[Federal Register Volume 84, Number 126 (Monday, July 1, 2019)]
[Notices]
[Pages 31368-31373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13926]


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SECURITIES AND EXCHANGE COMMISSION

[Release No 34-86197; File No. SR-MIAX-2019-30]


Self-Regulatory Organizations; Miami International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 515, Execution of Orders 
and Quotes

June 25, 2019.
    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 18, 2019, 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.
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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 515, 
Execution of Orders and Quotes, to add additional detail and make 
clarifying changes to the rule.
    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.

[[Page 31369]]

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 Exchange Rule 515, Execution of 
Orders and Quotes, to add additional detail and make clarifying changes 
to the rule. Specifically, the Exchange proposes to make a number of 
minor non-substantive edits to references to ``Rule 515'' or ``Exchange 
Rule 515'' throughout the rule text. Currently, there are several 
references in Exchange Rule 515 where the rule refers back to itself 
generally as ``Rule 515'' or ``Exchange Rule 515.'' The Exchange 
proposes to amend all general references in Exchange Rule 515 that are 
to ``Rule 515'' or ``Exchange Rule 515'' that do not refer to any 
particular section or paragraph to be replaced with ``this Rule'' in 
order to provide consistency and clarity within the rule text. The 
proposed changes would be to references to ``Rule 515'' or ``Exchange 
Rule 515'' that are currently in the following sections in Exchange 
Rule 515: Paragraph (a); paragraph (c); subsection (c)(1)(i); 
subsection (c)(1)(ii)(A); subsection (c)(2)(i)(B); and Interpretation 
and Policy .04.
    Next, the Exchange proposes to amend paragraph (c) of Exchange Rule 
515, Non-Market Maker Orders That Could Not Be Executed or Could Not Be 
Executed in Full at the Original NBBO \3\ Upon Receipt, subsection 
(3)(i)(C), to clarify the System's \4\ behavior when certain conditions 
arise during a liquidity refresh pause. Paragraph (c) provides a 
definition of ``initiating order'' and ``original NBBO'' for the 
purposes of Exchange Rule 515 as follows. The term ``initiating order'' 
will be used to refer to (i) the incoming order that could not be 
executed, (ii) the order reevaluated by the System for execution that 
could not be executed, or (iii) the remaining contracts of the incoming 
order or reevaluated order that could not be executed in full. The term 
``original NBBO'' will be used to refer to the NBBO that existed at 
time of receipt of the initiating order or the NBBO at time of 
reevaluation of an order pursuant to Exchange Rule 515.
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    \3\ The term ``NBBO'' means the national best bid or offer as 
calculated by the Exchange based on market information received by 
the Exchange from OPRA. See Exchange Rule 100.
    \4\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of Securities. See Exchange Rule 
100.
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    Subsection (c)(3), Liquidity Refresh Pause for Exhausted Market 
Maker \5\ Quotes, provides that the System will pause the market for a 
time period not to exceed one second to allow additional orders or 
quotes refreshing the liquidity at the MBBO \6\ to be received 
(``liquidity refresh pause'') \7\ when at the time of receipt or 
reevaluation of the initiating order by the System: (A) Either the 
initiating order is a limit order whose limit price crosses the NBBO or 
the initiating order is a market order, and the limit order or market 
order could only be partially executed; (B) a Market Maker quote was 
all or part of the MBBO when the MBBO is alone at the NBBO; and (C) and 
the Market Maker quote was exhausted.\8\
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    \5\ The term ``Market Maker'' refers to ``Lead Market Makers'', 
``Primary Lead Market Makers'' and ``Registered Market Makers'' 
collectively. See Exchange Rule 100.
    \6\ The term ``MBBO'' means the best bid or offer on the 
Exchange. See Exchange Rule 100.
    \7\ The Exchange notes that the current setting is 20 
milliseconds.
    \8\ See Exchange Rule 515(c)(3).
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    As described in the Exchange's current subsection (c)(3)(i)(C), 
during the liquidity refresh pause, if the Exchange receives a new 
order or quote on the same side of the market as the initiating order's 
remaining contracts, which locks or crosses the original NBBO, the 
liquidity refresh pause will be terminated early.\9\ The Exchange 
recently identified an inconsistency between subsection (c)(3)(i)(C) of 
Exchange Rule 515 and the Exchange's System behavior regarding the NBBO 
used for evaluation purposes (original versus current), which 
determines whether the System will terminate the liquidity refresh 
pause early based on the receipt of a new order or quote on the same 
side of the market as the initiating order's remaining contracts. The 
Exchange believes that the System is operating correctly and that the 
rule text inadvertently described the NBBO used for evaluation purposes 
as the original NBBO, rather than the current NBBO. The System 
currently operates in the following manner. During the liquidity 
refresh pause, if the Exchange receives a new order or quote on the 
same side of the market as the initiating order's remaining contracts, 
which locks or crosses the current NBBO, the liquidity refresh pause 
will be terminated early. Accordingly, in subsection (c)(3)(i)(C) of 
Exchange Rule 515, the Exchange proposes to replace the word 
``original'' preceding NBBO with the word ``current'' to more 
accurately describe the NBBO used in the reevaluation process that 
occurs in this scenario. By using the current NBBO, the System ensures 
the proper handling of new same side interest. The System will not 
execute routable orders \10\ or non-routable orders \11\ at prices that 
are inferior to the current NBBO, therefore the Exchange's proposal 
improves the specificity of Exchange Rule 515.
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    \9\ See Exchange Rule 515(c)(3)(i)(C).
    \10\ See Exchange Rule 515(c)(1)(i).
    \11\ See Exchange Rule 515(c)(1)(ii)(A).
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    Next, the Exchange proposes to amend subsection (c)(3) of Exchange 
Rule 515 to succinctly describe the conditions that must be present for 
the liquidity refresh pause to occur and make minor corrective changes 
to the numerical and alphabetical list item identifiers to properly 
conform to the hierarchical heading scheme used throughout the 
Exchange's rulebook. In particular, the Exchange proposes to insert 
numerical identifiers ``(1)'' and ``(2)'' into subsection (c)(3)(A) in 
order to clarify that to meet the first condition for the liquidity 
refresh pause to occur, the initiating order must be a limit order or 
market order, whose limit price must cross the NBBO and could only be 
partially executed. The Exchange proposes to delete redundant rule text 
in the first clause of subsection (c)(3)(A) in order to clarify the 
conditions for the liquidity refresh pause to occur. Accordingly, with 
the proposed changes, subsection (c)(3) will provide as follows:

    The System will pause the market for a time period not to exceed 
one second to allow additional orders or quotes refreshing the 
liquidity at the MBBO to be received (``liquidity refresh pause'') 
when at the time of receipt or reevaluation of the initiating order 
by the System: (A) The initiating order is a limit order or market 
order whose (1) limit price crosses the NBBO and (2) could only be 
partially executed; (B) a Market Maker quote was all or part of the 
MBBO when the MBBO is alone at the NBBO; and (C) the Market Maker 
quote was exhausted.

    Next, the Exchange proposes to amend paragraph (d) of Exchange Rule 
515 to harmonize the rule text to the Exchange's affiliate, MIAX 
Emerald,

[[Page 31370]]

LLC (``MIAX Emerald''), and to make corrective changes to the numerical 
and alphabetical list item identifiers to properly conform to the 
hierarchical heading scheme used throughout the Exchange's rulebook. 
The Exchange proposes to separate paragraph (d) into several 
subsections. In particular, the Exchange proposes to adopt subsection 
(d)(1) of Exchange Rule 515, which would state as follows:

    If a Market Maker order or quote could not be executed or could 
not be executed in full upon receipt, the System will continue to 
execute the Market Maker's order or quote at multiple prices until 
(i) the Market Maker's quote has been exhausted or its order has 
been completely filled; (ii) the executions have reached the Market 
Maker's limit price; or (iii) further executions will trade at a 
price inferior to the ABBO, whichever occurs first.

    This new subsection (d)(1) would not contain any substantive change 
or add or delete any rule text already in place. The Exchange also 
proposes to adopt new subsection (d)(2) of Exchange Rule 515, which 
would state as follows:

    For a Market Maker order or quote that locks or crosses the 
opposite side ABBO and the MBBO is inferior to the ABBO, the System 
will manage such order or quote in accordance with the following. 
Once the System can no longer execute the Market Maker's order or 
quote, the System will display the order or quote one MPV away from 
the current opposite side ABBO and book the order or quote at a 
price that will lock the current opposite side ABBO. Should the ABBO 
price change to an inferior price level, the Market Maker order or 
quote's Book price will continuously re-price to lock the new ABBO 
and the Market Maker order or quote's displayed price will 
continuously re-price one MPV away from the new ABBO, until the 
Market Maker order or quote reaches its original limit price, is 
fully executed or cancelled.

This new subsection (d)(2) of Exchange Rule 515 does not contain any 
substantive change to the rule text already in place and harmonizes the 
rule text to the Exchange's affiliate, MIAX Emerald, by replacing 
references from ``NBBO'' to ``ABBO.'' \12\ The Exchange also proposes 
to delete the word ``internally'' in subsection (d)(2) to harmonize the 
rule text to the Exchange's affiliate, MIAX Emerald.\13\
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    \12\ See MIAX Emerald Rule 515(d)(ii).
    \13\ See id.
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    The Exchange also proposes to adopt new subsection (d)(3)(i) of 
Exchange Rule 515, which would state as follows:

    If the Exchange receives a new order or quote on the opposite 
side of the market from the Market Maker order or quote that can be 
executed, the System will immediately execute the remaining 
contracts from the Market Maker order or quote to the extent 
possible at the Market Maker order or quote's current Book bid or 
offer price, provided that the execution price does not violate the 
current NBBO.

The Exchange also proposes to adopt new subsection (d)(3)(ii) of 
Exchange Rule 515, which would state as follows:

    If unexecuted contracts remain from the Market Maker's order or 
quote, the order or quote size will be revised and the MBBO 
disseminated to reflect the order or quote's remaining contracts.

The new subsections (d)(3)(i) and (d)(3)(ii) of Exchange Rule 515 do 
not contain any substantive change or add or delete any rule text 
already in place.
    Next, the Exchange proposes to amend Exchange Rule 515(h) to 
consolidate subsections (h)(1)(A) and (h)(1)(C) into paragraph (h)(1) 
to conform Exchange Rule 515(h) to the Exchange's affiliate, MIAX 
Emerald.\14\ The Exchange also proposes to delete the rule text for 
subsection (h)(1)(B) as that subsection is redundant rule text and the 
Exchange believes that it is not necessary to specify the minimum 
trading increments applicable to that particular order type since 
minimum trading increments are covered in Exchange Rule 510. 
Accordingly, with the proposed changes, subsection (h)(1) of Exchange 
Rule 515 would state as follows:
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    \14\ See MIAX Emerald Rule 515(h).

    Customer Cross Orders, as defined in Rule 516(i), are 
automatically executed upon entry provided that the execution (i) is 
at or between the best bid and offer on the Exchange; (ii) is not at 
the same price as a Priority Customer Order on the Exchange's Book; 
and (iii) will not trade at a price inferior to the NBBO. If trading 
interest exists on the MIAX Book that is subject to the liquidity 
refresh pause or managed interest process pursuant to Rule 515(c), 
or a route timer pursuant to Rule 529 when the Exchange receives a 
Customer Cross Order, the System will reject the Customer Cross 
Order. If trading interest exists that is subject to a PRIME Auction 
or PRIME Solicitation Auction pursuant to Rule 515A when the 
Exchange receives a Customer Cross Order, the System will reject the 
Customer Cross Order. Customer Cross Orders will be automatically 
canceled if they cannot be executed. Rule 520, Interpretation and 
Policy .01 applies to the entry and execution of Customer Cross 
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Orders.

    The Exchange proposes to amend Exchange Rule 515(h) to consolidate 
subsection (h)(2)(A) into subsection (h)(2) to conform Exchange Rule 
515(h) to the Exchange's affiliate, MIAX Emerald. The Exchange also 
proposes to delete the rule text for subsection (h)(2)(B) of Exchange 
Rule 515 as that subsection is redundant rule text and the Exchange 
believes that it is not necessary to specify the minimum trading 
increments applicable to that particular order type since minimum 
trading increments are covered in Exchange Rule 510. Accordingly, with 
the proposed changes, subsection (h)(2) of Exchange Rule 515 would 
state as follows:

    Qualified Contingent Cross Orders, as defined in Rule 516(j), 
are automatically executed upon entry provided that the execution 
(i) is not at the same price as a Priority Customer Order on the 
Exchange's Book; and (ii) is at or between the NBBO. If trading 
interest exists on the MIAX Book that is subject to the liquidity 
refresh pause or managed interest process pursuant to Rule 515(c), 
or a route timer pursuant to Rule 529 when the Exchange receives a 
Qualified Contingent Cross Order, the System will reject the 
Qualified Contingent Cross Order. If trading interest exists that is 
subject to a PRIME Auction or PRIME Solicitation Auction pursuant to 
Rule 515A when the Exchange receives a Qualified Contingent Cross 
Order, the System will reject the Qualified Contingent Cross Order. 
Qualified Contingent Cross Orders will be automatically canceled if 
they cannot be executed.

    Next, the Exchange proposes to amend subsections (h)(3) and (h)(4) 
of Exchange Rule 515 to amend references in those subsections from the 
plural ``Interpretations and Policies'' to the singular 
``Interpretation and Policy'' when referring to one specific 
Interpretation and Policy. Accordingly, the Exchange proposes to amend 
subsection (h)(3) of Exchange Rule 515, which references 
``Interpretations and Policies .12'' to now read ``Interpretation and 
Policy .12.'' The Exchange proposes to amend subsection (h)(3)(C) of 
Exchange Rule 515, which references ``Interpretations and Policies 
.01'' to now read ``Interpretation and Policy .01.'' The Exchange 
proposes to amend subsection (h)(4) of Exchange Rule 515, which 
references ``Interpretations and Policies .12'' to now read 
``Interpretation and Policy .12.'' The purpose of these changes is to 
provide consistency and clarity within the rule text and harmonize the 
rule text to the Exchange's affiliate, MIAX Emerald.

[[Page 31371]]

    Additionally, the Exchange proposes to amend Exchange Rule 515, 
Execution of Orders and Quotes, Interpretation and Policy .02, to adopt 
new rule text clarifying the treatment of interest being managed by the 
System during the limited scenario when the ABBO \15\ transitions from 
a crossed state to an uncrossed state. Currently, Exchange Rule 515 
provides two separate processes for handling orders that could not be 
executed or that could not be executed in full upon receipt; subsection 
(c), Non-Market Maker Orders That Could Not Be Executed or Could Not Be 
Executed in Full at the Original NBBO Upon Receipt, and subsection (d) 
Handling of Market Maker Orders and Quotes. Exchange Rule 515(c)(1)(ii) 
discusses the Managed Interest Process for Non-Routable Orders. If the 
limit price locks or crosses the current opposite side NBBO, the System 
will display the order one MPV \16\ away from the current opposite side 
NBBO, and book the order at a price that will lock the current opposite 
side NBBO. Should the NBBO price change to an inferior price level, the 
order's Book price will continuously re-price to lock the NBBO and the 
managed order's display price will continuously re-price one MPV away 
from the new NBBO.\17\ Similarly, current Exchange Rule 515(d) 
discusses the handling of Market Maker orders or quotes that could not 
be executed or could not be executed in full upon receipt. 
Specifically, for a Market Maker order or quote that locks or crosses 
the ABBO, the System will manage such order or quote in accordance with 
the following. Once the System can no longer execute the Market Maker's 
order or quote, the System will display the order or quote one MPV away 
from the current opposite side NBBO and book the order or quote at a 
price that will internally lock the current opposite side NBBO. Should 
the NBBO price change to an inferior price level, the Market Maker 
order or quote's Book price will continuously re-price to lock the new 
NBBO and the Market Maker order or quote's displayed price will 
continuously re-price one MPV away from the new NBBO.\18\
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    \15\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the 
best bid(s) or offer(s) disseminated by other Eligible Exchanges 
(defined in Rule 1400(f)) and calculated by the Exchange based on 
market information received by the Exchange from OPRA. See Exchange 
Rule 100.
    \16\ An ``MPV'' is the Minimum Price Variation for options 
traded on the Exchange. See Exchange Rule 510, Minimum Price 
Variations and Minimum Trading Increments.
    \17\ See Exchange Rule 515(c)(1)(ii)(A).
    \18\ See Exchange Rule 515(d).
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    Currently, Interpretation and Policy .02 of Exchange Rule 515 
discusses the Managed Interest Process for Non-Routable Orders as 
provided in subparagraph (c)(1)(ii) if managed interest becomes 
tradable at multiple price points on MIAX due to the ABBO transitioning 
from a crossed state to an uncrossed state, the midpoint of the MBBO, 
rounded up to the nearest MPV if necessary, will be used for the 
initial trade price. However, the current rule does not discuss how 
Market Maker orders or quotes that are being managed by the System are 
handled if the ABBO transitions from a crossed state to an uncrossed 
state.
    The Exchange now proposes to amend Interpretation and Policy .02 of 
Exchange Rule 515 to adopt a definition for the term ``Handled 
Interest'' which will include both Non-Routable Orders as defined in 
subparagraph (c)(1)(ii) and Market Maker orders and quotes as defined 
in subparagraph (d). Additionally, the Exchange proposes to adopt new 
rule text regarding the handling of Handled Interest when the ABBO 
transitions from a crossed state to an uncrossed state. Specifically, 
the Exchange proposes to amend Interpretation and Policy .02 to replace 
the term ``order'' with the newly defined term ``Handled Interest'' 
where necessary, to more accurately describe the current functionality 
of the System during this specific scenario as Market Maker orders and 
quotes that are being managed are handled in a similar fashion. The 
purpose of these changes is to provide consistency and clarity within 
the rule text and harmonize the rule text to the Exchange's affiliate, 
MIAX Emerald.\19\ Accordingly, with the proposed changes to 
Interpretation and Policy .02, the Exchange would adopt new paragraphs 
``(a)'' through ``(c),'' and Interpretation and Policy .02 would be 
newly titled ``Uncrossing of Orders and Quotes.'' The proposed changes 
to Interpretation and Policy .02 would be as follows:
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    \19\ See MIAX Emerald Rule 515, Interpretation and Policy .02.

    (a) In the course of the Managed Interest Process for Non-
Routable Orders as provided in subparagraph (c)(1)(ii) or the 
management of a Market Maker order or quote as provided in 
subparagraph (d) (such Non-Routable Orders and Market Maker orders 
and quotes, ``Handled Interest''), if Handled Interest becomes 
tradable at multiple price points on MIAX due to the ABBO 
transitioning from a crossed state to an uncrossed state, the 
midpoint of the MBBO, rounded up to the nearest MPV if necessary, 
will be used for the initial trade price for the Handled Interest. 
If locking or crossing interest remains, the next trade occurs at 
the Book price of the interest with lesser size.
    (b) Trades included in the Handled Interest will continue to 
occur until (i) all locking or crossing interest has been satisfied, 
(ii) the ABBO is reached at which time the interest will be managed 
according to subparagraph (c)(1)(ii) or subparagraph (d), as 
applicable, (iii) the Handled Interest's limit price is reached at 
which time any remaining contracts will be booked, or (iv) the 
Handled Interest's price protection limit is reached at which time 
any remaining contracts will be canceled.
    (c) Trades included in the Handled Interest will then be handled 
as follows: (i) If the order or quote would lock or cross the 
current opposite side MBBO where the MBBO is the NBBO, the order or 
quote will be handled pursuant to the Managed Interest Process under 
515(c)(1)(ii) and Rule 515(d).

    The proposed changes are designed to clarify existing Exchange 
functionality in the Exchange's rules. The Exchange believes the 
proposed changes will also help eliminate potential confusion on behalf 
of market participants by clearly stating that any interest being 
managed is handled similarly by the System in this limited situation.
2. Statutory Basis
    The Exchange believes that its proposed rule change are consistent 
with Section 6(b) of the Act \20\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \21\ in particular, in that 
they are 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.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed changes to Exchange Rule 
515(c)(3)(i)(C) to replace the word ``original'' preceding NBBO with 
the word ``current'' to more accurately describe the NBBO used in the 
reevaluation process promotes just and equitable principles of trade, 
fosters cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, and removes impediments to 
and perfects the mechanisms of a free and open market. This is because 
the proposal provides clarity and additional detail to Members, 
investors, and the public regarding the operation of the

[[Page 31372]]

Exchange's System in the limited circumstance when a new order or quote 
is received on the same side of the market as an initiating order's 
remaining contracts during a liquidity refresh pause. The Exchange 
believes that the System is operating correctly and that the rule text 
inadvertently described the NBBO used for evaluation purposes as the 
original NBBO, rather than the current NBBO. By using the current NBBO, 
the System ensures the proper handling of new same side interest. The 
System will not execute routable orders or non-routable orders at 
prices that are inferior to the current NBBO, therefore the Exchange's 
proposal improves the specificity of Exchange Rule 515. Further, the 
Exchange believes it is in the interest of investors and the public to 
accurately describe the behavior of the Exchange's System in its rules 
as this information may be used by investors to make decisions 
concerning the submission of their orders. Accordingly, the Exchange 
proposes to replace the word ``original'' preceding NBBO with the word 
``current'' to more accurately describe the NBBO used in the 
reevaluation process that occurs during a liquidity refresh pause under 
Exchange Rule 515(c)(3)(i)(C) to correct this inconsistency between the 
rule text and the System's behavior. Transparency and clarity are 
consistent with the Act because it removes impediments to and helps 
perfect the mechanism of a free and open market and a national market 
system, and, in general, protects investors and the public interest by 
accurately describing the behavior of the Exchange's System.
    Currently, Exchange Rule 515 discusses the treatment of Non-
Routable Orders that are being managed by the System as the ABBO 
transitions from a crossed to an uncrossed state. The Exchange believes 
that adopting a new definition of ``Handled Interest'' in 
Interpretation and Policy .02(a) to include Market Maker orders and 
quotes and amending the rule text to replace the term order with the 
newly defined term ``Handled Interest'' more accurately describes the 
operation of Exchange functionality during the limited circumstance 
when interest becomes tradable at multiple price points on MIAX due to 
the ABBO transitioning from a crossed state to an uncrossed state. The 
Exchange believes that its proposal contributes to the operation of a 
fair and orderly market, and in general, protects investors and the 
public interest by providing additional detail to clarify how orders 
that are being managed are handled in the limited circumstance when the 
ABBO transitions from a crossed state to an uncrossed state. The 
Exchange believes these changes provide consistency and clarity within 
the rule text regarding how Market Maker orders and quotes are handled 
and harmonize the rule text to the Exchange's affiliate, MIAX 
Emerald.\22\ The Exchange also believes that its proposal to add the 
term ``Handled Interest'' to describe the System's functionality when 
interest becomes tradable at multiple price points on MIAX due to the 
ABBO transitioning from a crossed state to an uncrossed state 
contributes to the operation of a fair and orderly market, and in 
general, protects investors and the public interest because this 
proposed change will facilitate executions on the Exchange.
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    \22\ See MIAX Emerald Rule 515, Interpretation and Policy .02.
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    The Exchange believes the proposed changes to consolidate Exchange 
Rule 515 subsections (h)(1)(A) and (h)(1)(C) into paragraph (h)(1) and 
delete redundant rule text in subsections (h)(1)(B) promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because the proposed changes clarify the Exchange's rule text. In 
particular, the Exchange believes that deleting the rule text for 
subsection (h)(1)(B) will promote just and equitable principles of 
trade and remove impediments to and perfect the mechanism of a free and 
open market because that subsection is redundant rule text. The 
Exchange believes it is not necessary to specify the minimum trading 
increments applicable to Customer Cross Orders since minimum trading 
increments are covered in Exchange Rule 510 and applicable to all 
options traded on the Exchange.\23\ Accordingly, the reference to 
minimum trading increments in subsection (h)(1)(B) is redundant, which 
the Exchange believes will cause confusion. The Exchange believes it is 
in the interest of investors and the public to accurately describe the 
Exchange's rules as this information is used by investors to make 
decisions concerning the submission of their orders on the Exchange.
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    \23\ See Exchange Rule 510(a).
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    Likewise, the Exchange believes the proposed changes to consolidate 
subsection (h)(2)(A) into subsection (h)(2) promote just and equitable 
principles of trade and remove impediments to and perfect the mechanism 
of a free and open market and a national market system because the 
proposed changes clarify the Exchange's rule text and conform Exchange 
Rule 515(h) to the Exchange's affiliate, MIAX Emerald.\24\ Further, the 
Exchange believes that deleting the rule text for subsection (h)(2)(B) 
will promote just and equitable principles of trade and remove 
impediments to and perfect the mechanism of a free and open market 
because that subsection is redundant rule text. The Exchange believes 
it is not necessary to specify the minimum trading increments 
applicable to Qualified Contingent Cross Orders as minimum trading 
increments are covered in Exchange Rule 510 and applicable to all 
options traded on the Exchange.\25\ Accordingly, the reference to 
minimum trading increments in subsection (h)(2)(B) is redundant, which 
the Exchange believes will cause confusion. The Exchange believes it is 
in the interest of investors and the public to accurately describe the 
Exchange's rules as this information is used by investors to make 
decisions concerning the submission of their orders on the Exchange.
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    \24\ See MIAX Emerald Rule 515(h).
    \25\ See Exchange Rule 510(a).
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    The Exchange believes the proposed changes to amend paragraph (d) 
to harmonize the rule text to the Exchange's affiliate, MIAX Emerald, 
by replacing references from ``NBBO'' to ``ABBO'' and to make 
corrective changes to the numerical and alphabetical list item 
identifiers promote just and equitable principles of trade and remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because the proposed changes clarify the 
Exchange's rule text and conform Exchange Rule 515(d) to the Exchange's 
affiliate, MIAX Emerald.\26\ The Exchange also believes that its 
proposal to replace references from ``NBBO'' to ``ABBO'' in subsection 
(d)(2) contributes to the operation of a fair and orderly market, and 
in general, protects investors and the public interest because it is 
more accurate to use the term ``ABBO'' as the System is not considering 
MIAX's market at this point. Further, the Exchange's proposal to delete 
the word ``internally'' in subsection (d)(2) harmonizes the rule text 
to the Exchange's affiliate, MIAX Emerald.\27\
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    \26\ See MIAX Emerald Rule 515(d)(ii).
    \27\ See MIAX Emerald Rule 515(d)(ii).
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    The Exchange believes the proposed changes promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because the proposed changes provide

[[Page 31373]]

additional detail and make clarifying changes to the rule text of 
Exchange Rule 515, and correct errors in the hierarchical heading 
scheme to provide uniformity in the Exchange's rulebook. The Exchange 
believes that the proposed changes will provide greater clarity to 
Members and the public regarding the Exchange's rules and that it is in 
the public interest for rules to be accurate and concise so as to 
eliminate the potential for confusion.

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 changes will not impose any burden on intra-
market competition as there is no functional change to the Exchange's 
System and because the rules of the Exchange apply to all MIAX 
participants equally. The proposed rule changes will have no impact on 
competition as they are not designed to address any competitive issues 
but rather are designed to add additional clarity to existing Exchange 
Rule 515 and to remedy minor non-substantive issues in the rule text. 
In addition, the Exchange does not believe the proposal will impose any 
burden on inter-market competition as the proposal does not address any 
competitive issues and is intended to protect investors by providing 
further transparency regarding the Exchange's functionality.

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 \28\ and Rule 19b-4(f)(6) \29\ 
thereunder.
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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. 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-2019-30 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-2019-30. 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-2019-30, and should be submitted on 
or before July 22, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-13926 Filed 6-28-19; 8:45 am]
 BILLING CODE 8011-01-P


