[Federal Register Volume 78, Number 178 (Friday, September 13, 2013)]
[Notices]
[Pages 56764-56766]
[FR Doc No: 2013-22256]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70347; File No. SR-NYSEArca-2013-85]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to Changes
to the Means of Achieving the Investment Objective Applicable to the
AdvisorShares QAM Equity Hedge ETF

September 9, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on August 27, 2013, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the 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\ 15 U.S.C. 78a.
    \3\ 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 proposes to reflect changes to the means of achieving
the investment objective applicable to the AdvisorShares QAM Equity
Hedge ETF (``Fund''). The Fund is currently listed and traded on the
Exchange under NYSE Arca Equities Rule 8.600. The text of the proposed
rule change is available on the Exchange's Web site at www.nyse.com, at
the principal office of the Exchange, 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 self-regulatory organization
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission has approved listing and trading on the Exchange of
shares (``Shares'') of the AdvisorShares QAM Equity Hedge ETF, a series
of AdvisorShares Trust (``Trust''),\4\ under NYSE Arca Equities Rule
8.600, which governs the listing and trading of Managed Fund Shares.
The Fund is currently listed and traded on the Exchange under NYSE Arca
Equities Rule 8.600.
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    \4\ See Securities Exchange Act Release No. 67559 (August 1,
2012), 77 FR 47482 (August 8, 2012) (SR-NYSEArca-2012-57) (``Prior
Order''). See also Securities Exchange Act Release No. 67196 (June
13, 2012), 77 FR 36591(June 19, 2012) (SR-NYSEArca-2012-57) (``Prior
Notice,'' and together with the Prior Order, the ``Prior Release'').
The Fund and the Shares are currently in compliance with the listing
standards and other rules of the Exchange and the requirements set
forth in the Prior Release.
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    The Shares are offered by the Trust, a statutory trust organized
under the laws of the State of Delaware and registered with the
Commission as an open-end management investment company.\5\ The
investment advisor to the Fund is AdvisorShares Investments, LLC
(``Adviser''). Commerce Asset Management is the sub-advisor (``Sub-
Adviser'') to the Fund and provides day-to-day portfolio management of
the Fund.
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    \5\ The Trust is registered under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). On September 16, 2011, the
Trust filed with the Commission an amendment to its registration
statement on Form N-1A under the Securities Act of 1933 (15 U.S.C.
77a) (``Securities Act'') and under the 1940 Act relating to the
Fund (File Nos. 333-157876 and 811-22110) (``Registration
Statement''). The description of the operation of the Trust and the
Fund herein is based, in part, on the Registration Statement. In
addition, the Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act. See Investment
Company Act Release No. 28822 (July 20, 2009) (File No. 812-13488)
(``Exemptive Order'').
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    In this proposed rule change, the Exchange proposes to reflect
changes to the description of the measures the Sub-Adviser will utilize
to implement the Fund's investment objective.\6\
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    \6\ The changes described herein will be effective upon filing
with the Commission of another amendment to the Trust's Registration
Statement. See note 5, supra. The Adviser represents that the
Adviser and Sub-Adviser have managed and will continue to manage the
Fund in the manner described in the Prior Release, and will not
implement the changes described herein until the instant proposed
rule change is operative.
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    As stated in the Prior Release, in managing the Fund's portfolio,
among other proprietary analytics, the Sub-Adviser utilizes Markov
Processes International, LLC's (``MPI'') Dynamic Style Analysis
(``DSA'') patented hedge fund analysis software to help select the
Fund's investments and determine the allocation among such investments.
The Sub-Adviser identifies approximately 50 market factors that track
the aggregated exposure and approximate the returns of the selected
universe of long/short equity hedge funds. The Sub-Adviser uses DSA and
other proprietary analytics to define and track the various market
factors and relative exposures and to adjust the Fund's portfolio as
necessary. As stated in the Prior Release, the Fund's portfolio
typically consists of up to 50 Underlying ETPs and other securities.
    Going forward, the Fund proposes to implement the following changes
from the representations made in the Prior Release. First, in managing
the Fund's portfolio, the Fund will no longer utilize the MPI DSA
software. Instead, the Sub-Adviser will utilize, among other
proprietary analytics, its own quantitative techniques, including time
dependent factor approximations, to help select the Fund's investments
and determine the allocation among such investments. The Sub-Adviser
will use quantitative analysis including other proprietary analytics to
define and track the various market factors and relative exposures and
to adjust the Fund's portfolio as necessary. Second, the Sub-Adviser
will identify approximately 100, instead of approximately 50, market
factors that track the aggregated exposure and approximate the returns
of the selected universe of long/short equity hedge funds.\7\ Third,
the Fund's portfolio typically will consist of between 40 and 80,
instead of up to 50, Underlying ETPs and other securities, as described
in the Prior Release.
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    \7\ As stated in the Prior Release, at any given time, such
market factors may include country exposure, sector exposure,
industry exposure, and currency exposure. In seeking to achieve its
investment objective, the Fund seeks to remain invested at all times
in securities or derivatives (as described in the Prior Release)
that provide the desired exposures to market factors.
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    The Adviser represents that the purpose of this change is, first,
to provide additional flexibility to the Sub-Adviser to meet the Fund's
investment objective by substantially increasing the number of market
factors that track the aggregated exposure and approximate the returns
of the selected universe of long/short equity hedge funds. Such an

increase will permit the Fund to include a broader range of market
sectors in the mid- and large-cap equity securities and Underlying ETPs
in which the Fund invests, and will further the Fund's objective to
seek capital appreciation. Second, the Fund will utilize proprietary
quantitative techniques to select the Fund's investments and
allocations, which will provide the Fund with additional control over
its investments. Third, the Fund will substantially increase the
maximum number of Underlying ETPs and other securities that will
compose the Fund's portfolio, which will also provide additional
flexibility to the Fund to include a broader range of securities in
furtherance of the Fund's investment objectives.
    The Exchange also notes that the Prior Release stated that the Sub-
Adviser is affiliated with a broker-dealer. The Adviser represents that
the Sub-Adviser is no longer affiliated with a broker-dealer.
    The Adviser represents that there is no change to the Fund's
investment objective. The Fund will continue to comply with all initial
and continued listing requirements under NYSE Arca Equities Rule 8.600.
Except for the changes noted above, all other facts presented and
representations made in the Prior Release remain unchanged. All terms
referenced but not defined herein are defined in the Prior Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \8\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will continue to be listed and traded on the Exchange pursuant
to the initial and continued listing criteria in NYSE Arca Equities
Rule 8.600. The Adviser represents that the purpose of this change is,
first, to provide additional flexibility to the Sub-Adviser to meet the
Fund's investment objective by substantially increasing the number of
market factors that track the aggregated exposure and approximate the
returns of the selected universe of long/short equity hedge funds. Such
an increase will permit the Fund to include a broader range of market
sectors in the mid- and large-cap equity securities and Underlying ETPs
in which the Fund invests, and will further the Fund's objective to
seek capital appreciation. Second, the Fund will utilize proprietary
quantitative techniques to select the Fund's investments and
allocations, which will provide the Fund with additional control over
its investments. Third, the Fund will substantially increase the
maximum number of Underlying ETPs and other securities that will
compose the Fund's portfolio, which will also provide additional
flexibility to the Fund to include a broader range of securities in
furtherance of the Fund's investment objectives. The Adviser represents
that there is no change to the Fund's investment objective. The Fund
will continue to comply with all initial and continued listing
requirements under NYSE Arca Equities Rule 8.600.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Adviser represents that there is no change to the Fund's
investment objective. The Fund will continue to comply with all initial
and continued listing requirements under NYSE Arca Equities Rule 8.600.
The Adviser represents that the purpose of this change is to provide
additional flexibility to the Sub-Adviser to meet the Fund's investment
objective, as discussed above.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that the Fund will continue to comply with all
initial and continued listing requirements under NYSE Arca Equities
Rule 8.600. The Adviser represents that the purpose of this change is
to provide additional flexibility to the Sub-Adviser to meet the Fund's
investment objective, as discussed above. The Adviser represents that
there is no change to the Fund's investment objective. Except for the
changes noted above, all other representations made in the Prior
Release remain unchanged.

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 changes to the
Fund's means of achieving the investment objective will permit the Fund
to invest in a broader number of market sectors and a greater number of
Underlying ETPs and other securities, and will enhance competition
among issues of Managed Fund Shares that invest in equity securities.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission notes that
waiver of the operative delay would permit the Fund to immediately
implement the changes proposed herein.
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    \11\ Id.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    Under the proposal,\13\ (1) the Fund would seek to employ certain

proprietary techniques, in lieu of the MPI DSA software, in addition to
other proprietary analytics, to help select and determine the
allocation of its investments and to define and track the various
market factors and relative exposures and to adjust the Fund's
portfolio, as necessary, (2) the Sub-Adviser would seek to identify
approximately 100, instead of approximately 50, market factors that
track the aggregated exposure and approximate the returns of the
selected universe of long/short equity hedge funds, and (3) the Fund's
portfolio would seek to consist of between 40 and 80, instead of up to
50, Underlying ETPs and other securities. The Commission believes that
utilizing certain proposed proprietary techniques, in addition to other
proprietary analytics, increasing the number of identifiable market
factors to track the aggregated exposure and approximate the returns of
the selected universe of long/short equity hedge funds and raising the
maximum number of Underlying ETPs and other securities in which the
Fund may invest would allow for additional flexibility for the Fund to
include a broader and more diversified range of market sectors and
securities investments, in furtherance of the Fund's investment
objective to seek investment results that exceed the risk adjusted
performance of approximately 50% of the long/short equity hedge fund
universe, as defined by the HFRI Equity Hedge (Total) Index
constituents.\14\ In addition, the Exchange represents that, by
investing in a broader range of market sectors, the Sub-Adviser may be
able to reduce some of the market risk associated with investment in a
smaller number of market sectors and reduce price volatility in the
Fund's Shares.
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    \13\ In the proposed rule change, the Exchange also clarified
that the Sub-Adviser is no longer affiliated with a broker-dealer.
The Commission notes that, as stated in the Prior Release, in the
event the Sub-Adviser becomes newly affiliated with a broker-dealer,
it will implement a fire wall with respect to such broker-dealer
regarding access to information concerning the composition and/or
changes to the portfolio and will be subject to procedures designed
to prevent the use and dissemination of material, non-public
information regarding such portfolio.
    \14\ See Prior Release, supra note 4 (providing additional
details regarding the investment objective of the Fund).
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    The Exchange represents that the Fund's investment objective is not
changing, all other representations made in the Prior Release remain
unchanged, and the Fund will continue to comply with all of the listing
requirements under NYSE Arca Equities Rule 8.600. For the foregoing
reasons, the Commission believes that the proposed change does not
raise novel or unique regulatory issues and is consistent with the
protection of investors and the public interest. Therefore, the
Commission waives the 30-day operative delay requirement and designates
the proposed rule change as operative upon filing.\15\
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    \15\ For purposes only of waiving the 30-day operative delay,
the Commission 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 such 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_ADDRESS>Please include
File Number SR-NYSEArca-2013-85 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2013-85. 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 Web site (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 Web site 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; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-NYSEArca-2013-85 and should be
submitted on or before October 4, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22256 Filed 9-12-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 101 (Wednesday, May 25, 2016)]
[Notices]
[Pages 33301-33307]
[FR Doc No: 2016-12235]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77853; File No. SR-MIAX-2016-11]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Exchange Rule 100 Concerning Professional
Customers

May 19, 2016.
    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 May 6, 2016, 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.
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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 the
Substance of the Proposed Rule Change

    The Exchange is filing a proposal to amend the definition of
Priority Customer in Exchange Rule 100 (Definitions), and to make a
technical change to correct a typographical error in the rule text.
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, 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 the definition of ``Priority
Customer'' in Rule 100 (Definitions) and to add Interpretations and
Policies .01 thereto to specify the manner in which the Exchange will
calculate the number of orders submitted by a MIAX participant to
determine if such orders should be designated as Priority Customer \3\
or Professional Interest \4\ orders. The Exchange believes that the
proposed rule change would provide additional clarity in the Exchange's
Rules and serve to promote the purposes for which the Exchange
originally adopted its Priority Customer and Professional Interest
rules. This filing is based upon proposals recently submitted by
Chicago Board Options Exchange, Incorporated (``CBOE'') \5\ and NASDAQ
OMX PHLX LLC (``PHLX'') \6\ and approved by the Commission.
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    \3\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 listed options orders per day on average during a
calendar month for its own beneficial account(s). The term
``Priority Customer Order'' means an order for the account of a
Priority Customer. See Exchange Rule 100 (Definitions).
    \4\ The term ``Professional Interest'' means (i) an order that
is for the account of a person or entity that is not a Priority
Customer, or (ii) an order or non-priority quote for the account of
a Market Maker. See Exchange Rule 100 (Definitions).
    \5\ See Securities Exchange Act Release No. 77450 (March 25,
2016), 81 FR 18668 (March 31, 2016) (Order Approving SR-CBOE-2016-
005).
    \6\ See Securities Exchange Act Release No. 77449 (March 25,
2016), 81 FR 18665 (March 31, 2016) (Order Approving SR-PHLX-2016-
10).
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Background
    In general, certain customers that are not ``industry
professionals'', Market Makers or brokers and dealers of securities are
granted certain marketplace advantages on most U.S. options exchanges
over other market participants, including over those customers that are
industry professionals, Market Makers or broker-dealers. The U.S.
options exchanges generally categorize persons or entities that are not
brokers or dealers in securities that place more than 390 orders per
day on average during a calendar month for their own beneficial
account(s) to be ``industry professionals''. Various exchanges refer to
persons or entities that meet or exceed the 390 orders per day
threshold as ``professionals'' or ``professional customers'',\7\ while
other exchanges refer to orders placed for such customers' beneficial
account(s) to be ``professional orders'' or ``professional
interests''.\8\ Various exchanges adopted similar rules relating to
orders placed by or for these industry professionals for many of the
same reasons, including, but not limited to the desire to create more
competitive marketplaces and attract retail order flow.\9\ In addition,
several of the exchanges noted in their original professional order
rule filings, their beliefs that disparate professional order rules and
a lack of uniformity in the application of such rules across the
options markets would not promote the best regulation and may, in fact,
encourage regulatory arbitrage.\10\
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    \7\ See BATS Exchange, Inc. (``BZX'') Rule 16.1(a)(45)
(Professional); BOX Options Exchange LLC (``BOX'') Rule 100(a)(50)
(Professional); CBOE Rule 1.1(ggg) (Professional); C2 Rule 1.1; BX
Chapter I, Sec. 1(49) (Professional); PHLX Rule 1000(b)(14)
(Professional); and Nasdaq Options Market (``NOM'') Chapter I, Sec.
1(a)(48) (Professional). See also NYSE MKT LLC (``NYSE MKT'') Rule
900.2NY(18A) (Professional Customer); and NYSE Arca, Inc. (``Arca'')
Rule 6.1A(4A) (Professional Customer).
    \8\ See ISE Rule 100(a)(37C) (Professional Order); ISE Gemini,
LLC (``Gemini'') Rule 100(a)(37C) (Professional Order); and MIAX
Rule 100 (Professional Interest).
    \9\ See, e.g., Securities Exchange Act Release No. 60931
(November 4, 2009), 74 FR 58355, 58356 (November 12, 2009) (Notice
of Filing of Proposed Rule Change, as Modified by Amendment No. 1,
Related to Professional Orders) (SR-CBOE 2009-078); Securities
Exchange Act Release No. 59287 (January 23, 2009), 74 FR 5694, 5694
(January 30, 2009) (Notice of Filing of Amendment No. 2 and Order
Granting Accelerated Approval of the Proposed Rule Change, as
Modified by Amendment Nos. 1 and 2 Thereto, Relating to Professional
Account Holders) (SR-ISE-2006-026); Securities Exchange Act Release
No. 61802 (March 30, 2010), 75 FR 17193, 17194 (April 5, 2010)
(Notice of Filing of Amendment No. 2 and Order Granting Accelerated
Approval of the Proposed Rule Change, as Modified by Amendment No. 2
Thereto, Relating to Professional Orders) (SR-PHLX-2010-005);
Securities Exchange Act Release No. 61629 (March 2, 2010), 75 FR
10851, 10851 (March 9, 2010) (Notice of Filing of Proposed Rule
Change Relating to the Designation of a ``Professional Customer'')
(SR-NYSEMKT-2010-018).
    \10\ See, e.g., Securities and Exchange Act Release No. 62724
(August 16, 2010), 75 FR 51509 (August 20, 2010) (Notice of Filing
of a Proposed Rule Change by the NASDAQ Stock Market LLC To Adopt a
Definition of Professional and Require That All Professional Orders
Be Appropriately Marked) (SR-NASDAQ-2010-099); Securities and
Exchange Act Release No. 65500 (October 6, 2011), 76 FR 63686
(October 13, 2011) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Adopt a Definition of Professional and
Require That All Professional Orders Be Appropriately Marked) (SR-
BATS-2011-041); Securities Exchange Act Release No. 65036 (August 4,
2011), 76 FR 49517, 49518 (August 10, 2011) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Adopt a
Definition of ``Professional'' and Require That Professional Orders
Be Appropriately Marked by BOX Options Participants) (SR-BX-2011-
049); Securities Exchange Act Release No. 60931 (November 4, 2009),
74 FR 58355, 58357 (November 12, 2009) (Notice of Filing of Proposed
Rule Change, as Modified by Amendment No. 1, Related to Professional
Orders) (SR-CBOE 2009-078); see also Securities Exchange Act Release
73628 (November 18, 2014), 79 FR 69958, 69960 (November 24, 2014)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change Relating to Professional Orders) (SR-CBOE-2014-085).
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    Similar to other U.S. options exchanges, the Exchange grants its
Priority Customers certain marketplace advantages over other market
participants pursuant to the Exchange's Fee Schedule \11\ and
Rules.\12\ In general, Priority Customers receive allocation and
execution priority above equally priced competing interests of Market
Makers, broker-dealers, and other market participants. In addition,
Priority Customer Orders are generally exempt from transaction fees.
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    \11\ See, e.g., MIAX Options Fee Schedule.
    \12\ Priority Customer Orders have priority over Professional
Interest and all Market Maker interest at the same price. See
Exchange Rule 514(d) (Priority of Quotes and Orders); see also 515A
(MIAX Price Improvement Mechanism (``PRIME'') and PRIME Solicitation
Mechanism) (a)(2)(iii) (PRIME Auction Order Allocation) and
(b)(2)(iii) (PRIME Solicitation Mechanism Order Allocation).
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    The Exchange currently defines a ``Professional Interest'' in
relevant part as an order that is for the account of a person or entity
that is not a Priority Customer.\13\ The Exchange's Priority Customer
and Professional Interest rules were adopted to distinguish non-broker

dealer individuals and entities that have access to information and
technology that enable them to professionally trade listed options in a
manner similar to brokers or dealers in securities, from retail
investors for order priority and/or transaction fees purposes. In
general, Professional Interest orders are treated in the same manner as
the orders of broker-dealers under the Exchange's Rules, including but
not limited to, rules governing execution priority and fees.\14\ MIAX's
average daily order threshold of 390 orders per day is substantially
similar to the distinction made by professional order rules of other
exchanges and was materially based upon the preexistent professional
order rules of other exchanges.\15\
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    \13\ See supra note 4.
    \14\ See Exchange Rule 100 (Professional Interest). See also
supra notes 11 and 12.
    \15\ See supra notes 7 and 8.
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    In September 2014, the Exchange clarified its Priority Customer
Order and Professional Interest distinctions by issuing a Regulatory
Circular to its Members \16\ summarizing the requirements for
determining the designation of orders as Priority Customer or
Professional Interest. For example, the Regulatory Circular codified
the Exchange's interpretation that for order counting purposes, a
``parent'' order that is broken up into multiple ``child'' orders by an
individual at a broker or dealer, or by an algorithm housed at a broker
or dealer, at a single price, should count as one single order. This
interpretation was a clarification of Exchange Rules based on the
Exchange's past interpretations of the definitions of Priority Customer
and Professional Interest under Rule 100.
---------------------------------------------------------------------------

    \16\ See MIAX Regulatory Circular 2014-69 (Priority Customer and
Professional Interest Order Summary).
---------------------------------------------------------------------------

    The Exchange's Regulatory Circular, however, has not clarified the
Exchange's Priority Customer and Professional Interest rules
completely. The advent of new multi-leg spread products and the
proliferation of the use of complex orders and algorithmic execution
strategies by both institutional and retail market participants
continue to raise questions as to what constitutes an ``order'' for
professional order counting purposes. For example, do multi-leg spread
orders or strategy orders constitute a single order or multiple orders
for professional order counting purposes? The Exchange's Rules do not
fully address these issues and there is no common interpretation across
the U.S. options markets. The Exchange believes that additional clarity
is needed regarding professional order counting. Accordingly, the
Exchange is proposing to amend its definition of a Priority Customer
and to add Interpretations and Policies .01 to such definition to
address how various new execution and order strategies should be
treated under the Exchange's Rules.
    Moreover, the Exchange believes that the proposed rule change would
better serve to accomplish the Exchange's goals for its Priority
Customer and Professional Interest rules. Based upon current order
counting methodology under these Rule 100 definitions, many market
participants who are not broker-dealers but nevertheless use
sophisticated execution strategies and trading algorithms such that
they would typically be considered ``industry professionals'' or
``professional traders'' are not captured by the Exchange's
Professional Interest rule and are instead treated as Priority
Customers. The Exchange believes that these types of market
participants have access to technology and market information akin to
broker-dealers, unlike typical retail market participants. The
Exchange's Priority Customer and Professional Interest rules were
designed to differentiate between the foregoing market participants.
The Exchange therefore believes that a new Interpretations and Policies
to the definition of Priority Customer under Rule 100 is warranted to
ensure that Priority Customers are afforded the marketplace advantages
that they are intended to be afforded over other types of market
participants on the Exchange.
    The Exchange notes that despite the adoption of materially similar
professional order rules across the markets, there is no consistent
definition across the markets as to what constitutes an ``order'' for
professional order counting purposes. While several options exchanges,
including MIAX, have attempted to clarify their interpretations of
their professional order counting rules through regulatory and
information notices and circulars,\17\ many of the options exchanges
have not adopted rules regarding the application of their professional
order counting methodologies. Furthermore, where exchanges have issued
interpretive guidance, those interpretations have not necessarily been
consistent.\18\ As a result, the Exchange believes that the lack of
uniformity amongst the exchanges' professional order counting
methodologies may not promote the best regulation and in fact may
encourage regulatory arbitrage.
---------------------------------------------------------------------------

    \17\ See CBOE Regulatory Circular RG09-148 (Professional
Orders); ISE Regulatory Information Circular 2014-007/Gemini
Regulatory Information Circular 2014-011 (Priority Customer Orders
and Professional Orders (FAQ)); MIAX Regulatory Circular 2014-69
(Priority Customer and Professional Interest Order Summary); NYSE
Joint Regulatory Bulletin, NYSE Acra RBO-15-03, NYSE Amex RBO-15-06)
(Professional Customer Orders); BOX Regulatory Circular RC-2015-21
(Professional Orders).
    \18\ Compare NYSE Joint Regulatory Bulletin, NYSE Acra RBO-15-
03, NYSE Amex RBO-15-06 (Professional Customer Orders) with
Interpretation and Policy .01 to Rule 1.1(ggg); Regulatory Circular
RG09-148 (Professional Orders); ISE Regulatory Information Circular
2014-007/Gemini Regulatory Information Circular 2014-011 (Priority
Customer Orders and Professional Orders (FAQ)); and ISE Regulatory
Information Circular 2009-179 (Priority Customer Orders and
Professional Orders (FAQ)).
---------------------------------------------------------------------------

Proposal
    The Exchange proposes to add additional details to the definition
of Priority Customer under Rule 100, including a new Interpretations
and Policies setting forth a more detailed counting regime for
calculating average daily orders for Priority Customer and Professional
Interest order counting purposes. Specifically, the Exchange's proposed
Interpretations and Policies would make clear how to count complex
orders, ``parent/child'' orders that are broken into multiple orders,
and ``cancel/replace'' orders for Priority Customer and Professional
Interest order counting purposes.
    Proposed Interpretations and Policies .01, paragraph (a) would
provide that except as noted below, each order of any order type,
regardless of the options exchange on which the order is entered or to
which the order is routed, shall be counted as one (1) order toward the
390-order threshold, except that Flexible Exchange Option (FLEX) orders
shall not be counted. This is because FLEX orders are non-electronic
orders, and the proposed rule change relates only to orders that are
submitted electronically.
    Proposed Interpretations and Policies .01, paragraph (b) would
state that a complex order \19\ comprised of eight (8) options legs or
fewer will count as a single order toward the 390-order threshold. A
complex order comprised of nine (9) options legs or more will count as
multiple orders, with each options leg counting as its own separate
order. Stock components of stock-option orders are explicitly excluded
from the count because they do not constitute orders in listed options.
The Exchange believes that complex orders with nine or more legs are
more likely to be used by professional traders than traditional two,
three and four leg complex orders

strategies and combinations thereof with eight legs or fewer, which are
generally not algorithmically generated and are frequently used by
retail investors. Thus, the types of complex orders traditionally
placed by retail investors would continue to count as a single order
toward the 390-order threshold while the more complex strategy orders
that are typically used by professional traders would count as multiple
orders.
---------------------------------------------------------------------------

    \19\ The Exchange notes that it does not currently accept
complex orders, however as noted above, the proposed Priority
Customer and Professional Interest order counting regime will count
all orders regardless of the options exchange on which entered.
---------------------------------------------------------------------------

    Proposed Interpretations and Policies .01, paragraph (c) would
provide details relating to the counting of ``parent/child'' orders.
Under the proposal, a ``parent'' order placed for the beneficial
account(s) of a person or entity not a broker or dealer that is broken
into multiple subordinate ``child'' orders on the same side (buy/sell)
and series as the ``parent'' order, by a broker or dealer or an
algorithm housed at a broker or dealer or licensed from a broker dealer
but housed with the customer, shall count as one (1) order, even if the
``child'' orders are routed away. Proposed paragraph (c) would permit
larger ``parent'' orders (which may be simple orders or complex orders
consisting of up to eight legs), to be broken into multiple smaller
orders on the same side (buy/sell) and in the same series (or complex
orders consisting of up to eight legs) in order to attempt to achieve
best execution for the overall order. Proposed paragraph (c) would
essentially separate orders that are part of an overall strategy from
those orders that are being ``worked'' by a broker in order to achieve
best execution or in an attempt to time the market.
    For example, if a customer were to enter an order to buy 1,000 XYZ
$5 January calls at a limit price of $1, which the customer's broker
then broke into four separate orders to buy 250 XYZ $5 January calls at
a limit price of $1 in order to achieve a better execution, the four
``child'' orders would still only count as one order for Priority
Customer and Professional Interest order counting purposes (whether or
not the four separate orders were sent to the same or different
exchanges for execution).\20\ Similarly, in the case of a complex
order, if a customer were to enter an order to buy 1,000 XYZ $5
January(sell)/March(buy) calendar spreads (with a 1:1 ratio on the
legs), at a net debit limit price of $0.20, which the customer's broker
then broke into four separate orders to buy 250 XYZ $5 January/March
calendar spreads (each with a 1:1 ratio on the legs), each at a net
debit limit price of $0.20, the four ``child'' orders would still only
count as one order for Priority Customer and Professional Interest
order counting purposes (whether or not the four separate orders were
sent to the same or different exchanges for execution).
---------------------------------------------------------------------------

    \20\ Notably, however, if the customer herself were to enter the
same four identical orders to buy 250 XYZ $5 January calls at a
limit price of $1 prior to sending the orders, those orders would
count as four separate orders for Priority Customer and Professional
Interest order counting purposes because the orders would not have
been broken into multiple ``child'' orders on the same side(buy/
sell) and series as the ``parent'' order by a broker or dealer, or
by an algorithm housed at a broker or dealer or licensed from a
broker or dealer but housed with the customer.
---------------------------------------------------------------------------

    On the other hand, a ``parent'' order (including a strategy order)
\21\ that is broken into multiple subordinate ``child'' orders on both
sides (buy/sell) of a series and/or multiple series shall count as
multiple orders, with each ``child'' order counted as a new and
separate order per side and series. Accordingly under this provision,
strategy orders, which are most often used by sophisticated traders
best characterized as industry professionals, would count as multiple
orders for each ``child'' order entered as part of the overall
strategy. For example, if a customer were to enter an order with her
broker by which multiple ``child'' orders were then sent to the
Exchange on both sides (buy/sell) of a series in a particular option
class, each order entered would count as a separate order for Priority
Customer and Professional Interest order counting purposes. Further, if
a customer were to enter an order with her broker by which multiple
``child'' orders were then sent to the Exchange across multiple series
in a particular option class, each order entered would count as a
separate order for Priority Customer and Professional Interest order
counting purposes. Likewise, if the customer instructed her broker to
buy a variety of calls across various option classes as part of a
basket trade, each order entered by the broker in order to obtain the
positions making up the basket would count as a separate order for
Priority Customer and Professional Interest order counting
purposes.\22\
---------------------------------------------------------------------------

    \21\ For purposes of the proposed Interpretation and Policy, the
term ``strategy order'' is intended to mean an execution strategy,
trading instruction, or algorithm whereby multiple ``child'' orders
on both sides of a series and/or multiple series are generated prior
to being sent to any or multiple U.S. options exchange(s).
    \22\ Notably, with respect to the types of ``parent'' orders
(including strategy orders) described in paragraph (c) to the
definition of Priority Customer under proposed Interpretation and
Policy .01 to Rule 100, such orders would be received only as
multiple ``child'' orders on the U.S. options exchange receiving
such orders. The ``parent'' order would be broken apart before being
sent by the participant to the exchange(s) as multiple ``child''
orders.
---------------------------------------------------------------------------

    The Exchange believes that the distinctions between ``parent'' and
``child'' orders in proposed paragraph (c) are appropriate. The purpose
of proposed paragraph (c) is to distinguish ``child'' orders of
``parent'' orders generated by algorithms that are typically used by
sophisticated traders to continuously update their orders in concert
with market updates in order to keep their overall trading strategies
in balance. The Exchange believes that these types of ``parent/child''
orders typically used by sophisticated traders should count toward the
390-order threshold as multiple orders.
    Proposed Interpretations and Policies .01, paragraph (d) would
discuss the counting of orders that are cancelled and replaced toward
the 390-order threshold. Specifically, proposed paragraph (d)(1) would
provide that an order that cancels and replaces a prior order shall
count as a second order, or multiple new orders in the case of a
complex order comprised of nine (9) options legs or more, including
``single-strike algorithms.'' A series of cancel and replace orders in
an individual strike which track the Exchange's best bid or offer
(``MBBO'') or the national best bid or offer (``NBBO'') shall count as
separate new orders. Paragraph (d)(1) makes clear that a cancel message
in and of itself, is not an order. For example, if a trader were to
enter a non-marketable limit order to buy an option contract at a
certain net debit price, cancel the order in response to market
movements, and then reenter the same order once it became marketable,
those orders would count as two separate orders for Priority Customer
and Professional Interest order counting purposes even though the terms
of both orders were the same.
    Proposed paragraph (d)(2) would provide that except as noted in
proposed paragraph (d)(3), an order that cancels and replaces a
subordinate ``child'' order on the same side and series as the
``parent'' order shall not count as a new order. For example, if a
customer were to enter an order with her broker to buy 10,000 XYZ $5
January calls at a limit price of $1, which the customer's broker then
entered, but could not fill and then cancelled to avoid having to rest
the order in the book as part of a strategy to obtain a better
execution for the customer and then resubmitted the remainder of the
order, which would be considered a ``child'' of the ``parent'' order,
once it became marketable, such orders would only count as one order
for Priority Customer and Professional Interest order counting
purposes.

    Proposed paragraph (d)(3) would state that an order that cancels
and replaces a subordinate ``child'' order and results in multiple new
sides and/or in multiple series will count as a new order per side and
series. Proposed paragraph (d)(3) is aimed at identifying ``child''
orders of ``parent'' orders generated by algorithms that are typically
used by sophisticated traders to continuously update their orders in
concert with market updates in order to keep their overall trading
strategies in balance. The Exchange believes that proposed paragraph
(d)(3) is consistent with these goals. For example, if an investor were
to seek to make a trade (or series of trades) to take a long position
at a certain percentage limit on a basket of options, the investor may
need to cancel and replace several of the ``child'' orders entered to
achieve the overall execution strategy several times to account for
updates in the prices of the underlying securities. In such a case,
each ``child'' order placed to keep the overall execution strategy in
place would count as a new and separate order even if the particular
``child'' order were being used to replace a slightly different
``child'' order that was previously being used to keep the same overall
execution strategy in place. The Exchange believes that the
distinctions between cancel/replace orders in proposed paragraphs
(d)(2) and (d)(3) are appropriate as the orders described in proposed
paragraph (d)(3) are typically generated by algorithms used by
sophisticated traders to keep strategy orders continuously in line with
updates in the markets. As such, the Exchange believes that in such
cases, cancel/replace orders should count as multiple orders.
    Finally, proposed paragraph (d)(3) would also codify the Exchange's
``pegged'' order interpretation in the text of the Rules. Proposed
paragraph (d)(3) would provide that an order that cancels and replaces
a subordinate ``child'' order ``pegged'' to the MBBO or NBBO will count
as a new order each time a cancel/replace order is used to follow the
MBBO or NBBO. This interpretation is similar to the Exchange's current
interpretation of its Priority Customer and Professional Interest
rules.\23\ The Exchange believes that paragraph (d)(3) is appropriate
to make clear that pegged strategy orders that are typically used by
sophisticated traders should be counted as multiple orders even though
such orders may cancel/replace orders on the same side (buy/sell) of
the market in a single series in order to achieve an overall order
strategy.
---------------------------------------------------------------------------

    \23\ See supra note 16.
---------------------------------------------------------------------------

    Under current definitions of Priority Customer and Professional
Interest under Rule 100, in order to properly represent orders entered
on the Exchange, MIAX Members are required to mark orders as ``Priority
Customer'' or ``Professional Interest''.\24\ This requirement will
remain the same. To comply with this requirement, Members are required
to review their customer activity on at least a quarterly basis to
determine whether orders that are not for the account of a broker-
dealer should be represented as Priority Customer or Professional
Interest.\25\ Orders for any account that had an average of more than
390 orders per day during any month of a given quarter must be
represented as Professional Interest for the entire next calendar
quarter. Members are required to conduct a quarterly review and make
any appropriate changes to the way in which they are representing
orders within five days after the end of each calendar quarter. While
Members only will be required to review their customer accounts on a
quarterly basis, if during a quarter the Exchange identifies a customer
for which orders are being represented as Priority Customer but that
has averaged more than 390 orders per day during a month, the Exchange
will notify the Member and the Member will be required to change the
manner in which it is representing the customer's orders within five
days.
---------------------------------------------------------------------------

    \24\ See id.
    \25\ See id.
---------------------------------------------------------------------------

    The Exchange's rules only require that Members conduct a look-back
to determine whether their customers are averaging more than 390 orders
per day at the end of each calendar quarter.\26\ The Exchange therefore
proposes that the proposed rule amendment become operative on July 1,
2016 in order to ensure that all orders during the quarterly review
period commencing July 1, 2016 will be counted in the same manner and
that the proposed order counting rules will not be applied
retroactively. The Exchange will issue a Regulatory Circular 30 days
prior to the operative date.
---------------------------------------------------------------------------

    \26\ See supra note 16.
---------------------------------------------------------------------------

    Additionally, the Exchange is making a technical change to correct
a typographical error in the definition of Priority Customer under Rule
100 such that ``accounts(s)'' shall be corrected to read as
``account(s)''.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \27\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \28\ 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 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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \29\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \29\ See id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed amendment to
the definition of Priority Customer under Rule 100 will promote
consistent application of the rule by further defining the manner in
which the Exchange will compute the average daily number of orders
submitted by a MIAX participant during a calendar month for its
beneficial account(s) for purposes of determining the appropriate
Priority Customer or Professional Interest designation. Furthermore,
the Exchange believes that specifying the manner in which the 390-order
daily threshold will be calculated within its Rules will provide
Members with certainty and provide them with insight as they conduct
their quarterly reviews for purposes of designating orders.
    The Exchange additionally believes that the proposed rule change
provides a more conservative order counting regime that would identify
more traders as industry professionals, which the Exchange's definition
of Priority Customer was designed to exclude, and thus create a better
competitive balance for all participants on the Exchange, consistent
with the Act. As the options markets have evolved to become more
electronic and more competitive, the Exchange believes that the
distinction between registered broker-dealers on the one hand and
professional traders who are nevertheless currently treated as Priority
Customers on the other hand has become increasingly blurred. More and
more, the Exchange's category of Priority Customer today includes
sophisticated algorithmic traders

including former market makers and hedge funds that trade with a
frequency resembling that of broker-dealers. The Exchange believes that
it is reasonable under the Act to treat those customers who meet the
high level of trading activity established in the proposal differently
than customers who do not meet that threshold and are more typical
retail investors to ensure that professional traders do not take
advantage of priority and fee benefits intended for Priority Customers.
    The Exchange notes that it is not unfair to differentiate between
different types of investors in order to achieve certain marketplace
balances. The Rules currently differentiate between Priority Customers,
broker-dealers, Market-Makers, and the like, and these differentiations
have been recognized to be consistent with the Act.\30\ The Exchange
believes that the current rules of MIAX and other exchanges that accord
priority to non-broker-dealer customers over broker-dealers are
appropriate and consistent with the Act. The Exchange further believes
that it is appropriate and consistent with the Act to accord priority
to only those non-professional customers who on average do not place
more than one order per minute (390 per day) under the counting regime
that the Exchange proposes. The Exchange believes that such
differentiations drive competition in the marketplace and are within
the business judgment of the Exchange. Accordingly, the Exchange also
believes that its proposal is consistent with the requirement of
Section 6(b)(8) of the Act \31\ that the rules of an exchange not
impose an unnecessary or inappropriate burden upon competition in that
it treats persons who should be deemed industry professionals, but who
may not be so deemed under current Exchange Rules, in a manner so that
they do not receive special priority benefits.
---------------------------------------------------------------------------

    \30\ See, e.g., Securities Exchange Act Release No. 59287
(January 23, 2009), 74 FR 5694, 5694 (January 30, 2009) (Notice of
Filing of Amendment No. 2 and Order Granting Accelerated Approval of
the Proposed Rule Change, as Modified by Amendment Nos. 1 and 2
Thereto, Relating to Professional Account Holders) (SR-ISE-2006-
026).
    \31\ 15 U.S.C. 78(b)(8).
---------------------------------------------------------------------------

    Furthermore, the Exchange believes that the proposed rule change
will protect investors and the public interest by helping to assure
that true Priority Customers continue to receive the appropriate
marketplace benefits in the MIAX marketplace as intended, while
furthering competition among marketplace professionals by treating them
in the same manner as other similarly situated professional market
participants. The Exchange believes that it is consistent with Section
6(b)(5) of the Act \32\ not to afford certain market participants that
have access to information and technology similar to that of brokers
and dealers of securities with marketplace advantages intended for
Priority Customers. Finally, the Exchange believes that the proposed
rule change sets forth a more detailed and clear regulatory regime with
respect to calculating average daily order entry for Priority Customer
and Professional Interest order counting purposes. The Exchange
believes that this additional clarity and detail will eliminate
confusion among market participants, which is in the interests of all
investors and the general public.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that a new set of standards and a more
detailed counting regime than the Exchange's current Priority Customer
and Professional Interest rules provide would allow the Exchange to
better compete for order flow and help ensure deeper levels of
liquidity on the Exchange. The Exchange also believes that the proposed
rule change would help to remove impediments to and help perfect the
mechanism of a free and open market and a national market system by
increasing competition in the marketplace. Accordingly, the Exchange
proposes to amend the definition of Priority Customer under Rule 100
and adopt a new Interpretations and Policies thereto.

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. In this regard and as
indicated above, the Exchange notes that this rule change is
substantially similar to recent CBOE and PHLX filings approved by the
Commission.\33\ As discussed above, the Exchange does not believe that
the current rules of MIAX and other exchanges that accord priority to
non-broker-dealer customers over broker-dealers are unfairly
discriminatory. Nor does the Exchange believe that it is unfairly
discriminatory to accord priority to only those non-professional
customers who on average do not place more than one order per minute
(390 per day) under the counting regime that the Exchange proposes.
---------------------------------------------------------------------------

    \33\ See supra notes 5 and 6.
---------------------------------------------------------------------------

    The Exchange believes that its proposal does not impose an undue
burden on competition. Rather, the Exchange believes that the proposed
rule change would help to remove burdens on competition and promote a
more competitive marketplace by affording certain marketplace
advantages only to those for whom they are intended. The Exchange notes
that one of the purposes of the rules regarding professional traders is
to help ensure fairness in the marketplace and promote competition
among all market participants. The Exchange believes that the proposed
rule change should help establish more competition among market
participants and promote the purposes underlying Exchange's Priority
Customer and Professional Interest rules. The Exchange does not believe
that the Act requires it to equally provide the same incentives and
discounts to all market participants given as discussed above, the
distinctions among such market participants as professional traders or
retail investors.
    Rather than burden competition, the Exchange believes that the
proposed rule change promotes competition by ensuring that retail
investors continue to receive the appropriate marketplace benefits in
the MIAX marketplace as intended in the MIAX Rules, while furthering
competition among marketplace professionals by treating them in the
same manner under the Rules as other similarly situated market
participants. The proposal will accomplish this by ensuring that market
participants with similar access to information and technology (i.e.
professional traders and broker-dealers) receive similar treatment
under the Rules, while retail investors receive the benefits of order
priority and fee waivers that are intended to apply to Priority
Customers.

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

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \34\ and Rule 19b-4(f)(6) thereunder.\35\
Because the 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 prior to 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, if consistent
with the protection of investors and the public interest, the proposed
rule change has become effective pursuant to Section 19(b)(3)(A) of the
Act and Rule 19b-4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \35\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) of the Act \36\ to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File No. SR-MIAX-2016-11 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 No. SR-MIAX-2016-11. 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 Web site (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 Web site 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-MIAX-2016-11, and should be
submitted on or before June 15, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12235 Filed 5-24-16; 8:45 am]
 BILLING CODE 8011-01-P


Gold Eagle
Consumer product
4 oz to 32 oz
15% max of 2,4,6 in Isomax 133  -  how much do they buy? 35,000-40,000 gallons per year
4% to max 8% of that goes into final product, 0.6% to 1.8% in final product, 1 oz treating 2.5 gallons
Gasoline additive
STABLE 25% of all annual sales. Finishes consumer product sold directly to WALMART, LOWES, HOME DEPOT, INTERNET, DISTRIBUTORS, AUTOPART STORES. OEM for Kawasaki (for example) blending and labeling (<1%).
Average prices: 8 oz bottle - $5.99 - $7.99, $4.50 - $7.00
Older cars, antique cars, boats, lawn mowers,
Storage formulation
Small engine use formulation
Marine formulation
Alternatives to Isomax 133  -  phenylamines? BHT? They have not found an antioxidant that works as effectively. Antioxidant blends (3 blends)?
ASTM D 525

Oil treatments, lubricating oils?