Notice2024-29472
Self-Regulatory Organizations; MIAX Sapphire, LLC; Order Declaring Effective a Minor Rule Violation Plan
Primary source
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Published
December 16, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 241 (Monday, December 16, 2024)</title>
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[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Notices]
[Pages 101678-101679]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-29472]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 101869; File No. 4-844]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Order
Declaring Effective a Minor Rule Violation Plan
December 10, 2024.
On October 1, 2024, MIAX Sapphire, LLC (``Sapphire'' or the
``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 (the ``Act''),\1\ and Rule 19d-1(c)(2) thereunder.\2\ The
proposed MRVP was published for comment on October 15, 2024.\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. 101283 (October 8,
2024), 89 FR 83067 (``Notice'').
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The Exchange's MRVP specifies the rule violations that will be
included in the Plan and will have sanctions not exceeding $2,500. Any
violations 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 minor rule violations and requested that it be relieved
of the prompt reporting requirements regarding such violations,
provided it gives notice of such 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, 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 violation 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 allegedly violated, the act or omission
constituting each such violation, the fine imposed for each violation,
and the date by which such determination becomes final or by which such
fine must be paid or contested. If the person against whom the fine is
imposed pays the fine, such payment shall be deemed to be a waiver of
such 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 become a
disciplinary proceeding.\9\
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\7\ The Exchange received its grant of registration on July 15,
2024, which included approving the rules that govern the Exchange.
See Securities Exchange Act Release No. 100539 (July 15, 2024), 89
FR 58848 (July 19, 2024) (File No. 10-240). 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); Rule 1904 (Failure to Timely File
Amendments to Form U4, Form U5, and Form BD); and Rules 1701-1713
(Failure to Comply with the Consolidated Audit Trail Compliance Rule
Under Chapter XVII). According to the Exchange, the Conduct and
Decorum Policies under Rule 1014(d)(1) are excluded from the
proposed MRVP. See Notice, supra note 3, at 83067.
\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.
\9\ See Notice, supra note 3, at 83067.
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According to the Exchange, upon the Commission's declaration of
effectiveness of the MRVP, the Exchange will provide to the Commission
a quarterly report for any actions taken on minor rule violations under
the MRVP.\10\ 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 instances the violation
occurred, and the sanction imposed.\11\
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\10\ See id.
\11\ See id.
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The Exchange requested that the Commission deem any changes to the
rules applicable to the Exchange's MRVP to be deemed modifications to
the Exchange's MRVP.
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,\12\ because the MRVP will permit the Exchange to carry
out its oversight and enforcement
[[Page 101679]]
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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\12\ 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(d). Violation of an SRO's rules, as well as Commission rules, is a
serious matter. However, Exchange Rule 1014(d) 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,\13\ that the proposed MRVP for MIAX Sapphire, LLC, File No. 4-844
be, and hereby is, declared effective.
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\13\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(44).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29472 Filed 12-13-24; 8:45 am]
BILLING CODE 8011-01-P
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