Document ID: SEC-2017-1191-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2017-07-17T04:00Z

[Federal Register Volume 82, Number 135 (Monday, July 17, 2017)]
[Notices]
[Pages 32737-32739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14889]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81119; File No. SR-PEARL-2017-31]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX 
PEARL Rule 524, Reporting of Matched Trades to Clearing Corporation

July 11, 2017.
    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 June 28, 2017, MIAX PEARL, LLC (``MIAX PEARL'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I, II, 
and III 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 524, 
Reporting of Matched Trades to Clearing Corporation.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL'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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Exchange Rule 524, Reporting of 
Matched Trades to Clearing Corporation, to adopt Interpretations and 
Policies .01, to state that post-trade adjustments that do not affect 
the contractual terms of a trade are to be performed by the Exchange 
Member \3\ via an Exchange approved electronic interface. The Exchange 
will notify Members of the approved electronic interface via Regulatory 
Circular. The Exchange notes that an identical filing has been 
submitted by its affiliate, MIAX Options. In order to ensure consistent 
operation of both MIAX PEARL and MIAX Options through having consistent 
rules, the Exchange proposes to amend MIAX PEARL Rule 524 as described 
below.
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    \3\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associate with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.

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[[Page 32738]]

    The Exchange staffs a Help Desk \4\ to provide customer service and 
support to its Members. One of the support functions the Help Desk 
currently provides is to make certain post-trade adjustments to a 
Member's matched trades at the Member's request and on its behalf. The 
Exchange has also developed functionality that it makes available to 
all Members that enables Members to electronically and independently 
perform post-trade adjustments that do not affect the contractual terms 
of the transaction to their side of the matched trade. Examples of 
post-trade adjustments that do not affect the contractual terms of a 
trade include: Changing the position indicator (e.g., from Open to 
Close or Close to Open); adding or removing Clearing Member Trade 
Agreement (``CMTA'') information; changing the clearing account type 
(e.g., Customer or Firm); and modifying the optional data field, which 
may be used by Members for their own internal back-office processing.
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    \4\ The term ``Help Desk'' means the Exchange's control room 
consisting of Exchange staff authorized to make certain trading 
determinations on behalf of the Exchange. The Help Desk shall report 
to and be supervised by a senior executive officer of the Exchange. 
See Exchange Rule 100.
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    Despite the availability of functionality for Members to perform 
these straightforward post-trade adjustments on their own, the Help 
Desk still receives a significant number of requests on a daily basis 
to manually perform these adjustments. Processing these requests is a 
time consuming exercise for Exchange staff and is an inefficient use of 
Exchange time and resources given that Members have the ability to 
perform these adjustments themselves electronically via an Exchange 
provided interface. Accordingly, the Exchange proposes to mandate that 
Members perform their own post-trade adjustments which do not affect 
the contractual terms of a trade as discussed above, using the 
functionality provided by the Exchange. The Exchange notes that use of 
the functionality provided by the Exchange does not relieve Members of 
their obligations to abide by the rules of the Exchange.\5\ The 
Exchange also represents that it has an adequate surveillance program 
in place to review post-trade adjustments made by its Members. 
Additionally, the Exchange has a Regulatory Services Agreement in place 
with the Financial Industry Regulatory Authority to monitor adjustments 
done directly at the Options Clearing Corporation (``OCC'') to ensure 
compliance with applicable Exchange rules and such Securities and 
Exchange Commission Trading rules related to options trading. Further, 
the Exchange notes that Members may make post-trade adjustments to 
trades executed on the Exchange directly at the OCC, as the OCC 
provides functionality for Members to update certain non-critical trade 
information with respect to the transaction, provided such changes are 
not in contravention of any rule of the Exchange on which a confirmed 
trade was executed.\6\
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    \5\ Specifically, the Exchange notes that Members have an 
obligation to adhere to Exchange Rule 507, Must Give Up Clearing 
Member.
    \6\ See OCC Rules, Chapter IV, Rule 401, Reporting of Confirmed 
Trades Effected on Exchanges.
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    The Exchange notes that other exchanges offer similar functionality 
to their members for post-trade adjustments.\7\ However, these 
Exchanges incentivize their members to perform their own post-trade 
adjustments by charging a fee when the member elects to have the 
exchange perform the adjustment on their behalf, as opposed to 
mandating usage of an interface to perform post-trade adjustments such 
as the Exchange is proposing.
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    \7\ See Securities Exchange Act Release Nos. 73585 (November 13, 
2014), 79 FR 68927 (November 19, 2014) (SR-NYSEArca-2014-116); and 
73542 (November 6, 2014), 79 FR 67496 (November 13, 2014) (SR-
NYSEMKT-2014-87).
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2. Statutory Basis
    MIAX PEARL believes that its proposed rule change is consistent 
with Section 6(b) of the Act \8\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \9\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal would promote just and 
equitable principles of trade and not unfairly discriminate between 
Members because the functionality to make post-trade adjustments is 
available to all Members. Further, the Exchange believes that its 
proposal would promote a fair and orderly market and protect investors 
and the public interest because its proposal would result in a more 
efficient use of Exchange resources, which would benefit all market 
participants.

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. The proposed rule change is 
not designed to address any competitive issues but rather to make more 
efficient use of the Exchange's employee time and resources, which may 
ultimately benefit Members.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intra-market 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 \10\ and Rule 19b-4(f)(6) \11\ 
thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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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    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.

[[Page 32739]]

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-PEARL-2017-31 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-PEARL-2017-31. 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 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-PEARL-2017-31, and should be 
submitted on or before August 7, 2017.

    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)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017-14889 Filed 7-14-17; 8:45 am]
BILLING CODE 8011-01-P