82 FR 25436 - Self-Regulatory Organizations; MIAX PEARL, 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 | 25436-25439 | |
| FR Document | 2017-11368 |
[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)] [Notices] [Pages 25436-25439] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-11368] [[Page 25436]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80792; File No. SR-PEARL-2017-23] Self-Regulatory Organizations; MIAX PEARL, 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, MIAX PEARL, LLC (``MIAX PEARL'' 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 PEARL Rule 606, Securities Accounts and Orders of Market Makers (``Rule 606'' or the ``Position Reporting Rule'') by adding new Interpretation and Policy .02 to Rule 606, and MIAX PEARL 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/pearl, at MIAX PEARL's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set 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 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 164FR45 (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 PEARL Rule 606, 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. [[Page 25437]] MIAX PEARL Rule 804,\14\ 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. --------------------------------------------------------------------------- \14\ MIAX PEARL Rule 804 is incorporated by reference from the rules contained in Miami International Securities Exchange, LLC Rule Book Chapter VIII, as such rules may be in effect from time to time (the ``Chapter VIII Rules''), and is thus a MIAX PEARL Rule and thereby applicable to MIAX PEARL Members. MIAX PEARL Members shall comply with the Chapter VIII Rules as though such rules were fully- set forth in the MIAX PEARL Rule Book. All defined terms, including any variations thereof, contained in Chapter VIII Rules shall be read to refer to the MIAX PEARL related meaning of such term. See Securities Exchange Act Release No. 79543 (December 13, 2016), 81 FR 92901 (December 20, 2016) (Order pursuant to Section 36 of the Exchange Act granting application by MIAX PEARL for exemption from the rule filing requirements of Section 19(b) of the Exchange Act with respect to certain rules incorporated by reference) at 92916. --------------------------------------------------------------------------- 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 606 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.\15\ --------------------------------------------------------------------------- \15\ 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 .02 to the Position Reporting Rule to clarify how the Exchange will request Market Maker account, order and position data under Rule 606 after MIAX PEARL 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 PEARL Members are reporting to the CAT. With respect to the Position Reporting Rule, proposed Interpretation and Policy .02 to Rule 606 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 .02 to Rule 606, the Exchange will make requests under Rule 606 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.\16\ 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 PEARL 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 PEARL 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. --------------------------------------------------------------------------- \16\ 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 PEARL 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 PEARL 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 PEARL 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 PEARL 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.'' \17\ 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 [[Page 25438]] 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. --------------------------------------------------------------------------- \17\ 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.'' \18\ 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. --------------------------------------------------------------------------- \18\ 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.'' \19\ 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. --------------------------------------------------------------------------- \19\ 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).\20\ 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''). --------------------------------------------------------------------------- \20\ 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,\21\ 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 impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.'' \22\ 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. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f(b)(5). \22\ 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. [[Page 25439]] B. Self-Regulatory Organization's Statement on Burden on Competition Section 6(b)(8) of the Exchange Act \23\ 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. --------------------------------------------------------------------------- \23\ 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-PEARL-2017-23 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-PEARL-2017-23. 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-PEARL-2017-23, and should be submitted on or before June 22, 2017. --------------------------------------------------------------------------- \24\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-11368 Filed 5-31-17; 8:45 am] BILLING CODE 8011-01-P
![25436 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices
SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s Register on May 17, 2016,9 and
COMMISSION Statement of the Purpose of, and approved by the Commission, as
Statutory Basis for, the Proposed Rule modified, on November 15, 2016.10 The
[Release No. 34–80792; File No. SR–
Change Plan is designed to create, implement
PEARL–2017–23] In its filing with the Commission, the and maintain a CAT that would capture
Exchange included statements customer and order event information
Self-Regulatory Organizations; MIAX concerning the purpose of and basis for for orders in NMS Securities and OTC
PEARL, LLC; Notice of Filing of the proposed rule change and discussed Equity Securities, across all markets,
Proposed Rule Change To Eliminate any comments it received on the from the time of order inception through
Requirements That Will Be Duplicative proposed rule change. The text of these routing, cancellation, modification, or
of CAT statements may be examined at the execution in a single consolidated data
places specified in Item IV below. The source. Pursuant to Appendix C of the
May 26, 2017. Exchange has prepared summaries, set CAT NMS Plan, each Participant is
forth in sections A, B, and C below, of required to conduct analyses of which
Pursuant to Section 19(b)(1) of the
the most significant aspects of such of its existing trade and order data rules
Securities Exchange Act of 1934
statements. and systems require the collection of
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 information that is duplicative of
notice is hereby given that on May 15, A. Self-Regulatory Organization’s information collected for the CAT.11 In
2017, MIAX PEARL, LLC (‘‘MIAX Statement of the Purpose of, and the addition, among other things, Section
PEARL’’ or ‘‘Exchange’’) filed with the Statutory Basis for, the Proposed Rule C.9 of Appendix C to the Plan, as
Securities and Exchange Commission Change modified by the Commission, requires
(‘‘SEC’’ or ‘‘Commission’’) the proposed 1. Purpose each Participant to ‘‘file with the SEC
rule change as described in Items I, II, the relevant rule change filing to
Bats BYX Exchange, Inc., Bats BZX
and III below, which Items have been eliminate or modify its duplicative rules
Exchange, Inc., Bats EDGA Exchange,
prepared by the Exchange. The Inc., Bats EDGX Exchange, Inc., BOX within six (6) months of the SEC’s
Commission is publishing this notice to Options Exchange LLC, C2 Options approval of the CAT NMS Plan.’’ 12 The
solicit comments on the proposed rule Exchange, Incorporated, Chicago Board Plan notes that ‘‘the elimination of such
change from interested persons. Options Exchange, Incorporated, rules and the retirement of such systems
Chicago Stock Exchange, Inc., Financial [will] be effective at such time as CAT
I. Self-Regulatory Organization’s Data meets minimum standards of
Statement of the Terms of Substance of Industry Regulatory Authority, Inc.
(‘‘FINRA’’), Investors’ Exchange LLC, accuracy and reliability.’’ 13 The
the Proposed Rule Change Exchange has determined that the
Miami International Securities
The Exchange is filing a proposal to Exchange, LLC, MIAX PEARL, LLC, Position Reporting Rule and the EBS
amend MIAX PEARL Rule 606, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Rule is affected by the implementation
Nasdaq ISE, LLC, Nasdaq MRX, LLC,4 of the CAT and, therefore, is filing this
Securities Accounts and Orders of
NASDAQ PHLX LLC, The NASDAQ proposed rule change.
Market Makers (‘‘Rule 606’’ or the
‘‘Position Reporting Rule’’) by adding Stock Market LLC, New York Stock (1) The CAT Duplicative Rules
new Interpretation and Policy .02 to Exchange LLC, NYSE MKT LLC, NYSE
Rule 606, and MIAX PEARL Rule 804, Arca, Inc. and NYSE National, Inc.5 MIAX PEARL Rule 606, the Position
Automated Submission of Trade Data (collectively, the ‘‘Participants’’) filed Reporting Rule, is the Exchange’s rule
with the Commission, pursuant to requiring Market Makers to (a) keep
(‘‘Rule 804’’ or the ‘‘EBS Rule’’ and
Section 11A of the Exchange Act 6 and current and file with the Exchange a list
together with the Position Reporting
Rule 608 of Regulation NMS identifying specified accounts in which
Rule, the ‘‘CAT Duplicative Rules’’) by thereunder,7 the CAT NMS Plan.8 The it may engage in trading activities or
adding new Interpretation and Policy Participants filed the Plan to comply over which it exercises investment
.01 to Rule 804, as the CAT Duplicative with Rule 613 of Regulation NMS under discretion (‘‘MM account information’’)
Rules provide for the collection of the Exchange Act. The Plan was and (b) report to the Exchange every
information that is duplicative of the published for comment in the Federal order entered by the Market Maker for
data collection requirements of the the purchase or sale of a security
consolidated audit trail (‘‘CAT’’) 4 ISE Gemini, LLC, ISE Mercury, LLC and
underlying options traded on the
adopted pursuant to the National International Securities Exchange, LLC have been Exchange or convertible into or
Market System Plan Governing the renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
and Nasdaq ISE, LLC, respectively. See Securities exercisable for such underlying security
Consolidated Audit Trail (the ‘‘CAT Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR (‘‘MM order information’’), as well as
NMS Plan’’ or ‘‘Plan’’).3 14547 (Mar. 21, 2017); Securities Exchange Act Rel. opening and closing positions in all
No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4, such securities held in each of the
The text of the proposed rule change 2017); and Securities Exchange Act Rel. No. 80325
is available on the Exchange’s Web site (Mar. 29, 2017), 82 FR 164FR45 (Apr. 4, 2017). aforementioned specified accounts
at http://www.miaxoptions.com/rule- 5 National Stock Exchange, Inc. has been renamed (‘‘MM position information’’), in each
filings/pearl, at MIAX PEARL’s NYSE National, Inc. See Securities Exchange Act case in a manner prescribed by the
Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3, Exchange.
principal office, and at the 2017).
Commission’s Public Reference Room. 6 15 U.S.C. 78k–1.
mstockstill on DSK30JT082PROD with NOTICES
9 See Securities Exchange Act Release. No. 77724
7 17 CFR 242.608.
8 See Letter from the Participants to Brent J. (Apr. 27, 2016), 81 FR 30614 (May 17, 2016).
10 See Securities Exchange Act Rel. No. 79318
1 15U.S.C. 78s(b)(1). Fields, Secretary, Commission, dated September 30,
2014; and Letter from Participants to Brent J. Fields, (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016)
2 17CFR 240.19b–4.
Secretary, Commission, dated February 27, 2015. (‘‘Approval Order’’).
3 Unless otherwise specified, capitalized terms 11 Appendix C of CAT NMS Plan, Approval Order
On December 24, 2015, the Participants submitted
used in this rule filing are defined as set forth an amendment to the CAT NMS Plan. See Letter at 85010.
herein, or in the CAT Compliance Rule Series or in 12 Id.
from Participants to Brent J. Fields, Secretary,
the CAT NMS Plan. Commission, dated December 23, 2015. 13 Id.
VerDate Sep<11>2014 18:32 May 31, 2017 Jkt 241001 PO 00000 Frm 00213 Fmt 4703 Sfmt 4703 E:\FR\FM\01JNN1.SGM 01JNN1](https://thefederalregister.org/doc/82_FR_25540/page/1.svg)
![Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices 25437
MIAX PEARL Rule 804,14 the EBS pursuant to the Position Reporting Rule The CAT NMS Plan states, however,
Rule, is the Exchange’s rule requiring regarding MM position information that the elimination of rules that are
Members to submit requested trade data (because the CAT does not currently duplicative of the requirements of the
elements (‘‘Member trade data’’) to the address position reporting), and CAT and the retirement of the related
Exchange in such automated format as Exchange staff may still need to request systems should be effective at such time
may be prescribed by the Exchange from information pursuant to the Position as CAT Data meets minimum standards
time to time, in regard to a transaction(s) Reporting Rule for MM account of accuracy and reliability.16
that is the subject of a particular request information and MM order information Accordingly, as discussed in more detail
for information. Rule 804 contemplates before a Market Maker was reporting to below, the Exchange believes that MM
using the Electronic Blue Sheet (‘‘EBS’’) the CAT. Further, the EBS Rule cannot account information and MM order
system for the automated submission of be completely eliminated immediately information (but not MM position
Member trade data as requested by the upon the CAT achieving the appropriate information) may be replaced by CAT
Exchange, including, among other thresholds because Exchange staff may Data at a date after all Industry Members
information, clearing house number or still need to request information are reporting to the CAT when the
alpha symbol, identifying symbol pursuant to the EBS Rule for trading proposed error rate thresholds have
assigned to the security, options month activity occurring before a Member was been met, and MIAX PEARL has
and/or series, transaction execution reporting to the CAT.15 determined that its usage of the CAT
date, number of option contracts for The proposed rule change proposes Data has not revealed material issues
transaction and whether opening or to: (1) Add new Interpretation and that have not been corrected, confirmed
closing purchase or sale, transaction Policy .02 to the Position Reporting Rule that the CAT includes all data necessary
price, account number and/or market to clarify how the Exchange will request to allow MIAX PEARL to continue to
center where executed. Market Maker account, order and meet its surveillance obligations, and
Once broker-dealer reporting to the position data under Rule 606 after confirmed that the Plan Processor is
CAT has begun, the CAT will contain MIAX PEARL Market Makers are sufficiently meeting all of its obligations
certain of the data the Participants reporting to the CAT, and (2) add new under the CAT NMS Plan.
would otherwise have requested via the Interpretation and Policy .01 to the EBS The Exchange further believes, as
Position Reporting Rule or via the EBS Rule to clarify how the Exchange will discussed in more detail below, that the
system for purposes of NMS Securities request trade data under Rule 804 after EBS data may be replaced by CAT Data
and OTC Equity Securities. MIAX PEARL Members are reporting to at a date after all Industry Members are
Consequently, the Exchange will not reporting to the CAT when the proposed
the CAT.
need to use the Position Reporting Rule error rate thresholds have been met, and
to obtain MM account information or With respect to the Position Reporting MIAX PEARL has determined that its
MM order information (although Rule, proposed Interpretation and usage of the CAT Data has not revealed
Exchange still anticipates the need to Policy .02 to Rule 606 will specifically material issues that have not been
obtain MM position information permit the Exchange to request corrected, confirmed that the CAT
pursuant to Rule 606 because the CAT information under such rule only if the includes all data necessary to allow
does not currently address position information is not available in the CAT MIAX PEARL to continue to meet its
reporting) or use the EBS system to because, for example, the transactions in surveillance obligations, and confirmed
obtain Member trade data or request question occurred before the Market that the Plan Processor is sufficiently
information pursuant to the CAT Maker was reporting information to the meeting all of its obligations under the
Duplicative Rules for NMS Securities or CAT or relates to position information CAT NMS Plan.
OTC Equity Securities for time periods because the CAT does not currently MIAX PEARL believes CAT Data
after CAT reporting has begun if the address position reporting. In essence, should not be used in place of MM
appropriate accuracy and reliability under the new Interpretation and Policy account information and MM order
thresholds are achieved, including an .02 to Rule 606, the Exchange will make information or EBS data until all
acceptable accuracy rate for customer requests under Rule 606 if and only if Participants and Industry Members are
and account information. However, the the information is not otherwise reporting data to CAT. In this way,
Position Reporting Rule cannot be available through the CAT. MIAX PEARL will continue to have
completely eliminated immediately With respect to the EBS Rule, access to the necessary data to perform
upon the CAT achieving the appropriate proposed Interpretation and Policy .01 its regulatory duties.
thresholds because Exchange staff will to Rule 804 will specifically permit the The CAT NMS Plan requires that a
still need to request information Exchange to request information under rule filing to eliminate a duplicative
such rule only if the information is not rule address whether ‘‘the availability of
14 MIAX PEARL Rule 804 is incorporated by available in the CAT because, for certain data from Small Industry
reference from the rules contained in Miami example, the transactions in question Members two years after the Effective
International Securities Exchange, LLC Rule Book
Chapter VIII, as such rules may be in effect from
occurred before the Member was Date would facilitate a more expeditious
time to time (the ‘‘Chapter VIII Rules’’), and is thus reporting information to the CAT. In retirement of duplicative systems.’’ 17
a MIAX PEARL Rule and thereby applicable to essence, under the new Interpretation The Exchange believes that MM account
MIAX PEARL Members. MIAX PEARL Members and Policy .01 to Rule 804, the information and MM order information
shall comply with the Chapter VIII Rules as though
such rules were fully-set forth in the MIAX PEARL Exchange will make requests under Rule reporting should not be eliminated until
Rule Book. All defined terms, including any 804 if and only if the information is not all Participants and Industry Members
variations thereof, contained in Chapter VIII Rules otherwise available through the CAT. that report such information are
mstockstill on DSK30JT082PROD with NOTICES
shall be read to refer to the MIAX PEARL related
meaning of such term. See Securities Exchange Act
reporting comparable data to the CAT.
Release No. 79543 (December 13, 2016), 81 FR 15 Firms are required to maintain the trade The Exchange further believes that the
92901 (December 20, 2016) (Order pursuant to information for pre-CAT transactions in equities EBS system should not be retired until
Section 36 of the Exchange Act granting application and options pursuant to applicable rules, such as
books and records retention requirements, for the
all Participants and Industry Members
by MIAX PEARL for exemption from the rule filing
requirements of Section 19(b) of the Exchange Act relevant time period, which is generally three or six
16 Id. [sic]
with respect to certain rules incorporated by years depending upon the record. See 17 CFR
reference) at 92916. 240.17a–3(a), 240.17a–4. 17 Id.
VerDate Sep<11>2014 18:32 May 31, 2017 Jkt 241001 PO 00000 Frm 00214 Fmt 4703 Sfmt 4703 E:\FR\FM\01JNN1.SGM 01JNN1](https://thefederalregister.org/doc/82_FR_25540/page/2.svg)
![Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices 25439
B. Self-Regulatory Organization’s • Send an email to rule-comments@ SECURITIES AND EXCHANGE
Statement on Burden on Competition sec.gov. Please include File Number SR– COMMISSION
Section 6(b)(8) of the Exchange Act 23 PEARL–2017–23 on the subject line.
[Release No. 34–80794; File No. SR–
requires that Exchange rules not impose Paper Comments NYSEMKT–2017–30]
any burden on competition that is not
necessary or appropriate. The Exchange • Send paper comments in triplicate Self-Regulatory Organizations; NYSE
does not believe that the proposed rule to Brent J. Fields, Secretary, Securities MKT LLC; Notice of Filing of Proposed
change will result in any burden on and Exchange Commission, 100 F Street Rule Change To Eliminate
competition that is not necessary or NE., Washington, DC 20549–1090. Requirements That Will Be Duplicative
appropriate in furtherance of the of CAT
purposes of the Exchange Act. The All submissions should refer to File
Number SR–PEARL–2017–23. This file May 26, 2017.
Exchange notes that the proposed rule Pursuant to Section 19(b)(1) of the
change implements the requirements of number should be included on the
subject line if email is used. To help the Securities Exchange Act of 1934
the CAT NMS Plan approved by the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Commission regarding the elimination Commission process and review your
notice is hereby given that on May 22,
of rules and systems that are duplicative comments more efficiently, please use
2017, NYSE MKT LLC (‘‘NYSE MKT’’ or
the CAT, and is designed to assist the only one method. The Commission will
the ‘‘Exchange’’) filed with the
Exchange in meeting its regulatory post all comments on the Commission’s Securities and Exchange Commission
obligations pursuant to the Plan. Internet Web site (http://www.sec.gov/ (‘‘SEC’’ or ‘‘Commission’’) the proposed
Similarly, all exchanges and FINRA are rules/sro.shtml). Copies of the rule change as described in Items I, II,
proposing the elimination of their EBS submission, all subsequent and III below, which Items have been
and other CAT duplicative rules to amendments, all written statements prepared by the Exchange. The
implement the requirements of the CAT with respect to the proposed rule Commission is publishing this notice to
NMS Plan. Therefore, this is not a change that are filed with the solicit comments on the proposed rule
competitive rule filing and, therefore, it Commission, and all written change from interested persons.
does not raise competition issues communications relating to the
between and among the self-regulatory proposed rule change between the I. Self-Regulatory Organization’s
organizations and/or their members. Statement of the Terms of Substance of
Commission and any person, other than
the Proposed Rule Change
C. Self-Regulatory Organization’s those that may be withheld from the
Statement on Comments on the public in accordance with the The Exchange proposes to delete the
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be Order Audit Trail System (‘‘OATS’’)
Members, Participants, or Others available for Web site viewing and rules in the Rule 7400—Equities Series
printing in the Commission’s Public (Order Audit Trail System) and amend
Written comments were neither Rule 8211 of the Office Rules
solicited nor received. Reference Room, 100 F Street NE.,
Washington, DC 20549 on official (Automated Submission of Trading Data
III. Date of Effectiveness of the Requested by the Exchange) governing
business days between the hours of
Proposed Rule Change and Timing for submission of Electronic Blue Sheet
10:00 a.m. and 3:00 p.m. Copies of such
Commission Action trading data (‘‘EBS’’) as these Rules
filing also will be available for provide for the collection of information
Within 45 days of the date of inspection and copying at the principal that is duplicative of the data collection
publication of this notice in the Federal office of the Exchange. All comments requirements of the CAT once the
Register or within such longer period (i) received will be posted without change; Financial Industry Regulatory Authority
as the Commission may designate up to the Commission does not edit personal (‘‘FINRA’’) publishes a notice
90 days of such date if it finds such identifying information from announcing the date that it will retire its
longer period to be appropriate and submissions. You should submit only OATS and EBS rules. The proposed rule
publishes its reasons for so finding or information that you wish to make change is available on the Exchange’s
(ii) as to which the Exchange consents, available publicly. All submissions Web site at www.nyse.com, at the
the Commission shall: (a) By order should refer to File Number SR– principal office of the Exchange, and at
approve or disapprove such proposed PEARL–2017–23, and should be the Commission’s Public Reference
rule change, or (b) institute proceedings submitted on or before June 22, 2017. Room.
to determine whether the proposed rule
change should be disapproved. For the Commission, by the Division of II. Self-Regulatory Organization’s
Trading and Markets, pursuant to delegated Statement of the Purpose of, and
IV. Solicitation of Comments authority.24 Statutory Basis for, the Proposed Rule
Interested persons are invited to Eduardo A. Aleman, Change
submit written data, views, and Assistant Secretary. In its filing with the Commission, the
arguments concerning the foregoing, [FR Doc. 2017–11368 Filed 5–31–17; 8:45 am] self-regulatory organization included
including whether the proposed rule BILLING CODE 8011–01–P statements concerning the purpose of,
change is consistent with the Act. and basis for, the proposed rule change
Comments may be submitted by any of and discussed any comments it received
the following methods: on the proposed rule change. The text
mstockstill on DSK30JT082PROD with NOTICES
Electronic Comments of those statements may be examined at
the places specified in Item IV below.
• Use the Commission’s Internet The Exchange has prepared summaries,
comment form (http://www.sec.gov/ set forth in sections A, B, and C below,
rules/sro.shtml); or
1 15 U.S.C. 78s(b)(1).
23 15 U.S.C. 78f(b)(8). 24 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:32 May 31, 2017 Jkt 241001 PO 00000 Frm 00216 Fmt 4703 Sfmt 4703 E:\FR\FM\01JNN1.SGM 01JNN1](https://thefederalregister.org/doc/82_FR_25540/page/4.svg)
Document Created: 2017-06-01 03:05:32
Document Modified: 2017-06-01 03:05:32
| 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 25436 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR