4008 Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 

17 17 CFR 240.19b–4(f)(6)(iii). 

18 15 U.S.C. 78s(b)(2)(B). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73739 

(November 12, 2014), 79 FR 73382 (‘‘Notice’’). 

4The term ‘‘Nasdaq Opening Cross’’ is defined in 

Chapter VI, Section 8(a)(3) of the Exchange’s rules. 

As is discussed infra, this definition is among those 

that the Exchange has proposed to revise. 

5Unless otherwise noted, all citations herein to 

Sections of the Exchange’s rules are citations to 

Sections of Chapter VI of its rules. 

6See proposed Sections 1(e)(7) and 1(g)(1). 

7The term ‘‘Eligible Interest’’ is defined in 

Section 8(a)(4) and, as discussed below, is a term 

that the Exchange proposes to modify. 

8See Section 8(a)(2). The Exchange proposes to 

provide itself with the ability to disseminate the 

Order Imbalance Indicator more frequently than the 

five second intervals currently required. See 

proposed Section 8(b)(3). The Exchange also 

proposes to specify that the dissemination interval, 

in addition to the start of dissemination, would be 

posted on its Web site. Id. 

9See Section 8(a)(2)(A). 

10See proposed Section 8(a)(2)(A). The Exchange 

states that the revised definition of Current 

Reference Price would be substantively similar to 

the current definition, but with the opening cross 

price determined pursuant to Section 8(b). See 

Notice, 79 FR at 73383. 

to Rule 19b–4(f)(6)(iii),17 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. 

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 18 of the Act 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 

• 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– 

NYSEMKT–2015–05 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–NYSEMKT–2015–05. 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– 

NYSEMKT–2015–05 and should be 

submitted on or before February 17, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01247 Filed 1–23–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74096; File No. SR– 

NASDAQ–2014–116] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving a Proposed Rule Change 

Relating to the NASDAQ Opening and 

Halt Cross 

January 20, 2015. 

I. Introduction 

On November 21, 2014, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’ or the 

‘‘Exchange’’) 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 

relating to its process for opening 

trading on Nasdaq Options Market, LLC 

(‘‘NOM’’) at the beginning of the trading 

day and following a trading halt. The 

proposed rule change was published for 

comment in the Federal Register on 

December 10, 2014.3 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change. 

II. Description of the Proposal 

The Exchange proposes to modify its 

process for opening option trading on 

NOM at the beginning of the trading day 

and following a trading halt. The 

Exchange proposes to accomplish this 

by revising definitional terms set forth 

in Chapter VI, Sections 1 and 8(a) of its 

rules, and by revising the description of 

the processing of the Nasdaq Opening 

Cross 4 set forth in Chapter VI, Section 

8(b) of its rules. The Exchange also 

proposes to revise the language set forth 

in Chapter VI, Section 8(c) describing 

what occurs in the absence of an 

opening cross.5

Definitions—Sections 1 and 8(a) 

The Exchange proposes to add an ‘‘On 

the Open Order’’ or ‘‘OPG’’ as a new 

order type and time-in-force condition 

defined in Section 1. As proposed, any 

order designated as such would be 

executable only during the Nasdaq 

Opening Cross, with any portion not so 

executed cancelled back to the entering 

participant.6

In addition, the Exchange proposes to 

make the following definitional changes 

to Section 8(a): 

• ‘‘Order Imbalance Indicator’’ is 

currently defined as a message 

disseminated by electronic means 

containing information about ‘‘Eligible 

Interest’’ 7 and the price in penny 

increments at which such interest 

would execute at the time of 

dissemination.8 The ‘‘Current Reference 

Price’’ is one piece of information 

disseminated as part of the Order 

Imbalance Indicator and, as currently 

defined, is determined based on three 

price parameters.9 The Exchange 

proposes to delete these price 

parameters and to simplify the 

definition of ‘‘Current Reference Price’’ 

to be: An indication of what the opening 

cross would be at a particular point in 

time.10 Additionally, the indicative 

prices at which the Nasdaq Opening 


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Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 4009 

11See Section 8(a)(2)(E). 

12See proposed Section 8(a)(2), from which 

current Section 8(a)(2)(E) would be deleted. 

13See proposed Section 8(a)(3). 

14See proposed Section 8(a)(4). 

15 Id. 

16See Notice, 79 FR at 73383. 

17See proposed Section 8(a)(6). 

18 Id.; see also Notice, 79 FR at 73384. 

19See proposed Section 8(a)(6). 

20See Notice, 79 FR at 73384. The Exchange also 

notes that, with respect to the Valid Width NBBO, 

the orders and quotes on the Exchange would be 

received over the OTTO or SQF protocols. Id. 

21See proposed Section 8(b); see also Notice, 79 

FR at 73384. Chapter V, Section 4 states that trading 

in an option that has been the subject of a halt 

under Section 3 of Chapter V shall be resumed 

upon the determination by Nasdaq Regulation that 

the conditions which led to the halt are no longer 

present or that the interests of a fair and orderly 

market are best served by a resumption of trading. 

According to the Exchange, trading shall resume 

according to the process set forth in proposed 

Section 8(b). See Notice, 79 FR at 73383. 

22See proposed Section 8(b). 

23See proposed Section 8(b)(1). 

24See proposed Section 8(b)(2). In the case of a 

crossed ABBO, the Exchange notes that the 

conditions set forth in proposed Sections 8(b)(1) 

and (b)(2) would become operative when the ABBO 

becomes uncrossed. See Notice, 79 FR at 73384 

n.18. Additionally, the Exchange notes that, due to 

its proposed addition of new Sections 8(b)(1) and 

(b)(2), it has proposed to renumber current Sections 

8(b)(1) through 8(b)(5) to 8(b)(3) through 8(b)(7), 

respectively. See Notice, 79 FR at 73386. 

25See proposed Section 8(b)(4)(A). 

26The Exchange notes that rounding would be 

applied, if needed, in the following manner: If the 

previous closing price is less than the midpoint, 

then the opening price rounds down; and if the 

previous closing price is greater than the midpoint, 

or if there is no closing price, then the opening 

price rounds up. For example, if there is a midpoint 

of 1.045, the opening price would be rounded to 

1.04 if the previous closing price was 1.00, and 

would be rounded to 1.05 if the previous closing 

price was 1.10. See Notice, 79 FR at 73385 n.22. 

27See proposed Section 8(b)(4)(B). 

Cross would occur, which are also 

currently disseminated as part of the 

Order Imbalance Indicator,11 would be 

eliminated from such dissemination as 

part of the proposal.12

• The Exchange proposes to revise 

the term ‘‘Nasdaq Opening Cross’’ to 

mean the process for opening or 

resuming trading pursuant to Section 8, 

which includes the process for 

determining the price at which Eligible 

Interest shall be executed at the opening 

of trading for the day or the opening of 

trading for a halted option, and the 

process for executing such Eligible 

Interest.13

• The Exchange would revise the 

term ‘‘Eligible Interest’’ to mean any 

quotation or any order that may be 

entered into the system and designated 

with a time-in-force of IOC (immediateor-cancel), DAY (day order), GTC (goodtill-cancelled), and OPG (On the Open 

Order).14 The Exchange would also 

revise the definition of this term to 

specify that orders received via FIX 

protocol prior to the Nasdaq Opening 

Cross designated with a time-in-force of 

IOC would be rejected and shall not be 

considered Eligible Interest, and orders 

received via OTTO and SQF protocols 

prior to the Nasdaq Opening Cross 

designated with a time-in-force of IOC 

would remain in force through the 

opening but be cancelled immediately 

after the opening.15 The Exchange notes 

that FIX protocol users generally prefer 

a cancellation if an order is not executed 

immediately so that they can have an 

opportunity to access other markets, 

while OTTO and SQF protocol users are 

liquidity providers who prefer that their 

orders live throughout the entire 

opening process until it is clear that 

their liquidity was not utilized in the 

opening.16

• The Exchange also proposes to add 

new terms ‘‘Valid Width National Best 

Bid or Offer’’ (or ‘‘Valid Width NBBO’’) 

and ‘‘Away Best Bid or Offer’’ (or 

‘‘ABBO’’) to Section 8(a). Specifically, 

in new Section 8(a)(6), the Exchange 

proposes to define ‘‘Valid Width NBBO’’ 

as the combination of all away market 

quotes and any combination of NOMregistered Market Maker (‘‘Market 

Maker’’) orders and quotes received over 

the OTTO or SQF protocols within a 

specified bid/ask differential as 

established and published by the 

Exchange. The Valid Width NBBO 

would be configurable by underlying, 

and a table with valid width 

differentials would be posted by Nasdaq 

on its Web site.17 Away markets that are 

crossed (i.e., an away market is 

internally crossed or crosses another 

away market) would void all Valid 

Width NBBO calculations.18 If any 

Market Maker orders or quotes on NOM 

are crossed internally, then all such 

orders and quotes would be excluded 

from the Valid Width NBBO 

calculation.19 In addition, in new 

Section 8(a)(7), the Exchange proposes 

to define ‘‘ABBO’’ as the displayed 

National Best Bid or Offer not including 

the Exchange’s Best Bid or Offer. The 

Exchange states that it is proposing to 

add these new terms in order to ensure 

that all away market quotes and any 

combination of Market Maker orders 

and quotes, whether they include the 

Exchange’s Best Bid or Offer or not, are 

represented in the opening cross.20

Processing of Nasdaq Opening Cross— 

Section 8(b) 

The Exchange proposes various 

revisions to the Nasdaq Opening Cross 

process set forth in Section 8(b). As an 

initial matter, the Exchange proposes to 

edit the introductory paragraph of 

Section 8(b) by: Deleting the phrase 

‘‘there is no Imbalance’’ so that the rule 

applies more generally; deleting the 

phrase ‘‘on a class-by-class basis’’ in 

order to clarify that the Exchange will 

use a regular market hours quote or 

trade (as determined by the Exchange) 

for all classes on the Exchange for the 

Opening Cross without distinguishing 

among different classes; and adding the 

phrase ‘‘the Opening Process shall 

occur’’ in order to clarify that an 

Opening Cross shall occur after a 

trading halt when trading resumes 

pursuant to Chapter V, Section 4.21

Following the introductory paragraph, 

the Exchange proposes to set forth the 

criteria that must be present for NOM to 

open trading at the beginning of the day 

or after a halt, provided the ABBO is not 

crossed.22 Specifically, the rule would 

state that, if a trade is possible on NOM, 

there must be a Valid Width NBBO 

before trading will open; 23 and if no 

trade is possible on NOM, then trading 

would open upon the occurrence of any 

one of the following three criteria: (A) 

A Valid Width NBBO is present, (B) a 

certain number of other options 

exchanges (as determined by the 

Exchange) have disseminated a firm 

quote on OPRA, or (C) a certain period 

of time (as determined by the Exchange) 

has elapsed.24

In addition, the Exchange proposes to 

add language in proposed Section 

8(b)(4)(A)–(C) to specify how the 

Opening Cross price would be 

determined when a trade is possible on 

NOM and a Valid Width NBBO is 

present. Proposed Section 8(b)(4)(A) 

would state that the Nasdaq Opening 

Cross shall occur at the price that 

maximizes the number of contracts of 

Eligible Interest in NOM to be executed 

at or within the ABBO and within a 

defined range, as established and 

published by the Exchange, of the Valid 

Width NBBO.25 Proposed Section 

8(b)(4)(B) would state that if more than 

one price exists under subparagraph (A) 

and there are no contracts that would 

remain unexecuted in the cross, the 

Nasdaq Opening Cross shall occur at the 

midpoint price, rounded to the penny 

closest to the price of the last execution 

in that series (and in the absence of a 

previous execution price, the price will 

round up, if necessary),26 of (1) the 

National Best Bid or the last offer on 

NOM against which contracts would be 

traded, whichever is higher; and (2) the 

National Best Offer or the last bid on 

NOM against which contracts would be 

traded, whichever is lower.27 Proposed 

Section 8(b)(4)(C) would state if more 

than one price exists under 


emcdonald on DSK67QTVN1PROD with NOTICES
4010 Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 

28The Exchange notes that, pursuant to Section 

10(7), the system will also calculate a defined range 

to limit the range of prices at which an order would 

be allowed to execute. See Notice, 79 FR at 73385 

n.23. 

29See proposed Section 8(b)(4)(C). 

30See proposed Section 8(b)(4)(C)(i)–(iv). 

31 Id. 

32See Notice, 79 FR at 73386. 33 Id. 34 Id. 35See proposed Section 8(b)(5). 36See proposed Section 8(c). 37 Id. 38 Id. 

39 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

40 15 U.S.C. 78f(b)(5). 

subparagraph (A) and contracts would 

remain unexecuted in the cross, then 

the opening price would be the highest 

(lowest) price in the case of a buy (sell) 

imbalance at which the maximum 

number of contracts can trade which is 

equal to or within a defined range, as 

established and published by the 

Exchange,28 of the Valid Width NBBO 

on the contra side of the imbalance that 

would not trade through the ABBO.29

Further, the Exchange proposes to add 

subsections to proposed Section 

8(b)(4)(C) in order to specify the price at 

which unexecuted contracts would be 

posted on the book following the 

Opening Cross and the subsequent 

handling of the residual unexecuted 

contracts.30 These subsections would 

provide as follows: (i) If unexecuted 

contracts remain with a limit price that 

is equal to the opening price, then the 

remaining unexecuted contracts would 

be posted at the opening price, 

displayed one minimum price variation 

(MPV) away if displaying at the opening 

price would lock or cross the ABBO, 

with the contra-side NOM BBO reflected 

as firm; (ii) if unexecuted contracts 

remain with a limit price that is through 

the opening price, and there is a contra 

side ABBO at the opening price, then 

the remaining unexecuted contracts 

would be posted at the opening price, 

displayed one minimum price variation 

(MPV) away from the ABBO, with the 

contra side NOM BBO reflected as firm, 

and order handling of any remaining 

interest would be done in accordance 

with the routing and time-in-force 

instructions of such interest and would 

follow the Acceptable Trade Range 

mechanism set forth in Section 10; (iii) 

if unexecuted contracts remain with a 

limit price that is through the opening 

price, and there is no contra side ABBO 

at the opening price, then the remaining 

contracts would be posted at the 

opening price, with the contra-side 

NOM BBO reflected as non-firm; and 

(iv) order handling of any residual 

unexecuted contracts would be done in 

accordance with Section 10(7), with the 

opening price representing the reference 

price.31

This proposed handling of 

unexecuted contracts set forth in 

subsections (i)–(iv) of proposed Section 

8(b)(4)(C) is intended to ensure that 

residual unexecuted contracts from the 

Opening Cross, regardless of their limit 

prices, are posted on the book at the 

opening price before subsequently being 

routed pursuant to Section 11 or walked 

to the next potential execution price(s) 

under the Acceptable Trade Range set 

forth in Section 10(7) (with the opening 

price representing the ‘‘reference price’’ 

of that rule).32 Moreover, the ‘‘firm’’ 

versus ‘‘non-firm’’ tagging of contra-side 

interest when residual Opening Cross 

interest is posted follows the construct 

currently in place on the Exchange 

when aggressive interest is received and 

triggers an Acceptable Trade Range 

(ATR) process.33 Contra-side NOM BBO 

interest is reflected as non-firm when 

the Exchange has interest with a limit 

price (or market order) that is more 

aggressive than the Opening Cross price 

in order to ensure that aggressively 

priced residual interest maintains 

priority should other aggressively priced 

interest be entered before the residual 

interest is permitted to access the next 

allowable range of prices.34

The Exchange is also proposing to add 

new text to proposed Section 8(b)(5) to 

indicate that if the Nasdaq Opening 

Cross price is selected and fewer than 

all contracts of Eligible Interest that are 

available in NOM would be executed, 

all Eligible Interest shall be executed at 

the Nasdaq Opening Cross price in 

accordance with the execution 

algorithm assigned to the associated 

underlying option.35

Absence of Opening Cross—Section 8(c) 

Lastly, the Exchange proposes to add 

a new Section 8(c) providing for the 

return of orders in un-opened symbols 

in the absence of an Opening Cross. 

Proposed new Section 8(c) would be 

substituted for current Section 8(c) and 

would provide that if an Opening Cross 

in a symbol is not initiated before the 

conclusion of the Opening Order Cancel 

Timer, a firm may elect to have orders 

returned by providing written 

notification to the Exchange.36 These 

orders include all non GTC orders 

received over the FIX protocol.37 The 

Opening Order Cancel Timer represents 

a period of time since the underlying 

market has opened, and shall be 

established and disseminated by Nasdaq 

on its Web site.38

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.39 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,40 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, 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. 

The Exchange believes that the 

proposal is consistent with Section 

6(b)(5) of the Act because it will 

enhance and clarify the opening cross 

process, minimize or negate 

unnecessary complexity, and encourage 

liquidity when trading opens. The 

Exchange notes that it proposes to set 

forth in Section 8(b) clear language 

describing under what circumstances an 

opening cross will occur, and how the 

opening cross will occur if more than 

one possible cross price exists. In 

addition, according to the Exchange, the 

proposed rule change will enhance the 

price discovery mechanism in the 

opening process by including not only 

Market Maker orders and quotes but 

also away market interest as represented 

by quotes. The Exchange believes this 

change will make the transition from the 

opening cross period to regular market 

trading more efficient and thus promote 

just and equitable principles of trade 

and serve to protect investors and the 

public interest. The Exchange also 

believes that the proposal will 

significantly improve the quality of 

execution of NOM’s opening, which 

should attract new order flow. In the 

Exchange’s view, the proposed rule 

changes should prove helpful to market 

participants, particularly those that are 

involved in adding liquidity during the 

opening cross. 

The Commission believes that the 

proposal is reasonably designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and to protect investors and the 

public interest by adding clarity to the 

Exchange’s rules governing NOM’s 

opening cross process. This enhanced 

transparency should help to reduce the 


emcdonald on DSK67QTVN1PROD with NOTICES
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 


emcdonald on DSK67QTVN1PROD with NOTICES