Document ID: SEC-2022-1438-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2022-11-07T05:00Z

[Federal Register Volume 87, Number 214 (Monday, November 7, 2022)]
[Notices]
[Pages 67098-67100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24145]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96201; File No. SR-MIAX-2022-40]

Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by Miami International 
Securities Exchange, LLC To Remove the Fill-Or-Kill (``FOK'') Order 
Type and Fill Or Kill (``FOK'') eQuotes From the Exchange

November 1, 2022.
    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 27, 2022, Miami International 
Securities Exchange, LLC (``MIAX Options'' or the ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to remove the fill-or-kill 
(``FOK'') \3\ order type and fill or kill (``FOK'') eQuotes \4\ from 
the Exchange.
---------------------------------------------------------------------------

    \3\ See Exchange Rule 516(b)(2).
    \4\ See Exchange Rule 517(a)(2)(v).
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/ at MIAX Options' 
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 offers a number of different order types for use on 
the Exchange.\5\ One of the order types the Exchange offers to Members 
\6\ is a fill-or-kill (``FOK'') order. A fill-or-kill order is a limit 
order that is to be executed in its entirety at a single price as soon 
as it is received and, if not so executed is cancelled. A fill-or-kill 
order is not valid during the opening rotation process described in 
Rule 503.\7\ Similarly, the Exchange offers a fill or kill (``FOK'') 
eQuote which is an eQuote submitted by a Market Maker \8\ that must be 
matched with another quote or order for an execution in its entirety at 
a single price upon receipt into the System or will be immediately 
cancelled. An FOK eQuote does not automatically cancel or replace the 
Market Maker's previous Standard quote or eQuote. An FOK eQuote is not 
valid during the opening rotation process described in Rule 503.\9\
---------------------------------------------------------------------------

    \5\ See Exchange Rule 516.
    \6\ 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.
    \7\ See Exchange Rule 516(b)(2).
    \8\ The term ``Market-Makers'' refers to ``Lead Market Makers'', 
``Primary Lead Market-Makers'' and ``Registered Market Makers'' 
collectively. See Exchange Rule 100.
    \9\ See supra note 4.
---------------------------------------------------------------------------

    In Rule 516, Order Types Defined, the Exchange states it will issue 
a Regulatory Circular listing which order types, among the order types 
set forth in the Rule, are available.\10\ Additionally, the rule 
provides that Regulatory Circulars will also be issued when an order 
type that had been in usage on the Exchange will no longer be available 
for use. Similarly, in Rule 517, Quote Types Defined, the Exchange 
states it will issue a Regulatory Circular listing which quote types, 
among those quote types set forth in the Rule, are available.\11\ 
Additionally, the rule provides that Regulatory Circulars will also be 
issued when a quote type that had been in usage on the Exchange will no 
longer be available for use. The Exchange determined that FOK orders 
and FOK eQuotes were not order types or eQuote types that were being 
regularly used by Members on the Exchange. In April of 2021, the 
Exchange issued Regulatory Circulars to announce that FOK orders \12\ 
and FOK eQuotes \13\ would no longer be available for use on the 
Exchange. Prior to undertaking the effort to remove FOK orders and FOK 
eQuotes completely from the System,\14\ the Exchange wanted to ensure 
that there were no unforeseen consequences from disabling FOK orders 
and FOK eQuotes, hence the delay between disabling usage via Regulatory 
Circular and formally removing the order type from use on the Exchange.
---------------------------------------------------------------------------

    \10\ See Exchange Rule 516.
    \11\ See Exchange Rule 517.
    \12\ See MIAX Regulatory Circular 2021-20, Fill-or-Kill Orders 
Will No Longer Be Supported on the MIAX Options Exchange (April 8, 
2021), available at https://www.miaxoptions.com/sites/default/files/circular-files/MIAX_Options_RC_2021_20.pdf.
    \13\ See MIAX Regulatory Circular 2021-21, Fill-or-Kill eQuotes 
Will No Longer Be Supported on the MIAX Options Exchange (April 9, 
2021), available at https://www.miaxoptions.com/sites/default/files/circular-files/MIAX_Options_RC_2021_21.pdf.
    \14\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
---------------------------------------------------------------------------

    The Exchange now proposes to permanently remove the functionality 
from the Exchange's System and to also remove references to FOK orders 
and FOK eQuotes from the Exchange's Rulebook. Specifically, the 
Exchange proposes to eliminate references to FOK orders and FOK eQuotes 
in the following Exchange Rules: Exchange Rule 308, Exemptions from 
Position Limits; Rule 515, Execution of Orders and Quotes; Rule 516, 
Order Types Defined; Rule 517, Quote Types Defined; Rule 529, Order 
Routing to Other Exchanges; Rule 605, Market Maker Orders; and Rule 
612, Aggregate Risk Manager (ARM). In connection with the proposed 
change to remove references to FOK orders and FOK eQuotes from the 
Rulebook, the Exchange also proposes to amend cross-references to other 
rules that need to be updated for accuracy as a result of the removal 
of FOK orders and FOK eQuotes. These proposed changes are non-
substantive edits that are intended to harmonize the Rulebook with the 
System functionality and provide consistency and clarity throughout the 
Rulebook.
    First, the Exchange proposes to amend Exchange Rule 308(c)(vi)(A), 
to remove paragraph (A) which contains a reference to a fill-or-kill 
instruction. The Exchange then proposes to amend subparagraph 
(c)(vi)(B) to be

[[Page 67099]]

renumbered to proposed paragraph (c)(vi)(A).
    Next, the Exchange proposes to amend Exchange Rule 515, Execution 
of Orders and Quotes, to remove references to FOK orders in 
subparagraph (c)(1) and subparagraph (c)(3)(i)(E). Additionally, the 
Exchange proposes to remove the contents of paragraph (f) in its 
entirety and mark the paragraph as reserved for future use. Also, 
within current subparagraph 515(g) the Exchange proposes to amend the 
cross-reference to Exchange Rule 517(a)(2)(vi) to Rule 517(a)(2)(v). 
This proposed change reflects the proposed renumbering of Exchange Rule 
517, discussed below, after the paragraph pertaining to fill or kill 
eQuotes is removed.
    Next, the Exchange proposes to amend Exchange Rule 516, Order Types 
Defined, to eliminate subparagraph (b)(2) in its entirety. The Exchange 
also proposes to adjust the hierarchical numbering order to reflect the 
removal of current subparagraph (b)(2) by renumbering current 
subparagraphs (b)(3) and (b)(4) to paragraphs (b)(2) and (b)(3), 
respectively. The Exchange also proposes to amend Exchange Rule 510, 
Minimum Price Variations and Minimum Trading Increments, to amend the 
cross-reference contained in paragraph 510(b) from ``Rule 516(b)(3)'' 
to ``Rule 516(b)(2)'' to reflect the proposed renumbering of Exchange 
Rule 516, discussed above.
    The Exchange also proposes to amend Exchange Rule 517, Quote Types 
Defined, to remove subparagraph (a)(2)(v) in its entirety. Also, as a 
result of the removal of this paragraph, the Exchange proposes to 
renumber current subparagraph (a)(2)(vi) to proposed subparagraph 
(a)(2)(v). Further, the Exchange proposes to eliminate subparagraph 
(d)(4) in its entirety. The Exchange then proposes to amend current 
subparagraphs (d)(5) and (d)(6) to renumber as proposed paragraphs 
(d)(4) and (d)(5), respectively.
    The Exchange proposes to amend Exchange Rule 529, Order Routing to 
Other Exchanges, to remove the references to FOK orders and FOK eQuotes 
contained within subparagraph 529(b)(2)(iii).
    The Exchange proposes to amend Exchange Rule 604(b)(1) by amending 
a cross-reference to current Rule 516(b)(3), non-displayed penny 
orders, to proposed Rule 516(b)(2). This amendment reflects the 
proposed re-numbering changes to the Rulebook resulting from removal of 
FOK orders as described above.
    The Exchange also proposes to amend Exchange Rule 605, Market Maker 
Orders, by deleting the reference to fill-or-kill orders within Rule 
605(a).
    Lastly, the Exchange proposes to amend Exchange Rule 612, Aggregate 
Risk Manager (ARM), by removing references to FOK eQuotes within 
Interpretations and Policies .02(c).
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \15\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \16\ 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 regulating, 
clearing, settling, processing information with respect to, and 
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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed change promotes just and 
equitable principles of trade and removes impediments to and perfects 
the mechanism of a free and open market and a national market system as 
the proposal removes an order type and a quote type infrequently used 
by the Exchange's Members. Removal of infrequently used functionality 
simplifies the operation of the Exchange's System, as the Exchange does 
not need to support and maintain order types and quote types that are 
not regularly used. Additionally, removing the reference to FOK orders 
and FOK eQuotes in the Exchange's Rulebook provides consistency and 
clarity throughout the Rulebook. Clarity and precision in the 
Exchange's Rulebook protects investors and the public by clearly 
enumerating the order types and eQuote types available for use on the 
Exchange.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. Specifically, the Exchange 
believes the proposed change will not impose any burden on intra-market 
competition as the Exchange originally disabled FOK orders and FOK 
eQuotes via a Regulatory Circular.\17\ The Exchange now proposes to 
remove the functionality completely from the Exchange's System and to 
update the Exchange's Rulebook accordingly. The Exchange does not 
believe its proposal will impose any burden on intra-market competition 
as all Members are equally affected as these order types and quote 
types were infrequently used and have been unavailable for use on the 
Exchange since being disabled via Regulatory Circular.
---------------------------------------------------------------------------

    \17\ See supra notes 12 and 13.
---------------------------------------------------------------------------

    The Exchange does not believe the proposal will impose any burden 
on inter-market competition as not every option exchange offers FOK 
orders.\18\ However, for those Members that wish to use the FOK order 
type there are exchanges that will accept and process this order 
type.\19\
---------------------------------------------------------------------------

    \18\ BOX Options Exchange offers a Fill and Kill (FAK) order 
instruction but not fill-or-kill. See Box Options Exchange Rule 
7110(e)(ii).
    \19\ See Cboe Exchange Rule 5.6, and NYSE Arca Exchange Rule 
6.91-O.
---------------------------------------------------------------------------

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 \20\ and Rule 19b-4(f)(6) \21\ 
thereunder.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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.
---------------------------------------------------------------------------

    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.

[[Page 67100]]

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 [email protected]. Please include 
File Number SR-MIAX-2022-40 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-MIAX-2022-40. 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-MIAX-2022-40, and should be submitted on 
or before November 28, 2022.
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-24145 Filed 11-4-22; 8:45 am]
BILLING CODE 8011-01-P