Notice2023-23816
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay Implementation of an Amendment to Rule 518, Complex Orders, T o Permit Legging Through the Simple Market
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 30, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 208 (Monday, October 30, 2023)</title>
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[Federal Register Volume 88, Number 208 (Monday, October 30, 2023)]
[Notices]
[Pages 74224-74225]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23816]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98792; File No. SR-MIAX-2023-42]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Delay Implementation of an Amendment to Rule
518, Complex Orders, To Permit Legging Through the Simple Market
October 24, 2023.
Pursuant to 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 October 12, 2023, Miami International Securities Exchange LLC
(``MIAX'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the self-
regulatory organization. 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 delay implementation of the
change to allow a component of a complex order \3\ that legs into the
Simple Order Book \4\ to execute at a price that is outside the
NBBO.\5\
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\3\ A ``complex order'' is any order involving the concurrent
purchase and/or sale of two or more different options in the same
underlying security (the ``legs'' or ``components'' of the complex
order), for the same account, in a ratio that is equal to or greater
than one-to-three (.333) and less than or equal to three-to-one
(3.00) and for the purposes of executing a particular investment
strategy. Mini-options may only be part of a complex order that
includes other mini-options. Only those complex orders in the
classes designated by the Exchange and communicated to Members via
Regulatory Circular with no more than the applicable number of legs,
as determined by the Exchange on a class-by-class basis and
communicated to Members via Regulatory Circular, are eligible for
processing. See Exchange Rule 518(a)(5).
\4\ The ``Simple Order Book'' is the Exchange's regular
electronic book of orders and quotes. See Exchange Rule 518(a)(15).
\5\ The term ``NBBO'' means the national best bid or offer as
calculated by the Exchange based on market information received by
the Exchange from the appropriate Securities Information Processor
(``SIP''). See Exchange Rule 518(a)(14).
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings</a>, 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
On October 22, 2019, the Exchange filed a proposed rule change to
amend subsection (c)(2)(iii) of Exchange Rule 518, Complex Orders, to
remove the provision which provides that a component of a complex order
that legs into the Simple Order Book may not execute at a price that is
outside the NBBO.\6\ The proposed rule change indicated that the
Exchange would announce the implementation date of the proposed rule
change by Regulatory Circular to be published no later than 90 days
following the operative date of the proposed rule. The implementation
date will be no later than 90 days following the issuance of the
Regulatory Circular. The Exchange filed to delay the implementation of
this functionality and the latest proposal delayed implementation until
the third quarter of 2023.\7\ The Exchange now proposes to again delay
the implementation of this functionality until the fourth quarter of
2024, at the latest.
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\6\ See Securities Exchange Release No. 87440 (November 1,
2019), 84 FR 60117 (November 7, 2019) (SR-MIAX-2019-45).
\7\ See Securities Exchange Release Nos. 94939 (May 18, 2022),
87 FR 31590 (May 24, 2022) (SR-MIAX-2022-21); No. 96490 (December
13, 2022), 87 FR 77648 (December 19, 2022) (SR-MIAX-2022-46).
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The Exchange proposes this delay in order to allow the Exchange to
reprioritize its software delivery and release schedule as a result of
a shift in priorities at the Exchange. The Exchange will issue a
Regulatory Circular notifying market participants at least 45 days
prior to implementing this functionality.
2. Statutory Basis
The Exchange 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 regulating,
clearing, settling, processing information with respect to, and
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 by
allowing the Exchange additional time to plan and implement the
proposed functionality.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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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's proposal to
delay the implementation of the proposed functionality does not impose
an undue burden on competition. Delaying the implementation will simply
allow the Exchange additional time to properly plan and implement the
proposed functionality.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition as the delay will apply
equally to all Members of the Exchange.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition as the proposal is to
delay the implementation of approved functionality which affects MIAX
Members only and does not impact intermarket competition.
[[Page 74225]]
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 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)(iii) of the Act \10\ and Rule
19b-4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. Rule 19b-4(f)(6)(iii)
also requires a self-regulatory organization to provide the Commission
with written notice of its intent to file a proposed rule change, along
with a brief description and 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.
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive both the five-
business day pre-filing requirement and the 30-day operative delay to
allow the Exchange to provide an immediate update regarding the
implementation of the functionality, which would eliminate potential
confusion regarding the implementation of the proposal. The Exchange
states that delaying the implementation of the functionality will allow
the Exchange to reprioritize its software delivery and release schedule
and provide the Exchange additional time to plan and implement the
functionality.
The Commission waives the five-business day pre-filing requirement.
In addition, the Commission finds that it is consistent with the
protection of investors and the public interest to waive the 30-day
operative delay. As discussed above, the Exchange amended its rules in
2019 to allow the component legs of a complex order to execute at a
price that is outside the NBBO when they execute against interest on
the Exchange's Simple Order Book.\14\ The Exchange has delayed the
implementation of this functionality several times, most recently until
the third quarter of 2023.\15\ Waiver of the operative delay will allow
the Exchange to immediately notify its members of the delay in
implementing the functionality, which could help to avoid confusion
regarding its implementation. Therefore, the Commission waives the 30-
day operative delay and designates the proposal operative upon
filing.\16\
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\14\ See supra note 6.
\15\ See supra note 7.
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#295b5c454c044a4644444c475d5a695a4c4a074e465f"><span class="__cf_email__" data-cfemail="fd8f889198d09e9290909893898ebd8e989ed39a928b">[email protected]</span></a>. Please include
file number SR-MIAX-2023-42 on the subject line.
Paper Comments
<bullet> 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-2023-42. 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 website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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 website 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MIAX-2023-42 and should be
submitted on or before November 20, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-23816 Filed 10-27-23; 8:45 am]
BILLING CODE 8011-01-P
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