[Federal Register Volume 78, Number 174 (Monday, September 9, 2013)]
[Notices]
[Pages 55131-55133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21813]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70299; File No. SR-MIAX-2013-40]
Self-Regulatory Organizations: Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by Miami International
Securities Exchange LLC To Amend MIAX Rule 1322, Options Communications
September 3, 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 August 19, 2013, Miami International Securities Exchange LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
[[Page 55132]]
Commission (the ``Commission'') a proposed rule change as described in
Items I, and II below, which Items have been substantially prepared by
the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule 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 proposes to amend MIAX Rule 1322, Options
Communications. The text of the proposed rule change is available from
the principal office of the Exchange, at the Commission's Public
Reference Room and also on the Exchange's Internet Web site at http://www.miaxoptions.com/.
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 1322, Options Communications,
to conform the rule to changes recently made by the Financial Industry
Regulatory Authority, Inc. (``FINRA'') to its corresponding rule.\3\
The proposed changes are designed to alert Members to their
requirements with respect to Options Communications while further
regulating all communications for compliance with Exchange Rules and
the Act. In addition, the Exchange believes that the proposed rule
change will help ensure that investors are protected from potentially
false or misleading communications with the public distributed by
Exchange Members.
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\3\ See Securities Exchange Act Release No. 68650 (January 14,
2013), 78 FR 4182 (January 18, 2013) (SR-FINRA-2013-001) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Update
Cross-References and Make Other Non-Substantive Changes Within FINRA
Rules and By-Laws). See also Securities Exchange Act Release 69807
(June 20, 2013), 78 FR 38423 (June 26, 2013) (SR-CBOE-2013-043)
(Order Approving a Proposed Rule Change Relating to Exchange Rule
9.21) and Securities Exchange Act Release No. 70070 (July 30, 2013),
78 FR 47476 (August 5, 2013) (SR-BOX-2013-037) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule
4170 (Options Communications)).
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First, the Exchange proposes to amend Exchange Rule 1322(a) by
reducing the number of defined categories of communication in current
Rule 1322(a) from six to three. The proposed three categories of
communications are: Retail communications, correspondence, and
institutional communications. The current definitions of ``sales
literature,'' ``advertisement,'' and ``independently prepared reprint''
would be combined into a single category of ``retail communications.''
The Exchange proposes to define ``retail communication'' as any written
(including electronic) communication that is distributed or made
available to more than 25 retail investors within any 30 calendar-day
period. The Exchange also proposes to amend the current definition of
``correspondence'' to mean any written (including electronic)
communication distributed or made available by a Member to 25 or fewer
retail customers within any 30 calendar-day period. Additionally, the
Exchange proposes to delete the current term, ``institutional sales
material'' and replace that definition with the term ``institutional
communication,'' which would include written (including electronic)
communications that are distributed or made available only to
institutional investors.
Second, the Exchange proposes to amend Rule 1322(b), Approval by
Registered Options Principal, by replacing the phrase ``advertisements,
sales literature, and independently prepared reprints'' in Rule
1322(b)(1) with the new proposed term, ``retail communications.''
Under proposed Rule 1322(b)(2), correspondence would need not need
to be approved by a Registered Options Principal prior to use but would
be subject to the supervision and review requirements of Rule 1308. The
Exchange proposes to delete the provision requiring principal approval
of correspondence that is distributed to 25 or more existing retail
customers within a 30 calendar-day period that makes any financial or
investment recommendation or otherwise promotes the product or service
of a Member. Under proposed Rule 1322(b), such communications would be
considered ``retail communications'' and therefore remain subject to
the principal approval requirement under the proposed new definition.
As such, the proposed rule change would not substantively change the
scope of options communications that would require principal approval.
Third, the Exchange proposes to establish the required approvals of
institutional communications, currently known as institutional sales
material. Specifically, the Exchange proposes to delete the current
requirements for institutional sales material and add that Members
shall establish written procedures that are appropriate to its
business, size, structure, and customers for review by a Registered
Options Principal of institutional communications used by the Member.
Fourth, the Exchange proposes to amend Rule 1322(c) by replacing
the phrase ``advertisements, sales literature, and independently
prepared reprints'' with the new proposed term, ``retail
communications.'' The Exchange also proposes to further exempt the
options disclosure document (``ODD'') and prospectuses from Exchange
review as other requirements apply to these documents under the
Securities Act of 1933.
Fifth, the Exchange proposes to specify in Rule 1322(d) that no
Member or associated person may use any options communications that
``constitute a prospectus'' unless the communications meet the
requirements of the Securities Act, and further specifying that any
statement in any options communications referring to the potential
opportunities or advantages presented by options shall be balanced by a
statement of the corresponding risks. The risk statement shall reflect
the same degree of specificity as the statement of opportunities, and
broad generalities must be avoided. This language is identical to
language contained in current Rule 1322(d)(5), which is proposed to be
deleted.
2. Statutory Basis
The Exchange believes that the 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
[[Page 55133]]
general, to protect investors and the public interest.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the proposed rule changes will
provide greater clarity to Members and the public regarding the
Exchange's Rules. In addition, the Exchange believes that the proposed
rule change will help ensure that investors are protected from
potentially false or misleading communications with the public
distributed by Exchange Members.
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. In this regard and as indicated
above, the Exchange notes that the rule change being proposed is
substantially similar to filings submitted by other options exchanges
and recently approved by the Commission.\6\ The Exchange believes this
proposed rule change is necessary to establish uniform rules regarding
Options Communications.\7\
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\6\ See supra note 3.
\7\ Id.
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Specifically, the proposed rule change will bring clarity and
consistency to Exchange Rules. The Exchange does not believe the
proposed rule change will impose any burden on intramarket competition
as it applies to all Members. In addition, the Exchange does not
believe the proposed rule change will bring any unnecessary burden on
intermarket competition as it is consistent with the FINRA Options
Communications rule.
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
MIAX has filed the proposed rule change pursuant to Section
19(b)(3)(A) \8\ of the Act and Rule 19b-4(f)(6) thereunder.\9\ 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 Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to provide the Commission with written notice
of its 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.
\10\ 15 U.S.C. 78s(b)(3)(A).
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative for 30 days after the date of filing.
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. MIAX has asked the
Commission to waive the 30-day operative delay so that the proposal may
become operative immediately upon filing.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will it will ensure fair competition among the exchanges by allowing
the Exchange to conform with changes recently made by FINRA. For these
reasons, the Commission designates the proposed rule change to be
operative upon filing.\13\
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\13\ For purposes 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-2013-40 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-2013-40. 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-2013-40 and
should be submitted on or before September 30, 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).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21813 Filed 9-6-13; 8:45 am]
BILLING CODE 8011-01-P