Document ID: SEC-2019-0251-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX Emerald, LLC
Posted Date: 2019-03-06T05:00Z

[Federal Register Volume 84, Number 44 (Wednesday, March 6, 2019)]
[Notices]
[Pages 8127-8129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03983]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85224; File No. SR-EMERALD-2019-08]

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Exchange Rule 503, Openings on the Exchange, and Rule 515, Execution of 
Orders and Quotes, In Order To Harmonize Its Rule To the Rules of MIAX 
Options

February 28, 2019.
    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 22, 2019, MIAX Emerald, LLC (``MIAX 
Emerald'' 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 503, 
Openings on the Exchange, and MIAX Emerald Rule 515, Execution of 
Orders and Quotes, in order to harmonize its rule to the rules of MIAX 
Options.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX 
Emerald'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 MIAX Emerald Rule 503, Openings on 
the Exchange, and MIAX Emerald Rule 515, Execution of Orders and 
Quotes, in order to harmonize its rule to the rules of MIAX Options.
Background
    MIAX Emerald plans to commence operations as a national securities 
exchange registered under Section 6 of the Act \3\ on March 1, 2019. As 
described more fully in MIAX Emerald's Form 1 application,\4\ the 
Exchange is an affiliate of MIAX Options and MIAX PEARL, LLC (``MIAX 
PEARL''). MIAX Emerald Rules, in their current form, were filed as 
Exhibit B to its Form 1 on August 16, 2018, and at that time, the above 
mentioned rules, were substantially similar to the rules of the MIAX 
Options exchange. MIAX Options has filed a proposed rule change to 
amend MIAX Options Rule 503, Openings on the Exchange, and MIAX Options 
Rule 515, Execution of Orders and Quotes.\5\ In order to ensure 
consistent operation of both MIAX Emerald and MIAX Options through 
having consistent rules, the Exchange proposes to amend MIAX Emerald 
Rules as described below.
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    \3\ 15 U.S.C. 78f.
    \4\ See Securities Exchange Act Release No. 84891 (December 20, 
2018), 83 FR 67421 (December 28, 2018) (File No. 10-233) (order 
approving application of MIAX EMERALD, LLC for registration as a 
national securities exchange).
    \5\ See SR-MIAX-2019-06 filed on February 22, 2019 to amend 
Exchange Rule 503, Openings on the Exchange, and Exchange Rule 515, 
Execution of Orders and Quotes, to delete certain rule text 
regarding functionality that the Exchange proposes to remove from 
the System.
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Proposal
    The Exchange proposes to amend Exchange Rule 503, Openings on the 
Exchange, and Exchange Rule 515, Execution of Orders and Quotes, to 
delete certain rule text regarding functionality that the Exchange 
proposes to remove from the System \6\ and to make certain minor 
clarifying changes related thereto. These changes would make MIAX 
Emerald Rule 503 and Rule 515 consistent with MIAX Options Rule 503 and 
Rule 515 and are identical to changes made by MIAX Options when it 
modified its rule.\7\
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    \6\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \7\ See supra note 5.
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    First, the Exchange proposes to delete Exchange Rule 515, 
Interpretations and Policies .01. Presently, this rule states that 
``[r]esubmission of Orders. A Member \8\ may submit written 
instructions to the Exchange designating orders the Member submits as 
eligible for automatic resubmission when the order or any remaining 
part of the order has been automatically cancelled by the System. The 
resubmitted order will be automatically submitted as a new order. This 
automatic resubmission functionality of the System will not apply to 
Immediate-or-Cancel, Fill-or-Kill or Intermarket Sweep Orders.'' The 
Exchange notes that this functionality was completely voluntary for 
Members to use on MIAX Options and was intended to provide Members with 
an automated way to resubmit certain cancelled orders. The Exchange 
believes this functionality is no longer necessary as very few Members 
on MIAX Options

[[Page 8128]]

ever used such functionality, and no Members on MIAX Options are 
currently utilizing this functionality. Therefore, the Exchange 
proposes to delete this rule text as it believes no Member of MIAX 
Emerald would ever utilize this functionality because all Members of 
MIAX Emerald are currently also Members of MIAX Options.
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    \8\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
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    Second, the Exchange proposes to amend Exchange Rule 515(e) related 
to handling of Immediate-or-Cancel (``IOC'') Orders. Specifically, the 
Exchange proposes to delete the last sentence of Rule 515(e) which 
currently states that ``[c]ontracts remaining from an IOC order will 
not be eligible for automatic resubmissions as a new order for Members 
who have instructed the Exchange in writing to re-enter remaining 
contracts.'' The Exchange notes that, since it is proposing to delete 
the order resubmission functionality, this corresponding rule text is 
no longer necessary because it was intended as a carve-out for IOC 
orders from the functionality the Exchange now proposes to delete from 
Interpretations and Policies .01.
    Third, the Exchange proposes to amend Exchange Rule 515(f) related 
to handling of Fill-or-Kill (``FOK'') Orders. Specifically, the 
Exchange proposes to delete the last sentence of Rule 515(f) which 
currently states that ``[a]n FOK order will not be eligible for 
automatic resubmissions as a new order for Members who have instructed 
the Exchange in writing to re-enter remaining contracts.'' Similarly, 
this corresponding rule text is no longer necessary because it was 
intended as a carve-out for FOK orders from the functionality the 
Exchange now proposes to delete from Interpretations and Policies .01.
    Fourth, the Exchange proposes to amend Exchange Rule 515(g) related 
to handling of Intermarket Sweep Orders and Intermarket Sweep eQuote 
(``ISOs''). Specifically, the Exchange proposes to delete part of the 
last sentence of Rule 515(g) which currently states that ``. . .and are 
not eligible for automatic resubmissions as a new order for Members who 
have instructed the Exchange in writing to re-enter remaining 
contracts.'' Similarly, this corresponding rule text is no longer 
necessary because it was intended as a carve-out for ISOs from the 
functionality the Exchange now proposes to delete from Interpretations 
and Policies .01.
    Finally, the Exchange proposes to amend Exchange Rule 
503(f)(2)(vii)(B)(5) to delete a sentence related to the automatic 
resubmission of new orders as part of the opening process. 
Specifically, the Exchange proposes to delete text which reads ``. . 
.unless the Member that submitted the original order has instructed the 
Exchange in writing to re-enter the remaining size, in which case the 
remaining size will be automatically submitted as a new order. . .'' 
The Exchange notes that this functionality was completely voluntary for 
Members of MIAX Options to use and was intended to provide Members of 
MIAX Options with an automated way to resubmit certain cancelled 
orders. The Exchange believes this functionality is no longer necessary 
as very few Members of MIAX Options ever used such functionality, and 
the Exchange believes no Members of MIAX Emerald would ever utilize 
this functionality because all Members of MIAX Emerald are currently 
also Members of MIAX Options. Therefore, the Exchange proposes to 
delete this rule text as it no longer offers this functionality to MIAX 
Options Members,\9\ and does not intend to offer this functionality to 
MIAX Emerald Members. The Exchange believes that the proposed changes 
will provide greater clarity to Members and the public regarding the 
Exchange's Rules, and it is in the public interest for rules to be 
accurate and concise so as to minimize the potential for confusion.
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    \9\ See supra note 5.
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    The proposed changes are scheduled to become operative March 1, 
2019.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \10\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed changes promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because the proposed rule change deletes rule text that relates to 
voluntary functionality that the Exchange believes no Member would ever 
utilize and updates corresponding rules to remove carve-outs which 
would no longer be applicable, to provide uniformity in the Exchange's 
rulebook with respect to System functionality. The Exchange notes that 
the proposed changes to Exchange Rule 515, Execution of Orders and 
Quotes, and Exchange Rule 503, Openings on the Exchange, would not have 
a substantive impact on Exchange Members since the Exchange believes no 
Members would ever utilize such functionality because all Members of 
MIAX Emerald are currently also Members of MIAX Options. As such, the 
proposed amendments would foster cooperation and coordination with 
persons engaged in facilitating transactions in securities and would 
remove impediments to and perfect the mechanism of a free and open 
market and a national exchange system, since it is proposing to remove 
rule text that relates to functionality that would not be used by its 
Members. The Exchange further believes that the proposed rule change is 
consistent with the Act because Members will have other means of 
submitting orders and the removal of the automatic order resubmission 
functionality would not impact the ability of Members to transact on 
the Exchange. The Exchange does not believe that removing this 
functionality will negatively impact Members because very few MIAX 
Options Members ever used such functionality, and the Exchange believes 
no MIAX Emerald Members would ever utilize this functionality because 
all Members of MIAX Emerald are currently also Members of MIAX Options.
    Additionally, the Exchange believes the proposed changes promote 
just and equitable principles of trade and remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system because they seek to add additional clarity to, and improve the 
accuracy of, the Exchange's rules. In particular, the Exchange believes 
that the proposed rule changes will provide clarity and transparency of 
the Exchange's rules to Members and the public because it would delete 
rule text related to voluntary functionality that is no longer 
available on MIAX Options \12\ and would not be available on MIAX 
Emerald, and it is in the public interest for rules to be accurate and 
concise so as to minimize the potential for confusion.
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    \12\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    MIAX Emerald does not believe that the proposed rule change will 
impose

[[Page 8129]]

any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The proposed rule change will have no 
impact on competition as it is not designed to address any competitive 
issues but rather is designed to delete rule text that relates to 
voluntary functionality that is no longer used by Members of MIAX 
Options and that the Exchange believes would never be utilized by 
Members of MIAX Emerald because all Members of MIAX Emerald are 
currently also Members of MIAX Options, and updates corresponding rules 
to remove carve-outs which would no longer be applicable as a result. 
The Exchange does not believe that the proposed rule change will impose 
any burden on intermarket competition as the Rules apply equally to all 
Exchange Members.

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 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 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 \13\ and Rule 19b-4(f)(6) \14\ 
thereunder.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) normally does 
not become operative for 30 days from the date of filing. However, Rule 
19b-4(f)(6)(iii) \15\ 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. The Exchange seeks to make the voluntary 
functionality contained in Exchange Rule 515, Execution of Orders and 
Quotes, and Exchange Rule 503, Openings on the Exchange no longer 
available on March 1, 2019. The Commission believes that the waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest and hereby waives the 30-day 
operative delay and designates the proposal operative on March 1, 
2019.\16\
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ 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 rule-comments@sec.gov. Please include 
File Number SR-EMERALD-2019-08 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-EMERALD-2019-08. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-EMERALD-2019-08 and should be submitted 
on or before March 27, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-03983 Filed 3-5-19; 8:45 am]
 BILLING CODE 8011-01-P