[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Notices]
[Pages 6662-6664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01150]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79778; File No. SR-PEARL-2016-01]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 510 To Extend the Penny Pilot Program
January 12, 2017.
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 December 30, 2016, MIAX PEARL, LLC (``MIAX
PEARL'' 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
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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 510,
Interpretations and Policies .01 to extend the pilot program for the
quoting and trading of certain options in pennies (the ``Penny Pilot
Program'').
The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/content/miax-pearl, at MIAX
PEARL'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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
MIAX PEARL plans to commence operations as a national securities
exchange registered under Section 6 of the Act \3\ on February 6,
2017.\4\ The Exchange will be a participant in an industry-wide pilot
program that provides for the quoting and trading of certain option
classes in penny increments (the ``Penny Pilot Program'' or
``Program''). The Penny Pilot Program allows the quoting and trading of
certain option classes in minimum increments of $0.01 for all series in
such option classes with a price of less than $3.00; and in minimum
increments of $0.05 for all series in such option classes with a price
of $3.00 or higher. Options overlying the PowerShares QQQTM
(``QQQ''), SPDR[supreg] S&P 500[supreg] ETF (``SPY''), and
iShares[supreg] Russell 2000 ETF (``IWM''), however, are quoted and
traded in minimum increments of $0.01 for all series regardless of the
price. The Penny Pilot Program was initiated at the then existing
option exchanges in January 2007 \5\ and currently includes more than
300 of the most active option classes. The Penny Pilot Program is set
to expire on December 31, 2016.\6\ The purpose of the proposed rule
change is to implement the Penny Pilot Program in its current format
through June 30, 2017, to match the most recent extension date of all
the other option exchanges.\7\
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\3\ 15 U.S.C. 78f.
\4\ See Securities Exchange Act Release No. 79543 (December 13,
2016), 81 FR 92901 (December 20, 2016) (File No. 10-227) (order
approving application of MIAX PEARL, LLC for registration as a
national securities exchange.)
\5\ See Securities Exchange Act Release Nos. 55154 (January 23,
2007), 72 FR 4743 (February 1, 2007) (SR-CBOE-2006-92); 55161
(January 24, 2007), 72 FR 4754 (February 1, 2007) (SR-ISE-2006-62);
54886 (December 6, 2006), 71 FR 74979 (December 13, 2006) (SR-Phlx-
2006-74); 54590 (October 12, 2006), 71 FR 61525 (October 18, 2006)
(SR-NYSEArca-2006-73); and 54741 (November 9, 2006), 71 FR 67176
(November 20, 2006) (SR-Amex-2006-106).
\6\ See Exchange Rule 510, Interpretations and Policies .01.
\7\ See Securities Exchange Act Release Nos. 79425 (November 29,
2016), 81 FR 87633 (December 5, 2016) (SR-Phlx-2016-115); 79429
(November 30, 2016), 81 FR 87991 (December 6, 2016) (SR-BOX-2016-
55); 79432 (November 30, 2016), 81 FR 87990 (December 6, 2016) (SR-
MIAX-2016-45); 79523 (December 9, 2016), 81 FR 90895 (December 15,
2016) (SR-BatsBZX-2016-84); 79526 (December 12, 2016), 81 FR 91235
(December 16, 2016) (SR-BatsEDGX-2016-71);79442 (December 1, 2016),
81 FR 88293 (December 7, 2016) (SR-CBOE-2016-083); 79441 (December
1, 2016), 81 FR 88282 (December 7, 2016) (SR-C2-2016-023); 79420
(November 29, 2016), 81 FR 87639 (December 5, 2016) (SR-BX-2016-
062); and 79525 (December 12, 2016), 81 FR 91230 (December 16, 2016)
(SR-NYSEMKT-2016-111).
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In addition to the extension of the Penny Pilot Program through
June 30, 2017, the Exchange proposes to extend one other date in the
Rule. Currently, Interpretations and Policies .01 states that the
Exchange will replace any Penny Pilot issues that have been delisted
with the next most actively traded multiply listed option classes that
are not yet included in the Penny Pilot Program, and that the
replacement issues will be selected based on trading activity in the
previous six months. Such option classes will be added to the Penny
Pilot Program on the second trading day following December 31, 2016.\8\
The Exchange intends to continue this practice for the duration of the
Penny Pilot Program and is proposing to amend the Rule to reflect that
such option classes will be added to the Penny Pilot Program on the
second trading day following January 1, 2017.\9\
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\8\ The Exchange notes that the current rule text reflected
December 31, 2016, whereas the date additional series would have
been added during the prior pilot period was July 31, 2016.
\9\ The month immediately preceding a replacement class's
addition to the Pilot Program (i.e., December) is not used for
purposes of the six-month analysis. For example, a replacement added
on the second trading day following January 1, 2017, will be
identified based on trading activity from June 1, 2016, through
November 30, 2016.
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The purpose of this provision is to reflect the new date on which
replacement issues may be added to the Penny Pilot Program. The
Exchange notes that this filing is based upon and, in all material
respects, substantially similar to a recent filing of Miami
International Securities Exchange, Inc. (``MIAX Options'') regarding
the extension of the Penny Pilot Program.\10\
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\10\ See Securities Exchange Act Release No. 79432 (November 30,
2016), 81 FR 87990 (December 6, 2016) (SR-MIAX-2016-45).
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2. Statutory Basis
MIAX PEARL believes that its proposed rule change is consistent
with Section 6(b) of the Act \11\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \12\ 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the proposed rule change, which extends the Penny
Pilot Program for six months, allows the Exchange to participate in a
program that has been viewed as beneficial to traders, investors and
public customers and viewed as successful by the other options
exchanges participating in it.
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. Specifically, the Exchange
believes that, by extending the expiration of the Pilot Program, the
proposed rule change will enable the Exchange to participate in the
Pilot Program and provide additional data for further analysis of the
Penny Pilot Program and allow for a determination of how the Program
should be structured in the future. In doing so, the proposed rule
change will also serve to promote regulatory clarity and consistency,
thereby reducing burdens on the marketplace, facilitating investor
protection, and fostering a competitive environment.
[[Page 6664]]
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 \13\ and Rule 19b-4(f)(6) \14\
thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of the
filing.\16\ However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the
Commission may 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 so that
the proposal may become operative immediately upon filing. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because doing so will allow the Pilot Program to continue without
interruption in a manner that is consistent with the Commission's prior
approval of the extension and expansion of the Pilot Program and will
allow the Exchange and the Commission additional time to analyze the
impact of the Pilot Program. Accordingly, the Commission designates the
proposed rule change as operative upon filing with the Commission.\18\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 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.
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the operative delay for this
proposal, 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 under
Section 19(b)(2)(B) of the Act \19\ to determine whether the proposed
rule should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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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-PEARL-2016-01 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-PEARL-2016-01. 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 20549-1090, 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-PEARL-2016-01 and should be
submitted on or before February 9, 2017.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01150 Filed 1-18-17; 8:45 am]
BILLING CODE 8011-01-P