Federal Register / Vol. 80, No. 18 / Wednesday, January 28, 2015 / Notices 4605 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In Amendment No. 1, the Exchange proposed 

changes to the Form 19b–4, Exhibit 1, and Exhibit 

5 to clarify that once triggered, the Risk Protection 

Monitor described therein will apply to orders in 

all series in all classes of options from the Exchange 

Member. 

4See Rule 612. The proposed Risk Protection 

Monitor is similar in that it is based on a counting 

program that triggers a risk protection if a certain 

predetermined threshold is reached. 

5The Allowable Order Rate is the number of 

orders entered during the specific time period that 

has been established by the Member. 

6The Allowable Contract Execution Rate is the 

number of contracts executed during the specific 

time period that has been established by the 

Member. 

7The Exchange notes that the specific time period 

does not need to be the same for both the Allowable 

Order Rate and Allowable Contract Execution Rate 

(i.e., there can be one specific time period for 

Allowable Order Rate and a different specific time 

period for Allowable Contract Execution Rate). 

• Send an email to rule-comments@

sec.gov. Please include File No. SR–ISE 

Gemini-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–ISE Gemini–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 such 

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–ISE 

Gemini–2015–02 and should be 

submitted on or before February 18, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01507 Filed 1–27–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74118; File No. SR–MIAX– 

2015–03] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing of a Proposed Rule 

Change, as Modified by Amendment 

No. 1 Thereto, To Adopt Rule 519A 

Risk Protection Monitor 

January 22, 2015. 

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 January 8, 

2015, 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 and II below, which Items have 

been prepared by the Exchange. On 

January 20, 2015, the Exchange filed 

Amendment No.1 to the proposal.3 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 proposes to adopt new 

risk protections for orders. 

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 adopt Rule 

519A, Risk Protection Monitor, to 

provide new risk protections for orders 

entered by Members on the Exchange. 

The proposed functionality is similar to 

the existing Aggregate Risk Protections 

available to Market Makers that provide 

risk protections for Market Maker 

quotations, however it will apply to 

orders entered by Members.4 The 

Exchange also proposes to codify 

existing functionality regarding the 

Aggregate Risk Manager to provide 

additional transparency in the Rule to 

Members regarding the current 

functionality. 

The Exchange proposes that the MIAX 

System will maintain a counting 

program (‘‘counting program’’) for each 

participating Member that will count 

the number of orders entered and the 

number of contracts traded via an order 

entered by a Member on the Exchange 

within a specified time period that has 

been established by the Member (the 

‘‘specified time period’’). The maximum 

duration of the specified time period 

will be established by the Exchange and 

announced via a Regulatory Circular. 

Members may establish an Allowable 

Order Rate 5 and/or an Allowable 

Contract Execution Rate 6. When a 

Member’s order is entered or when an 

execution of a Member’s order occurs, 

the System will look back over the 

specified time period to determine 

whether the order entered or the 

execution that occurred triggers the Risk 

Protection Monitor.7 Members may 

establish whether the Risk Protection 

Monitor, when triggered, will (i) prevent 

the System from receiving any new 

orders in all series in all classes from 

the Member; or (ii) prevent the System 

from receiving any new orders in all 

series in all classes from the Member 

and cancel all existing Day orders in all 

series in all classes from the Member; or 

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4606 Federal Register / Vol. 80, No. 18 / Wednesday, January 28, 2015 / Notices 

8See Proposed Rule 519A(a). As discussed below, 

the Risk Protection Monitor will not cancel any 

existing GTC orders. GTC Orders will remain in the 

System available for trading when the Risk 

Protection Monitor is engaged. See Proposed Rule 

519A, Interpretations and Policies .02. 

9The Exchange does not believe that establishing 

a minimum or maximum Allowable Order Rate or 

Allowable Contract Execution Rate is necessary at 

this time. The Exchange notes that use of the Risk 

Protection Monitor is optional and not mandatory. 

If, after some time of gaining experience with the 

Risk Protection Monitor, the Exchange sees a need 

for either minimums or maximums in the interest 

of maintaining fair and orderly markets, the 

Exchange will submit a subsequent 19b–4 rule 

filing as necessary. 

10See Proposed Rule 519A(b). The 

communication from the Member to the Help Desk 

can either be via email or phone. 

(iii) send a notification that the Risk 

Protection Monitor has been triggered 

without any further preventative or 

cancellation action by the System.8

The System will trigger the Risk 

Protection Monitor when the counting 

program has determined either (i) that a 

Member has entered during the 

specified time period a number of 

orders exceeding their Allowable Order 

Rate, or (ii) that a Member has executed 

during the specified time period a 

number of contracts exceeding their 

Allowable Contract Execution Rate.9

Once engaged, the Risk Protection 

Monitor will then automatically either 

prevent the System from receiving any 

new orders in all series in all classes 

from the Member, and cancel all 

existing Day orders in all series in all 

classes from the Member (if designated 

by the Member’s instructions), or send 

a notification without any further 

preventative or cancellation action by 

the System. When engaged, the Risk 

Protection Monitor will still allow the 

Member to interact with existing orders 

entered prior to exceeding the 

Allowable Order Rate or the Allowable 

Contract Execution Rate, including 

sending cancel order messages and 

receiving trade executions from those 

orders. The Risk Protection Monitor 

shall remain engaged until the Member 

communicates with the Help Desk to 

enable the acceptance of new orders.10

The following examples show how 

the proposed Risk Protection Monitor 

would operate. 

Example 1. 

BD1 designates the following settings: 

1. Allowable Order Rate = 500 orders/ 

per 2 second. Reject new orders. 

2. Allowable Contract Execution Rate 

= 1000 contracts/per 2 seconds. Reject 

new orders and cancel day orders. 

Time Event Count total 

@100 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 10 orders. 

@110 milliseconds ................................................................. 50 contracts execute ...................................................... 50 contracts 

@200 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 20 orders. 

@225 milliseconds ................................................................. 355 contracts execute .................................................... 405 contracts. 

@250 milliseconds ................................................................. 45 contracts execute ...................................................... 450 contracts. 

@350 milliseconds ................................................................. 150 contracts execute .................................................... 600 contracts. 

@500 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 30 orders. 

@1000 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 230 orders. 

@1500 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 430 orders. 

@1700 milliseconds ............................................................... BD1 enters 50 orders ............................................................ 480 orders. 

@2000 milliseconds ............................................................... BD1 enters 50 orders ............................................................ 530 orders. 

• 530 orders over 2 seconds exceeds 

the Allowable Order Rate—triggers the 

RPM 

• Once engaged, the System will 

reject new orders from BD1 until BD1 

contacts the Help Desk to request reenabling the acceptance of new orders 

from BD1. 

• Orders on the book, may continue 

to trade. 

@2200 milliseconds ............................................................... 300 contracts execute ........................................................... 850 contracts. 

@2500 milliseconds ............................................................... 500 contracts execute ........................................................... 800 contracts. 

@3000 milliseconds ............................................................... 300 contracts execute ........................................................... 1100 contracts. 

• 1100 contract executions over 2 

seconds exceeds the Allowable Contract 

Execution Rate—triggers RPM 

• Once engaged, the System will then 

reject new orders and cancel day orders 

from BD1 until BD1 contacts the Help 

Desk to request re-enabling the 

acceptance of new orders for BD1. 

Example 2. 

BD1 designates the following settings: 

1. Allowable Order Rate = 500 orders/ 

per 2 second. Reject new orders. 

2. Allowable Contract Execution Rate 

= 6,000 contracts/per 2 seconds. Reject 

new orders and cancel day orders. 

Time Event Count total 

@100 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 10 orders. 

@110 milliseconds ................................................................. 5050 contracts execute .................................................. 5050 contracts. 

@200 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 20 orders. 

@225 milliseconds ................................................................. 355 contracts execute .................................................... 5405 contracts. 

@250 milliseconds ................................................................. 45 contracts execute ...................................................... 5450 contracts. 

@350 milliseconds ................................................................. 150 contracts execute .................................................... 5600 contracts. 

@500 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 30 orders. 

@1000 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 230 orders. 

@1500 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 430 orders. 

@1700 milliseconds ............................................................... BD1 enters 50 orders ............................................................ 480 orders. 

@2000 milliseconds ............................................................... BD1 enters 50 orders ............................................................ 530 orders. 

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11See Proposed Rule 519A, Interpretations and 

Policies .01. 

12See Proposed Rule 519A, Interpretations and 

Policies .01(a). 

13See Proposed Rule 519A, Interpretations and 

Policies .01(b). 

14See id. 

15See e.g., MIAX Options Fee Schedule, Sections 

1)a)i), 1)a)iii); CBOE Fees Schedule, p. 3 (Volume 

Incentive Program), p. 13 (Liquidity Provider 

Sliding Scale), p. 13 [sic] (Clearing Trading Permit 

Holder Fee Cap); NASDAQ Options Market, 

Chapter XV, Section 2(1). 

• 530 orders over 2 seconds exceeds 

the Allowable Order Rate—triggers the 

RPM 

• Once engaged, the System will 

reject new orders from BD1 until BD1 

contacts the Help Desk to request reenabling the acceptance of new orders 

from BD1. 

• Orders on the book, may continue 

to trade. 

@2200 milliseconds ............................................................... 300 contracts execute ........................................................... 850 contracts. 

@2500 milliseconds ............................................................... 500 contracts execute ........................................................... 800 contracts. 

@3000 milliseconds ............................................................... 5300 contracts execute ......................................................... 6100 contracts. 

• 6100 contract executions over 2 

seconds exceeds the Allowable Contract 

Execution Rate—triggers RPM 

• Once engaged, the System will then 

reject new orders and cancel day orders 

from BD1 until BD1 contacts the Help 

Desk to request re-enabling the 

acceptance of new orders for BD1. 

In Examples 1 and 2, the Exchange 

notes that contracts continued to 

execute even though the Risk Protection 

Monitor was triggered because the 

orders received during the specified 

time period exceeded the Allowable 

Order Rate. If BD1 wishes to mitigate 

the risk of additional executions after 

the Risk Protection Monitor is triggered 

in scenarios like Examples 1 or 2, BD1 

could designate that the Risk Protection 

Monitor prevent the System from 

receiving any new orders in all series in 

all classes from the Member and cancel 

all existing Day orders in all series in all 

classes from the Member if the orders 

entered equal or exceed the Allowable 

Order Rate. 

Example 3. 

BD1 designates the following settings: 

1. Allowable Order Rate = 500 orders/ 

per 2 second. Reject new orders. 

2. Allowable Contract Execution Rate 

= 1000 contracts/per 2 seconds. Reject 

new orders and cancel day orders. 

@100 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 10 orders 

@110 milliseconds ................................................................. 50 contracts execute ...................................................... 50 contracts 

@200 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 20 orders 

@225 milliseconds ................................................................. 355 contracts execute .................................................... 405 contracts 

@250 milliseconds ................................................................. 45 contracts execute ...................................................... 450 contracts 

@350 milliseconds ................................................................. 150 contracts execute .................................................... 600 contracts 

@500 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 30 orders 

@1000 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 230 orders 

@1500 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 430 orders 

@1700 milliseconds ............................................................... BD1 enters 50 orders ............................................................ 480 orders 

@2200 milliseconds ............................................................... BD1 enters 10 orders ............................................................ 480 orders 

@2200 milliseconds ............................................................... 300 contracts execute .................................................... 850 contracts 

@2500 milliseconds ............................................................... 500 contracts execute .................................................... 800 contracts 

@3050 milliseconds ............................................................... BD1 enters 150 orders .......................................................... 410 orders 

@3060 milliseconds ............................................................... 300 contracts execute .................................................... 1100 contracts 

• 1100 contract executions over 2 

seconds exceeds the Allowable Contract 

Execution Rate—triggers RPM 

• Once engaged, the System will then 

reject new orders and cancel day orders 

from BD1 until BD1 contacts the Help 

Desk to request re-enabling the 

acceptance of new orders for BD1. 

The Exchange also proposes 

Interpretation and Policy .01 to provide 

that Members may elect to group with 

other Members to enable the Risk 

Protection Monitor to apply collectively 

to the group.11 The Members in the 

group must designate a group owner. 

Specifically, Members may elect to 

group with other Members to enable the 

Risk Protection Monitor to apply 

collectively to the group, provided that 

either: (i) There is at least 75% common 

ownership between the firms as 

reflected on each firm’s Form BD, 

Schedule A; or (ii) there is written 

authorization signed by all Members in 

the group and the group owner 

maintains exclusive control of all orders 

sent to the Exchange from each MPID 

within the group.12 A Member may also 

elect to group with the Member’s 

clearing firm.13 A clearing firm may also 

elect to group several Members to 

enable the Risk Protection Monitor to 

apply collectively to the group with the 

clearing firm designated as the group 

owner, provided that the clearing firm 

serves as the clearing firm for all the 

MPIDs of the group and there is written 

authorization signed by the clearing 

firm and each Member of the group. A 

clearing firm that has grouped several 

Members may only receive warning 

messages pursuant to Interpretation and 

Policy .03 of this Rule, unless one 

Member of the group maintains 

exclusive control of all orders routed 

through all MPIDs within the group.14

The Exchange believes that the 

threshold of at least 75% common 

ownership between the firms as 

reflected on each firm’s Form BD, 

Schedule A, is reasonable and 

appropriate for determining adequate 

affiliation between two or more Member 

firms. The Exchange notes that this 

threshold level has been widely adopted 

by options exchanges in the context of 

aggregated trading volume of affiliated 

firms for volume based fee/rebate 

programs.15 The written authorization 

and exclusive control requirement helps 

ensure that the Risk Protection Monitor 

does not apply to Members in a group 

or orders without adequate permission 

in the manner that is designed to 

prevent fraudulent and manipulative 

acts and practices, and to foster 

cooperation and coordination with 

persons engaged in facilitating 

transaction in securities. 

The Risk Protection Monitor for 

groups will operate in the same manner 

as described in paragraphs (a) and (b) of 

Proposed Rule 519A, except that: (i) The 

counting program will count the 

number of orders entered and the 

number of contracts traded resulting 

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16See Proposed Rule 519A, Interpretations and 

Policies .01(c). 

from an order entered by all MPIDs in 

the group collectively; (ii) the System 

will trigger the Risk Protection Monitor 

when the group collectively exceeds 

either the Allowable Order Rate or 

Allowable Contract Execution Rate for 

the group; (iii) once engaged, the Risk 

Protection Monitor will then either 

automatically prevent the System from 

receiving any new orders in all series in 

all classes from each MPID in the group, 

and, if designated by the group owner’s 

instructions, cancel all existing Day 

orders in all series in all classes from 

the group, or send a notification without 

any further preventative or cancellation 

action by the System; and (iv) only the 

designated group owner may request 

through the Help Desk to enable the 

acceptance of new orders for all the 

Members of the group.16

The following examples show how 

the proposed Risk Protection Monitor 

would operate for groups. 

Example 4. 

BD1, BD2, BD3 elect to group with 

each other, with BD1 as the group 

owner. BD1, BD2, BD3 designate the 

following settings: 

1. Allowable Order Rate = 500 orders/ 

per 2 second. Reject new orders. 

2. Allowable Contract Execution Rate 

= 1000 contracts/per 2 seconds. Reject 

new orders and cancel day orders. 

Time Event Count total 

@100 milliseconds ................................................................. BD1 enters 10 orders ............................................................ 10 orders 

@110 milliseconds ................................................................. 50 contracts execute ...................................................... 50 contracts 

@200 milliseconds ................................................................. BD2 enters 10 orders ............................................................ 20 orders 

@225 milliseconds ................................................................. 355 contracts execute for BD1 ...................................... 405 contracts 

@250 milliseconds ................................................................. 45 contracts execute for BD2 ........................................ 450 contracts 

@350 milliseconds ................................................................. 150 contracts execute for BD1 ...................................... 600 contracts 

@500 milliseconds ................................................................. BD3 enters 10 orders ............................................................ 30 orders 

@1000 milliseconds ............................................................... BD1 enters 200 orders .......................................................... 230 orders 

@1500 milliseconds ............................................................... BD2 enters 200 orders .......................................................... 430 orders 

@1700 milliseconds ............................................................... BD3 enters 50 orders ............................................................ 480 orders 

@2000 milliseconds ............................................................... BD3 enters 50 orders ............................................................ 530 orders 

• 530 orders over 2 seconds exceeds 

the Allowable Order Rate for the 

group—triggers the RPM 

• Once engaged, the System will 

reject new orders from BD1, BD2, BD3 

until BD1 contacts the Help Desk to 

request re-enabling the acceptance of 

new orders from BD1, BD2, BD3. 

• Orders on the book, may continue 

to trade. 

@2200 milliseconds ............................................................... 300 contracts execute for BD3 .............................................. 850 contracts. 

@2500 milliseconds ............................................................... 500 contracts execute for BD2 .............................................. 800 contracts. 

@3000 milliseconds ............................................................... 300 contracts execute for BD1 .............................................. 1100 contracts. 

• 1100 contract executions over 2 

seconds exceeds the Allowable Contract 

Execution Rate for the group—triggers 

RPM 

• Once engaged, the System will then 

reject new orders and cancel day orders 

from BD1, BD2, BD3 until BD1 contacts 

the Help Desk to request re-enabling the 

acceptance of new orders for BD1, BD2, 

BD3. 

Example 5. 

BD1 elects to group with their 

clearing firm CC1, with CC1 as the 

group owner. BD1, CC1 designate the 

following settings: 

1. Allowable Order Rate = 500 orders/ 

per 2 second. Reject new orders. 

2. Allowable Contract Execution Rate 

= 1000 contracts/per 2 seconds. Reject 

new orders and cancel day orders. 

Time Event Count total 

@100 milliseconds .......................................... BD1 enters 10 orders ................................................................................ 10 orders. 

@110 milliseconds .......................................... 50 contracts execute .......................................................................... 50 contracts. 

@200 milliseconds .......................................... BD1 enters 10 orders ................................................................................ 20 orders. 

@225 milliseconds .......................................... 355 contracts execute ........................................................................ 405 contracts. 

@250 milliseconds .......................................... 45 contracts execute .......................................................................... 450 contracts. 

@350 milliseconds .......................................... 150 contracts execute ........................................................................ 600 contracts. 

@500 milliseconds .......................................... BD1 enters 10 orders ................................................................................ 30 orders. 

@1000 milliseconds ........................................ BD1 enters 200 orders .............................................................................. 230 orders. 

@1500 milliseconds ........................................ BD1 enters 200 orders .............................................................................. 430 orders. 

@1700 milliseconds ........................................ BD1 enters 50 orders ................................................................................ 480 orders. 

@2200 milliseconds ........................................ BD1 enters 10 orders ................................................................................ 480 orders. 

@2200 milliseconds ........................................ 300 contracts execute ........................................................................ 850 contracts. 

@2500 milliseconds ........................................ 500 contracts execute ........................................................................ 800 contracts. 

@3050 milliseconds ........................................ BD1 enters 150 orders .............................................................................. 410 orders. 

@3060 milliseconds ........................................ 300 contracts execute ........................................................................ 1100 contracts. 

• 1100 contract executions over 2 

seconds exceeds the Allowable Contract 

Execution Rate—triggers RPM 

• Once engaged, the System will then 

reject new orders and cancel day orders 

from BD1 until CC1 contacts the Help 

Desk to request re-enabling the 

acceptance of new orders from BD1. 

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17The terms ‘‘PRIME Order’’ and ‘‘PRIME 

Solicitation Order’’ refer to a two-sided paired order 

that consists of both an Agency Order and a Contraside Order that is submitted to the Exchange 

pursuant to Rule 515A. 

18See Proposed Rule 519A, Interpretations and 

Policies .02. 

19See Proposed Rule 519A, Interpretations and 

Policies .03. 

20See Proposed Rule 519A, Interpretations and 

Policies .04. 

21See Rule 517(a)(2). 

22See Proposed Rule 612, Interpretations and 

Policies .01. 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(5). 

The Exchange believes that the ability 

for affiliated Members to collectively 

monitor and manage their risk from 

excessive order or execution rates that 

may be caused by a system error or 

market event, will provide a valuable 

risk management tool for such Members 

that have shared order exposure and 

execution risk across affiliated entities. 

The Exchange believes that allowing 

Members to group with their clearing 

firm will help both Members and 

clearing firms monitor and manage 

order exposure and execution risk that 

may be caused from a system or other 

error or market event in a manner that 

removes impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, protects investors and the 

public interest. 

The Exchange proposes Interpretation 

and Policy .02 to provide that PRIME 

Orders, PRIME Solicitation Orders 17

and GTC Orders do not participate in 

the Risk Protection Monitor. However, 

the System does include such PRIME 

Orders, PRIME Solicitation Orders and 

GTC Orders in the counting program for 

purposes of this Rule. PRIME Orders, 

PRIME Solicitation Orders and 

Customer-to-Customer Orders will each 

be counted as two orders for the 

purpose of calculating the Allowable 

Order Rate. Once engaged, the Risk 

Protection Monitor will not cancel any 

existing PRIME Orders, PRIME 

Solicitation Orders, AOC orders, OPG 

orders, or GTC orders. PRIME Orders, 

PRIME Solicitation Orders and GTC 

Orders will remain in the System 

available for trading when the Risk 

Protection Monitor is engaged.18 The 

Exchange believes the proposed 

treatment of PRIME Orders, PRIME 

Solicitation Orders, AOC orders, OPG 

orders, and GTC Orders is an equitable 

approach to handling the unique 

characteristics of these order types 

within the Risk Protection Monitor 

mechanism. Separately, the Exchange 

believes the proposed treatment of 

paired orders in the form of PRIME 

Orders and PRIME Solicitation Orders 

processed pursuant to Rule 515A versus 

standard Agency Orders processed 

pursuant to Rule 515, is an equitable 

approach to handling the unique 

characteristics of PRIME Orders and 

PRIME Solicitation Orders within the 

Risk Protection Monitor mechanism. 

The Exchange notes that PRIME Orders 

submitted pursuant to Rule 515A by 

operation of the ‘‘stop’’ have been 

guaranteed an execution at the time of 

acceptance into the System; therefore, 

the Exchange does not believe that such 

orders should be cancelled when the 

Risk Protection Monitor is engaged, 

since the execution effectively already 

happened. In contrast, standard Agency 

Orders that a Member is representing as 

a principal are processed according to 

Rule 515 in the same manner as other 

incoming orders and are not been 

guaranteed an execution at the time of 

acceptance in the System, thus the 

Exchange believes that standard Agency 

Orders should be treated the same as 

other orders and be subject to the 

protections of the Risk Protection 

Monitor. 

The Exchange proposes Interpretation 

and Policy .03 to provide that Members 

may elect to receive warning 

notifications indicating that a specific 

percentage of an Allowable Order Rate 

or an Allowable Contract Execution Rate 

has been met.19

The Exchange proposes Interpretation 

and Policy .04 to provide that at the 

request of a Member or in order to 

maintain a fair and orderly market the 

Help Desk may pause and restart the 

specified time period used by the 

counting program or clear and reset any 

calculated Allowable Order Rate or 

Allowable Contract Execution Rate.20

The Exchange also proposes to amend 

Rule 612 to codify existing functionality 

regarding the Aggregate Risk Manager to 

provide additional transparency in the 

Rule to Members regarding the current 

functionality. Currently, the Rule 

provides that after the System engages 

the Aggregate Risk Manager, that the 

Aggregate Risk Manager will 

automatically remove the Market 

Maker’s quotations from the Exchange’s 

disseminated quotation in all series of 

that particular option class until the 

Market Maker submits a new revised 

quotation. However, submitting a new 

revised quotation alone is not currently 

enough in this situation. The Market 

Maker must also send a notification to 

the System of the intent to reengage 

quoting. The Exchange proposes to 

amend the Rule to codify this additional 

requirement, of sending a notification to 

the System of the intent to reengage 

quoting, in order to eliminate potential 

confusion on behalf of Market Makers. 

In addition, the Exchange proposes to 

adopt a new Interpretation and Policy 

.01 to Rule 612 to codify existing 

functionality regarding the Aggregate 

Risk Manager to provide additional 

transparency in the Rule to Members 

regarding the current functionality. The 

Exchange proposes to specify that 

eQuotes do not participate in the 

Aggregate Risk Manager. An eQuote is a 

quote with a specific time in force that 

does not automatically cancel and 

replace a previous Standard quote or 

eQuote. An eQuote can be cancelled by 

the Market Maker at any time, or can be 

replaced by another eQuote that 

contains specific instructions to cancel 

an existing eQuote.21 The System does 

not include contracts traded through the 

use of an eQuote in the counting 

program for purposes of this Rule. 

eQuotes will remain in the System 

available for trading when the Aggregate 

Risk Manager is engaged.22 The 

proposed changes to the Aggregate Risk 

Manager are designed to protect 

investors and the public interest by 

codifying the protections that apply to 

quotation orders that help Market 

Makers avoid quotation activity that 

exceeds their established risk thresholds 

on the Exchange. In addition, the 

Exchange believes that the proposed 

amendment removes impediments to 

and perfects the mechanisms of a free 

and open market and a national market 

system and, in general, protects 

investors and the public interest by 

helping to eliminate potential confusion 

on behalf of Market Makers by clearly 

stating the System’s functionality with 

regard to quotations that trigger the 

Aggregate Risk Manager protections. 

2. Statutory Basis 

MIAX believes that its proposed rule 

change is consistent with Section 6(b) of 

the Act 23 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 24

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. 

The Exchange believes that Members 

will benefit from the proposed new Risk 

Protection Monitor. Members are 

vulnerable to the risk from system or 

other error or a market event, that may 

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4610 Federal Register / Vol. 80, No. 18 / Wednesday, January 28, 2015 / Notices 

25 17 CFR 200.30–3(a)(12). 

cause them to send a large number of 

orders or receive multiple, automatic 

executions before they can adjust their 

order exposure in the market. Without 

adequate risk management tools, such as 

the Risk Protection Monitor, Members 

could reduce the amount of order flow 

and liquidity that they provide to the 

market. Such actions may undermine 

the quality of the markets available to 

customers and other market 

participants. Accordingly, the proposed 

Risk Protection Monitor is designed to 

encourage Members to submit 

additional order flow and liquidity to 

the Exchange, thereby removing 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, protecting investors and the 

public interest. In addition, providing 

Members with more tools for managing 

risk will facilitate transactions in 

securities because, as noted above, the 

Members will have more confidence 

that protections are in place that reduce 

the risks from potential system errors 

and market events. As a result, the new 

functionality has the potential to 

promote just and equitable principles of 

trade. 

The written authorization and 

exclusive control requirement helps 

ensure that the Risk Protection Monitor 

does not apply to Members in a group 

or orders without adequate permission 

in the manner that is designed to 

prevent fraudulent and manipulative 

acts and practices, and to foster 

cooperation and coordination with 

persons engaged in facilitating 

transaction in securities. The Exchange 

believes the proposed treatment of 

PRIME Orders, PRIME Solicitation 

Orders, AOC orders, OPG orders, and 

GTC Orders is an equitable approach to 

handling the unique characteristics of 

these order types within the Risk 

Protection Monitor mechanism. Further, 

the Exchange believes the proposed 

treatment of paired orders in the form of 

PRIME Orders and PRIME Solicitation 

Orders processed pursuant to Rule 515A 

versus standard Agency Orders 

processed pursuant to Rule 515, is an 

equitable approach to handling the 

unique characteristics of Agency Orders 

within the Risk Protection Monitor 

mechanism. 

The proposed changes to the 

Aggregate Risk Manager are designed to 

protect investors and the public interest 

by codifying the protections that apply 

to quotations that help Market Makers 

avoid executions from quotation activity 

that exceeds their established risk 

thresholds on the Exchange. In addition, 

the Exchange believes that the proposed 

amendment removes impediments to 

and perfects the mechanisms of a free 

and open market and a national market 

system and, in general, protects 

investors and the public interest by 

helping to eliminate potential confusion 

on behalf of Market Makers by clearly 

stating the System’s functionality with 

regard to quotations that trigger the 

Aggregate Risk Manager protections. 

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. Rather, the 

Exchange believes that the new Risk 

Protection Monitor help promote fair 

and order markets. The Exchange 

believes the proposed changes will not 

impose any burden on intra-market 

competition because the use of the Risk 

Protection Monitor is voluntary and is 

available to all Members. The Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to competing venues who offer 

similar functionality. As to inter-market 

competition, the Exchange believes that 

the proposed risk protections should 

promote competition for such 

functionality that is designed to protect 

market participants from system errors 

or market events that may cause them to 

send a large number of orders or receive 

multiple, automatic executions before 

they can adjust their order exposure in 

the market. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the Exchange consents, the Commission 

will: 

(a) by order approve or disapprove 

such proposed rule change, or 

(b) institute proceedings to determine 

whether the proposed rule change 

should be 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, as modified by Amendment No. 

1, 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–2015–03 on the subject line. 

Paper Comments 

• 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–2015–03. 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 such 

filing also will be available for 

inspection and copying at the principal 

offices 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– 

2015–03, and should be submitted on or 

before February 18, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01510 Filed 1–27–15; 8:45 am] 

BILLING CODE 8011–01–P 

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