[Federal Register Volume 82, Number 135 (Monday, July 17, 2017)]
[Notices]
[Pages 32737-32739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14889]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81119; File No. SR-PEARL-2017-31]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX
PEARL Rule 524, Reporting of Matched Trades to Clearing Corporation
July 11, 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 June 28, 2017, MIAX PEARL, LLC (``MIAX PEARL''
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 Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend Exchange Rule 524,
Reporting of Matched Trades to Clearing Corporation.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/rule-filings/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
The Exchange proposes to amend Exchange Rule 524, Reporting of
Matched Trades to Clearing Corporation, to adopt Interpretations and
Policies .01, to state that post-trade adjustments that do not affect
the contractual terms of a trade are to be performed by the Exchange
Member \3\ via an Exchange approved electronic interface. The Exchange
will notify Members of the approved electronic interface via Regulatory
Circular. The Exchange notes that an identical filing has been
submitted by its affiliate, MIAX Options. In order to ensure consistent
operation of both MIAX PEARL and MIAX Options through having consistent
rules, the Exchange proposes to amend MIAX PEARL Rule 524 as described
below.
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\3\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associate with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
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[[Page 32738]]
The Exchange staffs a Help Desk \4\ to provide customer service and
support to its Members. One of the support functions the Help Desk
currently provides is to make certain post-trade adjustments to a
Member's matched trades at the Member's request and on its behalf. The
Exchange has also developed functionality that it makes available to
all Members that enables Members to electronically and independently
perform post-trade adjustments that do not affect the contractual terms
of the transaction to their side of the matched trade. Examples of
post-trade adjustments that do not affect the contractual terms of a
trade include: Changing the position indicator (e.g., from Open to
Close or Close to Open); adding or removing Clearing Member Trade
Agreement (``CMTA'') information; changing the clearing account type
(e.g., Customer or Firm); and modifying the optional data field, which
may be used by Members for their own internal back-office processing.
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\4\ The term ``Help Desk'' means the Exchange's control room
consisting of Exchange staff authorized to make certain trading
determinations on behalf of the Exchange. The Help Desk shall report
to and be supervised by a senior executive officer of the Exchange.
See Exchange Rule 100.
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Despite the availability of functionality for Members to perform
these straightforward post-trade adjustments on their own, the Help
Desk still receives a significant number of requests on a daily basis
to manually perform these adjustments. Processing these requests is a
time consuming exercise for Exchange staff and is an inefficient use of
Exchange time and resources given that Members have the ability to
perform these adjustments themselves electronically via an Exchange
provided interface. Accordingly, the Exchange proposes to mandate that
Members perform their own post-trade adjustments which do not affect
the contractual terms of a trade as discussed above, using the
functionality provided by the Exchange. The Exchange notes that use of
the functionality provided by the Exchange does not relieve Members of
their obligations to abide by the rules of the Exchange.\5\ The
Exchange also represents that it has an adequate surveillance program
in place to review post-trade adjustments made by its Members.
Additionally, the Exchange has a Regulatory Services Agreement in place
with the Financial Industry Regulatory Authority to monitor adjustments
done directly at the Options Clearing Corporation (``OCC'') to ensure
compliance with applicable Exchange rules and such Securities and
Exchange Commission Trading rules related to options trading. Further,
the Exchange notes that Members may make post-trade adjustments to
trades executed on the Exchange directly at the OCC, as the OCC
provides functionality for Members to update certain non-critical trade
information with respect to the transaction, provided such changes are
not in contravention of any rule of the Exchange on which a confirmed
trade was executed.\6\
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\5\ Specifically, the Exchange notes that Members have an
obligation to adhere to Exchange Rule 507, Must Give Up Clearing
Member.
\6\ See OCC Rules, Chapter IV, Rule 401, Reporting of Confirmed
Trades Effected on Exchanges.
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The Exchange notes that other exchanges offer similar functionality
to their members for post-trade adjustments.\7\ However, these
Exchanges incentivize their members to perform their own post-trade
adjustments by charging a fee when the member elects to have the
exchange perform the adjustment on their behalf, as opposed to
mandating usage of an interface to perform post-trade adjustments such
as the Exchange is proposing.
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\7\ See Securities Exchange Act Release Nos. 73585 (November 13,
2014), 79 FR 68927 (November 19, 2014) (SR-NYSEArca-2014-116); and
73542 (November 6, 2014), 79 FR 67496 (November 13, 2014) (SR-
NYSEMKT-2014-87).
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2. Statutory Basis
MIAX PEARL believes that its proposed rule change is consistent
with Section 6(b) of the Act \8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that its proposal would promote just and
equitable principles of trade and not unfairly discriminate between
Members because the functionality to make post-trade adjustments is
available to all Members. Further, the Exchange believes that its
proposal would promote a fair and orderly market and protect investors
and the public interest because its proposal would result in a more
efficient use of Exchange resources, which would benefit all market
participants.
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 proposed rule change is
not designed to address any competitive issues but rather to make more
efficient use of the Exchange's employee time and resources, which may
ultimately benefit Members.
The Exchange does not believe that the proposed rule change will
impose any burden on intra-market competition as the Rules apply
equally to all Exchange Members.
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 \10\ and Rule 19b-4(f)(6) \11\
thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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.
[[Page 32739]]
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-2017-31 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-2017-31. 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
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-2017-31, and should be
submitted on or before August 7, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017-14889 Filed 7-14-17; 8:45 am]
BILLING CODE 8011-01-P