Document ID: SEC-2017-2169-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2017-12-28T05:00Z

[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Pages 61613-61614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27990]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82385; File No. 4-715]

Self-Regulatory Organizations; MIAX PEARL, LLC; Order Declaring 
Effective a Minor Rule Violation Plan

December 21, 2017.
    On November 16, 2017, MIAX PEARL, LLC (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed minor 
rule violation plan (``MRVP'' or ``Plan'') pursuant to Section 19(d)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19d-
1(c)(2) thereunder.\2\ The proposed MRVP was published for comment on 
November 28, 2017.\3\ The Commission received no comments on the 
proposal. This order declares the Exchange's proposed MRVP effective.
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    \1\ 15 U.S.C. 78s(d)(1)
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ See Securities Exchange Act Release No. 82146 (November 22, 
2017), 82 FR 56280 (``Notice'').
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    The Exchange's MRVP specifies the rule violations which will be 
included in the Plan and will have sanctions not exceeding $2,500. Any 
violations which are resolved under the MRVP would not be subject to 
the provisions of Rule 19d-1(c)(1) of the Act,\4\ which requires that a 
self-regulatory organization (``SRO'') promptly file notice with the 
Commission of any final disciplinary action taken with respect to any 
person or organization.\5\ In accordance with Rule 19d-1(c)(2) under 
the Act,\6\ the Exchange proposed to designate certain specified rule 
violations as eligible for consideration as minor rule violations, and 
requested that it be relieved of the prompt reporting requirements 
regarding such violations, provided it gives notice of the violations 
to the Commission on a quarterly basis.
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    \4\ 17 CFR 240.19d-1(c)(1).
    \5\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 to allow SROs to submit for Commission approval plans for the 
abbreviated reporting of minor disciplinary infractions. See 
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 
23828 (June 8, 1984). Any disciplinary action taken by an SRO 
against any person for violation of a rule of the SRO which has been 
designated as a minor rule violation pursuant to a plan filed with 
and declared effective by the Commission is not considered ``final'' 
for purposes of Section 19(d)(1) of the Act if the sanction imposed 
consists of a fine not exceeding $2,500 and the sanctioned person 
has not sought an adjudication, including a hearing, or otherwise 
exhausted his administrative remedies.
    \6\ 17 CFR 240.19d-1(c)(2).
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    The Exchange proposed to include in its MRVP the procedures and 
violations currently included in Exchange Rule 1014 (``Imposition of 
Fines for Minor Rule Violations'').\7\ According to the Exchange's 
proposed MRVP, under Exchange Rule 1014, the Exchange may impose a fine 
(not to exceed $2,500) on any Member, or person associated with or 
employed by a Member, for any rule listed in Rule 1014(d).\8\ The 
Exchange shall serve the person against whom a fine is imposed with a 
written statement setting forth the rule or rules violated, the act or 
omission constituting each such violation, the fine imposed, and the 
date by which such determination becomes final or by which such 
determination must be contested. If the person against whom the fine is 
imposed pays the fine, the payment shall be deemed to be a waiver of 
the person's right to a disciplinary proceeding and any review of the 
matter under the Exchange rules. Any person against whom a fine is 
imposed may contest the Exchange's determination by filing with the 
Exchange a written answer, at which point the matter shall

[[Page 61614]]

proceed under the rules governing formal disciplinary proceedings.
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    \7\ The Exchange received its grant of registration on December 
13, 2016, which included approving the rules that govern the 
Exchange. See Securities Exchange Act Release No. 79543 (December 
13, 2016), 81 FR 92901 (December 20, 2016).
    \8\ While Rule 1014 allows the Exchange to administer fines up 
to $5,000, the Exchange is only seeking relief from the reporting 
requirements of paragraph (c)(1) of Rule 19d-1 for fines 
administered under Rule 1014(d) that do not exceed $2,500.
    Under the proposed MRVP, violations of the following rules would 
be appropriate for disposition under the MRVP: Rule 307 (Position 
Limits); Rule 803 (Focus Reports); Rule 804 (Requests for Trade 
Data); Rule 520 (Order Entry); Rule 605 (Execution of Orders in 
Appointed Options); Rule 314 (Mandatory Systems Testing); Rule 700 
(Exercise of Option Contracts); Rule 309 (Exercise Limits); Rule 310 
(Reports Related to Position Limits); Rule 403 (Trading in 
Restricted Classes); Rule 605 (Market Maker Quotations); and Rules 
1301, 1302, and 1303 (Failure to Timely File Amendments to Form U4, 
Form U5, and Form BD). According to the Exchange, Conduct and 
Decorum Policies under Rule 1014(d)(4) are excluded from the 
proposed MRVP. See Notice, supra note 3.
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    Once the Exchange's MRVP is effective, the Exchange will provide to 
the Commission a quarterly report for any actions taken on minor rule 
violations under the MRVP. The quarterly report will include: The 
disposition date, the name of the firm/individual, the Exchange's 
internal enforcement number, the review period, the nature of the 
violation type, the number of the rule that was violated, the number of 
times the violation occurred, and the sanction imposed.\9\
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    \9\ The Exchange attached a sample form of the quarterly report 
with its submission to the Commission.
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    The Commission finds that the proposal is consistent with the 
public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act,\10\ because the MRVP will permit the Exchange to carry 
out its oversight and enforcement responsibilities as an SRO more 
efficiently in cases where formal disciplinary proceedings are not 
necessary due to the minor nature of the particular violation.
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    \10\ 17 CFR 240.19d-1(c)(2).
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    In declaring the Exchange's MRVP effective, the Commission does not 
minimize the importance of compliance with Exchange rules and all other 
rules subject to the imposition of sanctions under Exchange Rule 1014. 
Violation of an SRO's rules, as well as Commission rules, is a serious 
matter. However, Exchange Rule 1014 provides a reasonable means of 
addressing violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects the Exchange to 
continue to conduct surveillance and make determinations based on its 
findings, on a case-by-case basis, regarding whether a violation 
requires formal disciplinary action or whether a sanction under the 
MRVP is appropriate.
    It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the 
Act,\11\ that the proposed MRVP for MIAX PEARL, LLC, File No. 4-715, 
be, and hereby is, declared effective.
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    \11\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(44).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-27990 Filed 12-27-17; 8:45 am]
 BILLING CODE 8011-01-P