[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Notices]
[Pages 681-683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31520]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71203; File No. SR-MIAX-2013-60]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to the Short Term Option Series Program
December 30, 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 December 23, 2013, Miami International Securities Exchange LLC
(``MIAX'' 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.
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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 404 to allow the
Exchange to list five Short Term Option Series at one time and to
specify that new series of Short Term Option Series may be listed up
to, and including on, the expiration date.
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 Exchange is proposing to amend Exchange Rule 404. Currently the
Exchange's Rules allow for the Exchange to list options in the Short
Term Option Series Program (``STOS Program'' or ``STOS option'') ``on
each of the next five consecutive Fridays that are business days.'' \3\
Related filings of other option exchanges, including MIAX, which
provided the Exchange with precedent for its rule to list five STOS
option expirations specifically states [sic] that ``the total number of
consecutive expirations will be five (5), including any existing
monthly or quarterly expirations'' for the STOS Program.\4\ The
Exchange is now proposing to make explicit that the next five STOS
options may be listed at one time, not including the monthly or
Quarterly options. The Exchange is also proposing to codify an existing
practice by adding language stating that strikes may be listed up until
and on the day of expiration.
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\3\ See Exchange Rule 404.02.
\4\ See Securities Exchange Act Release Nos. 69658 (May 29,
2013), 78 FR 33454 (June 4, 2013) (SR-MIAX-2013-23); 68242 (November
15, 2012), 77 FR 69908 (November 21, 2012) (SR-CBOE-2012-110).
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As proposed, the Exchange will have the ability to list a total of
five STOS and that count of five would not include monthly or Quarterly
option expirations. The Exchange notes that this proposal would
restrict the five listed STOS to those closest to the Short Term Option
Opening Date. For example, if a class of options has five STOS listed
with expiration dates in July, the other two listed expiration dates
may not be in December. The Exchange believes that allowing otherwise
would undermine the purpose of the STOS Program.
As examples of how this would work in practice, consider a
situation in which a Quarterly option expires week 1 and a monthly
option expire week 3 from now, the proposal would allow the following
expirations: Week 1 Quarterly option, week 2 STOS option, week 3
monthly option, week 4 STOS option, week 5 STOS option, week 6 STOS
[[Page 682]]
option, and week 7 STOS option.\5\ As another example, if a Quarterly
option expires week 3 and a monthly option expires week 5, the
following expirations would be allowed: Week 1 STOS option, week 2 STOS
option, week 3 Quarterly option, week 4 STOS option, week 5 monthly
option, week 6 STOS option, week 7 STOS option.\6\
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\5\ The proposal would not allow, for example, for nothing to be
listed week 7 but week 8 a STOS option.
\6\ Id.
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Next, the Exchange is proposing to add language to Rule 404 to
state that additional series of STOS options may be added up to, and
including on, the expiration date of the series.\7\ Currently, Exchange
rules state that the Exchange ``may open up to 20 initial series for
each option class that participates in the Short Term Option Series
Program'' and ``up to 10 additional series for each option class that
participates in the Short Term Option Series Program'' however the
Exchange's rules are silent on when series may be added.\8\ In
practice, however, the Exchange notes that other exchanges list
additional series until the expiration day.\9\ The Exchange believes
that codifying this provision will clearly provide the ability which is
currently not explicitly stated to add series up until the day of
expiration which is in the current Rules [sic]. In addition, given the
short lifespan of STOS, the Exchange believes that the ability to list
new series of options intraday is appropriate.
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\7\ The Exchange is also proposing to add language stating that
the proposed provisions in Rule 404.02 will not contradict current
provisions in Exchange Rules. The Exchange believes this addition
will eliminate any confusion about when additional series may be
added in the STOS Program in comparison to other Exchange listing
programs.
\8\ See Exchange Rule 404.02.
\9\ The Exchange notes that the Options Clearing Corporation
(``OCC'') has the ability to accommodate series in the STOS Program
added intraday.
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The Exchange notes that the STOS Program has been very well-
received by market participants, in particular by retail investors. 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. In addition, the proposed changes
will codify an existing practice in the options exchange industry.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) \10\ of the Act in general, and furthers the
objectives of Section 6(b)(5) \11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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In particular, 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.
With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that the Exchange and
the Options Price Reporting Authority (``OPRA'') has the necessary
systems capacity to handle any potential additional traffic associated
with this current amendment to the STOS Program. The Exchange believes
that its members will not have a capacity issue as a result of this
proposal. The Exchange also does not believe this expansion will cause
fragmentation to liquidity.
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 this
proposed rule change will benefit investors by providing additional
methods to trade options on the liquid securities, and providing
greater ability to mitigate risk in managing large portfolios.
Specifically, the Exchange believes that investors would benefit from
the introduction and availability of additional series available as an
investing tool. The Exchange also believes the proposed changes will
provide investors with an additional tool for hedging risk in highly
liquid securities. 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, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6)
thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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.
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange stated that waiver of this requirement will ensure
fair competition among the exchanges by allowing the Exchange to open
up to five expirations under the STOS Program in a manner consistent
with another competing exchange. The proposal will also clarify that,
like other options exchanges, the Exchange may list new STO series up
to, and including on, the expiration date. For these reasons, the
Commission believes that the proposed rule change presents no novel
issues and that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest and will allow the
Exchange to remain competitive with other exchanges. Therefore, the
Commission designates the proposed rule change to be operative upon
filing.\14\
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\14\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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
[[Page 683]]
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-2013-60 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-2013-60. 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-2013-60 and should be
submitted on or before January 27, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-31520 Filed 1-3-14; 8:45 am]
BILLING CODE 8011-01-P