Federal Register / Vol. 79, No. 245 / Monday, December 22, 2014 / Notices 76415 

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

2 17 CFR 240.19b–4. 

Funds in an amount at least equal to any 

compensation received by the 

Subadviser, or an affiliated person of the 

Subadviser, from an Unaffiliated Fund, 

other than any advisory fees paid to the 

Subadviser or its affiliated person by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund 

made at the direction of the Subadviser. 

In the event that the Subadviser waives 

fees, the benefit of the waiver will be 

passed through to the applicable Fund 

of Funds. 

11. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(l) or 3(c)(7) of the Act in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund: (a) 

receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(l) 

of the Act); or (b) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to (i) 

acquire securities of one or more 

investment companies for short-term 

cash management purposes, or (ii) 

engage in interfund borrowing and 

lending transactions. 

12. Any sales charges and/or service 

fees charged with respect to shares of a 

Fund of Funds will not exceed the 

limits applicable to fund of funds set 

forth in NASD Conduct Rule 2830. 

Other Investments by Same Group Fund 

of Funds 

Applicants agree that the relief to 

permit Same Group Fund of Funds to 

invest in Other Investments shall be 

subject to the following condition: 

13. Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Same Group Fund of 

Funds from investing in Other 

Investments as described in the 

application. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29809 Filed 12–19–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73846; File No. SR–MIAX– 

2014–64] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change by Miami International 

Securities Exchange, LLC To Amend 

Exchange Rules 307 and 309 To 

Extend the SPY Pilot Program 

December 16, 2014. 

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 December 

11, 2014, 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. 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 

The Exchange is filing a proposal to 

amend Exchange Rules 307 and 309 to 

extend the pilot program that eliminates 

the position and exercise limits for 

physically-settled options on the SPDR 

S&P 500 ETF Trust (‘‘SPY Pilot 

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 amend 

Exchange Rule 307, Commentary .01, 

Position Limits, and Exchange Rule 309, 

Commentary .01, Exercise limits, to 

extend the duration of the SPY Pilot 

Program through July 12, 2015. There 

are no substantive changes being 

proposed to the SPY Pilot Program. In 

proposing to extend the SPY Pilot 

Program, the Exchange affirms its 

consideration of several factors that 

support the proposal to establish the 

SPY Pilot Program, which include: (1) 

The liquidity of the option and the 

underlying security; (2) the market 

capitalization of the underlying security 

and the securities that make up the S&P 

500 Index; (3) options reporting 

requirements; and (4) financial 

requirements imposed by MIAX and the 

Commission. 

The current Pilot Report for the SPY 

Pilot Program is not due until on or 

before January 15, 2015. The Exchange 

notes that it is not aware of any 

problems created by the current SPY 

Pilot Program and does not foresee any 

problems with the proposed extension. 

The Exchange will formally submit the 

current Pilot Report for the SPY Pilot 

Program on or before January 15, 2015. 

In addition, the Exchange represents 

that if it chooses to extend or seek 

permanent approval of the SPY Pilot 

Program, that the Exchange will submit 

another Pilot Report at least thirty (30) 

days prior to the expiration of the 

extended SPY Pilot Program time period 

which would cover the period between 

reports. The Pilot Report will compare 

the impact of the pilot program, if any, 

on the volumes of SPY options and the 

volatility in the price of the underlying 

SPY contract, particularly at expiration. 

The Pilot Report also will detail the size 

and different types of strategies 

employed with respect to positions 

established in SPY options; note 

whether any problems, in the 

underlying SPY ETF or otherwise, arose 

as a result of the no-limit approach; and 

include any other information that may 

be useful in evaluating the effectiveness 

of the pilot program. In preparing the 

Pilot Report, the Exchange will utilize 

various data elements such as volume 

and open interest. In addition the 

Exchange would make available to 

Commission staff data elements relating 

to the effectiveness of the SPY Pilot 

Program. 

Prior to the expiration of the SPY 

Pilot Program and based upon the 


tkelley on DSK3SPTVN1PROD with NOTICES
76416 Federal Register / Vol. 79, No. 245 / Monday, December 22, 2014 / Notices 

3 15 U.S.C. 78f(b). 

4 15 U.S.C. 78f(b)(5). 

5 15 U.S.C. 78s(b)(3)(A). 

6 17 CFR 240.19b–4(f)(6). 

7 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission 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. The 

Exchange has satisfied this requirement. 

8 17 CFR 240.19b–4(f)(6). 

9 17 CFR 240.19b–4(f)(6)(iii). 

10For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

findings of the Pilot Report, the 

Exchange will be able to either extend 

the SPY Pilot Program, adopt the SPY 

Pilot Program on a permanent basis, or 

terminate the SPY Pilot Program. If the 

SPY Pilot Program is not extended or 

adopted on a permanent basis by the 

expiration of the Extended Pilot, the 

position limits for SPY would revert to 

limits in effect at the commencement of 

the SPY Pilot Program. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 

Section 6(b) 3 of the Act in general, and 

furthers the objectives of Section 

6(b)(5) 4 of the Act 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. 

Specifically, the Exchange believes 

that extending the SPY Pilot Program 

promotes just and equitable principles 

of trade by permitting market 

participants, including market makers, 

institutional investors and retail 

investors, to establish greater positions 

when pursuing their investment goals 

and needs. The Exchange also believes 

that economically equivalent products 

should be treated in an equivalent 

manner so as to avoid regulatory 

arbitrage, especially with respect to 

position limits. Treating SPY and SPX 

options differently by virtue of imposing 

different position limits is inconsistent 

with the notion of promoting just and 

equitable principles of trade and 

removing impediments to perfect the 

mechanisms of a free and open market. 

At the same time, the Exchange believes 

that the elimination of position limits 

for SPY options would not increase 

market volatility or facilitate the ability 

to manipulate the market. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not designed to 

address any aspect of competition, 

whether between the Exchange and its 

competitors, or among market 

participants. Instead, the proposed rule 

change is designed to allow the SPY 

Pilot Program to continue as other SROs 

have adopted similar provisions. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A) of the Act 5 and Rule 19b– 

4(f)(6) thereunder.6 Because the 

foregoing 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act and Rule 19b– 

4(f)(6) thereunder.7

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 8 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 9

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay, noting that the 

Exchange believes a waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest because it would ensure fair 

competition among the exchanges by 

allowing the SPY Pilot Program to 

continue without interruption. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 

operative delay and designates the 

proposed rule change operative upon 

filing.10

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–2014–64 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2014–64. 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 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 245 / Monday, December 22, 2014 / Notices 76417 

11 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, OCC amended the filing 

to include the Monthly Clearing Fund Sizing 

Procedure and the Financial Resource Monitoring 

and Call Procedure as exhibits to the filing, both 

defined hereinafter, as Exhibits 5A and 5B, 

respectively. 

4 ‘‘Financial Resources’’ means, with respect to a 

projected loss attributable to a particular Clearing 

Member, the sum of the margin deposits and 

deposits in lieu of margin in respect of such 

Clearing Member’ accounts, and the value of OCC’s 

Clearing Fund, including both the Base Amount, as 

defined below, and the prudential margin of safety, 

as discussed below. 

5 ‘‘Clearing Member Group’’ means a Clearing 

Member and any affiliated entities that control, are 

controlled by or are under common control with 

such Clearing Member. See OCC By-Laws, Article 

I, Sections 1.C.(15) and 1.M(11). 

6This proposed rule filing has also been filed as 

an advance notice filing (SR–OCC–2014–811). 

7The procedures described herein would be in 

effect until the development of a new standard 

Clearing Fund sizing methodology. Following such 

development, which will include a quantitative 

approach to calculating the ‘‘prudential margin of 

safety,’’ as discussed below, OCC will file a separate 

rule change and advance notice with the 

Commission that will include a description of the 

new methodology as well as a revised Monthly 

Clearing Fund Sizing Procedure. 

8On October 15, 2014, OCC filed an emergency 

notice with the Commission to suspend the 

effectiveness of the second sentence of Rule 

1001(a). See Securities Exchange Act Release No. 

73579 (November 12, 2014), 79 FR 68747 

(November 18, 2014) (SR–OCC–2014–807). On 

November 13, 2014, OCC filed SR–OCC–2014–21 

with the Commission to delete the second sentence 

of Rule 1001(a), preserving the suspended 

effectiveness of that sentence until such time as the 

Commission approves or disapproves SR–OCC– 

2014–21. See Securities Exchange Act Release No. 

73685 (November 25, 2014) (SR–OCC–2014–21). At 

the time of this filing, the referenced Securities 

Exchange Act Release had not yet been published 

in the Federal Register. 

9See OCC Rule 1001(a). 

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–MIAX– 

2014–64, and should be submitted on or 

before January 12, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29815 Filed 12–19–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73853; File No. SR–OCC– 

2014–22] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of a Proposed Rule Change, 

and Amendment No. 1 Thereto, To 

Establish Procedures Regarding the 

Monthly Resizing of its Clearing Fund 

and the Addition of Financial 

Resources 

December 16, 2014. 

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 December 

1, 2014, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by OCC. On December 16, 2014, OCC 

filed Amendment No. 1 to the proposed 

rule change.3 This Amendment No. 1 

amends and replaces in its entirety the 

proposed rule change as originally filed 

on December 1, 2014. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

OCC proposes to establish procedures 

regarding the monthly resizing of its 

Clearing Fund and the addition of 

financial resources through intra-day 

margin calls and/or an intra-month 

increase of the Clearing Fund to ensure 

that it maintains adequate financial 

resources in the event of a default of a 

Clearing Member or group of affiliated 

Clearing Members presenting the largest 

exposure to OCC. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

This Amendment No. 1 to SR–OCC– 

2014–22 (‘‘Filing’’) amends and replaces 

in its entirety the Filing as originally 

submitted on December 1, 2014. The 

purpose of this Amendment No. 1 to the 

Filing is to include the procedures that 

support the processes described in Item 

3 of the Filing as Exhibit 5A, Monthly 

Clearing Fund Sizing Procedure, and 

Exhibit 5B, Financial Resources 

Monitoring and Call Procedure. 

The proposed rule change is intended 

to describe the situations in which OCC 

would exercise authority under its Rules 

to ensure that it maintains adequate 

Financial Resources 4 in the event that 

stress tests reveal a default of the 

Clearing Member or Clearing Member 

Group 5 presenting the largest exposure 

would threaten the then-current 

Financial Resources. This proposed rule 

change would establish procedures 

governing: (i) OCC’s resizing of the 

Clearing Fund on a monthly basis 

pursuant to Rule 1001(a) (the ‘‘Monthly 

Clearing Fund Sizing Procedure’’); and 

(ii) the addition of Financial Resources 

through an intra-day margin call on one 

or more Clearing Members under Rule 

609 and, if necessary, an intra-month 

increase of the Clearing Fund pursuant 

to Rule 1001(a) (the ‘‘Financial Resource 

Monitoring and Call Procedure’’).6 The 

Monthly Clearing Fund Sizing 

Procedure would permit OCC to 

determine the size of the Clearing Fund 

by relying on a broader range of sound 

risk management practices than those 

historically used under Rule 1001(a).7

The Financial Resource Monitoring and 

Call Procedure would require OCC to 

collect additional Financial Resources 

in certain circumstances, establish how 

OCC calculates and collects such 

resources and provide the timing by 

which such resources would be required 

to be deposited by Clearing Members. 

Background 

OCC monitors the sufficiency of the 

Clearing Fund on a daily basis but, prior 

to emergency action taken on October 

15, 2014,8 OCC had no express authority 

to increase the size of the Clearing Fund 

on an intra-month basis.9 During 

ordinary course daily monitoring on 

October 15, 2014, and as a result of 

increased volatility in the financial 

markets in October 2014, OCC 

determined that the Financial Resources 

needed to cover the potential loss 

associated with a default of the Clearing 

Member or Clearing Member Group 

presenting the largest exposure could 


tkelley on DSK3SPTVN1PROD with NOTICES