Notice2024-09334
Self-Regulatory Organizations; Miami International Securities Exchange; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 313, Other Restrictions on Options Transactions and Exercises; and Rule 700, Exercise of Option Contracts
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
May 1, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 85 (Wednesday, May 1, 2024)</title>
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[Federal Register Volume 89, Number 85 (Wednesday, May 1, 2024)]
[Notices]
[Pages 35257-35260]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-09334]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100028; File No. SR-MIAX-2024-21]
Self-Regulatory Organizations; Miami International Securities
Exchange; Notice of Filing of a Proposed Rule Change To Amend Exchange
Rule 313, Other Restrictions on Options Transactions and Exercises; and
Rule 700, Exercise of Option Contracts
April 25, 2024
Pursuant to 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 April 12, 2024, Miami International Securities Exchange, LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the 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 Rule 313, Other
Restrictions on Options Transactions and Exercises; and Rule 700,
Exercise of Option Contracts.\3\
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\3\ The Exchange notes that MIAX Rule 313 and MIAX Rule 700 are
incorporated by reference to the Exchange's affiliates MIAX Pearl
and MIAX Emerald.
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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
The Exchange proposes to amend Exchange Rule 313, Other
Restrictions on Options Transactions and Exercises; and Rule 700,
Exercise of Option Contracts.
Background
Historically, standard expiration contracts expired at 11:59 p.m.
Eastern Time, on the Saturday following the third Friday of the
specified expiration month. In 2013 the Options Clearing Corporation
(``OCC'') proposed a rule change to allow the OCC to change the
expiration date for most option contracts to the third Friday of the
expiration month instead of the Saturday following the third Friday.\4\
[[Page 35258]]
Since that time the industry has supplemented options that expire
monthly by offering options that expire on Mondays and Wednesdays \5\
and also on Tuesdays and Thursdays.\6\
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\4\ See Securities Exchange Act Release No. 69772 (June 17,
2013), 78 FR 37645 (June 21, 2013) (SR-OCC-2013-04) (Order Approving
Proposed Rule Change to Change the Expiration Date For Most Option
Contracts to the Third Friday of the Expiration Month Instead of the
Saturday Following the Third Friday).
\5\ See Securities Exchange Act Release Nos. 82719 (February 15,
2018), 83 FR 7790 (February 22, 2018) (SR-MIAX-2018-05) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change by
Miami International Securities Exchange, LLC To Expand the Short
Term Option Series Program); 91667 (April 23, 2021), 86 FR 22734
(April 29, 2021) (SR-MIAX-2021-16) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Permit Monday and Wednesday
Expirations for Options Listed Pursuant to the Short Term Option
Series Program on the Invesco QQQ Trust\SM\ Series (``QQQ'') ETF
Trust); and 93251 (October 4, 2021), 86 FR 56308 (October 8, 2021)
(SR-MIAX-2021-47) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Permit Monday and Wednesday Expirations for
Options Listed Pursuant to the Short Term Option Series Program on
the iShares Russell 2000 ETF (``IWM'').
\6\ See Securities Exchange Act Release No. 96342 (November 17,
2022), 87 FR 71727 (November 23, 2022) (SR-MIAX-2022-41) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Amend Exchange Rule 404, Series of Option Contracts Open for Trading
and the Short Term Option Series Program).
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Proposal
While the Exchange's rule that governs the listing of options, Rule
404, Series of Option Contracts Open for Trading, has been periodically
amended to account for changes to the Short Term Options Series
Program,\7\ other tangentially related rules have not been
simultaneously updated to adequately reflect these changes.
Specifically, the Exchange now proposes to amend Exchange Rule 313,
Other Restrictions on Options Transactions and Exercises, to adopt
clarifying language and Rule 700, Exercise of Option Contracts, to
adopt clarifying language and to amend paragraph (c) to adopt
clarifying language and to also remove unnecessary rule text to align
to current Rule 404.
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\7\ See Interpretations and Policies .02 of Exchange Rule 404.
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The Exchange proposes to amend paragraph (a)(2) of Rule 313 to
adopt rule text that will provide additional detail for options that
expire on a business day and a non-business day. Currently, the first
sentence of paragraph (a)(2) provides that, ``[n]otwithstanding the
foregoing, during the ten (10) business days prior to the expiration
date of a given series of options, other than index options, no
restriction on exercise under this Rule may be in effect with respect
to that series of options.'' The Exchange now proposes to amend the
sentence to provide that, ``[n]otwithstanding the foregoing, during the
ten (10) business days prior to the expiration date of a given series
of options, which shall include such expiration date for an option
contract that expires on a business day, other than index options, no
restriction on exercise under this Rule may be in effect with respect
to that series of options.'' The Exchange also proposes to amend the
second sentence of paragraph (a)(2) of Rule 313. Currently, the second
sentence provides that, ``[w]ith respect to index options, restrictions
on exercise may be in effect until the opening of business on the last
business day before the expiration date.'' The Exchange now proposes to
amend the sentence to provide that, ``[w]ith respect to index options,
restrictions on exercise that may be in effect until the opening of
business on the business day of their expiration, or, in the case of an
option contract expiring on a day that is not a business day, on the
last business day before the expiration date.'' \8\
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\8\ The Exchange notes that the proposed rule text is
substantively identical to BOX Rule 3170(a)(2).
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The Exchange also proposes to amend paragraph (a)(3)(ii) of
Exchange Rule 313. Currently, paragraph (a)(3)(ii) provides that
``Exercises of expiring American-style, cash-settled index options
shall not be prohibited on the last business day prior to their
expiration.'' The Exchange now proposes to amend the sentence to
provide that, ``[e]xercises of expiring American-style, cash-settled
index options shall not be prohibited on the business day of their
expiration, or, in the case of an option contract expiring on a day
that is not a business day, on the last business day prior to their
expiration.'' \9\
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\9\ The Exchange notes that the proposed rule text is
substantively identical to BOX Exchange Rule 3170(a)(3)(ii).
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The Exchange proposes to amend Exchange Rule 700, Exercise of
Option Contracts, to adopt new rule text related to expiring options.
Currently, paragraph (b) provides that, ``[s]pecial procedures apply to
the exercise of equity options on the last business day before their
expiration (`expiring options').'' The Exchange now proposes to amend
the sentence to provide that, ``[s]pecial procedures apply to the
exercise of equity options on the business day of their expiration, or,
in the case of an option contract expiring on a day that is not a
business day, on the last business day before their expiration
(`expiring options').'' \10\
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\10\ The Exchange notes that the proposed rule text is
substantively identical to BOX Exchange Rule 9000(b).
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The Exchange also proposes to amend paragraph (c) of Rule 700.
Currently, paragraph (c) provides that, ``[o]ption holders have until
5:30 p.m. Eastern Time on the business day immediately prior to the
expiration date or, in the case of Short Term Option Series and
Quarterly Options Series, on the expiration date, to make a final
decision to exercise or not exercise an expiring option.'' The Exchange
now proposes to amend the sentence to provide that, ``[o]ption holders
have until 5:30 p.m. Eastern Time on the business day of their
expiration, or, in the case of an option contract expiring on a day
that is not a business day, on the business day immediately prior to
the expiration date, to make a final decision to exercise or not
exercise an expiring option.'' The Exchange also proposes to remove
unnecessary language from paragraph (c).\11\ Specifically, the Exchange
proposes to remove the text that provides, ``[r]especting options that
expire after February 1, 2015, option holders have until 5:30 p.m.
Eastern Time on the expiration date to make a final decision to
exercise or not exercise an expiring option. Members may set earlier
cutoff times for customers submitting exercise notices,'' as this text
is made obsolete by the proposed changes to the first sentence of
paragraph (c).
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\11\ The Exchange notes that the proposed rule text is
substantively identical to BOX Rule 9000(c).
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The Exchange proposes to amend paragraph (d)(iii) of Rule 700.
Currently, paragraph (d)(iii) provides that, ``Members have until 7:30
p.m. Eastern Time on the business day immediately prior to the
expiration date or, in the case of Short Term Option Series and
Quarterly Options Series, on the expiration date, to submit a Contrary
Exercise Advice to the Exchange if such Member employs an electronic
submission procedure with time stamp for the submission of exercise
instructions by option holders.'' The Exchange now proposes to amend
this sentence to remove unnecessary language, such that the proposed
sentence will provide, ``Members have until 7:30 p.m. Eastern Time to
submit a Contrary Exercise Advice to the Exchange if such Member
employs an electronic submission procedure with time stamp for the
submission of exercise instructions by option holders.''
The Exchange proposes to amend paragraph (h) of Rule 700.
Currently, paragraph (h) provides that, ``[i]n the event the Exchange
provides advance notice on or before 5:30 p.m. Eastern Time on the
business day immediately prior to the last business day before the
expiration date indicating that a modified time for the close of
trading in equity options on such last business day
[[Page 35259]]
before expiration will occur, then the deadline to make a final
decision to exercise or not exercise an expiring option shall be 1 hour
30 minutes following the time announced for the close of trading on
that day instead of the 5:30 p.m. Eastern Time deadline found in Rule
700(c).'' The Exchange now proposes to amend the sentence to provide
that, ``[i]n the event the Exchange provides advance notice on or
before 5:30 p.m. Eastern Time on the business day immediately prior to
the business day of expiration, or, in the case of an option contract
expiring on a day that is not a business day, the business day
immediately prior to the last business day before the expiration date
indicating that a modified time for the close of trading in equity
options on such business day or expiration, or, in the case of an
option contract expiring on a day that is not a business day, such last
business day before expiration will occur, then the deadline to make a
final decision to exercise or not exercise an expiring option shall be
1 hour 30 minutes following the time announced for the close of trading
on that day instead of the 5:30 p.m. Eastern Time deadline found in
Rule 700(c).'' \12\
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\12\ The Exchange notes that the proposed rule text is
substantively identical to BOX Rule 9000(h).
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The Exchange proposes to amend paragraph (i)(2) of Rule 700.
Currently, the last sentence of paragraph (i)(2) provides, ``[f]or
purposes of this subparagraph (i)(2), an `unusual circumstance'
includes, but is not limited to, a significant news announcement
concerning the underlying security of an option contract that is
scheduled to be released just after the close on the business day
immediately prior to expiration.'' The Exchange now proposes to amend
the sentence to provide that, ``[f]or purposes of this subparagraph
(i)(2), an `unusual circumstance' includes, but is not limited to, a
significant news announcement concerning the underlying security of an
option contract that is scheduled to be released just after the close
on the business day the option contract expires, or, in the case of an
option contract expiring on a day that is not a business day, the
business day immediately prior to expiration.'' \13\
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\13\ The Exchange notes that the proposed rule text is
substantively identical to BOX Rule 9000(i)(2).
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Finally, the Exchange proposes to amend paragraph (l)(8)(ii) of
Rule 700. Currently, paragraph (l)(8)(ii) provides, ``[e]xercises of
expiring American-style, cash-settled index options shall not be
prohibited on the last business day prior to their expiration.'' The
Exchange now proposes to amend this sentence to provide, ``[e]xercises
of expiring American-style, cash-settled index options shall not be
prohibited on the business day of their expiration, or, in the case of
option contracts expiring on a day that is not a business day, on the
last business day prior to their expiration.'' \14\
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\14\ The Exchange notes that the proposed rule text is
substantively identical to BOX Rule 9000(l)(8)(ii).
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2. Statutory Basis
The Exchange believes the proposed rule changes are consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\15\ Specifically, the Exchange believes the proposed rule changes
are consistent with Section 6(b)(5) \16\ requirements that the rules of
an exchange be 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 mechanism 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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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
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The Exchange believes its proposal to amend Rule 313 promotes just
and equitable principles of trade and perfects the mechanism of a free
and open market and a national market system, and, in general, protects
investors and the public interest as the proposal provides additional
detail and clarity to the Exchange's rules. Clear and concise rules
benefit investors and the public interest by clearly describing
Exchange processes which removes the potential for confusion.
The Exchange believes that its proposal to amend Rule 700 promotes
just and equitable principles of trade, fosters cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, removes impediments to and perfects the mechanism of a
free and open market and a national market system, and, in general
protects investors and the public interest as the proposal provides
additional detail and clarity to the Exchange's rules. Additionally,
the proposed changes to paragraph (c) harmonizes the Exchange's
exercise cut-off time process to that of other options exchanges \17\
providing consistency within the industry which benefits investors and
the public interest. The Exchange believes that keeping its rules
consistent with those of other option exchanges will protect all
participants in the market by eliminating confusion. Finally, the
proposed changes do not permit unfair discrimination between Members
\18\ as the rules of the Exchange apply to all Members equally.
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\17\ See, e.g., BOX Exchange Rule 9000, Nasdaq ISE Options 6B,
Section 1, and NYSE Arca Rule 6.24-O(c).
\18\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rules changes would not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule changes
are not intended to address a competitive issue but rather would
calrify the interaction of the Exchange's rules with one another and
harmonize certain rule text regarding expiring options to that of other
option exchanges. The proposal is not designed to address any aspect of
competition, either between the Exchange and its competitors, or among
market participants. Therefore, the Exchange does not believe the
proposed rule change would impose a burden on competition.
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 \19\ and Rule 19b-4(f)(6) \20\
thereunder.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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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[[Page 35260]]
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#2b595e474e06484446464e455f586b584e48054c445d"><span class="__cf_email__" data-cfemail="87f5f2ebe2aae4e8eaeae2e9f3f4c7f4e2e4a9e0e8f1">[email protected]</span></a>. Please include
file number SR-MIAX-2024-21 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-2024-21. 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-2024-21 and should be
submitted on or before May 22, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-09334 Filed 4-30-24; 8:45 am]
BILLING CODE 8011-01-P
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