[Federal Register Volume 79, Number 69 (Thursday, April 10, 2014)]
[Notices]
[Pages 19956-19958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07995]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71881; File No. SR-MIAX-2014-14]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Pilot Period Applicable to Rule 530
Relating to Limit Up/Limit Down
April 4, 2014.
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 April 3, 2014, 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 530 to extend the
pilot period for the treatment of erroneous transactions during a Limit
or Straddle State.
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 proposes to amend Rule 530 (Limit Up-Limit Down) in
order to (i) extend the pilot period for the treatment of erroneous
transactions that occur in a Limit or Straddle State until February 20,
2015; and (ii) to provide that paragraphs (a)-(i) of the Rule shall be
in effect during a pilot period to coincide with the pilot period for
the Plan to Address Extraordinary Market Volatility Pursuant to Rule
608 of Regulation NMS.
Exchange Rule 530(j) provides for the treatment of erroneous
transactions occurring during Limit and Straddle States. Specifically,
once an NMS Stock has entered a Limit or Straddle State, the Exchange
will nullify a transaction in an option overlying such an NMS Stock as
provided in the Rule 530(j). This provision was adopted for a one year
pilot period beginning on the date of the implementation of the Plan to
Address Extraordinary Market Volatility Pursuant to Rule 608 of
Regulation NMS, April 8, 2013.\3\ The Exchange proposes extending the
pilot period for Rule 530(j) until February 20, 2015 in order to allow
the Exchange and the Commission additional time to collect and analyze
data regarding the impact of Rule 530(j) on liquidity and market
quality in the options markets.
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\3\ See Exchange Rule 503(j). See also Securities Exchange Act
Release Nos. 69210 (March 22, 2013), 78 FR 18637 (March 27, 2013)
(SR-MIAX-2013-12); 69342 (April 8, 2013), 78 FR 22017 (April 12,
2013) (SR-MIAX-2013-12); 69234 (March 25, 2013), 78 FR 19344 (March
29, 2013) (SR-MIAX-2013-15); 69354 (April 9, 2013), 78 FR 22357
(April 15, 2013) (SR-MIAX-2013-15).
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To assist the Commission in its analysis, the Exchange will
continue to provide the Commission with data and analysis during the
duration of the pilot in order to evaluate the impact of Limit and
Straddle States on liquidity and market quality in the options markets.
Specifically, by September 30, 2014, the Exchange represents that it
shall provide the Commission assessments relating to the impact of the
obvious error Rules during Limit and Straddle States that (i) evaluate
the statistical and economic impact of Limit and Straddle States on
liquidity and market quality in the options markets; and (ii) assess
whether the lack of obvious error rules in effect during the Straddle
and Limit States are problematic. Additionally, each month during the
pilot period the Exchange shall provide to the Commission and the
public a dataset containing the data for each Straddle and Limit State
in optionable stocks. For each stock that reaches a Straddle or Limit
State, the number of options included in the dataset can be reduced by
selecting options in which at least one (1) trade occurred on the
Exchange during the Straddle or Limit State. For each of those options
affected, each data record should contain the following information:
(i) Stock symbol, option symbol, time at the start of the straddle or
limit state, an indicator for whether it is a straddle or limit state;
and (ii) for activity on the exchange--(A) executed volume, time-
weighted quoted bid-ask spread, time-weighted average quoted depth at
the bid, time-weighted average quoted depth at the offer, (B) high
execution price, low execution price, (C) number of trades for which a
request for review for error was received during Straddle and Limit
States, (D) an indicator variable for whether those options outlined
above have a price change exceeding 30% during the underlying stock's
Limit or Straddle state compared to the last available option price as
reported by OPRA before the start of the Limit or Straddle state (1 if
observe 30% and 0 otherwise) and another indicator variable for whether
the option price within five minutes of the underlying stock leaving
the Limit or Straddle state (or halt if applicable) is 30% away from
the price before the
[[Page 19957]]
start of the Limit or Straddle state. The Exchange notes that it will
also update the data available on the Exchange's Web site for the
period April 2013 through January 2014 with the revised parameters
described above once the Exchange has completed its analysis and review
of such data.
The Exchange also proposes to amend Rule 530 to provide that
paragraphs (a)-(i) of the Rule shall be in effect during a pilot period
to coincide with the pilot period for the Plan to Address Extraordinary
Market Volatility Pursuant to Rule 608 of Regulation NMS. The proposed
change will allow the Exchange's Limit Up-Limit Down Rule to continue
without interruption for as long as corresponding pilot period for the
Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of
Regulation NMS remains in effect and will also more closely align the
pilot language to that of other options exchanges.\4\
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\4\ See NYSE MKT Rule 953.1NY; NYSE Arca Options Rule 6.65A.
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) \5\ of the Act in general, and furthers the
objectives of Section 6(b)(5) \6\ 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. Specifically,
the proposal supports the objectives of perfecting the mechanism of a
free and open market and the national market system because it promotes
uniformity across markets concerning when and how to halt trading in
all stock options as a result of extraordinary market volatility. In
addition, the Exchange believes that the extension of the pilot will
help ensure that market participants continue to benefit from the
protections of the Limit Up-Limit Down Rules which will protect
investors and the public interest while allowing the Exchange and the
Commission additional time to collect and analyze data regarding the
impact of Rules on liquidity and market quality in the options markets.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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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. The proposed changes are being
made to extend the pilot program that provides for how the Exchange
shall treat orders and quotes in options overlying NMS stocks when the
Limit Up-Limit Down Plan is in effect and will not impose any burden on
competition while providing certainty of treatment and execution of
options orders during periods of extraordinary volatility in the
underlying NMS stock, and facilitating appropriate liquidity during a
Limit State or Straddle State.
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 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 \7\ and Rule 19b-
4(f)(6)(iii) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6)(iii). 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 allow
the Exchange to extend the pilot program prior to its expiration on
April 8, 2014. For this reason, 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. Therefore, the Commission designates the
proposed rule change to be operative upon filing.\9\
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\9\ 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 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-2014-14 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2014-14. 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
[[Page 19958]]
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-2014-14 and should be submitted on or before May 1,
2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07995 Filed 4-9-14; 8:45 am]
BILLING CODE 8011-01-P