Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Notices 10173 

14 15 U.S.C. 78q–1(b)(3)(F). 

15 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

16 15 U.S.C. 78s(b)(2). 

17 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 Nos. 73999 

(January 6, 2015), 80 FR 1559 (January 12, 2015) 

(SR–ISE–2014–52); 74016 (January 8, 2015), 80 FR 

1976 (January 14, 2015) (SR–BOX–2015–01). 

4See Exchange Rule 404, Interpretations and 

Policies .02(a). 

rules and regulations thereunder 

applicable to such organization. 

The Commission finds that the 

proposed rule change is consistent with 

Section 17A(b)(3)(F) of the Act 14 which 

requires the rules of a clearing agency 

to, among other things, assure the 

safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible. OCC is amending Article 

XII, Section 7, to include a new policy 

and interpretation setting forth the 

specific criteria a futures exchange must 

meet in order for EFPs and Block Trades 

to not be subject to the delayed novation 

times set forth in Article XII of OCC’s 

By-Laws. Specifically the exchange 

must provide OCC with a certification 

that the exchange has rules, policies or 

procedures as they relate to verifying 

the reasonableness of the price of the 

EFP and Block Trade. OCC’s proposal, 

as approved, does not affect the 

novation time for any securities 

transactions. 

OCC has determined that EFPs and 

Block Trades that are subject to price 

reasonability checks do not present the 

same settlement risks as those executed 

on exchanges without price 

reasonability checks, and as such has 

determined that OCC’s requirement that 

exchanges certify price reasonableness 

policies and procedures are sufficiently 

appropriate to mitigate the risks 

associated with non-competitively 

executed trades. In addition, in the 

event a clearing member fails to its first 

variation payment to OCC on an EFP or 

Block Trade that was executed on an 

exchange with price reasonability 

checks, OCC will employ the same risk 

management methodology used for all 

other competitively executed trades 

accept for clearing at OCC, which 

should in turn reduce settlement risks 

that could expose OCC to loss if it is 

required to close out a defaulting 

purchaser’s EFP or Block Trade 

position. Combining OCC’s price 

reasonableness requirements for 

exchanges and OCC’s ability to liquidate 

futures positions or use its clearing fund 

to management risks associated with 

non-payment of premiums for those 

trades accepted for clearance and 

settlement, OCC should have sufficient 

risk management controls in place in to 

assure the safeguarding of securities and 

funds which are in the custody of 

control of OCC or for which it is 

responsible. 

III. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the 

Act 15 and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,16 that the 

proposed rule change File No. SR–OCC– 

2014–23 be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–03811 Filed 2–24–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74301; File No. SR–MIAX– 

2015–10] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Exchange Rule 404 

February 19, 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 February 9, 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 

amend Exchange Rule 404. 

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 amend 

Exchange Rule 404, Interpretations and 

Policies .02, to extend current $0.50 

strike price intervals in non-index 

options to short term options with strike 

prices less than $100. This is a 

competitive filing that is based on 

proposals recently submitted by the 

International Securities Exchange, LLC 

(‘‘ISE’’) and BOX Options Exchange LLC 

(‘‘BOX’’).3

The Exchange proposes to amend its 

rules governing the Short Term Option 

Series Program to introduce finer strike 

price intervals for certain Short Term 

Option Series. In particular, the 

Exchange proposes to amend Rule 404, 

Interpretations and Policies .02(e), to 

extend $0.50 strike price intervals in 

non-index options to Short Term 

Options Series with strike prices less 

than $100 instead of the current $75. 

This proposed change is intended to 

eliminate gapped strikes between $75 

and $100 that result from conflicting 

strike price parameters under the Short 

Term Option Series and $2.50 Strike 

Price Programs as described in more 

detail below. 

Under the Exchange’s rules, the 

Exchange may list Short Term Option 

Series in up to fifty option classes in 

addition to option classes that are 

selected by other securities exchanges 

that employ a similar program under 

their respective rules.4 On any Thursday 

or Friday that is a business day, the 

Exchange may list Short Term Option 

Series in designated option classes that 

expire at the close of business on each 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
10174 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Notices 

5See Exchange Rule 404, Interpretations and 

Policies .02. 

6See Exchange Rule 404, Interpretations and 

Policies .02(e). 

7See Exchange Rule 404(f). 

8 Id. The term ‘‘primary market’’ means the 

principal market in which an underlying security 

is traded. See Exchange Rule 100. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

11See Exchange Rule 404, Interpretations and 

Policies .02(e). 12 Id. [sic]. 

of the next five Fridays that are business 

days and are not Fridays in which 

monthly or quarterly options expire.5

These Short Term Option Series trade in 

$0.50, $1, or $2.50 strike price intervals 

depending on the strike price and 

whether the option trades in dollar 

increments in the related monthly 

expiration.6 Specifically, short term 

options in non-index option classes 

admitted to the Short Term Options 

Series Program currently trade in: (1) 

$0.50 or greater strike price intervals 

where the strike price is less than $75, 

and $1 or greater where the strike price 

is between $75 and $150 for all classes 

that participate in the Short Term 

Option Series Program; (ii) $0.50 strike 

price intervals for classes that trade in 

one dollar increments in non-Short 

Term Options and that participate in the 

Short Term Option Series Program; or 

(iii) $2.50 or higher strike price intervals 

where the strike price is above $150. 

The Exchange also operates a $2.50 

Strike Price Program that permits the 

Exchange to select up to sixty options 

classes on individual stocks to trade in 

$2.50 strike price intervals, in addition 

to option classes selected by other 

securities exchanges that employ a 

similar program under their respective 

rules.7 Monthly expiration options in 

classes admitted to the $2.50 Strike 

Price Program trade in $2.50 intervals 

where the strike price is (1) greater than 

$25 but less than $50; or (2) between 

$50 and $100 if the strikes are no more 

than $10 from the closing price of the 

underlying stock in its primary market 

on the preceding day.8 These strike 

price parameters conflict with strike 

prices allowed for short term options 

because dollar strikes between $75 and 

$100 that are otherwise allowed under 

the Short Term Option Series Program 

may be within $0.50 of strikes listed 

pursuant to the $2.50 Strike Price 

Program. In order to remedy this 

conflict, the Exchange proposes to 

extend the $0.50 or greater strike price 

intervals currently allowed for Short 

Term Options Series with strike prices 

less than $75 to Short Term Options 

Series with strike prices less than $100. 

With this proposed change, Short Term 

Options Series in non-index option 

classes will trade in: (1) $0.50 or greater 

intervals for strike prices less than $100, 

or for option classes that trade in one 

dollar increments in the related monthly 

expiration option; (2) $1intervals for 

strike prices that are between $100 and 

$150; and (3) $2.50 or greater intervals 

for strike prices above $150. 

2. Statutory Basis 

MIAX believes that its proposed rule 

change is consistent with Section 6(b) of 

the Act 9 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 10

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

During the month prior to expiration, 

the Exchange is permitted to list related 

monthly option contracts in the 

narrower strike price intervals available 

for Short Term Options Series.11 After 

transitioning to short term strike price 

intervals, however, monthly options 

that trade in $2.50 intervals between 

$50 and $100 under the $2.50 Strike 

Price Program, trade with dollar strikes 

between $75 and $150. Due to the 

overlap of $1 and $2.50 intervals, the 

Exchange cannot list certain dollar 

strikes between $75 and $100 that 

conflict with the prior $2.50 strikes. For 

example, if the Exchange initially listed 

monthly options on ABC with $75, 

$77.50, and $80 strikes, the Exchange 

could list the $76 and $79 strikes when 

these transition to short term intervals. 

The Exchange would not be permitted 

to list the $77 and $78 strikes, however, 

as these are $0.50 away from the $77.50 

strike already listed on the Exchange. 

This creates gapped strikes between $75 

and $100, where investors are not able 

to trade otherwise allowable dollar 

strikes on the Exchange. Similarly, these 

conflicting strike price parameters 

create issues for investors who want to 

roll their positions from monthly to 

weekly expirations. In the example 

above, for instance, an investor that 

purchased a monthly ABC option with 

a $77.50 strike price would not be able 

to roll that position into a later short 

term expiration with the same strike 

price as that strike is unavailable under 

current Short Term Option Series 

Program rules. Permitting $0.50 

intervals for Short Term Options Series 

up to $100 would remedy both of these 

issues as strikes allowed under the 

$2.50 Strike Price Program would not 

conflict with the finer $0.50 strike price 

interval. 

The Short Term Option Series 

Program has been well-received by 

market participants and the Exchange 

believes that introducing finer strike 

price intervals for Short Term Options 

Series with strike prices between $75 

and $100, and thereby eliminating the 

gapped strikes described above, will 

benefit these market participants by 

giving them more flexibility to closely 

tailor their investment and hedging 

decisions. 

With regard to the impact of this 

proposal on system capacity, the 

Exchange has analyzed its capacity and 

represents that it and the Options Price 

Reporting Authority (‘‘OPRA’’) have the 

necessary systems capacity to handle 

any potential additional traffic 

associated with this proposed rule 

change. The Exchange believes that its 

members will not have a capacity issue 

as a result of this proposal. The 

Exchange also represents that it does not 

believe this expansion will cause 

fragmentation of liquidity. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. In this regard 

and as indicated above, the Exchange 

notes that the rule change is being 

proposed as a competitive response to 

filings submitted by ISE and BOX.12 To 

the contrary, the Exchange believes that 

the proposed rule change will result in 

additional investment options and 

opportunities to achieve the investment 

objectives of market participants seeking 

efficient trading and hedging vehicles, 

to the benefit of investors, market 

participants, and the marketplace in 

general. Additionally, the Exchange 

believes that the proposed rule change 

is necessary to permit fair competition 

among the options exchanges with 

respect to Short Term Option Series 

Programs. 

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. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Notices 10175 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

15For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not (i) significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, the 

proposed rule change has become 

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

of the Act 13 and Rule 19b–4(f)(6) 

thereunder.14

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange stated that waiver 

of this requirement will allow the 

Exchange to compete with other 

exchanges with similar provisions 

without putting the Exchange at a 

competitive disadvantage. For this 

reason, the Commission believes that 

the proposed rule change presents no 

novel issues and that waiver of the 30- 

day operative delay is consistent with 

the protection of investors and the 

public interest; and will allow the 

Exchange to remain competitive with 

other exchanges. Therefore, the 

Commission designates the proposed 

rule change to be operative upon 

filing.15

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

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– 

MIAX–2015–10 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–2015–10. 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– 

2015–10 and should be submitted on or 

before March 18, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–03810 Filed 2–24–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74311; File No. SR– 

ISEGemini–2015–05] 

Self-Regulatory Organizations; ISE 

Gemini, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Extend the Limit UpLimit Down Obvious Error Pilot 

February 19, 2015. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

19, 2015, ISE Gemini, LLC (the 

‘‘Exchange’’ or ‘‘ISE Gemini’’) 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 self-regulatory 

organization. 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 the Substance 

of the Proposed Rule Change 

ISE Gemini proposes to extend a pilot 

program under Rule 703A(d) that 

suspends Rule 720 regarding obvious 

errors during Limit and Straddle States 

in securities that underlie options 

traded on the Exchange. The text of the 

proposed rule change is available on the 

Exchange’s Internet Web site at http://

www.ise.com, at the principal office of 

the Exchange, 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 

self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B and C below, of the most 

significant aspects of such statements. 


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