[Federal Register Volume 78, Number 121 (Monday, June 24, 2013)]
[Notices]
[Pages 37856-37858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-14963]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69785; File No. SR-MIAX-2013-28]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change to Extend the Penny Pilot Program
June 18, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 12, 2013, Miami International Securities Exchange LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (the ``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 Rule 510,
Interpretations and Policies .01 to extend the pilot program for the
quoting and trading of certain options in pennies (the ``Penny Pilot
Program'') and to revise the provision describing how the Exchange
specifies which option classes trade in the Penny Pilot Program.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is a participant in an industry-wide pilot program
that provides for the quoting and trading of certain option classes in
penny increments (the ``Penny Pilot Program'' or ``Program'').
Specifically, the Penny Pilot Program allows the quoting and trading of
certain option classes in minimum increments of $0.01 for all series in
such option classes with a price of less than $3.00; and in minimum
increments of $0.05 for all series in such option classes with a price
of $3.00 or higher. Options overlying the PowerShares QQQ Trust
(``QQQQ'')[supreg], SPDR S&P 500 Exchange Traded Funds (``SPY''), and
iShares Russell 2000 Index Funds (``IWM''), however, are quoted and
traded in minimum increments of $0.01 for all series regardless of the
price. The Penny Pilot Program was initiated at the then existing
option exchanges in January 2007 and currently includes more than 300
of the most active option classes. The Penny Pilot Program is currently
scheduled to expire on June 30, 2013. The purpose of the proposed rule
change is to extend the Penny Pilot Program in its current format
through December 31, 2013.
In addition to the extension of the Penny Pilot Program through
December 31, 2013, the Exchange will replace any Penny Pilot issues
that have been delisted with the next most actively traded multiply
listed option classes that are not yet included in the Penny Pilot
Program. The replacement issues will be selected based on trading
activity in the previous six months and
[[Page 37857]]
will be added to the Penny Pilot Program on the second trading day
following July 1, 2013. Please note, the month immediately preceding a
replacement class's addition to the Pilot program (i.e., June) will not
be used for purposes of the six-month analysis. Thus, a replacement
added on the second trading day following July 1, 2013 will be
identified based on trading activity from December 1, 2012 through May
31, 2013. Rule 510 has been updated to reflect the new date replacement
issues will be added to the Penny Pilot Program.
Finally, the Exchange proposes to revise the provision describing
how the Exchange specifies which option classes trade in the Penny
Pilot Program. Currently, the rule provides that the Exchange specifies
which option classes trade in the Penny Pilot Program and in what
increments in a Regulatory Circular that has been filed with the
Commission pursuant to Rule 19b-4 under the Exchange Act and
distributed to its Members. The Exchange now proposes to revise that
provision to indicate information regarding the option classes trading
in the Penny Pilot Program will be communicated to Members through a
Listings Alert and posted on the Exchange's Web site.\3\ By revising
this provision, the Exchange will eliminate the requirement to file a
Regulatory Circular with the Commission pursuant to Rule 19b-4.
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\3\ This revision is consistent with rules at most of the other
options exchanges participating in the Penny Pilot Program: BATS
Exchange, Inc. (``BATS'') Rule 21.5, Interpretations and Policies
.01; NASDAQ OMX BX, Inc. (``BX'') Chapter VI, Section 5(3); NASDAQ
OMX PHLX, Inc. (``PHLX'') Rule 1034(a)(i)(B); The NASDAQ Stock
Market LLC (``NOM'') Chapter VI, Section 5; NYSE MKT LLC Rule 960NY,
Commentary .02; and NYSE Arca, Inc. Rule 6.72, Commentary .02.
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2. Statutory Basis
MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \4\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \5\ 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. In particular, the proposed
rule change, which extends the Penny Pilot Program for six months,
allows the Exchange to continue to participate in a program that has
been viewed as beneficial to traders, investors and public customers
and viewed as successful by the other options exchanges participating
in it. In addition, the revision to how the Exchange will specify which
options participate in the Penny Pilot Program promotes just and
equitable principles of trade since it clarifies how Members and other
market participants will be made aware of which options classes are
trading in the Penny Pilot Program and eliminates an unnecessary
requirement that the Exchange specify which option classes are in the
Penny Pilot Program through a Regulatory Circular that has been filed
with Commission pursuant to Rule 19b-4 under the Act. The requirement
to file the Regulatory Circular with the Commission is unnecessary
because most (i.e., all but two option exchanges \6\) do not require
such a submission to the Commission.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Only BOX Options Exchange LLC (at Rule 7050(b)) and
International Securities Exchange, LLC (at Rule 710, Supplementary
Materials .01) require that the Regulatory Information Circulars
specifying which options trade in the Penny Pilot Program be
submitted to the Commission.
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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. Specifically, the Exchange
believes that, by extending the expiration of the Pilot Program, the
proposed rule change will allow for further analysis of the Penny Pilot
Program and a determination of how the Program should be structured in
the future. In doing so, the proposed rule change will also serve to
promote regulatory clarity and consistency, thereby reducing burdens on
the marketplace and facilitating investor protection. In addition,
consistent with previous practices, the Exchange believes the other
options exchanges will be filing similar extensions of the Penny Pilot
Program.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.\11\
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because doing so will
allow the Pilot Program to continue without interruption in a manner
that is consistent with the Commission's prior approval of the
extension and expansion of the Pilot Program and will allow the
Exchange and the Commission additional time to analyze the impact of
the Pilot Program. Accordingly, the Commission designates the proposed
rule change as operative upon filing with the Commission.\13\
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\11\ 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 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. The
Exchange has satisfied this pre-filing requirement.
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the operative delay for this
proposal, 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.
[[Page 37858]]
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-2013-28 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-2013-28. 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 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-2013-28 and should be
submitted on or before July 15, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14963 Filed 6-21-13; 8:45 am]
BILLING CODE 8011-01-P