Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 4011 

41 15 U.S.C. 78s(b)(2). 

42 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Program which provides equity-like 

consideration in exchange for market making or the 

provision of liquidity, order flow or volume is open 

to market participants generally. All MIAX 

Members may participate subject to their 

satisfaction of eligibility requirements. To be 

designated as a participant Member, an applicant 

must: (i) Be a Member in good standing of MIAX; 

(ii) qualify as an ‘‘accredited investor’’ as such term 

is defined in Regulation D of the Securities Act of 

1933; and (iii) have executed all required 

documentation for Program participation. Members 

may elect to participate in either or both of the 

options. If either the C-Unit or the D-Unit option is 

oversubscribed, the units in the oversubscribed 

option will be allocated on a pro-rata basis that may 

result in a fractional allocation. 

4See Ninth Article (b)(i)(B), Amended and 

Restated Certificate of Incorporation of Miami 

International Holdings, Inc., dated August 31, 2012 

(providing that no Exchange Member, either alone 

or together with its Related Persons, may own, 

directly or indirectly, of record or beneficially, 

shares constituting more than twenty percent (20%) 

of any class of capital stock of the Corporation). 

Any purported transfer of shares or ownership of 

shares in violation of the ownership cap by a 

Member would be subject to the limitations of the 

Certificate of Incorporation, including the nonrecognition of voting rights of shares in excess of 

the cap and a redemption right by MIH for excess 

shares. See Ninth Article (d) and (e), Amended and 

Restated Certificate of Incorporation of Miami 

International Holdings, Inc., dated August 31, 2012. 

potential for investor confusion as to 

when an opening cross occurs, how the 

price for the opening cross is 

determined, and how orders involved in 

the opening cross are handled. The 

Commission also believes that the 

proposed opening cross process is 

reasonably designed to open trading in 

a fair and orderly manner, which is 

consistent with the protection of 

investors and the public interest. 

Additionally, to extent the proposal 

results in additional liquidity during 

NOM’s opening at the beginning of the 

trading day or following a trading halt, 

and a more orderly transition to regular 

trading, it should further promote the 

goals of Section 6(b)(5) of the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,41 that the 

proposed rule change (SR–NASDAQ– 

2014–116) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01249 Filed 1–23–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74095; File No. SR–MIAX– 

2015–02] 

Self-Regulatory Organizations: Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Implement an Equity Rights 

Program 

January 20, 2015. 

Pursuant to the provisions of 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 January 6, 2015, 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 prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

implement an equity rights program. 

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 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 implement 

an equity rights program (‘‘Program’’) 

pursuant to which units representing 

the right to acquire equity in the 

Exchange’s parent holding company, 

Miami International Holdings, Inc. 

(‘‘MIH’’) would be issued to a 

participating Member in exchange for 

payment of an initial purchase price or 

the prepayment of certain transaction 

fees and the achievement of certain 

liquidity volume thresholds on the 

Exchange over a 29-month period. The 

purpose of the Program is to promote 

the long-term interests of MIAX by 

providing incentives designed to 

encourage future MIH owners and 

MIAX market participants to contribute 

to the growth and success of MIAX, by 

being active liquidity providers and 

takers to provide enhanced levels of 

trading volume to MIAX’s market, 

through an opportunity to increase their 

proprietary interests in MIAX’s 

enterprise value. 

Members that participate in the 

Program will have two options to 

choose from: (i) an offering of C-Units; 

and/or (ii) an offering of D-Units.3

C-Units Option 

Members that participate in the CUnit option of the Program will be 

issued for each unit (i) 52,021 shares of 

MIH common stock and (ii) warrants to 

purchase 1,752,670 shares of common 

stock of MIH in exchange for such 

participant Member’s initial cash capital 

contribution of $312,125, and with such 

warrants being exercisable upon the 

achievement by the participating 

Member of certain volume thresholds on 

the Exchange during a 29-month 

measurement period commencing 

February 1, 2015. A total of 20 C-Units 

will be offered. The total equity 

ownership of MIH common stock held 

by any one participant Member will be 

subject to a cap of 19.9%.4

The warrants will vest in six (6) 

tranches: (i) One (1) tranche, upon 

initial investment; and (ii) five (5) 

tranches during a measurement period 

of months 1—29 of the Program. In 

addition, the participant Members may 

earn or lose the right to exercise 

warrants on a pro-rata basis based upon 

meeting volume commitments during 

the measurement periods, as detailed 

below. 

Upon the initial investment, the 

participant Member would receive 

common shares equal to 52,021 shares 

of the common stock and 10% of the 

warrants will vest. A participant 

Member will be eligible to earn [sic] the 

remaining warrants during 

measurement periods provided that the 

participant has achieved a specified 

percentage of the total national average 

daily volume of options contracts 

reported to The Options Clearing 

Corporation (‘‘OCC’’) (‘‘OCC ADV’’) on 


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5 If an options class is not listed on MIAX, then 

the trading volume in that options class will be 

omitted from the calculation of % OCC ADV. 

Priority Customer-to-Priority Customer Crossing 

transactions where no fees are paid to the Exchange, 

special strategies, and contracts as to which a 

Member acts solely as clearing agent will not be 

counted in the number of option contracts executed 

on the Exchange by any Member. (Incidental 

Priority Customer-to-Priority Customer transactions, 

that are not crossing transactions, will be counted 

in the number of options contracts executed on the 

Exchange by a Member.) Special strategies for the 

purpose of calculating trading volume include: (i) 

Dividend strategy; (ii) merger strategy; (iii) short 

stock interest strategy; (iv) reversal and conversion 

strategies; (v) jelly roll strategy; and (vi) similar 

strategies offered by an options exchange that are 

subject to a fee cap. Trading in special strategies 

currently is not available on MIAX. Special 

strategies will be omitted from the calculation of % 

OCC ADV to the extent it is possible to identify 

such transactions. Calculation of % OCC ADV will 

be discounted by 5% of ADV for complex order 

functionality not yet established on the Exchange 

until such time that functionality is available on 

MIAX. 

6The first measurement period will begin on 

February 1, 2015 and end June 30, 2015. Therefore, 

February 1, 2015 through June 30, 2015 will count 

as months 1–5 for purposes of the measurement 

period. 

7The Exchange notes that if a participant Member 

has not satisfied the volume commitment for 

measurement period 4, the participant Member 

would only have one remaining measurement 

period immediately following to vest warrants from 

measurement period 4 versus up to two 

measurement periods for measurement periods 1– 

3. 

8The first measurement period will begin on 

February 1, 2015 and end June 30, 2015. Therefore, 

February 1, 2015 through June 30, 2015 will count 

as months 1–5 for purposes of the measurement 

period. 

9The Exchange notes that if a participant Member 

has not satisfied the volume commitment for 

measurement period 4, the participant Member 

would only have one remaining measurement 

period immediately following to vest warrants from 

measurement period 4 versus up to two 

measurement periods for measurement periods 1– 

3. 

MIAX of all option classes listed on 

MIAX.5

The remaining five (5) tranches, of 

90% of the warrants, will vest during 

the following measurement periods: (i) 

3.76% of the warrants resulting from 

months 1–5, with a volume commitment 

of 0.084% of OCC ADV on MIAX per CUnit; 6 (ii) 16.82% of the warrants 

resulting from months 6–11, with a 

volume commitment of 0.313% of OCC 

ADV on MIAX per C-Unit; (iii) 20.15% 

of the warrants resulting from months 

12–17, with a volume commitment of 

0.375% of OCC ADV on MIAX per CUnit; (iv) 22.41% of the warrants 

resulting from months 18–23, with a 

volume commitment of 0.417% of OCC 

ADV on MIAX per C-Unit; and (v) 

26.86% of the warrants resulting from 

months 24–29, with a volume 

commitment of 0.5% of OCC ADV on 

MIAX per C-Unit. If a participant 

Member exceeds 100% of the volume 

commitment during a tranche’s 

measurement period, the Member is 

able to earn, on a pro-rata basis, 

warrants not earned by other participant 

Members. If a participant Member 

reaches 70–99% of the volume 

commitment during a tranche’s 

measurement period, the Member will 

earn [sic] a reduced amount of warrants 

on a pro-rata basis applicable to such 

measurement period. If a participant 

Member fails to reach a minimum of 

70% of the volume commitment during 

a tranche’s measurement period, the 

Member will lose all right to that 

tranche of warrants. Notwithstanding, in 

the event a participant Member has not 

satisfied the volume commitment for 

any one measurement period (other than 

measurement period 5), the participant 

Member will have an opportunity to 

vest those warrants if such participant 

Member applies a portion of the 

Members performance from up to two 

measurement periods immediately 

following to the prior measurement 

period to ensure a minimum of 70% of 

the volume commitment in prior period 

and in addition has satisfied the volume 

commitment for the measurement 

periods immediately following.7

D-Units Option 

Members that participate in the DUnit option of the Program will be 

issued for each unit warrants to 

purchase 1,353,518 shares of common 

stock of MIH in exchange for the 

prepayment of Exchange fees in the 

amount of $250,000 for the 29-month 

period commencing February 1, 2015, 

and with such warrants being 

exercisable upon the achievement by 

the participating Member of certain 

volume thresholds on the Exchange 

during a 29-month measurement period 

commencing February 1, 2015. A total 

of 20 D-Units will be offered. The total 

equity ownership of MIH common stock 

held by any one participant Member 

will be subject to a cap of 19.9%. 

The warrants will vest in five (5) 

tranches during the following 

measurement periods: (i) 4.18% of the 

warrants resulting from months 1–5, 

with a volume commitment of 0.084% 

of OCC ADV on MIAX per D-Unit; 8 (ii) 

18.69% of the warrants resulting from 

months 6–11, with a volume 

commitment of 0.313% of OCC ADV on 

MIAX per D-Unit; (iii) 22.39% of the 

warrants resulting from months 12–17, 

with a volume commitment of 0.375% 

of OCC ADV on MIAX per D-Unit; (iv) 

24.90% of the warrants resulting from 

months 18–23, with a volume 

commitment of 0.417% of OCC ADV on 

MIAX per D-Unit; and (v) 29.84% of the 

warrants resulting from months 24–29, 

with a volume commitment of 0.5% of 

OCC ADV on MIAX per D-Unit. If a 

participant Member exceeds 100% of 

the volume commitment during any one 

tranche’s measurement period, the 

Member is able to earn, on a pro-rata 

basis, warrants not earned by other 

participant Members. If a participant 

Member reaches 70–99% of the volume 

commitment during any one tranche’s 

measurement period, the Member will 

earn [sic] a reduced amount of warrants 

on a pro-rata basis applicable to such 

measurement period. If a participant 

Member fails to reach a minimum of 

70% of the volume commitment during 

the measurement period, the Member 

will lose all right to that tranche of 

warrants. Notwithstanding, in the event 

a participant Member has not satisfied 

the volume commitment for any one 

measurement period (other than 

measurement period 5), the participant 

Member will have an opportunity to 

vest those warrants if such participant 

Member applies a portion of the 

Member’s performance from up to two 

measurement periods immediately 

following to the prior measurement 

period to ensure a minimum of 70% of 

the volume commitment in prior period 

and in addition has satisfied the volume 

commitment for the measurement 

periods immediately following.9

Once a participant Member has 

prepaid Exchange fees for the initial 29- 

month period, each month the 

participant Member may execute 

contracts and accumulate transaction 

fees based on the prevailing MIAX 

Options Fee Schedule in effect at the 

time. Once a D-Unit participant Member 

has executed contract volume whereby 

the total accumulated transaction fees 

equal the prepaid amount, all 

subsequently executed contracts will be 

billed and collected at the appropriate 

rate as defined in the MIAX Options Fee 

Schedule. 

Provisions Applicable to Both C-Units 

and D-Units 

Each participant Member will have a 

standard piggyback registration right to 

include the common shares and the 

common shares issuable upon exercise 

of the warrants should MIH file a 

Registration Statement under the 

Securities Act of 1933. Each participant 

Member will also have the right to 

participate pro rata in all future 

offerings of MIH securities for so long as 

the participant Member holds at least 

51% of the common shares purchased 

by the participating Member directly or 

issuable upon the exercise of warrants 

included in at least one D-Unit. MIH 


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10 ‘Fair market value’ means the value of the MIH 

common stock as determined by a nationallyrecognized firm of independent certified public 

accountants to be jointly selected by the MIH and 

the participant Member, if such common stock is 

not publicly traded. 

11The purpose of this criterion relates to the 

ability of MIH to sell shares of common stock 

pursuant to an exemption from registration under 

the Securities Act of 1933. The definition of 

‘‘accredited investor’’ under Rule 501(a)(1) of the 

Securities Act of 1933 includes any broker or dealer 

registered pursuant to Section 15 of the Act. MIAX 

Rule 200(b) requires a Member to be registered as 

a broker or dealer pursuant to Section 15 of the Act, 

therefore all MIAX Members will satisfy this 

criterion. 

12See, e.g., Securities Exchange Act Release Nos. 

62358 (June 22, 2010), 75 FR 37861 (June 30, 2010) 

(SR–NSX–2010–06); 64742 (June 24, 2011), 76 FR 

38436 (June 30, 2011) (SR–NYSEAmex–2011–018); 

69200 (March 21, 2013), 78 FR 18657 (March 27, 

2013) (SR–CBOE–2013–31). 

13See Securities Exchange Act Release No. 70498 

(September 25, 2013), 78 FR 60348 (October 1, 

2013) (SR–MIAX–2013–43). 

14 15 U.S.C. 78f(b). 

15 15 U.S.C. 78f(b)(5). 

16 15 U.S.C. 78f(b)(5). 

17 15 U.S.C. 78f(b)(4). 

will have the right of first refusal to 

purchase any common shares or warrant 

shares that a participant Member 

decides to transfer or sell. Other 

participant Members will have the 

secondary right of first refusal to 

purchase any common shares or warrant 

shares that a participant Member 

decides to transfer or sell. 

In addition, beginning one (1) year 

after the last month of the final 

measurement period, for a period of 90 

days, the participant Member will have 

a right to sell the shares back to MIH at 

a price per share equal to a fixed 

percentage of fair market value 10 of the 

common stock. The right to sell the 

shares back will reoccur on an annual 

basis and last for a 90-day period. Years 

1 and 2 after the final measurement 

period, the participant Member may sell 

back 10% of the common shares vested 

at a price equal to 50% of the fair 

market value. Year 3 after the final 

measurement period, the participant 

Member may sell back 30% of the 

common shares vested at a price equal 

to 60% of the fair market value. Year 4 

after the final measurement period, the 

participant Member may sell back 60% 

of the common shares vested at a price 

equal to 70% of the fair market value. 

Year 5 after the final measurement 

period, the participant Member may sell 

back 90% of the common shares vested 

at a price equal to 80% of the fair 

market value. Year 6 after the final 

measurement period, the participant 

Member may sell back 100% of the 

common shares vested at a price equal 

to 90% of the fair market value. 

When a participating Member 

acquires a certain number of units, the 

Member can appoint one director to the 

MIH Board and/or the MIAX Board. The 

Exchange notes that the number of nonindustry directors on the MIAX Board, 

including at least one independent 

director, must equal or exceed the 

number of industry directors and 

Member representatives, and that 

additional new non-industry directors 

and Member representative directors 

will need to be added in order to 

maintain this status. The Exchange also 

notes that any directors that may be 

selected by a participating Member 

would not be counted towards the 20% 

Member representative requirement on 

the MIAX Board. In addition, the 

Exchange notes that a Member is only 

entitled to a new seat if they are not 

currently represented on the MIAX 

board. 

All applicants will be subject to the 

same eligibility and designation criteria, 

and all participant Members will 

participate in the Program on the same 

terms, conditions and restrictions. To be 

designated as a participant Member, an 

applicant must: (i) Be a Member in good 

standing of MIAX; (ii) qualify as an 

‘‘accredited investor’’ as such term is 

defined in Regulation D of the Securities 

Act of 1933; 11 and (iii) have executed 

all required documentation for Program 

participation. Participant Members must 

have executed the definitive 

documentation, satisfied the eligibility 

criteria required of Program participants 

enumerated above, and tendered the 

minimum cash investment or 

prepayment of fees by January 27, 2015, 

with a closing to occur on January 30, 

2015. 

As discussed above, the purpose of 

the Program is to encourage Members to 

direct greater trade volume to MIAX to 

enhance trading volume in MIAX’s 

market. Increased volume will provide 

for greater liquidity and enhanced price 

discovery, which benefits all market 

participants. Other exchanges currently 

engage in the practice of incentivizing 

increased order flow in order to attract 

liquidity providers through equity 

sharing arrangements.12 In addition, the 

Exchange previously adopted a 

substantially similar program to 

incentivize increased order flow in 

order to attract liquidity providers 

through an equity sharing 

arrangement.13 The Program similarly 

intends to attract order flow, which will 

increase liquidity, thereby providing 

greater trading opportunities and tighter 

spreads for other market participants 

and causing a corresponding increase in 

order flow from these other market 

participants. The Program will similarly 

reward the liquidity providers that 

provide this additional volume with a 

potential proprietary interest in MIAX. 

The specific volume thresholds of the 

Program’s measurement periods were 

set based upon business determinations 

and analysis of current volume levels. 

The volume thresholds are intended to 

incentivize firms to increase the number 

of orders that are sent to MIAX to 

achieve the next threshold. Increasing 

the number of orders that are sent to 

MIAX will in turn provide tighter and 

more liquid markets, and therefore 

attract more business as well. 

MIAX will initiate the measurement 

period on February 1, 2015. The 

Exchange will notify Members of the 

implementation of the Program and the 

dates of the enrollment period by 

Regulatory Circular, and will post a 

copy of this rule filing on its Web site. 

Any MIAX Member that is interested in 

participating in the Program may 

contact MIAX for more information and 

legal documentation and will be 

required to enter into a nondisclosure 

agreement regarding this additional 

Program information. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 

Section 6(b) of the Act 14 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act 15 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 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. Additionally, the 

Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) of the Act 16 requirement that the 

rules of an exchange not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange also believes the 

proposed rule change is consistent with 

Section 6(b)(4) of the Act,17 which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and other persons using its 

facilities. 

In particular, the proposed rule 

change is equitable and not unfairly 

discriminatory, because all Members 

may elect to participate (or elect to not 


emcdonald on DSK67QTVN1PROD with NOTICES
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18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f). 

participate) in the Program and earn 

units on the same terms and conditions, 

assuming they satisfy the same 

eligibility criteria as described above. 

The eligibility criteria are objective; 

thus, all Members have the ability to 

satisfy them. The Board also has 

authorized MIAX to offer common 

shares in MIH to any Member that 

requests designation to participate in 

the Program and otherwise satisfies the 

eligibility criteria to ensure that all 

Members will have the opportunity to 

own common shares and thus 

participate in the Program if they so 

choose. In addition, participant 

Members will earn [sic] warrants on a 

pro-rata basis upon meeting fixed 

volume threshold amounts during the 

measurement periods that will apply to 

all participant Members. 

The Exchange believes that the 

methodology used to calculate the 

volume thresholds is fair, reasonable 

and not unfairly discriminatory because 

it is based on objective criteria that are 

designed to omit from the calculation 

functionality that is not available on the 

Exchange and types of transactions that 

are subject to little or no transaction 

fees. Specifically, the Exchange believes 

excluding Priority Customer-to-Priority 

Customer Crossing transactions where 

no fees are paid to the Exchange, special 

strategies, and contracts as to which a 

Member acts solely as clearing agent 

from the number of option contracts 

executed on the Exchange by any 

Member is reasonable and not unfairly 

discriminatory because participating 

Members could otherwise game the 

volume thresholds by executing excess 

volumes in these types of transactions 

in which either no transaction fees are 

charged on the Exchange, or the 

transaction is subject to a fee cap. The 

Program is designed to reward 

participating Members for bringing their 

orders and quotes to the Exchange to be 

executed on the Exchange. The 

Exchange believes it is appropriate to 

exclude special strategies from the OCC 

volume calculation since those 

transactions are not executed on the 

Exchange. The Exchange believes that 

omitting clearing only transactions from 

the calculation to be fair and reasonable 

because the fact that a Member is 

clearing a trade is coincidental to the 

choice of where to execute that trade. 

And, because clearing only transactions 

are not executed on the MIAX, they 

don’t fall within the intended 

transactions that qualify for the 

Program. In addition, if the Exchange 

were to reward the party clearing a 

trade, the Exchange would possibly be 

double counting that trade—once for the 

executing party and once for the 

clearing party. Furthermore, the 

Exchange believes that counting 

incidental Priority Customer-to-Priority 

Customer transactions, which are not 

crossing transactions, in the number of 

options contracts executed on the 

Exchange by a Member is fair and 

reasonable because in these situations 

the Priority Customer is not necessarily 

choosing to execute against another 

Priority Customer in order to avoid a 

transaction fee. 

The Exchange believes the Program is 

equitable and reasonable because an 

increase in volume and liquidity would 

benefit all market participants by 

providing more trading opportunities 

and tighter spreads, even to those 

market participants that do not 

participate in the Program. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Act because, as described above, the 

Program is designed to bring greater 

volume and liquidity to the Exchange, 

which will benefit all market 

participants by providing tighter 

quoting and better prices, all of which 

perfects the mechanism for a free and 

open market and national market 

system. 

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. The 

Exchange believes that the proposed 

rule change will improve competition 

by providing market participants with 

another option when determining where 

to execute orders and post liquidity. 

The Exchange believes that the 

proposed change would increase both 

intermarket and intramarket 

competition by incenting participant 

Members to direct their orders to the 

Exchange, which will enhance the 

quality of quoting and increase the 

volume of contracts traded here. To the 

extent that there is an additional 

competitive burden on non-participant 

Members, the Exchange believes that 

this is appropriate because the Program 

should incent Members to direct 

additional order flow to the Exchange 

and thus provide additional liquidity 

that enhances the quality of its markets 

and increases the volume of contracts 

traded here. To the extent that this 

purpose is achieved, all of the 

Exchange’s market participants should 

benefit from the improved market 

liquidity. Enhanced market quality and 

increased transaction volume that 

results from the anticipated increase in 

order flow directed to the Exchange will 

benefit all market participants and 

improve competition on the Exchange. 

Given the robust competition for 

volume among options markets, many of 

which offer the same products, 

implementing a program to attract order 

flow like the one being proposed in this 

filing is consistent with the abovementioned goals of the Act. This is 

especially true for the smaller options 

markets, such as MIAX, which is 

competing for volume with much larger 

exchanges that dominate the options 

trading industry. As a newer exchange, 

MIAX has a nominal percentage of the 

average daily trading volume in options, 

so it is unlikely that the Program could 

cause any competitive harm to the 

options market or to market 

participants. Rather, the Program is a 

modest attempt by a small options 

market to attract order volume away 

from larger competitors by adopting an 

innovative pricing strategy, as 

evidenced by the volume thresholds of 

the Program that represent fractions of 

1% of OCC ADV. The Exchange notes 

that if the Program resulted in a modest 

percentage increase in the average daily 

trading volume in options executing on 

MIAX, while such percentage would 

represent a large volume increase for 

MIAX, it would represent a minimal 

reduction in volume of its larger 

competitors in the industry. The 

Exchange believes that the Program will 

help further competition, because 

market participants will have yet 

another additional option in 

determining where to execute orders 

and post liquidity if they factor the 

benefits of MIAX equity participation 

into the determination. 

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 foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 18 and paragraph (f) of Rule 

19b–4 thereunder.19 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 


emcdonald on DSK67QTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 4015 

20 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Amendment No. 1 amended the proposed rule 

change in the following ways: (1) Specified that the 

floating rate high yield corporate bonds in which 

the Fund invests generally must have a $100 

million par amount outstanding at the time of 

investment; (2) clarified that senior loans in which 

the Fund may invest includes leveraged loans; and 

(3) specified that the U.S. exchange-traded futures 

contracts, U.S. exchange-traded options on futures 

contracts, and U.S. exchange-traded put and call 

options in which the Fund invests will trade on 

exchanges that are members of the Intermarket 

Surveillance Group (‘‘ISG’’). 

4See Securities Exchange Act Release No. 73717 

(December 2, 2014), 79 FR 72730 (‘‘Notice’’). 

5The Trust is registered under the Investment 

Company Act of 1940 (‘‘1940 Act’’). The Exchange 

states that on June 25, 2014, the Trust filed with the 

Commission an amendment to its registration 

statement on Form N–1A under the Securities Act 

of 1933 (15 U.S.C. 77a) and under the 1940 Act 

relating to the Fund (File Nos. 333–157876 and 

811–22110) (‘‘Registration Statement’’). In addition, 

according to the Exchange, the Commission has 

issued an order granting certain exemptive relief to 

the Trust under the 1940 Act. See Investment 

Company Act Release No. 29291 (May 28, 2010) 

(File No. 812–13677). 

6The Exchange represents that the Adviser is not 

registered as a broker-dealer or affiliated with a 

broker-dealer. The Sub-Adviser is not registered as 

a broker-dealer but is affiliated with Pacific Select 

Disteributors, Inc., a registered broker-dealer. The 

Exchange states that the Sub-Adviser represetnts 

that Pacific Select Distributors, Inc. is a limited 

purpose broker-dealer with a primary business 

purpose of serving as distributor for mutual funds 

and variable annuity products, and that Pacific 

Select Distributors, Inc. does not engage in any 

borkerage or trading activity. The Exchange states 

that in the event (a) the Adviser or the Sub-Adviser 

becomes a registered broker-dealer or becomes 

newly affilitated with a broker-dealer, or (b) any 

new adviser or sub-adviser is a registered brokerdealer or becomes affiliated with a broker-dealer, 

such adviser or sub-adviser will implement a fire 

wall with respect to its relevant personnel or its 

broker-dealer affiliate regarding access to 

information concerning the composition of or 

changes to the portfolio, and the adviser or subadviser will be subject to procedures designed to 

prevent the use and dissemination of material nonpublic information regarding the portfolio. 

7The Commission notes that additional 

information regarding the Fund, the Trust, and the 

Shares, including investment strategies, risks, 

creation and redemption procedures, fees, portfolio 

holdings disclosure policies, distributions, and 

taxes, among other things, can be found in the 

Notice and the Registration Statement, as 

applicable. See Notice, supra note 4, and 

Registration Statement, supra note 5, respectively. 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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 rule-comments@

sec.gov. Please include File Number SR– 

MIAX–2015–02 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–2015–02. 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 

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 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–2015–02 and should 

be submitted on or before February 17, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01248 Filed 1–23–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74093: File No. SR– 

NYSEArca-2014–126] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, Relating to the 

Listing and Trading of Shares of the 

AdvisorShares Pacific Asset Enhanced 

Floating Rate ETF Under NYSE Arca 

Equities Rule 8.600 

January 20, 2015. 

I. Introduction 

On November 19, 2014, NYSE Arca, 

Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b-4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the AdvisorShares Pacific 

Asset Enhanced Floating Rate ETF 

(‘‘Fund’’) under NYSE Arca Equities 

Rule 8.600. On November 26, 2014, the 

Exchange filed Amendment No. 1 to the 

proposal.3 The proposed rule change, as 

modified by Amendment No. 1 thereto, 

was published for comment in the 

Federal Register on December 8, 2014.4

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change, as modified by 

Amendment No. 1. 

II. Description of the Proposal 

The Exchange proposes to list and 

trade Shares of the Fund under NYSE 

Arca Equities Rule 8.600 (‘‘Managed 

Fund Shares’’), which governs the 

listing and trading of Managed Fund 

Shares on the Exchange. The Shares will 

be offered by AdvisorShares Trust 

(‘‘Trust’’), a statutory trust organized 

under the laws of the State of Delaware 

and registered with the Commission as 

an open-end management investment 

company.5 AdvisorShares Investments, 

LLC (‘‘Adviser’’) will be the investment 

adviser to the Fund, and Pacific Asset 

Management (‘‘Sub-Adviser’’), will be 

the sub-adviser to the Fund.6 The Bank 

of New York Mellon (‘‘Administrator’’) 

will serve as the administrator, 

custodian, transfer agent and fund 

accounting agent for the Fund. Foreside 

Fund Services, LLC will be the principal 

underwriter and distributor of the 

Fund’s Shares. 

The Exchange has made the following 

representations and statements in 

describing the Fund and its investment 

strategy, including other portfolio 

holdings and investment restrictions.7


emcdonald on DSK67QTVN1PROD with NOTICES