[Federal Register Volume 79, Number 245 (Monday, December 22, 2014)]
[Notices]
[Pages 76415-76417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29815]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73846; File No. SR-MIAX-2014-64]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change by Miami International Securities Exchange, LLC To
Amend Exchange Rules 307 and 309 To Extend the SPY Pilot Program
December 16, 2014.
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 December 11, 2014, Miami International Securities Exchange LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``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 the
Substance of the Proposed Rule Change
The Exchange is filing a proposal to amend Exchange Rules 307 and
309 to extend the pilot program that eliminates the position and
exercise limits for physically-settled options on the SPDR S&P 500 ETF
Trust (``SPY 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Exchange Rule 307, Commentary .01,
Position Limits, and Exchange Rule 309, Commentary .01, Exercise
limits, to extend the duration of the SPY Pilot Program through July
12, 2015. There are no substantive changes being proposed to the SPY
Pilot Program. In proposing to extend the SPY Pilot Program, the
Exchange affirms its consideration of several factors that support the
proposal to establish the SPY Pilot Program, which include: (1) The
liquidity of the option and the underlying security; (2) the market
capitalization of the underlying security and the securities that make
up the S&P 500 Index; (3) options reporting requirements; and (4)
financial requirements imposed by MIAX and the Commission.
The current Pilot Report for the SPY Pilot Program is not due until
on or before January 15, 2015. The Exchange notes that it is not aware
of any problems created by the current SPY Pilot Program and does not
foresee any problems with the proposed extension. The Exchange will
formally submit the current Pilot Report for the SPY Pilot Program on
or before January 15, 2015. In addition, the Exchange represents that
if it chooses to extend or seek permanent approval of the SPY Pilot
Program, that the Exchange will submit another Pilot Report at least
thirty (30) days prior to the expiration of the extended SPY Pilot
Program time period which would cover the period between reports. The
Pilot Report will compare the impact of the pilot program, if any, on
the volumes of SPY options and the volatility in the price of the
underlying SPY contract, particularly at expiration. The Pilot Report
also will detail the size and different types of strategies employed
with respect to positions established in SPY options; note whether any
problems, in the underlying SPY ETF or otherwise, arose as a result of
the no-limit approach; and include any other information that may be
useful in evaluating the effectiveness of the pilot program. In
preparing the Pilot Report, the Exchange will utilize various data
elements such as volume and open interest. In addition the Exchange
would make available to Commission staff data elements relating to the
effectiveness of the SPY Pilot Program.
Prior to the expiration of the SPY Pilot Program and based upon the
[[Page 76416]]
findings of the Pilot Report, the Exchange will be able to either
extend the SPY Pilot Program, adopt the SPY Pilot Program on a
permanent basis, or terminate the SPY Pilot Program. If the SPY Pilot
Program is not extended or adopted on a permanent basis by the
expiration of the Extended Pilot, the position limits for SPY would
revert to limits in effect at the commencement of the SPY Pilot
Program.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) \3\ of the Act in general, and furthers the
objectives of Section 6(b)(5) \4\ 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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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that extending the SPY Pilot
Program promotes just and equitable principles of trade by permitting
market participants, including market makers, institutional investors
and retail investors, to establish greater positions when pursuing
their investment goals and needs. The Exchange also believes that
economically equivalent products should be treated in an equivalent
manner so as to avoid regulatory arbitrage, especially with respect to
position limits. Treating SPY and SPX options differently by virtue of
imposing different position limits is inconsistent with the notion of
promoting just and equitable principles of trade and removing
impediments to perfect the mechanisms of a free and open market. At the
same time, the Exchange believes that the elimination of position
limits for SPY options would not increase market volatility or
facilitate the ability to manipulate the market.
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 rule change is not
designed to address any aspect of competition, whether between the
Exchange and its competitors, or among market participants. Instead,
the proposed rule change is designed to allow the SPY Pilot Program to
continue as other SROs have adopted similar provisions.
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) of the Act \5\ and Rule 19b-4(f)(6) thereunder.\6\ 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 from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder.\7\
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6).
\7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
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. The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \8\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \9\ permits the
Commission to 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, noting
that the Exchange believes a waiver of the operative delay is
consistent with the protection of investors and the public interest
because it would ensure fair competition among the exchanges by
allowing the SPY Pilot Program to continue without interruption. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\10\
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\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ For purposes only 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-2014-64 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-2014-64. 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
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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-2014-64, and should be
submitted on or before January 12, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29815 Filed 12-19-14; 8:45 am]
BILLING CODE 8011-01-P