[Federal Register Volume 83, Number 75 (Wednesday, April 18, 2018)]
[Notices]
[Pages 17198-17200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08054]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83040]


Order Granting Application by MIAX PEARL, LLC for Exemption 
Pursuant to Section 36(a) of the Exchange Act From the Rule Filing 
Requirements of Section 19(b) of the Exchange Act With Respect to 
Certain Rules Incorporated by Reference

April 12, 2018.
    MIAX PEARL, LLC (``MIAX PEARL'' or ``Exchange'') has filed with the 
Securities and Exchange Commission (``Commission'') an application for 
an exemption under Section 36(a)(1) of the Securities Exchange Act of 
1934 (``Exchange Act'') \1\ from the rule filing requirements of 
Section 19(b) of the

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Exchange Act \2\ with respect to certain rules of the Miami 
International Securities Exchange, LLC (``MIAX Options'' \3\) that the 
Exchange seeks to incorporate by reference. Section 36 of the Exchange 
Act authorizes the Commission to conditionally or unconditionally 
exempt any person, security, or transaction, or any class thereof, from 
any provision of the Exchange Act or rule thereunder, if necessary or 
appropriate in the public interest and consistent with the protection 
of investors.
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    \1\ 15 U.S.C. 78mm(a)(1).
    \2\ 15 U.S.C. 78s(b).
    \3\ The Commission notes that MIAX PEARL referred to the Miami 
International Securities Exchange, LLC as ``MIAX Options'' in its 
application for an exemption under Section 36(a)(1) of the Exchange 
Act. See Letter from Dimitriy Kotov, Counsel, MIAX PEARL, to Brent 
J. Fields, Secretary, Commission, dated March 14, 2018 (``Exemptive 
Request''). References herein to the rules of MIAX Options are to 
the rules of the Miami International Securities Exchange, LLC.
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    On September 27, 2017, the Commission approved a proposed rule 
change by MIAX Options to adopt new Chapter XVIII comprising MIAX 
Options Rules 1801-1812 (``MIAX Options Index Options Rules''), to 
accommodate the trading of index options by MIAX Options members and 
establish generic listing standards and maintenance standards to permit 
MIAX Options to list ``broad-based'' and ``narrow-based'' index options 
pursuant to Rule 19b-4(e) under the Act.\4\ On February 8, 2018, MIAX 
PEARL filed a proposed rule change with the Commission to incorporate 
by reference, in new Chapter XVIII of the MIAX PEARL rulebook, the 
rules contained in MIAX Options Chapter XVIII.\5\
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    \4\ See 17 CFR 240.19b-4(e). See also Securities Exchange Act 
Release No. 81739 (February 2, 2017), 82 FR 46111 (October 3, 2017). 
The proposed rule change also made related changes to other rules in 
the MIAX Options rulebook. See id.
    \5\ See Securities Exchange Act Release No. 82756 (February 21, 
2018), 83 FR 8538 (February 27, 2018). MIAX PEARL's proposed rule 
change was approved by the Commission on April 12, 2018. See 
Securities Exchange Act Release No. 83039.
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    MIAX PEARL has requested, pursuant to Rule 0-12 under the Exchange 
Act,\6\ that the Commission grant the Exchange an exemption from the 
rule filing requirements of Section 19(b) of the Exchange Act for 
changes to MIAX PEARL Chapter XVIII that are effected solely by virtue 
of a change to Chapter XVIII of the MIAX Options rules. Specifically, 
MIAX PEARL requests that it be permitted to incorporate by reference 
changes made to each MIAX Options Index Options Rule that is cross-
referenced in the MIAX PEARL Chapter XVIII rules,\7\ without the need 
for the Exchange to file separately the same proposed rule changes 
pursuant to Section 19(b) of the Exchange Act.\8\ By virtue of these 
incorporations by reference, MIAX PEARL members will comply with the 
MIAX Options Index Options Rules by complying with the MIAX Options 
rules referenced in the MIAX PEARL Chapter XVIII rules.\9\ The Exchange 
states that the MIAX Options rules the Exchange seeks to incorporate by 
reference are categories of rules that are regulatory in nature. The 
Exchange has agreed to provide written notice to its members whenever 
MIAX Options proposes a change to Chapter XVIII of its Rules.\10\
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    \6\ 17 CFR 240.0-12.
    \7\ MIAX PEARL Chapter XVIII states ``[t]he rules contained in 
MIAX Options Exchange Chapter XVIII, as such rules may be in effect 
from time to time (the `Chapter XVIII Rules'), are hereby 
incorporated by reference into this MIAX PEARL Chapter XVIII, and 
are thus MIAX PEARL Rules and thereby applicable to MIAX PEARL 
Members.''
    \8\ See Exemptive Request, supra note 3, at 2.
    \9\ Id.
    \10\ The Exchange states that it will provide such notice on its 
website in the same section it uses to post its own proposed rule 
change filings pursuant to Rule 19b-4(l). See 17 CFR 240.19b-4(l). 
In addition, the Exchange states that its website will also include 
a link to the MIAX Options website where the proposed rule change 
filings are located. See Exemptive Request, supra note 3, at 2.
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    The Exchange believes this exemption is appropriate in the public 
interest and consistent with the protection of investors because it 
will promote more efficient use of the Exchange's and the Commission's 
resources by avoiding duplicative rule filings based on simultaneous 
changes to identical rules sought by more than one self-regulatory 
organization (``SRO''),\11\ and because it will result in the 
Exchange's rules being consistent with the relevant cross-referenced 
MIAX Options rules.
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    \11\ Id.
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    The Commission has issued exemptions similar to the Exchange's 
request.\12\ In granting one such exemption in 2010, the Commission 
repeated a prior, 2004 Commission statement that it would consider 
similar future exemption requests from other SROs, provided that:
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    \12\ See, e.g., Securities Exchange Act Release Nos. 76998 
(January 29, 2016), 81 FR 6066, 6083-84 (February 4, 2016) (order 
granting application for registration as a national securities 
exchange of ISE Mercury, LLC (now known as Nasdaq MRX, LLC) and 
exemptive request relating to rules of the International Securities 
Exchange, LLC (now known as Nasdaq ISE, LLC) (``ISE'') incorporated 
by reference, including index options rules); 70050 (July 26, 2013), 
78 FR 46622, 46642 (August 1, 2013) (order granting application for 
registration as a national securities exchange of Topaz Exchange, 
LLC (now known as Nasdaq GEMX, LLC) and exemptive request relating 
to rules of ISE incorporated by reference, including index options 
rules); 61152 (December 10, 2009), 74 FR 66699, 66709-10 (December 
16, 2009) (order granting application for registration as a national 
securities exchange of C2 Options Exchange, Incorporated (``C2'') 
and exemptive request relating to rules of the Chicago Board Options 
Exchange, Incorporated (``CBOE'') incorporated by reference, 
including index options rules). See also, e.g., Securities Exchange 
Act Release No. 61534 (February 18, 2010), 75 FR 8760 (February 25, 
2010) (order granting BATS Exchange, Inc.'s exemptive request 
relating to rules incorporated by reference by the BATS Exchange 
Options Market rules) (``BATS Options Market Order'').
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     An SRO wishing to incorporate rules of another SRO by 
reference has submitted a written request for an order exempting it 
from the requirement in Section 19(b) of the Exchange Act to file 
proposed rule changes relating to the rules incorporated by reference, 
has identified the applicable originating SRO(s), together with the 
rules it wants to incorporate by reference, and otherwise has complied 
with the procedural requirements set forth in the Commission's release 
governing procedures for requesting exemptive orders pursuant to Rule 
0-12 under the Exchange Act; \13\
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    \13\ See 17 CFR 240.0-12 and Securities Exchange Act Release No. 
39624 (February 5, 1998), 63 FR 8101 (February 18, 1998) 
(``Commission Procedures for Filing Applications for Orders for 
Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final 
Rule'').
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     The incorporating SRO has requested incorporation of 
categories of rules (rather than individual rules within a category) 
that are not trading rules (e.g., the SRO has requested incorporation 
of rules such as margin, suitability, or arbitration); and
     The incorporating SRO has reasonable procedures in place 
to provide written notice to its members each time a change is proposed 
to the incorporated rules of another SRO.\14\
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    \14\ See BATS Options Market Order, supra note 12 (citing 
Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR 
8500 (February 24, 2004) (order granting exemptive request relating 
to rules incorporated by reference by several SROs) (``2004 
Order'')).
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    The Commission believes that the Exchange has satisfied each of 
these conditions. The Commission also believes that granting the 
Exchange an exemption from the rule filing requirements under Section 
19(b) of the Exchange Act will promote efficient use of Commission and 
Exchange resources by avoiding duplicative rule filings based on 
simultaneous changes to identical rule text sought by more than one 
SRO.\15\ The Commission therefore finds it appropriate in the public 
interest and consistent with the protection of investors to exempt the 
Exchange from the rule filing requirements under Section 19(b) of the 
Exchange Act with respect to the above-described rules it has 
incorporated by reference. This exemption is

[[Page 17200]]

conditioned upon the Exchange promptly providing written notice to its 
members whenever MIAX Options changes a rule that the Exchange has 
incorporated by reference.
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    \15\ See BATS Options Market Order, supra note 12, 75 FR at 
8761; see also 2004 Order, supra note 14, 69 FR at 8502.
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    Accordingly, It is ordered, pursuant to Section 36 of the Exchange 
Act,\16\ that the Exchange is exempt from the rule filing requirements 
of Section 19(b) of the Exchange Act solely with respect to changes to 
the rules identified in its request that incorporate by reference 
certain MIAX Options rules that are the result of changes to such MIAX 
Options' rules, provided that the Exchange promptly provides written 
notice to its members whenever MIAX Options proposes to change a rule 
that the Exchange has incorporated by reference.
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    \16\ 15 U.S.C. 78mm.

    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)(76).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-08054 Filed 4-17-18; 8:45 am]
BILLING CODE 8011-01-P


