[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Pages 61613-61614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27990]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82385; File No. 4-715]
Self-Regulatory Organizations; MIAX PEARL, LLC; Order Declaring
Effective a Minor Rule Violation Plan
December 21, 2017.
On November 16, 2017, MIAX PEARL, LLC (``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a proposed minor
rule violation plan (``MRVP'' or ``Plan'') pursuant to Section 19(d)(1)
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19d-
1(c)(2) thereunder.\2\ The proposed MRVP was published for comment on
November 28, 2017.\3\ The Commission received no comments on the
proposal. This order declares the Exchange's proposed MRVP effective.
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\1\ 15 U.S.C. 78s(d)(1)
\2\ 17 CFR 240.19d-1(c)(2).
\3\ See Securities Exchange Act Release No. 82146 (November 22,
2017), 82 FR 56280 (``Notice'').
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The Exchange's MRVP specifies the rule violations which will be
included in the Plan and will have sanctions not exceeding $2,500. Any
violations which are resolved under the MRVP would not be subject to
the provisions of Rule 19d-1(c)(1) of the Act,\4\ which requires that a
self-regulatory organization (``SRO'') promptly file notice with the
Commission of any final disciplinary action taken with respect to any
person or organization.\5\ In accordance with Rule 19d-1(c)(2) under
the Act,\6\ the Exchange proposed to designate certain specified rule
violations as eligible for consideration as minor rule violations, and
requested that it be relieved of the prompt reporting requirements
regarding such violations, provided it gives notice of the violations
to the Commission on a quarterly basis.
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\4\ 17 CFR 240.19d-1(c)(1).
\5\ The Commission adopted amendments to paragraph (c) of Rule
19d-1 to allow SROs to submit for Commission approval plans for the
abbreviated reporting of minor disciplinary infractions. See
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR
23828 (June 8, 1984). Any disciplinary action taken by an SRO
against any person for violation of a rule of the SRO which has been
designated as a minor rule violation pursuant to a plan filed with
and declared effective by the Commission is not considered ``final''
for purposes of Section 19(d)(1) of the Act if the sanction imposed
consists of a fine not exceeding $2,500 and the sanctioned person
has not sought an adjudication, including a hearing, or otherwise
exhausted his administrative remedies.
\6\ 17 CFR 240.19d-1(c)(2).
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The Exchange proposed to include in its MRVP the procedures and
violations currently included in Exchange Rule 1014 (``Imposition of
Fines for Minor Rule Violations'').\7\ According to the Exchange's
proposed MRVP, under Exchange Rule 1014, the Exchange may impose a fine
(not to exceed $2,500) on any Member, or person associated with or
employed by a Member, for any rule listed in Rule 1014(d).\8\ The
Exchange shall serve the person against whom a fine is imposed with a
written statement setting forth the rule or rules violated, the act or
omission constituting each such violation, the fine imposed, and the
date by which such determination becomes final or by which such
determination must be contested. If the person against whom the fine is
imposed pays the fine, the payment shall be deemed to be a waiver of
the person's right to a disciplinary proceeding and any review of the
matter under the Exchange rules. Any person against whom a fine is
imposed may contest the Exchange's determination by filing with the
Exchange a written answer, at which point the matter shall
[[Page 61614]]
proceed under the rules governing formal disciplinary proceedings.
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\7\ The Exchange received its grant of registration on December
13, 2016, which included approving the rules that govern the
Exchange. See Securities Exchange Act Release No. 79543 (December
13, 2016), 81 FR 92901 (December 20, 2016).
\8\ While Rule 1014 allows the Exchange to administer fines up
to $5,000, the Exchange is only seeking relief from the reporting
requirements of paragraph (c)(1) of Rule 19d-1 for fines
administered under Rule 1014(d) that do not exceed $2,500.
Under the proposed MRVP, violations of the following rules would
be appropriate for disposition under the MRVP: Rule 307 (Position
Limits); Rule 803 (Focus Reports); Rule 804 (Requests for Trade
Data); Rule 520 (Order Entry); Rule 605 (Execution of Orders in
Appointed Options); Rule 314 (Mandatory Systems Testing); Rule 700
(Exercise of Option Contracts); Rule 309 (Exercise Limits); Rule 310
(Reports Related to Position Limits); Rule 403 (Trading in
Restricted Classes); Rule 605 (Market Maker Quotations); and Rules
1301, 1302, and 1303 (Failure to Timely File Amendments to Form U4,
Form U5, and Form BD). According to the Exchange, Conduct and
Decorum Policies under Rule 1014(d)(4) are excluded from the
proposed MRVP. See Notice, supra note 3.
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Once the Exchange's MRVP is effective, the Exchange will provide to
the Commission a quarterly report for any actions taken on minor rule
violations under the MRVP. The quarterly report will include: The
disposition date, the name of the firm/individual, the Exchange's
internal enforcement number, the review period, the nature of the
violation type, the number of the rule that was violated, the number of
times the violation occurred, and the sanction imposed.\9\
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\9\ The Exchange attached a sample form of the quarterly report
with its submission to the Commission.
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The Commission finds that the proposal is consistent with the
public interest, the protection of investors, or otherwise in
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2)
under the Act,\10\ because the MRVP will permit the Exchange to carry
out its oversight and enforcement responsibilities as an SRO more
efficiently in cases where formal disciplinary proceedings are not
necessary due to the minor nature of the particular violation.
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\10\ 17 CFR 240.19d-1(c)(2).
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In declaring the Exchange's MRVP effective, the Commission does not
minimize the importance of compliance with Exchange rules and all other
rules subject to the imposition of sanctions under Exchange Rule 1014.
Violation of an SRO's rules, as well as Commission rules, is a serious
matter. However, Exchange Rule 1014 provides a reasonable means of
addressing violations that do not rise to the level of requiring formal
disciplinary proceedings, while providing greater flexibility in
handling certain violations. The Commission expects the Exchange to
continue to conduct surveillance and make determinations based on its
findings, on a case-by-case basis, regarding whether a violation
requires formal disciplinary action or whether a sanction under the
MRVP is appropriate.
It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the
Act,\11\ that the proposed MRVP for MIAX PEARL, LLC, File No. 4-715,
be, and hereby is, declared effective.
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\11\ Id.
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)(44).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-27990 Filed 12-27-17; 8:45 am]
BILLING CODE 8011-01-P