Document ID: SEC-2015-1819-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2015-11-04T05:00Z

[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)]
[Notices]
[Pages 68373-68376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28026]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76303; File No. SR-MIAX-2015-61]

Self-Regulatory Organizations: Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt Rule 321 Business Continuity and Disaster 
Recovery Plans Testing Requirements for Designated Members

October 29, 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 October 21, 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 adopt Rule 321, Business 
Continuity and Disaster Recovery Plans Testing Requirements for 
Designated Members.
    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

[[Page 68374]]

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 is proposing to adopt new Rule 321 to require those 
MIAX Members designated by the Exchange to participate in certain 
scheduled testing of the Exchange's business continuity and disaster 
recovery plans (``BC/DR plans''), as required by Section 1004 of 
Regulation Systems Compliance and Integrity (``Regulation SCI'').\3\
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    \3\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR 72252 (December 5, 2014) (the ``Reg SCI Adopting 
Release'').
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    As adopted by the Securities and Exchange Commission 
(``Commission''), Regulation SCI applies to certain self-regulatory 
organizations (including the Exchange), alternative trading systems 
(``ATSs''), plan processors, and exempt clearing agencies 
(collectively, ``SCI entities''), and will require these SCI entities 
to comply with requirements with respect to the automated systems 
central to the performance of their regulated activities. Among the 
requirements of Regulation SCI is Rule 1001(a)(2)(v), which requires 
the Exchange and other SCI entities to maintain ``[b]usiness continuity 
and disaster recovery plans that include maintaining backup and 
recovery capabilities sufficiently resilient and geographically diverse 
and that are reasonably designed to achieve next business day 
resumption of trading and two-hour resumption of critical SCI systems 
following a wide-scale disruption.'' The Exchange takes pride in the 
reliability and availability of its systems. Historically, MIAX systems 
have been up and available more than 99.999% of the time; yet as a 
precaution, MIAX has and intends to continue to put extensive time and 
resources toward planning for system failures and to implement and 
maintain robust BC/DR plans consistent with the Rule. As set forth 
below, in connection with Regulation SCI, the Exchange is proposing to 
require certain Members to participate in testing of the operation of 
the Exchange's BC/DR plans.
    With respect to an SCI entity's BC/DR plans, paragraph (a) of Rule 
1004 of Regulation SCI requires each SCI entity to: ``[e]stablish 
standards for the designation of those members or participants that the 
SCI entity reasonably determines are, taken as a whole, the minimum 
necessary for the maintenance of fair and orderly markets in the event 
of the activation of such plans.'' Paragraph (b) of Rule 1004 further 
requires each SCI entity to ``[d]esignate members or participants 
pursuant to the standards established in paragraph (a) of [Rule 1004] 
and require participation by such designated members or participants in 
scheduled functional and performance testing of the operation of such 
plans, in the manner and frequency specified by the SCI entity, 
provided that such frequency shall not be less than once every 12 
months.'' In order to comply with Regulation SCI, the Exchange proposes 
to adopt Rule 321 governing mandatory participation in testing of 
Exchange disaster recovery plans and systems, as described below.
    First, in paragraph (a) of Rule 321, the Exchange proposes to 
include language from paragraph (a) of Rule 1004 of Regulation SCI to 
summarize the Exchange's obligation pursuant to the rule. Specifically, 
the Exchange proposes to state that ``[p]ursuant to Regulation Systems 
Compliance and Integrity (``Regulation SCI''), 17 CFR 242.1000 et seq. 
and with respect to the Exchange's business continuity and disaster 
recovery plans, including its disaster recovery systems, the Exchange 
is required to establish standards for the designation of Members that 
the Exchange reasonably determines are, taken as a whole, the minimum 
necessary for the maintenance of fair and orderly markets in the event 
of the activation of such plans.'' The Exchange further proposes that 
paragraph (a) indicate that ``[t]he Exchange has established standards 
and will designate Members according to those standards'' as set forth 
in the proposed Rule. In addition, the Exchange proposes to make clear 
that all Members are permitted to connect to the Exchange's disaster 
recovery systems as well as to participate in testing of such systems. 
Proposed paragraph (a) is consistent with the Commission's adoption of 
Regulation SCI, which encouraged ``SCI entities to permit non-
designated members or participants to participate in the testing of the 
SCI entity's BC/DR plans if they request to do so.'' \4\
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    \4\ See id at p. 72350.
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    Second, in paragraph (b) of Rule 321, the Exchange proposes to 
specify the criteria that will result in a Member receiving a 
designation requiring it to connect to the Exchange's disaster recovery 
systems and to participate in functional and performance testing as 
announced by the Exchange, which shall occur at least once every 12 
months. Specifically, proposed paragraph (b) would require all Members 
that account for a meaningful percentage of the Exchange's volume to 
connect to the Exchange's disaster recovery systems and to participate 
in functional and performance testing.
    The Exchange notes that it encourages all Members to connect to the 
Exchange's disaster recovery systems and to participate in testing of 
such systems. In fact, the Exchange provides logical ports to all 
Members that connect to Exchange disaster recovery systems without 
additional charge in order to help reduce the economic burden of 
maintaining connectivity to Exchange disaster recovery systems. 
However, in adopting the requirements of Rule 321(b), including both 
the requirement to maintain connectivity to Exchange disaster recovery 
systems and to participate in mandatory testing of such systems, the 
Exchange intends to subject to the Rule only those Members that the 
Exchange believes are necessary to maintain fair and orderly markets at 
the Exchange. The Exchange believes that designating Members to 
participate in mandatory testing because they account for a meaningful 
percentage of the Exchange's overall volume is a reasonable means to 
ensure the maintenance of a fair and orderly market on the Exchange.
    In addition to paragraphs (a) and (b) described above, the Exchange 
also proposes to adopt Interpretation and Policy .01, which would 
provide additional detail regarding the notice that will be provided to 
Members that have been designated pursuant to paragraph (b) of the Rule 
as well as the Exchange's notice of the applicable measuring calendar 
quarter and method for measuring the volume threshold. As proposed, 
Interpretation and Policy .01 would state that for purposes of 
identifying Members that account for a meaningful percentage of the 
Exchange's overall volume (``meaningful percentage''), the Exchange 
will measure volume executed on the Exchange during a calendar quarter 
to be determined by the Exchange (``measurement quarter'') and 
announced via circular distributed to Members. The meaningful 
percentage will also be determined by the Exchange and published in a 
circular distributed to Members. The meaningful percentage applicable 
in any measurement quarter will be published in advance of such 
measurement quarter and will not apply retroactively to any measurement 
quarter completed or in progress. The Exchange will publish the first 
circular consistent with this proposal prior to the Regulation SCI 
compliance date of

[[Page 68375]]

November 3, 2015. The proposed Interpretation and Policy would also 
require the Exchange to notify individual Members that are subject to 
proposed paragraph (b) based on the applicable calendar quarter's 
volume following the completion of such calendar quarter. The Exchange 
believes the proposed notice requirements will provide Members with 
proper advance notice in the event they become subject to proposed Rule 
321(b) to become compliant with such Rule, including allowing for 
adequate time to make any necessary infrastructure changes to connect 
to the Exchange's disaster recovery systems for a Member that is not 
already connected.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \5\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \6\ 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. The proposal will ensure 
that the Members necessary to ensure the maintenance of a fair and 
orderly market are properly designated consistent with Rule 1004 of 
Regulation SCI. Specifically, the proposal will adopt criteria with 
respect to the designation of Members that are required to participate 
in the testing of the Exchange's BC/DR plans, as well as appropriate 
notification regarding such designation. As set forth in the SCI 
Adopting Release, ``SROs have the authority, and legal responsibility, 
under Section 6 of the Exchange Act, to adopt and enforce rules 
(including rules to comply with Regulation SCI's requirements relating 
to BC/DR testing) applicable to their members or participants that are 
designed to, among other things, foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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.'' \7\ The Exchange believes 
that this proposal is consistent with such authority and legal 
responsibility.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ See supra note 4.
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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. To the contrary, the 
proposal is not a competitive proposal but rather is necessary for the 
Exchange's compliance with Regulation SCI.

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

    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 after the date of the filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) \9\ thereunder.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \11\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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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 Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
as it will allow the Exchange to incorporate changes required under 
Regulation SCI, such as establishing standards for designating BCP/DR 
Participants, prior to the November 3, 2015 compliance date. Therefore, 
the Commission designates the proposed rule change to be operative upon 
filing.\12\
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    \12\ 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.

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-2015-61 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-2015-61. 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

[[Page 68376]]

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-2015-61 and 
should be submitted on or before November 25, 2015.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28026 Filed 11-3-15; 8:45 am]
 BILLING CODE 8011-01-P