[Federal Register Volume 78, Number 107 (Tuesday, June 4, 2013)]
[Notices]
[Pages 33454-33456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13146]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69658; File No. SR-MIAX-2013-23]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Expand the Short Term Option Series Program
May 29, 2013.
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 May 20, 2013, Miami International Securities Exchange LLC (the
``Exchange'' or ``MIAX'') filed with the Securities and Exchange
Commission (``Commission'') the 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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 404,
Series of Option Contracts Open for Trading, by modifying
Interpretations and Policies .02 to the Rule to expand the number of
expirations available under the Short Term Option Series Program
(``STOS Program''), to allow the Exchange to delist certain series in
STOS that do not have open interest, and to expand the number of series
in STOS under limited circumstances.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at
MIAX'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 purpose of the proposal is to amend Exchange Rule 404,
Interpretations and Policies .02, to provide for the ability to open up
to five consecutive expirations under the STOS Program for trading on
the Exchange, to allow the Exchange to delist certain series in STOS
that do not have open interest, and to expand the number of series in
STOS under limited circumstances when there are no series at least 10%
but not more than 30% away from the current price of the underlying
security.
Currently, the Exchange may select up to 25 currently listed option
classes in which STOS options may be opened in the STOS Program, and
the Exchange may also match any option classes that are selected by
other securities exchanges that employ a similar program under their
respective rules. For each option class eligible for participation in
the STOS Program, the Exchange may open up to 30 Short Term Option
Series for each expiration date in that class.\3\
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\3\ See Exchange Rule 404, Interpretations and Policies .02(a).
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This proposal seeks to allow the Exchange to open STOS option
series for up to five consecutive week expirations. The Exchange
intends to add a maximum of five consecutive week expirations under the
STOS Program. However, it will not add an STOS expiration in the same
week that a monthly options series expires or, in the case of Quarterly
Option Series,\4\ on an expiration that coincides with an expiration of
Quarterly Option Series on the same class. In other words, the total
number of consecutive expirations will be five, including any existing
monthly or quarterly expirations.\5\
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\4\ See Exchange Rule 404, Interpretations and Policies .03.
\5\ For example, if Quarterly Options expire week 1 and monthly
options expire week 3 from now, the proposal would allow the
following expirations: week 1 Quarterly, week 2 STOS, week 3
monthly, week 4 STOS, and week 5 STOS.
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The Exchange notes that the STOS Program has been well-received by
market participants, in particular by retail investors.\6\ The Exchange
believes that the current proposed revision to the STOS Program will
permit the Exchange to meet increased customer demand and provide
market participants with the ability to hedge in a greater number of
option classes and series.
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\6\ Since the STOS Program has been adopted, it has seen rapid
acceptance among industry participants as evidenced by the expansion
of the number of classes eligible for the STOS Program by various
Exchanges. See Securities Exchange Act Release Nos. 65775 (November
17, 2011), 76 FR 72473 (November 23, 2011) (SR-NASDAQ-2011-138);
65776 (November 17, 2011), 76 FR 72482 (November 23, 2011) (SR-PHLX-
2011-131); 66563 (March 9, 2012), 77 FR 15426 (March 15, 2012);
67194 (June 13, 2012), 77 FR 36597 (June 19, 2012) (SR-NYSEMKT-2012-
08); and 67178 (June 11, 2012), 77 FR 36305 (June 18, 2012) (SR-
NYSEArca-2012-60).
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With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority have the necessary systems capacity
to handle the potential additional traffic associated with trading of
an expanded number of expirations that participate in the STOS Program.
In addition, to provide for circumstances where the underlying
security has moved such that there are no series that are at least 10%
above or below the current price of the underlying security, the
Exchange is proposing to add new language to Interpretations and
Policies .02 to provide that the Exchange would delist series with no
open interest in both the call and the put series having: (i) A
[[Page 33455]]
strike higher than the highest price with open interest in the put and/
or call series for a given expiration month; and (ii) a strike lower
than the lowest strike price with open interest in the put and/or the
call series for a given expiration month, so as to list series that are
at least 10% but not more than 30% above or below the current price of
the underlying security. Further, in the event that all existing series
have open interest and there are no series at least 10% above or below
the current price of the underlying security, the Exchange may list
additional series, in excess of the 30 allowed currently under
Interpretations and Policies .02, that are at least 10% and not more
than 30% above or below the current price of the underlying security.
The Exchange believes that it is important to allow investors to
roll existing option positions, and ensuring that there are always
series at least 10% but not more than 30% above or below the current
price of the underlying security will allow investors the flexibility
they need to roll existing positions. This change is being proposed
notwithstanding the current cap of 30 series per class under the STOS
Program.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) \7\ of the Act in general, and furthers the
objectives of Section 6(b)(5) \8\ of the Act in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that expanding the STOS Program will result
in a continuing benefit to investors by giving them more flexibility to
closely tailor their investment decisions and hedging decisions in a
greater number of securities. The Exchange also believes that expanding
the STOS Program will provide the investing public and other market
participants with additional opportunities to hedge their investment,
thus allowing these investors to better manage their risk exposure.
While the expansion of the STOS Program will generate additional quote
traffic, the Exchange does not believe that this increased traffic will
become unmanageable since the proposal remains limited to a fixed
number of expirations.
The Exchange believes that the ability to delist series with no
open interest in both the call and the put series will benefit
investors by devoting the current cap in the number of series to those
series that are more closely tailored to the investment decisions and
hedging decisions of investors.
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 not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes that the proposal enhances competition among
exchanges by enabling market participants to use STOS in a greater
number of series in making investment decisions. MIAX will have more
series through which investors will be able to tailor their investment
and hedge positions, therefore enabling MIAX to compete with other
exchanges that have similar rules in place, as cited below.
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 significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposal is substantially similar to those of
other exchanges that have been approved by the Commission and would
provide the investing public and other market participants with greater
flexibility to closely tailor their investment and hedging decisions in
a greater number of series, thus allowing investors to better manage
their risk exposure.\11\ Therefore, the Commission designates the
proposal operative upon filing.\12\
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\11\ See Exchange Act Release Nos. 68190 (November 8, 2012), 77
FR 68193 (November 15, 2012) (SR-NYSEArca-2012-95); 68191 (November
8, 2012), 77 FR 68194 (November 15, 2012) (SR-NYSEMKT-2012-42).
\12\ 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).
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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 Comments
Use 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-2013-23 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2013-23. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the
[[Page 33456]]
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 Web site 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; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-MIAX-2013-23 and should be
submitted on or before June 25, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13146 Filed 6-3-13; 8:45 am]
BILLING CODE 8011-01-P