83 FR 7824 - Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 517A, Aggregate Risk Manager for EEMs (“ARM-E”), and Rule 517B, Aggregate Risk Manager for Market Makers (“ARM-M”)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 36 (February 22, 2018)
Federal Register Volume 83, Issue 36 (February 22, 2018)
| Page Range | 7824-7827 | |
| FR Document | 2018-03567 |
[Federal Register Volume 83, Number 36 (Thursday, February 22, 2018)] [Notices] [Pages 7824-7827] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-03567] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82721; File No. SR-PEARL-2018-01] Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 517A, Aggregate Risk Manager for EEMs (``ARM-E''), and Rule 517B, Aggregate Risk Manager for Market Makers (``ARM-M'') February 15, 2018. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on February 6, 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 and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Exchange Rule 517A, Aggregate Risk Manager for EEMs (``ARM-E''), and Rule 517B, Aggregate Risk Manager for Market Makers (``ARM-M''). 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 Rule 517A, Aggregate Risk Manager for EEMs (``ARM-E''), and Rule 517B, Aggregate Risk Manager for Market Makers (``ARM-M''), to enhance the Aggregate Risk Manager (``ARM'') protections available to Members \3\ on the Exchange. Specifically, the Exchange proposes to adopt a single side protection (``SSP'') feature, which is an additional, optional, and more granular feature of the ARM protection that is currently offered by the Exchange. Accordingly, the Exchange proposes to modify (i) Interpretations and Policies of Rule 517A, to adopt new subsection .02, EEM Single Side Protection; and (ii) Interpretations and Policies .01, of Rule 517B, to adopt new subsection (c), Market Maker Single Side Protection. --------------------------------------------------------------------------- \3\ The term ``Member'' means an individual or organization that is registered with the Exchange pursuant to Chapter II of the MIAX PEARL 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. --------------------------------------------------------------------------- The Exchange currently offers a number of risk protection mechanisms to its Members. One important risk protection mechanism is the ARM. The purpose of the ARM is to remove the Member from the market, once certain pre-determined trading limit thresholds (set up in advance by the Member) have been triggered, to limit the risk exposure of the Member. The Exchange now proposes to further enhance the ARM to introduce an SSP feature. The SSP feature, which is optional, will provide an additional level of granularity to the ARM, as this protection will apply only to quotes \4\ and orders on the same side (bid or offer) of an individual option.\5\ Members who avail themselves of the SSP feature will have even greater precision to tailor their risk tolerance level. --------------------------------------------------------------------------- \4\ The term ``quote'' or ``quotation'' means a bid or offer entered by a Market Maker as a firm order that updates the Market Maker's previous bid or offer, if any. When the term order is used in these Rules and a bid or offer is entered by the Market Maker in the option series to which such Market Maker is registered, such order shall, as applicable, constitute a quote or quotation for purposes of these Rules. See Exchange Rule 100. \5\ The term ``individual option'' means an option contract that is either a put or a call, covering a specific underlying security and having a specific exercise price and expiration date. See Exchange Rule 100. --------------------------------------------------------------------------- To implement the SSP feature for Electronic Exchange Members \6\ the Exchange proposes to adopt new subsection .02 to Interpretations and Policies of Rule 517A, entitled EEM Single Side Protection. Subsection .02 will provide that an EEM may determine to engage the EEM Single Side Protection (``SSP'') feature for orders delivered via the MEO Interface \7\ by MPID.\8\ If engaged, if the full remaining size of an EEM's order, in an individual option, is exhausted by a trade, the System \9\ will trigger the SSP. When triggered, the System will cancel all open orders and block all new inbound orders delivered via the MEO Interface, for that particular side of that individual option for that MPID. The System will provide a notification message to the EEM that the SSP has been triggered. The block will remain in effect until the EEM notifies the Exchange (in a manner required by the [[Page 7825]] Exchange and communicated to Members by Regulatory Circular) \10\ to reset the SSP (``SSP Reset''). The SSP feature is optionally available and may be enabled for an EEM's MPID. Additionally, the Exchange notes that Intermarket Sweep Orders \11\ are not eligible for EEM Single Side Protection. --------------------------------------------------------------------------- \6\ The term ``Electronic Exchange Member'' or ``EEM'' means the holder of a Trading Permit who is a Member representing as agent Public Customer Orders or Non-Customer Orders on the Exchange and those non-Market Maker Members conducting proprietary trading. Electronic Exchange Members are deemed ``members'' under the Exchange Act. See Exchange Rule 100. \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. \8\ The term ``MPID'' means unique market participant identifier. See Exchange Rule 100. \9\ The term ``System'' means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. \10\ The Exchange notes that the manner by which Members will be required to notify the Exchange to remove the block will be similar to that of MIAX Options. See MIAX Options Regulatory Circular 2018- 04, January 24, 2018. \11\ An Intermarket Sweep Order or ``ISO'', as defined in Rule 1400(h), is a limit order that is designated by a Member as an ISO in the manner prescribed by the Exchange, and is executed within the System by Members without respect to Protected Quotations of other Eligible Exchanges as defined in Rule 1400(p) and (f). ISOs are immediately executable within the System and shall not be eligible for routing. See Exchange Rule 516(f). --------------------------------------------------------------------------- To implement the SSP feature for Market Makers,\12\ the Exchange proposes to adopt new subsection (c) to Interpretations and Policies .01 of Rule 517B, entitled Market Maker Single Side Protection. Subsection (c) will provide that a Market Maker may determine to engage the Market Maker Single Side Protection (``SSP'') feature for orders delivered via the MEO Interface by MPID. If engaged, if the full remaining size of a Market Maker's order, in an individual option, is exhausted by a trade, the System will trigger the SSP. When triggered, the System will cancel all open orders and block all new inbound orders delivered via the MEO Interface, for that particular side of that individual option for that MPID. The System will provide a notification message to the Market Maker that the SSP has been triggered. The block will remain in effect until the Market Maker notifies the Exchange (in a manner required by the Exchange and communicated to Members by Regulatory Circular) \13\ to reset the SSP (``SSP Reset''). The SSP feature is optionally available and may be enabled for a Market Maker's MPID. Additionally, the Exchange notes that Intermarket Sweep Orders are not eligible for Market Maker Single Side Protection. --------------------------------------------------------------------------- \12\ The term ``Market Maker'' or ``MM'' means a Member registered with the Exchange for the purpose of making markets in option contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of the MIAX PEARL Rules. See Exchange Rule 100. \13\ See supra note 10. --------------------------------------------------------------------------- The Exchange notes that the proposed rule change is substantially similar to a rule that is currently operative on the Exchange's affiliate, MIAX Options Exchange (``MIAX Options'').\14\ MIAX Options has two types of Members; \15\ MIAX Options Market Makers \16\ and MIAX Options Electronic Exchange Members.\17\ The Aggregate Risk Manager protections available on MIAX Options are available only to Market Makers of the Exchange. Further, on MIAX Options, the only interface connection that allows Market Makers of the Exchange to provide quotations \18\ to the market is the MIAX Express Interface (``MEI'') connection.\19\ Therefore, SSP on MIAX Options is limited to MIAX Options Market Makers that send Standard quotes \20\ and select eQuotes \21\ to the MIAX Options Exchange via an MEI connection. --------------------------------------------------------------------------- \14\ See Securities Exchange Act Release No. 82394 (December 22, 2017), 82 FR 61638 (December 28, 2017) (SR-MIAX-2017-49). (The Exchange notes that its proposal is based on the amendment to MIAX Options Rule 612). \15\ The term MIAX Options ``Member'' means an individual or organization approved to exercise the trading rights associate with a Trading Permit. MIAX Options Members are deemed ``members'' under the Exchange Act. See MIAX Options Exchange Rule 100. \16\ The term MIAX Options ``Market Makers'' refers to ``Lead Market Makers'', ``Primary Lead Market Makers'' and ``Registered Market Makers'' on MIAX Options Exchange collectively. See MIAX Options Exchange Rule 100. \17\ The term MIAX Options ``Electronic Exchange Member'' means the holder of a Trading Permit who is not a Market Maker. Electronic Exchange Members are deemed ``members'' under the Exchange Act. See MIAX Options Exchange Rule 100. \18\ The term ``quote'' or ``quotation'' means a bid or offer entered by a Market Maker that is firm and may update the Market Maker's previous quote, if any. The Rules of the Exchange provide for the use of different types of quotes, including Standard quotes and eQuotes, as more fully described in MIAX Options Exchange Rule 517. A Market Maker may, at times, choose to have multiple types of quotes active in an individual option. See MIAX Options Exchange Rule 100. \19\ The MIAX Express Interface is a connection to MIAX systems that enables Market Makers to submit simple and complex electronic quotes to MIAX. See MIAX Options Fee Schedule, Section 5)d)ii), footnote 26. \20\ A Standard quote is a quote submitted by a Market Maker that cancels and replaces the Market Maker's previous Standard quote, if any. See MIAX Options Exchange Rule 517(a)(1). \21\ An eQuote is a quote with a specific time in force that does not automatically cancel and replace a previous Standard quote or eQuote. See MIAX Options Exchange Rule 517(a)(2). --------------------------------------------------------------------------- Similarly, MIAX PEARL has two types of Members; Market Makers \22\ and Electronic Exchange Members.\23\ The MEO Interface on MIAX PEARL is analogous to the MEI Interface on MIAX Options. However, on MIAX PEARL, both Market Makers and EEMs may connect to the System using the MEO Interface. Therefore, the Exchange is proposing to amend Exchange Rule 517A, Aggregate Risk Manager for EEMs (``ARM-E''), and also Exchange Rule 517B, Aggregate Risk Manager for Market Makers (``ARM-M''). --------------------------------------------------------------------------- \22\ See supra note 12. \23\ See supra note 6. --------------------------------------------------------------------------- On MIAX PEARL, the proposed rule provides that when the SSP is triggered the System will cancel all open orders submitted via the MEO interface and block all new inbound orders. Intermarket Sweep Orders are not eligible for SSP and are not canceled or blocked when the SSP is triggered. On MIAX Options, the rule text provides that when the SSP is triggered the System \24\ will cancel all Standard quotes and block all new inbound Standard quotes, IOC eQuotes,\25\ and FOK eQuotes \26\ for that particular side of that individual option for that MPID.\27\ The proposed rule will provide the same functionality currently offered on MIAX Options,\28\ however due to technical differences between the MIAX Options interface (MEI) and the MIAX PEARL interface (MEO), the proposed rule text is not identical to that of MIAX Options. --------------------------------------------------------------------------- \24\ The term ``System'' means the automated trading system used by the Exchange for the trading of securities. See MIAX Options Exchange Rule 100. \25\ An immediate or cancel or ``IOC'' eQuote is an eQuote submitted by a Market Maker that must be matched with another quote or order for an execution in whole or in part upon receipt by the System. Any portion of the IOC eQuote not executed will be immediately canceled. See MIAX Options Exchange Rule 517(a)(2)(iv). \26\ A fill or kill or ``FOK'' eQuote is an eQuote submitted by a Market Maker that must be matched with another quote or order for an execution in its entirety at a single price upon receipt into the System or will be immediately cancelled. See MIAX Options Exchange Rule 517(a)(2)(v). \27\ MIAX Options has a separate Intermarket Sweep eQuote that is not eligible for SSP and that is not canceled or blocked when the SSP is triggered. See MIAX Options Exchange Rule 517(a)(2)(vi). \28\ See MIAX Options Exchange Rule 612, Aggregate Risk Manager (ARM). --------------------------------------------------------------------------- To maintain consistency in the functionality between MIAX Options and MIAX PEARL, and to promote the operation of a fair and orderly market, the Exchange is excluding Intermarket Sweep Orders from the SSP functionality on MIAX PEARL.\29\ MIAX PEARL and MIAX Options have a number of common Members and where feasible the Exchange strives to provide consistency between the markets so as to avoid confusion among the Members. --------------------------------------------------------------------------- \29\ See supra note 27. --------------------------------------------------------------------------- The Exchange has analyzed its capacity and represents that it has the necessary systems capacity to handle the potential additional message traffic that may arise from the cancellation of open orders as a result of SSP being triggered. The Exchange will announce the implementation date of the proposed rule change by Regulatory Circular to be published no later than 60 days following the operative date of the proposed rule. The implementation date [[Page 7826]] will be no later than 60 days following the issuance of the Regulatory Circular. 2. Statutory Basis MIAX PEARL believes that its proposed rule change is consistent with Section 6(b) of the Act \30\ in general, and furthers the objectives of Section 6(b)(5) of the Act \31\ 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \30\ 15 U.S.C. 78f(b). \31\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes the proposed changes remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest by providing Members with an additional risk management tool. Members who are Market Makers have a heightened obligation on the Exchange and are obligated to submit continuous two-sided quotations in a certain number of series in their appointed classes for a certain percentage of time in each trading session,\32\ rendering them vulnerable to risk from market conditions. Additionally, EEMs may also submit a large volume of orders that rest on the book also rendering them vulnerable to risk from market conditions. --------------------------------------------------------------------------- \32\ See Exchange Rule 605. --------------------------------------------------------------------------- The ability of a Member to engage the SSP feature of ARM is a valuable tool in assisting Members in risk management. Without adequate risk management tools Members could reduce the size of their quotations and orders which could undermine the quality of the markets available to customers and other market participants. The proposed rule change removes impediments to and is designed to perfect the mechanisms of a free and open market by giving Members the ability to further refine their risk protections from an option class level to a single side of an individual option. Accordingly, the SSP feature is designed to provide Members with greater control over their quotations and orders in the market, thereby removing impediments to and helping to perfect the mechanisms of a free and open market and a national market system and, in general, protecting investors and the public interest. In addition, providing Members with more tools for managing risk will facilitate transactions in securities because, as noted above, Members will have more confidence that protections are in place that reduce the risks from market events. As a result, the new functionality has the potential to promote just and equitable principles of trade. The Exchange believes the proposed changes remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest, and promote a fair and orderly market by excluding Intermarket Sweep Orders from the SSP functionality. Intermarket Sweep Orders are used to prevent locked and crossed markets from occurring \33\ and it is in the public interest for markets to remain uncrossed to promote competition and price discovery. --------------------------------------------------------------------------- \33\ See supra note 11. --------------------------------------------------------------------------- The Exchange notes that the proposed rule change will not relieve Exchange Market Makers of their continuous quoting obligations under Exchange Rule 605 or any other obligation under the Rules of the Exchange, or any obligations arising under Reg NMS Rule 602.\34\ Nor will the proposed rule change prohibit the Exchange from taking disciplinary action against a Market Maker for failing to meet their continuous quoting obligation each trading day. --------------------------------------------------------------------------- \34\ 17 CFR 242.602. --------------------------------------------------------------------------- Additionally, the Exchange notes that a similar rule is currently operative on the Exchange's affiliate, MIAX Options.\35\ MIAX PEARL and MIAX Options have a number of common members and where feasible the Exchange strives to offer similar functionality to reduce the potential for confusion by its members that are also members of MIAX Options. --------------------------------------------------------------------------- \35\ See supra note 28. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange 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. The Exchange believes that the proposed rule change will foster competition by providing Members with the ability to specifically customize their use of the Exchange's risk management tools in order to compete for executions and order flow. Additionally, the Exchange believes that the proposed rule change should promote competition as it is designed to allow Members greater flexibility and control of their risk exposure to protect them from market conditions that may increase their risk exposure in the market. The Exchange does not believe the proposed rule change will impose a burden on intra-market competition as the optional risk protection feature is equally available to all Members of the Exchange. For all the reasons stated, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \36\ and Rule 19b-4(f)(6) thereunder.\37\ --------------------------------------------------------------------------- \36\ 15 U.S.C. 78s(b)(3)(A). \37\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \38\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \39\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the Exchange may immediately implement risk protections similar to those found on MIAX Options. The Exchange states that MIAX PEARL and MIAX Options have a number of common Members and [[Page 7827]] where feasible it intends to implement similar risk protections to provide consistency between markets so as to avoid confusion among Members. For this reason, the Commission believes that waiving the 30- day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.\40\ --------------------------------------------------------------------------- \38\ 17 CFR 240.19b-4(f)(6). \39\ 17 CFR 240.19b-4(f)(6)(iii). \40\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change 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-2018-01 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-PEARL-2018-01. 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-2018-01 and should be submitted on or before March 15, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\41\ --------------------------------------------------------------------------- \41\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-03567 Filed 2-21-18; 8:45 am] BILLING CODE 8011-01-P
![7824 Federal Register / Vol. 83, No. 36 / Thursday, February 22, 2018 / Notices
those that may be withheld from the I. Self-Regulatory Organization’s protection mechanism is the ARM. The
public in accordance with the Statement of the Terms of Substance of purpose of the ARM is to remove the
provisions of 5 U.S.C. 552, will be the Proposed Rule Change Member from the market, once certain
available for website viewing and The Exchange is filing a proposal to pre-determined trading limit thresholds
printing in the Commission’s Public amend Exchange Rule 517A, Aggregate (set up in advance by the Member) have
Reference Room, 100 F Street NE, Risk Manager for EEMs (‘‘ARM–E’’), and been triggered, to limit the risk exposure
Washington, DC 20549, on official Rule 517B, Aggregate Risk Manager for of the Member.
business days between the hours of The Exchange now proposes to
Market Makers (‘‘ARM–M’’).
10:00 a.m. and 3:00 p.m. Copies of the The text of the proposed rule change further enhance the ARM to introduce
filing also will be available for an SSP feature. The SSP feature, which
is available on the Exchange’s website at
is optional, will provide an additional
inspection and copying at the principal http://www.miaxoptions.com/rule-
level of granularity to the ARM, as this
office of the Exchange. All comments filings/pearl at MIAX PEARL’s principal
protection will apply only to quotes 4
received will be posted without change. office, and at the Commission’s Public
and orders on the same side (bid or
Persons submitting comments are Reference Room.
offer) of an individual option.5 Members
cautioned that we do not redact or edit II. Self-Regulatory Organization’s who avail themselves of the SSP feature
personal identifying information from Statement of the Purpose of, and will have even greater precision to tailor
comment submissions. You should Statutory Basis for, the Proposed Rule their risk tolerance level.
submit only information that you wish Change To implement the SSP feature for
to make available publicly. All Electronic Exchange Members 6 the
submissions should refer to File In its filing with the Commission, the
Exchange included statements Exchange proposes to adopt new
Number SR–PEARL–2018–03 and subsection .02 to Interpretations and
concerning the purpose of and basis for
should be submitted on or before March Policies of Rule 517A, entitled EEM
the proposed rule change and discussed
15, 2018. Single Side Protection. Subsection .02
any comments it received on the
For the Commission, by the Division of proposed rule change. The text of these will provide that an EEM may
Trading and Markets, pursuant to delegated statements may be examined at the determine to engage the EEM Single
authority.21 places specified in Item IV below. The Side Protection (‘‘SSP’’) feature for
Eduardo A. Aleman, Exchange has prepared summaries, set orders delivered via the MEO Interface 7
forth in sections A, B, and C below, of by MPID.8 If engaged, if the full
Assistant Secretary. remaining size of an EEM’s order, in an
[FR Doc. 2018–03566 Filed 2–21–18; 8:45 am] the most significant aspects of such
statements. individual option, is exhausted by a
BILLING CODE 8011–01–P trade, the System 9 will trigger the SSP.
A. Self-Regulatory Organization’s When triggered, the System will cancel
Statement of the Purpose of, and all open orders and block all new
SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule inbound orders delivered via the MEO
COMMISSION Change Interface, for that particular side of that
1. Purpose individual option for that MPID. The
[Release No. 34–82721; File No. SR– System will provide a notification
PEARL–2018–01] The Exchange proposes to amend message to the EEM that the SSP has
Rule 517A, Aggregate Risk Manager for been triggered. The block will remain in
Self-Regulatory Organizations; MIAX EEMs (‘‘ARM–E’’), and Rule 517B, effect until the EEM notifies the
PEARL LLC; Notice of Filing and Aggregate Risk Manager for Market Exchange (in a manner required by the
Immediate Effectiveness of a Proposed Makers (‘‘ARM–M’’), to enhance the
Rule Change To Amend Rule 517A, Aggregate Risk Manager (‘‘ARM’’) 4 The term ‘‘quote’’ or ‘‘quotation’’ means a bid or
Aggregate Risk Manager for EEMs protections available to Members 3 on offer entered by a Market Maker as a firm order that
the Exchange. Specifically, the updates the Market Maker’s previous bid or offer,
(‘‘ARM–E’’), and Rule 517B, Aggregate if any. When the term order is used in these Rules
Risk Manager for Market Makers Exchange proposes to adopt a single and a bid or offer is entered by the Market Maker
(‘‘ARM–M’’) side protection (‘‘SSP’’) feature, which in the option series to which such Market Maker is
is an additional, optional, and more registered, such order shall, as applicable,
February 15, 2018. granular feature of the ARM protection constitute a quote or quotation for purposes of these
Rules. See Exchange Rule 100.
that is currently offered by the
Pursuant to the provisions of Section 5 The term ‘‘individual option’’ means an option
Exchange. Accordingly, the Exchange contract that is either a put or a call, covering a
19(b)(1) of the Securities Exchange Act
proposes to modify (i) Interpretations specific underlying security and having a specific
of 1934 (‘‘Act’’) 1 and Rule 19b–4 and Policies of Rule 517A, to adopt new exercise price and expiration date. See Exchange
thereunder,2 notice is hereby given that subsection .02, EEM Single Side Rule 100.
on February 6, 2018, MIAX PEARL, LLC Protection; and (ii) Interpretations and
6 The term ‘‘Electronic Exchange Member’’ or
(‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed ‘‘EEM’’ means the holder of a Trading Permit who
Policies .01, of Rule 517B, to adopt new is a Member representing as agent Public Customer
with the Securities and Exchange subsection (c), Market Maker Single Orders or Non-Customer Orders on the Exchange
Commission (‘‘Commission’’) a Side Protection. and those non-Market Maker Members conducting
proposed rule change as described in The Exchange currently offers a proprietary trading. Electronic Exchange Members
Items I and II below, which Items have are deemed ‘‘members’’ under the Exchange Act.
number of risk protection mechanisms See Exchange Rule 100.
been prepared by the Exchange. The to its Members. One important risk
daltland on DSKBBV9HB2PROD with NOTICES
7 The term ‘‘MEO Interface’’ means a binary order
Commission is publishing this notice to interface used for submitting certain order types (as
solicit comments on the proposed rule 3 The term ‘‘Member’’ means an individual or set forth in Rule 516) to the MIAX PEARL System.
change from interested persons. organization that is registered with the Exchange See Exchange Rule 100.
8 The term ‘‘MPID’’ means unique market
pursuant to Chapter II of the MIAX PEARL Rules
for purposes of trading on the Exchange as an participant identifier. See Exchange Rule 100.
21 17 CFR 200.30–3(a)(12). ‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’ 9 The term ‘‘System’’ means the automated
1 15 U.S.C. 78s(b)(1). Members are deemed ‘‘members’’ under the trading system used by the Exchange for the trading
2 17 CFR 240.19b–4. Exchange Act. See Exchange Rule 100. of securities. See Exchange Rule 100.
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![Federal Register / Vol. 83, No. 36 / Thursday, February 22, 2018 / Notices 7827
where feasible it intends to implement communications relating to the an ‘‘Unaffiliated Closed-End Investment
similar risk protections to provide proposed rule change between the Company’’ and, together with the
consistency between markets so as to Commission and any person, other than Unaffiliated Open-End Investment
avoid confusion among Members. For those that may be withheld from the Companies, the ‘‘Unaffiliated
this reason, the Commission believes public in accordance with the Investment Companies’’), and registered
that waiving the 30-day operative delay provisions of 5 U.S.C. 552, will be unit investment trusts (the ‘‘Unaffiliated
is consistent with the protection of available for website viewing and Trusts,’’ and together with the
investors and the public interest. printing in the Commission’s Public Unaffiliated Investment Companies, the
Therefore, the Commission hereby Reference Room, 100 F Street NE, ‘‘Unaffiliated Funds’’) that are within
waives the operative delay and Washington, DC 20549, on official the same group of investment
designates the proposed rule change business days between the hours of companies (collectively, the ‘‘Affiliated
operative upon filing.40 10:00 a.m. and 3:00 p.m. Copies of the Funds’’) and outside the same group of
At any time within 60 days of the filing also will be available for investment companies as the acquiring
filing of the proposed rule change, the inspection and copying at the principal investment companies (collectively, the
Commission summarily may office of the Exchange. All comments Affiliated Funds and, together with the
temporarily suspend such rule change if received will be posted without change. Unaffiliated Funds, the ‘‘Underlying
it appears to the Commission that such Persons submitting comments are Funds’’), in excess of the limits in
action is necessary or appropriate in the cautioned that we do not redact or edit section 12(d)(1) of the Act.
public interest, for the protection of personal identifying information from Applicants: Morningstar Funds Trust,
investors, or otherwise in furtherance of comment submissions. You should a Delaware statutory trust that is
the purposes of the Act. If the submit only information that you wish registered under the Act as an open-end
Commission takes such action, the to make available publicly. All management investment company and
Commission shall institute proceedings submissions should refer to File intends to introduce multiple series,
to determine whether the proposed rule Number SR–PEARL–2018–01 and and Morningstar Investment
change should be approved or should be submitted on or before March Management LLC, a Delaware limited
disapproved. 15, 2018. liability company registered as an
IV. Solicitation of Comments For the Commission, by the Division of investment adviser under the
Trading and Markets, pursuant to delegated Investment Advisers Act of 1940.
Interested persons are invited to authority.41 Filing Dates: The application was
submit written data, views, and Eduardo A. Aleman, filed on August 10, 2017 and amended
arguments concerning the foregoing, Assistant Secretary. on January 19, 2018.
including whether the proposed rule [FR Doc. 2018–03567 Filed 2–21–18; 8:45 am]
change is consistent with the Act. Hearing or Notification of Hearing: An
Comments may be submitted by any of
BILLING CODE 8011–01–P order granting the requested relief will
the following methods: be issued unless the Commission orders
a hearing. Interested persons may
Electronic Comments SECURITIES AND EXCHANGE request a hearing by writing to the
COMMISSION Commission’s Secretary and serving
• Use the Commission’s internet
comment form (http://www.sec.gov/ Investment Company Act Release No. applicants with a copy of the request,
rules/sro.shtml); or 33005A; File No. 812–14808 personally or by mail. Hearing requests
• Send an email to rule-comments@ Morningstar Funds Trust, et al.; Notice should be received by the Commission
sec.gov. Please include File Number SR– of Application by 5:30 p.m. on March 12, 2018 and
PEARL–2018–01 on the subject line. should be accompanied by proof of
February 15, 2018. service on the applicants, in the form of
Paper Comments AGENCY: Securities and Exchange an affidavit, or, for lawyers, a certificate
• Send paper comments in triplicate Commission (‘‘Commission’’). of service. Pursuant to Rule 0–5 under
to Brent J. Fields, Secretary, Securities ACTION: Notice. the Act, hearing requests should state
and Exchange Commission, 100 F Street the nature of the writer’s interest, any
NE, Washington, DC 20549–1090. Notice of an application for an order facts bearing upon the desirability of a
under section 12(d)(1)(J) of the hearing on the matter, the reason for the
All submissions should refer to File Investment Company Act of 1940 (the
Number SR–PEARL–2018–01. This file request, and the issues contested.
‘‘Act’’) for an exemption from sections Persons who wish to be notified of a
number should be included on the 12(d)(1)(A), (B), and (C) of the Act and
subject line if email is used. To help the hearing may request notification by
under sections 6(c) and 17(b) of the Act writing to the Commission’s Secretary.
Commission process and review your for an exemption from sections 17(a)(1)
comments more efficiently, please use and (2) of the Act. The requested order ADDRESSES: Secretary, U.S. Securities
only one method. The Commission will would permit certain registered open- and Exchange Commission, 100 F Street
post all comments on the Commission’s end investment companies to acquire NE, Washington, DC 20549–1090.
internet website (http://www.sec.gov/ shares of certain registered open-end Applicants: Daniel Needham,
rules/sro.shtml). Copies of the investment companies (each an Morningstar Investment Management
submission, all subsequent ‘‘Unaffiliated Open-End Investment LLC, 22 West Washington Street,
amendments, all written statements Company’’), registered closed-end Chicago, IL 60602; and Michael W.
daltland on DSKBBV9HB2PROD with NOTICES
with respect to the proposed rule investment companies and ‘‘business Mundt, Esq., Stradley Ronon Stevens &
change that are filed with the development companies,’’ as defined in Young, LLP, 1250 Connecticut Avenue
Commission, and all written section 2(a)(48) of the Act (each NW, Suite 500, Washington, DC 20036.
40 For purposes only of waiving the 30-day
registered closed-end management and FOR FURTHER INFORMATION CONTACT: Judy
operative delay, the Commission has considered the each business development company, Lee, Senior Special Counsel, at (202)
proposed rule’s impact on efficiency, competition, 551–6259, or Holly Hunter-Ceci,
and capital formation. See 15 U.S.C. 78c(f). 41 17 CFR 200.30–3(a)(12). Assistant Chief Counsel, at (202) 551–
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Document Created: 2018-02-22 02:50:44
Document Modified: 2018-02-22 02:50:44
| 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 7824 |
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