[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Pages 63196-63198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-25148]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73382; File No. SR-MIAX-2014-52]
Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend MIAX Rule 1107 Concerning Exchange
Arbitrations
October 17, 2014.
Pursuant to the provisions of 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 October 2, 2014, 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 and II below, which Items have been
substantially prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons. The Exchange has designated the proposed rule
change as constituting a ``non-controversial'' rule change under Rule
19b-4(f)(6) of the Act,\3\ which renders the proposal effective upon
receipt of this filing by the Commission.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to harmonize the language
of MIAX Rule 1107 (Arbitration) with that of another options exchange,
the International Securities Exchange, LLC (``ISE''). 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 the principal office
of the Exchange, 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 MIAX Rule 1107 (Arbitration) to
harmonize it with the rules of ISE in order to incorporate by reference
the arbitration rules of Financial Industry Regulatory Authority, Inc.
(``FINRA'').\4\ The current MIAX Rule 1107 is based on ISE Rule 1800,
but incorporates by reference the arbitration rules of the Chicago
Board Options Exchange (``CBOE''). This was appropriate when the
Exchange maintained a Regulatory Service Agreement (``RSA'') with CBOE.
The Exchange, however, recently entered into a RSA with FINRA, which
became effective on October 1, 2014. The Exchange believes the proposed
rule change to reference the arbitration rules of FINRA is consistent
with this recent change in regulatory service providers.
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\4\ See ISE Rule 1800.
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Proposed Rule Change
The Exchange proposes to replace current references to CBOE
arbitration rules in MIAX Rule 1107 with references to the
corresponding arbitration rules of FINRA. The proposed rule change
would align MIAX's arbitration rule with the arbitration rule of ISE,
which also references FINRA's arbitration rules.\5\ As proposed, the
Rule 12000 Series and Rule 13000 Series of the FINRA Manual (Code of
Arbitration Procedures for Customer Disputes and Code of Arbitration
Procedures for Industry Disputes, respectively) (collectively, the
``FINRA Code of Arbitration''), as the same may be in effect from time
to time, would govern Exchange arbitrations except as may be specified
in proposed Rule 1107. Definitions in the FINRA Code of Arbitration
would have the same meaning as prescribed therein, and procedures in
the FINRA Code of Arbitration would have the same application with
respect to Exchange arbitrations.
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\5\ See ISE Rule 1800.
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Under proposed Rule 1107, any dispute, claim, or controversy
arising out of or in connection with the business of any member of the
Exchange (``Member''), or arising out of the employment or termination
of employment of associated person(s) with any Member would be
arbitrable, except that: (1) A dispute, claim, or controversy alleging
employment discrimination (including a sexual harassment claim) in
violation of a statue may only be arbitrated if the parties have agreed
to arbitrate it after the dispute arose; and (2) any type of dispute,
claim, or controversy that is not permitted to be arbitrated under the
FINRA Code of Arbitration (such as class action claims) shall not be
eligible for arbitration under proposed Rule 1107. In addition, under
the proposal the requirements of FINRA Rule 2268 (Requirements When
Using Predispute Arbitration Agreements for Customer Accounts) would
apply to predispute arbitration agreements between Members and their
customers.
In addition, under proposed Rule 1107, if any matter comes to the
attention of an arbitrator during, and in connection with, the
arbitrator's participation in a proceeding, either from the record of
the proceeding or from material or communications related to the
proceeding, that the arbitrator has reason to believe may constitute a
violation of the Exchange's rules or the federal securities laws, the
arbitrator may initiate a referral of the matter to the Exchange for
disciplinary investigation; provided, however, that any such referral
could only be initiated by an arbitrator after the matter before her or
him has been settled or otherwise disposed of, or after an award
finally disposing of the matter has been rendered pursuant to FINRA
Rules 12904 or 13904, as applicable.
If the proposal is approved, the principle structure of the
Exchange's arbitration rule would remain the same, except that it would
reference the applicable FINRA arbitration rules in
[[Page 63197]]
lieu of the CBOE arbitration rules. In addition, the proposed rule
change would closely align the Exchange's arbitration rule with the
arbitration rule of another options exchange (ISE).\6\ The Exchange
believes that the proposed rule change would provide detailed
guidelines and framework concerning Exchange arbitrations in a manner
that is easily understood and enforceable not only by Members, but also
by FINRA, with which the Exchange recently entered into a RSA.
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\6\ See Proposed MIAX Rule 1107. See also ISE Rule 1800.
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\8\ in particular, because 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that the proposed rule change
would provide a clear framework concerning Exchange arbitrations in a
manner designed to prevent fraudulent and manipulative acts and
practices, and to promote the protection of investors and the public
interest. Further, the Exchange notes that the proposed rule change
would provide greater harmonization between Exchange rules and the
rules of similar substance and purpose of FINRA resulting in less
burdensome and more efficient regulatory compliance for members of both
MIAX and FINRA (``Dual Members''). As such, the Exchange believes that
the proposed rule change would foster cooperation and coordination with
persons engaged in facilitating transactions in securities and would
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
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 competitive issues but rather is designed to
provide greater harmonization between Exchange and FINRA rules of
similar purpose, resulting in less burdensome and more efficient
regulatory compliance for Dual 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ Because
the 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.\11\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ Rule 19b-4(f)(6) also requires a self-regulatory
organization (``SRO'') 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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter period of 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
proposed rule may become operative immediately upon filing.
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because it allows the Exchange to immediately harmonize its arbitration
rules with those of ISE and, by extension, the FINRA Code of
Arbitration. The Commission notes that the Exchange also recently
entered into an RSA with FINRA, which became effective on October 1,
2014. Together, the Commission believes that these steps help ensure
that Dual Members would be subject to a single set of SRO rules
governing arbitration. The Commission also believes that this would
promote less burdensome and more efficient regulatory compliance. For
these reasons, the Commission designates the proposed rule change to be
operative upon filing.\13\
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\13\ For purposes 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 under
Section 19(b)(2)(B) of the Act \14\ to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 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-MIAX-2014-52 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-2014-52. 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
[[Page 63198]]
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-MIAX-2014-52 and
should be submitted on or before November 12, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-25148 Filed 10-21-14; 8:45 am]
BILLING CODE 8011-01-P