[Federal Register Volume 81, Number 114 (Tuesday, June 14, 2016)]
[Notices]
[Pages 38751-38753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13966]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78023; File No. SR-MIAX-2016-14]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Adopt Exchange Rule 519C, Mass Cancellation of
Trading Interest
June 8, 2016.
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 May 27, 2016, 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, II, and III 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 adopt Exchange Rule 519C, Mass
Cancellation of Trading Interest.
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 adopt new Rule 519C, Mass Cancellation of
Trading Interest, to codify the Exchange's current practice of
cancelling quotes and/or orders upon the receipt of a verbal or an
electronic request from a Member.\3\
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\3\ The term ``Member'' means an individual or organization
approved to exercise trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Act. See Exchange
Rule 100.
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Proposed Rule 519C would codify the current process by which
Members may call or send an electronic message to the Exchange's
designated staff and to direct them to cancel all quotations and/or
orders they have in the System.\4\ All of the directing Member's
quotations then in the System will be cancelled; a Member may submit a
request to cancel all or any subset of its orders in the System.
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\4\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
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Currently, Exchange Members may cancel all quotations and/or open
orders in the System electronically or, in the alternative, may request
Exchange staff to do so verbally by phone or via electronic message.
The proposed rule would codify the current process of
[[Page 38752]]
requesting cancellations verbally or via electronic message.
Specifically, proposed Rule 519C states that a Member may cancel all of
its quotations and/or orders in the System by requesting the Exchange
staff to effect such cancellations. The form of such a request includes
but is not limited to email or a phone call from authorized
individuals. The cancellation of quotes and orders as described herein
does not disconnect Members from the Exchange's System.
The purpose of the proposed rule change is to codify this current
practice in the Exchange's rules. The Exchange has a number of other
rules covering related risk management processes available to Members
\5\ and it believes that this clarification will enhance transparency
in the Exchange's rules.
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\5\ See, e.g., Exchange Rules 519, MIAX Order Monitor, and 612,
Aggregate Risk Manager (ARM).
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2. Statutory Basis
MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \6\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \7\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The proposed rule codifies existing risk protections that are
currently available to Members and provides that the Exchange may take
action on their behalf. The proposed rule protects investors and the
public interest by clarifying, in the Exchange's rules, the risk
protection tools and other mechanisms and processes available on the
Exchange. The Exchange notes that similar rules are currently operative
on other exchanges.\8\
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\8\ See BATS BZX Exchange, Inc. (``BZX'') Rule 22.11, NASDAQ
Options Market (``NOM'') Rules, Chapter VII, Section 11, and NASDAQ
BX, Inc. (``BX'') Rules, Chapter VII, Section 11.
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The Exchange notes that the proposed rule change will not relieve
Exchange Market Makers of their continuous quoting obligations under
Exchange Rule 604 and under Reg NMS Rule 602.\9\ Specifically, any
interest that is executable against a Member's quotes and orders that
is received by the Exchange prior to the time the cancellation is
received by the System will automatically execute at the price up to
the Member's size. Market Makers that request a mass cancellation of
their trading interest will not be relieved of the obligation to
provide continuous two-sided quotes on a daily basis, nor will it
prohibit the Exchange from taking disciplinary action against a Market
Maker for failing to meet their continuous quoting obligation each
trading day. Cancel messages entered into the System by Exchange staff
are accepted upon receipt by the System, and will be processed in that
order such that cancel messages and other interest already accepted
into the System will be processed prior to the receipt by the System of
the mass cancel message.
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\9\ 17 CFR 242.602.
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The codification of the existing process of requesting the removal
of quotes and orders is intended to remove impediments to and perfect
the mechanisms of a free and open market by adding precision and ease
of reference to the Exchange's rules, thus promoting transparency and
clarity for 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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
The Exchange believes the proposed rule change will not impose any
burden on intra-market competition because every Member of the Exchange
has the opportunity to benefit from the procedure described in the
proposed rule. The proposed rule is meant to provide all Members with
the same protection in the event the Member is experiencing an issue
that would require the Member to withdraw its quotes and/or orders from
the market in order to ensure a fair and orderly market on the
Exchange.
The Exchange believes the proposed rule change will not impose any
burden on inter-market competition because the process of cancellation
of quotations and orders on the Exchange is substantially similar to
processes currently operative on other exchanges.\10\
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\10\ See supra note 8.
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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.
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 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 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\
thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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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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-2016-14 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-2016-14. This file
[[Page 38753]]
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 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-2016-14, and should be
submitted on or before July 5, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-13966 Filed 6-13-16; 8:45 am]
BILLING CODE 8011-01-P