83 FR 31812 - Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 602, Appointment of Market Makers
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 131 (July 9, 2018)
Federal Register Volume 83, Issue 131 (July 9, 2018)
| Page Range | 31812-31816 | |
| FR Document | 2018-14545 |
[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)] [Notices] [Pages 31812-31816] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14545] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83577; File No. SR-MIAX-2018-13] Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 602, Appointment of Market Makers July 2, 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 June 26, 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, 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 Rule 602, Appointment of Market Makers, to specify the new method by which Lead Market Makers \3\ (``LMMs'') and Registered Market Makers \4\ (``RMMs'') request appointments to one or more classes of option contracts traded on the Exchange. --------------------------------------------------------------------------- \3\ The term ``Lead Market Maker'' means a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of the Exchange's Rules with respect to Lead Market Makers. See Exchange Rule 100. \4\ The term ``Registered Market Maker'' means a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange, who is not a Lead Market Maker and is vested with the rights and responsibilities specified in Chapter VI of the Exchange's Rules with respect to Registered Market Makers. See Exchange Rule 100. --------------------------------------------------------------------------- [[Page 31813]] 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend MIAX Options Rule 602, Appointment of Market Makers, to specify the new method by which LMMs and RMMs would request appointments to (and relinquishment of appointments from) one or more classes of option contracts traded on the Exchange pursuant to Rule 602(a). The Exchange believes this proposal would improve the efficiency of the appointment process for both the Exchange and for these types of Market Makers.\5\ Other option exchanges also specify a method which governs the appointment of market makers to classes of option contracts traded on the exchange, however, these methods, while generally automated, differ somewhat across exchanges.\6\ --------------------------------------------------------------------------- \5\ The term ``Market Makers'' refers to ``Lead Market Makers,'' ``Primary Lead Market Makers'' and ``Registered Market Makers'' collectively. See Exchange Rule 100. \6\ See, e.g.., Cboe BZX Exchange, Inc. (``Cboe BZX'') Rules 22.3(a),(b) (Market Maker Registration); see also Nasdaq PHLX, LLC (``Nasdaq 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). --------------------------------------------------------------------------- Once a Member \7\ has qualified as either an LMM or an RMM, such Market Maker may request an appointment (or, following an appointment, relinquishment from an appointment) in one or more option classes pursuant to Rule 602. Currently, an LMM or RMM may request such an appointment by contacting Exchange staff, either by phone or via email, identifying those classes of option contracts in which the Market Maker is seeking an appointment. A Primary Lead Market Maker (``PLMM''),\8\ however, goes through a different, more extensive appointment process. Accordingly, the Exchange intentionally excluded PLMMs from this proposal. The Exchange believes it is appropriate to exclude PLMMs from this new appointment method because the Board or designated committee appoints only one PLMM to each options class traded on the Exchange, as opposed to the multiple number of LMMs and RMMs, and because of the heightened obligations associated with performing the responsibilities of a PLMM.\9\ Because of the heightened responsibilities of PLMMs, the Exchange believes that it is appropriate to have a different method for PLMMs on the one hand, and LMMs and RMMs on the other hand, with respect to the method by which appointments (and relinquishments of appointments) are requested. --------------------------------------------------------------------------- \7\ The term ``Member'' means an individual or organization approved to exercise the trading rights associated with a Trading Permit. Members are deemed ``members'' under the Exchange Act. See Exchange Rule 100. \8\ A ``Primary Lead Market Maker'' is a Lead Market Maker appointment by the Exchange to act as the Primary Lead Market Maker for the purpose of making markets in securities traded on the Exchange. The Primary Lead Market Maker is vested with the rights and responsibilities specified in Chapter VI of these Rules with respect to Primary Lead Market Makers. See Exchange Rule 100. \9\ See, for example, Exchange Rules 603 and 604 for certain heightened obligations of PLMMs. --------------------------------------------------------------------------- According to the Exchange's current practice, with respect to LMMs and RMMs, after the LMM or RMM contacts Exchange staff either by phone or via email, the Exchange staff then delivers that request to the Board or a committee designated by the Board for its approval. Upon the decision of the Board or committee designated by the Board regarding that appointment, Exchange staff then notifies the Market Maker of the determination, with such notification being made the next business day. The Exchange notes that it is not proposing to make any changes to timing of the notification, which will continue to be made the next business day. Specifically, Rule 602(a) provides that ``[t]he Board or a committee designated by the Board shall appoint Market Makers to one or more classes of option contracts traded on the Exchange.'' \10\ In addition to having the authority to appoint one PLMM to each options class, ``[t]he Exchange will impose an upper limit on the aggregate number of Market Makers that may quote in each class of options (``Class Quoting Limit'' or ``CQL'').'' Currently, the CQL is set at fifty (50) Market Makers per option class but the Exchange may ``increase the CQL for an existing or new option class if the President determines that it would be appropriate.'' \11\ Further, Rule 602(c)(2) provides that ``Market Makers requesting an appointment in a class of options will be considered for the appointment in accordance with paragraphs (a), (b) and (f) of this Rule 602, provided the number of Market Makers appointed in the options class does not exceed the CQL.'' --------------------------------------------------------------------------- \10\ See Rule 602(a). \11\ See Rule 602(c). --------------------------------------------------------------------------- In making appointments of Market Makers to one or more classes of option contracts traded on the Exchange, the Board or designated committee shall consider the financial resources available to the Market Maker; the Market Maker's experience and expertise in market making or options trading; the preferences of the Market Maker to receive appointment(s) in specific option class(es); and the maintenance and enhancement of competition among Market Makers in each class of option contracts to which they are appointed.\12\ Rule 602(c)(2) also states that, when the number of Market Makers appointed in the options class equals the CQL, all other Market Makers requesting to be appointed in that options class will be wait-listed in the order in which they submitted their request.\13\ --------------------------------------------------------------------------- \12\ See Rule 602(a). \13\ See Rule 602(c)(2). --------------------------------------------------------------------------- Under the current Rule, ``[t]he Board or designated committee may suspend or terminate any appointment of a Market Maker under this Rule [602] and may make additional appointments or change the option classes included in a Market Maker's appointed classes whenever, in the Board's or designated committee's judgment, the interests of a fair and orderly market are best served by such action.'' \14\ Moreover, the Exchange ``shall periodically conduct an evaluation of Market Makers to determine whether they have fulfilled performance standards relating to, among other things, quality of markets, competition among Market Makers, observance of ethical standards, and administrative factors. The Exchange may consider any relevant information, including but not limited to the results of a Market Maker evaluation questionnaire, trading data, a Market Maker's regulatory history and such other factors and data as may be [[Page 31814]] pertinent in the circumstances.'' \15\ If the Exchange finds that a Market Maker has not met the performance standards, the Exchange may take action, including suspending, terminating or restricting a Market Maker's appointment or registration.\16\ --------------------------------------------------------------------------- \14\ See Rule 602(e). \15\ See Rule 602(f). \16\ See id. --------------------------------------------------------------------------- The Exchange proposes to amend MIAX Options Rule 602 solely to specify the new method by which LMMs and RMMs would request appointments to (or relinquishment of appointments from) one or more classes of option contracts traded on the Exchange pursuant to Rule 602(a). In particular, the Exchange proposes to adopt Interpretations & Policies .02 to Rule 602 to provide that, ``Lead Market Makers and Registered Market Makers shall request appointments to (and relinquishment of appointments from) one or more classes of option contracts traded on the Exchange pursuant to Rule 602(a) via an Exchange approved electronic interface, which request must be submitted prior to 6:00 p.m. Eastern Time of the business day immediately preceding the next trading day. The Exchange approved electronic interface will also ensure that, before any appointment request (or relinquishment of an appointment) is approved, the CQL established by Rule 602 has not been exceeded. Appointments (and relinquishments of appointments) shall become effective on the day after the request is submitted, provided that it has been approved. Approvals and denials of appointments (and relinquishment of appointments) shall be communicated by the Exchange via the same Exchange approved electronic interface through which the request was made.'' The Exchange believes that requiring LMMs and RMMs to use an Exchange approved electronic interface to request appointments to one or more classes of option contracts would enable LMMs and RMMs to streamline the process by which they request appointments (and relinquishment of appointments) and get notified of approvals or denials related to such requests, which, in turn, would reduce the time and resources expended by such Market Makers and the Exchange on the appointment process. The Exchange also believes this proposal would provide LMMs and RMMs with 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. The Exchange would retain the ability to suspend or terminate any appointment of a Market Maker if necessary to maintain a fair and orderly market.\17\ The Exchange also notes that the proposed changes to Rule 602 are similar in some respects to the rules of other exchanges \18\ and therefore raises no new or novel issues. Furthermore, the Exchange notes that it is only proposing to specify the new method by which LMMs and RMMs would request appointments to (and relinquishment of appointments from) one or more classes of option contracts traded on the Exchange pursuant to Rule 602(a), and would not change the substantive provisions of the rules including the CQL, quoting requirements, or the Exchange's ability to make additional appointments or change the option classes included in a Market Maker's requested appointment whenever, in the Board's or designated committee's judgment, the interests of a fair and orderly market are best served by such action. --------------------------------------------------------------------------- \17\ See Rule 602(e). \18\ See e.g., 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.''). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act \19\ in general, and furthers the objectives of Section 6(b)(5) of the Act \20\ 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. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b). \20\ 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 streamline the process by which LMMs and RMMs request appointments to (and relinquishment of appointments from) one or more classes of option contracts traded on the Exchange and offer LMMs and RMMs the ability to manage their appointments in a more efficient manner, through use of an automated tool. The Exchange believes the proposed change would reduce the burden on both LMMs and RMMs, 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 to require LMMs and RMMs to use an Exchange approved electronic interface to request to be appointed to a class, and to make changes thereto, is consistent with Act because it would provide LMMs and RMMs with more efficient access to the securities in which they want to make markets. The Exchange also believes that allowing LMMs and RMMs to request relinquishment from appointments using the same process used by LMMs and RMMs to request appointments, would serve to promote just and equitable principles of trade and benefit investors and the public interest by establishing a more systematic way for LMMs and RMMs to manage their appointments and provide more clarity with respect to the process. In addition, the Exchange believes that improving the efficiency of the process by which LMMs and RMMs request appointments and relinquishment of appointments on an automated basis without having to manually contact Exchange staff is likewise consistent with the Act. First, the Board or a designated committee will continue to have responsibility for approving the appointments requested by LMMs and RMMs in one or more classes of options contracts traded on the Exchange. The Board or a designated committee would continue to consider the relevant factors and conduct an evaluation of Market Makers prior to their appointment. \21\ In addition, as noted above, the Exchange would continue to have authority to suspend or terminate any Market Maker appointment in the interest of a fair and orderly market, including, if necessary to prevent fraudulent and manipulative acts and practices and protect investors, or if a Market Maker does not satisfy its obligations with respect to an appointment.\22\ Furthermore, the [[Page 31815]] Exchange approved electronic interface utilized by LMMs and RMMs to request an appointment will ensure that, before any additions to a Market Maker's appointment are approved, the CQL established by Rule 602 has not been exceeded. Accordingly, the Exchange believes this proposal is consistent with Section 6(b) of the Exchange Act.\23\ --------------------------------------------------------------------------- \21\ See supra notes 10-14. \22\ See Rule 602(e). See also Rule 600(c) (regarding the Exchange's ability to suspend or terminate a Market Maker's registration based on ``a determination that such Member has failed to properly perform as a Market Maker.''). \23\ 15 U.S.C. 78f(b). --------------------------------------------------------------------------- The proposed rule change would not result in unfair discrimination, as it applies to all LMMs and RMMs equally. As noted above, the Exchange intentionally excluded PLMMs from this proposal. The Exchange believes it isn't unfairly discriminatory to exclude PLMMs from this new appointment method because the Board or designated committee appoints only one PLMM to each options class traded on the Exchange, as opposed to the multiple number of LMMs and RMMs, and because of the heightened obligations associated with performing the responsibilities of a PLMM.\24\ Because of these heightened responsibilities of PLMMs, the Exchange believes that it is not unfairly discriminatory to treat PLMMs differently from LMMs and RMMs with respect to the method by which appointments (and relinquishments of appointments) are requested. --------------------------------------------------------------------------- \24\ See supra note 9. --------------------------------------------------------------------------- Further, the proposed rule change would reduce the burden on LMMs and RMMs to manage their appointments, and thus provide greater liquidity to the Exchange while reducing the time and resources expended by such Market Makers and the Exchange on the appointment process. Nevertheless, Market Makers would still be required to comply with certain obligations to maintain their status as a Market Maker, including that they provide continuous, two-sided quotations in their appointed securities.\25\ --------------------------------------------------------------------------- \25\ See Rule 604. --------------------------------------------------------------------------- Finally, as noted above, specifying the method of the appointment process would also align the rules of the Exchange with the rules of other options exchanges, where Market Makers presently have the ability to select and make changes to their appointments and registrations via an exchange-approved electronic interface.\26\ The Exchange believes this consistency across exchanges would remove impediments to and perfect the mechanism of a free and open market by ensuring that members, regulators and the public can more easily navigate the Exchange's rulebook and better understand the appointment process. --------------------------------------------------------------------------- \26\ See supra notes 6 and 18. --------------------------------------------------------------------------- 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 because it provides the same enhancement to a group of similarly situated market participants--LMMs and RMMs. The proposed rule change would reduce the burden on these Market Makers to manage their appointments and thus provide greater liquidity to the Exchange while reducing the time and resources expended by such Market Makers and the Exchange on the appointment process. The Exchange does not believe the proposed rule change would help these Market Makers to the detriment of market participants on other exchanges, particularly because the proposed appointment process for LMMs and RMMs is meant to simply create a more efficient process by which such Market Makers can request an appointment, and it is similar to the appointment and registration processes for market makers already in place on other exchanges.\27\ LMMs and RMMs would still be subject to the same obligations with respect to its appointment; however, the proposed rule change would make the appointment 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 LMMs and RMMs to streamline the process by which they request appointments (and relinquishment of appointments) and get notified of approvals or denials related to such requests, which, in turn, would reduce the time and resources expended by such Market Makers and the Exchange on the appointment process. --------------------------------------------------------------------------- \27\ Id. --------------------------------------------------------------------------- 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 \28\ and Rule 19b-4(f)(6) \29\ thereunder. --------------------------------------------------------------------------- \28\ 15 U.S.C. 78s(b)(3)(A). \29\ 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-MIAX-2018-13 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-2018-13. 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 [[Page 31816]] 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-2018-13 and should be submitted on or before July 30, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\30\ --------------------------------------------------------------------------- \30\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-14545 Filed 7-6-18; 8:45 am] BILLING CODE P
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III. Date of Effectiveness of the investors, or otherwise in furtherance of should be submitted on or before July
Proposed Rule Change and Timing for the purposes of the Act. If the 30, 2018.
Commission Action Commission takes such action, the For the Commission, by the Division of
Because the foregoing proposed rule Commission shall institute proceedings Trading and Markets, pursuant to delegated
change does not: (i) Significantly affect to determine whether the proposed rule authority.13
the protection of investors or the public change should be approved or Eduardo A. Aleman,
interest; (ii) impose any significant disapproved. Assistant Secretary.
burden on competition; and (iii) become IV. Solicitation of Comments [FR Doc. 2018–14666 Filed 7–6–18; 8:45 am]
operative for 30 days from the date on
Interested persons are invited to BILLING CODE 8011–01–P
which it was filed, or such shorter time
submit written data, views, and
as the Commission may designate, it has
arguments concerning the foregoing,
become effective pursuant to Section SECURITIES AND EXCHANGE
including whether the proposed rule
19(b)(3)(A)(iii) of the Act 8 and COMMISSION
change is consistent with the Act.
subparagraph (f)(6) Rule 19b–4
Comments may be submitted by any of [Release No. 34–83577; File No. SR–MIAX–
thereunder.9
the following methods: 2018–13]
A proposed rule change filed under
Rule 19b–4(f)(6) 10 normally does not Electronic Comments
Self-Regulatory Organizations; Miami
become operative for 30 days after the • Use the Commission’s internet International Securities Exchange,
date of filing. However Rule 19b– comment form (http://www.sec.gov/ LLC; Notice of Filing and Immediate
4(f)(6)(iii) 11 permits the Commission to rules/sro.shtml); or Effectiveness of a Proposed Rule
designate a shorter time if such action • Send an email to rule-comments@ Change To Amend Exchange Rule 602,
is consistent with the protection of sec.gov. Please include File Number SR– Appointment of Market Makers
investors and the public interest. The CBOE–2018–051 on the subject line.
Exchange has requested that the July 2, 2018.
Commission waive the 30-day operative Paper Comments
Pursuant to Section 19(b)(1) of the
delay to permit the applicable fee • Send paper comments in triplicate Securities Exchange Act of 1934
waivers to be extended on a timely basis to Secretary, Securities and Exchange (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
and without interruption and to update Commission, 100 F Street NE, notice is hereby given that on June 26,
its rule text to reflect the sunsetting of Washington, DC 20549–1090. 2018, Miami International Securities
the FLEX Trader Incentive Program as All submissions should refer to File Exchange, LLC (‘‘MIAX Options’’ or the
scheduled. The Commission believes Number SR–CBOE–2018–051. This file ‘‘Exchange’’) filed with the Securities
that waiver of the 30-day operative number should be included on the and Exchange Commission
delay is consistent with the protection subject line if email is used. To help the (‘‘Commission’’) a proposed rule change
of investors and the public interest Commission process and review your as described in Items I, II, and III below,
because the proposal to extend to comments more efficiently, please use which Items have been prepared by the
December 31, 2018 temporary only one method. The Commission will Exchange. The Commission is
incentives designed to encourage post all comments on the Commission’s publishing this notice to solicit
trading in the above-discussed products internet website (http://www.sec.gov/ comments on the proposed rule change
and trading sessions, and to remove rules/sro.shtml). Copies of the from interested persons.
obsolete text concerning the FLEX submission, all subsequent
Trader Incentive Program, does not raise amendments, all written statements I. Self-Regulatory Organization’s
any new or novel issues. Therefore, the with respect to the proposed rule Statement of the Terms of Substance of
Commission hereby waives the 30-day change that are filed with the the Proposed Rule Change
operative delay and designates the Commission, and all written The Exchange is filing a proposal to
proposed rule change operative upon communications relating to the amend Rule 602, Appointment of
filing.12 proposed rule change between the Market Makers, to specify the new
At any time within 60 days of the Commission and any person, other than method by which Lead Market Makers 3
filing of the proposed rule change, the those that may be withheld from the (‘‘LMMs’’) and Registered Market
Commission summarily may public in accordance with the Makers 4 (‘‘RMMs’’) request
temporarily suspend such rule change if provisions of 5 U.S.C. 552, will be appointments to one or more classes of
it appears to the Commission that such available for website viewing and option contracts traded on the
action is necessary or appropriate in the printing in the Commission’s Public Exchange.
public interest, for the protection of Reference Room, 100 F Street NE,
Washington, DC 20549 on official 13 17 CFR 200.30–3(a)(12).
8 15 U.S.C. 78s(b)(3)(A). business days between the hours of 1 15 U.S.C. 78s(b)(1).
9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 2 17 CFR 240.19b–4.
10:00 a.m. and 3:00 p.m. Copies of the
4(f)(6)(iii) requires the Exchange to give the 3 The term ‘‘Lead Market Maker’’ means a
Commission written notice of the Exchange’s intent filing also will be available for
Member registered with the Exchange for the
to file the proposed rule change, along with a brief inspection and copying at the principal purpose of making markets in securities traded on
description and text of the proposed rule change, office of the Exchange. All comments the Exchange and that is vested with the rights and
at least five business days prior to the date of filing received will be posted without change. responsibilities specified in Chapter VI of the
of the proposed rule change, or such shorter time Exchange’s Rules with respect to Lead Market
Persons submitting comments are
sradovich on DSK3GMQ082PROD with NOTICES
as designated by the Commission. The Exchange Makers. See Exchange Rule 100.
has satisfied this requirement. cautioned that we do not redact or edit 4 The term ‘‘Registered Market Maker’’ means a
10 17 CFR 240.19b–4(f)(6). personal identifying information from Member registered with the Exchange for the
11 17 CFR 240.19b–4(f)(6)(iii).
comment submissions. You should purpose of making markets in securities traded on
12 For purposes only of waiving the 30-day the Exchange, who is not a Lead Market Maker and
submit only information that you wish
operative delay, the Commission also has is vested with the rights and responsibilities
considered the proposed rule’s impact on
to make available publicly. All specified in Chapter VI of the Exchange’s Rules
efficiency, competition, and capital formation. See submissions should refer to File with respect to Registered Market Makers. See
15 U.S.C. 78c(f). Number SR–CBOE–2018–051 and Exchange Rule 100.
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The text of the proposed rule change one or more option classes pursuant to Market Makers that may quote in each
is available on the Exchange’s website at Rule 602. Currently, an LMM or RMM class of options (‘‘Class Quoting Limit’’
http://www.miaxoptions.com/rule- may request such an appointment by or ‘‘CQL’’).’’ Currently, the CQL is set at
filings/ at MIAX Options’ principal contacting Exchange staff, either by fifty (50) Market Makers per option class
office, and at the Commission’s Public phone or via email, identifying those but the Exchange may ‘‘increase the
Reference Room. classes of option contracts in which the CQL for an existing or new option class
Market Maker is seeking an if the President determines that it would
II. Self-Regulatory Organization’s
appointment. A Primary Lead Market be appropriate.’’ 11 Further, Rule
Statement of the Purpose of, and
Maker (‘‘PLMM’’),8 however, goes 602(c)(2) provides that ‘‘Market Makers
Statutory Basis for, the Proposed Rule
through a different, more extensive requesting an appointment in a class of
Change
appointment process. Accordingly, the options will be considered for the
In its filing with the Commission, the Exchange intentionally excluded appointment in accordance with
Exchange included statements PLMMs from this proposal. The paragraphs (a), (b) and (f) of this Rule
concerning the purpose of and basis for Exchange believes it is appropriate to 602, provided the number of Market
the proposed rule change and discussed exclude PLMMs from this new Makers appointed in the options class
any comments it received on the appointment method because the Board does not exceed the CQL.’’
proposed rule change. The text of these or designated committee appoints only In making appointments of Market
statements may be examined at the one PLMM to each options class traded Makers to one or more classes of option
places specified in Item IV below. The on the Exchange, as opposed to the
Exchange has prepared summaries, set contracts traded on the Exchange, the
multiple number of LMMs and RMMs, Board or designated committee shall
forth in sections A, B, and C below, of and because of the heightened
the most significant aspects of such consider the financial resources
obligations associated with performing available to the Market Maker; the
statements. the responsibilities of a PLMM.9 Market Maker’s experience and
A. Self-Regulatory Organization’s Because of the heightened expertise in market making or options
Statement of the Purpose of, and responsibilities of PLMMs, the trading; the preferences of the Market
Statutory Basis for, the Proposed Rule Exchange believes that it is appropriate Maker to receive appointment(s) in
Change to have a different method for PLMMs
specific option class(es); and the
on the one hand, and LMMs and RMMs
1. Purpose maintenance and enhancement of
on the other hand, with respect to the
competition among Market Makers in
The Exchange proposes to amend method by which appointments (and
each class of option contracts to which
MIAX Options Rule 602, Appointment relinquishments of appointments) are
they are appointed.12 Rule 602(c)(2) also
of Market Makers, to specify the new requested.
According to the Exchange’s current states that, when the number of Market
method by which LMMs and RMMs Makers appointed in the options class
would request appointments to (and practice, with respect to LMMs and
RMMs, after the LMM or RMM contacts equals the CQL, all other Market Makers
relinquishment of appointments from) requesting to be appointed in that
one or more classes of option contracts Exchange staff either by phone or via
email, the Exchange staff then delivers options class will be wait-listed in the
traded on the Exchange pursuant to order in which they submitted their
Rule 602(a). The Exchange believes this that request to the Board or a committee
designated by the Board for its approval. request.13
proposal would improve the efficiency
of the appointment process for both the Upon the decision of the Board or Under the current Rule, ‘‘[t]he Board
Exchange and for these types of Market committee designated by the Board or designated committee may suspend
Makers.5 Other option exchanges also regarding that appointment, Exchange or terminate any appointment of a
specify a method which governs the staff then notifies the Market Maker of Market Maker under this Rule [602] and
appointment of market makers to classes the determination, with such may make additional appointments or
of option contracts traded on the notification being made the next change the option classes included in a
exchange, however, these methods, business day. The Exchange notes that Market Maker’s appointed classes
while generally automated, differ it is not proposing to make any changes whenever, in the Board’s or designated
somewhat across exchanges.6 to timing of the notification, which will committee’s judgment, the interests of a
Once a Member 7 has qualified as continue to be made the next business fair and orderly market are best served
either an LMM or an RMM, such Market day. by such action.’’ 14 Moreover, the
Maker may request an appointment (or, Specifically, Rule 602(a) provides that Exchange ‘‘shall periodically conduct an
following an appointment, ‘‘[t]he Board or a committee designated evaluation of Market Makers to
relinquishment from an appointment) in by the Board shall appoint Market determine whether they have fulfilled
Makers to one or more classes of option performance standards relating to,
5 The term ‘‘Market Makers’’ refers to ‘‘Lead contracts traded on the Exchange.’’ 10 In among other things, quality of markets,
Market Makers,’’ ‘‘Primary Lead Market Makers’’ addition to having the authority to competition among Market Makers,
and ‘‘Registered Market Makers’’ collectively. See appoint one PLMM to each options observance of ethical standards, and
Exchange Rule 100.
6 See, e.g.., Cboe BZX Exchange, Inc. (‘‘Cboe
class, ‘‘[t]he Exchange will impose an administrative factors. The Exchange
BZX’’) Rules 22.3(a),(b) (Market Maker upper limit on the aggregate number of may consider any relevant information,
Registration); see also Nasdaq PHLX, LLC (‘‘Nasdaq including but not limited to the results
Phlx’’) Rule 3212(b) (Registration as a Market 8 A ‘‘Primary Lead Market Maker’’ is a Lead
of a Market Maker evaluation
Maker); Nasdaq Options Market (‘‘NOM’’), Chapter Market Maker appointment by the Exchange to act
sradovich on DSK3GMQ082PROD with NOTICES
VII (Market Participants), Section 3(a),(b) as the Primary Lead Market Maker for the purpose
questionnaire, trading data, a Market
(Continuing Market Maker Registration); NYSE of making markets in securities traded on the Maker’s regulatory history and such
American, LLC (‘‘NYSE American’’), Rule 923NY Exchange. The Primary Lead Market Maker is other factors and data as may be
(Appointment of Market Makers). vested with the rights and responsibilities specified
7 The term ‘‘Member’’ means an individual or in Chapter VI of these Rules with respect to Primary
11 See Rule 602(c).
organization approved to exercise the trading rights Lead Market Makers. See Exchange Rule 100.
9 See, for example, Exchange Rules 603 and 604 12 See Rule 602(a).
associated with a Trading Permit. Members are
for certain heightened obligations of PLMMs. 13 See Rule 602(c)(2).
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100. 10 See Rule 602(a). 14 See Rule 602(e).
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![31816 Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
Commission and any person, other than satisfied, the registrant is granted an Securities and Exchange Commission
those that may be withheld from the automatic filing extension. (‘‘Commission’’) the proposed rule
public in accordance with the Approximately 3,432 registrants file change as described in Items I, II, and
provisions of 5 U.S.C. 552, will be Form 12b–25 and it takes approximately III below, which Items have been
available for website viewing and 2.5 hours per response for a total of prepared by the Exchange. The
printing in the Commission’s Public 8,580 burden hours. Commission is publishing this notice to
Reference Room, 100 F Street NE, Written comments are invited on: (a) solicit comments on the proposed rule
Washington, DC 20549, on official Whether the proposed collection of change from interested persons.
business days between the hours of information is necessary for the proper I. Self-Regulatory Organization’s
10:00 a.m. and 3:00 p.m. Copies of the performance of the functions of the Statement of the Terms of Substance of
filing also will be available for agency, including whether the the Proposed Rule Change
inspection and copying at the principal information will have practical utility;
office of the Exchange. All comments (b) the accuracy of the agency’s estimate (a) Pursuant to the provisions of
received will be posted without change. of the burden imposed by the collection Section 19(b)(1) under the Securities
Persons submitting comments are of information; (c) ways to enhance the Exchange Act of 1934 (‘‘Act’’),4 and
cautioned that we do not redact or edit quality, utility, and clarity of the Rule 19b–4 thereunder,5 Investors
personal identifying information from information collected; and (d) ways to Exchange LLC (‘‘IEX’’ or ‘‘Exchange’’) is
comment submissions. You should minimize the burden of the collection of filing with the Securities and Exchange
submit only information that you wish information on respondents, including Commission (‘‘Commission’’) a
to make available publicly. All through the use of automated collection proposed rule change to modify Rules
submissions should refer to File techniques or other forms of information 11.280(h)(8) and 11.350(e), which
Number SR–MIAX–2018–13 and should technology. Consideration will be given collectively govern the IPO Auction
be submitted on or before July 30, 2018. to comments and suggestions submitted processes for trading in an IEX-listed
in writing within 60 days of this security that is the subject of an initial
For the Commission, by the Division of
Trading and Markets, pursuant to delegated publication. public offering (‘‘IPO’’).6 The Exchange
authority.30 An agency may not conduct or is also proposing to modify certain
Eduardo A. Aleman, sponsor, and a person is not required to definitions in Rule 11.350(a) regarding
Assistant Secretary. respond to, a collection of information IPO Auction market data that is
unless it displays a currently valid disseminated in IEX Auction
[FR Doc. 2018–14545 Filed 7–6–18; 8:45 am]
Information.7 The Exchange has
BILLING CODE P control number.
designated this rule change as ‘‘non-
Please direct your written comment to
controversial’’ under Section 19(b)(3)(A)
Pamela Dyson, Director/Chief
of the Act 8 and provided the
SECURITIES AND EXCHANGE Information Officer, Securities and
Commission with the notice required by
COMMISSION Exchange Commission, c/o Candace
Rule 19b–4(f)(6) thereunder.9
Kenner, 100 F Street NE, Washington, The text of the proposed rule change
Proposed Collection; Comment DC 20549 or send an email to: PRA_
Request is available at the Exchange’s website at
Mailbox@sec.gov. www.iextrading.com, at the principal
Upon Written Request Copies Available Dated: July 3, 2018. office of the Exchange, and at the
From: Securities and Exchange Eduardo A. Aleman, Commission’s Public Reference Room.
Commission, Office of FOIA Services, Assistant Secretary.
100 F Street NE, Washington, DC II. Self-Regulatory Organization’s
[FR Doc. 2018–14652 Filed 7–6–18; 8:45 am] Statement of the Purpose of, and
20549–2736
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
Extension: Change
Form 12b–25, SEC File No. 270–071, OMB
Control No. 3235–0058 SECURITIES AND EXCHANGE In its filing with the Commission, the
Notice is hereby given that, pursuant COMMISSION self-regulatory organization included
to the Paperwork Reduction Act of 1995 statements concerning the purpose of
[Release No. 34–83579; File No. SR–IEX– and basis for the proposed rule change
(44 U.S.C. 3501 et seq.), the Securities 2018–13]
and Exchange Commission and discussed any comments it received
(‘‘Commission’’) is soliciting comments on the proposed rule change. The text
Self-Regulatory Organizations; of these statement may be examined at
on the collection of information Investors Exchange LLC; Notice of
summarized below. The Commission the places specified in Item IV below.
Filing and Immediate Effectiveness of
plans to submit this existing collection Proposed Rule Change to the IPO 4 15 U.S.C. 78s(b)(1).
of information to the Office of Auction Processes for Trading in an 5 17 CFR 240.19b–4.
Management and Budget for extension IEX-Listed Security That Is the Subject 6 Pursuant to section 12(f)(1)(G)(i)–(ii) of the
and approval. of an Initial Public Offering Securities Exchange Act, a security is the subject of
The purpose of Form 12b–25 (17 CFR an initial public offering if the offering of the
240.12b–25) is to provide notice to the July 2, 2018. subject security is registered under the Securities
Commission and the marketplace that a Act of 1933, the issuer of the security, immediately
Pursuant to Section 19(b)(1) 1 of the prior to filing the registration statement with
registrant will be unable to timely file a Securities Exchange Act of 1934 respect to the offering, was not subject to the
sradovich on DSK3GMQ082PROD with NOTICES
required periodic report or transition (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 reporting requirements of the Act, and the initial
report pursuant to the Securities notice is hereby given that on June 22, public offering of such security commences at the
Exchange Act of 1934 (15 U.S.C 78a et opening of trading on the day on which such
2018, Investors Exchange LLC (‘‘IEX’’ or security commences trading on the national
seq.) or the Investment Company Act of the ‘‘Exchange’’) filed with the securities exchange with which such security is
1940 (15 U.S.C. 80a et seq.). If all the registered. See 15 U.S.C. 78l(f)(1)(G).
filing conditions of the form are 1 15 U.S.C. 78s(b)(1). 7 See Rule 11.350(a)(9).
2 15 U.S.C. 78a. 8 15 U.S.C. 78s(b)(3)(A).
30 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. 9 17 CFR 240.19b–4.
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Document Created: 2018-07-07 00:42:07
Document Modified: 2018-07-07 00:42:07
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 31812 |
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