83 FR 11278 - Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for Underlying Securities
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 50 (March 14, 2018)
Federal Register Volume 83, Issue 50 (March 14, 2018)
| Page Range | 11278-11281 | |
| FR Document | 2018-05074 |
[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)] [Notices] [Pages 11278-11281] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-05074] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82828; File No. SR-MIAX-2018-06] Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for Underlying Securities March 8, 2018. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on February 22, 2018, Miami International Securities Exchange, LLC (``MIAX Options'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Exchange Rule 402, Criteria for Underlying Securities, to modify the criteria for listing an option on an underlying covered security. The text of the proposed rule change is available on the Exchange's website at http://www.miaxoptions.com/rule-filings/ at MIAX Options' principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Exchange Rule 402, Criteria for Underlying Securities, to modify the criteria for listing options on an underlying security as defined in Section 18(b)(1)(A) of the Securities Act of 1933 (hereinafter ``covered security'' or ``covered securities''). This is a competitive filing that is based on a proposal recently submitted by Nasdaq PHLX LLC (``Nasdaq Phlx'') and approved by the Commission.\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 82474 (January 9, 2018), 83 FR 2240 (January 16, 2018) (Order Approving SR-Phlx-2017- 75). --------------------------------------------------------------------------- In particular, the Exchange proposes to modify Rule 402(b)(5)(i) to permit the listing of an option on an underlying covered security that has a market price of at least $3.00 per share for the previous three (3) consecutive business days preceding the date on which the Exchange submits a certificate to the Options Clearing Corporation (``OCC'') for listing and trading. The Exchange does not intend to amend any other criteria for listing options on an underlying security in Rule 402. Currently the underlying covered security must have a closing market price of $3.00 per share for the previous five (5) consecutive business days preceding the date on which the Exchange submits a listing certificate to OCC. In the proposed amendment, the market price will still be measured by the closing price reported in the primary market in which the underlying covered security is traded, but the measurement will be the price over the prior three (3) consecutive business day period preceding the submission of the listing certificate to OCC, instead of the prior five (5) business day period. The Exchange acknowledges that the Options Listing Procedures Plan \4\ requires that the listing certificate be provided to OCC no earlier than 12:01 a.m. and no later than 11:00 a.m. (Chicago time) on the trading day prior to the day on which trading is to begin.\5\ The proposed amendment will still comport with that requirement. For example, if an initial public offering (``IPO'') occurs at 11:00 a.m. on Monday, the earliest date the Exchange could submit its listing certificate to OCC would be on Thursday by 12:01 a.m. (Chicago time), with the market price determined by the closing price over the three- day period from Monday through Wednesday. The option on the IPO would then be eligible for trading on the Exchange on Friday. The proposed amendment would essentially enable options trading within four (4) business days of an IPO becoming available instead of six (6) business days (five (5) consecutive days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \4\ The Plan for the Purpose of Developing and Implementing Procedures Designed to Facilitate the Listing and Trading of Standardized Options Submitted Pursuant to Section 11a(2)(3)(B) of the Securities Exchange Act of 1934 (a/k/a the Options Listing Procedures Plan (``OLPP'')) is a national market system plan that, among other things, sets forth procedures governing the listing of new options series. See Securities Exchange Act Release No. 44521 (July 6, 2001), 66 FR 36809 (July 13, 2001) (Order approving OLPP). The sponsors of OLPP include OCC; BATS Exchange, Inc.; BOX Options Exchange LLC; C2 Options Exchange, Incorporated; Chicago Board Options Exchange, Incorporated; EDGX Exchange, Inc.; Miami International Securities Exchange, LLC; MIAX PEARL, LLC; The Nasdaq Stock Market LLC; NASDAQ BX, Inc.; Nasdaq PHLX LLC; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; NYSE American, LLC; and NYSE Arca, Inc. \5\ See OLPP at page 3. --------------------------------------------------------------------------- The Exchange's initial listing standards for equity options in Rule 402 (including the current price/time standard of $3.00 per share for five (5) consecutive business days) are substantially similar to the initial listing standards adopted by other options exchanges.\6\ At the time the Exchange received its initial approval from the Commission, as part of its Rules, the Exchange adopted the ``look back'' period of five (5) consecutive business days, it determined that the five-day period was sufficient to protect against attempts to manipulate the market price of the underlying security and would [[Page 11279]] provide a reliable test for stability.\7\ Surveillance technologies and procedures concerning manipulation have evolved since then to provide adequate prevention or detection of rule or securities law violations within the proposed time frame, and the Exchange represents that its existing trading surveillances are adequate to monitor the trading of options on the Exchange.\8\ --------------------------------------------------------------------------- \6\ See, e.g., Phlx Rule 1009, Commentary .01; see also BOX Rule 5020(b)(5). \7\ See Securities Exchange Act Release No. 68341 (December 3, 2012), 77 FR 73065 (December 7, 2012) (order granting approval of MIAX Options for registration as a National Securities Exchange). \8\ Such surveillance procedures generally focus on detecting securities trading subject to opening price manipulation, closing price manipulation, layering, spoofing or other unlawful activity impacting an underlying security, the option, or both. The Exchange, through the Financial Industry Regulatory Authority (``FINRA''), has price movement alerts, unusual market activity and order book alerts active for all trading symbols. These real time patterns are active for the new security as soon as the IPO begins trading. --------------------------------------------------------------------------- Furthermore, the Exchange notes that the scope of its surveillance program also includes cross market surveillance for trading that is not just limited to the Exchange. In particular, the Financial Industry Regulatory Authority (``FINRA''), pursuant to a regulatory services agreement, operates a range of cross-market equity surveillance patterns on behalf of the Exchange to look for potential manipulative behavior, including spoofing, algorithm gaming, marking the close and open, and momentum ignition strategies, as well as more general, abusive behavior related to front running, wash shales, quoting/ routing, and Reg SHO violations. These cross-market patterns incorporate relevant data from various markets beyond the Exchange and its affiliate, MIAX PEARL, LLC (``MIAX PEARL''), including data from the New York Stock Exchange (``NYSE'') and from the Nasdaq Stock Market (``Nasdaq''). Additionally, for options, MIAX Options, through FINRA, utilizes an array of patterns that monitor manipulation of options, or manipulation of equity securities (regardless of venue) for the purpose of impacting options prices on both MIAX Options and MIAX PEARL options markets (i.e., mini-manipulation strategies). Accordingly, the Exchange believes that the cross market surveillance performed by FINRA on behalf of the Exchange, coupled with the Exchange staff's real-time monitoring of similarly violative activity on MIAX Options and its affiliated market as described herein, reflects a comprehensive surveillance program that is adequate to monitor for manipulation of the underlying security and overlying option within the proposed three- day look back period. Furthermore, the Exchange notes that the proposed listing criteria would still require that the underlying security be listed on NYSE, the American Stock Exchange (now known as NYSE American), or the National Market System of The Nasdaq Stock Market (now known as the Nasdaq Global Market) (collectively, the ``Named Markets''), as provided for in the definition of ``covered security'' from Section 18(b)(1)(A) of the 1933 Act.\9\ Accordingly, the Exchange believes that the proposed rule change would still ensure that the underlying security meets the high listing standards of a Named Market, and would also ensure that the underlying is covered by the regulatory protections (including market surveillance, investigation and enforcement) offered by these exchanges for trading in covered securities conducted on their facilities. --------------------------------------------------------------------------- \9\ See 15 U.S.C. 77r(b)(1)(A). --------------------------------------------------------------------------- Furthermore, the Nasdaq, Nasdaq Phlx's affiliated listing market, had no cases within the past five years where an IPO-related issue for which it had pricing information qualified for the $3.00 price requirement during the first three (3) days of trading and did not qualify for the $3.00 price requirement during the first five (5) days.\10\ In other words, none of these qualifying issues fell below the $3.00 threshold within the first three (3) or five (5) days of trading. As such, the Exchange believes that its existing surveillance technologies and procedures, coupled with Nasdaq's findings related to the IPO-related issues as described herein, adequately address potential concerns regarding possible manipulation or price stability within the proposed timeframe. --------------------------------------------------------------------------- \10\ There were over 750 IPO-related issues on Nasdaq within the past five years. Out of all of the issues with pricing information, there was only one issue that had a price below $3 during the first five consecutive business days. The Exchange notes, however, that Nasdaq allows for companies to list on the Nasdaq Capital Market at $2.00 or $3.00 per share in some instances, which was the case for this particular issue. See Nasdaq Rule 5500 Series for initial listing standards on the Nasdaq Capital Market. See also supra note 3. --------------------------------------------------------------------------- The Exchange also believes that the proposed look back period can be implemented in connection with the other initial listing criteria for underlying covered securities. In particular, the Exchange recognizes that it may be difficult to verify the number of shareholders in the days immediately following an IPO due to the fact that stock trades generally clear within two business days (T+2) of their trade date and therefore the shareholder count will generally not be known until T+2.\11\ The Exchange notes that the current T+2 settlement cycle was recently reduced from T+3 on September 5, 2017 in connection with the Commission's amendments to Exchange Rule 15c6-1(a) to adopt the shortened settlement cycle,\12\ and the look back period of three (3) consecutive business days proposed herein reflects this shortened T+2 settlement period. As proposed, stock trades would clear within T+2 of their trade date (i.e., within three (3) business days) and therefore the number of shareholders could be verified within three (3) business days, thereby enabling options trading within four (4) business days of an IPO (three (3) consecutive business days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \11\ The number of shareholders of record can be validated by large clearing agencies such as The Depository Trust and Clearing Corporation (``DTCC'') upon the settlement date (i.e., T+2). \12\ See Securities Exchange Act Release No. 78962 (September 28, 2016), 81 FR 69240 (October 5, 2016) (Amendment to Securities Transaction Settlement Cycle) (File No. S7-22-16). --------------------------------------------------------------------------- Furthermore, the Exchange notes that it can verify the shareholder count with various brokerage firms that have a large retail customer clientele. Such firms can confirm the number of individual customers who have a position in the new issue. The earliest that these firms can provide confirmation is usually the day after the first day of trading (T+1) on an unsettled basis, while others can confirm on the third day of trading (T+2). The Exchange has confirmed with some of these brokerage firms who provide shareholder numbers to the Exchange that they are T+2 after an IPO. For the foregoing reasons, the Exchange believes that basing the proposed three (3) business day look back period on the T+2 settlement cycle would allow for sufficient verification of the number of shareholders. The proposed rule change will apply to all covered securities that meet the criteria of Rule 402. Pursuant to Rule 402, the Exchange establishes guidelines to be considered in evaluating the potential underlying securities for Exchange option transactions.\13\ However, the fact that a particular security may meet the guidelines established by the Exchange does not necessarily mean that it will be approved as an underlying security.\14\ As part of the established criteria, the issuer must be in compliance with any applicable requirement of the Securities [[Page 11280]] Exchange Act of 1934.\15\ Additionally, in considering the underlying security, the Exchange relies on information made publicly available by the issuer and/or the markets in which the security is traded.\16\ Even if the proposed option meets the objective criteria, the Exchange may decide not to list, or place limitations or conditions upon listing.\17\ The Exchange believes that these measures, together with its existing surveillance procedures, provide adequate safeguards in the review of any covered security that may meet the proposed criteria for consideration of the option within the timeframe contained in this proposal. --------------------------------------------------------------------------- \13\ See Exchange Rule 402(b). The Exchange established specific criteria to be considered in evaluating potential underlying securities for Exchange Option Transactions. \14\ Id. \15\ See Exchange Rule 402(b)(3). \16\ See Exchange Rule 402(d). \17\ See Exchange Rule 402(b). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act \18\ in general, and furthers the objectives of Section 6(b)(5) of the Act \19\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78f(b). \19\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed changes to its listing standards for covered securities would allow the Exchange to more quickly list options on a qualifying covered security that has met the $3.00 eligibility price without sacrificing investor protection. As discussed above, the Exchange believes that its existing trading surveillances provide a sufficient measure of protection against potential price manipulation within the proposed three (3) consecutive business day timeframe. The Exchange also believes that the proposed three (3) consecutive business day timeframe would continue to be a reliable test for price stability in light of Nasdaq's findings that none of the IPO-related issues on Nasdaq within the past five years that qualified for the $3.00 per share price standard during the first three trading days fell below the $3.00 threshold during the fourth or fifth trading day. Furthermore, the established guidelines to be considered by the Exchange in evaluating the potential underlying securities for Exchange option transactions,\20\ together with existing trading surveillances, provide adequate safeguards in the review of any covered security that may meet the proposed criteria for consideration of the option within the proposed timeframe. --------------------------------------------------------------------------- \20\ See notes 13-17 above. --------------------------------------------------------------------------- In addition, the Exchange believes that basing the proposed timeframe on the T+2 settlement cycle adequately addresses the potential difficulties in confirming the number of shareholders of the underlying covered security. Having some of the largest brokerage firms that provide these shareholder counts to the Exchange confirm that they are able to provide these numbers within T+2 further demonstrates that the 2,000 shareholder requirement can be sufficiently verified within the proposed timeframe. For the foregoing reasons, the Exchange believes that the proposed amendments will remove and perfect the mechanism of a free and open market and a national market system by providing an avenue for investors to swiftly hedge their investment in the stock in a shorter amount of time than what is currently in place.\21\ --------------------------------------------------------------------------- \21\ This proposed rule change does not alter any obligations of issuers or other investors of an IPO that may be subject to a lock- up or other restrictions on trading related securities. --------------------------------------------------------------------------- Finally, it should be noted that a price/time standard for the underlying security was first adopted when the listed options market was in its infancy, and was intended to prevent the proliferation of options being listed on low-priced securities that presented special manipulation concerns and/or lacked liquidity needed to maintain fair and orderly markets.\22\ When options trading commenced in 1973, the Commission determined that it was necessary for securities underlying options to meet certain minimum standards regarding both the quality of the issuer and the quality of the market for a particular security.\23\ These standards, including a price/time standard, were imposed to ensure that those issuers upon whose securities options were to be traded were widely-held, financially sound companies whose shares had trading volume and float substantial enough so as not to be readily susceptible to manipulation.\24\ At the time, the Commission determined that the imposition of these standards was reasonable in view of the pilot nature of options trading and the limited experience of investors with options trading.\25\ --------------------------------------------------------------------------- \22\ See Securities Exchange Act Release No. 29628 (August 29, 1991), 56 FR 43949-01 (September 5, 1991) (SR-AMEX-86-21; SR-CBOE- 86-15; SR-NYSE-86-20; SR-PSE-86-15; and SR-PHLX-86-21) (``1991 Approval Order'') ay 43949 (discussing the Commission's concerns when options trading initially commenced in 1973). \23\ See 1991 Approval Order at 43949. \24\ Id. \25\ Id. --------------------------------------------------------------------------- Now more than 40 years later, the listed options market has evolved into a mature market with sophisticated investors. In view of this evolution, the Commission has approved various exchange proposals to relax some of these initial listing standards throughout the years,\26\ including reducing the price/time standard in 2003 from $7.50 per share for the majority of business days over a three month period to the current $3.00 per share/five business day standard (``2003 Proposal'').\27\ It has been almost fifteen years since the Commission approved the 2003 proposal, and both the listed options market and exchange technologies have continued to evolve since then. In this instance, MIAX Options is only proposing a modest reduction of the current five (5) business day standard to three (3) business days to correspond to the securities industry's move to a T+2 standard settlement cycle.\28\ The $3.00 per share standard and all other initial options listing criteria in Rule 402 will remain unchanged by this proposal. For the reasons discussed herein, the Exchange therefore believes that the proposed three (3) business day period will be beneficial to the marketplace without sacrificing investor protections. --------------------------------------------------------------------------- \26\ See e.g., 1991 Approval Order (modifying a number of initial listing criteria, including the reduction of the price/time standard from $10 per share each day during the preceding three calendar months to $7.50 per share for the majority of days during the same period). \27\ See Securities Exchange Act Release Nos. 47190 (January 15, 2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62); 47352 (February 11, 2003), 68 FR 8319 (February 20, 2003) (SR-PCX-2003- 06); 47483 (March 11, 2003), 68 FR 13352 (March 19, 2003) (SR-ISE- 2003-04); 47613 (April 1, 2003), 68 FR 17120 (April 8, 2003) (SR- Amex-2003-19); and 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003) (SR-Phlx-2003-27). \28\ See supra note 12. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition MIAX Options does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. In this regard and as indicated above, the Exchange notes that the rule change is being proposed as a competitive response to a filing submitted by Nasdaq Phlx that was recently approved by the Commission.\29\ The proposed rule change will reduce the number of days [[Page 11281]] to list options on an underlying security, and is intended to bring new options listings to the marketplace quicker. --------------------------------------------------------------------------- \29\ See supra note 3. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \30\ and Rule 19b-4(f)(6) thereunder.\31\ --------------------------------------------------------------------------- \30\ 15 U.S.C. 78s(b)(3)(A). \31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \32\ normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\33\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Exchange to modify the criteria for listing an option on an underlying covered security to align with the criteria of other options exchanges, and the Exchange's proposal does not raise new issues. Accordingly, the Commission hereby waives the 30-day operative delay requirement and designates the proposed rule change as operative upon filing.\34\ --------------------------------------------------------------------------- \32\ 17 CFR 240.19b-4(f)(6). \33\ 17 CFR 240.19b-4(f)(6)(iii). \34\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-MIAX-2018-06 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-MIAX-2018-06. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-MIAX-2018-06, and should be submitted on or before April 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\35\ --------------------------------------------------------------------------- \35\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-05074 Filed 3-13-18; 8:45 am] BILLING CODE 8011-01-P
![11278 Federal Register / Vol. 83, No. 50 / Wednesday, March 14, 2018 / Notices
available for website viewing and The text of the proposed rule change will be the price over the prior three (3)
printing in the Commission’s Public is available on the Exchange’s website at consecutive business day period
Reference Room, 100 F Street NE, http://www.miaxoptions.com/rule- preceding the submission of the listing
Washington, DC 20549, on official filings/ at MIAX Options’ principal certificate to OCC, instead of the prior
business days between the hours of office, and at the Commission’s Public five (5) business day period.
10:00 a.m. and 3:00 p.m. Copies of the Reference Room. The Exchange acknowledges that the
filing also will be available for
II. Self-Regulatory Organization’s Options Listing Procedures Plan 4
inspection and copying at the principal
Statement of the Purpose of, and requires that the listing certificate be
office of the Exchange. All comments
Statutory Basis for, the Proposed Rule provided to OCC no earlier than 12:01
received will be posted without change.
Change a.m. and no later than 11:00 a.m.
Persons submitting comments are
cautioned that we do not redact or edit In its filing with the Commission, the (Chicago time) on the trading day prior
personal identifying information from Exchange included statements to the day on which trading is to begin.5
comment submissions. You should concerning the purpose of and basis for The proposed amendment will still
submit only information that you wish the proposed rule change and discussed comport with that requirement. For
to make available publicly. All any comments it received on the example, if an initial public offering
submissions should refer to File proposed rule change. The text of these (‘‘IPO’’) occurs at 11:00 a.m. on Monday,
Number SR–MRX–2018–08 and should statements may be examined at the the earliest date the Exchange could
be submitted on or before April 4, 2018. places specified in Item IV below. The submit its listing certificate to OCC
Exchange has prepared summaries, set would be on Thursday by 12:01 a.m.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated forth in sections A, B, and C below, of (Chicago time), with the market price
authority.8 the most significant aspects of such determined by the closing price over the
Eduardo A. Aleman, statements. three-day period from Monday through
Assistant Secretary. A. Self-Regulatory Organization’s Wednesday. The option on the IPO
[FR Doc. 2018–05165 Filed 3–13–18; 8:45 am] Statement of the Purpose of, and the would then be eligible for trading on the
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule Exchange on Friday. The proposed
Change amendment would essentially enable
options trading within four (4) business
1. Purpose days of an IPO becoming available
SECURITIES AND EXCHANGE
COMMISSION The Exchange proposes to amend instead of six (6) business days (five (5)
Exchange Rule 402, Criteria for consecutive days plus the day the listing
[Release No. 34–82828; File No. SR–MIAX– Underlying Securities, to modify the certificate is submitted to OCC).
2018–06]
criteria for listing options on an The Exchange’s initial listing
Self-Regulatory Organizations; Miami underlying security as defined in standards for equity options in Rule 402
International Securities Exchange, Section 18(b)(1)(A) of the Securities Act (including the current price/time
LLC; Notice of Filing and Immediate of 1933 (hereinafter ‘‘covered security’’ standard of $3.00 per share for five (5)
Effectiveness of a Proposed Rule or ‘‘covered securities’’). This is a consecutive business days) are
Change To Amend Exchange Rule 402, competitive filing that is based on a substantially similar to the initial listing
Criteria for Underlying Securities proposal recently submitted by Nasdaq standards adopted by other options
PHLX LLC (‘‘Nasdaq Phlx’’) and exchanges.6 At the time the Exchange
March 8, 2018. approved by the Commission.3
Pursuant to the provisions of Section received its initial approval from the
In particular, the Exchange proposes
19(b)(1) of the Securities Exchange Act Commission, as part of its Rules, the
to modify Rule 402(b)(5)(i) to permit the
of 1934 (‘‘Act’’) 1 and Rule 19b–4 Exchange adopted the ‘‘look back’’
listing of an option on an underlying
thereunder,2 notice is hereby given that period of five (5) consecutive business
covered security that has a market price
on February 22, 2018, Miami days, it determined that the five-day
of at least $3.00 per share for the
International Securities Exchange, LLC period was sufficient to protect against
previous three (3) consecutive business
(‘‘MIAX Options’’ or the ‘‘Exchange’’) days preceding the date on which the attempts to manipulate the market price
filed with the Securities and Exchange Exchange submits a certificate to the of the underlying security and would
Commission (‘‘Commission’’) a Options Clearing Corporation (‘‘OCC’’)
4 The Plan for the Purpose of Developing and
proposed rule change as described in for listing and trading. The Exchange
Implementing Procedures Designed to Facilitate the
Items I and II below, which Items have does not intend to amend any other Listing and Trading of Standardized Options
been prepared by the Exchange. The criteria for listing options on an Submitted Pursuant to Section 11a(2)(3)(B) of the
Commission is publishing this notice to underlying security in Rule 402. Securities Exchange Act of 1934 (a/k/a the Options
solicit comments on the proposed rule Currently the underlying covered Listing Procedures Plan (‘‘OLPP’’)) is a national
market system plan that, among other things, sets
change from interested persons. security must have a closing market forth procedures governing the listing of new
price of $3.00 per share for the previous options series. See Securities Exchange Act Release
I. Self-Regulatory Organization’s
five (5) consecutive business days No. 44521 (July 6, 2001), 66 FR 36809 (July 13,
Statement of the Terms of Substance of 2001) (Order approving OLPP). The sponsors of
preceding the date on which the
the Proposed Rule Change OLPP include OCC; BATS Exchange, Inc.; BOX
Exchange submits a listing certificate to Options Exchange LLC; C2 Options Exchange,
The Exchange is filing a proposal to OCC. In the proposed amendment, the Incorporated; Chicago Board Options Exchange,
amend Exchange Rule 402, Criteria for market price will still be measured by
daltland on DSKBBV9HB2PROD with NOTICES
Incorporated; EDGX Exchange, Inc.; Miami
Underlying Securities, to modify the the closing price reported in the primary International Securities Exchange, LLC; MIAX
criteria for listing an option on an PEARL, LLC; The Nasdaq Stock Market LLC;
market in which the underlying covered NASDAQ BX, Inc.; Nasdaq PHLX LLC; Nasdaq
underlying covered security. security is traded, but the measurement GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC;
NYSE American, LLC; and NYSE Arca, Inc.
8 17 CFR 200.30–3(a)(12). 3 See Securities Exchange Act Release No. 82474 5 See OLPP at page 3.
1 15 U.S.C. 78s(b)(1). (January 9, 2018), 83 FR 2240 (January 16, 2018) 6 See, e.g., Phlx Rule 1009, Commentary .01; see
2 17 CFR 240.19b–4. (Order Approving SR–Phlx–2017–75). also BOX Rule 5020(b)(5).
VerDate Sep<11>2014 18:17 Mar 13, 2018 Jkt 244001 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 E:\FR\FM\14MRN1.SGM 14MRN1](https://thefederalregister.org/doc/83_FR_11328/page/1.svg)
![Federal Register / Vol. 83, No. 50 / Wednesday, March 14, 2018 / Notices 11281
to list options on an underlying At any time within 60 days of the personal identifying information from
security, and is intended to bring new filing of the proposed rule change, the comment submissions. You should
options listings to the marketplace Commission summarily may submit only information that you wish
quicker. temporarily suspend such rule change if to make available publicly. All
it appears to the Commission that such submissions should refer to File
C. Self-Regulatory Organization’s
action is necessary or appropriate in the Number SR–MIAX–2018–06, and
Statement on Comments on the
public interest, for the protection of should be submitted on or before April
Proposed Rule Change Received From
investors, or otherwise in furtherance of 4, 2018.
Members, Participants, or Others
the purposes of the Act. If the
Written comments were neither Commission takes such action, the For the Commission, by the Division of
solicited nor received. Commission shall institute proceedings Trading and Markets, pursuant to delegated
to determine whether the proposed rule authority.35
III. Date of Effectiveness of the
should be approved or disapproved. Eduardo A. Aleman,
Proposed Rule Change and Timing for
Commission Action Assistant Secretary.
IV. Solicitation of Comments
[FR Doc. 2018–05074 Filed 3–13–18; 8:45 am]
Because the proposed rule change Interested persons are invited to
BILLING CODE 8011–01–P
does not (i) significantly affect the submit written data, views, and
protection of investors or the public arguments concerning the foregoing,
interest; (ii) impose any significant including whether the proposed rule
burden on competition; and (iii) become SECURITIES AND EXCHANGE
change is consistent with the Act.
operative for 30 days from the date on COMMISSION
Comments may be submitted by any of
which it was filed, or such shorter time the following methods:
as the Commission may designate if [Release No. 34–82845; File No. SR–BOX–
consistent with the protection of Electronic Comments 2018–08]
investors and the public interest, the • Use the Commission’s internet
proposed rule change has become comment form (http://www.sec.gov/ Self-Regulatory Organizations; BOX
effective pursuant to Section 19(b)(3)(A) rules/sro.shtml); or Options Exchange LLC; Notice of
of the Act 30 and Rule 19b–4(f)(6) • Send an email to rule-comments@ Filing and Immediate Effectiveness of
thereunder.31 sec.gov. Please include File Number SR– a Proposed Rule Change To Amend
A proposed rule change filed under MIAX–2018–06 on the subject line. Rule 7600(c) To State That the
Rule 19b–4(f)(6) 32 normally does not Qualified Open Outcry (‘‘QOO’’) Order
Paper Comments
become operative for 30 days after the is Subject to the Trade-Through
date of filing. However, pursuant to • Send paper comments in triplicate Exceptions Outlined in Rule 15010(b)
Rule 19b–4(f)(6)(iii),33 the Commission to Secretary, Securities and Exchange
may designate a shorter time if such Commission, 100 F Street NE, March 9, 2018.
action is consistent with the protection Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
of investors and the public interest. The All submissions should refer to File Securities Exchange Act of 1934
Exchange has asked the Commission to Number SR–MIAX–2018–06. This file (‘‘Act’’),1 and Rule 19b–4 thereunder,2
waive the 30-day operative delay so that number should be included on the notice is hereby given that on February
the proposal may become operative subject line if email is used. To help the 27, 2018, BOX Options Exchange LLC
upon filing. The Commission believes Commission process and review your (the ‘‘Exchange’’) filed with the
that waiving the 30-day operative delay comments more efficiently, please use Securities and Exchange Commission
is consistent with the protection of only one method. The Commission will (‘‘Commission’’) the proposed rule
investors and the public interest as it post all comments on the Commission’s
change as described in Items I and II
will allow the Exchange to modify the internet website (http://www.sec.gov/
below, which Items have been prepared
criteria for listing an option on an rules/sro.shtml). Copies of the
underlying covered security to align by the self-regulatory organization. The
submission, all subsequent
with the criteria of other options Commission is publishing this notice to
amendments, all written statements
exchanges, and the Exchange’s proposal solicit comments on the proposed rule
with respect to the proposed rule
does not raise new issues. Accordingly, change that are filed with the change from interested persons.
the Commission hereby waives the 30- Commission, and all written I. Self-Regulatory Organization’s
day operative delay requirement and communications relating to the Statement of the Terms of Substance of
designates the proposed rule change as proposed rule change between the the Proposed Rule Change
operative upon filing.34 Commission and any person, other than
those that may be withheld from the The Exchange proposes to amend
30 15 U.S.C. 78s(b)(3)(A). public in accordance with the Rule 7600(c) to state that the Qualified
31 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
provisions of 5 U.S.C. 552, will be Open Outcry (‘‘QOO’’) Order is subject
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent available for website viewing and to the trade-through exceptions outlined
to file the proposed rule change, along with a brief printing in the Commission’s Public in Rule 15010(b). The text of the
description and text of the proposed rule change, Reference Room, 100 F Street NE, proposed rule change is available from
at least five business days prior to the date of filing Washington, DC 20549, on official the principal office of the Exchange, at
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange business days between the hours of the Commission’s Public Reference
daltland on DSKBBV9HB2PROD with NOTICES
has satisfied this requirement. 10:00 a.m. and 3:00 p.m. Copies of the Room and also on the Exchange’s
32 17 CFR 240.19b–4(f)(6). filing also will be available for internet website at http://
33 17 CFR 240.19b–4(f)(6)(iii).
inspection and copying at the principal boxoptions.com.
34 For purposes only of waiving the 30-day
office of the Exchange. All comments
operative delay, the Commission has also
considered the proposed rule’s impact on
received will be posted without change. 35 17 CFR 200.30–3(a)(12).
efficiency, competition, and capital formation. See Persons submitting comments are 1 15 U.S.C. 78s(b)(1).
15 U.S.C. 78c(f). cautioned that we do not redact or edit 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:17 Mar 13, 2018 Jkt 244001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\14MRN1.SGM 14MRN1](https://thefederalregister.org/doc/83_FR_11328/page/4.svg)
Document Created: 2018-03-14 01:06:54
Document Modified: 2018-03-14 01:06:54
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 11278 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR