83 FR 18614 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 602, Continuing Market Maker Registration
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 82 (April 27, 2018)
Federal Register Volume 83, Issue 82 (April 27, 2018)
| Page Range | 18614-18616 | |
| FR Document | 2018-08850 |
[Federal Register Volume 83, Number 82 (Friday, April 27, 2018)] [Notices] [Pages 18614-18616] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-08850] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83092; File No. SR-PEARL-2018-11] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 602, Continuing Market Maker Registration April 23, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on April 13, 2018, MIAX PEARL, LLC (``MIAX PEARL'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend MIAX PEARL Rule 602, Continuing Market Maker Registration, to modify the Market Maker \3\ series registration process utilized by the Exchange. --------------------------------------------------------------------------- \3\ The term ``Market Maker'' or ``MM'' means a Member registered with the Exchange for the purpose of making markets in options contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of the Exchange rules. See Exchange Rule 100. --------------------------------------------------------------------------- The text of the proposed rule change is available on the Exchange's website at http://www.miaxoptions.com/rule-filings/pearl at MIAX PEARL's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend MIAX PEARL Rule 602, Continuing Market Maker Registration, to modify the Market Maker series registration process utilized by the Exchange. The Exchange believes this proposal would simplify and enhance the efficiency of the Market Maker series registration process, for both Market Makers and the Exchange. Other option exchanges generally have comparable Market Maker series registration processes.\4\ --------------------------------------------------------------------------- \4\ See, e.g., Cboe BZX Exchange, Inc. (``BZX Options'') Rules 22.3(a), (b) (Market Maker Registration); see also Nasdaq PHLX, LLC (``Phlx'') Rule 3212(b) (Registration as a Market Maker); Nasdaq Options Market (``NOM''), Chapter VII (Market Participants), Section 3(a), (b) (Continuing Market Maker Registration); NYSE American, LLC (``NYSE American''), Rule 923NY (Appointment of Market Makers). --------------------------------------------------------------------------- Current Registration Process Once a Member \5\ has qualified as a Market Maker, such Market Maker may seek registration in individual series of options pursuant to Rule 602. Specifically, Rule 602(b) provides that ``[a] Market Maker may become registered in a series by entering a registration request via an Exchange approved electronic interface with the Exchange's Systems by 9:00 a.m. Eastern Time. Registration shall become effective on the day the registration request is entered.'' \6\ --------------------------------------------------------------------------- \5\ The term ``Member'' means an individual or organization that is registered with the Exchange pursuant to Chapter II of the Rules for purposes of trading on the Exchange as an ``Electronic Exchange Member'' or ``Market Maker.'' Members are deemed ``members'' under the Exchange Act. See Exchange Rule 100. \6\ See Exchange Rule 602(b). --------------------------------------------------------------------------- Proposed Registration Process The Exchange proposes to amend MIAX PEARL Rule 602(b) to modify the process by which a Market Maker becomes registered in a series. Specifically, the Exchange proposes to amend the rule text to state that registration may be requested by either utilizing the currently approved MIAX Express Order (``MEO'') \7\ interface, which requires series registration to be submitted prior to 9:00 a.m. Eastern Time of the current trading day, which registration request shall be submitted for every requested trading day, or an additional Exchange approved electronic interface, which requires series registration to be submitted prior to 6:00 p.m. Eastern Time of the business day immediately preceding the next trading day, which registration request shall persist until it is withdrawn. A Market Maker can withdraw a registration request by utilizing the same tool as it used to submit such request. --------------------------------------------------------------------------- \7\ The term ``MEO Interface'' means a binary order interface used for submitting certain order types (as set forth in Rule 516) to the MIAX PEARL System. See Exchange Rule 100. --------------------------------------------------------------------------- The purpose of this proposed change is to accommodate an additional Exchange approved electronic interface that the Exchange intends to make available to Market Makers for series registration, which additional electronic interface has a different submission deadline than the existing approved electronic interface, and which additional electronic interface allows the registration request to persist until a new request is submitted (whereas the existing electronic interface does not allow the registration request to persist--it requires a Market Maker to [[Page 18615]] resubmit for every trading day). The Exchange believes that adding more detail to the rule text would make it clear to Market Makers that it is mandatory to utilize one of the two Exchange approved electronic interfaces for series registration, and that there are different submission deadlines and requirements for resubmission for each device. Accordingly, Market Makers would continue to self-register in a series, however the Market Maker would select the method to use, and thereby clearly understand when a series registration must be submitted for that particular method and the submission frequency related thereto. Market Makers may choose to use either Exchange approved electronic interface, or any combination of the two, to process their series registrations and withdrawals. The Exchange believes that offering Market Makers an additional electronic interface for series registration will be beneficial for Market Makers because it will provide Market Makers with greater flexibility on how to perform series registration. The Exchange also believes that it will provide Market Makers with greater and more efficient access to the securities in which they want to make markets and disseminate competitive quotations, which would provide additional liquidity and enhance competition in those securities. In addition, the Exchange also proposes to delete Rule 602(c), in its entirety. Presently, sub-section (c) states that, ``[a] Market Maker's registration in a series shall be terminated if the Market Maker fails to enter quotations in the series within five (5) business days after the Market Maker's registration in the series becomes effective.'' \8\ --------------------------------------------------------------------------- \8\ See Rule 602(c). --------------------------------------------------------------------------- The Exchange believes that Rule 602(c), when read in conjunction with certain other Exchange Rules, could potentially be interpreted to be inconsistent with such rules. In particular, Rule 604(a)(6) provides that Market Makers are expected to ``maintain active markets'' in all series in which they are registered. Rule 602(c) applies only to the first five days that a Market Maker is registered, whereas Rule 604(a)(6) continues for as long as the Market Maker is registered in a series. When read together, the Exchange believes that there is potential for an inconsistent interpretation relating to a Market Maker's quoting obligations during the first five days after registering in a series. In the Exchange's view, the requirement to maintain active markets should be the same throughout the entire registration period. The Exchange notes that it will continue to be permitted to suspend or terminate a registered Market Maker under Rule 600(b) if it is found that the Market Maker has failed in its obligations to maintain active markets under Rule 604(a)(6) or fails its obligation to provide continuous two-sided quotes under Rule 605(d).\9\ Removing Rule 602(c) would simply remove the non- discretionary requirement that the Exchange must terminate a Market Maker's registration in a series if it does not enter quotations in the series within five business days of registration. --------------------------------------------------------------------------- \9\ See Exchange Rule 600(b) (``The registration of any Member as a Market Maker may be suspended or terminated by the Exchange upon a determination that such Member has failed to properly perform as a Market Maker.''). --------------------------------------------------------------------------- The Exchange currently conducts surveillance to monitor and enforce compliance with the ``active markets'' provision of Rule 604(a)(6) for all Market Makers. A registered Market Maker is subject to the Rule 604(a)(6) surveillance for the entire time the Market Maker is registered, including the first five days covered by Rule 602(c). If a registered Market Maker is found by surveillance not to be maintaining active markets in the option series in which it is registered, the Exchange will determine the appropriate course of action against such Market Maker. The Exchange may take actions of escalating severity against the offending Market Maker from suspending the Market Maker up to terminating the Market Maker in the options in which it fails to maintain active markets or bringing formal action.\10\ --------------------------------------------------------------------------- \10\ See Exchange Rule 600(b). --------------------------------------------------------------------------- The Exchange notes that its Market Maker series registration process is generally similar in structure to the comparable processes at other exchanges.\11\ Additionally, the Exchange's proposal to remove Rule 602(c) is based on the rules of another Exchange.\12\ Accordingly, the Exchange believes that the proposed changes to Rule 602 are not material and raise no new or novel issues. --------------------------------------------------------------------------- \11\ See e.g., BZX Options Rules 22.3(a) (``An Options Member that has qualified as an Options Market Maker may register to make markets in individual series of options''); NOM, Chapter VII, Section 3(a) (``An Options Participant that has qualified as an Options Market Maker may register to make markets in individual options.''). See also Phlx Rule 3212(b) (``A PSX Market Maker may become registered in an issue by entering a registration request via an Exchange approved electronic interface with PSX's systems or by contacting PSX Market Operations. Registration shall become effective on the day the registration request is entered''); Phlx Rule 3220(a) (``A market maker may voluntarily terminate its registration in a security by withdrawing its two-sided quotation from PSX. A PSX Market Maker that voluntarily terminates its registration in a security may not re-register as a market maker for one (1) business day.''). See also BZX Options Rules 22.3(b) (``An Options Market Maker may become registered in a series by entering a registration request via an Exchange approved electronic interface with the Exchange's systems by 9:00 a.m. Eastern time. Registration shall become effective on the day the registration request is entered''); NOM, Chapter VII, Section 3(b) (``An Options Market Maker may become registered in an option by entering a registration request via a Nasdaq approved electronic interface with Nasdaq's systems. Registration shall become effective on the day the registration request is entered.''). \12\ See Securities Exchange Act Release No. 79039 (October 4, 2016), 81 FR 70198 (October 11, 2016) (SR-BatsBZX-2016-62). --------------------------------------------------------------------------- 2. Statutory Basis MIAX PEARL believes that its proposed rule change is consistent with Section 6(b) \13\ of the Securities Exchange Act of 1934 (the ``Act''), in general, and furthers the objectives of Section 6(b)(5),\14\ 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, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change removes impediments to a free and open market because it would enable Market Makers to manage their series registration and the submission frequency related thereto, with more flexibility through the use of multiple electronic interfaces. The Exchange believes the proposed change would reduce the burden on both Market Makers and Exchange staff, which would result in a fair and reasonable use of resources to the benefit of all market participants. In particular, the proposal will enable Market Makers to have a choice of multiple electronic interfaces to perform series registration, and consequently will provide Market Makers with more efficient access to the securities in which they want to make markets and thus more quickly begin disseminating competitive quotations in those securities, which would provide additional liquidity and enhance competition in those securities. In addition, the Exchange believes that the proposed deletion of sub-section (c) of Rule 602 promotes just and equitable principles of trade and provides clarity for the benefit of Market Makers and the marketplace as a whole [[Page 18616]] by deleting rule text that could potentially be inconsistent with certain other Exchange rules. Additionally, the Exchange believes the proposal is consistent with Section 6(b)(1) \15\ in that it enables the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Exchange Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members with the rules of the Exchange--in particular, the Exchange's Market Maker obligations. Accordingly, the Exchange believes this proposal is consistent with Section 6(b) of the Exchange Act.\16\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b)(1). \16\ 15 U.S.C. 78f(b). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because it applies equally to a group of similarly situated market participants--Market Makers. The proposed rule change would reduce the burden on Market Makers to manage their series registration and thus provide liquidity to the Exchange. Market Makers would still be subject to the same obligations with respect to their registration; the proposed rule change would make the registration process more efficient for such Market Makers. The Exchange believes that the proposed rule change would relieve any burden on, or otherwise promote, competition, as it would enable Market Makers to manage their registration with more flexibility through the use of multiple electronic interfaces. The Exchange believes this would provide Market Makers with more efficient access to the securities in which they want to make markets and thus more quickly begin disseminating competitive quotations in those securities, which would provide additional liquidity and enhance competition in those securities. 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 foregoing 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 after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) \18\ thereunder. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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. --------------------------------------------------------------------------- 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-PEARL-2018-11 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-PEARL-2018-11. 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-PEARL-2018-11 and should be submitted on or before May 18, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-08850 Filed 4-26-18; 8:45 am] BILLING CODE 8011-01-P
![18614 Federal Register / Vol. 83, No. 82 / Friday, April 27, 2018 / Notices
only one method. The Commission will which Items have been prepared by the Current Registration Process
post all comments on the Commission’s Exchange. The Commission is Once a Member 5 has qualified as a
internet website (http://www.sec.gov/ publishing this notice to solicit Market Maker, such Market Maker may
rules/sro.shtml). Copies of the comments on the proposed rule change seek registration in individual series of
submission, all subsequent from interested persons. options pursuant to Rule 602.
amendments, all written statements Specifically, Rule 602(b) provides that
with respect to the proposed rule I. Self-Regulatory Organization’s
Statement of the Terms of Substance of ‘‘[a] Market Maker may become
change that are filed with the registered in a series by entering a
Commission, and all written the Proposed Rule Change
registration request via an Exchange
communications relating to the The Exchange is filing a proposal to approved electronic interface with the
proposed rule change between the amend MIAX PEARL Rule 602, Exchange’s Systems by 9:00 a.m. Eastern
Commission and any person, other than Continuing Market Maker Registration, Time. Registration shall become
those that may be withheld from the to modify the Market Maker 3 series effective on the day the registration
public in accordance with the registration process utilized by the request is entered.’’ 6
provisions of 5 U.S.C. 552, will be Exchange.
available for website viewing and The text of the proposed rule change Proposed Registration Process
printing in the Commission’s Public is available on the Exchange’s website at The Exchange proposes to amend
Reference Room, 100 F Street NE, http://www.miaxoptions.com/rule- MIAX PEARL Rule 602(b) to modify the
Washington, DC 20549 on official filings/pearl at MIAX PEARL’s principal process by which a Market Maker
business days between the hours of office, and at the Commission’s Public becomes registered in a series.
10:00 a.m. and 3:00 p.m. Copies of the Reference Room. Specifically, the Exchange proposes to
filing also will be available for amend the rule text to state that
inspection and copying at the principal II. Self-Regulatory Organization’s registration may be requested by either
office of the Exchange. All comments Statement of the Purpose of, and utilizing the currently approved MIAX
received will be posted without change. Statutory Basis for, the Proposed Rule Express Order (‘‘MEO’’) 7 interface,
Persons submitting comments are Change which requires series registration to be
cautioned that we do not redact or edit In its filing with the Commission, the submitted prior to 9:00 a.m. Eastern
personal identifying information from Exchange included statements Time of the current trading day, which
comment submissions. You should concerning the purpose of and basis for registration request shall be submitted
submit only information that you wish the proposed rule change and discussed for every requested trading day, or an
to make available publicly. All any comments it received on the additional Exchange approved
submissions should refer to File proposed rule change. The text of these electronic interface, which requires
Number SR–CBOE–2018–031 and statements may be examined at the series registration to be submitted prior
should be submitted on or before May places specified in Item IV below. The to 6:00 p.m. Eastern Time of the
18, 2018. Exchange has prepared summaries, set business day immediately preceding the
For the Commission, by the Division of forth in sections A, B, and C below, of next trading day, which registration
Trading and Markets, pursuant to delegated the most significant aspects of such request shall persist until it is
authority.11 statements. withdrawn. A Market Maker can
Eduardo A. Aleman, withdraw a registration request by
Assistant Secretary. A. Self-Regulatory Organization’s utilizing the same tool as it used to
[FR Doc. 2018–08851 Filed 4–26–18; 8:45 am]
Statement of the Purpose of, and submit such request.
BILLING CODE 8011–01–P
Statutory Basis for, the Proposed Rule The purpose of this proposed change
Change is to accommodate an additional
1. Purpose Exchange approved electronic interface
SECURITIES AND EXCHANGE that the Exchange intends to make
COMMISSION The Exchange proposes to amend available to Market Makers for series
MIAX PEARL Rule 602, Continuing registration, which additional electronic
[Release No. 34–83092; File No. SR– Market Maker Registration, to modify interface has a different submission
PEARL–2018–11]
the Market Maker series registration deadline than the existing approved
Self-Regulatory Organizations; MIAX process utilized by the Exchange. The electronic interface, and which
PEARL, LLC; Notice of Filing and Exchange believes this proposal would additional electronic interface allows
Immediate Effectiveness of a Proposed simplify and enhance the efficiency of the registration request to persist until a
Rule Change To Amend Rule 602, the Market Maker series registration new request is submitted (whereas the
Continuing Market Maker Registration process, for both Market Makers and the existing electronic interface does not
Exchange. Other option exchanges allow the registration request to
April 23, 2018. generally have comparable Market persist—it requires a Market Maker to
Pursuant to Section 19(b)(1) of the Maker series registration processes.4
Securities Exchange Act of 1934 (‘‘NYSE American’’), Rule 923NY (Appointment of
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 3 The term ‘‘Market Maker’’ or ‘‘MM’’ means a Market Makers).
5 The term ‘‘Member’’ means an individual or
notice is hereby given that on April 13, Member registered with the Exchange for the
purpose of making markets in options contracts organization that is registered with the Exchange
2018, MIAX PEARL, LLC (‘‘MIAX traded on the Exchange and that is vested with the pursuant to Chapter II of the Rules for purposes of
PEARL’’ or ‘‘Exchange’’) filed with the
daltland on DSKBBV9HB2PROD with NOTICES
rights and responsibilities specified in Chapter VI trading on the Exchange as an ‘‘Electronic Exchange
Securities and Exchange Commission of the Exchange rules. See Exchange Rule 100. Member’’ or ‘‘Market Maker.’’ Members are deemed
(‘‘Commission’’) a proposed rule change 4 See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX ‘‘members’’ under the Exchange Act. See Exchange
Options’’) Rules 22.3(a), (b) (Market Maker Rule 100.
as described in Items I, II, and III below, 6 See Exchange Rule 602(b).
Registration); see also Nasdaq PHLX, LLC (‘‘Phlx’’)
Rule 3212(b) (Registration as a Market Maker); 7 The term ‘‘MEO Interface’’ means a binary order
11 17 CFR 200.30–3(a)(12). Nasdaq Options Market (‘‘NOM’’), Chapter VII interface used for submitting certain order types (as
1 15 U.S.C. 78s(b)(1). (Market Participants), Section 3(a), (b) (Continuing set forth in Rule 516) to the MIAX PEARL System.
2 17 CFR 240.19b–4. Market Maker Registration); NYSE American, LLC See Exchange Rule 100.
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resubmit for every trading day). The period. The Exchange notes that it will Exchange’s proposal to remove Rule
Exchange believes that adding more continue to be permitted to suspend or 602(c) is based on the rules of another
detail to the rule text would make it terminate a registered Market Maker Exchange.12 Accordingly, the Exchange
clear to Market Makers that it is under Rule 600(b) if it is found that the believes that the proposed changes to
mandatory to utilize one of the two Market Maker has failed in its Rule 602 are not material and raise no
Exchange approved electronic interfaces obligations to maintain active markets new or novel issues.
for series registration, and that there are under Rule 604(a)(6) or fails its
2. Statutory Basis
different submission deadlines and obligation to provide continuous two-
requirements for resubmission for each sided quotes under Rule 605(d).9 MIAX PEARL believes that its
device. Accordingly, Market Makers Removing Rule 602(c) would simply proposed rule change is consistent with
would continue to self-register in a remove the non-discretionary Section 6(b) 13 of the Securities
series, however the Market Maker requirement that the Exchange must Exchange Act of 1934 (the ‘‘Act’’), in
would select the method to use, and terminate a Market Maker’s registration general, and furthers the objectives of
thereby clearly understand when a in a series if it does not enter quotations Section 6(b)(5),14 in particular, in that it
series registration must be submitted for in the series within five business days is designed to prevent fraudulent and
that particular method and the of registration. manipulative acts and practices, to
submission frequency related thereto. The Exchange currently conducts promote just and equitable principles of
Market Makers may choose to use either surveillance to monitor and enforce trade, to foster cooperation and
Exchange approved electronic interface, compliance with the ‘‘active markets’’ coordination with persons engaged in
or any combination of the two, to provision of Rule 604(a)(6) for all facilitating transactions in securities,
process their series registrations and Market Makers. A registered Market and to remove impediments to and
withdrawals. Maker is subject to the Rule 604(a)(6) perfect the mechanism of a free and
The Exchange believes that offering surveillance for the entire time the open market and a national market
Market Makers an additional electronic Market Maker is registered, including system.
interface for series registration will be the first five days covered by Rule The Exchange believes that the
beneficial for Market Makers because it 602(c). If a registered Market Maker is proposed rule change removes
will provide Market Makers with greater found by surveillance not to be impediments to a free and open market
flexibility on how to perform series maintaining active markets in the option because it would enable Market Makers
registration. The Exchange also believes series in which it is registered, the to manage their series registration and
that it will provide Market Makers with Exchange will determine the the submission frequency related
greater and more efficient access to the appropriate course of action against thereto, with more flexibility through
securities in which they want to make such Market Maker. The Exchange may the use of multiple electronic interfaces.
markets and disseminate competitive take actions of escalating severity The Exchange believes the proposed
quotations, which would provide against the offending Market Maker change would reduce the burden on
additional liquidity and enhance from suspending the Market Maker up both Market Makers and Exchange staff,
competition in those securities. to terminating the Market Maker in the which would result in a fair and
In addition, the Exchange also options in which it fails to maintain reasonable use of resources to the
proposes to delete Rule 602(c), in its active markets or bringing formal benefit of all market participants. In
entirety. Presently, sub-section (c) states action.10 particular, the proposal will enable
that, ‘‘[a] Market Maker’s registration in The Exchange notes that its Market Market Makers to have a choice of
a series shall be terminated if the Market Maker series registration process is multiple electronic interfaces to perform
Maker fails to enter quotations in the generally similar in structure to the series registration, and consequently
series within five (5) business days after comparable processes at other will provide Market Makers with more
the Market Maker’s registration in the exchanges.11 Additionally, the efficient access to the securities in
series becomes effective.’’ 8 which they want to make markets and
The Exchange believes that Rule 9 See Exchange Rule 600(b) (‘‘The registration of thus more quickly begin disseminating
602(c), when read in conjunction with any Member as a Market Maker may be suspended competitive quotations in those
certain other Exchange Rules, could or terminated by the Exchange upon a
securities, which would provide
potentially be interpreted to be determination that such Member has failed to
properly perform as a Market Maker.’’). additional liquidity and enhance
inconsistent with such rules. In 10 See Exchange Rule 600(b). competition in those securities.
particular, Rule 604(a)(6) provides that 11 See e.g., BZX Options Rules 22.3(a) (‘‘An In addition, the Exchange believes
Market Makers are expected to Options Member that has qualified as an Options that the proposed deletion of sub-
‘‘maintain active markets’’ in all series Market Maker may register to make markets in
section (c) of Rule 602 promotes just
in which they are registered. Rule 602(c) individual series of options’’); NOM, Chapter VII,
Section 3(a) (‘‘An Options Participant that has and equitable principles of trade and
applies only to the first five days that a qualified as an Options Market Maker may register provides clarity for the benefit of Market
Market Maker is registered, whereas to make markets in individual options.’’). See also Makers and the marketplace as a whole
Rule 604(a)(6) continues for as long as Phlx Rule 3212(b) (‘‘A PSX Market Maker may
the Market Maker is registered in a become registered in an issue by entering a
registration request via an Exchange approved Exchange’s systems by 9:00 a.m. Eastern time.
series. When read together, the electronic interface with PSX’s systems or by Registration shall become effective on the day the
Exchange believes that there is potential contacting PSX Market Operations. Registration registration request is entered’’); NOM, Chapter VII,
Section 3(b) (‘‘An Options Market Maker may
for an inconsistent interpretation shall become effective on the day the registration
become registered in an option by entering a
relating to a Market Maker’s quoting request is entered’’); Phlx Rule 3220(a) (‘‘A market
registration request via a Nasdaq approved
daltland on DSKBBV9HB2PROD with NOTICES
maker may voluntarily terminate its registration in
obligations during the first five days a security by withdrawing its two-sided quotation electronic interface with Nasdaq’s systems.
after registering in a series. In the from PSX. A PSX Market Maker that voluntarily Registration shall become effective on the day the
registration request is entered.’’).
Exchange’s view, the requirement to terminates its registration in a security may not re-
12 See Securities Exchange Act Release No. 79039
maintain active markets should be the register as a market maker for one (1) business
day.’’). See also BZX Options Rules 22.3(b) (‘‘An (October 4, 2016), 81 FR 70198 (October 11, 2016)
same throughout the entire registration Options Market Maker may become registered in a (SR–BatsBZX–2016–62).
13 15 U.S.C. 78f(b).
series by entering a registration request via an
8 See Rule 602(c). Exchange approved electronic interface with the 14 15 U.S.C. 78f(b)(5).
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by deleting rule text that could interest; (ii) impose any significant proposed rule change between the
potentially be inconsistent with certain burden on competition; and (iii) become Commission and any person, other than
other Exchange rules. Additionally, the operative for 30 days after the date of those that may be withheld from the
Exchange believes the proposal is the filing, or such shorter time as the public in accordance with the
consistent with Section 6(b)(1) 15 in that Commission may designate, it has provisions of 5 U.S.C. 552, will be
it enables the Exchange to be so become effective pursuant to 19(b)(3)(A) available for website viewing and
organized as to have the capacity to be of the Act 17 and Rule 19b–4(f)(6) 18 printing in the Commission’s Public
able to carry out the purposes of the thereunder. Reference Room, 100 F Street NE,
Exchange Act and to comply, and to At any time within 60 days of the Washington, DC 20549, on official
enforce compliance by its exchange filing of the proposed rule change, the business days between the hours of
members and persons associated with Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the
its exchange members with the rules of temporarily suspend such rule change if filing also will be available for
the Exchange—in particular, the it appears to the Commission that such inspection and copying at the principal
Exchange’s Market Maker obligations. action is necessary or appropriate in the office of the Exchange. All comments
Accordingly, the Exchange believes this public interest, for the protection of received will be posted without change.
proposal is consistent with Section 6(b) investors, or otherwise in furtherance of Persons submitting comments are
of the Exchange Act.16 the purposes of the Act. If the cautioned that we do not redact or edit
Commission takes such action, the personal identifying information from
B. Self-Regulatory Organization’s
Commission shall institute proceedings comment submissions. You should
Statement on Burden on Competition
to determine whether the proposed rule submit only information that you wish
The Exchange does not believe that should be approved or disapproved. to make available publicly. All
the proposed rule change would impose submissions should refer to File
any burden on competition that is not IV. Solicitation of Comments
Number SR–PEARL–2018–11 and
necessary or appropriate in furtherance Interested persons are invited to should be submitted on or before May
of the purposes of the Act because it submit written data, views, and 18, 2018.
applies equally to a group of similarly arguments concerning the foregoing,
For the Commission, by the Division of
situated market participants—Market including whether the proposed rule Trading and Markets, pursuant to delegated
Makers. The proposed rule change change is consistent with the Act. authority.19
would reduce the burden on Market Comments may be submitted by any of Eduardo A. Aleman,
Makers to manage their series the following methods:
Assistant Secretary.
registration and thus provide liquidity
Electronic Comments [FR Doc. 2018–08850 Filed 4–26–18; 8:45 am]
to the Exchange.
Market Makers would still be subject • Use the Commission’s internet BILLING CODE 8011–01–P
to the same obligations with respect to comment form (http://www.sec.gov/
their registration; the proposed rule rules/sro.shtml); or
change would make the registration • Send an email to rule-comments@ SMALL BUSINESS ADMINISTRATION
process more efficient for such Market sec.gov. Please include File Number SR–
Makers. The Exchange believes that the PEARL–2018–11 on the subject line. Reporting and Recordkeeping
proposed rule change would relieve any Requirements Under OMB review
Paper Comments
burden on, or otherwise promote, AGENCY: Small Business Administration.
competition, as it would enable Market • Send paper comments in triplicate
to Secretary, Securities and Exchange ACTION: 30-Day notice.
Makers to manage their registration with
more flexibility through the use of Commission, 100 F Street NE, SUMMARY: The Small Business
multiple electronic interfaces. The Washington, DC 20549–1090. Administration (SBA) is publishing this
Exchange believes this would provide All submissions should refer to File notice to comply with requirements of
Market Makers with more efficient Number SR–PEARL–2018–11. This file the Paperwork Reduction Act (PRA),
access to the securities in which they number should be included on the which requires agencies to submit
want to make markets and thus more subject line if email is used. To help the proposed reporting and recordkeeping
quickly begin disseminating competitive Commission process and review your requirements to OMB for review and
quotations in those securities, which comments more efficiently, please use approval, and to publish a notice in the
would provide additional liquidity and only one method. The Commission will Federal Register notifying the public
enhance competition in those securities. post all comments on the Commission’s that a submission.
internet website (http://www.sec.gov/ DATES: Submit comments on or before
C. Self-Regulatory Organization’s
rules/sro.shtml). Copies of the May 29, 2018.
Statement on Comments on the
submission, all subsequent
Proposed Rule Change Received From ADDRESSES: Comments should refer to
amendments, all written statements
Members, Participants, or Others the information collection by name and/
with respect to the proposed rule
Written comments were neither or OMB Control Number and should be
change that are filed with the
solicited nor received. sent to: Agency Clearance Officer, Curtis
Commission, and all written
Rich, Small Business Administration,
III. Date of Effectiveness of the communications relating to the
409 3rd Street SW, 5th Floor,
Proposed Rule Change and Timing for Washington, DC 20416; and SBA Desk
daltland on DSKBBV9HB2PROD with NOTICES
17 15 U.S.C. 78s(b)(3)(A).
Commission Action 18 17 Officer, Office of Information and
CFR 240.19b–4(f)(6). In addition, Rule 19b–
Because the foregoing proposed rule 4(f)(6) requires a self-regulatory organization to give Regulatory Affairs, Office of
change does not: (i) Significantly affect the Commission written notice of its intent to file Management and Budget, New
the proposed rule change at least five business days Executive Office Building, Washington,
the protection of investors or the public prior to the date of filing of the proposed rule
change, or such shorter time as designated by the DC 20503.
15 15 U.S.C. 78f(b)(1). Commission. The Exchange has satisfied this
16 15 U.S.C. 78f(b). requirement. 19 17 CFR 200.30–3(a)(12).
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Document Created: 2018-04-27 01:46:24
Document Modified: 2018-04-27 01:46:24
| 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 18614 |
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