[Federal Register Volume 79, Number 190 (Wednesday, October 1, 2014)]
[Notices]
[Pages 59338-59340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23309]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73211; File No. SR-MIAX-2014-30]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Order Instituting Proceedings To Determine Whether To
Approve or Disapprove a Proposed Rule Change To List and Trade Options
on Certain iShares ETFs
September 25, 2014.
I. Introduction
On June 17, 2014, Miami International Securities Exchange LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade options on
shares of the iShares MSCI Brazil Capped ETF, iShares MSCI Chile Capped
ETF, iShares MSCI Peru Capped ETF, and iShares MSCI Spain Capped ETF
(collectively ``iShares ETFs''). The proposed rule change was published
for comment in the Federal Register on July 3, 2014.\3\ No comments
were received on the proposed rule change. On August 13, 2014, the
Commission extended the time period in which to either approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to approve or disapprove the proposed
change, to October 1, 2014.\4\ This order institutes proceedings under
Section 19(b)(2)(B) of the Act to determine whether to approve or
disapprove the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 72492 (June 27,
2014), 79 FR 38099 (``Notice''). The Commission notes that MIAX also
submitted a similar proposed rule change to list and trade options
on shares of certain Market Vectors ETFs. See Securities Exchange
Act Release No. 72777 (August 6, 2014), 79 FR 47165 (August 12,
2014) (MIAX-2014-39). The Commission is similarly instituting
proceedings to determine whether to approve or disapprove that
proposed rule change as well.
\4\ See Securities Exchange Act Release No. 72835 (August 13,
2014), 79 FR 49140 (August 19, 2014).
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II. Description of the Proposed Rule Change
The Exchange proposes to list for trading on the Exchange options
on shares of the iShares ETFs. According to the Exchange, the iShares
ETFs are registered pursuant to the Investment Company Act of 1940 as
management investment companies designed to hold
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a portfolio of securities that track the MSCI Brazil 25/50 Index
(``Brazil Index''), which consists of stocks traded primarily on
BM&FBOVESPA; MSCI Chile Investable Market Index (IMI) 25/50 (``Chile
Index''), which consists of stocks traded primarily on the Santiago
Stock Exchange (``SSE''); MSCI All Peru Capped Index (``Peru Index''),
which consists of stocks traded primarily on Bolsa de Valores de Lima
(``BVL''); and MSCI Spain 25/50 Index (``Spain Index''), which consists
of stocks traded primarily on Bolsa de Madrid (``BME'').\5\
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\5\ See Notice, supra note 3. Morgan Stanley Capital
International Inc. (``MSCI'') created and maintains the Brazil
Index, Chile Index, Peru Index, and Spain Index.
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MIAX Rule 402 establishes the Exchange's initial listing standards
for equity options (the ``Listing Standards'') that must be satisfied
for the Exchange to list and trade options on the shares of open-end
investment companies, such as the iShares ETFs.\6\ Options on the
iShares ETFs do not meet the Listing Standards. In particular, options
on the iShares ETFs do not meet the requirement concerning the
existence of a comprehensive surveillance sharing agreement (``CSSA'')
between MIAX and its foreign counterpart.\7\ Accordingly, the Exchange
may not list and trade options on the iShares ETFs.
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\6\ MIAX Rule 402(i) provides the Listing Standards for shares
or other securities (``Exchange-Traded Fund Shares'') that are
traded on a national securities exchange and are defined as an ``NMS
stock'' under Rule 600 of Regulation NMS.
\7\ See MIAX Rule 402(i)(5)(ii)(B). This rule requires that
``component securities of an index or portfolio of securities on
which the Exchange Traded Fund Shares are based for which the
primary market is in any one country that is not subject to a
comprehensive surveillance agreement do not represent 20% or more of
the weight of the index.''
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According to the Exchange, it has attempted, but not entered into,
CSSAs with the applicable foreign markets. In its proposal, the
Exchange requested that the Commission allow the listing and trading of
options on shares of the iShares ETFs without a CSSA. Instead, the
Exchange proposes to rely on agreements between the Commission and the
applicable foreign regulators. Specifically, the Exchange cited to the
agreements between the Commission and the Comissao de Valores
Mobiliarios (``CVM''),\8\ which has responsibility for the Brazilian
exchanges and over-the-counter markets; the Superintendencia de Valores
y Seguros de Chile (``SVS''),\9\ which has the responsibility for the
Chilean securities markets; and the Comision Nacional del Mercado de
Valores (``CNMV''), which has the responsibility for the Spanish stock
exchanges.\10\ In addition, the Exchange noted that the
Superintendencia del Mercado de Valores, which has responsibility for
Peruvian stock exchanges, and the Commission are signatories to the
International Organization of Securities Commissions Multilateral
Memorandum of Understanding.
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\8\ See Notice, supra note 3 (citing to MOU with the CVM dated
as of July 24, 2012).
\9\ See Notice, supra note 3 (citing to MOU with the SVS dated
as of June 3, 1993).
\10\ See Notice, supra note 3 (citing to MOU with the CNMV dated
as of July 22, 2013).
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III. Proceedings To Determine Whether To Approve or Disapprove SR-MIAX-
2014-30 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \11\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change, as discussed below.
Institution of proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
Rather, as described in greater detail below, the Commission seeks and
encourages interested persons to provide additional comment on the
proposed rule change.
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\11\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\12\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of, and input from commenters with respect to, the proposed
rule change's consistency with Section 6(b)(5) of the Act,\13\ which
require that the rules of a national securities exchange be designed,
among other things, to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism 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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\12\ Id. Section 19(b)(2)(B) of the Exchange Act also provides
that proceedings to determine whether to disapprove a proposed rule
change must be concluded within 180 days of the date of publication
of notice of the filing of the proposed rule change. See id. The
time for conclusion of the proceedings may be extended for up to 60
days if the Commission finds good cause for such extension and
publishes its reasons for so finding. See id.
\13\ 15 U.S.C. 78f(b)(5).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data and arguments with respect to the
concerns identified above, as well as any other concerns they may have
with the proposed rule change. In particular, the Commission invites
the written views of interested persons concerning whether the proposal
is inconsistent with Section 6(b)(5) \14\ or any other provision of the
Act, or the rules and regulation thereunder. Although there do not
appear to be any issues relevant to approval or disapproval which would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\15\
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\14\ Id.
\15\ Section 19(b) (2) of the Act, as amended by the Securities
Act Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by October 22, 2014. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
November 5, 2014. The Commission asks that commenters address the
sufficiency and merit of the Exchange's statements in support of the
proposed rule change, in addition to any other comments they may wish
to submit about the proposed rule change.
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-2014-30 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2014-30. This file
number should be included on the subject line if email is used. To help
the Commission process and review your
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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
such 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-2014-30 and should be submitted on or before
October 22, 2014. Rebuttal comments should be submitted by November 5,
2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(57).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23309 Filed 9-30-14; 8:45 am]
BILLING CODE 8011-01-P