[Federal Register Volume 85, Number 200 (Thursday, October 15, 2020)]
[Notices]
[Pages 65443-65449]
[FR Doc No: 2020-22869]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90146; File No. SR-MIAX-2020-32]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Fee Schedule

October 9, 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 September 30, 2020, Miami International Securities
Exchange LLC (``MIAX Options'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee
Schedule (the ``Fee Schedule'') to: (1) Make non-substantive
reorganizing changes to certain sections of the Fee Schedule; and (2)
extend the waiver period for certain non-transaction fees applicable to
Market Makers \3\ that trade solely in Proprietary Products \4\ until
December 31, 2020.
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    \3\ The term ``Market Makers'' refers to ``Lead Market Makers'',
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
    \4\ The term ``Proprietary Product'' means a class of options
that is listed exclusively on the Exchange. See Exchange Rule 100.
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    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 the Fee Schedule to: (1) Make non-
substantive reorganizing changes to certain sections of the Fee
Schedule; and (2) extend the waiver period for certain non-transaction
fees applicable to Market Makers that trade solely in Proprietary
Products until December 31, 2020.
    On October 12, 2018, the Exchange received approval from the
Commission to list and trade on the Exchange, options on the
SPIKES[supreg] Index, a new index that measures expected 30-day
volatility of the SPDR S&P 500 ETF Trust (commonly known and referred
to by its ticker symbol, ``SPY'').\5\ The Exchange adopted its initial
SPIKES transaction fees on February 15, 2019 and adopted a new section
of the Fee Schedule--Section 1)a)xi), SPIKES--for those fees.\6\
Options on the SPIKES Index began trading on the Exchange on February
19, 2019.
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    \5\ See Securities Exchange Act Release No. 84417 (October 12,
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order
Granting Approval of a Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the Exchange Options
on the SPIKES[supreg] Index).
    \6\ See Securities Exchange Release No. 85283 (March 11, 2019),
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). The Exchange
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04).
That filing was withdrawn and replaced with SR-MIAX-2019-11.
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Fee Schedule Reorganization
    The Exchange now proposes to reorganize several sections of the Fee
Schedule for purposes of clarity and to avoid potential confusion.
First, the Exchange proposes to rename Section 1)a), Exchange Fees, to
now be titled ``Multiply-Listed Options Exchange Fees.'' The purpose of
this change is to clarify that the fees and rebates listed in this
section of the Fee Schedule will apply only to multiply-listed options
transactions, and not transactions in the Exchange's Proprietary
Products, including SPIKES options.
    Next, the Exchange proposes to move Section 1)a)xi), SPIKES, to now
be Section 1)b)i). As described above, the Exchange began listing
SPIKES options on February 19, 2019. The Exchange plans to continue
adding Proprietary Products and will include all fees and rebates for
such products in one section of the Fee Schedule in order to clarify
that the fees and rebates for multiply-listed options are different
than for the Exchange's Proprietary Products. Accordingly, the Exchange
proposes to move Section 1)a)xi), SPIKES, to now be Section 1)b)i). In
connection with this proposed reorganization, the Exchange also plans
to rename Section 1)b), Marketing Fee, to now be titled ``Proprietary
Products Exchange Fees.'' Further, the Exchange proposes to move the
Marketing Fee section (currently Section 1)b)) to now be Section
1)a)xi). The purpose of this change is to clarify that the Marketing
Fee applies to all multiply-listed options transactions on the Exchange
and not to the Exchange's Proprietary Products, including SPIKES
options. The Exchange does not propose to amend or change any of the
actual fee or rebate amounts or applicability in the Fee Schedule.
Extend Fee Waiver for Certain Non-Transaction Fees
    On May 31, 2019, the Exchange filed a proposal with the Commission
to amend the Fee Schedule to waive certain non-transaction fees
applicable to Market Makers that trade solely in Proprietary Products
(including options on the SPIKES Index) until September 30, 2019.\7\ In
particular, the Exchange adopted waivers for Membership Application
fees, monthly Market Maker Trading Permit fees, Application Programming
Interface (``API'') Testing and Certification fees for Members, and
monthly MEI Port fees assessed to Market Makers that trade solely in
Proprietary Products (including options on SPIKES) until September 30,
2019.
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    \7\ See Securities Exchange Act Release No. 86109 (June 14,
2019), 84 FR 28860 (June 20, 2019) (SR-MIAX-2019-28).
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    On October 1, 2019, the Exchange filed a proposal with the
Commission to extend the waiver period for the same non-transaction
fees applicable to Market Makers that trade solely in Proprietary
Products (including options on SPIKES) until December 31, 2019.\8\ On
December 30, 2019, the Exchange filed a proposal with the Commission to
extend the waiver period for the same non-transaction fees applicable
to Market Makers that trade solely in Proprietary Products (including
options on SPIKES) until June 30, 2020.\9\ On June 30, 2020, the
Exchange filed a proposal with the Commission to extend the waiver
period for the same non-transaction fees applicable to Market Makers
that trade solely in Proprietary Products (including options on SPIKES)
until September 30, 2020.\10\
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    \8\ See Securities Exchange Act Release No. 87282 (October 10,
2019), 84 FR 55658 (October 17, 2019) (SR-MIAX-2019-43).
    \9\ See Securities Exchange Act Release No. 87897 (January 6,
2020), 85 FR 1346 (January 10, 2020) (SR-MIAX-2019-53).
    \10\ See Securities Exchange Act Release No. 89289 (July 10,
2020), 85 FR 43279 (July 16, 2020) (SR-MIAX-2020-22).
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    The Exchange now proposes to extend the waiver period for the same
non-transaction fees applicable to Market Makers that trade solely in
Proprietary Products (including options on SPIKES) until December 31,
2020. In particular, the Exchange proposes to waive

Membership Application fees, monthly Market Maker Trading Permit fees,
Member API Testing and Certification fees, and monthly MEI Port fees
assessed to Market Makers that trade solely in Proprietary Products
(including options on SPIKES) until December 31, 2020.
Membership Application Fees
    The Exchange currently assesses Membership fees for applications of
potential Members. The Exchange assesses a one-time Membership
Application fee on the earlier of (i) the date the applicant is
certified in the membership system, or (ii) once an application for
MIAX membership is finally denied. The one-time application fee is
based upon the applicant's status as either a Market Maker or an
Electronic Exchange Member (``EEM'').\11\ A Market Maker is assessed a
one-time Membership Application fee of $3,000.00.
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    \11\ The term ``Electronic Exchange Member'' or ``EEM'' means
the holder of a Trading Permit who is not a Market Maker. Electronic
Exchange Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
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    The Exchange proposes that the waiver for the one-time Membership
Application fee of $3,000.00 for Market Makers that trade solely in
Proprietary Products (including options on SPIKES) will be extended
from September 30, 2020 until December 31, 2020, which the Exchange
proposes to state in the Fee Schedule. The purpose of this proposed
change is to continue to provide an incentive for potential Market
Makers to submit membership applications, which should result in
increasing potential liquidity in Proprietary Products, including
options on SPIKES. Even though the Exchange is proposing to extend the
waiver of this particular fee for Market Makers who will trade solely
in Proprietary Products from September 30, 2020 until December 31,
2020, the overall structure of the fee is outlined in the Fee Schedule
so that there is general awareness that the Exchange intends to assess
such a fee after December 31, 2020.
Trading Permit Fees
    The Exchange issues Trading Permits that confer the ability to
transact on the Exchange. MIAX Trading Permits are issued to Market
Makers and EEMs. Members receiving Trading Permits during a particular
calendar month are assessed monthly Trading Permit fees as set forth in
the Fee Schedule. As it relates to Market Makers, MIAX currently
assesses a monthly Trading Permit fee in any month the Market Maker is
certified in the membership system, is credentialed to use one or more
MIAX Express Interface Ports (``MEI Ports'') \12\ in the production
environment and is assigned to quote in one or more classes. MIAX
assesses its Market Makers the monthly Market Maker Trading Permit fee
based on the greatest number of classes listed on MIAX that the MIAX
Market Maker was assigned to quote in on any given day within a
calendar month and the applicable fee rate is the lesser of either the
per class basis or percentage of total national average daily volume
measurements. A MIAX Market Maker is assessed a monthly Trading Permit
Fee according to the following table:
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    \12\ Full Service MEI Ports provide Market Makers with the
ability to send Market Maker simple and complex quotes, eQuotes, and
quote purge messages to the MIAX System. Full Service MEI Ports are
also capable of receiving administrative information. Market Makers
are limited to two Full Service MEI Ports per matching engine. See
Fee Schedule, note 27.

----------------------------------------------------------------------------------------------------------------
                                                         Market maker assignments (the lesser of the applicable
                                         Monthly MIAX                  measurements below) [Omega]
        Type of trading permit          trading permit ---------------------------------------------------------
                                              fee                                   % of national average daily
                                                                Per class                      volume
----------------------------------------------------------------------------------------------------------------
Market Maker (includes RMM, LMM, PLMM)       $7,000.00  Up to 10 Classes.........  Up to 20% of Classes by
                                                                                volume
                                            $12,000.00  Up to 40 Classes.........  Up to 35% of Classes by
                                                                                volume
                                          $17,000.00 *  Up to 100 Classes........  Up to 50% of Classes by
                                                                                volume
                                          $22,000.00 *  Over 100 Classes.........  Over 50% of Classes by volume
                                                                                up to all Classes listed on
                                                                                MIAX
----------------------------------------------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX Trading Permit Fee levels, if the Market Maker's total monthly executed volume during
  the relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market
  maker account type for MIAX-listed option classes for that month, then the fee will be $15,500 instead of the
  fee otherwise applicable to such level.

    MIAX proposes that the waiver for the monthly Trading Permit fee
for Market Makers that trade solely in Proprietary Products (including
options on SPIKES) will be extended from September 30, 2020 to December
31, 2020, which the Exchange proposes to state in the Fee Schedule. The
purpose of this proposed change is to continue to provide an incentive
for Market Makers to provide liquidity in Proprietary Products on the
Exchange, which should result in increasing potential order flow and
volume in Proprietary Products, including options on SPIKES. Even
though the Exchange is proposing to extend the waiver of this
particular fee for Market Makers trading solely in Proprietary Products
from September 30, 2020 until December 31, 2020, the overall structure
of the fee is outlined in the Fee Schedule so that there is general
awareness by potential Members seeking a Trading Permit on the Exchange
that the Exchange intends to assess such a fee after December 31, 2020.
    The Exchange also proposes that Market Makers who trade Proprietary
Products (including options on SPIKES) along with multi-listed classes
will continue to not have Proprietary Products (including SPIKES)
counted toward those Market Makers' class assignment count or
percentage of total national average daily volume. This exclusion is
noted with the symbol ``[Omega]'' following the table that shows the
monthly Trading Permit Fees currently assessed for Market Makers in
Section 3)b) of the Fee Schedule.
API Testing and Certification Fee
    The Exchange assesses an API Testing and Certification fee to all
Members depending upon the type of Member. An API makes it possible for
Members' software to communicate with MIAX software applications, and
is subject to Members testing with, and certification by, MIAX. The
Exchange offers four types of interfaces: (i) The Financial Information
Exchange Port (``FIX Port'') \13\, which enables the FIX Port user
(typically an EEM or a Market

Maker) to submit simple and complex orders electronically to MIAX; (ii)
the MEI Port, which enables Market Makers to submit simple and complex
electronic quotes to MIAX; (iii) the Clearing Trade Drop Port (``CTD
Port'') \14\, which provides real-time trade clearing information to
the participants to a trade on MIAX and to the participants' respective
clearing firms; and (iv) the FIX Drop Copy Port (``FXD Port'') \15\,
which provides a copy of real-time trade execution, correction and
cancellation information through a FIX Port to any number of FIX Ports
designated by an EEM to receive such messages.
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    \13\ A FIX Port is an interface with MIAX systems that enables
the Port user (typically an Electronic Exchange Member or a Market
Maker) to submit simple and complex orders electronically to MIAX.
See Fee Schedule, note 24.
    \14\ Clearing Trade Drop (``CTD'') provides Exchange members
with real-time clearing trade updates. The updates include the
Member's clearing trade messages on a low latency, real-time basis.
The trade messages are routed to a Member's connection containing
certain information. The information includes, among other things,
the following: (i) Trade date and time; (ii) symbol information;
(iii) trade price/size information; (iv) Member type (for example,
and without limitation, Market Maker, Electronic Exchange Member,
Broker-Dealer); (v) Exchange Member Participant Identifier
(``MPID'') for each side of the transaction, including Clearing
Member MPID; and (vi) strategy specific information for complex
transactions. CTD Port Fees will be assessed in any month the Member
is credentialed to use the CTD Port in the production environment.
See Fee Schedule, Section 5)d)iii.
    \15\ The FIX Drop Copy Port (``FXD'') is a messaging interface
that will provide a copy of real-time trade execution, trade
correction and trade cancellation information for simple and complex
orders to FIX Drop Copy Port users who subscribe to the service. FIX
Drop Copy Port users are those users who are designated by an EEM to
receive the information and the information is restricted for use by
the EEM only. FXD Port Fees will be assessed in any month the Member
is credentialed to use the FXD Port in the production environment.
See Fee Schedule, Section 5)d)iv.
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    API Testing and Certification fees for Market Makers are assessed
(i) initially per API for CTD and MEI in the month the Market Maker has
been credentialed to use one or more ports in the production
environment for the tested API and the Market Maker has been assigned
to quote in one or more classes, and (ii) each time a Market Maker
initiates a change to its system that requires testing and
certification. API Testing and Certification fees will not be assessed
in situations where the Exchange initiates a mandatory change to the
Exchange's system that requires testing and certification. The Exchange
currently assesses a Market Maker an API Testing and Certification fee
of $2,500.00. The API Testing and Certification fees represent costs
incurred by the Exchange as it works with each Member for testing and
certifying that the Member's software systems communicate properly with
MIAX's interfaces.
    MIAX proposes to extend the waiver of the API Testing and
Certification fee for Market Makers that trade solely in Proprietary
Products (including options on SPIKES) from September 30, 2020 until
December 31, 2020, which the Exchange proposes to state in the Fee
Schedule. The purpose of this proposed change is to continue to provide
an incentive for potential Market Makers to develop software
applications to trade in Proprietary Products, including options on
SPIKES. Even though the Exchange is proposing to extend the waiver of
this particular fee for Market Makers who trade solely in Proprietary
Products from September 30, 2020 until December 31, 2020, the overall
structure of the fee is outlined in the Fee Schedule so that there is
general awareness that the Exchange intends to assess such a fee after
December 31, 2020.
MEI Port Fees
    MIAX provides four (4) Port types, including (i) the FIX Port,
which enables the FIX Port user (typically an EEM or a Market Maker) to
submit simple and complex orders electronically to MIAX; (ii) the MEI
Port, which enables Market Makers to submit simple and complex
electronic quotes to MIAX; (iii) the CTD Port, which provides real-time
trade clearing information to the participants to a trade on MIAX and
to the participants' respective clearing firms; and (iv) the FXD Port,
which provides a copy of real-time trade execution, correction and
cancellation information through a FIX Port to any number of FIX Ports
designated by an EEM to receive such messages.
    MIAX assesses monthly MEI Port Fees to Market Makers in each month
the Member has been credentialed to use the MEI Port in the production
environment and has been assigned to quote in at least one class. The
amount of the monthly MEI Port Fee is based upon the number of classes
in which the Market Maker was assigned to quote on any given day within
the calendar month, and upon the class volume percentages set forth in
the above table. The class volume percentage is based on the total
national average daily volume in classes listed on MIAX in the prior
calendar quarter. Newly listed option classes are excluded from the
calculation of the monthly MEI Port Fee until the calendar quarter
following their listing, at which time the newly listed option classes
will be included in both the per class count and the percentage of
total national average daily volume. The Exchange assesses MIAX Market
Makers the monthly MEI Port Fee based on the greatest number of classes
listed on MIAX that the MIAX Market Maker was assigned to quote in on
any given day within a calendar month and the applicable fee rate that
is the lesser of either the per class basis or percentage of total
national average daily volume measurement. MIAX assesses MEI Port Fees
on Market Makers according to the following table:

------------------------------------------------------------------------
                                 Market maker assignments (the lesser of
                                   the applicable measurements below)
                                                 [Omega]
     Monthly MIAX MEI Fees     -----------------------------------------
                                                   % of national average
                                    Per class           daily volume
------------------------------------------------------------------------
$5,000.00.....................  Up to 5 Classes..  Up to 10% of Classes
                                                    by volume
$10,000.00....................  Up to 10 Classes.  Up to 20% of Classes
                                                    by volume
$14,000.00....................  Up to 40 Classes.  Up to 35% of Classes
                                                    by volume
$17,500.00 *..................  Up to 100 Classes  Up to 50% of Classes
                                                    by volume
$20,500.00 *..................  Over 100 Classes.  Over 50% of Classes
                                                    by volume up to all
                                                    Classes listed on
                                                    MIAX
------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX MEI Fees levels, if the Market Maker's total
  monthly executed volume during the relevant month is less than 0.060%
  of the total monthly executed volume reported by OCC in the market
  maker account type for MIAX-listed option classes for that month, then
  the fee will be $14,500 instead of the fee otherwise applicable to
  such level.

    MIAX proposes to extend the waiver of the monthly MEI Port Fee for
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) from September 30, 2020 until December 31, 2020,
which the Exchange proposes to state in the Fee Schedule. The purpose
of this proposal is to continue to provide an incentive to

Market Makers to connect to MIAX through the MEI Port such that they
will be able to trade in MIAX Proprietary Products. Even though the
Exchange is proposing to extend the waiver of this particular fee for
Market Makers trading solely in Proprietary Products until December 31,
2020, the overall structure of the fee is outlined in the Fee Schedule
so that there is general awareness that the Exchange intends to assess
such a fee after December 31, 2020.
    The Exchange notes that for the purposes of this proposed change,
other Market Makers who trade MIAX Proprietary Products (including
options on SPIKES) along with multi-listed classes will continue to not
have Proprietary Products (including SPIKES) counted toward those
Market Makers' class assignment count or percentage of total national
average daily volume. This exclusion is noted by the symbol ``[Omega]''
following the table that shows the monthly MEI Port Fees currently
assessed for Market Makers in Section 5)d)ii) of the Fee Schedule.
    The proposed extension of the fee waivers are targeted at market
participants, particularly market makers, who are not currently members
of MIAX, who may be interested in being a Market Maker in Proprietary
Products on the Exchange. The Exchange estimates that there are fewer
than ten (10) such market participants that could benefit from the
extension of these fee waivers. The proposed extension of the fee
waivers does not apply differently to different sizes of market
participants, however the fee waivers do only apply to Market Makers
(and not EEMs).
    Market Makers, unlike other market participants, take on a number
of obligations, including quoting obligations that other market
participants do not have. Further, Market Makers have added market
making and regulatory requirements, which normally do not apply to
other market participants. For example, Market Makers have obligations
to maintain continuous markets, engage in a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market, and to not make bids or offers or enter into
transactions that are inconsistent with a course of dealing.
Accordingly, the Exchange believes it is reasonable and not unfairly
discriminatory to continue to offer the fee waivers to Market Makers
because the Exchange is seeking additional liquidity providers for
Proprietary Products, in order to enhance liquidity and spreads in
Proprietary Products, which is traditionally provided by Market Makers,
as opposed to EEMs.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \16\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \17\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among its members and issuers and other persons using
its facilities. The Exchange also believes the proposal furthers the
objectives of Section 6(b)(5) of the Act in that it 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 and is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposed changes to reorganize certain
sections of the Fee Schedule promotes just and equitable principles of
trade and removes impediments to and perfects the mechanism of a free
and open market and a national market system because the proposed
changes make clarifying, non-substantive edits to the Fee Schedule. The
Exchange believes that these proposed changes will provide greater
clarity to Members and the public regarding the Exchange's Fee Schedule
and that it is in the public interest for the Fee Schedule to be
accurate and concise so as to eliminate the potential for confusion.
    The Exchange believes that the proposal to extend the fee waiver
period for certain non-transaction fees for Market Makers in
Proprietary Products is an equitable allocation of reasonable fees
because the proposal continues to waive non-transaction fees for a
limited period of time in order to enable the Exchange to improve its
overall competitiveness and strengthen its market quality for all
market participants in MIAX's Proprietary Products, including options
on SPIKES. The Exchange believe the proposed extension of the fee
waivers is fair and equitable and not unreasonably discriminatory
because it applies to all market participants not currently registered
as Market Makers at the Exchange. Any market participant may choose to
satisfy the additional requirements and obligations of being a Market
Maker and trade solely in Proprietary Products in order to qualify for
the fee waivers.
    The Exchange believes that the proposed extension of the fee
waivers is equitable and not unfairly discriminatory for Market Makers
as compared to EEMs because Market Makers, unlike other market
participants, take on a number of obligations, including quoting
obligations that other market participants do not have. Further, Market
Makers have added market making and regulatory requirements, which
normally do not apply to other market participants. For example, Market
Makers have obligations to maintain continuous markets, engage in a
course of dealings reasonably calculated to contribute to the
maintenance of a fair and orderly market, and to not make bids or
offers or enter into transactions that are inconsistent with a course
of dealing.
    The Exchange believes it is reasonable and equitable to continue to
waive the one-time Membership Application Fee, monthly Trading Permit
Fee, API Testing and Certification Fee, and monthly MEI Port Fee for
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) until December 31, 2020, since the waiver of such
fees provides incentives to interested market participants to trade in
Proprietary Products. This should result in increasing potential order
flow and liquidity in MIAX Proprietary Products, including options on
SPIKES.
    The Exchange believes it is reasonable and equitable to continue to
waive the API Testing and Certification fee assessable to Market Makers
that trade solely in Proprietary Products (including options on SPIKES)
until December 31, 2020, since the waiver of such fees provides
incentives to interested Members to develop and test their APIs sooner.
Determining system operability with the Exchange's system will in turn
provide MIAX with potential order flow and liquidity providers in
Proprietary Products.
    The Exchange believes it is reasonable, equitable and not unfairly
discriminatory that Market Makers who trade in Proprietary Products
along with multi-listed classes will continue to not have Proprietary
Products counted toward those Market Makers' class assignment count or
percentage of total national average daily volume for monthly Trading
Permit Fees and monthly MEI Port Fees in order to incentivize existing
Market Makers who currently trade in multi-listed classes to also trade
in Proprietary Products,

without incurring certain additional fees.
    The Exchange believes that the proposed extension of the fee
waivers constitutes an equitable allocation of reasonable fees and
other charges among its members and issuers and other persons using its
facilities. The proposed extension of the fee waivers means that all
prospective market makers that wish to become Market Maker Members of
the Exchange and quote solely in Proprietary Products may do so and
have the above-mentioned fees waived until December 31, 2020. The
proposed extension of the fee waivers will continue to not apply to
potential EEMs because the Exchange is seeking to enhance the quality
of its markets in Proprietary Products through introducing more
competition among Market Makers in Proprietary Products. In order to
increase the competition, the Exchange believes that it must continue
to waive entry type fees for such Market Makers. EEMs do not provide
the benefit of enhanced liquidity which is provided by Market Makers,
therefore the Exchange believes it is reasonable and not unfairly
discriminatory to continue to only offer the proposed fee waivers to
Market Makers (and not EEMs). Further, the Exchange believes it is
reasonable and not unfairly discriminatory to continue to exclude
Proprietary Products from an existing Market Maker's permit fees and
port fees, in order to incentive such Market Makers to quote in
Proprietary Products. The amount of a Market Maker's permit and port
fee is determined by the number of classes quoted and volume of the
Market Maker. By excluding Proprietary Products from such fees, the
Exchange is able to incentivize Market Makers to quote in Proprietary
Products. EEMs do not pay permit and port fees based on the classes
traded or volume, so the Exchange believes it is reasonable, equitable,
and not unfairly discriminatory to only offer the exclusion to Market
Makers (and not EEMs).

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 not necessary or appropriate in
furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange believes that the proposal to reorganize certain
sections of the Fee Schedule does not impose any burden on intra-market
competition that is not necessary or appropriate because this proposal
is not competitive in nature, but rather is designed to remedy minor
non-substantive issues and provide added clarity to the Fee Schedule in
order to avoid potential confusion on the part of market participants.
    The Exchange believes that the proposal to extend certain of the
non-transaction fee waivers until December 31, 2020 for Market Makers
in Proprietary Products would increase intra-market competition by
incentivizing new potential Market Makers to quote in Proprietary
Products, which will enhance the quality of quoting and increase the
volume of contracts in Proprietary Products traded on MIAX. To the
extent that this purpose is achieved, all the Exchange's market
participants should benefit from the improved market liquidity for the
Exchange's Proprietary Products. Enhanced market quality and increased
transaction volume in Proprietary Products that results from the
anticipated increase in Market Maker activity on the Exchange will
benefit all market participants and improve competition on the
Exchange.
    The Exchange does not believe that the proposed rule change will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed changes for each separate type of market participant (new
Market Makers and existing Market Makers) will be assessed equally to
all such market participants. While different fees are assessed to
different market participants in some circumstances, these different
market participants have different obligations and different
circumstances as discussed above. For example, Market Makers have
quoting obligations that other market participants (such as EEMs) do
not have.
Inter-Market Competition
    The Exchange does not believe the proposal to reorganize certain
sections of the Fee Schedule will impose any burden on inter-market
competition as the proposal does not address any competitive issues and
is intended to protect investors by providing further transparency
regarding the Exchange's Fee Schedule.
    The Exchange does not believe that the proposed rule change to
extend the fee waiver for certain non-transaction fees will impose any
burden on inter-market competition that is not necessary or appropriate
in furtherance of the purposes of the Act because the proposed
extension of the fee waivers apply only to the Exchange's Proprietary
Products (including options on SPIKES), which are traded exclusively on
the Exchange.

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 foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\18\ and Rule 19b-4(f)(2) \19\ thereunder.
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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-MIAX-2020-32 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-2020-32. 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-2020-32, and should be submitted on or before November 5, 2020.
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22869 Filed 10-14-20; 8:45 am]
BILLING CODE 8011-01-P


                               January 16, 2020

--------------------------------------------------------------------------------
 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
--------------------------------------------------------------------------------
REGION 8
--------------------------------------------------------------------------------
1595 Wynkoop Street
--------------------------------------------------------------------------------
DENVER, CO   80202-1129
--------------------------------------------------------------------------------
Phone<PHONE_NUMBER>
--------------------------------------------------------------------------------
http://www.epa.gov/region08
--------------------------------------------------------------------------------
0
Ref: 8P-AR

MEMORANDUM

SUBJECT: 	Kalispell and Libby Critical Design Value Calculations

FROM:	James Hou
		Environmental Engineer

TO: 		File

According to the Limited Maintenance Plan (LMP) Option for Moderate PM10 Nonattainment Areas (NAA) memo, in order to qualify for the LMP option,

     "To qualify for the limited maintenance plan option, an area should meet the following applicability criteria. The area should be attaining the NAAQS and the average PM10 design value for the area, based upon the most recent 5 years of air quality data at all monitors in the area, should be at or below 40 :g/m3 for the annual and 98 :g/m3 for the 24-hr PM10 NAAQS with no violations at any monitor in the nonattainment area5 . If an area cannot meet this test it may still be able to qualify for the LMP option if the average design values of the site are less than their respective site-specific CDV.

     We believe it is appropriate to offer this second method of qualifying for the LMP because, based on the air quality data we have studied, we believe there are some monitoring sites with average design values above 40 :g/m3 or 98 :g/m3 , depending on the NAAQS in question, that have experienced little variability in the data over the years. When the CDV calculation was performed for these sites we discovered that their average design values are less than their CDVs, indicating that the areas have a very low probability (1 in 10) of exceeding the NAAQS in the future. We believe it is appropriate to provide these areas the opportunity to qualify for the LMP in this circumstance since the 40 :g/m3 or 98 :g/m3 criteria are based on a national analysis and don't take into account each local situation."

The following methodology can be found in Attachment A of the LMP Option memo, and is used to determine the site-specific CDV for a NAA

The equation set forth is:
                             CDV = NAAQS/(1+tc*CV)

Where:
      CDV = Critical Design Value in μg/m3
      NAAQS = 150 ug/m3 for the 24-hr PM10 standard,
      tc = critical t-value corresponding to a 10% probability,
      CV = coefficient of variation of the annual design values

Kalispell Critical Design Value Calculation:

                                     Year
                         Design Concentration (ug/m3)
                                                                           2007
                                                                            102
                                                                           2008
                                                                            105
                                                                           2009
                                                                            115
                                                                           2010
                                                                             61
                                                                           2011
                                                                            108
                                                                           2012
                                                                            108
                                                                           2013
                                                                            108
                                                                           2014
                                                                             88
                                                                           2015
                                                                             89
                                                                           2016
                                                                             89
                                                                           2017
                                                                             88
                                                                           2018
                                                                             90
st dev
                                                                          14.76
mean
                                                                          95.92
CV
                                                                           0.15
NAAQS
                                                                         150.00
tc
                                                                           1.36
Critical Design Value
                                                                          124.0
Current Avg 3-yr Design Value
                                                                             89

Libby Critical Design Value Calculation

DV Year
Design Values (Table Look-up) 98-155 removed
                                                                           2007
                                                                             99
                                                                           2008
                                                                             89
                                                                           2009
                                                                             79
                                                                           2010
                                                                             87
                                                                           2011
                                                                             87
                                                                           2012
                                                                             90
                                                                           2013
                                                                             90
                                                                           2014
                                                                             90
                                                                           2015
                                                                             90
                                                                           2016
                                                                             90
                                                                           2017
                                                                             92
                                                                           2018
                                                                             95
st dev
                                                                           4.76
mean
                                                                          89.83
CV
                                                                           0.05
NAAQS
                                                                         150.00
tc
                                                                           1.36
Critical Design Value
                                                                          139.9
Current Avg 3-yr Design Value
                                                                           92.3


[Federal Register: March 28, 2007 (Volume 72, Number 59)]
[Notices]
[Page 14631-14636]
[DOCID:fr28mr07-141]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55496; File No. SR-NYSE-2006-37]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Amendment No. 3 to and Order Granting Accelerated
Approval of Proposed Rule Change, as Amended, Relating to the
Establishment of NYSE Bonds

March 20, 2007.

I. Introduction

    On May 16, 2006, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule
19b-4 thereunder,\2\ to establish a new bond trading platform, NYSE
Bonds, to replace its existing bond trading system, the Automated Bond
System (``ABS''). The Exchange filed Amendments No. 1 and 2 to the
proposed rule change on August 4, 2006 and October 10, 2006,
respectively. The proposed rule change, as amended, was published for
comment in the Federal Register on October 24, 2006.\3\ The Commission
received two comments on the proposal.\4\ On March 15, 2007, the
Exchange filed Amendment No. 3 to the proposal.\5\ On March 16, 2007,
the NYSE submitted a response to the comment letters.\6\ This order
provides notice of Amendment No. 3 to the proposed rule change and
approves the proposed rule change as amended on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 54615 (October 17,
2006), 71 FR 62338.
    \4\ See Letters from Mary C.M. Kuan, Vice President and
Assistant General Counsel, Securities Industry and Financial Markets
Association (``SIFMA'') to Nancy Morris, Secretary, Commission,
dated November 14, 2006 (``SIFMA Letter'') and from Ron L. Klein,
Chairman and CEO, General Associates, Inc., dated December 13, 2006
(``Klein Letter'').
    \5\ For a discussion of Amendment No. 3, see Section V, infra.
Amendment No. 3 replaced and superseded Amendment No. 2 in its
entirety.
    \6\ See Letter from Mary Yeager, Assistant Secretary, NYSE, to
Nancy M. Morris, Secretary, Commission, dated March 16, 2007 (``NYSE
Response Letter'').
---------------------------------------------------------------------------

II. Description of the Proposal

    NYSE proposes to amend its Rule 86 to replace its existing bond
trading system, ABS, with a bond trading platform based on technology
used to operate the NYSE Arca Marketplace.\7\ The new name of the NYSE
bond trading platform would be ``NYSE Bonds.'' NYSE also proposes to
amend other Exchange rules to conform to revised NYSE Rule 86.
---------------------------------------------------------------------------

    \7\ The NYSE Arca Marketplace is the successor to the
Archipelago Exchange. See Securities Exchange Act Release No. 53615
(April 7, 2006), 71 FR 19226 (April 13, 2006) (SR-PCX-2006-24).
---------------------------------------------------------------------------

    Any security traded on NYSE Bonds would have to be listed, or
otherwise admitted to dealing, on the Exchange. NYSE has represented
that all debt securities currently trading on ABS would be transferred
to NYSE Bonds.\8\ Additional debt securities that meet the listing
standards in NYSE Listed Company Manual Sections 102.03, 103.05,
703.19, or 703.21, or that are deemed ``exempted securities'' under
Section 3(a)(12) of the Exchange Act,\9\ could trade on NYSE Bonds. In
addition, NYSE intends to trade unregistered corporate bonds pursuant
to an exemption from Section 12(a) of the Exchange Act and a related
rule change recently approved by the Commission.\10\
---------------------------------------------------------------------------

    \8\ Such debt securities include, but are not limited to the
following: corporate bonds (including convertible bonds),
international bank bonds, foreign government bonds, U.S. government
bonds, government agency bonds, municipal bonds, and debt-based
structured products. Any security that would trade on NYSE Bonds is
referred to as a ``bond'' for the purposes of NYSE rules.
    \9\ 15 U.S.C. 78c(a)(12).
    \10\ See Securities Exchange Act Release No. 54766 (November 16,
2006), 71 FR 67657 (November 22, 2006) (File No. S7-06-05)
(permitting NYSE member organizations to trade bonds on the Exchange
that are not registered under Section 12(b) of the Exchange Act, but
are issued by NYSE-listed companies or their wholly owned
subsidiaries and that meet other conditions); Securities Exchange
Act Release No. 54767 (November 16, 2006), 71 FR 67680 (November 22,
2006) (SR-NYSE-2004-69) (collectively, the ``Unlisted Corporate
Bonds Orders'').
---------------------------------------------------------------------------

    NYSE Bonds would be an electronic order-driven matching system.
Initially, the System would allow limit orders and reserve orders.
Visible interest would be executed on a price/time priority basis.
However, undisplayed reserve interest in NYSE Bonds would always yield
to displayed interest at a particular price.\11\ Outside of an auction
(described below), orders marketable at the time of entry would be
matched and executed, except if the price exceeded the ``price collar''
established for the bond at the time of entry. An order that is priced
beyond the price collar threshold would be rejected by the system; an
order that is not marketable at the time of entry would post to the
NYSE Bonds order ``book.'' \12\ If an order were entered at a better
price than the then-best priced contra-side order on the NYSE Bonds
book, the system would match the incoming order against

the booked order at the booked order's price, thereby providing price
improvement to the incoming order. Bonds generally would be traded in
denominations of $1,000.\13\
---------------------------------------------------------------------------

    \11\ See proposed NYSE Rule 86(j)(3)(B).
    \12\ See proposed NYSE Rule 86(e).
    \13\ A User submitting an order priced in a denomination less
than $1,000 would be required to specify the original principal
amount of the bond. See proposed Rule 86(d).
---------------------------------------------------------------------------

    NYSE Bonds would have three trading sessions: (1) The Opening Bond
Trading Session (4 a.m. until 9:30 a.m. Eastern Time (``ET'')); (2) the
Core Bond Trading Session (9:30 a.m. until 4 p.m. ET); and (3) the Late
Bond Trading Session (4 p.m. until 8 p.m. ET). A User \14\ entering an
order into NYSE Bonds would be required to designate the time in force
of the order. A day order, if not executed, would expire at the end of
any of the three daily trading sessions for which it was designated. A
good-`til-cancelled order would remain in effect until it was either
cancelled or executed, but would be available for execution only during
the Core Bond Trading Session. Unless the User indicated otherwise, the
system's default assumption would be that all orders are day orders.
---------------------------------------------------------------------------

    \14\ See proposed NYSE Rule 86(b)(2)(M) (defining ``User'' as
any Subscriber, Sponsored Participant, or Authorized Trader that is
authorized to obtain access to NYSE Bonds).
---------------------------------------------------------------------------

    At the commencement of both the Opening Bond Trading Session and
the Core Bond Trading Session, the Exchange would conduct a bond
auction. Users would be able to submit orders for execution Opening
Bond Auction and the Core Bond Auction beginning at 3:30 a.m. ET.
Orders designated for the Opening Bond Trading Session would queue
until 4 a.m. ET, at which time the Opening Bond Auction would take
place and orders designated for the Core Bond Trading Session would
queue until 9:30 a.m. ET, at which time the Core Bond Auction would
take place.\15\ During a bond auction, the system would attempt to
match and execute orders at the Indicative Match Price (``IMP''). The
IMP is defined as: (1) The price at which the maximum volume of bonds
are executable; (2) if there are two or more prices at which the
maximum volume of bonds are executable, the price that is closest to
the closing price in that bond on the previous trading day, or if the
bond did not trade on the previous day, the price that is closest to
the closing price on the last day that the bond traded; (3) if bond
orders to buy and bond orders to sell are not marketable, the highest
priced bid; or (4) if there were no bids but only offers, the lowest
offer price.\16\ Beginning at 3:30 a.m. ET and various times
thereafter, the IMP of the Opening Bond Auction and/or the Core Bond
Auction and any Imbalance \17\ associated therewith would be
disseminated by the Exchange.
---------------------------------------------------------------------------

    \15\ See proposed NYSE Rule 86(i).
    \16\ See proposed NYSE Rule (b)(2)(G).
    \17\ See proposed NYSE Rule 86(b)(2)(F) (defining ``Imbalance ''
as the number of buy or sell orders that cannot be matched with
other orders at the IMP at any given time).
---------------------------------------------------------------------------

    A single order to sell coupled with a single order to buy would be
sufficient to establish a bond auction, provided the orders were
marketable.\18\ If no marketable orders were entered into the system
prior to the commencement of a bond auction, the auction would not
occur, and the existing orders would be available only for ordinary
trading in the designated bond trading session(s). Orders that were
designated for a particular bond trading session and eligible to
participate in the related bond auction, but not executed in such bond
auction, would also be available for ordinary trading in the trading
session. Orders designated for but not executed in the Opening Bond
Trading Session would be eligible to be matched and executed in the
Core Bond Auction at the IMP. Orders eligible for the Opening Bond
Auction or the Core Bond Auction could be cancelled at any point until
two minutes prior to the commencement of the respective bond auction.
---------------------------------------------------------------------------

    \18\ See proposed NYSE Rule 86(l) (prescribing procedures NYSE
Bonds Bond Auctions).
---------------------------------------------------------------------------

    To post an order on NYSE Bonds, a User would be required to enter
the following information: CUSIP number; quantity; order type (i.e.,
limit or reserve); price (up to three decimals); account type indicator
(``P'' for principle or ``A'' for agent); time in force; and whether
the order is buy, sell, or sell/short.\19\ An order could not be
modified but could be cancelled at any time before it is executed,
except that a User could not cancel an order eligible for execution in
a regularly scheduled bond auction inside of two minutes prior to the
beginning of the bond auction.
---------------------------------------------------------------------------

    \19\ The staff of the Division of Market Regulation of the
Commission previously has stated that it would not recommend that
the Commission take enforcement action if short sales in exchange-
listed bonds and debentures are effected without complying with Rule
10a-1 under the Exchange Act, 17 CFR 240.10a-1. See Securities
Exchange Act Release No. 30772 (June 3, 1992), 57 FR 24415 (June 9,
1992) (File No. S7-13-92) (``Bond Short Sale No-Action Position'').
The Exchange deems this determination by the Commission Staff to
apply to Exchange Rule 440B (Short Sales).
---------------------------------------------------------------------------

    The proposal contemplates the halting, suspension, and closing of
bond trading on NYSE Bonds (a ``Bond Halt'') in certain
circumstances.\20\ During a Bond Halt, orders could enter the system
and queue according to price/time priority but would not execute. When
the Bond Halt is concluded, trading would resume with a Bond Halt
Auction, at which time orders would match and execute at the IMP under
similar terms to the other bond auctions. Like the other bond auctions,
no executions would occur unless marketable orders were available prior
to the commencement of the Bond Halt Auction. Orders eligible for
execution in the Bond Halt Auction could be cancelled at any point
prior to the beginning of the Bond Halt Auction. At the conclusion of
the Bond Halt Auction, ordinary trading would resume in the trading
session in progress at the conclusion of the halt.
---------------------------------------------------------------------------

    \20\ See proposed NYSE Rule 86(k).
---------------------------------------------------------------------------

    A member organization wishing to trade on NYSE Bonds
(``Subscriber'') would be required to enter into a written agreement
with the Exchange.\21\ A non-member (``Sponsored Participant'') \22\
could gain access to NYSE Bonds only by entering into a written
agreement with a Subscriber (i.e., a ``Sponsoring Member
Organization'') \23\ and the Exchange. In the sponsorship agreement,
the Sponsoring Member Organization would acknowledge, among other
things, that any order entered by the Sponsored Participant and any
execution resulting from such order would be binding in all respects on
the Sponsoring Member Organization.\24\ The Sponsoring Member
Organization would be responsible for any and all actions taken by its
Sponsored Participant. The Sponsored Participant, in turn, would agree,
among other things, to comply with the rules of the Exchange and the
rules and procedures with regard to NYSE Bonds, as if it were a member
of the Exchange.\25\ The Sponsored Participant also would be required
to: (1) Take reasonable security precautions to prevent unauthorized
access to NYSE Bonds; (2) establish and maintain an up-to-date list of
persons permitted to access NYSE Bonds on behalf of the Sponsored
Participant (i.e., ``Authorized Traders'') \26\; and (3) provide that
list to the Sponsoring Member Organization. Moreover, the Sponsoring
Member Organization would be required to undertake certain
responsibilities related to a Sponsored

Participant's Authorized Traders, including: (1) Maintaining a list of
Authorized Traders; (2) establishing procedures to ensure that
Authorized Traders comply with Exchange rules and to ensure the safety
of and access to the equipment used to access NYSE Bonds; and (3)
suspending an individual's status as an Authorized Trader when such
individual's action has caused the Sponsoring Member Organization to
fail to comply with Exchange rules.\27\
---------------------------------------------------------------------------

    \21\ See proposed NYSE Rule 86(o)(a).
    \22\ See proposed NYSE Rule 86(b)(2)(K).
    \23\ See proposed NYSE Rule 86(b)(2)(J).
    \24\ See proposed NYSE Rule 86(o)(b)(2)(B)(i).
    \25\ See proposed NYSE Rule 86(o)(b)(2)(C).
    \26\ See proposed NYSE Rule 86(b)(2)(L).
    \27\ See proposed NYSE Rule 86(o)(b)(4).
---------------------------------------------------------------------------

    The proposed NYSE Bonds rules also include provisions for the
handling of a ``Clearly Erroneous Execution,'' defined as an execution
involving an obvious error in any term of an order participating in
such execution, such as price, unit of trading, or identification of
the bond.\28\ Subject to the approval of the Exchange, a Clearly
Erroneous Execution could be nullified if no party to the trade
objects.\29\ The Exchange also has proposed to establish procedures for
reviewing a transaction if one of the parties does not agree to the
cancellation. A User could request a review via telephone, facsimile,
or e-mail. Upon receipt of such request, the Exchange would notify the
counterparty as soon as practicable. Any request for review would
generally be required to be submitted within 30 minutes of the trade;
however, the Exchange could consider a request after 30 minutes on a
case-by-case basis in a manner that promotes a fair and orderly market
and does not unfairly discriminate against Users of NYSE Bonds. Each
party to the transaction would be required to provide, within 30
minutes of the request for review, any supporting written information
as may be reasonably requested by the Exchange to aid in the resolution
of the matter.
---------------------------------------------------------------------------

    \28\ See proposed NYSE Rule 86(b)(2)(H).
    \29\ See proposed NYSE Rule 86(m)(1).
---------------------------------------------------------------------------

    Unless both parties to the disputed transaction agreed to withdraw
the initial request for review, an Officer of the Exchange or a
designee (the ``Reviewer'') would review the transaction and determine
whether it were clearly erroneous, with a view towards maintaining a
fair and orderly market and the protection of investors and the public
interest. In Amendment No. 3, the Exchange proposed factors that the
Reviewer could consider in the determination of a Clearly Erroneous
Execution.\30\ If the Reviewer determines that the transaction in
dispute is erroneous, the transaction would be declared null and void,
or one or more of the terms of the transaction would be modified. The
parties would be promptly notified of the determination.
---------------------------------------------------------------------------

    \30\ Such factors include execution price(s); volume and
volatility of a bond; news released for the issuer or the bond and/
or the related security; the existence of trading halts; corporate
action(s); general market conditions; rating of the bond; interest
and or coupon rate; maturity date; yield curves; last sale, if
available within a reasonable time frame; executions inconsistent
with the trading pattern of a bond; current day's trading high/low;
recent day's and week's trading high/low; executions outside the 52
week high/low; effect of a single large order creating several
prints at various prices; and quotes and executions of other market
centers. See proposed NYSE Rule 86(m)(2)(E).
---------------------------------------------------------------------------

    A request for review of the initial determination by the Clearly
Erroneous Execution Panel (``CEE Panel'') \31\ may be made within 30
minutes after the party making the appeal is given notice of the
determination. However, the CEE Panel would not review a determination
of the Reviewer if the Reviewer determined that the number of affected
transactions was such that immediate finality would be necessary to
maintain a fair and orderly market and to protect investors and the
public interest. All determinations by the CEE Panel would constitute
final action by the Exchange.
---------------------------------------------------------------------------

    \31\ The CEE Panel would be comprised of the Chief Executive
Officer of NYSE Regulation or a designee, and representatives from
two Subscribers to NYSE Bonds. The Exchange would designate at least
ten Subscribers to NYSE Bonds to act as representatives to be called
upon to serve on the CEE Panel, as needed. In no case would a CEE
Panel include a person related to a party to the trade in question.
To the extent reasonably possible, the Exchange would call upon the
designated representatives to participate on a CEE Panel on an
equally frequent basis. See proposed NYSE Rule 86(m)(4)(A) and (B).
---------------------------------------------------------------------------

    In addition, the proposal would allow the Exchange to review
transactions affected by a system disruption, system malfunction, or
equipment changeover to decide if any such transactions were
erroneous.\32\ In the event of any system disruption, system
malfunction, or equipment changeover in the use or operation of any
electronic communications and trading facilities of the Exchange, an
Officer of the Exchange or a designee, on his or her own initiative,
could review a transaction arising out of the use or operation of such
facilities during such period and declare it unchanged, nullify it, or
modify the terms of the trade. Absent extraordinary circumstances, any
such action of the Exchange would need to be taken within 30 minutes of
detection of the system disruption, system malfunction, equipment
changeover, or an erroneous transaction resulting from such system
problem. If an erroneous transaction occurred as a result of a system
problem and the Exchange determines to revise the trade, the
counterparties to the erroneous transaction would be notified of the
action as soon as practicable. A User aggrieved by such action could
appeal such action to the CEE Panel in accordance with the provisions
described above.
---------------------------------------------------------------------------

    \32\ See proposed NYSE Rule 86(m)(5).
---------------------------------------------------------------------------

    Most orders matched on NYSE Bonds would be locked-in trades and
would be submitted to a registered clearing agency with accrued
interest calculated according to the defined eligibility
characteristics of the particular bond.\33\ Settlement of corporate
bond trades would be ``regular way,'' i.e., three-day settlement. At a
later date, the Exchange intends to publish a real-time bond data feed,
and intends to make such data available for purchase by non-subscribing
market participants, third-party data vendors, and other interested
parties who agree to the Exchange's terms. In addition to disseminating
the NYSE Bonds order book, the data feed would also include the last
sale price and size as executions occur. The Exchange also proposed
several technical changes to other NYSE rules to remove certain
obsolete references and otherwise conform the terms of certain other
rules to revised NYSE Rule 86.
---------------------------------------------------------------------------

    \33\ The Exchange submits completed trades to one of the
subsidiaries of the Depository Trust Clearing Corporation (``DTCC'')
for clearance and settlement. The National Securities Clearing
Corporation (``NSCC''), a subsidiary of DTCC, provides clearance and
settlement services for government agency, corporate, and municipal
bonds that trade on ABS. While the Government Securities Division of
the Fixed Income Clearing Corporation (``FICC''), another subsidiary
of DTCC, provides clearance and settlement services for transactions
in U.S. government bonds, the Exchange does not currently have an
agreement with FICC for such settlement and clearance. Presently,
U.S. government bonds that trade on ABS are traded ex-clearing
(i.e., the parties to the transaction arrange for manual clearing
and settlement). The Exchange plans to submit trades on a locked-in
basis to FICC for clearance and settlement in 2007. Until such time
as the Exchange has established such an agreement with the FICC, the
U.S. government bonds that trade on NYSE Bonds would continue to
trade ex-clearing as they do today on ABS. Trades that would not be
locked-in would be those in bonds that are not set up for the
Exchange's registered clearing agency, or bonds having a face value
other than $1,000.
---------------------------------------------------------------------------

III. Summary of Comments and NYSE's Response

    As noted above, the Commission received two comment letters on the
proposal. The Klein Letter expressed support for the NYSE's proposal.
The other commenter, SIFMA, expressed some support for NYSE's proposal
but also raised certain concerns. The Exchange responded to the
concerns raised in the SIFMA Letter.
    SIFMA questioned whether the Exchange's plans to assess a fee for
the market data generated by NYSE Bonds would confer an unfair
competitive

advantage as the exclusive processor of quote and trade data of NYSE
Bonds, which it believed may lead to unreasonable prices for such
data.\34\ In addition, SIFMA raised concern regarding the Exchange's
intention to limit the use and redistribution of its market data.\35\
NYSE responded that SIFMA's concerns were premature in that the
Exchange has not yet filed a proposal with the Commission under Rule
19b-4 under the Exchange Act to modify the fees that it charges for
NYSE Bonds data.\36\
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    \34\ See SIFMA Letter at 2-3.
    \35\ Id.
    \36\ See NYSE Response Letter at 2.
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    SIFMA also expressed concerns relating to the jurisdiction of NASD
for transactions on NYSE Bonds.\37\ Specifically, SIFMA requested
clarity on whether Users of NYSE Bonds would have any trade reporting
obligations to NASD for bonds that trade on NYSE pursuant to Exchange
Rules 1400 and 1401. SIFMA also raised a more general concern that NASD
may assert jurisdiction over trading activities effected on a national
securities exchange, including NYSE Bonds. NYSE argued that the
concerns were without merit because NASD recently established a two-
year pilot program \38\ that exempted unlisted bonds trading on the
NYSE subject to the Exchange's trade reporting requirements from TRACE
reporting requirements.\39\ Moreover, NYSE clarified that NYSE
Regulation will undertake primary responsibility for regulating NYSE
Bonds and that NASD will retain responsibility for regulating the over-
the-counter corporate bond market.
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    \37\ See SIFMA Letter at 3-4.
    \38\ See Securities Exchange Act Release No. 54678 (November 16,
2006), 71 FR 67673 (November 22, 2006) (SR-NASD-2006-110).
    \39\ See NYSE Response Letter at 3.
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    Finally, SIFMA expressed concern about the lack of definitive
quantitative standards in the proposed trade nullification rule for
NYSE Bonds.\40\ The Exchange included in Amendment No. 3 relevant
factors that may be considered when the Exchange determines whether an
execution is clearly erroneous.\41\
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    \40\ See SIFMA Letter at 4.
    \41\ See proposed NYSE Rule 86(m)(2)(E).
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IV. Discussion

    After careful review, the Commission finds that the proposed rule
change is consistent with the Exchange Act and the rules and
regulations promulgated thereunder applicable to a national securities
exchange.\42\ Specifically, the Commission finds that approval of the
proposal is consistent with Section 6(b)(5) of the Exchange Act \43\ in
that it is designed to facilitate transactions in securities; 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.
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    \42\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
    \43\ 15 U.S.C. 78f(b)(5).
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    NYSE Bonds will replace ABS as the facility for trading bonds on
the Exchange. The Commission believes that an exchange's determination
to implement new trading technology is generally consistent with the
Exchange Act. As described above, the proposal includes provisions
regarding order entry, priority, trading sessions and auctions, manner
of execution, clearing, trade halt procedures, and trade nullification.
The Commission finds that these provisions are reasonably designed to
promote the efficient functioning of NYSE Bonds and are generally
consistent with the Exchange Act.\44\ Other aspects of the proposal are
described in more detail below.
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    \44\ However, the Commission notes that the Exchange did not in
this filing propose any fee changes in connection with the NYSE
Bonds system. Therefore, the Commission in this order is not making
any findings regarding any fee that the Exchange charges or may in
the future propose to charge in connection with the use of the NYSE
Bonds system.
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Sponsored Access to NYSE Bonds
    Only members that enter into a service agreement with the Exchange
may access NYSE Bonds. In addition, the Exchange would permit a non-
member that enters into an agreement with a subscribing member and the
Exchange to access NYSE Bonds as a ``Sponsored Participant.'' These
sponsored access provisions are substantially similar to those that
have been adopted by other national securities exchanges and previously
approved by the Commission.\45\
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    \45\ See NYSE Arca Equities, Inc. (``NYSE Arca Equities'') Rule
7.29(b); Securities Exchange Act Release No. 44983 (October 25,
2001), 66 FR 55225 (November 1, 2001) (SR-PCX-00-25) (establishing
sponsored participant provision for equity trading on the NYSE Arca
Marketplace).
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Price Collars
    The Exchange would reject an incoming order that is otherwise
marketable if the price of the order violated the price collar for that
bond. The Commission believes that the proposed price collars are
reasonably designed to protect investors and promote the public
interest by preventing executions that are substantially away from the
prevailing market price. These provisions are similar to others
employed by NYSE Arca and Nasdaq, which previously have been approved
by the Commission.\46\
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    \46\ See, e.g., NYSE Arca Equities Rule 1.1(r)(A) (NYSE Arca
Market Order Auction and Closing Auction), Securities Exchange Act
Release No. 52361 (August 30, 2005), 70 FR 53704 (September 9, 2005)
(SR-PCX-2005-58); Nasdaq Rule 4752(d)(2)(E) (Nasdaq Opening
Process), Securities Exchange Act Release No. 50405 (September 16,
2004), 69 FR 57118 (September 23, 2004) (SR-NASD-2004-071); and
Nasdaq Rule 4754(b)(2)(E) (Nasdaq Closing Cross), Securities
Exchange Act Release No. 49406 (March 11, 2004), 69 FR 12879 (March
18, 2004) (SR-NASD-2003-173).
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Applicability of Section 11(a) and (b) of the Exchange Act

    Section 11(a) of the Exchange Act \47\ prohibits a member of a
national securities exchange from effecting transactions on that
exchange for its own account, the account of an associated person, or
an account over which it or its associated person exercises investment
discretion, unless an exception applies. The Commission notes that this
general prohibition would not generally impact trading on NYSE Bonds
because Rule 11a1-4(T) under the Exchange Act \48\ deems transactions
in bonds on a national securities exchange for a member's own account
to be consistent with Section 11(a). However, for those securities
trading on NYSE Bonds for which this exemption may not be available,
such as certain structured products, the Exchange has represented that
transactions effected on NYSE Bonds meet the requirements of Rule 11a2-
2(T) under the Exchange Act.\49\ Similarly, the Commission notes that
Section 11(b) of the Exchange Act \50\ and Rule 11b-1 thereunder,\51\
which pertain to specialists and market-makers, would not be implicated
because there would be no specialists or market makers on NYSE Bonds.
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    \47\ 15 U.S.C. 78k(a).
    \48\ 17 CFR 240.11a1-4(T).
    \49\ The Commission notes that, to the extent that any security
trading on NYSE Bonds is an NMS security, see 17 CFR 242.600(b)(46),
the Commission is not making any finding herein as to whether NYSE
Bonds is compliant with the requirements of Regulation NMS under the
Exchange Act.
    \50\ 15 U.S.C. 78k(b).
    \51\ 17 CFR 240.11b-1.

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Applicability of Rule 10a-1 Under the Exchange Act

    In its filing, NYSE states that: ``The staff of the Division of
Market Regulation of the Securities and Exchange Commission has stated
that it would not recommend that the Commission take enforcement action
if short sales in exchange-listed bonds and debentures are effected
without complying with SEC Rule 10a-1.'' \52\ By this filing, the
Exchange seeks continued effect of this position. The staff maintains
this position. However, the Commission notes that the staff's position
does not apply to convertible bonds.\53\ Accordingly, convertible bonds
would continue to be excluded from applicability of this position.
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    \52\ See Bond Short Sale No-Action Position, supra note 19
(footnote omitted) (stating that, ``From and after the date of this
release until the Commission takes final action on the proposed
amendment to Rule 10a-1(b), the staff of the Division will not
recommend that the Commission take enforcement action under Rule
10a-1 if short sales in exchange-listed bonds and debentures are
effected without complying with the Rule'').
    \53\ See id. (noting that convertible bonds are defined as
``equity securities'' in the Exchange Act and that ``Exchange Act
Section 3(a)(11), 15 U.S.C. 78c(a)(11), defines the term `equity
security' to include `any stock or similar security, or any security
convertible, with or without consideration, into such a security * *
*.' Short selling of convertible bonds * * * may have an impact on
the price of related exchange-traded equity securities'').
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V. Accelerated Approval

    Pursuant to Section 19(b)(2) of the Exchange Act,\54\ the
Commission may not approve any proposed rule change prior to the 30th
day after the date of publication of notice of the filing thereof,
unless the Commission finds good cause for so doing and publishes its
reasons for so finding. In Amendment No. 3, the Exchange, among other
things:
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    \54\ 15 U.S.C. 78s(b)(2).
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     Revised proposed NYSE Rule 86(b) to indicate that, if
other NYSE rules relating to bonds conflict with the provisions of
proposed NYSE Rule 86, Rule 86 would control;
     Eliminated references to the ``Floor'' of the Exchange to
make clear that NYSE Bonds is a fully electronic trading platform;
     Noted that dealers trading municipal bonds must report
such transactions to the Municipal Securities Rulemaking Board
(``MSRB'') in accordance with MSRB Rule G-14;
     Revised proposed NYSE Rule 86(b)(2)(E) to indicate that,
unless otherwise designated, an order will be treated as a day order;
     Revised proposed NYSE Rule 86(b)(2)(G) to indicate that,
if no bids are submitted to a Bond Auction, the Indicative Match Price
will be the lowest offer price;
     Revised proposed NYSE Rule 86(e) to clarify that the price
collars will only apply during ordinary trading and not during the
queuing of bond orders or during bond auctions;
     Revised proposed NYSE Rule 86(h) to clarify that orders
designated only for the Opening Bond Trading Session that do not
execute in the Opening Bond Auction or Opening Bond Trading Session
will be eligible to participate in the Core Bond Auction and would be
cancelled if not executed in the Core Bond Auction;
     Modified proposed NYSE Rule 86(i) to clarify that orders
may be entered into NYSE Bonds until 8 p.m. ET and to otherwise clarify
the operation of the three proposed bond trading sessions;
     Revised proposed NYSE Rule 86(l) to indicate that,
beginning at 3:30 a.m. ET, the IMP for the Opening Bond Auction and the
Core Bond Auction, and any associated Imbalance, will be published by
the Exchange. In addition, the changes to proposed NYSE Rule 86(l)
further explain the functionalities of the Bond Auctions;
     Clarified in proposed NYSE Rule 86(m) the possible
outcomes after review of potentially erroneous transactions by the
Reviewer and by the Clearly Erroneous Execution Panel. In addition, the
Exchange added factors that may be considered in the determination of a
Clearly Erroneous Execution;
     Revised proposed NYSE Rule 86(n)(2)(G) to indicate that
orders that are eligible for execution in the Bond Halt Auction may be
cancelled at any time;
     Revised portions of proposed NYSE Rule 86(o) related to a
sponsored access to NYSE Bonds to conform substantially to related
provisions of other national securities exchanges, including NYSE Arca;
\55\
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    \55\ See NYSE Arca Equities Rule 7.29.
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     Represented that transactions effected on NYSE Bonds meet
the requirements of Rule 11a2-2(T) under the Exchange Act and included
an accompanying discussion;
     Represented that NYSE Regulation can effectively regulate
NYSE Bonds; and
     Made other minor clarifying and technical changes to the
proposal.
    The Commission believes that these changes do not raise any
significant or novel regulatory issues. Accordingly, the Commission
hereby finds good cause for approving the proposed rule change, as
modified by Amendment No. 3, prior to the 30th day after publishing
notice of the amended proposal in the Federal Register.

VI. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning Amendment No. 3, including whether Amendment No. 3
is consistent with the Exchange 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NYSE-2006-37 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2006-37. This file
number should be included on the subject line if e-mail 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 inspection and
copying in the Commission's Public Reference Room. Copies of the filing
also will be available for inspection and copying at the principal
office of NYSE. 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 Number SR-
NYSE-2006-37 and should be submitted on or before April 18, 2007.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\56\ that the proposed rule change (SR-NYSE-2006-37), as
amended, be, and it hereby is, approved on an accelerated basis.
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    \56\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\57\
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    \57\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-5610 Filed 3-27-07; 8:45 am]

BILLING CODE 8010-01-P