[Federal Register Volume 88, Number 99 (Tuesday, May 23, 2023)]
[Notices]
[Pages 33175-33179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10905]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97520; File No. SR-MIAX-2023-20]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 518, Complex Orders

May 17, 2023.
    Pursuant to 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 May 4, 2023, Miami International Securities Exchange LLC (``MIAX'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
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 amend Exchange Rule 518, 
Complex Orders.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings, at MIAX'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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 518, Complex Orders, to: (i) 
amend the definition of a conforming ratio and a non-conforming ratio 
to include the conforming and non-conforming ratios for stock-option 
orders; (ii) amend the definition of a complex order to insert the 
clarifying phrase, ``conforming or non-conforming ratio'' for stock-
option orders; and (iii) adopt new paragraph (2) to Interpretations and 
Policies .01(c) of Rule 518 to describe the handling of stock-option 
orders with non-conforming ratios. Additionally, the Exchange proposes 
to make a minor non-substantive edit to the first paragraph of 
Interpretations and Policies .01(c) of Rule 518 to renumber the 
paragraph as paragraph (1).
Background
    Currently, the Exchange defines a ``complex order'' as any order 
involving the concurrent purchase and/or sale of two or more different 
options in the same underlying security (the ``legs'' or ``components'' 
of the complex order), for the same account, in a conforming \3\ or 
non-conforming ratio \4\ for the purposes of executing a particular 
investment strategy. Mini-options may only be part of a complex order 
that includes other mini-options. Only those complex orders in the 
classes designated by the Exchange and communicated to Members \5\ via 
Regulatory Circular with no more than the applicable number of legs, as 
determined by the Exchange on a class-by-class basis and communicated 
to Members via Regulatory Circular, are eligible for processing.
---------------------------------------------------------------------------

    \3\ A ``conforming ratio'' is where the ratio between the sizes 
of the components of a complex order comprised solely of options is 
equal to or greater than one-to-three (.333) and less than or equal 
to three-to-one (3.00). See Exchange Rule 518(a)(8).
    \4\ A ``non-conforming ratio'' is where the ratio between the 
sizes of the components of a complex order comprised solely of 
options is greater than three-to-one (3.00) or less than one-to-
three (.333). See Exchange Rule 518(a)(16).
    \5\ 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.
---------------------------------------------------------------------------

    Additionally, a complex order can also be a ``stock-option order'' 
as described further, and subject to the limitations set forth, in 
Interpretations and Policies .01 of Rule 518. A stock-option order is 
an order to buy or sell a stated number of units of an underlying 
security (stock or Exchange Traded Fund Share (``ETF'')) or a security 
convertible into the underlying stock (``convertible security'') 
coupled with the purchase or sale of options contract(s) on the 
opposite side of the market representing either (i) the same number of 
units of the underlying security or convertible security, or (ii) the 
number of units of the underlying stock necessary to create a delta 
neutral position, but in no case in a ratio greater than eight-to-one 
(8.00), where the ratio represents the total number of units of the 
underlying security or convertible security in the option leg to the 
total number of units of the underlying security or convertible 
security in the stock leg. Only those stock-option orders in the 
classes designated by the Exchange and communicated to Members via 
Regulatory Circular with no more than the applicable number of legs as 
determined by the Exchange on a class-by-class basis and communicated 
to Members via Regulatory Circular, are eligible for processing.\6\
---------------------------------------------------------------------------

    \6\ See Exchange Rule 518(a)(5).
---------------------------------------------------------------------------

Proposal
    The Exchange now proposes to accept stock-option orders with ratios 
greater than eight-to-one, or non-conforming ratios, as defined herein. 
To support its proposal, the Exchange proposes to amend the definition 
of a ``conforming ratio'' in Exchange Rule 518(a)(8) to include the 
current ratio for stock-option orders accepted by the Exchange, which 
is where one component of the complex order is the underlying security 
(stock or ETF), or security convertible into the underlying stock 
(``convertible security'') and the ratio between the option 
component(s) and the underlying security (stock or ETF), or convertible 
security is less than or equal to eight-to-one (8.00).
    Specifically, as amended the proposed rule will provide that, a

[[Page 33176]]

``conforming ratio'' is where the ratio between the sizes of the 
components of a complex order comprised solely of options is equal to 
or greater than one-to-three (.333) and less than or equal to three-to-
one (3.00); where one component of the complex order is the underlying 
security (stock or ETF) or security convertible into the underlying 
stock (``convertible security'') the ratio between the option 
component(s) and the underlying security (stock or ETF) or convertible 
security is less than or equal to eight-to-one (8.00).\7\ The Exchange 
also proposes to amend the definition of a non-conforming ratio in 
Exchange Rule 518(a)(16) to include stock-option orders, to state, 
where one component of the complex order is the underlying security 
(stock or ETF) or underlying security convertible into the underlying 
stock (``convertible security''), the ratio between the option 
component(s) and the underlying security (stock or ETF) or convertible 
security is greater than eight-to-one (8.00). Specifically, as amended 
the proposed rule will provide that, a ``non-conforming ratio'' is 
where the ratio between the sizes of the components of a complex order 
comprised solely of options is greater than three-to-one (3.00) or less 
than one-to-three (.333); where one component of the complex order is 
the underlying security (stock or ETF) or security convertible into the 
underlying stock (``convertible security''), the ratio between the 
option component(s) and the underlying security (stock or ETF) or 
convertible security is greater than eight-to-one (8.00).\8\
---------------------------------------------------------------------------

    \7\ See proposed Exchange Rule 518(a)(8).
    \8\ See proposed Exchange Rule 518(a)(16).
---------------------------------------------------------------------------

    Additionally, the Exchange proposes to amend the second paragraph 
of Rule 518(a)(5) which discusses stock-option orders to include the 
terms conforming and non-conforming ratio and to remove the reference 
to the eight-to-one ratio as the conforming and non-conforming ratios 
for stock-option complex orders are being relocated under this proposal 
to Rule 518(a)(8) and (a)(16) respectively.
    The Exchange also proposes to renumber the first paragraph of 
Interpretations and Policies .01(c) of Rule 518 as paragraph (1) and to 
insert the clarifying phrase, ``with a conforming ratio,'' to delineate 
stock-option order handling when there is a conforming ratio versus a 
non-conforming ratio.
    Like stock-option orders with conforming ratios, stock-option 
orders with non-conforming ratios will also be required to create delta 
neutral positions \9\ and must also comply with the Qualified 
Contingent Trade Exemption from Rule 611(a) of Regulation NMS under the 
Securities Exchange Act of 1934 in the same manner as stock-option 
orders with conforming ratios.\10\ Members submitting stock option 
orders in conforming or non-conforming ratios represent that such 
orders comply with the Qualified Contingent Trade Exemption.\11\ The 
Exchange represents that it will have the necessary surveillance in 
place for stock-option orders with non-conforming ratios prior to 
implementing this functionality.
---------------------------------------------------------------------------

    \9\ See Exchange Rule 518(a)(5).
    \10\ See Interpretations and Policies .01(a) of Exchange Rule 
518.
    \11\ See id.
---------------------------------------------------------------------------

    The Exchange proposes to adopt new paragraph (2) to Interpretations 
and Policies .01(c) of Rule 518 to describe stock-option order 
processing on the Exchange for stock-option orders with non-conforming 
ratios. Proposed paragraph (2) will provide that, ``the option leg(s) 
of a stock-option order with a non-conforming ratio shall not be 
executed (i) at a price that is inferior to the Exchange's best bid 
(offer) in the option or (ii) at the Exchange's best bid (offer) in 
that option if there are one or more Priority Customer Orders \12\ 
resting on the Simple Order Book \13\ at the best bid (offer) price for 
any option leg of a stock-option order. Each component of a stock-
option order with a non-conforming ratio must trade at a price better 
than any Priority Customer Order(s) resting on the Simple Order Book at 
the best bid (offer) price by at least $0.01. The option leg(s) of a 
stock-option order may be executed in a $0.01 increment, regardless of 
the minimum quoting increment applicable to that series.'' \14\
---------------------------------------------------------------------------

    \12\ The term ``Priority Customer Order'' means an order for the 
account of a Priority Customer. See Exchange Rule 100.
    \13\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes. See Exchange Rule 518(a)(17).
    \14\ See proposed Interpretations and Policies .01(c) of Rule 
518.
---------------------------------------------------------------------------

    Additionally, the Exchange's proposal is consistent with the 
Exchange's handling of complex orders with only options components with 
non-conforming ratios as Exchange Rule 518(c)(1)(v) provides that, a 
complex order with a non-conforming ratio will not be executed at a net 
price that would cause any option component of the complex strategy to 
be executed: (A) at a price of zero; (B) ahead of a Priority Customer 
Order at the MBBO \15\ on the Simple Order Book; or (C) at a price that 
is through the NBBO.\16\ Like Exchange Rule 518(c)(1)(v) which requires 
each component of a complex order with a non-conforming ratio to trade 
at a price that is better than the MBBO if there is Priority Customer 
interest resting on the Simple Order Book at the MBBO, this proposal 
will protect Priority Customer interest by requiring that each leg of a 
stock-option order with a non-conforming ratio trade at a price that is 
$0.01 better than any Priority Customer interest resting on the Simple 
Order Book at the best bid or offer.\17\ Thus the proposed rule 
continues to protect Priority Customer interest on the Exchange.
---------------------------------------------------------------------------

    \15\ The term ``MBBO'' means the best bid of offer on the 
Exchange. See Exchange Rule 100. The Exchange notes that this 
requirement is similar to that of other options exchanges. See Cboe 
Exchange Rule 5.33(f)(2)(A)(iv)(b); and BOX Exchange Rule 
7240(b)(2)(iii).
    \16\ 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.
    \17\ See proposed Interpretations and Policies .01(c)(2) of 
Exchange Rule 518.
---------------------------------------------------------------------------

Implementation
    The Exchange will announce the implementation of stock-option 
orders with non-conforming ratios by Regulatory Circular at least 48 
hours prior to implementation of this functionality, as the Exchange 
believes that 48 hours of notice is adequate for Members.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act,\18\ 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. Additionally, the Exchange believes the proposed rule change 
is consistent with the Section (6)(b)(5) \19\ requirement that the 
rules of an exchange not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78(f)(b)(5).
---------------------------------------------------------------------------

    The Exchange currently only processes stock-option orders that fit 
within the definition of a conforming ratio, that is where one 
component of

[[Page 33177]]

the complex order is the underlying instrument and the ratio between 
the option component(s) and the underlying instrument must be less than 
or equal to eight-to-one (8.00). The Exchange has received significant 
demand from its Members to support stock-option orders in non-
conforming ratios, and the Exchange believes the proposed rule change 
will remove impediments to and perfect the mechanism of a free and open 
market and benefit investors, because it will allow market participants 
to execute stock-option orders where one component of the complex order 
is the underlying security (stock or ETF) or security convertible into 
the underlying stock (``convertible security'') and the ratio between 
the option component(s) and the underlying security (stock or ETF) or 
convertible security is greater than eight-to-one (8.00).
    The proposed rule change will further remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, as at least two other options exchanges permit the trading of 
stock-option orders with non-conforming ratios. Specifically, Cboe and 
Cboe EDGX began supporting the electronic processing of stock-option 
orders in non-conforming ratios via Cboe's Complex Order Auctions 
(``COA''); \20\ Complex Order Book (``COB''); \21\ Automated 
Improvement Mechanism (``AIM''); \22\ and as Qualified Contingent Cross 
Orders (``QCC'') \23\ in August of 2022.\24\ Additionally, the 
execution price for each option leg must improve the local BBO \25\ by 
at least $0.01 when there is a Priority Customer Order resting at the 
BBO on that leg,\26\ which is the same requirement that applies on the 
Exchange to all complex orders with non-conforming ratios.\27\
---------------------------------------------------------------------------

    \20\ See Cboe Exchange Rule 5.33(d).
    \21\ See Cboe Exchange Rule 5.33(a).
    \22\ See Cboe Exchange Rule 5.37.
    \23\ See ``Qualified Contingent Cross or QCC'' at Cboe Exchange 
Rule 5.6(c).
    \24\ See Cboe Exchange Alert, ``Update--Cboe Options Introduces 
C-SAM Enhancement, New Net, Leg Price Increments, and Enhanced 
Handling for Complex Orders with Non-Conforming Ratios, Reference 
ID: C2022072700 available online at https://cdn.cboe.com/resources/release_notes/2022/Update-Cboe-Options-Introduces-C-SAM-Enhancement-New-Net-Leg-Price-Increments-and-Enhanced-Handling-for-Complex-Orders-with-Non-Conforming-Ratios.pdf.
    \25\ The term ``BBO'' means the best bid or offer disseminated 
on the Exchange. See Cboe Exchange Rule 1.1. The Exchange notes that 
at least one other options exchange offers stock-option orders with 
non-conforming ratios. See the definition of ``Stock-Option Order'' 
in Cboe Exchange Rule 1.1; and see also Cboe Exchange Rule 
5.85(b)(3) which provides that, ``stock-option orders . . . have 
priority over bids (offers) of in-crowd market participants but not 
over Priority Customer bids (offers) in the Book.''
    \26\ See supra note 24. [sic]
    \27\ See Exchange Rule 518(c)(1)(v).
---------------------------------------------------------------------------

    Further, the Exchange's proposal promotes a free and open market 
and a national system and, in general, protects investors and the 
public interest by providing market participants an additional venue to 
route stock-option orders with non-conforming ratios to for execution. 
This provides investors an additional venue to choose from when making 
order-routing decisions.
    The proposed change rule change will continue to protect Priority 
Customer Order interest on the Simple Order Book in the same manner as 
it does today, as all complex orders with a conforming ratio will 
continue to be executed on the Exchange without change.\28\ As 
discussed above, the proposed Exchange rules provide that a stock-
option order with a non-conforming ratio will not be executed (i) at a 
price that is inferior to the Exchange's best bid (offer) in the option 
or (ii) at the Exchange's best bid (offer) in that option if there are 
one or more Priority Customer Orders resting on the Simple Order Book 
at the best bid (offer) price for any option leg of a stock-option 
order. Each component of a stock-option order with a non-conforming 
ratio must trade at a price better than any Priority Customer Order(s) 
resting on the Simple Order Book at the best bid (offer) price by at 
least $0.01.\29\
---------------------------------------------------------------------------

    \28\ See Exchange Rule 518(c)(1)(iv).
    \29\ See supra note 17.
---------------------------------------------------------------------------

    The Exchange believes the proposed changes will increase 
opportunities for execution of stock-option orders with non-conforming 
ratios, which will benefit all investors. The Exchange also believes 
that the proposed rule change is designed to not permit unfair 
discrimination among market participants, as all market participants 
may trade stock-option orders with non-conforming ratios, and the 
priority and eligibility requirements apply equally to the stock-option 
orders with non-conforming ratios of all market participants.
    The Exchange believes that its proposal is designed 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, by 
enhancing its System \30\ and rules governing complex orders. The 
Exchange's proposal should provide market participants with trading 
opportunities more closely aligned with their investment or risk 
management strategies and allow market participants to benefit from 
trading these orders electronically.
---------------------------------------------------------------------------

    \30\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
---------------------------------------------------------------------------

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 Exchange does not believe that its proposed rule change will 
impose any burden on intra-market competition as the Rules of the 
Exchange apply equally to all Members of the Exchange and all Members 
may submit stock-option orders with non-conforming ratios. Therefore, 
any Member of the Exchange may submit a stock-option order with a 
conforming or non-conforming ratio and the order will be handled in a 
uniform fashion by the System. Further, the Exchange's proposal 
protects investors as Priority Customer interest is protected and the 
Exchange's proposal prevents any option component of a stock-option 
order in a non-conforming ratio to be [sic] executed ahead of a 
Priority Customer Order.\31\
---------------------------------------------------------------------------

    \31\ See proposed Interpretations and Policies .01(c)(2) of 
Exchange Rule 518.
---------------------------------------------------------------------------

    The Exchange does not believe that its proposed rule change will 
impose any burden on inter-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, rather the 
Exchange believes that its proposal will promote inter-market 
competition. Currently, at least two other options exchanges process 
stock-option orders with ratios that are greater than eight-to-one.\32\ 
The Exchange's proposal will enhance inter-market competition by 
providing an additional venue where investors may electronically 
execute their stock-option orders with non-conforming ratios, giving 
investors greater flexibility and a choice of where to send their 
orders. Market participants may find it more convenient to access one 
exchange over another or may choose to concentrate volume at a 
particular exchange in order to maximize the impact of volume-based 
incentive programs, or may prefer the trade execution services of one 
exchange over another.
---------------------------------------------------------------------------

    \32\ See supra note 24.
---------------------------------------------------------------------------

    As such, the Exchange does not believe the proposed rule change 
will impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

[[Page 33178]]

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 \33\ and Rule 19b-4(f)(6) \34\ 
thereunder.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \35\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\36\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange states 
that waiver of the operative delay will benefit investors by making 
available immediately an additional venue for trading stock-option 
orders in which the ratio between the options component(s) of the order 
and the underlying security component is greater than 8:1. The Exchange 
states that the proposal protects investors by requiring each option 
leg of a non-conforming ratio stock-option order, as defined in 
proposed Exchange Rule 518(a)(16), to trade at a price that is better 
than Priority Customer Order(s) resting on the Simple Order Book at the 
Exchange's best bid (offer) by at least $0.01.\37\ The Exchange notes 
that this requirement is consistent with the current requirements in 
Exchange Rule 518(c)(1)(v), which, among other things, states that a 
non-conforming ratio complex order comprised solely of options will not 
be executed at a net price that would cause any option component of the 
order to be executed ahead of a Priority Customer Order at the MBBO on 
the Exchange's Simple Order Book.\38\ As noted above, the Exchange 
states that it has received significant demand from its Members to 
support stock-option orders with non-conforming ratios. The Exchange 
further states that it will have surveillance procedures in place for 
stock-option orders with non-conforming ratios prior to implementing 
the functionality.
---------------------------------------------------------------------------

    \35\ 17 CFR 240.19b-4(f)(6).
    \36\ 17 CFR 240.19b-4(f)(6)(iii).
    \37\ See proposed Exchange Rule 518, Interpretation and Policy 
.01(c)(2).
    \38\ See Exchange Rule 518(c)(1)(v).
---------------------------------------------------------------------------

    The Commission finds that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The rules of at least one other options exchange currently permit the 
trading on the exchange's floor of stock-option orders in which the 
ratio between the option component(s) of the order and the underlying 
security component is greater than 8:1.\39\ The proposal will provide 
investors with an additional venue for trading these stock-option 
orders. The proposal protects the priority of Priority Customer orders 
resting on the Exchange's Simple Order Book by requiring each option 
component of a non-conforming ratio stock-option order to trade at a 
price that is better than any Priority Customer Order(s) resting on the 
Exchange's Simple Order Book at the best bid (offer) price by at least 
$0.01.\40\ This protection for Priority Customer orders is consistent 
with Exchange Rule 518(c)(1)(v), which, among other things, states that 
a non-conforming ratio complex order comprised solely of options will 
not be executed at a net price that would cause any option component of 
the order to be executed ahead of a Priority Customer Order at the MBBO 
on the Exchange's Simple Order Book.\41\ In addition, like stock-option 
orders with a conforming ratio, stock-option orders with a non-
conforming ratio must create a delta neutral position and comply with 
the requirements of the QCT Exemption.\42\ The Exchange states that it 
will have necessary surveillance procedures in place prior to 
introducing non-conforming ratio stock-option orders. For all of these 
reasons, the Commission designates the proposal operative upon 
filing.\43\
---------------------------------------------------------------------------

    \39\ Cboe Rule 1.1 states that ``A stock-option order is an 
order to buy or sell a stated number of units of an underlying or a 
related security coupled with either (a) the purchase or sale of 
option contract(s) on the opposite side of the market representing 
either the same number of units of the underlying or related 
security or the number of units of the underlying security necessary 
to create a delta neutral position or (b) the purchase or sale of an 
equal number of put and call option contracts, each having the same 
exercise price and expiration date, and each representing the same 
number of units of stock as, and on the opposite side of the market 
from, the underlying or related security portion of the order. For 
purposes of electronic trading, the term ``stock-option order'' has 
the meaning set forth in Rule 5.33.'' See also Cboe Rule 5.85(b)(3) 
(establishing the priority of stock-option orders on Cboe's floor).
    \40\ See proposed Exchange Rule 518, Interpretation and Policy 
.01(c)(2). Proposed Exchange Rule 518, Interpretation and Policy 
.01(c)(2) also states that the option leg(s) of a non-conforming 
ratio stock-option order may not be executed (i) at a price that is 
inferior to the Exchange's best bid (offer) in the option or (ii) at 
the Exchange's best bid (offer) in that option if there are one or 
more Priority Customer Orders resting on the Simple Order Book at 
the best bid (offer) price for any option leg of the order.
    \41\ See Exchange Rule 518(c)(1)(v). Other options exchanges 
that provide for the trading of complex orders comprised solely of 
options that have a ratio greater than 3:1 provide the same 
protection for customer orders on their single-leg limit order 
books. See, e.g., Cboe Rule 5.33(f)(2)(A)(iv)(b) (stating that if 
the complex order has a ratio less than one-to-three (.333) or 
greater than three-to-one (3.00), the component(s) of the complex 
order for the leg(s) with a Priority Customer order at the BBO must 
execute at a price that improves the price of that Priority Customer 
order(s) on the Simple Book by at least one minimum increment); and 
BOX Rule 7240(b)(2)(iii) (stating that a Multi-Leg Order may be 
executed at a net credit or debit price; provided, however, that 
each component leg must execute (A) at or between the NBBO, and (B) 
at a price that is at least $0.01 better than any Public Customer 
order on the BOX Book).
    \42\ See proposed Exchange Rule 518(b)(5) and Exchange Rule 518, 
Interpretation and Policy .01(a).
    \43\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 [email protected]. Please include 
File Number SR-MIAX-2023-20 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 33179]]

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2023-20. 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. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-MIAX-2023-20 and should be submitted on 
or before June 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\44\
---------------------------------------------------------------------------

    \44\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10905 Filed 5-22-23; 8:45 am]
BILLING CODE 8011-01-P


