Document ID: SEC-2014-1778-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2014-10-22T04:00Z

[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Pages 63196-63198]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25148]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73382; File No. SR-MIAX-2014-52]

Self-Regulatory Organizations: Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend MIAX Rule 1107 Concerning Exchange 
Arbitrations

October 17, 2014.
    Pursuant to the provisions of 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 October 2, 2014, 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 
substantially prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons. The Exchange has designated the proposed rule 
change as constituting a ``non-controversial'' rule change under Rule 
19b-4(f)(6) of the Act,\3\ which renders the proposal effective upon 
receipt of this filing by the Commission.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to harmonize the language 
of MIAX Rule 1107 (Arbitration) with that of another options exchange, 
the International Securities Exchange, LLC (``ISE''). 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 the principal office 
of the Exchange, 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 Rule 1107 (Arbitration) to 
harmonize it with the rules of ISE in order to incorporate by reference 
the arbitration rules of Financial Industry Regulatory Authority, Inc. 
(``FINRA'').\4\ The current MIAX Rule 1107 is based on ISE Rule 1800, 
but incorporates by reference the arbitration rules of the Chicago 
Board Options Exchange (``CBOE''). This was appropriate when the 
Exchange maintained a Regulatory Service Agreement (``RSA'') with CBOE. 
The Exchange, however, recently entered into a RSA with FINRA, which 
became effective on October 1, 2014. The Exchange believes the proposed 
rule change to reference the arbitration rules of FINRA is consistent 
with this recent change in regulatory service providers.
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    \4\ See ISE Rule 1800.
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Proposed Rule Change
    The Exchange proposes to replace current references to CBOE 
arbitration rules in MIAX Rule 1107 with references to the 
corresponding arbitration rules of FINRA. The proposed rule change 
would align MIAX's arbitration rule with the arbitration rule of ISE, 
which also references FINRA's arbitration rules.\5\ As proposed, the 
Rule 12000 Series and Rule 13000 Series of the FINRA Manual (Code of 
Arbitration Procedures for Customer Disputes and Code of Arbitration 
Procedures for Industry Disputes, respectively) (collectively, the 
``FINRA Code of Arbitration''), as the same may be in effect from time 
to time, would govern Exchange arbitrations except as may be specified 
in proposed Rule 1107. Definitions in the FINRA Code of Arbitration 
would have the same meaning as prescribed therein, and procedures in 
the FINRA Code of Arbitration would have the same application with 
respect to Exchange arbitrations.
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    \5\ See ISE Rule 1800.
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    Under proposed Rule 1107, any dispute, claim, or controversy 
arising out of or in connection with the business of any member of the 
Exchange (``Member''), or arising out of the employment or termination 
of employment of associated person(s) with any Member would be 
arbitrable, except that: (1) A dispute, claim, or controversy alleging 
employment discrimination (including a sexual harassment claim) in 
violation of a statue may only be arbitrated if the parties have agreed 
to arbitrate it after the dispute arose; and (2) any type of dispute, 
claim, or controversy that is not permitted to be arbitrated under the 
FINRA Code of Arbitration (such as class action claims) shall not be 
eligible for arbitration under proposed Rule 1107. In addition, under 
the proposal the requirements of FINRA Rule 2268 (Requirements When 
Using Predispute Arbitration Agreements for Customer Accounts) would 
apply to predispute arbitration agreements between Members and their 
customers.
    In addition, under proposed Rule 1107, if any matter comes to the 
attention of an arbitrator during, and in connection with, the 
arbitrator's participation in a proceeding, either from the record of 
the proceeding or from material or communications related to the 
proceeding, that the arbitrator has reason to believe may constitute a 
violation of the Exchange's rules or the federal securities laws, the 
arbitrator may initiate a referral of the matter to the Exchange for 
disciplinary investigation; provided, however, that any such referral 
could only be initiated by an arbitrator after the matter before her or 
him has been settled or otherwise disposed of, or after an award 
finally disposing of the matter has been rendered pursuant to FINRA 
Rules 12904 or 13904, as applicable.
    If the proposal is approved, the principle structure of the 
Exchange's arbitration rule would remain the same, except that it would 
reference the applicable FINRA arbitration rules in

[[Page 63197]]

lieu of the CBOE arbitration rules. In addition, the proposed rule 
change would closely align the Exchange's arbitration rule with the 
arbitration rule of another options exchange (ISE).\6\ The Exchange 
believes that the proposed rule change would provide detailed 
guidelines and framework concerning Exchange arbitrations in a manner 
that is easily understood and enforceable not only by Members, but also 
by FINRA, with which the Exchange recently entered into a RSA.
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    \6\ See Proposed MIAX Rule 1107. See also ISE Rule 1800.
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2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, because 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes that the proposed rule change 
would provide a clear framework concerning Exchange arbitrations in a 
manner designed to prevent fraudulent and manipulative acts and 
practices, and to promote the protection of investors and the public 
interest. Further, the Exchange notes that the proposed rule change 
would provide greater harmonization between Exchange rules and the 
rules of similar substance and purpose of FINRA resulting in less 
burdensome and more efficient regulatory compliance for members of both 
MIAX and FINRA (``Dual Members''). As such, the Exchange believes that 
the proposed rule change 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 market system.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
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 competitive issues but rather is designed to 
provide greater harmonization between Exchange and FINRA rules of 
similar purpose, resulting in less burdensome and more efficient 
regulatory compliance for Dual 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ Rule 19b-4(f)(6) also requires a self-regulatory 
organization (``SRO'') 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 prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may 
designate a shorter period of 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 so that the 
proposed rule may become operative immediately upon filing.
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, 
because it allows the Exchange to immediately harmonize its arbitration 
rules with those of ISE and, by extension, the FINRA Code of 
Arbitration. The Commission notes that the Exchange also recently 
entered into an RSA with FINRA, which became effective on October 1, 
2014. Together, the Commission believes that these steps help ensure 
that Dual Members would be subject to a single set of SRO rules 
governing arbitration. The Commission also believes that this would 
promote less burdensome and more efficient regulatory compliance. For 
these reasons, the Commission designates the proposed rule change to be 
operative upon filing.\13\
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    \13\ For purposes 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).
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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 under 
Section 19(b)(2)(B) of the Act \14\ to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(2)(B).
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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-2014-52 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-2014-52. 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

[[Page 63198]]

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 20549-1090, 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-2014-52 and 
should be submitted on or before November 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-25148 Filed 10-21-14; 8:45 am]
BILLING CODE 8011-01-P