[Federal Register Volume 85, Number 135 (Tuesday, July 14, 2020)]
[Notices]
[Pages 42447-42449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15116]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89261; File No. SR-MIAX-2020-24]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Temporarily Extend Filing Deadlines for Certain
Supervision-Related Reports
July 8, 2020.
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 July 2, 2020, 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 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.
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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 1308,
Supervision of Accounts, to temporarily extend the filing requirements
for certain supervision-related reports, currently given an extension
to June 30, 2020, to July 31, 2020.
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
Given current market conditions, the Exchange proposes to provide
its members temporary relief from filing certain supervision-related
reports pursuant to Exchange Rule 1308 (Supervision of Accounts).\3\
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\3\ The Exchange notes that MIAX Rule 1308 is incorporated by
reference into the rulebooks of MIAX PEARL, LLC (``PEARL'') and MIAX
Emerald, LLC (``Emerald''). As such, the amendments to MIAX Rule
1308 proposed herein will also impact PEARL and Emerald Rules 1308.
The Exchange initially filed the proposal on June 1, 2020 (SR-MIAX-
2020-14). On June 4, 2020, the Exchange withdrew that filing and
submitted this filing.
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The Exchange has been closely monitoring the current situation
regarding the novel coronavirus (``COVID-19'') pandemic. The Exchange
understands COVID-19 has placed stress on market participants'
information technology infrastructure and the required deployment of
significant resources, including to implement and continuously adapt
business continuity plans. On March 11, 2020, the World Health
Organization characterized COVID-19 as a pandemic.\4\ To slow the
spread of the disease, federal and state officials implemented social-
distancing measures, placed significant limitations on large
gatherings, limited travel, and closed non-essential businesses. These
measures have affected the U.S. markets.\5\ In the United States, Level
1 market wide circuit breaker halts were triggered on March 9, March
12, March 16, and March 18, 2020. While markets have seen significant
declines, governments around the world are undertaking efforts to
stabilize the economy and assist affected companies and their
employees.\6\ While many state governments recently relaxed some social
distancing measures and permitted the limited reopening of non-
essential businesses, many State governments have now paused the
reopening of non-essential businesses due to increased infection rates.
Significant uncertainty remains.
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\4\ See WHO Director-General's Opening Remarks at the Media
Briefing on COVID-19 (March 11, 2020), available at https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarksat-the-media-briefing-on-covid-19---11-march-2020.
\5\ ``Analysts showed that we saw the fastest `correction' in
history (down 10% from a high), occurring in a matter of days. In
the last week of February, the Dow fell 12.36% with notional trading
of $3.6 trillion.'' See Phil Mackintosh, Putting the Recent
Volatility in Perspective, available at https://www.nasdaq.com/articles/putting-the-recent-volatility-in-perspective2020-03-05.
\6\ See, e.g., the list of actions undertaken by the Board of
Governors of the Federal Reserve System at https://www.federalreserve.gov/covid-19.htm. See also Families First
Coronavirus Response Act, Public Law 116-127.
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Amidst this continued and unprecedented market uncertainty, the
Exchange sought to address potential challenges that members may face
in timely meeting their obligations to submit to the Exchange annual
supervision-related reports under Rule 1308(g) and (h) (``Supervision
Reporting Requirements''), especially in light of unforeseen and
uncertain demands on resources required to respond to COVID-19. By way
of background, Exchange Rule 1308(g) requires each Exchange member that
conducts a non-member customer business to submit to the Exchange a
written report on the member's supervision and compliance effort during
the preceding year and on the adequacy of the member's ongoing
compliance processes and procedures. Each member that conducts a public
customer options business is also required to specifically include its
options compliance program in the report.\7\ The Exchange Rule 1308(g)
report is due on April 1 of each year. Exchange Rule 1308(h) requires
that each member submit, by April 1 of each year, a copy of the Rule
1308(g) report to one or more control persons or, if the member has no
control person, to the audit committee of its board of directors or its
equivalent committee or group.\8\
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\7\ The report shall include, but not be limited to, the
information set out in Exchange Rule 1308(g)(1)-(6).
\8\ See Exchange Rule 1308(h) for the meaning of the term
``control person'' and requirements in the case of a control person
that is an organization.
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On each of March 31, 2020 and June 4, 2020, the Exchange filed a
proposal to temporarily extend the filing requirements for these annual
supervision-related reports from April 1, 2020 to June 1, 2020 and from
June 1,
[[Page 42448]]
2020 to June 30, 2020, respectively.\9\ However, as COVID-19 remains an
ongoing pandemic, to meet the current June 1 deadlines in Rule 1308,
member personnel would have to divide their efforts and resources that
are otherwise necessary to address continued disruptions and stresses
as a result of the ongoing COVID-19 pandemic. Accordingly, the Exchange
proposes to provide additional, temporary relief for members from the
Supervision Reporting Requirements by further extending the June 30,
2020 filing deadlines described above to July 31, 2020. The Exchange
believes that this additional, temporary relief will permit those
members who have been unable to submit their annual supervision-related
reports to continue to focus on running their businesses and the health
crisis caused by the COVID-19 pandemic, including its impact on their
employees, customers, and communities.
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\9\ See Securities Exchange Act Release Nos. 88543 (April 2,
2020), 85 FR 19788 (April 8, 2020) (SR-MIAX-2020-06); and 89093
(June 18, 2020), 85 FR 37986 (June 24, 2020) (SR-MIAX-2020-15).
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The Exchange notes that in response to COVID-19, the Financial
Industry Reporting Authority (``FINRA'') recently reissued temporary
relief for member firms by, among other things, extending the deadline
for submitting its supervision-related reports (FINRA Rule 3120 Report
and FINRA Rule 3130 certification) from its second extension deadlines
of June 30, 2020 \10\ to July 31, 2020.\11\ The Exchange notes, too,
that at least one other options exchange that had twice previously
extended the supervisory report deadlines from April 1 to June 1 and
then from June 1 to June 30 for its members,\12\ also other exchanges
either plan to or have already submitted a similar filing to, again,
extend its deadlines through July 31, 2020.\13\ In light of these
deadline extensions, the Exchange believes that a consistent regulatory
approach is important and therefore that extending its deadline would
avoid unnecessary confusion and added burden among entities that are
members of both the Exchange and FINRA because the deadline to submit
supervisory reports would remain uniform.
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\10\ See FINRA Regulatory Notice 20-08 (March 9, 2020) available
at https://www.finra.org/rules-guidance/notices/20-08.
\11\ See FINRA Regulatory Notice 20-08, FAQs, Supervision (June
29, 2020) available at https://www.finra.org/rules-guidance/key-topics/covid-19/faq#supe.
\12\ See Securities Exchange Act No. 88528 (March 31, 2020), 85
FR 19196 (April 6, 2020) (SR-CBOE-2020-029).
\13\ See SR-Phlx-2020-35 and SR-ISE-2020-26 [sic].
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \14\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \15\ 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 mechanism 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) \16\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ Id.
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In particular, the Exchange believes that the proposed rule will
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities. The proposed rule change will
allow the Exchange to extend temporary relief to its members by issuing
another extension of certain supervisory reporting deadlines from June
30, 2020 to July 31, 2020 in light of the ongoing COVID-19 crisis. The
Exchange understands this pandemic has caused, and continues to cause,
stress on market participants' information technology infrastructure
and the deployment of significant resources to address ongoing
disruptions and continued stresses. By allowing the Exchange to re-
extend the deadlines for filing certain supervision related reports in
Rule 1308, the Exchange believes the proposed rule will allow member
personnel, who would normally be tasked with organizing and compiling
such reports, to focus their attention on maintaining critical
operations and sustainable business continuity plans, and otherwise
adjusting their trading operations in line with evolving market
conditions and initiatives in response to the ongoing COVID-19
pandemic. The Exchange also believes the proposed rule change removes
impediments to and perfects the mechanism of a free and open market and
a national market system because, as noted above, FINRA has also re-
extended the time for their members to file supervision-related reports
from June 30, 2020 to July 31, 2020.\17\ Additionally, as indicated
above, other options exchanges that had previously extended the
supervisory report deadlines to June 30, 2020 for their members, plan
to submit similar filings to re-extend their deadlines through July 31,
2020.\18\
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\17\ See supra note 11.
\18\ See supra notes 12 and 13.
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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 proposed rule change is
not intended to address competitive issues. The Exchange does not
believe the proposed rule would impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
Act, because the additional June 30, 2020 extension for supervision-
related reports in Rule 1308 will apply equally to all members. The
Exchange does not believe that the proposed rule change would impose
any burden on intermarket competition because it relates only to the
extension of the filing deadline for supervision-related reports.
Additionally, and as stated above, FINRA has recently notified its
members that the filing deadline for their supervision-related reports
has again been extended to July 31, 2020,\19\ and other options
exchanges have filed or plan to file for the same relief through July
31, 2020, as well.\20\
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\19\ See supra note 11.
\20\ See supra notes 12 and 13.
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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 from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \21\ and
[[Page 42449]]
subparagraph (f)(6) of Rule 19b-4 thereunder.\22\
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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 Commission has waived this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \23\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \24\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. The
Commission notes that the proposed rule change would allow the
Exchange, in light of the COVID-19 pandemic, to provide temporary
relief for members by extending the deadlines in paragraphs (g) and (h)
of Exchange Rule 1308 (Supervision of Accounts) from June 30, 2020, to
July 31, 2020. This is consistent with extensions for certain
supervision-related reports provided by other exchanges.\25\ The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\26\
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\23\ 17 CFR 240.19b-4(f)(6).
\24\ 17 CFR 240.19b-4(f)(6)(iii).
\25\ See Securities Exchange Act Release Nos. 89246 (July 8,
2020) (ISE-2020-28); 89247 (July 8, 2020) (SR-PHLX-2020-35); and
89248 (July 8, 2020) (SR-CBOE-2020-063).
\26\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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-2020-24 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-2020-24. 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-2020-24 and should be submitted on
or before August 4, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15116 Filed 7-13-20; 8:45 am]
BILLING CODE 8011-01-P