proposed Rule International Securities Exchange, LLC have been
Change renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
SECURITIES AND EXCHANGE and Nasdaq ISE, LLC, respectively. See Securities
COMMISSION In its filing with the Commission, the Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR
Exchange included statements 14547 (Mar. 21, 2017); Securities Exchange Act Rel.
[Release No. 34–80790; File No. SR–MIAX– No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4,
concerning the purpose of and basis for 2017); and Securities Exchange Act Rel. No. 80325
2017–20]
the proposed rule change and discussed (Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017).
5 National Stock Exchange, Inc. has been renamed
Self-Regulatory Organizations; Miami any comments it received on the
NYSE National, Inc. See Securities Exchange Act
International Securities Exchange, proposed rule change. The text of these Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3,
LLC; Notice of Filing of Proposed Rule statements may be examined at the 2017).
Change To Eliminate Requirements places specified in Item IV below. The 6 15 U.S.C. 78k–1.
7 17 CFR 242.608.
That Will Be Duplicative of CAT Exchange has prepared summaries, set
8 See Letter from the Participants to Brent J.
forth in sections A, B, and C below, of
May 26, 2017. Fields, Secretary, Commission, dated September 30,
the most significant aspects of such 2014; and Letter from Participants to Brent J. Fields,
Pursuant to Section 19(b)(1) of the
statements. Secretary, Commission, dated February 27, 2015.
mstockstill on DSK30JT082PROD with NOTICES
Securities Exchange Act of 1934 On December 24, 2015, the Participants submitted
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 an amendment to the CAT NMS Plan. See Letter
notice is hereby given that on May 15, from Participants to Brent J. Fields, Secretary,
Commission, dated December 23, 2015.
2017, Miami International Securities 9 See Securities Exchange Act Release No. 77724
3 Unless otherwise specified, capitalized terms
(Apr. 27, 2016), 81 FR 30614 (May 17, 2016).
35 17 CFR 200.30–3(a)(12). used in this rule filing are defined as set forth 10 See Securities Exchange Act Rel. No. 79318
1 15 U.S.C. 78s(b)(1). herein, or in the CAT Compliance Rule Series or in (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016)
2 17 CFR 240.19b–4. the CAT NMS Plan. (‘‘Approval Order’’).
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![Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices 25367
required to conduct analyses of which transaction and whether opening or MIAX Options Members are reporting to
of its existing trade and order data rules closing purchase or sale, transaction the CAT.
and systems require the collection of price, account number and/or market With respect to the Position Reporting
information that is duplicative of center where executed. Rule, proposed Interpretation and
information collected for the CAT.11 In Once broker-dealer reporting to the Policy .01 to Rule 607 will specifically
addition, among other things, Section CAT has begun, the CAT will contain permit the Exchange to request
C.9 of Appendix C to the Plan, as certain of the data the Participants information under such rule only if the
modified by the Commission, requires would otherwise have requested via the information is not available in the CAT
each Participant to ‘‘file with the SEC Position Reporting Rule or via the EBS because, for example, the transactions in
the relevant rule change filing to system for purposes of NMS Securities question occurred before the Market
eliminate or modify its duplicative rules and OTC Equity Securities. Maker was reporting information to the
within six (6) months of the SEC’s Consequently, the Exchange will not CAT or relates to position information
approval of the CAT NMS Plan.’’ 12 The need to use the Position Reporting Rule because the CAT does not currently
Plan notes that ‘‘the elimination of such to obtain MM account information or address position reporting. In essence,
rules and the retirement of such systems MM order information (although under the new Interpretation and Policy
[will] be effective at such time as CAT Exchange still anticipates the need to .01 to Rule 607, the Exchange will make
Data meets minimum standards of obtain MM position information requests under Rule 607 if and only if
accuracy and reliability.’’ 13 The pursuant to Rule 607 because the CAT the information is not otherwise
Exchange has determined that the does not currently address position available through the CAT.
Position Reporting Rule and the EBS reporting) or use the EBS system to With respect to the EBS Rule,
Rule is affected by the implementation obtain Member trade data or request proposed Interpretation and Policy .01
of the CAT and, therefore, is filing this information pursuant to the CAT to Rule 804 will specifically permit the
proposed rule change. Duplicative Rules for NMS Securities or Exchange to request information under
OTC Equity Securities for time periods such rule only if the information is not
(1) The CAT Duplicative Rules after CAT reporting has begun if the available in the CAT because, for
MIAX Options Rule 607, the Position appropriate accuracy and reliability example, the transactions in question
Reporting Rule, is the Exchange’s rule thresholds are achieved, including an occurred before the Member was
requiring Market Makers to (a) keep acceptable accuracy rate for customer reporting information to the CAT. In
current and file with the Exchange a list and account information. However, the essence, under the new Interpretation
identifying specified accounts in which Position Reporting Rule cannot be and Policy .01 to Rule 804, the
it may engage in trading activities or completely eliminated immediately Exchange will make requests under Rule
over which it exercises investment upon the CAT achieving the appropriate 804 if and only if the information is not
discretion (‘‘MM account information’’) thresholds because Exchange staff will otherwise available through the CAT.
and (b) report to the Exchange every still need to request information The CAT NMS Plan states, however,
order entered by the Market Maker for pursuant to the Position Reporting Rule that the elimination of rules that are
the purchase or sale of a security regarding MM position information duplicative of the requirements of the
underlying options traded on the (because the CAT does not currently CAT and the retirement of the related
Exchange or convertible into or address position reporting), and systems should be effective at such time
exercisable for such underlying security Exchange staff may still need to request as CAT Data meets minimum standards
(‘‘MM order information’’), as well as information pursuant to the Position of accuracy and reliability.15
opening and closing positions in all Reporting Rule for MM account Accordingly, as discussed in more detail
such securities held in each of the information and MM order information below, the Exchange believes that MM
aforementioned specified accounts before a Market Maker was reporting to account information and MM order
(‘‘MM position information’’), in each the CAT. Further, the EBS Rule cannot information (but not MM position
case in a manner prescribed by the be completely eliminated immediately information) may be replaced by CAT
Exchange. upon the CAT achieving the appropriate Data at a date after all Industry Members
MIAX Options Rule 804, the EBS thresholds because Exchange staff may are reporting to the CAT when the
Rule, is the Exchange’s rule requiring still need to request information proposed error rate thresholds have
Members to submit requested trade data pursuant to the EBS Rule for trading been met, and MIAX Options has
elements (‘‘Member trade data’’) to the activity occurring before a Member was determined that its usage of the CAT
Exchange in such automated format as reporting to the CAT.14 Data has not revealed material issues
may be prescribed by the Exchange from The proposed rule change proposes that have not been corrected, confirmed
time to time, in regard to a transaction(s) to: (1) Add new Interpretation and that the CAT includes all data necessary
that is the subject of a particular request Policy .01 to the Position Reporting Rule to allow MIAX Options to continue to
for information. Rule 804 contemplates to clarify how the Exchange will request meet its surveillance obligations, and
using the Electronic Blue Sheet (‘‘EBS’’) Market Maker account, order and confirmed that the Plan Processor is
system for the automated submission of position data under Rule 607 after sufficiently meeting all of its obligations
Member trade data as requested by the MIAX Options Market Makers are under the CAT NMS Plan.
Exchange, including, among other reporting to the CAT, and (2) add new The Exchange further believes, as
information, clearing house number or Interpretation and Policy .01 to the EBS discussed in more detail below, that the
alpha symbol, identifying symbol Rule to clarify how the Exchange will EBS data may be replaced by CAT Data
at a date after all Industry Members are
mstockstill on DSK30JT082PROD with NOTICES
assigned to the security, options month request trade data under Rule 804 after
and/or series, transaction execution reporting to the CAT when the proposed
date, number of option contracts for 14 Firms are required to maintain the trade error rate thresholds have been met, and
information for pre-CAT transactions in equities MIAX Options has determined that its
and options pursuant to applicable rules, such as usage of the CAT Data has not revealed
11 Appendix C of CAT NMS Plan, Approval Order
books and records retention requirements, for the
at 85010. relevant time period, which is generally three or six material issues that have not been
12 Id.
years depending upon the record. See 17 CFR
13 Id. 240.17a–3(a), 240.17a–4. 15 Id. [sic].
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![Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices 25369
impediments to, and perfect the C. Self-Regulatory Organization’s available for Web site viewing and
mechanism of a national market system, Statement on Comments on the printing in the Commission’s Public
or is otherwise in furtherance of the Proposed Rule Change Received From Reference Room, 100 F Street NE.,
purposes of the Act.’’ 21 As this proposal Members, Participants, or Others Washington, DC 20549 on official
implements the Plan, the Exchange Written comments were neither business days between the hours of
believes that this proposal furthers the 10:00 a.m. and 3:00 p.m. Copies of such
solicited nor received.
objectives of the Plan, as identified by filing also will be available for
the SEC, and is therefore consistent with III. Date of Effectiveness of the inspection and copying at the principal
the Exchange Act. Proposed Rule Change and Timing for office of the Exchange. All comments
Commission Action received will be posted without change;
Moreover, the purpose of the the Commission does not edit personal
proposed rule change is to amend rules Within 45 days of the date of
publication of this notice in the Federal identifying information from
that require the submission of submissions. You should submit only
Register or within such longer period (i)
duplicative data to the Exchange. The information that you wish to make
as the Commission may designate up to
elimination of such duplicative available publicly. All submissions
90 days of such date if it finds such
requirements will reduce unnecessary should refer to File Number SR–MIAX–
longer period to be appropriate and
costs and other compliance burdens for publishes its reasons for so finding or 2017–20, and should be submitted on or
the Exchange and its Members, and (ii) as to which the Exchange consents, before June 22, 2017.
therefore, will enhance the efficiency of the Commission shall: (a) By order For the Commission, by the Division of
the securities markets. Furthermore, the approve or disapprove such proposed Trading and Markets, pursuant to delegated
Exchange believes that the approach set authority.23
rule change, or (b) institute proceedings
forth in the proposed rule change strikes to determine whether the proposed rule Eduardo A. Aleman,
the appropriate balance between change should be disapproved. Assistant Secretary.
ensuring that the Exchange is able to [FR Doc. 2017–11366 Filed 5–31–17; 8:45 am]
continue to fulfill its statutory IV. Solicitation of Comments BILLING CODE 8011–01–P
obligation to protect investors and the Interested persons are invited to
public interest by ensuring its submit written data, views, and
surveillance of market activity remains arguments concerning the foregoing, SECURITIES AND EXCHANGE
accurate and effective while also including whether the proposed rule COMMISSION
establishing a reasonable timeframe for change is consistent with the Act. [Release No. 34–80781; File No. SR–
elimination or modification of its rules Comments may be submitted by any of NYSEArca–2017–60]
that will be rendered duplicative after the following methods:
implementation of the CAT. Self-Regulatory Organizations; NYSE
Electronic Comments Arca, Inc.; Notice of Filing of Proposed
B. Self-Regulatory Organization’s • Use the Commission’s Internet Rule Change for a New NYSE Arca
Statement on Burden on Competition comment form (http://www.sec.gov/ Rule 11.6900 and a New NYSE Arca
rules/sro.shtml); or Equities Rule 6.6900 To Establish the
Section 6(b)(8) of the Exchange Act 22 • Send an email to rule- Procedures for Resolving Potential
requires that Exchange rules not impose comments@sec.gov. Please include File Disputes Related to CAT Fees Charged
any burden on competition that is not Number SR–MIAX–2017–20 on the to Industry Members
necessary or appropriate. The Exchange subject line.
does not believe that the proposed rule May 26, 2017.
Paper Comments Pursuant to Section 19(b)(1) 1 of the
change will result in any burden on
competition that is not necessary or • Send paper comments in triplicate Securities Exchange Act of 1934 (‘‘Act’’
appropriate in furtherance of the to Brent J. Fields, Secretary, Securities or the ‘‘Exchange Act’’) 2 and Rule 19b–
purposes of the Exchange Act. The and Exchange Commission, 100 F Street 4 thereunder,3 notice is hereby given
NE., Washington, DC 20549–1090. that, on May 16, 2017, NYSE Arca, Inc.
Exchange notes that the proposed rule
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
change implements the requirements of All submissions should refer to File
with the Securities and Exchange
the CAT NMS Plan approved by the Number SR–MIAX–2017–20. This file
Commission (‘‘SEC’’ or the
Commission regarding the elimination number should be included on the
‘‘Commission’’) the proposed rule
of rules and systems that are duplicative subject line if email is used. To help the
change as described in Items I and II
the CAT, and is designed to assist the Commission process and review your
below, which Items have been prepared
Exchange in meeting its regulatory comments more efficiently, please use
by the self-regulatory organization. The
obligations pursuant to the Plan. only one method. The Commission will
Commission is publishing this notice to
Similarly, all exchanges and FINRA are post all comments on the Commission’s
solicit comments on the proposed rule
proposing the elimination of their EBS Internet Web site (http://www.sec.gov/
change from interested persons.
and other CAT duplicative rules to rules/sro.shtml). Copies of the
submission, all subsequent I. Self-Regulatory Organization’s
implement the requirements of the CAT
amendments, all written statements Statement of the Terms of Substance of
NMS Plan. Therefore, this is not a
with respect to the proposed rule the Proposed Rule Change
competitive rule filing and, therefore, it
change that are filed with the
mstockstill on DSK30JT082PROD with NOTICES
does not raise competition issues The Exchange proposes a new NYSE
Commission, and all written Arca Rule 11.6900 and a new NYSE
between and among the self-regulatory communications relating to the
organizations and/or their members. Arca Equities Rule 6.6900 to establish
proposed rule change between the
Commission and any person, other than 23 17 CFR 200.30–3(a)(12).
those that may be withheld from the 1 15 U.S.C.78s (b)(1).
21 Approval Order at 84697. public in accordance with the 2 15 U.S.C. 78a.
22 15 U.S.C. 78f(b)(8) provisions of 5 U.S.C. 552, will be 3 17 CFR 240.19b–4.
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Document Created: 2017-06-01 03:05:06
Document Modified: 2017-06-01 03:05:06
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 25366 |
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