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[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)]
[Notices]
[Pages 10173-10175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03810]

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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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange 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\
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    \3\ See 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).
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    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

[[Page 10174]]

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.
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    \4\ See Exchange Rule 404, Interpretations and Policies .02(a).
    \5\ See Exchange Rule 404, Interpretations and Policies .02.
    \6\ See Exchange Rule 404, Interpretations and Policies .02(e).
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    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.
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    \7\ See 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.
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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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    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.
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    \11\ See Exchange Rule 404, Interpretations and Policies .02(e).
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    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.
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    \12\ Id. [sic].
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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.

[[Page 10175]]

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\
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    \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.
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    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\
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    \15\ For 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).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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 [email protected]. 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\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03810 Filed 2-24-15; 8:45 am]
BILLING CODE 8011-01-P
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