Document ID: SEC-2014-1649-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2014-10-01T04:00Z

[Federal Register Volume 79, Number 190 (Wednesday, October 1, 2014)]
[Notices]
[Pages 59332-59333]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23310]

[[Page 59332]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73212; File No. SR-MIAX-2014-39]

Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Order Instituting Proceedings To Determine Whether To 
Approve or Disapprove a Proposed Rule Change To List and Trade Options 
on Certain Market Vectors ETFs

September 25, 2014.

I. Introduction

    On July 28, 2014, the Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to list and trade options on 
shares of the Market Vectors Brazil Small-Cap ETF, Market Vectors 
Indonesia Index ETF, Market Vectors Poland ETF, and Market Vectors 
Russia ETF (collectively ``Market Vectors ETFs''). The proposed rule 
change was published for comment in the Federal Register on August 12, 
2014.\3\ No comments were received on the proposed rule change. This 
order institutes proceedings under Section 19(b)(2)(B) of the Act to 
determine whether to approve or disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 72777 (August 6, 
2014), 79 FR 47165 (``Notice''). The Commission notes that MIAX also 
submitted a similar proposed rule change to list and trade options 
on shares of certain iShares ETFs. See Securities Exchange Act 
Release No. 72492 (June 27, 2014), 79 FR 38099 (July 3, 2014) (MIAX-
2014-30). The Commission is similarly instituting proceedings to 
determine whether to approve or disapprove that proposed rule change 
as well.
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II. Description of the Proposed Rule Change

    The Exchange proposes to list for trading on the Exchange options 
on shares of the Market Vectors ETFs. According to the Exchange, the 
Market Vectors ETFs are registered pursuant to the Investment Company 
Act of 1940 as management investment companies designed to hold a 
portfolio of securities that track the Market Vectors Brazil Small-Cap 
Index (``Brazil Small-Cap Index''), which consists of stocks traded 
primarily on BM&FBOVESPA the Market Vectors Indonesia Index 
(``Indonesia Index''), which consists of stocks traded primarily on the 
Indonesia Stock Exchange; Market Vectors Poland Index (``Poland 
Index''), which consists of stocks traded primarily on the Warsaw Stock 
Exchange; and the Market Vectors Russia Index (``Russia Index''), which 
consists of stocks traded primarily on the Moscow Exchange.\4\
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    \4\ See Notice, supra note 3. Market Vectors Index Solutions 
created and maintains the Brazil Small-Cap Index, Indonesia Index, 
Poland Index, and Russia Index.
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    MIAX Rule 402 establishes the Exchange's initial listing standards 
for equity options (the ``Listing Standards'') that must be satisfied 
for the Exchange to list and trade options on the shares of open-end 
investment companies, such as the Market Vectors ETFs.\5\ Options on 
the Market Vectors ETFs do not meet the Listing Standards. In 
particular, options on the Market Vectors ETFs do not meet the 
requirement concerning the existence of a comprehensive surveillance 
sharing agreement (``CSSA'') between MIAX and its foreign 
counterpart.\6\ Accordingly, the Exchange may not list and trade 
options on the Market Vectors ETFs.
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    \5\ MIAX Rule 402(i) provides the Listing Standards for shares 
or other securities (``Exchange-Traded Fund Shares'') that are 
traded on a national securities exchange and are defined as an ``NMS 
stock'' under Rule 600 of Regulation NMS.
    \6\ See MIAX Rule 402(i)(5)(ii)(B). This rule requires that 
``component securities of an index or portfolio of securities on 
which the Exchange Traded Fund Shares are based for which the 
primary market is in any one country that is not subject to a 
comprehensive surveillance agreement do not represent 20% or more of 
the weight of the index.''
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    According to the Exchange, it has attempted, but not entered into, 
CSSAs with the applicable foreign markets. In its proposal, the 
Exchange requested that the Commission allow the listing and trading of 
options on shares of the Market Vectors ETFs without a CSSA. Instead, 
the Exchange proposes to rely on agreements between the Commission and 
the applicable foreign regulators. Specifically, the Exchange cited to 
the agreements between the Commission and (i) the Comissao de Valores 
Mobiliarios (``CVM''),\7\ which has responsibility for the Brazilian 
exchanges and over-the-counter markets, and (ii) the Federal Commission 
on Securities and the Capital Market of the Government of the Russian 
Federation (``FCSCM''), a forerunner of the Federal Commission on 
Securities Market of Russia, which has responsibility for Russian stock 
exchanges.\8\ In addition, the Exchange noted that the Indonesia 
Financial Services Authority, which has responsibility for the 
Indonesian stock exchanges, the Polish Financial Supervision Authority, 
which has responsibility for Polish stock exchanges, and the Commission 
are signatories to the International Organization of Securities 
Commissions Multilateral Memorandum of Understanding.
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    \7\ See Notice, supra note 3, (citing to MOU with the CVM dated 
as of July 24, 2012).
    \8\ See Notice, supra note 3 (citing to the MOU with the FCSCM 
dated December 6, 1995).
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III. Proceedings To Determine Whether To Approve or Disapprove SR-MIAX-
2014-39 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \9\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change, as discussed below. 
Institution of proceedings does not indicate that the Commission has 
reached any conclusions with respect to any of the issues involved. 
Rather, as described in greater detail below, the Commission seeks and 
encourages interested persons to provide additional comment on the 
proposed rule change.
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    \9\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\10\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of, and input from commenters with respect to, the proposed 
rule change's consistency with Section 6(b)(5) of the Act,\11\ which 
require that the rules of a national securities exchange be designed, 
among other things, to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, 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.
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    \10\ Id. Section 19(b)(2)(B) of the Exchange Act also provides 
that proceedings to determine whether to disapprove a proposed rule 
change must be concluded within 180 days of the date of publication 
of notice of the filing of the proposed rule change. See id. The 
time for conclusion of the proceedings may be extended for up to 60 
days if the Commission finds good cause for such extension and 
publishes its reasons for so finding. See id.
    \11\ 15 U.S.C. 78f(b)(5).
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IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data and arguments with respect to the 
concerns identified above, as well as any other concerns they may have 
with the proposed rule change. In particular, the

[[Page 59333]]

Commission invites the written views of interested persons concerning 
whether the proposal is inconsistent with Section 6(b)(5) \12\ or any 
other provision of the Act, or the rules and regulation thereunder. 
Although there do not appear to be any issues relevant to approval or 
disapproval which would be facilitated by an oral presentation of 
views, data, and arguments, the Commission will consider, pursuant to 
Rule 19b-4, any request for an opportunity to make an oral 
presentation.\13\
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    \12\ Id.
    \13\ Section 19(b) (2) of the Act, as amended by the Securities 
Act Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by October 22, 2014. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
November 5, 2014. The Commission asks that commenters address the 
sufficiency and merit of the Exchange's statements in support of the 
proposed rule change, in addition to any other comments they may wish 
to submit about the proposed rule change.
    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-2014-39 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-2014-39. 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 such 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-2014-39 and should be 
submitted on or before October 22, 2014. Rebuttal comments should be 
submitted by November 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(57).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23310 Filed 9-30-14; 8:45 am]
BILLING CODE 8011-01-P