			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

Issued by the Department of Transportation on October  12, 2005

NOTICE OF ACTION TAKEN -- DOCKET OST-2005-22258

________________________________________________________________________
________________________________________________________

This serves as notice to the public of the action described below, taken
by the Department official indicated (no additional confirming order
will be issued in this matter).

Applicant:  JAL Express Co., Ltd.					Date Filed:  August 26, 2005

Relief requested:

Exemption from 49 U.S.C. § 41301 and statement of authorization under
14 CFR Part 212 to permit JAL Express (1) to wet lease aircraft to its
parent company, Japan Airlines International Co., Ltd. (JAL) for flights
within Japan that would connect to JAL flights to and from the United
States; and (2) to display the code of American Airlines, Inc. on those
flights, consistent with the existing code-share arrangement between JAL
and American.

If renewal, date and citation of last action:  New Authority

Applicant representative:  William Karas<PHONE_NUMBER>

DOT Analyst:  Shelita Smith<PHONE_NUMBER>

Responsive pleadings:  None filed

DISPOSITION

Action:  Approved								Action date:  October  12, 2005

Effective dates of the exemption and statement of authorization granted:
 October 12, 2005-October 12, 2006

Basis for approval (bilateral agreement/reciprocity):  1998 Memorandum
of Understanding between the United States and Japan (1998 MOU).

Except to the extent exempted/waived, this authority is subject to the
terms, conditions, and limitations indicated:

X Standard exemption conditions (attached) and otherwise applicable
conditions initially imposed on American and JAL on February 18, 1999,
and most recently on October 1, 2004, in Docket OST-1999-4994.

Special conditions/Partial grant/Denial basis/Remarks:  Based on the
record in this case, we found that JAL Express is financially and
operationally qualified to perform the services authorized above.  In
addition, we found that JAL Express is substantially owned and
effectively controlled by Japanese citizens.  JAL Express is properly
licensed by the Government of Japan to perform the proposed services.

Action taken by:   Paul L. Gretch, Director

		      Office of International Aviation

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) the applicant was qualified to perform the
proposed operations; (2) our action was consistent with Department
policy; (3) grant of the authority was consistent with the public
interest; and (4) grant of the authority would not constitute a major
regulatory action under the Energy Policy and Conservation Act of 1975.
To the extent not granted/deferred/dismissed, we denied all requests in
the referenced Docket.  We may amend, modify, or revoke the authority
granted in this Notice at any time without hearing at our discretion.

Persons entitled to petition the Department for review of the action set
forth in this Notice under the Department’s regulations, 14 CFR §
385.30, may file their petitions within seven (7) days after the date of
issuance of this Notice.  This action was effective when taken, and the
filing of a petition for review will not alter such effectiveness.

An electronic version of this document is available on the World Wide
Web at:

  HYPERLINK "http://dms.dot.gov//reports/reports_aviation.asp"
http://dms.dot.gov//reports/reports_aviation.asp

Attachment

In the conduct of the operations authorized, the foreign carrier
applicant(s) shall:

(1)  Not conduct any operations unless it holds a currently effective
authorization from its homeland for such operations, and it has filed a
copy of such authorization with the Department;

(2)  Comply with all applicable requirements of the Federal Aviation
Administration, including, but not limited to, 14 CFR Parts 129, 91, and
36, and with all applicable U.S. Government requirements concerning
security, including, but not limited to, 49 CFR Part 1546 or 1550, as
applicable.  To assure compliance with all applicable U.S. Government
requirements concerning security, the holder shall, before commencing
any new service (including charter flights) from a foreign airport that
would be the holder’s last point of departure for the United States,
contact its International Principal Security Inspector (IPSI) to advise
the IPSI of its plans and to find out whether the Transportation
Security Administration has determined that security is adequate to
allow such airport(s) to be served;

(3)  Comply with the requirements for minimum insurance coverage
contained in 14 CFR Part 205, and, prior to the commencement of any
operations under this authority, file evidence of such coverage, in the
form of a completed OST Form 6411, with the Federal Aviation
Administration’s Program Management Branch (AFS-260), Flight Standards
Service (any changes to, or termination of, insurance also shall be
filed with that office);

(4)  Not operate aircraft under this authority unless it complies with
operational safety requirements at least equivalent to Annex 6 of the
Chicago Convention;

(5)  Conform to the airworthiness and airman competency requirements of
its Government for international air services;

(6)  Except as specifically exempted or otherwise provided for in a
Department Order, comply with the requirements of 14 CFR Part 203,
concerning waiver of Warsaw Convention liability limits and defenses;

(7)  Agree that operations under this authority constitute a waiver of
sovereign immunity, for the purposes of 28 U.S.C. 1605(a), but only with
respect to those actions or proceedings instituted against it in any
court or other tribunal in the United States that are: (a)  based on its
operations in international air transportation that, according to the
contract of carriage, include a point in the United States as a point of
origin, point of destination, or agreed stopping place, or for which the
contract of carriage was purchased in the United States; or (b)  based
on a claim under any international agreement or treaty cognizable in any
court or other tribunal of the United States.  In this condition, the
term "international air transportation" means "international
transportation" as defined by the Warsaw Convention, except that all
States shall be considered to be High Contracting Parties for the
purpose of this definition;

(8)  Except as specifically authorized by the Department, originate or
terminate all flights to/from the United States in its homeland;

(9)  Comply with the requirements of 14 CFR Part 217, concerning the
reporting of scheduled, nonscheduled, and charter data;

(10) If charter operations are authorized, except as otherwise provided
in the applicable aviation agreement, comply with the Department's rules
governing charters (including 14 CFR Parts 212 and 380); and

(11) Comply with such other reasonable terms, conditions, and
limitations required by the public interest as may be prescribed by the
Department, with all applicable orders or regulations of other U.S.
agencies and courts, and with all applicable laws of the United States.

This authority shall not be effective during any period when the holder
is not in compliance with the conditions imposed above.  Moreover, this
authority cannot be sold or otherwise transferred without explicit
Department approval under Title 49 of the U.S. Code.

												05/2004

  On February 18, 1999, we granted JAL and American statements of
authorization under Part 212 to engage in code-share services.  See
Notice of Action Taken dated February 18, 1999, in Docket OST-1999-4994.
 On August 26, 2005, American filed a request in Docket OST-1999-4994,
seeking to amend its existing code-share authority with JAL to include
JAL’s affiliate JAL Express.

  JAL Express’ application was accompanied by a motion under Rule 12
(14 CFR § 302.12) to withhold certain personal information relating to
the location of private domiciles of JAL Express’ directors and senior
officers from public disclosure.  JAL Express believes that disclosure
of such information would constitute an unwarranted invasion of the
personal privacy of its officers and directors and is not required by
the public interest.  We have reviewed the documents under the
disclosure guidelines of Rule 12 and have determined that they warrant
confidential treatment.


[Federal Register Volume 85, Number 11 (Thursday, January 16, 2020)]
[Notices]
[Pages 2763-2766]
[FR Doc No: 2020-00568]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87943; File No. S7-27-11]

Order Extending Temporary Exemptions From Exchange Act Section 8
and Exchange Act Rules 8c-1, 10b-16, 15a-1, 15c2-1 and 15c2-5 in
Connection With the Revision of the Definition of ``Security'' To
Encompass Security-Based Swaps

January 10, 2020.

I. Introduction

    The Securities and Exchange Commission (``Commission'') is
extending until November 5, 2020, temporary exemptions from Section 8
\1\ of the Securities Exchange Act of 1934 (``Exchange Act'') and from
Exchange Act Rules 8c-1, 15c2-1, 10b-16, 15c2-5, and 15a-1 \2\ in
connection with the revision of the definition of ``security'' to
encompass security-based swaps. The Commission is granting this nine-
month extension because it believes the temporary exemptions from these
provisions warrant further consideration to take into account the
finalized regulatory regime for security-based swap dealers and major
security-based swap participants, as well as the compliance date for
registration of those entities.\3\
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    \1\ 15 U.S.C. 78h.
    \2\ 17 CFR 240.8c-1, 240.15c2-1, 240.10b-16, 240.15c2-5 and
240.15a-1.
    \3\ Because the Commission ultimately may determine not to
provide permanent exemptions for security-based swaps from one or
more of these provisions, during the extension market participants
may wish to consider how they would design and implement appropriate
compliance measures and controls.
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    These and other temporary exemptions were originally provided by
the Commission in 2011 and periodically extended by the Commission,
most recently in January 2019.\4\ The remainder of the temporary
exemptions extended in January 2019, and not extended in this Order,
will expire on February 5, 2020.\5\
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    \4\ See Order Granting Temporary Exemptions under the Securities
Exchange Act of 1934 in Connection with the Pending Revisions of the
Definition of ``Security'' to Encompass Security-Based Swaps,
Exchange Act Release No. 64795 (July 1, 2011), 76 FR 39927 (July 7,
2011) (``2011 Exchange Act Exemptive Order''); see also Further
Definition of ``Swap,'' ``Security-Based Swap,'' and ``Security-
Based Swap Agreement''; Mixed Swaps; Security-Based Swap Agreement
Recordkeeping, Exchange Act Release No. 67453 (July 18, 2012), 77 FR
48207 (Aug. 13, 2012) (extending the expiration date of the
temporary exemptions to February 11, 2013); Order Extending
Temporary Exemptions under the Securities Exchange Act of 1934 in
Connection with the Revision of the Definition of ``Security'' to
Encompass Security-Based Swaps, and Request for Comment, Exchange
Act Release No. 68864 (Feb. 7, 2013), 78 FR 10218 (Feb. 13, 2013)
(extending the expiration date of the temporary exemptions to
February 11, 2014); Order Extending Temporary Exemptions under the
Securities Exchange Act of 1934 in Connection with the Revision of
the Definition of ``Security'' to Encompass Security-Based Swaps,
and Request for Comment, Exchange Act Release No. 71485 (Feb. 5,
2014), 79 FR 7731 (Feb. 10, 2014) (``2014 Extension Order'')
(extending the expiration date for certain temporary exemptions to
February 5, 2017); Order Extending Certain Temporary Exemptions
Under the Securities Exchange Act of 1934 in Connection With the
Revision of the Definition of ``Security'' To Encompass Security-
Based Swaps and Request for Comment, Exchange Act Release No. 79833
(Jan. 18, 2017), 82 FR 8467 (Jan. 25, 2017) (extending the
expiration date for certain temporary exemptions to February 5,
2018); Order Extending Until February 5, 2019 Certain Temporary
Exemptions under the Securities Exchange Act of 1934 in Connection
with the Pending Revision of the Definition of ``Security'' to
Encompass Security-Based Swaps and Request for Comment, Exchange Act
Release No. 82626 (Feb. 2, 2018), 83 FR 5665 (Feb. 18, 2018) (``2018
Extension Order'') (extending the expiration date for certain
temporary exemptions to February 5, 2019); Order Granting a Limited
Exemption from the Exchange Act Definition of ``Penny Stock'' for
Security-Based Swap Transactions between Eligible Contract
Participants; Granting a Limited Exemption from the Exchange Act
Definition of ``Municipal Securities'' for Security-Based Swaps; and
Extending Certain Temporary Exemptions under the Exchange Act in
Connection with the Revision of the Definition of ``Security'' to
Encompass Security-Based Swaps, Exchange Act Release No. 84991 (Jan.
25, 2019), 84 FR 863 (Jan. 31, 2019) (``January 2019 Extension
Order'') (extending the expiration date for certain temporary
exemptions to February 5, 2020).
    \5\ See January 2019 Extension Order, 84 FR at 864-65.
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II. Discussion

A. Background

    Title VII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act \6\ amended the definition of ``security'' under the
Exchange Act to expressly encompass security-based swaps.\7\ The
expansion of the definition of the term ``security'' to include
security-based swaps had the effect of changing the scope of the
Exchange Act regulatory provisions that apply to security-based swaps
and, in doing so, raised certain complex questions that required
further consideration.
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    \6\ The Dodd-Frank Wall Street Reform and Consumer Protection
Act, Public Law 111-203, 124 Stat. 1376 (2010) (``Dodd-Frank Act'').
    \7\ See Section 761(a)(2) of the Dodd-Frank Act (amending
Section 3(a)(10) of the Exchange Act, 15 U.S.C. 78c(a)(10)). The
provisions of Title VII generally became effective on July 16, 2011
(360 days after the enactment of the Dodd-Frank Act) (the
``Effective Date''), unless a provision required a rulemaking, in
which case the provision would go into effect ``not less than'' 60
days after publication of the related final rules in the Federal
Register or on July 16, 2011, whichever is later. See Section 774 of
the Dodd-Frank Act, 15 U.S.C. 77b note.
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    In July 2011, the Commission issued an order (the ``2011 Exchange
Act Exemptive Order''), which granted two relevant temporary exemptions
from compliance with certain provisions of the Exchange Act, and the
rules and regulations thereunder. First, the Commission granted to any
person who meets the definition of ``eligible contract participant''
set forth in Section 1a(12) of the Commodity Exchange Act as in effect
on July 20, 2010 (i.e., the day prior to the date the Dodd-Frank Act
was signed into law) and who is not a registered broker or dealer \8\
or a self-regulatory organization \9\ a temporary exemption from
certain provisions of the Exchange Act, and the rules and regulations
thereunder, solely in connection with the person's activities involving
security-based swaps.\10\ Second, the Commission granted to a broker or
dealer registered under Section 15(b) of the Exchange Act (other than a
broker or dealer registered under Section 15(b)(11) of the Exchange
Act), a temporary exemption from certain provisions of the Exchange
Act, and the

rules and regulations thereunder, solely with respect to security-based
swaps.\11\
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    \8\ This temporary exemption is available to a broker or dealer
registered under Section 15(b)(11) of the Exchange Act who meets the
other eligibility criteria for this relief. See 2011 Exchange Act
Exemptive Order, 76 FR at 39938.
    \9\ This temporary exemption is available to a self-regulatory
organization in limited circumstances. See 2011 Exchange Act
Exemptive Order, 76 FR at 39938-39.
    \10\ See 2011 Exchange Act Exemptive Order, 76 FR at 39938-39.
    \11\ See 2011 Exchange Act Exemptive Order, 76 FR at 39939. The
2011 Exchange Act Exemptive Order did not provide exemptive relief
for any provisions or rules prohibiting fraud, manipulation, or
insider trading (other than prophylactic reporting or recordkeeping
requirements such as the confirmation requirements of Exchange Act
Rule 10b-10). In addition, the 2011 Exchange Act Exemptive Order did
not affect the Commission's investigative, enforcement, and
procedural authority related to those provisions and rules. See 2011
Exchange Act Exemptive Order, 76 FR at 39931 n.34. The 2011 Exchange
Act Exemptive Order also did not address Sections 12, 13, 14, 15(d),
16, and 17A of the Exchange Act and the rules and regulations
thereunder.
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    The overall approach of the 2011 Exchange Act Exemptive Order was
directed toward maintaining the status quo during the implementation
process for the Dodd-Frank Act.\12\ In the 2011 Exchange Act Exemptive
Order, the Commission stated that it would accomplish this ``by
preserving the application of particular Exchange Act requirements that
already are applicable in connection with instruments that will be
`security-based swaps' following the Effective Date [of the Dodd-Frank
Act], but deferring the applicability of additional Exchange Act
requirements in connection with those instruments explicitly being
defined as `securities' as of the Effective Date.'' \13\
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    \12\ See 2011 Exchange Act Exemptive Order, 76 FR at 39929.
    \13\ 2011 Exchange Act Exemptive Order, 76 FR at 39929. Under
the 2011 Exchange Act Exemptive Order, instruments that (before the
Effective Date) were security-based swap agreements and (after the
Effective Date) constituted security-based swaps were still subject
to the application of those Exchange Act provisions. See 2011
Exchange Act Exemptive Order, 76 FR at 39930 nn.24-25.
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1. 2014 Extension Order

    In 2014, the Commission extended the expiration dates for the
temporary exemptions in the 2011 Exchange Act Exemptive Order.\14\ The
Commission distinguished between: (1) The temporary exemptions related
to pending security-based swap rulemakings (``Linked Temporary
Exemptions''), the expiration dates for which were extended to the
compliance dates for the specific rulemakings to which they were
``linked''; and (2) the temporary exemptions that generally were not
directly related to a specific security-based swap rulemaking
(``Unlinked Temporary Exemptions''), the expiration date for which was
extended to the earlier of three years following the effective date of
the 2014 Extension Order (i.e., February 5, 2017) or such time that the
Commission issues an order or rule determining whether continuing
exemptive relief is appropriate for security-based swaps with respect
to any such Unlinked Temporary Exemptions.\15\ This approach was
designed to provide the Commission with flexibility, while its Dodd-
Frank Act rulemaking is still in progress, to determine whether
continuing relief should be provided for any of the Unlinked Temporary
Exemptions.\16\
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    \14\ See 2014 Extension Order, 79 FR at 7734-35.
    \15\ See 2014 Extension Order, 79 FR at 7732-35.
    \16\ See 2014 Extension Order, 79 FR at 7731. The 2014 Extension
Order referred to the temporary exemptions provided for in the 2011
Exchange Act Exemptive Order as the ``Expiring Temporary
Exemptions'' and noted that the 2011 Exchange Act Exemptive Order
generally provided for the following exemptions from the Exchange
Act: ``(a) temporary exemptions in connection with security-based
swap activity by certain `eligible contract participants'; and (b)
temporary exemptions specific to security-based swap activities by
registered brokers and dealers.''
    The 2014 Extension Order identified the Linked Temporary
Exemptions as those Expiring Temporary Exemptions related to: (1)
Capital and margin requirements applicable to a broker or dealer
(Exchange Act Sections 7 and 15(c)(3), Regulation T, and Exchange
Act Rules 15c3-1, 15c3-3, and 15c3-4); (2) recordkeeping
requirements applicable to a broker or dealer (Exchange Act Sections
17(a) and 17(b) and Exchange Act Rules 17a-3, 17a-4, 17a-5, 17a-11,
and 17a-13); (3) registration requirements under Exchange Act
Section 15(a)(1), and the other requirements of the Exchange Act and
the rules and regulations thereunder that apply to a ``broker'' or
``dealer'' that is not registered with the Commission; (4) Exchange
Act Rule 10b-10; and (5) Regulation ATS. The remaining Expiring
Temporary Exemptions are the Unlinked Temporary Exemptions.
    As applicable, the Commission extended the Linked Temporary
Exemptions until the compliance date for pending rulemakings
concerning: Capital, margin, and segregation requirements for
security-based swap dealers and major security-based swap
participants; recordkeeping and reporting requirements for security-
based swap dealers and major security-based swap participants;
security-based swap trade acknowledgement and verification; and
registration requirements for security-based swap execution
facilities. The Linked Temporary Exemptions are not addressed in
this order and have been, or will be, separately considered in
connection with the related security-based swap rulemakings. See,
e.g., Capital, Margin, and Segregation Requirements for Security-
Based Swap Dealers and Major Security-Based Swap Participants and
Capital and Segregation Requirements for Broker-Dealers, Exchange
Act Release No. 86175 (June 21, 2019), 84 FR 43872, 43955-56 (Aug.
22, 2019); Recordkeeping and Reporting Requirements for Security-
Based Swap Dealers, Major Security-Based Swap Participants, and
Broker-Dealers, Exchange Act Release No. 87005 (Sept. 19 2019), 84
FR 68550, 68601-02 (Dec. 16, 2019); Trade Acknowledgement and
Verification of Security-Based Swap Transactions, Exchange Act
Release No. 78011 (June 8, 2016), 81 FR 39807, 39824-25 n.189 (June
17, 2016).
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2. 2018 Extension Order and January 2019 Extension Order
    In 2018, the Commission extended the expiration date of the
Unlinked Temporary Exemptions until February 5, 2019.\17\ The
Commission also requested comment on whether continuing exemptive
relief was necessary beyond February 5, 2019.\18\ The Commission
received four letters from two different commenters in response.\19\
One of these comments requested that the Commission make permanent a
limited number of the Unlinked Temporary Exemptions.\20\ The commenter
also requested an additional twelve-month transition period before the
expiration of the remaining Unlinked Temporary Exemptions.\21\ The
commenter argued that market participants would use the additional time
to ``further analyze the applicability of [Exchange Act provisions and
rules] to their [security-based swap] business and design and implement
appropriate compliance measures, including, where relevant, controls
designed to prevent or detect activity that might potentially trigger
these provisions.'' \22\ In response, the Commission provided limited

exemptions from the definition of ``penny stock'' in Section 3(a)(51)
of the Exchange Act and Rule 3a51-1 for transactions in security-based
swaps between eligible contract participants and from the definition of
``municipal securities'' in Section 3(a)(29) of the Exchange Act for
security-based swaps.\23\ The Commission also extended the Unlinked
Temporary Exemptions until February 5, 2020, providing a twelve-month
transition period to allow market participants adequate time to design
and implement appropriate compliance measures and controls.\24\
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    \17\ See 2018 Extension Order.
    \18\ Comments received are available at https://www.sec.gov/comments/s7-27-11/s72711.shtml.
    \19\ See letter from Kyle Brandon, Managing Director, SIFMA,
dated Nov. 8, 2018 (``SIFMA November 2018 Letter'') (requesting that
the Commission further extend the Unlinked Temporary Exemptions, and
also requesting certain permanent exemptive and other relief);
supplemental letter from Kyle Brandon, Managing Director, SIFMA,
dated Dec. 20, 2018 (``SIFMA December 2018 Letter'') (supplementing
the SIFMA November 2018 Letter with additional detail regarding the
Unlinked Temporary Exemptions and recommending a twelve-month
transition period before expiration of any Unlinked Temporary
Exemptions); see also letters from Walt L. Lukken, President and
Chief Executive Officer, Futures Industry Association, dated Nov. 18
and Nov. 29, 2018 (each expressing support for codifying the
exemptions for security-based swaps from inapplicable securities
rules).
    \20\ See SIFMA December 2018 Letter at 3 (request for exemption
from the definition of ``penny stock''); SIFMA December 2018 Letter
at 3-4 (request for guidance regarding the definition of ``municipal
securities''); SIFMA December 2018 Letter at 3-4 (request for
guidance regarding the definition of ``government securities'');
SIFMA December 2018 Letter at 4-5 (request for exemption from fees
under Section 31 of the Exchange Act); SIFMA December 2018 Letter at
5 (request for exemption from hypothecation requirements); SIFMA
December 2018 Letter at 5-6 (request for exemption from broker-
dealer disclosure requirements relating to extensions of credit);
SIFMA December 2018 Letter at 6 (request for exemption from
qualification requirements for personnel of broker-dealers); SIFMA
December 2018 Letter at 6 (request for exemption from fingerprinting
requirements for personnel of broker-dealers); SIFMA December 2018
Letter at 6-7 (request for exemption to permit OTC derivatives
dealers to transact in centrally cleared or listed security-based
swaps); SIFMA December 2018 Letter at 7 (request for exemption to
permit exchange members to engage in security-based swap
transactions without losing an existing limited exemption from the
requirement to be a member of a national securities association);
SIFMA December 2018 Letter at 7 (request for exemption from audit
and compensation committee requirements).
    \21\ See SIFMA December 2018 Letter at 1, 7.
    \22\ See SIFMA December 2018 Letter at 7.
    \23\ See January 2019 Extension Order, 84 FR at 867.
     In response to the commenter's request, the Commission noted
that the Unlinked Temporary Exemptions did not include an exemption
from the definition of ``government securities'' in Section 3(a)(42)
of the Exchange Act and noted that the Exchange Act does not permit
the Commission to provide such relief. The Commission further noted
that Section 31 fees do not currently apply to security-based swaps
but that it may revisit the appropriateness of exempting security-
based swaps from Section 31 fees at the time such fees begin to
apply. See January 2019 Extension Order, 84 FR at 866 & n.40.
    \24\ See January 2019 Extension Order, 84 FR at 866.
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    On January 8, 2020, the Commission received a letter from the same
commenter supplementing its earlier request.\25\ The commenter updated
its requests to make permanent the three aspects of the Unlinked
Temporary Exemptions: (1) Limitations on hypothecation of securities
carried for the account of a customer in Section 8 of the Exchange Act
and in Exchange Act Rules 8c-1 and 15c2-1,\26\ (2) broker-dealer
disclosure requirements relating to extensions of credit in Exchange
Act Rules 10b-16 and 15c2-5,\27\ and (3) certain limitations on an OTC
derivatives dealer's activities in Exchange Act Rule 15a-1.\28\ In the
alternative, the commenter requested that the Commission extend the
Unlinked Temporary Exemptions relating to these requests for an
additional twelve months so that the Commission may further consider
the requests.\29\ The commenter also confirmed that it was no longer
requesting additional extensions for any other Unlinked Temporary
Exemptions.\30\
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    \25\ See supplemental letter from Kyle Brandon, Managing
Director, SIFMA, dated Jan. 8, 2020 (``SIFMA January 2020 Letter'')
(requesting permanent exemptive relief for security based-swaps from
Section 8 of the Exchange Act and Exchange Act Rules 8c-1, 10b-16,
15a-1, 15c2-1 and 15c2-5 and withdrawing previous requests to make
permanent certain other aspects of the Unlinked Temporary
Exemptions, including those relating to Sections 15(b)(7), 17(f)(2),
and 31 of the Exchange Act and Exchange Act Rules 10A-3, 10C-1 15b7-
1, 15b9-1, and 17f-2).
    \26\ See SIFMA January 2020 Letter at 3-4); SIFMA December 2018
Letter at 5; Exchange Act Section 8, 15 U.S.C. 78h; Exchange Act
Rule 8c-1, 17 CFR 240.8c-1; Exchange Act Rule 15c2-1, 17 CFR
240.15c2-1. Section 8 of the Exchange Act and Exchange Act Rules 8c-
1 and 15c2-1 limit a broker-dealer's ability to hypothecate
securities carried for the account of a customer.
    \27\ See SIFMA January 2020 Letter at 4; SIFMA December 2018
Letter at 5-6; Exchange Act Rule 10b-16, 17 CFR 240.10b-16; Exchange
Act Rule 15c2-5, 17 CFR 240.15c2-5. Exchange Act Rules 10b-16 and
15c2-5 govern the disclosures that a broker-dealer must provide to
customers to whom they extend credit.
    \28\ See SIFMA January 2020 Letter at 4-5 (requesting relief to
permit OTC derivatives dealers to transact in centrally cleared or
listed security-based swaps); SIFMA December 2018 Letter at 6-7;
Exchange Act Rule 15a-1, 17 CFR 240.15a-1. Exchange Act Rule 15a-1
limits an OTC derivatives dealer's ability to engage in dealer
activities in listed instruments and in fungible instruments that
are standardized as to their material economic terms.
    \29\ See SIFMA January 2020 Letter at 2-3.
    \30\ See SIFMA January 2020 Letter at 5.
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B. Temporary Exemptions

    The Commission has finalized a majority of the rulemakings under
Title VII of the Dodd-Frank Act.\31\ Specifically, the Commission has
finalized the registration and regulatory regime for security-based
swap dealers and major security-based swap participants and set the
compliance date for registration of those entities (``Registration
Compliance Date''). The Commission believes that it would be
appropriate to provide market participants limited additional time to
consider the impact of the expiration of the Unlinked Temporary
Exemptions, with respect to the commenter's three remaining requests.
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    \31\ See, e.g., Regulation SBSR--Reporting and Dissemination of
Security-Based Swap Information, Exchange Act Release No. 74244
(Feb. 11, 2015), 80 FR 14563 (Mar. 19, 2015); Security-Based Swap
Data Repository Registration, Duties, and Core Principles, Exchange
Act Release No. 74246 (Feb. 11, 2015), 80 FR 14437 (Mar. 19, 2015);
Registration Process for Security-Based Swap Dealers and Major
Security-Based Swap Participants, Exchange Act Release No. 75611
(Aug. 5, 2015), 80 FR 48963 (Aug. 14, 2015); Regulation SBSR--
Reporting and Dissemination of Security-Based Swap Information,
Exchange Act Release No. 78321 (July 14, 2016), 81 FR 53545 (Aug.
12, 2016); Applications by Security-Based Swap Dealers or Major
Security-Based Swap Participants for Statutorily Disqualified
Associated Person To Effect or Be Involved in Effecting Security-
Based Swaps, Exchange Act Release No. 84858 (Dec. 19, 2018), 84 FR
4906 (Feb. 19, 2019); Capital, Margin, and Segregation Requirements
for Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital and Segregation Requirements for Broker-
Dealers, Exchange Act Release No. 86175 (June 21, 2019), 84 FR 43872
(Aug. 22, 2019); Recordkeeping and Reporting Requirements for
Security-Based Swap Dealers, Major Security-Based Swap Participants,
and Broker-Dealers, Exchange Act Release No. 87005 (Sept. 19, 2019),
84 FR 68550 (Dec. 16, 2019); Rule Amendments and Guidance Addressing
Cross-Border Application of Certain Security-Based Swap
Requirements, Exchange Act Release No. 87780 (Dec. 18, 2019).
---------------------------------------------------------------------------

    The Commission is extending, for a further nine months, the
Unlinked Temporary Exemptions that relate to three requests for
permanent exemptions for security-based swaps from limitations on
hypothecation of securities carried for the account of a customer in
Section 8 of the Exchange Act and in Exchange Act Rules 8c-1 and 15c2-
1, from broker-dealer disclosure requirements relating to extensions of
credit in Exchange Act Rules 10b-16 and 15c2-5, and from certain
limitations on an OTC derivatives dealer's activities in Exchange Act
Rule 15a-1. This additional time extends the transition period for the
Exchange Act provisions and rules relevant to these three requests to
allow time to further consider the requests taking into account the
finalized regulatory regime for security-based swap dealers and major
security-based swap participants, as well as the compliance date for
registration of those entities.\32\ The Commission believes that an
additional nine months will provide sufficient time for this further
consideration.
---------------------------------------------------------------------------

    \32\ See note 3, supra.
---------------------------------------------------------------------------

    The Commission is not extending any other of the Unlinked Temporary
Exemptions.\33\ The Commission continues to believe that market
participants will have had adequate time to consider the impact of the
expiration of the remainder of the Unlinked Temporary Exemptions when
they expire on February 5, 2020.
---------------------------------------------------------------------------

    \33\ As always, the Commission may, however, consider tailored
relief in the future under particular facts and circumstances.
---------------------------------------------------------------------------

III. Commission Findings

    Accordingly, pursuant to its authority under Section 36 of the
Exchange Act, the Commission finds that it is necessary or appropriate
in the public interest, and consistent with the protection of
investors, to extend for a period of nine months, until November 5,
2020, the Unlinked Temporary Exemptions from Section 8 of the Exchange
Act and from Exchange Act Rules 8c-1, 15c2-1, 10b-16, 15c2-5, and 15a-
1, in connection with the revision of the Exchange Act definition of
``security'' to encompass security-based swaps, in each case contained
in the 2011 Exchange Act Exemptive Order and extended in the January
2019 Extension Order. This extension will allow time to further
consider the requests taking into account the finalized regulatory
regime for security-based swap dealers and major security-based swap
participants, as well as the

compliance date for the registration of those entities.
    The remainder of the Unlinked Temporary Exemptions will expire on
February 5, 2020, as provided in the January 2019 Extension Order.
* * * * *

IV. Conclusion

    It is hereby ordered, pursuant to Section 36 of the Exchange Act,
that the Unlinked Temporary Exemptions from Section 8 of the Exchange
Act and from Exchange Act Rules 8c-1, 15c2-1, 10b-16, 15c2-5 and 15a-1
in connection with the revision of the Exchange Act definition of
``security'' to encompass security-based swaps, in each case contained
in the 2011 Exchange Act Exemptive Order and extended in the January
2019 Extension Order, are extended until November 5, 2020.

    By the Commission.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-00568 Filed 1-15-20; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)]
[Notices]
[Pages 25393-25398]
[FR Doc No: 2017-11355]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80779; File No. SR-MIAX-2017-22]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend MIAX Options Rule 515A, MIAX Price
Improvement Mechanism (``PRIME'') and PRIME Solicitation Mechanism

May 26, 2017.
    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 17, 2017, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rule 515A to
reflect changes to the MIAX Options Price Improvement Mechanism
(``PRIME'').
    The text of the proposed rule change is available on the Exchange's
Web site 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 Exchange Rule 515A, MIAX Price
Improvement Mechanism (``PRIME'') and PRIME Solicitation Mechanism, to
reflect new functionality to be included in the PRIME process, as
described below. The Exchange is also proposing certain clarifying
technical amendments to the Rule.
Background
    MIAX PRIME is a price-improvement mechanism on the Exchange under
which a Member \3\ (``Initiating Member'') electronically submits an
order that it represents as agent (an ``Agency Order'') into a PRIME
Auction (``Auction''). The Initiating Member, in submitting an Agency
Order, must be willing to either (i) cross the Agency Order at a single
price (a ``single-price submission'') as principal, or (ii)
automatically match (``auto-match''), as principal, the price and size
of responses to a Request for Response (``RFR'') that is broadcast to
MIAX Options participants up to an optional designated limit price.
Such a response is known as an ``RFR response.'' \4\ Members wishing to
participate in the PRIME Auction may do so by submitting RFR responses
during the RFR period (see below), which is currently 500 milliseconds.
---------------------------------------------------------------------------

    \3\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Act. See Exchange
Rule 100.
    \4\ See Exchange Rule 515A(a)(2)(i). When the Exchange receives
a properly designated Agency Order for auction processing, an RFR
detailing the option, side, size, and initiating price will be sent
to all subscribers of the Exchange's data feeds. The RFR currently
lasts for 500 milliseconds. Members may submit responses to the RFR
(specifying prices and sizes). RFR responses shall be an Auction or
Cancel (``AOC'') order or an AOC eQuote. Such responses cannot cross
the disseminated MIAX Best Bid or Offer (``MBBO'') on the opposite
side of the market from the response.
---------------------------------------------------------------------------

Multiple Auctions
    The Exchange is proposing to amend Rule 515A(a)(2) to state that,
as today, only one Auction may be ongoing at any given time in an
option. The Exchange is proposing to modify the rule to account for the
trading of complex orders on the Exchange.\5\ Specifically, Rule
515A(a)(2) will continue to state clearly that only one Auction may be
ongoing at any given time in an option and Auctions in the same option
may not queue or overlap in any manner. In addition, the Exchange
proposes to amend the Rule by stating that the System \6\ will reject
an Agency Order if, at the time of receipt of the Agency Order, the
option is in an Auction or is a component of a complex strategy \7\
that is the subject of a Complex Auction pursuant to Rule 518(d). The
Exchange believes that the rejection of Agency Orders that are received
in an option in which an Auction or Complex Auction is ongoing ensures
that there will not be any interference with the potential for price
improvement for the Agency Order from one ongoing auction type to
another.
---------------------------------------------------------------------------

    \5\ See Exchange Rule 518. See also, Securities Exchange Act
Release No. 79072 (October 7, 2016), 81 FR 71131 (October 14, 2016)
(SR-MIAX-2016-26).
    \6\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
    \7\ The term ``complex strategy'' means a particular combination
of components and their ratios to one another. New complex
strategies can be created as the result of the receipt of a complex
order or by the Exchange for a complex strategy that is not
currently in the System. The Exchange may limit the number of new
complex strategies that may be in the System at a particular time
and will communicate this limitation to Members via Regulatory
Circular. See Exchange Rule 518(a)(6).
---------------------------------------------------------------------------

    The Exchange notes that the limitation against simultaneous ongoing
Auctions and Complex Auctions applies to the specific option being
auctioned. The term ``option'' in the Exchange's rules refers to an
individual put or call with a specific underlying security, strike
price and expiration date. The Exchange defines a ``series of options''
as all option contracts of the same class having the same exercise
price and expiration date.\8\ Thus, a ``series of options'' on MIAX
Options includes both calls and puts overlying a security with the same
strike price and the same expiration. The individual call or put in the
series of options is the ``option.''
---------------------------------------------------------------------------

    \8\ See Exchange Rule 100.
---------------------------------------------------------------------------

    For example, if an Auction or a Complex Auction involving XYZ July
20 calls is underway and ongoing at the time of receipt of an Agency
Order in XYZ July 20 calls, the System will reject such Agency Order.
The System will not, however, reject an Agency Order in XYZ October 20
calls, or in XYZ July 25 calls, for example, because the series being
auctioned has a different strike price or expiration.\9\
---------------------------------------------------------------------------

    \9\ The Exchange notes that other exchanges also limit
simultaneous auctions by ``series,'' which on other exchanges has
the same meaning as ``option'' on MIAX Options. For example, Nasdaq
ISE, LLC (``ISE'') Rule 723.04 states that only one Price
Improvement Mechanism (``PIM'') may be ongoing at any given time in
a ``series.'' PIMs will not queue or overlap in any manner. See ISE
Rule 723.04. In another example, Chicago Board Options Exchange,
Inc. (``CBOE'') Automated Improvement Mechanism (``AIM'') rules
state that only one Auction may be ongoing at any given time in a
``series'' and Auctions in the same ``series'' may not queue or
overlap in any manner. See CBOE Rule 6.74A(b). See also, NASDAQ PHLX
LLC (``Phlx'') Rule 1080(n)(ii), which states that only one Auction
may be conducted at a time in the same ``series'' or same strategy,
otherwise the orders will be rejected. The use of the term
``series'' in these various exchanges' rules is synonymous with the
Exchange's use of the term ``option.''
---------------------------------------------------------------------------

    The Exchange believes that, without such a limitation, investors
could be faced with an unusually large number of simultaneous PRIME
and/or Complex Auctions in the same option in the simple market, and in
the same strategy in the complex market, which in turn could impact the
orderly function of the markets. The Exchange believes that this
limitation should ensure orderliness in the PRIME and Complex Auction
process.
Rounding
    The Exchange is proposing to adopt new Interpretations and Policies
.10 to Rule 515A to establish in the rule text that, when determining
the 40% or 50% Initiating Member allocation under paragraphs
(a)(2)(iii)(H) or (I), the

System will round the number of contracts to which the Initiating
Member is entitled to the nearest whole number (up or down). If the 40%
or 50% Initiating Member allocation results in a remainder of exactly
one-half contract (.50000), then the System will round the number of
contracts to which the Initiating Member is entitled up to the next
higher whole number. Other exchanges that allocate based on percentage
amounts employ some form of ``rounding.'' \10\
---------------------------------------------------------------------------

    \10\ For example, Phlx Rules provide that where the allocation
of contracts results in remaining amounts, the number of contracts
to be allocated shall be rounded down to the nearest integer. If
rounding would result in an allocation of less than one contract,
then one contract will be allocated to the Initiating Member only if
the Initiating Member did not otherwise receive an allocation. See
Phlx Rule 1080(n)(ii)(E)(2)(f). This differs slightly from the
instant proposal by the Exchange in that the System will round the
number of contracts to which the Initiating Member is entitled to
the nearest whole number (up or down). The Exchange also notes that
NASDAQ BX, Inc. (``BX''), in a filing relating to its directed
orders program, described a process for rounding that has the
potential to result in an allocation that is slightly greater than
their 40% or 50% entitlement for directed orders. See Securities
Exchange Act Release No. 73784 (December 8, 2014), 79 FR 73930 (SR-
BX-2014-049) (Notice of Filing of Proposed Rule Change Relating to
Directed Market Makers). See also, Securities Exchange Act Release
No. 74129 (January 23, 2015), 80 FR 4954 (January 29, 2015) (SR-BX-
2014-049) (Order Approving Proposed Rule Change Relating to Directed
Market Makers).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change regarding
rounding results in the fair and equitable allocation of contracts
among PRIME participants, and provides clarity and transparency in the
Exchange's rules so that all MIAX PRIME Auction participants will be
informed of their participation entitlements when submitting orders and
responses into MIAX PRIME.
Allocation of Contracts at the Conclusion of the PRIME Auction
    Currently, Exchange Rule 515A(a)(2)(iii) provides that at the
conclusion of the Auction, the Agency Order will be allocated at the
best price(s), subject to the following: (A) Such best prices include
non-Auction quotes and orders; (B) Priority Customer \11\ orders
resting on the Book \12\ before, or that are received during, the
Response Time Interval and Priority Customer RFR responses shall,
collectively have first priority to trade against the Agency Order. The
allocation of an Agency Order against the Priority Customer orders
resting in the Book, Priority Customer orders received during the
Response Time Interval, and Priority Customer RFR responses shall be in
the sequence in which they are received by the System; (C) Market Maker
priority quotes \13\ and RFR responses from Market Makers \14\ with
priority quotes will collectively have second priority. The allocation
of Agency Orders against these contra sided quotes and RFR responses
shall be on a size pro rata basis as defined in Rule 514(c)(2); (D)
Professional Interest orders resting in the Book, Professional Interest
orders placed in the Book during the Response Time Interval,
Professional Interest quotes, and Professional Interest RFR responses
will collectively have third priority. The allocation of Agency Orders
against these contra sided orders and RFR Responses shall be on a size
pro rata basis as defined in Rule 514(c)(2); (E) No participation
entitlement shall apply to orders executed pursuant to this Rule; (F)
If an unrelated market or marketable limit order on the opposite side
of the market as the Agency Order was received during the Auction and
ended the Auction, such unrelated order shall trade against the Agency
Order at the midpoint of the best RFR response (or in the absence of a
RFR response, the initiating price) and the NBBO on the other side of
the market from the RFR responses (rounded towards the disseminated
quote when necessary). (G) If an unrelated non-marketable limit order
on the opposite side of the market as the Agency Order was received
during the Auction and ended the Auction, such unrelated order shall
trade against the Agency Order at the midpoint of the best RFR response
and the unrelated order's limit price (rounded towards the unrelated
order's limit price when necessary).
---------------------------------------------------------------------------

    \11\ 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 orders in listed options per day on average
during a calendar month for its own beneficial account(s). See
Exchange Rule 100.
    \12\ The term ``Book'' means the electronic book of buy and sell
orders and quotes maintained by the System. See Exchange Rule 100.
    \13\ To be considered a priority quote, at the time of
execution, each of the following standards must be met: (A) The bid/
ask differential of a Market Maker's two-sided quote pair must be
valid width (no wider than the bid/ask differentials outlined in
Rule 603(b)(4)); (B) the initial size of both of the Market Maker's
bid and the offer must be in compliance with the requirements of
Rule 604(b)(2); (C) the bid/ask differential of a Market Maker's
two-sided quote pair must meet the priority quote width requirements
defined below in subparagraph (ii) [sic] for each option; and (D)
either of the following are true: 1. At the time a locking or
crossing quote or order enters the System, the Market Maker's two-
sided quote pair must be valid width for that option and must have
been resting on the Book; or 2. Immediately prior to the time the
Market Maker enters a new quote that locks or crosses the MBBO, the
Market Maker must have had a valid width quote already existing
(i.e., exclusive of the Market Maker's new marketable quote or
update) among his two-sided quotes for that option. See Exchange
Rule 517(b)(1)(i).
    \14\ The term ``Market Makers'' refers to ``Lead Market
Makers'', ``Primary Lead Market Makers'' and ``Registered Market
Makers'' collectively. The term ``Lead Market Maker'' means a Member
registered with the Exchange for the purpose of making markets in
securities traded on the Exchange and that is vested with the rights
and responsibilities specified in Chapter VI of the Exchange's Rules
with respect to Lead Market Makers. When a Lead Market Maker is
appointed to act in the capacity of a Primary Lead Market Maker, the
additional rights and responsibilities of a Primary Lead Market
Maker specified in Chapter VI of the Exchange's Rules will apply.
The term ``Primary Lead Market Maker'' means a Lead Market Maker
appointed by the Exchange to act as the Primary Lead Market Maker
for the purpose of making markets in securities traded on the
Exchange. The Primary Lead Market Maker is vested with the rights
and responsibilities specified in Chapter VI of the Exchange's Rules
with respect to Primary Lead Market Makers. The term ``Registered
Market Maker'' means a Member registered with the Exchange for the
purpose of making markets in securities traded on the Exchange, who
is not a Lead Market Maker and is vested with the rights and
responsibilities specified in Chapter VI of the Exchange's Rules
with respect to Registered Market Makers. See Exchange Rule 100.
---------------------------------------------------------------------------

    Rules 515A(a)(2)(iii)(H) and (I) describe the allocation of
contracts executed when the Initiating Member selects the single-price
submission or the auto-match option, respectively, when submitting
their Agency Order and there are either two or more participants at the
execution price or when there is only one other participant on parity
with the Initiating Member at either the single price execution price
or at the final auto-match price point.
    The Exchange is proposing to modify the PRIME trade allocation
rules with respect to determining the Initiating Member's entitlement
percentage (either 40% or 50%) at the single price submission price and
at the final auto-match price point, as applicable.
    Exchange Rules 515A(a)(2)(iii)(H) and (I) currently state that,
upon conclusion of an Auction, an Initiating Member will retain certain
priority and trade allocation privileges for a single-price submission
and for an auto-match submission. Under current Rule
515A(a)(2)(iii)(H), if the best price equals the Initiating Member's
single-price submission, the Initiating Member's single-price
submission shall be allocated the greater of one contract or a certain
percentage of the order, which percentage will be determined by the
Exchange and may not be larger than 40% of the Agency Order, subject to
the rounding provisions of proposed Rule 515A, Interpretations and
Policies .10 (described above). However, if only one Member's response,
subject to the System's calculation of the number of Member's responses
described in proposed Rule 515A, Interpretations and Policies .11
(described below) matches the Initiating Member's single

price submission, then the Initiating Member may be allocated up to 50%
of the Agency Order.
    Similarly, current Exchange Rule 515A(a)(2)(iii)(I) provides that
if the Initiating Member selected the auto-match option of the Auction,
the Initiating Member shall be allocated its full size of RFR responses
at each price point until the final auto-match price point is reached.
At the final auto-match price point, the Initiating Member shall be
allocated the greater of one contract or a certain percentage of the
remainder of the Agency Order, which percentage will be determined by
the Exchange and may not be larger than 40%, subject to the rounding
provisions of proposed Rule 515A, Interpretations and Policies .10
(described above). However, if only one Member's response, subject to
the System's calculation of the number of Member's responses described
in proposed Rule 515A, Interpretations and Policies .11 (described
below) matches the Initiating Member's submission at the final auto-
match price point, then the Initiating Member may be allocated up to
50% of the remainder of the Agency Order at the final auto-match price
point.
    At the conclusion of the Auction, the Agency Order is allocated at
the best price(s) pursuant to the matching algorithm in effect for the
class.\15\ The System first must determine the number of participants
that are entitled to receive contracts to be allocated, and whether any
participant(s) such as Priority Customers are entitled to receive
contracts first. Thereafter, contracts are allocated among participants
at the execution price.
---------------------------------------------------------------------------

    \15\ See Exchange Rule 515A(a)(2)(iii).
---------------------------------------------------------------------------

    The Exchange is proposing to adopt Interpretations and Policies .11
to Rule 515A to state the basis on which the System will determine a
Member's response to be a participant at the single price submission
price and at the final auto-match price point in calculating the
Initiating Member's entitlement at that price.\16\ Specifically, when
calculating the number of Members' responses that match the Initiating
Member's single price submission under sub-paragraph (a)(2)(iii)(H) and
the final auto-match price point under sub-paragraph (a)(2)(iii)(I) of
Rule 515A, the System will not include in such calculation: (i) Any
Priority Customer Auction response and/or unrelated Priority Customer
interest that has been executed, or (ii) any Member's response
(including unrelated orders and quotes) executed at a better price.
---------------------------------------------------------------------------

    \16\ The Exchange notes that under the NYSE MKT CUBE price
improvement mechanism, if only the accompanying contra order and one
other RFR response are eligible to trade at the CUBE execution
price, each will receive a 50% allocation; otherwise, the
accompanying contra order will receive a 40% guaranteed allocation
unless more than 60% of the order is price improved by other
participants (the accompanying contra will yield priority at a given
price once the 40% entitlement is satisfied). See NYSE MKT CUBE
Factsheet, https://www.nyse.com/markets/amex-options, Related
Information, dated February 9, 2016 at p.2.
---------------------------------------------------------------------------

    Exchange Rule 515A(2)(iii)(B) explicitly states that Priority
Customer orders resting on the Book before, or that are received
during, the Response Time Interval and Priority Customer RFR responses
shall, collectively, have first priority to trade against the Agency
Order. Therefore, all Priority Customer Interest at the single price
submission and at the final auto-match price point is executed first,
after which other interest is allocated in accordance with Rule
515A(a)(2)(iii).
    The Exchange is proposing to adopt Interpretations and Policies .11
to exclude from the number of responding participants remaining at
those prices (i) Priority Customer RFR responses and/or unrelated
Priority Customer interest that has already been executed, and (ii) any
Member's response (including unrelated orders and quotes) executed at a
better price. The purpose of this proposal is to calculate and
establish the actual number of Auction participants that may be
allocated contracts at a given price point. To include Priority
Customer and other interest that have already received full executions
and therefore cannot participate further in the allocation of contracts
as part of the remaining participants at the execution price could
artificially skew the entitlements of remaining participants at the
next level(s) of priority established in Rule 515A(2)(iii). This is
particularly true when there is only one remaining participant with the
Initiating Member that could or would be entitled to receive contracts
at the single price submission or at the final auto-match price point.
The following examples illustrate this.

Example 1--Priority Customer Interest Already Executed, One Participant
With Initiating Member
ABBO: 1.00-1.06
MBBO: 1.00-1.06
PRIME Order, Agency buy 20 contracts, Auction Start Price 1.05
Begin RFR Auction
During Auction, MM1 responds with an RFR response to sell 20 at 1.05
Customer order to sell 5 at 1.05
At the end of the RFR period
Agency Order buys 5 from the Customer order at 1.05
There is one remaining joining interest at 1.05 (MM1), so the contra
receives 50% of the original size of the order, or 10 contracts, and
MM1 receives the balance of 5 contracts \17\
---------------------------------------------------------------------------

    \17\ Under the current Rule, the result would be slightly
different. The Agency Order would still buy 5 contracts from the
Customer at $1.05. However, although the Customer has sold all 5
contracts it offered at $1.05, the current rule counts two remaining
joining offers at 1.05 (MM1 and Customer) for the remaining 15
contracts, so the contra receives 40% of the original size of the
order, or 8 contracts, and MM1 receives the balance of 7 contracts.
---------------------------------------------------------------------------

Example 2--Responses Executed at Better Prices, One Participant With
Initiating Member
ABBO: 1.00-1.06
MBBO: 1.00-1.06
PRIME Order, Agency buy 20 contracts, Auction Start Price 1.05
Begin RFR Auction
During Auction, MM1 responds with an RFR response to sell 20 at 1.05
MM2 responds with an RFR response to sell to sell 5 at 1.04
At the end of the RFR period
Agency Order buys 5 from MM2 at 1.04
There is one joining interest at 1.05 (MM1), so the contra receives 50%
of the original size of the order, or 10 contracts, and MM1 receives
the balance of 5 contracts \18\
---------------------------------------------------------------------------

    \18\ Under the current Rule, just as in Example 1, the result
would be slightly different. The Agency Order would buy 5 contracts
from MM2 at $1.04. However, although MM2 has sold all 5 contracts it
offered at $1.04, the current rule counts two remaining joining
offers at 1.05 (MM1 and MM2) for the remaining 15 contracts, so the
contra receives 40% of the original size of the order, or 8
contracts, and MM1 receives the balance of 7 contracts.

    When more than one participant matches the Initiating Member at the
single price submission and/or at the final auto-match price point, the
Initiating Member is entitled to receive and is allocated the greater
of one contract or a certain percentage of the remainder of the Agency
Order, which percentage will be determined by the Exchange and may not
be larger than 40%. Currently, in auto-match, in the situation where
there is one remaining participant matching the Initiating Member at
the final auto-match price point, the Initiating Member and the lone
remaining participant are each entitled to 50% of the remaining
contracts at that price (subject of course to their stated size). The
proposal to include only the remaining participant after other
participants have already received full executions at better prices
ensures that the Initiating Participant, who has guaranteed the full
execution at the single price submission or at the final auto-match
price point, will receive its rightful 50% allocation. The Exchange
believes that the proposed rule change rewards the Initiating

Participant, who has absorbed the maximum risk in the PRIME Auction, by
ensuring the 50% allocation entitlement when there is only one other
participant matching the Initiating Member at the single price
submission price or at the final auto-match price point. The Exchange
believes that this provides an additional incentive for Initiating
Members to submit Agency Orders for price improvement in MIAX PRIME.
Technical Amendments
    The Exchange is proposing to capitalize the term ``Agency Order''
in Rule 515A(a)(2)(iii)(H) because the term is defined in Rule 515A(a)
above. Additionally, the Exchange is proposing to add the word ``or''
to the first sentence of Rules 515A(a)(2)(iii)(H) and (I),
respectfully, for grammatical correctness. These proposed technical
amendments are intended for clarity and ease of reference.
    The Exchange will announce the implementation date of the proposed
rule change by Regulatory Circular to be published no later than 60
days following the operative date of the proposed rule. The
implementation date will be no later than 60 days following the
issuance of the Regulatory Circular.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \19\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \20\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system and, in general, to
protect investors and the public interest. The Exchange further
believes the proposed rule change is consistent with the Section
6(b)(5) \21\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
    \21\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed amendment to
Rule 515A(a)(2) stating that only one Auction or Complex Auction may be
ongoing at any given time in an option and/or in a complex strategy in
which that option is a component, and Auctions and Complex Auctions
involving the same option may not queue or overlap in any manner, is
consistent with the Act. The Exchange believes that, without such a
limitation, investors could be faced with an unusually large number of
simultaneous PRIME and/or Complex Auctions in the same option in the
simple market, and in the same strategy in the complex market, which in
turn could impact the orderly function of the markets. The Exchange
believes that this limitation is consistent with the Act because it is
designed to remove impediments to and perfect the mechanisms of a free
and open market and a national market system by ensuring orderliness in
the PRIME and Complex Auction process on the Exchange.
    The Exchange believes that the proposed rule change relating to
rounding removes impediments to and perfects the mechanisms of a free
and open market and a national market system by adopting rules that are
consistent with industry practices. As stated above, BX, in a filing
relating to its directed orders program, described a process for
rounding that has the potential to result in an allocation that is
slightly greater than their 40% or 50% entitlement for directed
orders.\22\ The Exchange believes that this supports its proposal to
adopt Proposed Interpretations and Policies .10 with respect to
rounding a remainder of exactly one-half contract (.50000) up to the
next higher whole number.
---------------------------------------------------------------------------

    \22\ See supra note 10.
---------------------------------------------------------------------------

    The Exchange further believes the proposed rule change protects
investors and is in the public interest because it fairly allocates the
PRIME Agency Order in a manner that rewards Initiating Members who
submit PRIME Agency Orders and guarantee price improvement for the
entire Agency Order. The allocation of 50% of the contracts to the
Initiating Member when there is only one remaining participant that
matches the initiating Member's single price submission price or final
auto-match price point should provide greater incentive to Initiating
Members to submit Agency Orders for price improvement in the PRIME
auction. The result of a greater number of Agency Orders submitted to
PRIME is a benefit to the MIAX Options markets and the marketplace as a
whole because it enriches liquidity on the Exchange at the NBBO,
providing investors with greater opportunities for executions at the
NBBO and beyond at improved prices through MIAX PRIME.
    The Exchange also believes that the proposed rule change removes
impediments to and perfects the mechanisms of a free and open market
and a national market system by attracting more order flow and by
increasing the frequency with which Initiating Members initiate
Auctions through PRIME. Moreover, the proposed rule change is
consistent with the rules and proposals of other exchanges.\23\
---------------------------------------------------------------------------

    \23\ See supra notes 9, 10, 16 and infra notes 26 and 27.
---------------------------------------------------------------------------

    Additionally, the Exchange believes that the proposed technical
clarifying and definitional amendments to Rule 515A will benefit market
participants by enhancing transparency, clarity and ease of reference
to the rules.

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 and their effect on trade allocations in MIAX
PRIME are meant to more fairly allocate an Agency Order submitted for
price improvement at the single price submission price or at the final
auto-match price point. The Exchange believes that the allocation of
50% of the remainder of the Agency Order to the Initiating Member when
there is only one non-Priority Customer response that will trade at the
execution price should in fact enhance competition by encouraging more
Initiating Members to submit Agency Orders to MIAX Options for price
improvement via MIAX PRIME, which should benefit investors by
attracting more order flow as well as increasing the frequency with
which Initiating Members submit Agency Orders into the PRIME Auction.
This should result in enhanced liquidity and more competition on the
Exchange.
    For all the reasons stated, 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, and
believes the proposed change will in fact enhance competition.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \24\ and Rule 19b-4(f)(6) \25\
thereunder.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 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 the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-MIAX-2017-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2017-22. 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 Number SR-MIAX-2017-22 and should be
submitted on or before June 22, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11355 Filed 5-31-17; 8:45 am]
BILLING CODE 8011-01-P


Comment Info: =================

General Comment:BLET Notice of Substitution of Hearing Petitioner?s Representative and Hearing  Petitioner?s Request for Extension of Time


[Federal Register Volume 76, Number 76 (Wednesday, April 20, 2011)]
[Notices]
[Pages 22158-22160]
[FR Doc No: 2011-9478]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64300; File No. SR-Phlx-2011-52]

 Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating
to Rebates and Fees for Customer Complex Orders

April 14, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on April 8, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its Complex Order \3\ Fees in
Section I of its Fee Schedule titled ``Rebates and Fees for Adding and
Removing Liquidity in Select Symbols.''
---------------------------------------------------------------------------

    \3\ A Complex Order is any order involving the simultaneous
purchase and/or sale of two or more different options series in the
same underlying security, priced at a net debit or credit based on
the relative prices of the individual components, for the same
account, for the purpose of executing a particular investment
strategy. Furthermore, a Complex Order can also be a stock-option
order, which is an order to buy or sell a stated number of units of
an underlying stock or ETF coupled with the purchase or sale of
options contract(s). See Exchange Rule 1080, Commentary .08(a)(i).
---------------------------------------------------------------------------

    While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on April 11, 2011.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, at the Commission's Public Reference
Room, and on the Commission's Web site at http://www.sec.gov.

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 purpose of the proposed rule change is to amend Section I, Part
B of the Exchange's Fee Schedule, titled ``Complex Order'' to: (i) Pay
a Customer Complex Order Rebate for Adding Liquidity of $0.25 per
contract for options overlying the iShares Russell 2000 Index
(``IWM''); and (ii) waive the Customer Complex Order Fee for Removing
Liquidity for options overlying Standard and Poor's Depositary
Receipts/SPDRs (``SPY'') \4\; the PowerShares QQQ Trust
(``QQQ'')[supreg]; and Apple, Inc. (``AAPL'') [sic]. The Exchange is
proposing these amendments to the Fee Schedule in order to continue to
attract additional Customer order flow.
---------------------------------------------------------------------------

    \4\ SPY options are based on the SPDR exchange-traded fund
(``ETF''), which is designed to track the performance of the S&P 500
Index.
---------------------------------------------------------------------------

Complex Order Rebate for Adding Liquidity
    Currently, the Exchange pays the following Complex Order Rebates
for Adding Liquidity in the Select Symbols:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Specialist,
                                                             Customer        Directed      ROT, SQT and        Firm        Broker-dealer   Professional
                                                                            participant        RSQT
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rebate for Adding Liquidity in all Select Symbols except           $0.24           $0.00           $0.00           $0.00           $0.00           $0.00
 SPY, QQQ and AAPL......................................
Rebate for Adding Liquidity for SPY, QQQ and AAPL.......            0.25            0.00            0.00            0.00            0.00            0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

    With respect to Complex Orders, the Exchange pays Customers a rate
of $0.25 per contract in specific Select Symbols, namely SPY, QQQ and
AAPL. The Exchange currently pays a Complex Order Customer Rebate of
$0.24 per contract for transactions that add liquidity in IWM (``IWM
Rebate'').\5\ The Exchange is proposing to change the IWM Customer
Complex Order Rebate for Adding Liquidity from $0.24 to $0.25 per
contract. The Exchange would continue to pay all other Select Symbols,
except SPY, QQQ and AAPL, a Customer Complex Order Rebate for Adding
Liquidity of $0.24 per contract. Other, non-Customer market
participants would not be paid a Complex Order Rebate for Adding
Liquidity.\6\ The Exchange believes that this increased rebate for
Customers transacting Complex Orders in options overlying IWM will
attract additional Customer order flow to the Exchange in IWM.
---------------------------------------------------------------------------

    \5\ The Exchange currently also pays a $0.24 per contract
Customer Complex Order Rebate for Adding Liquidity in all Select
Symbols except SPY, QQQ and AAPL.
    \6\ The only market participant that receives a Rebate for
Adding Liquidity for Complex Orders today is a Customer.
---------------------------------------------------------------------------

Complex Order Fee for Removing Liquidity
    Currently, the Exchange assesses the following Complex Orders Fees
for Removing Liquidity in the Select Symbols:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Specialist,
                                                             Customer        Directed      ROT, SQT and        Firm        Broker-dealer   Professional
                                                                            participant        RSQT
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fee for Removing Liquidity..............................           $0.25           $0.25           $0.27           $0.28           $0.35           $0.28
--------------------------------------------------------------------------------------------------------------------------------------------------------

    With respect to Complex Orders, the Exchange currently assesses
Customers a Fee for Removing Liquidity of $0.25 per contract in all
Select Symbols. The Exchange is proposing to waive the Customer Complex
Order Fee for Removing Liquidity for options overlying SPY, QQQ, IWM
and AAPL. All other Select Symbols would continue to be subject to a
Customer Complex Order Fee for Removing Liquidity of $0.25 per
contract. The Exchange is not proposing to waive the Complex Order Fee
for Removing Liquidity for any other market participant.\7\ The
Exchange believes that this waiver of the Customer Complex Order Fee
for Removing Liquidity for options overlying SPY, QQQ, IWM and AAPL
will attract additional Customer order flow to the Exchange in those
Select Symbols.
---------------------------------------------------------------------------

    \7\ The other non-Customer market participants would continue to
be assessed a Complex Order Fee for Removing Liquidity as noted
above.
---------------------------------------------------------------------------

    The Exchange does not propose to amend the fees in Section I, Part
A titled ``Single contra-side order.'' While changes to the Fee
Schedule pursuant to this proposal are effective upon filing, the
Exchange has designated these changes to be operative on April 11,
2011.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members. The Exchange also believes that there is an
equitable allocation of reasonable rebates among Exchange members.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to pay an increased
Complex Order Rebate for Adding Liquidity to Customers in options
overlying IWM and waive the Complex Order Fee for Removing Liquidity
for Customers in options overlying SPY, QQQ, IWM and AAPL, because both
the proposed Customer rebate and waiver of the fee should attract
additional Customer order flow to the Exchange for the benefit of all
market participants. The Exchange believes that the proposal is
equitable because by paying an increased Complex Order Rebate for
Adding Liquidity to Customers transacting options overlying IWM and
waiving the Customer Fee for Removing Liquidity in options overlying
SPY, QQQ, IWM and AAPL, all market participants should benefit from the
increased liquidity which increased Customer order flow should bring to
the Exchange. In addition, the aforementioned proposals are equitable
because the Exchange would uniformly pay and waive the rebate and fee,
respectively, for all Customer Complex Orders in the applicable
symbols.
    Also, the Exchange believes that it is reasonable to assess a
different Fee for Removing Liquidity in certain symbols. For example,
Chicago Board Options Exchange, Incorporated (``CBOE'') assesses
Customers different fees for transacting QQQ [sic] and SPY as compared
to other equity options.\10\
---------------------------------------------------------------------------

    \10\ See CBOE's Fees Schedule.
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market comprised of
nine U.S. options exchanges in which sophisticated and knowledgeable
market participants can readily send order flow to competing exchanges
if they deem fee levels at a particular exchange to be excessive. The
Exchange believes that the Complex Order fees and rebates it assesses
must be competitive with fees and rebates assessed in place on other
options exchanges. The Exchange believes that this competitive
marketplace impacts the fees and rebates present on the Exchange today
and influences the proposals set forth above.

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.

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

    No written comments were either solicited or 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.\11\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2011-52 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-Phlx-2011-52. 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 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
a.m. and 3 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 Number SR-Phlx-2011-52 and should be
submitted on or before May 11, 2011.
---------------------------------------------------------------------------

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

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-9478 Filed 4-19-11; 8:45 am]
BILLING CODE 8011-01-P