Notice2025-06115
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Exchange Rule 2005, Error Accounts
Primary source
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Published
April 10, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 68 (Thursday, April 10, 2025)</title>
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[Federal Register Volume 90, Number 68 (Thursday, April 10, 2025)]
[Notices]
[Pages 15376-15379]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-06115]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102772; File No. SR-SAPPHIRE-2025-15]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
Exchange Rule 2005, Error Accounts
April 4, 2025.
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 April 1, 2025, MIAX Sapphire, LLC (``MIAX Sapphire'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II
[[Page 15377]]
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 proposes to amend proposes to (i) amend Exchange Rule
100 to make a minor non-substantive correction to the rule to improve
the clarity of the rule text; and (ii) adopt Exchange Rule 2005 to
establish rules related to the use of Floor Broker \3\ error accounts.
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\3\ A Floor Broker is an individual who is registered with the
Exchange for the purpose, while on the Trading Floor, of accepting
and handling options orders. See Exchange Rule 2015. The term
``Trading Floor'' or ``Floor'' means the physical trading floor of
the Exchange located in Miami, Florida. The Trading Floor shall
consist of one ``Crowd Area'' or ``Pit'' where Floor Participants
will be located and option contracts will be traded. The Crowd Area
or Pit shall be marked with specific visible boundaries on the
Trading Floor, as determined by the Exchange. A Floor Broker must
represent all orders in an ``open outcry'' fashion in the Crowd
Area. See Exchange Rule 100.
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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-sapphire/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings</a>, at the Exchange'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 the definition of ``Participant'' in
Exchange Rule 100 to replace the phrase, ``that includes a Floor
Participant'' with the phrase, ``and includes a Floor Participant'' to
provide clarity in the rule text. As amended, the rule will provide
that, ``[t]he term `Participant' means a firm, or organization that is
registered with the Exchange pursuant to Chapter II of [MIAX Sapphire]
Rules for purposes of participating in trading on a facility of the
Exchange and includes a Floor Participant.''
The Exchange also proposes to adopt Exchange Rule 2005 to establish
rules related to the use of Floor Broker error accounts. First, the
Exchange proposes that each Participant \4\ who conducts a business as
a Floor Broker on the Exchange and who is not self-clearing must
establish and maintain an account with a Clearing Member \5\ of the
Exchange, for the sole purpose of carrying positions resulting from
bona fide errors made in the course of its floor brokerage business.\6\
Further, with respect to Floor Brokers only, such an account for option
transactions must be maintained with an entity that is also a member of
The Options Clearing Corporation.
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\4\ The term ``Participant'' means a firm, or organization that
is registered with the Exchange pursuant to Chapter II of MIAX
Sapphire Rules for purposes of participating in trading on a
facility of the Exchange that includes a Floor Participant. See
Exchange Rule 100. (The Exchange notes that it is revising a portion
of this definition with this filing.)
\5\ The term ``Clearing Member'' means a Member that has been
admitted to membership in the Clearing Corporation pursuant to the
provisions of the Rules of the Clearing Corporation. See Exchange
Rule 100.
\6\ A ``Bona fide error'' is defined as (i) the inaccurate
conveyance or execution of any term of an order including, but not
limited to, price, number of shares or other unit of trading;
identification of the security; identification of the account for
which securities are purchased or sold; lost or otherwise misplaced
order tickets; short sales that were instead sold long or vice
versa; or the execution of an order on the wrong side of a market;
(ii) the unauthorized or unintended purchase, sale, or allocation of
securities, or the failure to follow specific client instructions;
(iii) the incorrect entry of data into relevant systems, including
reliance on incorrect cash positions, withdrawals, or securities
positions reflected in an account; or (iv) a delay, outage, or
failure of a communication system used to transmit market data
prices or to facilitate the delivery of an order. See Securities
Exchange Act Release No. 55884 (June 8, 2007), 72 FR 32926 (June 14,
2007) (Order Exempting Certain Error Correction Transactions from
Rule 611 of Regulation NMS under the Securities Exchange Act of
1934).
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In practice, a Floor Broker will remedy a bona fide error by
entering a subsequent trade on behalf of the customer on the correct
terms of the original order.\7\ These types of transactions are
transactions which broker-dealers place to remedy the execution of
customer orders that have been placed in error or mishandled due to an
error involving any term of an order, including but not limited to (for
example), price, number of contracts, identification of security, or
execution of a transaction on the wrong side of the market.
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\7\ The erroneous trade is moved to the Floor Broker's error
account for disposition.
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Next, the Exchange proposes that each Participant which conducts
business as a Floor Broker must make available to the Exchange, upon
request, accurate and complete records of all trades cleared in such
Participant's error account. These records must include the following
audit trail elements: (1) name or identifying symbol of the security;
(2) number of shares or quantity of security; (3) transaction price;
(4) time of trade execution; (5) executing Floor Broker badge number,
or alpha symbol as may be used from time to time, in regard to its side
of the contract; (6) executing Floor Broker badge number, or alpha
symbol as may be used from time to time, of the contra side to the
contract; (7) clearing firm number, or alpha symbol as may be used from
time to time, in regard to its side of the contract; (8) clearing firm
number, or alpha symbol as may be used from time to time, in regard to
the contra side of the contract; (9) designation of whether the account
for which the order was executed was that of a Participant; (10) the
nature and amount of the error; (11) the Participant that cleared the
error trade on the Participant's behalf; (12) an explanation of the
means by which the Participant resolved the error; (13) the aggregate
amount of liability that the Participant incurred, and: (i) had
outstanding as of the time each such error trade entry was recorded or
(ii) had cleared by other Participant. The Exchange believes that it is
important for the Participant to provide the above information because
it will aid the Exchange in the surveillance of error account activity.
The Exchange notes that the proposed rule is substantially similar to
rules at other options exchanges with open outcry trading floors.\8\
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\8\ See BOX Exchange Rule 3030 and NYSE Arca Exchange Rule
11.17.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of Section
6(b)(5) of the Act \10\ 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 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. Additionally, the
[[Page 15378]]
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers, because the rule applies to all Participants
equally.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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Specifically, the Exchange believes the proposed amendment to the
definition of Participant will remove impediments to and perfect the
mechanism of a free and open market and a national market system
because it would provide clarity in the Exchange's rule text. The
proposed change provides additional clarity within the rule text,
making the Exchange's rules easier to understand. The proposed rule
change would, therefore, help prevent any potential investor confusion
and thus protect investors and the public interest. The Exchange also
believes that the proposed rule change is non-discriminatory as the
rules of the Exchange apply equally to all Members.
The Exchange believes the proposal allows Floor Brokers the
flexibility to execute orders that correct bona fide errors out of the
Floor Broker's error account, ensuring that customer orders (which were
previously entered in error) are executed, thereby protecting investors
and the public interest by ensuring that customer orders are executed
properly. Further, the Exchange believes the proposed rule promotes
just and equitable principles of trade by ensuring customer orders are
not harmed for order entry errors. The Exchange does not believe the
proposed rule is unfairly discriminatory toward customers, issuers, or
brokers because the proposed rule simply sets forth the process for
Floor Brokers to correct certain bona fide errors. As discussed above,
the Exchange believes that the proposed change is appropriate as it is
similar to rules in place at other options exchanges with open outcry
trading floors.\12\ The Exchange also believes that this proposed rule
change is non-discriminatory as it would apply equally to all Floor
Brokers.
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\12\ See supra note 8.
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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 not necessary or appropriate in
furtherance of the purposes of the Act. Specifically, the Exchange does
not believe that the proposed rule change will impose any burden on
intra-market competition because the proposed change to Exchange Rule
100 is non-substantive and only provides additional clarity to the
Exchange's rule text. The Exchange does not believe that proposed rule
2005 will impose any burden on intra-market competition because the
proposed rule will be applicable to all Floor Brokers. In addition, the
Exchange does not believe that the proposed change will impose any
burden on inter-market competition because the proposed change to Rule
100 is to provide clarity in the Exchange's rule and is not competitive
in nature and proposed Rule 2005 simply provides a mechanism for
correcting errors. Further, the Exchange believes that proposed Rule
2005 does not impose a burden on competition because it simply sets
forth the process for Floor Brokers to correct bona fide errors on the
Trading Floor.
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) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the 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.
The Exchange has satisfied this requirement.
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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 change 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#98eaedf4fdb5fbf7f5f5fdf6ecebd8ebfdfbb6fff7ee"><span class="__cf_email__" data-cfemail="fc8e899099d19f9391919992888fbc8f999fd29b938a">[email protected]</span></a>. Please include
file number SR-SAPPHIRE-2025-15 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-SAPPHIRE-2025-15. 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-SAPPHIRE-2025-15 and should
be submitted on or before May 1, 2025.
[[Page 15379]]
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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Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-06115 Filed 4-9-25; 8:45 am]
BILLING CODE 8011-01-P
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