82_FR_46301 82 FR 46111 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Order Granting Approval of a Proposed Rule Change To Adopt Rules Relating to Trading in Index Options

82 FR 46111 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Order Granting Approval of a Proposed Rule Change To Adopt Rules Relating to Trading in Index Options

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 190 (October 3, 2017)

Page Range46111-46114
FR Document2017-21163

Federal Register, Volume 82 Issue 190 (Tuesday, October 3, 2017)
[Federal Register Volume 82, Number 190 (Tuesday, October 3, 2017)]
[Notices]
[Pages 46111-46114]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-21163]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81739; File No. SR-MIAX-2017-39]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Order Granting Approval of a Proposed Rule Change To 
Adopt Rules Relating to Trading in Index Options

September 27, 2017.

I. Introduction

    On August 9, 2017, Miami International Securities Exchange, LLC 
(``MIAX Options'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission''), pursuant to the provisions of 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to adopt rules 
relating to trading in index options. The proposed rule change was 
published for comment in the Federal Register on August 16, 2017.\3\ 
The Commission received no comments regarding the proposal. This order 
approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81371 (August 10, 
2017), 82 FR 38942 (``Notice'').
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II. Description of the Proposal

A. Overview

    The Exchange proposes to adopt new Chapter 18 and amend certain 
rules in the MIAX Options rulebook. The purpose of the Exchange's 
proposal is to establish: (1) Trading rules enabling MIAX Options 
Members to trade index options on the Exchange and (2) generic listing 
standards and maintenance standards to permit the Exchange to list 
``broad-based'' and ``narrow-based'' index options on the Exchange 
pursuant to Rule 19b-4(e) under the Act.\4\ The proposed generic 
listing and maintenance standards for broad-based indices listed and 
traded on the Exchange require, among other things, that options on the 
index be a.m.-settled; that the index be capitalization-weighted, 
modified capitalization-weighted, price-weighted, or equal dollar-
weighted; and that the index be comprised of at least fifty securities, 
all of which must be ``NMS stocks,'' as defined in Rule 600 of 
Regulation NMS.\5\ The proposed generic listing and maintenance 
standards for narrow-based indices require, among other 
characteristics, that the proposed indices must consist of ten or more 
component securities.\6\
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    \4\ 17 CFR 240.19b-4(e). The term ``broad-based index'' is 
defined as an index designed to be representative of a stock market 
as a whole or of a range of companies in unrelated industries. See 
Proposed Rule 1801(k). The term ``narrow-based index'' is defined as 
an index designed to be representative of a particular industry or a 
group of related industries or an index whose constituents are all 
headquartered within a single country. See Proposed Rule 1801(j).
    \5\ See Proposed Rule 1802(d)(4).
    \6\ See Proposed Rule 1802(b)(2).
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    In accordance with the proposal, the Exchange will need to file 
additional proposed rule changes with the Commission when the Exchange 
identifies specific products, because the rules related to trading 
options in indices are product specific in many areas.\7\ For purposes 
of this proposed

[[Page 46112]]

rule change, certain rules will indicate that they apply to 
``Specified'' indices. Proposed Rules 1800, 1801(n), 1804(a), 1807(a), 
1809, and 1811 all contain provisions that are dependent upon the 
Exchange identifying specific index products in the rule. Accordingly, 
Proposed Rule 1800 states that where the rules in Chapter 18 indicate 
that particular indices or requirements with respect to particular 
indices will be ``Specified,'' the Exchange will file a proposed rule 
change with the Commission pursuant to Section 19 of the Act \8\ and 
Rule 19b-4 \9\ thereunder to specify such indices or requirements. As 
more fully set forth in the Notice and further described below, the 
proposed new Exchange Rules and changes to existing Exchange Rules, are 
based on the existing rules of other options exchanges.\10\
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    \7\ See Notice, supra note 3, at 38942-43.
    \8\ 15 U.S.C. 78s.
    \9\ 17 CFR 240.19b-4.
    \10\ See, e.g., Nasdaq ISE, LLC (``ISE'') Rules, Chapter 20, 
Index Rules; NASDAQ PHLX LLC (``Phlx'') Rules 1000A-1108A; and 
Chicago Board Options Exchange, Inc. (``CBOE'') Rules, Chapter XXIV, 
Index Options. See also Notice, supra note 3, at 38942.
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B. Index Options Trading Rules

    MIAX Options proposes to add new Chapter 18 to the Exchange rules 
and make conforming changes to certain existing Exchange rules.\11\ The 
proposed rules, among other things, set forth general rules that will 
govern the trading sessions for index options, including the days and 
hours of business, the rules governing trading rotations at the 
opening, and the rules related to trading halts or suspensions.\12\ The 
proposed rules further provide for the procedures Members must follow 
with respect to the exercise of American-style, cash settled index 
options.\13\
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    \11\ The Exchange also proposes to amend the following rules to 
account for the trading of index options: MIAX Rule 503 (index 
options in the opening); MIAX Rule 504 (handling of trade 
nullification in index options due to trading halts); MIAX Rule 527 
(limitation of liability regarding the calculation or dissemination 
of index information); and MIAX Rule 603 (obligations of market 
makers).
    \12\ See Proposed Rule 1808.
    \13\ See Proposed Rules 313(a)(3) and 700(h).
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    The proposed rules also establish position limit and exercise 
limits for index options.\14\ In addition, the proposed rules provide 
for exemption standards from position limits and procedures for 
requesting exemptions from those proposed rules.\15\ The proposed 
position limits and exercise limits, as well as the proposed 
exemptions, are different for broad-based index options and narrow-
based index options.\16\
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    \14\ See Proposed Rules 1804, 1805, and 1807.
    \15\ See Proposed Rule 308(b) and 1806.
    \16\ See Proposed Rules 1804 to 1807.
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C. Generic Listing Standards and Maintenance Standards for Broad-Based 
Index Options

    The Exchange also proposes to establish generic listing and 
maintenance standards in proposed Rule 1802 to enable the Exchange to 
list and trade new broad-based index options pursuant to Rule 19b-4(e) 
under the Act.\17\ Proposed Rule 1802(d) sets forth the initial listing 
standards for broad-based index options. The listing standards require, 
among other things, that the underlying index be broad-based, as 
defined in Rule 1801(k); that options on the index be a.m. settled; 
that the index be capitalization-weighted, modified capitalization-
weighted, price-weighted, or equal dollar-weighted; and that the index 
consist of 50 or more component securities, each of which must be an 
``NMS stock'' as defined in Rule 600 of Regulation NMS under the 
Exchange Act.\18\ In addition, Proposed Rule 1802(d) requires that the 
index's component securities meet certain minimum market capitalization 
and average daily trading volume requirements; that no single component 
account for more than 10% of the weight of the index and that the five 
highest weighted component securities represent no more than 33% of the 
weight of the index; that the index value be widely disseminated at 
least once every 15 seconds; and that the Exchange have written 
surveillance procedures in place with respect to the index options. 
Proposed Rule 1802(e) establishes maintenance standards for broad-based 
index options listed pursuant to Proposed Rule 1802(d). The Exchange 
states that the proposed listing and maintenance standards are modeled 
after standards approved by the Commission for other options 
exchanges.\19\
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    \17\ 17 CFR 240.19b-4(e). Rule 19b-4(e) provides that the 
listing and trading of a new derivative securities product by a 
self-regulatory organization (``SRO'') shall not be deemed a 
proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4, if 
the Commission has approved, pursuant to Section 19(b) of the Act, 
the SRO's trading rules, procedures, and listing standards for the 
product class that includes the new derivative securities product 
and the SRO has a surveillance program for the product class. When 
relying on Rule 19b-4(e), the SRO must submit Form 19b-4(e) to the 
Commission within five business days after the exchange begins 
trading the new derivative securities products. See Securities 
Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952 
(December 22, 1998) (File No. S7-13-98).
    \18\ See 17 CFR 242.600.
    \19\ See, e.g., NYSE American LLC (``NYSE American'') Rule 
901C.02(a) and (b); CBOE Rule 24.2(f) and (g); NYSE Arca, Inc. 
(``NYSE Arca'') Rule 5.12-O; Phlx Rule 1009A(d) and (e); and ISE 
Rule 2002(d) and (e).
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D. Generic Listing Standards and Maintenance Standards for Narrow-Based 
Index Options

    The Exchange further proposes to establish generic listing and 
maintenance standards in Proposed Rule 1802 to enable the Exchange to 
list and trade new narrow-based index options pursuant to Rule 19b-4(e) 
under the Act.\20\ Proposed Rule 1802(b) sets forth the initial listing 
standards for narrow-based index options. The listing standards 
require, among other things, that options on the index be a.m. settled; 
that the index be capitalization-weighted, price-weighted, equal 
dollar-weighted, or modified capitalization-weighted; and that the 
index consist of 10 or more component securities, each of which must be 
an ``NMS stock'' as defined in Rule 600 of Regulation NMS under the 
Exchange Act.\21\ In addition, Proposed Rule 1802(b) requires that the 
index's component securities meet certain minimum market capitalization 
and average daily trading volume requirements; that no single component 
account for more than 30% of the weight of the index and that the five 
highest weighted component securities represent no more than 50% (65% 
for an index consisting of fewer than 25 component securities) of the 
weight of the index; that the index value be widely disseminated at 
least once every 15 seconds; and that non-U.S. component securities 
(stocks or ADRs) that are not subject to comprehensive surveillance 
agreements do not in the aggregate represent more than 20% of the 
weight of the index. Proposed Rule 1802(c) establishes maintenance 
standards for narrow-based index options listed pursuant to Proposed 
Rule 1802(b). The Exchange states that the proposed listing and 
maintenance standards are modeled after standards approved by the 
Commission for other options exchanges.\22\
---------------------------------------------------------------------------

    \20\ 17 CFR 240.19b-4(e). See also supra note 18.
    \21\ See 17 CFR 242.600.
    \22\ See, e.g., NYSE American Rule 901C.03; CBOE Rule 24.2(b) 
and (c); NYSE Arca Rule 5.13-O; Phlx Rule 1009A(b) and (c); and ISE 
Rule 2002(b) and (c).
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E. Surveillance and Capacity

    The Exchange represents that it has an adequate surveillance 
program in place for index options. The Exchange is a member of the 
Intermarket Surveillance Group (``ISG''), which is comprised of an 
international group of exchanges, market centers, and market 
regulators.\23\

[[Page 46113]]

The Exchange further represents that it has analyzed its capacity and 
believes the Exchange and the Options Price Reporting Authority 
(``OPRA'') have the necessary systems capacity to handle the additional 
traffic associated with the listing and trading of index options.\24\
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    \23\ See Notice, supra note 3, at 38957. The ISG was formed on 
July 14, 1983, to, among other things, coordinate more effectively 
surveillance and investigative information sharing arrangements in 
the stock and options markets. The purpose of the ISG is to provide 
a framework for the sharing of information and the coordination of 
regulatory efforts among exchanges trading securities and related 
products to address potential intermarket manipulations and trading 
abuses. Id. The ISG plays a crucial role in information sharing 
among markets that trade securities, options on securities, security 
futures products, and futures and options on broad-based security 
indexes. Id.
    \24\ See id.
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F. Implementation

    The Exchange will announce the implementation date of the proposed 
rule change by Regulatory Circular to be published no later than 90 
days following the approval of the proposed rule change. The 
implementation date will be no later than 90 days following the 
issuance of the Regulatory Circular.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
and, in particular, with Section 6(b) of the Act.\25\ In particular, 
the Commission believes that the Exchange's proposal to establish 
trading rules and procedures applicable to index options and establish 
generic listing and maintenance standards for broad-based and narrow-
based index options is consistent with Section 6(b)(5) of the Act,\26\ 
which requires, among other things, that the rules of a national 
securities exchange be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanisms of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b). In approving this proposed rule change, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission's approval of the Exchange's proposed listing 
standards for broad-based and narrow-based index options will allow 
those index option products that satisfy the generic listing standards 
to begin trading pursuant to Rule 19b-4(e) under the Act, without the 
need for notice and comment and Commission approval. The Exchange's 
ability to rely on Rule 19b-4(e) under the Act for these products 
potentially reduces the time frame for listing and trading these 
securities, and thus enhances investors' opportunities.\27\
---------------------------------------------------------------------------

    \27\ The Exchange, however, must maintain regulatory oversight 
over any products listed under the generic listing standards through 
adequate surveillance. The Exchange represents that it has an 
adequate surveillance program in place for index options. See 
Notice, supra note 3, at 38957.
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A. Index Options Trading Rules

    The Commission believes that trading options on an index of 
securities (including a narrow-based index) permits investors to 
participate in the price movements of the index's underlying securities 
and allows investors holding positions in some or all of such 
securities to hedge the risks associated with their portfolios. The 
Commission further believes that trading options on an index provides 
investors with an important trading and hedging mechanism that is 
designed to reflect accurately the overall movement of the component 
stocks. In particular, the Commission believes that the proposed 
position and exercise limits should serve to minimize potential 
manipulation concerns.

B. Generic Listing and Maintenance Standards for Broad-Based and 
Narrow-Based Index Options

    In considering the proposed generic listing and maintenance 
standards for broad-based and narrow-based index options, the 
Commission notes that they are consistent with the listing and 
maintenance standards for broad-based and narrow-based index options 
that other exchanges \28\ have developed and that the Commission has 
previously approved.\29\ The Commission finds that the generic 
standards covering minimum capitalization, monthly trading volume, and 
relative weightings of component stocks are designed to ensure that the 
trading markets for component stocks are adequately capitalized and 
sufficiently liquid, and that no one stock or stock group dominates the 
index. Thus, the Commission believes that the satisfaction of these 
requirements significantly minimizes the potential for manipulation of 
the index.
---------------------------------------------------------------------------

    \28\ See, e.g., NYSE American Rules 901C.02 and 901C.03; CBOE 
Rule 24.2; NYSE Arca Rules 5.12-O and 5.13-O; Phlx Rule 1009A; and 
ISE Rule 2002.
    \29\ See, e.g., Securities Exchange Act Release Nos. 48405 
(August 25, 2003), 68 FR 52257 (September 2, 2003) (SR-ISE-2003-05) 
(order approving trading rules for index options and generic listing 
and maintenance standards for narrow-based index options); 52578 
(October 7, 2005), 70 FR 60590 (October 18, 2005) (SR-ISE-2005-27) 
(order approving generic listing and maintenance standards for 
broad-based index options); and 75650 (August 7, 2015), 80 FR 48600 
(August 13, 2015) (SR-EDGX-2015-18) (order approving options trading 
rules, including generic listing and maintenance standards for 
broad-based and narrow-based index options).
---------------------------------------------------------------------------

    The Commission also finds the requirements that all securities 
comprising the index be an ``NMS stock'' as defined in Rule 600 of 
Regulation NMS under the Act,\30\ and that the index value be 
disseminated at least once every 15 seconds during trading hours of the 
index, will contribute significantly to the transparency of the market 
for such index options.
---------------------------------------------------------------------------

    \30\ See 17 CFR 242.600.
---------------------------------------------------------------------------

    The Commission further notes that the Exchange's rules that are 
applicable to broad-based and narrow-based index options, including 
provisions addressing sales practices, floor trading procedures, 
position and exercise limits, margin requirements, and trading halts 
and suspensions, will continue to apply to any broad-based or narrow-
based index options listed pursuant to Rule 19b-4(e) under the Act.

C. Surveillance

    As noted above,\31\ the Commission believes that the Exchange must 
maintain regulatory oversight over any products listed under the 
generic listing standards through adequate surveillance, and the 
Exchange represents that it has an adequate surveillance program in 
place for index options. The Commission also believes that a 
surveillance sharing agreement between an Exchange proposing to list a 
stock index derivative product and the exchange(s) trading the stocks 
underlying the derivative product is an important measure for 
surveillance of the derivative and underlying securities markets. The 
Commission notes that such agreements ensure the availability of 
information necessary to detect and deter potential manipulations and 
other trading abuses, thereby making the stock index product less 
readily susceptible to manipulation. When a new derivative securities 
product based upon domestic securities is listed and traded on an 
exchange pursuant to Rule 19b-4(e) under the Act, the exchange should 
determine that the markets upon which all of the U.S. component 
securities trade are members of the ISG, which provides information 
relevant to the surveillance of the trading of securities on other 
market centers.\32\ In this regard, all of the registered national 
securities exchanges, including the Exchange, as

[[Page 46114]]

well as the Financial Industry Regulatory Authority (FINRA), are 
members of the ISG.
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    \31\ See supra note 27.
    \32\ See Securities Exchange Act Release No. 40761 (December 8, 
1998), 63 FR 70952 (December 22, 1998) (File No. S7-13-98).
---------------------------------------------------------------------------

    For new derivative securities products based on securities from a 
foreign market, the SRO should have a comprehensive Intermarket 
Surveillance Agreement with the market for the securities underlying 
the new securities product.\33\ Accordingly, the Commission finds that 
the requirement that no more than 20% of the weight of the index may be 
comprised of non-U.S. component securities (stocks or ADRs) that are 
not subject to a comprehensive surveillance sharing agreement between 
the particular U.S. exchange and the primary market of the underlying 
security will continue to ensure that the Exchange has the ability to 
adequately surveil trading in the broad-based and narrow-based index 
options and the ADR components of the index.\34\
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    \33\ Id.
    \34\ See Proposed Rule 1802(b)(9) and (d)(10).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\35\ that the proposed rule change (SR-MIAX-2017-39), be and hereby 
is approved.
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    \35\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21163 Filed 10-2-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                                                     Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices                                                   46111

                                                    Paper Comments                                            SECURITIES AND EXCHANGE                               to the provisions of Section 19(b)(1) of
                                                                                                              COMMISSION                                            the Securities Exchange Act of 1934
                                                      • Send paper comments in triplicate                                                                           (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
                                                    to Secretary, Securities and Exchange                     [Release No. 34–81738; File No. SR–
                                                                                                              NYSEArca–2017–84]
                                                                                                                                                                    proposed rule change to adopt rules
                                                    Commission, 100 F Street NE.,                                                                                   relating to trading in index options. The
                                                    Washington, DC 20549–1090.                                Self-Regulatory Organizations; NYSE                   proposed rule change was published for
                                                    All submissions should refer to File                      Arca, Inc.; Notice of Withdrawal of a                 comment in the Federal Register on
                                                    Number SR–NYSEArca–2017–112. This                         Proposed Rule Change To Extend the                    August 16, 2017.3 The Commission
                                                    file number should be included on the                     Implementation Date for Certain                       received no comments regarding the
                                                                                                              Changes to the NYSE Arca Rule 5 and                   proposal. This order approves the
                                                    subject line if email is used. To help the
                                                                                                              Rule 8 Series                                         proposed rule change.
                                                    Commission process and review your
                                                    comments more efficiently, please use                     September 27, 2017.                                   II. Description of the Proposal
                                                    only one method. The Commission will                         On August 3, 2017, NYSE Arca, Inc.                 A. Overview
                                                    post all comments on the Commission’s                     (‘‘Exchange’’) filed with the Securities
                                                    Internet Web site (http://www.sec.gov/                    and Exchange Commission                                  The Exchange proposes to adopt new
                                                    rules/sro.shtml). Copies of the                           (‘‘Commission’’), pursuant to Section                 Chapter 18 and amend certain rules in
                                                    submission, all subsequent                                19(b)(1) of the Securities Exchange Act               the MIAX Options rulebook. The
                                                    amendments, all written statements                        of 1934 1 and Rule 19b–4 thereunder,2 a               purpose of the Exchange’s proposal is to
                                                    with respect to the proposed rule                         proposed rule change to extend the                    establish: (1) Trading rules enabling
                                                    change that are filed with the                            implementation date for certain changes               MIAX Options Members to trade index
                                                    Commission, and all written                               to the NYSE Arca Rule 5 and Rule 8                    options on the Exchange and (2) generic
                                                    communications relating to the                            Series relating to continued listing                  listing standards and maintenance
                                                                                                              standards for exchange-traded products.               standards to permit the Exchange to list
                                                    proposed rule change between the
                                                                                                              The proposed rule change was                          ‘‘broad-based’’ and ‘‘narrow-based’’
                                                    Commission and any person, other than
                                                                                                              published for comment in the Federal                  index options on the Exchange pursuant
                                                    those that may be withheld from the
                                                                                                              Register on August 22, 2017.3 The                     to Rule 19b–4(e) under the Act.4 The
                                                    public in accordance with the                                                                                   proposed generic listing and
                                                    provisions of 5 U.S.C. 552, will be                       Commission received one comment
                                                                                                              letter on the proposed rule change.4 On               maintenance standards for broad-based
                                                    available for Web site viewing and                                                                              indices listed and traded on the
                                                                                                              September 22, 2017, the Exchange
                                                    printing in the Commission’s Public                                                                             Exchange require, among other things,
                                                                                                              withdrew the proposed rule change
                                                    Reference Room, 100 F Street NE.,                                                                               that options on the index be a.m.-
                                                                                                              (SR–NYSEArca–2017–84).
                                                    Washington, DC 20549, on official                                                                               settled; that the index be capitalization-
                                                    business days between the hours of                          For the Commission, by the Division of
                                                                                                              Trading and Markets, pursuant to delegated            weighted, modified capitalization-
                                                    10:00 a.m. and 3:00 p.m. Copies of the                    authority.5                                           weighted, price-weighted, or equal
                                                    filing also will be available for                         Eduardo A. Aleman,                                    dollar-weighted; and that the index be
                                                    inspection and copying at the principal                                                                         comprised of at least fifty securities, all
                                                                                                              Assistant Secretary.
                                                    office of the Exchange. All comments                                                                            of which must be ‘‘NMS stocks,’’ as
                                                                                                              [FR Doc. 2017–21162 Filed 10–2–17; 8:45 am]
                                                    received will be posted without change;                                                                         defined in Rule 600 of Regulation
                                                                                                              BILLING CODE 8011–01–P
                                                    the Commission does not edit personal                                                                           NMS.5 The proposed generic listing and
                                                    identifying information from                                                                                    maintenance standards for narrow-based
                                                    submissions. You should submit only                       SECURITIES AND EXCHANGE                               indices require, among other
                                                    information that you wish to make                         COMMISSION                                            characteristics, that the proposed
                                                    available publicly. All submissions                                                                             indices must consist of ten or more
                                                                                                              [Release No. 34–81739; File No. SR–MIAX–              component securities.6
                                                    should refer to File Number SR–
                                                                                                              2017–39]
                                                    NYSEArca–2017–112, and should be                                                                                   In accordance with the proposal, the
                                                    submitted on or before October 24,                        Self-Regulatory Organizations; Miami                  Exchange will need to file additional
                                                    2017.                                                     International Securities Exchange LLC;                proposed rule changes with the
                                                                                                              Order Granting Approval of a                          Commission when the Exchange
                                                      For the Commission, by the Division of                                                                        identifies specific products, because the
                                                    Trading and Markets, pursuant to delegated                Proposed Rule Change To Adopt Rules
                                                                                                              Relating to Trading in Index Options                  rules related to trading options in
                                                    authority.21
                                                                                                                                                                    indices are product specific in many
                                                    Eduardo A. Aleman,                                        September 27, 2017.                                   areas.7 For purposes of this proposed
                                                    Assistant Secretary.
                                                                                                              I. Introduction
                                                    [FR Doc. 2017–21161 Filed 10–2–17; 8:45 am]                                                                       1 15  U.S.C. 78s(b)(1).
                                                    BILLING CODE 8011–01–P
                                                                                                                 On August 9, 2017, Miami                             2 17  CFR 240.19b–4.
                                                                                                              International Securities Exchange, LLC                  3 See Securities Exchange Act Release No. 81371

                                                                                                              (‘‘MIAX Options’’ or ‘‘Exchange’’) filed              (August 10, 2017), 82 FR 38942 (‘‘Notice’’).
                                                                                                                                                                      4 17 CFR 240.19b–4(e). The term ‘‘broad-based
                                                                                                              with the Securities and Exchange
                                                                                                                                                                    index’’ is defined as an index designed to be
                                                                                                              Commission (‘‘Commission’’), pursuant                 representative of a stock market as a whole or of a
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                                                                                                                                    range of companies in unrelated industries. See
                                                                                                                1 15 U.S.C. 78s(b)(1).                              Proposed Rule 1801(k). The term ‘‘narrow-based
                                                                                                                2 17 CFR 240.19b–4.                                 index’’ is defined as an index designed to be
                                                                                                                3 See Securities Exchange Act Release No. 81411     representative of a particular industry or a group of
                                                                                                              (August 16, 2017), 82 FR 39929.                       related industries or an index whose constituents
                                                                                                                4 See letter from Jane Heinrichs, Associate         are all headquartered within a single country. See
                                                                                                              General Counsel, Investment Company Institute, to     Proposed Rule 1801(j).
                                                                                                                                                                      5 See Proposed Rule 1802(d)(4).
                                                                                                              Brent J. Fields, Secretary, Commission, dated
                                                                                                              September 1, 2017.                                      6 See Proposed Rule 1802(b)(2).
                                                      21 17   CFR 200.30–3(a)(12).                              5 17 CFR 200.30–3(a)(12).                             7 See Notice, supra note 3, at 38942–43.




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                                                    46112                         Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices

                                                    rule change, certain rules will indicate                based index options and narrow-based                   D. Generic Listing Standards and
                                                    that they apply to ‘‘Specified’’ indices.               index options.16                                       Maintenance Standards for Narrow-
                                                    Proposed Rules 1800, 1801(n), 1804(a),                                                                         Based Index Options
                                                                                                            C. Generic Listing Standards and
                                                    1807(a), 1809, and 1811 all contain                                                                              The Exchange further proposes to
                                                                                                            Maintenance Standards for Broad-Based
                                                    provisions that are dependent upon the                                                                         establish generic listing and
                                                                                                            Index Options
                                                    Exchange identifying specific index                                                                            maintenance standards in Proposed
                                                    products in the rule. Accordingly,                         The Exchange also proposes to
                                                                                                                                                                   Rule 1802 to enable the Exchange to list
                                                    Proposed Rule 1800 states that where                    establish generic listing and
                                                                                                                                                                   and trade new narrow-based index
                                                    the rules in Chapter 18 indicate that                   maintenance standards in proposed
                                                                                                                                                                   options pursuant to Rule 19b–4(e) under
                                                    particular indices or requirements with                 Rule 1802 to enable the Exchange to list
                                                                                                                                                                   the Act.20 Proposed Rule 1802(b) sets
                                                    respect to particular indices will be                   and trade new broad-based index
                                                                                                                                                                   forth the initial listing standards for
                                                    ‘‘Specified,’’ the Exchange will file a                 options pursuant to Rule 19b–4(e) under
                                                                                                                                                                   narrow-based index options. The listing
                                                    proposed rule change with the                           the Act.17 Proposed Rule 1802(d) sets
                                                                                                                                                                   standards require, among other things,
                                                    Commission pursuant to Section 19 of                    forth the initial listing standards for
                                                                                                                                                                   that options on the index be a.m.
                                                    the Act 8 and Rule 19b–4 9 thereunder to                broad-based index options. The listing
                                                                                                                                                                   settled; that the index be capitalization-
                                                    specify such indices or requirements. As                standards require, among other things,
                                                                                                                                                                   weighted, price-weighted, equal dollar-
                                                    more fully set forth in the Notice and                  that the underlying index be broad-
                                                                                                                                                                   weighted, or modified capitalization-
                                                    further described below, the proposed                   based, as defined in Rule 1801(k); that
                                                                                                                                                                   weighted; and that the index consist of
                                                    new Exchange Rules and changes to                       options on the index be a.m. settled;
                                                                                                                                                                   10 or more component securities, each
                                                    existing Exchange Rules, are based on                   that the index be capitalization-
                                                                                                                                                                   of which must be an ‘‘NMS stock’’ as
                                                    the existing rules of other options                     weighted, modified capitalization-
                                                                                                                                                                   defined in Rule 600 of Regulation NMS
                                                    exchanges.10                                            weighted, price-weighted, or equal
                                                                                                                                                                   under the Exchange Act.21 In addition,
                                                                                                            dollar-weighted; and that the index
                                                    B. Index Options Trading Rules                                                                                 Proposed Rule 1802(b) requires that the
                                                                                                            consist of 50 or more component
                                                                                                                                                                   index’s component securities meet
                                                                                                            securities, each of which must be an
                                                       MIAX Options proposes to add new                                                                            certain minimum market capitalization
                                                                                                            ‘‘NMS stock’’ as defined in Rule 600 of
                                                    Chapter 18 to the Exchange rules and                                                                           and average daily trading volume
                                                                                                            Regulation NMS under the Exchange
                                                    make conforming changes to certain                                                                             requirements; that no single component
                                                                                                            Act.18 In addition, Proposed Rule
                                                    existing Exchange rules.11 The proposed                                                                        account for more than 30% of the
                                                                                                            1802(d) requires that the index’s
                                                    rules, among other things, set forth                                                                           weight of the index and that the five
                                                                                                            component securities meet certain
                                                    general rules that will govern the                                                                             highest weighted component securities
                                                                                                            minimum market capitalization and
                                                    trading sessions for index options,                                                                            represent no more than 50% (65% for
                                                                                                            average daily trading volume
                                                    including the days and hours of                                                                                an index consisting of fewer than 25
                                                                                                            requirements; that no single component
                                                    business, the rules governing trading                                                                          component securities) of the weight of
                                                                                                            account for more than 10% of the
                                                    rotations at the opening, and the rules                 weight of the index and that the five                  the index; that the index value be
                                                    related to trading halts or suspensions.12              highest weighted component securities                  widely disseminated at least once every
                                                    The proposed rules further provide for                  represent no more than 33% of the                      15 seconds; and that non-U.S.
                                                    the procedures Members must follow                      weight of the index; that the index value              component securities (stocks or ADRs)
                                                    with respect to the exercise of                         be widely disseminated at least once                   that are not subject to comprehensive
                                                    American-style, cash settled index                      every 15 seconds; and that the Exchange                surveillance agreements do not in the
                                                    options.13                                              have written surveillance procedures in                aggregate represent more than 20% of
                                                       The proposed rules also establish                    place with respect to the index options.               the weight of the index. Proposed Rule
                                                    position limit and exercise limits for                  Proposed Rule 1802(e) establishes                      1802(c) establishes maintenance
                                                    index options.14 In addition, the                       maintenance standards for broad-based                  standards for narrow-based index
                                                    proposed rules provide for exemption                    index options listed pursuant to                       options listed pursuant to Proposed
                                                    standards from position limits and                      Proposed Rule 1802(d). The Exchange                    Rule 1802(b). The Exchange states that
                                                    procedures for requesting exemptions                    states that the proposed listing and                   the proposed listing and maintenance
                                                    from those proposed rules.15 The                        maintenance standards are modeled                      standards are modeled after standards
                                                    proposed position limits and exercise                   after standards approved by the                        approved by the Commission for other
                                                    limits, as well as the proposed                         Commission for other options                           options exchanges.22
                                                    exemptions, are different for broad-                    exchanges.19                                           E. Surveillance and Capacity
                                                      8 15  U.S.C. 78s.                                       16 See  Proposed Rules 1804 to 1807.
                                                                                                                                                                     The Exchange represents that it has an
                                                      9 17  CFR 240.19b–4.                                    17 17  CFR 240.19b–4(e). Rule 19b–4(e) provides      adequate surveillance program in place
                                                       10 See, e.g., Nasdaq ISE, LLC (‘‘ISE’’) Rules,       that the listing and trading of a new derivative       for index options. The Exchange is a
                                                    Chapter 20, Index Rules; NASDAQ PHLX LLC                securities product by a self-regulatory organization   member of the Intermarket Surveillance
                                                    (‘‘Phlx’’) Rules 1000A–1108A; and Chicago Board         (‘‘SRO’’) shall not be deemed a proposed rule
                                                                                                            change, pursuant to paragraph (c)(1) of Rule 19b–
                                                                                                                                                                   Group (‘‘ISG’’), which is comprised of
                                                    Options Exchange, Inc. (‘‘CBOE’’) Rules, Chapter
                                                    XXIV, Index Options. See also Notice, supra note        4, if the Commission has approved, pursuant to         an international group of exchanges,
                                                    3, at 38942.                                            Section 19(b) of the Act, the SRO’s trading rules,     market centers, and market regulators.23
                                                       11 The Exchange also proposes to amend the           procedures, and listing standards for the product
                                                                                                            class that includes the new derivative securities
                                                    following rules to account for the trading of index                                                            24.2(f) and (g); NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule
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                                                                                                            product and the SRO has a surveillance program for
                                                    options: MIAX Rule 503 (index options in the                                                                   5.12–O; Phlx Rule 1009A(d) and (e); and ISE Rule
                                                                                                            the product class. When relying on Rule 19b–4(e),
                                                    opening); MIAX Rule 504 (handling of trade              the SRO must submit Form 19b–4(e) to the               2002(d) and (e).
                                                    nullification in index options due to trading halts);   Commission within five business days after the
                                                                                                                                                                     20 17 CFR 240.19b–4(e). See also supra note 18.
                                                    MIAX Rule 527 (limitation of liability regarding the    exchange begins trading the new derivative               21 See 17 CFR 242.600.
                                                    calculation or dissemination of index information);     securities products. See Securities Exchange Act         22 See, e.g., NYSE American Rule 901C.03; CBOE
                                                    and MIAX Rule 603 (obligations of market makers).       Release No. 40761 (December 8, 1998), 63 FR 70952      Rule 24.2(b) and (c); NYSE Arca Rule 5.13–O; Phlx
                                                       12 See Proposed Rule 1808.
                                                                                                            (December 22, 1998) (File No. S7–13–98).               Rule 1009A(b) and (c); and ISE Rule 2002(b) and (c).
                                                       13 See Proposed Rules 313(a)(3) and 700(h).             18 See 17 CFR 242.600.                                23 See Notice, supra note 3, at 38957. The ISG was
                                                       14 See Proposed Rules 1804, 1805, and 1807.             19 See, e.g., NYSE American LLC (‘‘NYSE             formed on July 14, 1983, to, among other things,
                                                       15 See Proposed Rule 308(b) and 1806.                American’’) Rule 901C.02(a) and (b); CBOE Rule         coordinate more effectively surveillance and



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                                                                                  Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices                                                   46113

                                                    The Exchange further represents that it                 ability to rely on Rule 19b–4(e) under                  Commission believes that the
                                                    has analyzed its capacity and believes                  the Act for these products potentially                  satisfaction of these requirements
                                                    the Exchange and the Options Price                      reduces the time frame for listing and                  significantly minimizes the potential for
                                                    Reporting Authority (‘‘OPRA’’) have the                 trading these securities, and thus                      manipulation of the index.
                                                    necessary systems capacity to handle                    enhances investors’ opportunities.27                       The Commission also finds the
                                                    the additional traffic associated with the                                                                      requirements that all securities
                                                                                                            A. Index Options Trading Rules
                                                    listing and trading of index options.24                                                                         comprising the index be an ‘‘NMS
                                                                                                               The Commission believes that trading                 stock’’ as defined in Rule 600 of
                                                    F. Implementation                                       options on an index of securities                       Regulation NMS under the Act,30 and
                                                      The Exchange will announce the                        (including a narrow-based index)                        that the index value be disseminated at
                                                    implementation date of the proposed                     permits investors to participate in the                 least once every 15 seconds during
                                                    rule change by Regulatory Circular to be                price movements of the index’s                          trading hours of the index, will
                                                    published no later than 90 days                         underlying securities and allows                        contribute significantly to the
                                                    following the approval of the proposed                  investors holding positions in some or                  transparency of the market for such
                                                    rule change. The implementation date                    all of such securities to hedge the risks               index options.
                                                    will be no later than 90 days following                 associated with their portfolios. The                      The Commission further notes that
                                                    the issuance of the Regulatory Circular.                Commission further believes that                        the Exchange’s rules that are applicable
                                                                                                            trading options on an index provides                    to broad-based and narrow-based index
                                                    III. Discussion and Commission
                                                                                                            investors with an important trading and                 options, including provisions
                                                    Findings
                                                                                                            hedging mechanism that is designed to                   addressing sales practices, floor trading
                                                       After careful review, the Commission                 reflect accurately the overall movement                 procedures, position and exercise limits,
                                                    finds that the proposed rule change is                  of the component stocks. In particular,
                                                    consistent with the requirements of the                                                                         margin requirements, and trading halts
                                                                                                            the Commission believes that the                        and suspensions, will continue to apply
                                                    Act and the rules and regulations                       proposed position and exercise limits
                                                    thereunder applicable to a national                                                                             to any broad-based or narrow-based
                                                                                                            should serve to minimize potential                      index options listed pursuant to Rule
                                                    securities exchange and, in particular,                 manipulation concerns.
                                                    with Section 6(b) of the Act.25 In                                                                              19b–4(e) under the Act.
                                                    particular, the Commission believes that                B. Generic Listing and Maintenance                      C. Surveillance
                                                    the Exchange’s proposal to establish                    Standards for Broad-Based and Narrow-
                                                                                                            Based Index Options                                        As noted above,31 the Commission
                                                    trading rules and procedures applicable
                                                                                                                                                                    believes that the Exchange must
                                                    to index options and establish generic                     In considering the proposed generic
                                                                                                                                                                    maintain regulatory oversight over any
                                                    listing and maintenance standards for                   listing and maintenance standards for
                                                    broad-based and narrow-based index                                                                              products listed under the generic listing
                                                                                                            broad-based and narrow-based index
                                                    options is consistent with Section                                                                              standards through adequate
                                                                                                            options, the Commission notes that they
                                                    6(b)(5) of the Act,26 which requires,                                                                           surveillance, and the Exchange
                                                                                                            are consistent with the listing and
                                                    among other things, that the rules of a                                                                         represents that it has an adequate
                                                                                                            maintenance standards for broad-based
                                                    national securities exchange be                                                                                 surveillance program in place for index
                                                                                                            and narrow-based index options that
                                                    designed to prevent fraudulent and                                                                              options. The Commission also believes
                                                                                                            other exchanges 28 have developed and
                                                    manipulative acts and practices, to                                                                             that a surveillance sharing agreement
                                                                                                            that the Commission has previously                      between an Exchange proposing to list
                                                    promote just and equitable principles of                approved.29 The Commission finds that
                                                    trade, to remove impediments to and                                                                             a stock index derivative product and the
                                                                                                            the generic standards covering                          exchange(s) trading the stocks
                                                    perfect the mechanisms of a free and                    minimum capitalization, monthly
                                                    open market and a national market                                                                               underlying the derivative product is an
                                                                                                            trading volume, and relative weightings                 important measure for surveillance of
                                                    system and, in general, to protect                      of component stocks are designed to
                                                    investors and the public interest.                                                                              the derivative and underlying securities
                                                                                                            ensure that the trading markets for                     markets. The Commission notes that
                                                       The Commission’s approval of the                     component stocks are adequately
                                                    Exchange’s proposed listing standards                                                                           such agreements ensure the availability
                                                                                                            capitalized and sufficiently liquid, and                of information necessary to detect and
                                                    for broad-based and narrow-based index                  that no one stock or stock group
                                                    options will allow those index option                                                                           deter potential manipulations and other
                                                                                                            dominates the index. Thus, the                          trading abuses, thereby making the stock
                                                    products that satisfy the generic listing
                                                    standards to begin trading pursuant to                     27 The Exchange, however, must maintain
                                                                                                                                                                    index product less readily susceptible to
                                                    Rule 19b–4(e) under the Act, without                    regulatory oversight over any products listed under     manipulation. When a new derivative
                                                    the need for notice and comment and                     the generic listing standards through adequate          securities product based upon domestic
                                                    Commission approval. The Exchange’s                     surveillance. The Exchange represents that it has an    securities is listed and traded on an
                                                                                                            adequate surveillance program in place for index        exchange pursuant to Rule 19b–4(e)
                                                                                                            options. See Notice, supra note 3, at 38957.
                                                    investigative information sharing arrangements in          28 See, e.g., NYSE American Rules 901C.02 and        under the Act, the exchange should
                                                    the stock and options markets. The purpose of the       901C.03; CBOE Rule 24.2; NYSE Arca Rules 5.12–          determine that the markets upon which
                                                    ISG is to provide a framework for the sharing of        O and 5.13–O; Phlx Rule 1009A; and ISE Rule 2002.       all of the U.S. component securities
                                                    information and the coordination of regulatory
                                                    efforts among exchanges trading securities and
                                                                                                               29 See, e.g., Securities Exchange Act Release Nos.
                                                                                                                                                                    trade are members of the ISG, which
                                                                                                            48405 (August 25, 2003), 68 FR 52257 (September         provides information relevant to the
                                                    related products to address potential intermarket       2, 2003) (SR–ISE–2003–05) (order approving trading
                                                    manipulations and trading abuses. Id. The ISG                                                                   surveillance of the trading of securities
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                                                                                                            rules for index options and generic listing and
                                                    plays a crucial role in information sharing among       maintenance standards for narrow-based index            on other market centers.32 In this regard,
                                                    markets that trade securities, options on securities,
                                                    security futures products, and futures and options
                                                                                                            options); 52578 (October 7, 2005), 70 FR 60590          all of the registered national securities
                                                                                                            (October 18, 2005) (SR–ISE–2005–27) (order              exchanges, including the Exchange, as
                                                    on broad-based security indexes. Id.                    approving generic listing and maintenance
                                                       24 See id.
                                                                                                            standards for broad-based index options); and
                                                       25 15 U.S.C. 78f(b). In approving this proposed                                                                30 See 17 CFR 242.600.
                                                                                                            75650 (August 7, 2015), 80 FR 48600 (August 13,
                                                    rule change, the Commission has considered the          2015) (SR–EDGX–2015–18) (order approving                  31 See supra note 27.
                                                    proposed rule’s impact on efficiency, competition,      options trading rules, including generic listing and      32 See Securities Exchange Act Release No. 40761
                                                    and capital formation. See 15 U.S.C. 78c(f).            maintenance standards for broad-based and narrow-       (December 8, 1998), 63 FR 70952 (December 22,
                                                       26 15 U.S.C. 78f(b)(5).                              based index options).                                   1998) (File No. S7–13–98).



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                                                    46114                        Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices

                                                    well as the Financial Industry                          permit (a) actively-managed series of                 A. Etherington, American Century
                                                    Regulatory Authority (FINRA), are                       certain open-end management                           Investment Management, Inc., 4500
                                                    members of the ISG.                                     investment companies (‘‘Funds’’) to                   Main Street, Kansas City, MO 64111.
                                                      For new derivative securities products                issue shares redeemable in large                      FOR FURTHER INFORMATION CONTACT: Jean
                                                    based on securities from a foreign                      aggregations only (‘‘Creation Units’’); (b)           E. Minarick, Senior Counsel, at (202)
                                                    market, the SRO should have a                           secondary market transactions in Fund                 551–6811, or David J. Marcinkus,
                                                    comprehensive Intermarket Surveillance                  shares to occur at negotiated market                  Branch Chief, at (202) 551–6821
                                                    Agreement with the market for the                       prices rather than at net asset value                 (Division of Investment Management,
                                                    securities underlying the new securities                (‘‘NAV’’); (c) certain Funds to pay                   Chief Counsel’s Office).
                                                    product.33 Accordingly, the                             redemption proceeds, under certain
                                                                                                                                                                  SUPPLEMENTARY INFORMATION: The
                                                    Commission finds that the requirement                   circumstances, more than seven days
                                                                                                                                                                  following is a summary of the
                                                    that no more than 20% of the weight of                  after the tender of shares for
                                                                                                                                                                  application. The complete application
                                                    the index may be comprised of non-U.S.                  redemption; (d) certain affiliated
                                                                                                                                                                  may be obtained via the Commission’s
                                                    component securities (stocks or ADRs)                   persons of a Fund to deposit securities
                                                                                                                                                                  Web site by searching for the file
                                                    that are not subject to a comprehensive                 into, and receive securities from, the
                                                                                                            Fund in connection with the purchase                  number, or for an applicant using the
                                                    surveillance sharing agreement between
                                                                                                            and redemption of Creation Units; (e)                 Company name box, at http://
                                                    the particular U.S. exchange and the
                                                                                                            certain registered management                         www.sec.gov/search/search.htm or by
                                                    primary market of the underlying
                                                                                                            investment companies and unit                         calling (202) 551–8090.
                                                    security will continue to ensure that the
                                                    Exchange has the ability to adequately                  investment trusts outside of the same                 Summary of the Application
                                                    surveil trading in the broad-based and                  group of investment companies as the
                                                                                                                                                                     1. Applicants request an order that
                                                    narrow-based index options and the                      Funds (‘‘Funds of Funds’’) to acquire
                                                                                                                                                                  would allow Funds to operate as
                                                    ADR components of the index.34                          shares of the Funds; and (f) certain
                                                                                                                                                                  actively-managed exchange traded
                                                                                                            Funds (‘‘Feeder Funds’’) to create and
                                                    IV. Conclusion                                                                                                funds (‘‘ETFs’’).1 Fund shares will be
                                                                                                            redeem Creation Units in-kind in a
                                                      It is therefore ordered, pursuant to                  master-feeder structure.                              purchased and redeemed at their NAV
                                                    Section 19(b)(2) of the Act,35 that the                                                                       in Creation Units only. All orders to
                                                                                                            APPLICANTS: American Century ETF
                                                    proposed rule change (SR–MIAX–2017–                                                                           purchase Creation Units and all
                                                                                                            Trust (‘‘Trust’’), a Delaware statutory               redemption requests will be placed by
                                                    39), be and hereby is approved.                         trust that will be registered under the               or through an ‘‘Authorized Participant,’’
                                                      For the Commission, by the Division of                Act as an open-end management
                                                                                                                                                                  which will have signed a participant
                                                    Trading and Markets, pursuant to delegated              investment company with multiple
                                                                                                                                                                  agreement with a broker-dealer
                                                    authority.36                                            series, and American Century
                                                                                                                                                                  registered under the Securities
                                                    Eduardo A. Aleman,                                      Investment Management, Inc. (‘‘Initial
                                                                                                                                                                  Exchange Act of 1934 (‘‘Exchange Act’’)
                                                    Assistant Secretary.                                    Adviser’’), a Delaware corporation
                                                                                                                                                                  (the ‘‘Distributor’’). Shares will be listed
                                                    [FR Doc. 2017–21163 Filed 10–2–17; 8:45 am]             registered as an investment adviser
                                                                                                                                                                  and traded individually on a national
                                                                                                            under the Investment Advisers Act of
                                                    BILLING CODE 8011–01–P                                                                                        securities exchange, where share prices
                                                                                                            1940.
                                                                                                                                                                  will be based on the current bid/offer
                                                                                                            FILING DATES: The application was filed               market. Certain Funds may operate as
                                                    SECURITIES AND EXCHANGE                                 on June 30, 2017.                                     Feeder Funds in a master-feeder
                                                    COMMISSION                                              HEARING OR NOTIFICATION OF HEARING:                   structure. Any order granting the
                                                    [Investment Company Act Release No.                     An order granting the requested relief                requested relief would be subject to the
                                                    32838; 812–14793]                                       will be issued unless the Commission                  terms and conditions stated in the
                                                                                                            orders a hearing. Interested persons may              application.
                                                    American Century ETF Trust and                          request a hearing by writing to the                      2. Each Fund will consist of a
                                                    American Century Investment                             Commission’s Secretary and serving                    portfolio of securities and other assets
                                                    Management, Inc.                                        applicants with a copy of the request,                and investment positions (‘‘Portfolio
                                                                                                            personally or by mail. Hearing requests               Instruments’’). Each Fund will disclose
                                                    September 28, 2017.                                     should be received by the Commission                  on its Web site the identities and
                                                    AGENCY: Securities and Exchange                         by 5:30 p.m. on October 24, 2017, and                 quantities of the Portfolio Instruments
                                                    Commission (‘‘Commission’’).                            should be accompanied by proof of                     that will form the basis for the Fund’s
                                                    ACTION: Notice.                                         service on applicants, in the form of an              calculation of NAV at the end of the
                                                                                                            affidavit, or for lawyers, a certificate of           day.
                                                      Notice of an application for an order
                                                                                                            service. Pursuant to rule 0–5 under the                  3. Shares will be purchased and
                                                    under section 6(c) of the Investment
                                                                                                            Act, hearing requests should state the                redeemed in Creation Units and
                                                    Company Act of 1940 (the ‘‘Act’’) for an
                                                                                                            nature of the writer’s interest, any facts            generally on an in-kind basis. Except
                                                    exemption from sections 2(a)(32),
                                                                                                            bearing upon the desirability of a                    where the purchase or redemption will
                                                    5(a)(1), 22(d), and 22(e) of the Act and
                                                                                                            hearing on the matter, the reason for the             include cash under the limited
                                                    rule 22c–1 under the Act, under
                                                                                                            request, and the issues contested.                    circumstances specified in the
                                                    sections 6(c) and 17(b) of the Act for an
                                                                                                            Persons who wish to be notified of a
                                                    exemption from sections 17(a)(1) and
                                                                                                            hearing may request notification by
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                                                                                                                                                                     1 Applicants request that the order apply to the
                                                    17(a)(2) of the Act, and under section
                                                                                                            writing to the Commission’s Secretary.                Initial Fund, as well as to future series of the Trust,
                                                    12(d)(1)(J) for an exemption from                                                                             and any other open-end management investment
                                                    sections 12(d)(1)(A) and 12(d)(1)(B) of                 ADDRESSES: Secretary, Securities and
                                                                                                                                                                  companies or series thereof (each, included in the
                                                    the Act. The requested order would                      Exchange Commission, 100 F Street NE.,                term ‘‘Fund’’), each of which will operate as an
                                                                                                            Washington, DC 20549–1090;                            actively-managed ETF. Any Fund will (a) be
                                                      33 Id.                                                Applicants: Michael W. Mundt, Esq.,                   advised by the Initial Adviser or an entity
                                                                                                                                                                  controlling, controlled by, or under common
                                                      34 See Proposed Rule 1802(b)(9) and (d)(10).          Stradley Ronon Stevens & Young, LLP,                  control with the Initial Adviser (each, an
                                                      35 15 U.S.C. 78s(b)(2).                               1250 Connecticut Avenue NW., Ste.                     ‘‘Adviser’’) and (b) comply with the terms and
                                                      36 17 CFR 200.30–3(a)(12).                            500, Washington, DC 20036; Mr. Charles                conditions of the application.



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Document Created: 2017-10-03 01:01:11
Document Modified: 2017-10-03 01:01:11
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 46111 

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