Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Options Fee Schedule, 4175-4180 [2013-00967]

Download as PDF Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices 4175 List. Documents are available at www.prc.gov, Docket Nos. MC2013–32, CP2013–41. SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Stanley F. Mires, Attorney, Legal Policy & Legislative Advice. [File No. 500–1] [Release No. 34–68645; File No. SR–MIAX– 2012–05] Eco Global Corporation, Execute Sports, Inc., FacePrint Global Solutions, Inc., FinancialContent, Inc., and Firstgold Corp.; Order of Suspension of Trading Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Options Fee Schedule [FR Doc. 2013–00962 Filed 1–17–13; 8:45 am] BILLING CODE 7710–12–P POSTAL SERVICE January 16, 2013. Product Change—Priority Mail Negotiated Service Agreement AGENCY: ACTION: Postal ServiceTM. Notice. The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. SUMMARY: DATES: Effective date: January 18, 2013. FOR FURTHER INFORMATION CONTACT: Elizabeth A. Reed, 202–268–3179. The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on January 11, 2013, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Contract 51 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2013–31, CP2013–40. SUPPLEMENTARY INFORMATION: Stanley F. Mires, Attorney, Legal Policy & Legislative Advice. [FR Doc. 2013–00958 Filed 1–17–13; 8:45 am] BILLING CODE 7710–12–P RECOVERY ACCOUNTABILITY AND TRANSPARENCY BOARD Agency Information Collection Activities: Renewal of Currently Approved Collection; Comment Request mstockstill on DSK4VPTVN1PROD with Correction In notice document 2012–30952, appearing on page 76097, in the issue of Wednesday, December 26, 2012, make the following correction: In the first column, under the heading DATES, in the second and third lines, ‘‘February 22, 2013’’ should read ‘‘February 25, 2013’’. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Eco Global Corporation because it has not filed any periodic reports since the period ended September 30, 2009. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Execute Sports, Inc. because it has not filed any periodic reports since the period ended September 30, 2008. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of FacePrint Global Solutions, Inc. because it has not filed any periodic reports since the period ended June 30, 2007. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of FinancialContent, Inc. because it has not filed any periodic reports since the period ended December 31, 2008. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Firstgold Corp. because it has not filed any periodic reports since the period ended October 31, 2009. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted companies is suspended for the period from 9:30 a.m. EST on January 16, 2013 through 11:59 p.m. EST on January 30, 2013. By the Commission. Jill M. Peterson, Assistant Secretary. January 14, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 31, 2012, Miami International Securities Exchange LLC (‘‘Exchange’’ or ‘‘MIAX’’) 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 selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 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 establish membership and system connectivity fees applicable to Members and nonMembers using services provided by MIAX. While changes to the Exchange’s Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated that the proposed monthly Port Fees and the proposed monthly Member Participant Identifier Fee be implemented beginning January 1, 2013. The text of the proposed rule change is available on the Exchange’s Web site at http://www.miaxoptions.com/filter/ wotitle/rule_filing, at MIAX’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set [FR Doc. C1–2012–30952 Filed 1–17–13; 8:45 am] [FR Doc. 2013–01151 Filed 1–16–13; 4:15 pm] 1 15 BILLING CODE 1505–01–D BILLING CODE 8011–01–P 2 17 VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 E:\FR\FM\18JAN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 18JAN1 4176 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices 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 establish membership and system connectivity fees applicable to Members and non-Members using services provided by MIAX. Membership Fees: MIAX will assess Membership fees for Applications and Trading Permits. a. Application for MIAX Membership A one-time application fee based upon the applicant’s status as either an Electronic Exchange Member (‘‘EEM’’) or as a Market Maker will be assessed by MIAX. Applicants for MIAX Membership as an EEM will be assessed a one-time Application Fee of $2,500.00. Applicants for MIAX Membership as a Market Maker will be assessed a onetime Application Fee of $3,000.00. The difference in the fee charged to EEMs and Market Makers reflects the additional review and processing effort needed for Market Maker applications. MIAX’s one-time application fees are similar to and generally lower than one time application fees in place at the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’) ($3,000 for an individual applicant and $5,000 for an applicant organization) and at the International Securities Exchange, LLC (‘‘ISE’’) ($7,500 for a Primary Market Maker, $5,500 for a Competitive Market Maker and $3,500 for an Electronic Access Member). Applicants for MIAX membership that apply for membership on or before January 31, 2013 will not be assessed a fee for such application. MIAX believes that this will provide incentive for potential applicants to submit early applications, which should result in maximizing potential order flow and liquidity as MIAX begins trading, all to the benefit of the investing public. Applicants for MIAX membership that apply for membership on or after February 1, 2013 will be subject to the Membership Application Fees described above. mstockstill on DSK4VPTVN1PROD with b. Trading Permits MIAX will issue Trading Permits that confer the ability to transact on MIAX. There is no limit on the number of Trading Permits that may be issued by MIAX; however MIAX has the authority to limit or decrease the number of VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 Trading Permits it has determined to issue provided it complies with the provisions set forth in Rule 200(a) and Section 6(c)(4) of the Exchange Act.3 MIAX will assess monthly fees for Trading Permits depending upon the category of Member that is issued a particular trading permit. EEMs will be assessed a monthly fee of $1,000 for a Trading Permit. Registered Market Makers (‘‘RMMs’’) will be assessed $3,000.00 per month for a Trading Permit for an RMM assignment in up to 100 option classes, $4,500.00 per month for a Trading Permit for an RMM assignment in up to 250 option classes, or $6,000.00 per month for a Trading Permit for an RMM assignment in all option classes listed on MIAX. For the calculation of the monthly RMM Trading Permit Fees, the number of classes is defined as the greatest number of classes the RMM was assigned to quote in on any given day within the calendar month. Primary Lead Market Makers (‘‘PLMMs’’) and Lead Market Makers (‘‘LMMs’’) will be assessed the same monthly Trading Permit fees applicable to RMMs described above. In addition to the RMM Trading Permit fees, PLMMs and LMMs will be assessed an additional $1,000.00 per month for a Trading Permit. Thus, an LMM or PLMM will be assessed $4,000.00 per month for a Trading Permit for an LMM or PLMM assignment in up to 100 option classes, $5,500.00 per month for a Trading Permit for an LMM or PLMM assignment in up to 250 option classes, or $7,000.00 per month for a Trading Permit for an LMM or PLMM assignment in all option classes listed on MIAX. MIAX monthly Trading Permit Fees are generally lower than monthly trading permit fees in place at CBOE and the NASDAQ OMX PHLX LLC (‘‘PHLX’’). The $1,000 monthly Trading Permit fee assessed to EEMs is lower than the CBOE’s monthly electronic access trading permit fee ($1,600) and the PHLX’s monthly permit fee for members ($2,000). The Monthly Trading Permit Fees assessed to MIAX Market Makers is readily comparable to and lower than the monthly fees in place at PHLX for Remote Streaming Quote Traders ($5,000 per month for less than 100 classes, $8,000 per month for more than 100 classes and less than 999 classes, and $11,000 per month for 1,000 or more classes). Members receiving Trading Permits during the month will be assessed 3 For a complete description of MIAX Trading Permits, see MIAX Rule 200. See also 15 U.S.C. 78(f)(c)(4). PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 Trading Permit Fees according to the above schedule, except that the calculation of the Trading Permit fee for the first month in which the Trading Permit is issued will be pro-rated based on the number of trading days occurring after the date on which the Trading Permit was in effect during that first month divided by the total number of trading days in such month multiplied by the monthly rate. Testing and Certification Fees: a. API Testing and Certification Fee Members MIAX will assess a one-time Application Programming Interface (‘‘API’’) testing and certification fee on EEMs and Market Makers. An API makes it possible for Member software to communicate with MIAX software applications, and is subject to Member testing with, and certification by, MIAX. API testing and certification includes for EEMs testing all available order types, new order entry, order management, order throughput and mass order cancellation. For Market Makers, API testing and certification also includes testing of all available quote types, quote throughput, quote management and cancellation, Aggregate Risk Manager settings and triggers, and confirmation of quotes within the trading engines. The one-time MIAX API Testing and Certification fees are based upon the category of Member being tested and certified. EEMs will be assessed a onetime API Testing and Certification fee of $1,000.00. Market Makers will be assessed a one-time API Testing and Certification fee of $2,500.00. The fee represents costs incurred by the Exchange as it works with each Member while testing and certifying that the Member’s software systems communicate properly with MIAX. MIAX has set a one-time fee rather than an hourly rate used by some of the other exchanges so MIAX Members will know the full cost for the service prior to beginning to use such services. Until recently, PHLX charged hourly fees for use of its testing facility—a fee of $285 per hour for active connection testing during normal operating hours and $333 per hour for testing after normal hours.4 MIAX’s one-time fees are comparable and more cost effective to the Members than hourly rates at other exchanges. In order to provide an incentive to prospective Members to apply early for 4 See Securities Exchange Act Release No. 63257 (November 5, 2010) 75 FR 69493 (November 12, 2010) (SR–PHLX 2010–155) Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Fees Assessed for Use of the Testing Facility. E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices membership and to engage in API testing and certification such that they will be able to trade options on MIAX as soon as possible, API Testing and Certification fees will be waived for all EEMs and Market Makers that apply for MIAX membership and complete API testing and certification on or before January 31, 2013. EEMs and Market Makers that apply for MIAX membership or complete API testing and certification on or after February 1, 2013 are subject to the Member API Testing and Certification Fees as described above. Non-Members MIAX will assess a one-time API Testing and Certification fee of $5,000.00 on third party vendors 5 and Service Bureaus 6 whose software interfaces with MIAX software. As with Members, an API makes it possible for third party vendors’ and Service Bureaus’ software to communicate with MIAX software applications, and is subject to testing with, and certification by, MIAX. The higher fee charged to such non-Members reflects the greater amount of time spent by MIAX employees testing and certifying nonMembers. It has been MIAX’s experience that Member testing takes less time than non-Member testing because Members have more experience testing these systems with exchanges; generally fewer questions and issues arise during the testing and certification process. Also, because third party vendors and Service Bureaus are redistributing data and reselling services to other Members and market participants the number and types of scenarios that need to be tested are more numerous and complex than those tested and certified for a single Member. mstockstill on DSK4VPTVN1PROD with b. Member Network Testing and Certification Fee As described below under Connectivity Fees, MIAX will establish electronic communication connections with Members and will assess Members a one-time Testing and Certification Fee of $1,000.00 per Member for a one Gigabit connection, and $4,000.00 per Member for a ten Gigabit connection. 5 Third party vendors are subscribers of MIAX’s market and other data feeds, which they in turn use for redistribution purposes. Third party vendors do not provide connectivity and therefore are not subject to Network testing and certification. 6 A Service Bureau is a technology provider that offers and supplies technology and technology services to a trading firm that does not have its own proprietary system. The technology and technology services supplied by Service Bureaus includes both software applications and connectivity, thus Service Bureaus are subject to both API testing and certification and Network testing and certification. VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 Members will not be charged a Testing and Certification Fee for any additional connections they obtain since the additional connections will be from the same source and will have the same internal technology. c. Non-Member Network Testing and Certification Fee MIAX will establish electronic connections with and will assess Service Bureaus and Extranet Providers 7 a one-time Testing and Certification Fee of $2,000.00 for the initial one Gigabit connection and $1,000 for each additional one Gigabit connection. In addition, MIAX will assess Service Bureaus and Extranet Providers a Testing and Certification Fee of $6,000.00 for the initial ten Gigabit connection and $4,000.00 for each additional ten Gigabit connection. The Member and non-Member Network Testing and Certification fees represent installation and support costs incurred by the Exchange as it works with each Member and non-Member to make sure there are appropriate electronic connections with MIAX. MIAX has set a one-time fee for testing so MIAX Members and non-Members will know the full cost for the service prior to beginning to use such services. The higher fee charged to non-Members reflects the greater amount of time spent by MIAX employees testing and certifying non-Members. It has been MIAX’s experience that Member network connectivity testing takes less time than non-Member network connectivity testing because Members have more experience testing these systems with exchanges; generally fewer questions and issues arise during the testing and certification process. In addition, non-Members are charged a discounted Network Testing and Certification Fee for additional connections because each connection will be used by different customers of the non-Member Service Bureaus and Extranet Providers and will need to be individually tested requiring more Exchange resources for testing and certification. Connectivity Fees: MIAX will assess fees to Members, Service Bureaus, and Extranet Providers for electronic connections 8 between 7 An Extranet Provider is a technology provider that connects with MIAX systems and in turn provides such connectivity to MIAX participants that do not connect directly with MIAX. Extranet Providers do not provide software interfaces with MIAX software applications, thus Extranet Providers are not subject to API testing and certification. 8 For purposes of this proposed rule change, the terms ‘‘connectivity’’ and ‘‘connections’’ refer to the physical connections between Member and non- PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 4177 those entities and MIAX. The Connectivity fees are based upon the amount of bandwidth that will be used by the Member, Service Bureau, or Extranet Provider. MIAX currently offers connectivity with one (1) Gigabit, which connects the Member, Service Bureau, or Extranet Provider to MIAX using a copper cable, and ten (10) Gigabits, using fiber optic connections. a. Member Network Connectivity Fee MIAX will assess a monthly Member Network Connectivity fee of $1,000 for a one Gigabit connection, and $5,000 for a ten Gigabit connection. MIAX charges a higher fee for a ten Gigabit connection due the higher costs of the fiber optic connection. MIAX’s monthly Member Network Connectivity fee is comparable to monthly fees charged for similar connectivity at CBOE ($1,250 for a one Gigabit connection and $4,500 for a ten Gigabit connection) and PHLX ($2,100 for a one Gigabit connection and $5,000 for a ten Gigabit connection). The first monthly Member Network Connectivity fee for all Members will be assessed on a pro-rata basis, which is the number of trading days remaining in the month divided by the total number of trading days in the first month in which the fee was in effect multiplied by the monthly rate. Thereafter, the Member Network Connectivity fee will be pro-rated for new Members based on the number of trading days on which the Member used the connectivity in its first month of trading on MIAX, divided by the total number of trading days in such month multiplied by the monthly rate. b. Non-Member Network Connectivity Fee MIAX will assess a monthly nonMember Network Connectivity fee to Service Bureaus and Extranet Providers of $2,000.00 for a one Gigabit connection, and $10,000.00 for a ten Gigabit connection. MIAX’s monthly Non-Member Network Connectivity fee is comparable to monthly fees charged for similar connectivity at CBOE ($2,500 for a one Gigabit connection and $7,500 for a ten Gigabit connection). MIAX assesses a higher fee to Service Bureaus and Extranet Providers than to Members to reflect the fact that Service Bureaus and Extranet Providers serve as conduits to MIAX Members and non-Members that do not have their own proprietary systems or do not directly connect to MIAX. The Service Bureaus and Extranet Providers recover the cost of the MIAX Network Connectivity fee Member electronic networks and the MIAX systems. E:\FR\FM\18JAN1.SGM 18JAN1 4178 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices from their customers, resulting in a lower overall fee to Members and nonMembers using the services of such third party providers. The non-Member Network Connectivity fee for the first month of trading on MIAX will be assessed on a pro-rata basis in the same manner as the Member Network Connectivity fee described above. c. Pass-Through of External Connectivity Fees MIAX will assess External Connectivity fees to Members and nonMembers that establish connections with MIAX through a third-party. Fees charged to MIAX by third-party external vendors on behalf of a Member or nonMember connecting to MIAX (including cross-connects),9 will be passed through to the Member or non-Member. External Connectivity fees include one-time setup fees and monthly charges charged to MIAX by a third-party. The purpose of the External Connectivity fee is to recoup costs incurred by MIAX in establishing connectivity with external vendors acting on behalf of a Member or nonMember. MIAX will only pass-through the actual costs it is charged by the third-party external vendors. d. Port Fees mstockstill on DSK4VPTVN1PROD with Once network connectivity is established, MIAX will assess fees for access and services used by Members, Service Bureaus and Extranet Providers. Known as ‘‘Ports’’, MIAX provides two types: a Financial Information Exchange (‘‘FIX’’) Port,10 which allows Members to electronically send orders in all products traded on the Exchange and the MIAX Express Interface (‘‘MEI’’) 11 Port, which allows Market Makers to submit electronic quotes to the Exchange. MIAX will assess monthly MEI Port fees on Market Makers based upon the number of MIAX matching engines 12 used by the Market Maker. 9 A ‘‘cross-connect’’ occurs when the affected third-party system is sited at the same data center where MIAX systems are sited, and the third-party connects to MIAX through the data center, rather than connecting directly to MIAX outside of the data center. 10 A FIX Port is an interface with MIAX systems that enables the Port user (typically an EEM or a Market Maker) to submit orders electronically to MIAX. 11 MIAX Express Interface is a connection to MIAX systems that enables Market Makers to submit electronic quotes to MIAX. 12 A ‘‘matching engine’’ is a part of the MIAX electronic system that processes options quotes and trades on a symbol-by-symbol basis. Some matching engines will process option classes with multiple root symbols, and other matching engines will be dedicated to one single option root symbol (for example, options on SPY will be processed by one VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 Each Market Maker will be allocated two MEI quoting ports for each matching engine they use. For example, a Market Maker that wishes to make markets in just one symbol would require the two MEI quoting ports in a single matching engine; a Market Maker wishing to make markets in all symbols traded on MIAX would require the two MEI quoting ports in each of the Exchange’s matching engines. The FIX Port and the MEI Port each include access to MIAX’s primary and secondary data centers and its disaster recovery center. The proposed monthly Port Fees described below are scheduled to be implemented beginning January 1, 2013. FIX Port Fees MIAX will assess monthly FIX Port fees on Members based upon the number of FIX Ports used by the Member submitting orders to MIAX. Although one FIX Port gives access to all products traded on MIAX, some Members may choose to use more than one FIX Port. MIAX will assess a monthly FIX Port fee of $250.00 for the first FIX Port provided to the user, $150.00 per FIX Port for the second through fifth FIX Port provided to the user (if applicable), and $50.00 per FIX Port for the sixth FIX Port and any additional FIX Ports provided to the user (if applicable). MIAX’s monthly FIX Port fees are comparable to the Order Entry Port Fee charged by PHLX ($500 per month per mnemonic with no discount for multiple Ports), which includes a fee for assigning and maintaining mnemonics. MIAX charges a separate fee for assigning and maintaining mnemonics (known as Member Participant Identifier or ‘‘MPID’’). Taken together, the MIAX monthly FIX Port and the MPID fees are less than the PHLX’s monthly Order Entry Port Fee. MEI Port Fees MIAX will assess a monthly MEI Port fee of $1,000.00 for the first matching engine on which the Market Maker has the two ports, $500.00 each for the second through fifth matching engines on which the Market Maker has the two ports (if applicable), and $250.00 each for the sixth matching engine and any additional matching engines on which the Market Maker has the two ports (if applicable). MEI Port fees will be capped at $1,000 per month per Market Maker until the single matching engine that is dedicated only to SPY options). A particular root symbol may only be assigned to a single designated matching engine. A particular root symbol may not be assigned to multiple matching engines. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 first full calendar month during which MIAX lists and trades options overlying at least 100 underlying securities. Once MIAX begins listing and trading options overlying at least 100 underlying securities, MIAX will assess MEI Port fees as described above. MEI Port fees will be assessed for the entire month during which MIAX begins trading, regardless of the number of trading days that have already occurred during such month prior to the commencement of trading on MIAX. MEI Port fees will be assessed on a month-by-month basis. e. MPID Fees MIAX will assess monthly Member Participant Identifier (‘‘MPID’’) 13 fees on EEMs, based upon the number of MPIDs assigned to a particular EEM in a given month. EEMs will be assessed a monthly MPID fee of $200.00 for the first MPID assigned, $100.00 each for the second through fifth MPID assigned, and $50.00 each for the sixth MPID and any additional MPIDs assigned. MIAX assess MPID fees to cover the administrative costs it incurs in assigning and managing these identifiers for each EEM. As discussed above, MIAX’s monthly MPID fee together with its FIX Port fee are similar to and lower than the PHLX’s monthly Order Entry Port fee. The proposed monthly MPID Fees described above are scheduled to be implemented beginning January 1, 2013. 2. Statutory Basis MIAX believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act 14 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act 15 in particular, in that it is an equitable allocation of reasonable fees and other charges. The Exchange believes its one-time Membership Application fees are reasonable, equitable and not unfairly discriminatory. As described in the Purpose section, the one-time application fees are comparable to application fees in place at other options exchanges and are designed to recover costs associated with the processing of such applications. Market Maker applicants are charged slightly more than EEM applicants because of the additional work involved in processing a Market Maker’s application. MIAX believes it is 13 An MPID is a code used in the MIAX system to identify the participant to MIAX and to the participant’s Clearing Member respecting trades executed on MIAX. Participants may use more than one MPID. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(4) and 78f(b)(5). E:\FR\FM\18JAN1.SGM 18JAN1 mstockstill on DSK4VPTVN1PROD with Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices reasonable and equitable to waive the fee to applicants who apply for membership on or before January 31, 2013. The waiver of such fees provides incentives to interested applicants to apply early for MIAX membership, which provides MIAX with potential order flow and liquidity providers as it begins operations. The waiver will apply equally to all applicants. The Exchange believes its Trading Permit fees are reasonable, equitable and not unfairly discriminatory. The Trading Permit fees are lower than comparable fees at other exchanges as described in the Purpose section above. The differentiation between Trading Permit fees charged to EEMs and Market Makers reflects the additional Exchange access provided to Market Makers and the additional technical, regulatory and administrative costs associated with Market Makers’ use of the Exchange and its services. MIAX believes its API and Network Testing and Certification fees are a reasonable allocation of its costs and expenses among its Members and other persons using its facilities since it is recovering the costs associated with providing such infrastructure testing and certification services. MIAX believes it is reasonable, equitable and not unfairly discriminatory to assess different API and Network Testing and Certification fees to EEMs and Market Makers. The interface between Market Maker quoting software and MIAX systems is assessed higher API and Network Testing and Certification fees because the Market Maker software interface is more complex and has more functionality to validate than the EEM’s software interface requiring an increased level of support and expertise. MIAX therefore believes that the higher Member API and Network Testing and Certification fees applicable to Market Makers are not unfairly discriminatory. Additionally, MIAX believes it is reasonable, equitable and not unfairly discriminatory to assess different API and Network Testing and Certification fees to Members and non-Members. The higher fee charged to non-Members reflects the greater amount of time spent by MIAX employees testing and certifying non-Members. It has been MIAX’s experience that Member testing takes less time than non-Member testing because Members have more experience testing these systems with exchanges; generally fewer questions and issues arise during the testing and certification process. Also, with respect to API testing and certification because third party vendors and Service Bureaus are redistributing data and reselling services to other Members and market VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 participants the number and types of scenarios that need to be tested are more numerous and complex than those tested and certified for Members. In addition, MIAX believes it is reasonable, equitable and not unfairly discriminatory to assess non-Members a discounted Network Testing and Certification Fee for additional connections because each connection will be used by different customers of the non-Member Service Bureaus and Extranet Providers and will need to be individually tested requiring more Exchange resources for testing and certification. Members will not be charged for additional connections because additional network testing and certification will generally not be necessary since the additional connections will be from the same source and will have the same internal technology. The Exchange believes that the proposed Connectivity Fees in general constitute an equitable allocation of fees, and are not unfairly discriminatory, because they allow the Exchange to recover costs associated with offering access through the network connections and access and services through the Ports, responding to customer requests, configuring MIAX systems, programming API user specifications and administering the various services. Access to MIAX market will be offered on fair and nondiscriminatory terms. The proposed Connectivity Fees are also expected to offset the costs MIAX incurs in maintaining, and implementing ongoing improvements to the trading systems, including connectivity costs, costs incurred on gateway software and hardware enhancements and resources dedicated to gateway development, quality assurance, and technology support. The Exchange believes that its proposed fees are reasonable in that they are competitive with those charged by other exchanges. MIAX assesses a higher fee to Service Bureaus and Extranet Providers than to Members to reflect the fact that Service Bureaus and Extranet Providers serve as conduits to MIAX Members and/or non-Members that do not have their own proprietary systems or do not directly connect to MIAX. For the one monthly Network Connectivity Fee charged by MIAX, Service Bureaus and Extranet Provider may in turn provide connectivity to a number of Members and/or nonMembers. The Service Bureaus and Extranet Providers recover the cost of the MIAX Network Connectivity Fee, plus a premium, from their customers, which can still result in a lower overall PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 4179 fee to each Member and/or non-Member using the services of such third party providers. In allocating its costs among Members and users of its services, MIAX believes it is equitable to seek to recover a greater portion of those costs from Service Bureaus and Extranet Providers who profit from the reselling of those Network Connectivity services. MIAX believes it is reasonable, equitable and not unfairly discriminatory to pass-through External Connectivity fees to Members and nonMembers that establish connections with MIAX through a third-party. MIAX will only pass-through the actual costs it is charged by third-party external vendors. MIAX believes it is reasonable and equitable to recover costs charged it on behalf of a Member or non-Member that establishes connections with MIAX through a third party. MIAX believes it is reasonable, equitable and not unfairly discriminatory to assess FIX and MEI Port Fees on Members who use such services—the FIX Port enables Members to submit orders electronically to the Exchange for processing and the MEI Port enables Market Makers to submit quotes to the Exchange for processing. The amount charged for the MEI Port is higher because it is more complex and has more functionality than the FIX Port. Therefore, MIAX believes the higher fee for the MEI Port is not unfairly discriminatory. The Exchange believes that its proposed fees are reasonable in that they are competitive with those charged by other exchanges. The Exchange believes its fees for MPIDs are reasonable, equitable and not unfairly discriminatory in that they apply to all EEMs assigned MPID equally and allow the Exchange to recover operational and administrative costs in assigning and maintaining such services. The Exchange believes that its proposed fees are reasonable in that they are competitive with those charged by other exchanges. The Exchange believes that it is appropriate to include in this fee filing fees being assessed on non-Members such as the Connectivity fees and the API and Network Testing and Certification fees described above. Recent amendments to paragraph (A) of Section 19(b)(3) 16 of the Exchange Act now allow all self-regulatory organization rule proposals establishing or changing dues, fees or other charges to become immediately effective upon filing regardless of whether such dues, fees or other charges are imposed on 16 15 E:\FR\FM\18JAN1.SGM U.S.C. 78s(b)(3)(A). 18JAN1 4180 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices members of the self-regulatory organization, non-members, or both. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must establish fees that are competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed amendments to the MIAX Options Fee Schedule appropriately reflect this competitive environment. 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. Unilateral action by MIAX in establishing fees for services provided to its Members and others using its facilities will not have an impact on competition. As a new entrant in the already highly competitive environment for equity options trading, MIAX does not have the market power necessary to set prices for services that are unreasonable or unfairly discriminatory in violation of the Exchange Act. MIAX’s proposed fees for Membership and Systems Connectivity, as described herein, are comparable to and generally lower than fees charged by other options exchanges for the same or similar services. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited or received. mstockstill on DSK4VPTVN1PROD with 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.17 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–00967 Filed 1–17–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–MIAX–2012–05 on the subject line. Paper Comments [Release No. 34–68657; File No. SR–CHX– 2012–19] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Alter Fee Schedule Relating to Port Charges January 15, 2013. • 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–MIAX–2012–05. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–MIAX– 2012–05 and should be submitted on or before February 8, 2013. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on December 31, 2012, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CHX proposes to amend Exchange Rules and its Schedule of Participant Fees and Assessments (the ‘‘Fee Schedule’’) to alter fees relating to port charges. The Exchange proposes to implement the fee change on January 1, 2013. The text of this proposed rule change is available on the Exchange’s Web site at http://www.chx.com/rules/ proposed_rules.htm, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 17 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 16:52 Jan 17, 2013 18 17 Jkt 229001 PO 00000 CFR 200.30–3(a)(12). Frm 00061 Fmt 4703 Sfmt 4703 E:\FR\FM\18JAN1.SGM 18JAN1

Agencies

[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Notices]
[Pages 4175-4180]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00967]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68645; File No. SR-MIAX-2012-05]


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

January 14, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 31, 2012, Miami International Securities Exchange LLC 
(``Exchange'' or ``MIAX'') 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 self-
regulatory organization. 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 establish membership and system 
connectivity fees applicable to Members and non-Members using services 
provided by MIAX. While changes to the Exchange's Fee Schedule pursuant 
to this proposal are effective upon filing, the Exchange has designated 
that the proposed monthly Port Fees and the proposed monthly Member 
Participant Identifier Fee be implemented beginning January 1, 2013.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set

[[Page 4176]]

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 establish membership 
and system connectivity fees applicable to Members and non-Members 
using services provided by MIAX.
    Membership Fees:
    MIAX will assess Membership fees for Applications and Trading 
Permits.
a. Application for MIAX Membership
    A one-time application fee based upon the applicant's status as 
either an Electronic Exchange Member (``EEM'') or as a Market Maker 
will be assessed by MIAX. Applicants for MIAX Membership as an EEM will 
be assessed a one-time Application Fee of $2,500.00. Applicants for 
MIAX Membership as a Market Maker will be assessed a one-time 
Application Fee of $3,000.00. The difference in the fee charged to EEMs 
and Market Makers reflects the additional review and processing effort 
needed for Market Maker applications. MIAX's one-time application fees 
are similar to and generally lower than one time application fees in 
place at the Chicago Board Options Exchange, Incorporated (``CBOE'') 
($3,000 for an individual applicant and $5,000 for an applicant 
organization) and at the International Securities Exchange, LLC 
(``ISE'') ($7,500 for a Primary Market Maker, $5,500 for a Competitive 
Market Maker and $3,500 for an Electronic Access Member).
    Applicants for MIAX membership that apply for membership on or 
before January 31, 2013 will not be assessed a fee for such 
application. MIAX believes that this will provide incentive for 
potential applicants to submit early applications, which should result 
in maximizing potential order flow and liquidity as MIAX begins 
trading, all to the benefit of the investing public. Applicants for 
MIAX membership that apply for membership on or after February 1, 2013 
will be subject to the Membership Application Fees described above.
b. Trading Permits
    MIAX will issue Trading Permits that confer the ability to transact 
on MIAX. There is no limit on the number of Trading Permits that may be 
issued by MIAX; however MIAX has the authority to limit or decrease the 
number of Trading Permits it has determined to issue provided it 
complies with the provisions set forth in Rule 200(a) and Section 
6(c)(4) of the Exchange Act.\3\
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    \3\ For a complete description of MIAX Trading Permits, see MIAX 
Rule 200. See also 15 U.S.C. 78(f)(c)(4).
---------------------------------------------------------------------------

    MIAX will assess monthly fees for Trading Permits depending upon 
the category of Member that is issued a particular trading permit. EEMs 
will be assessed a monthly fee of $1,000 for a Trading Permit. 
Registered Market Makers (``RMMs'') will be assessed $3,000.00 per 
month for a Trading Permit for an RMM assignment in up to 100 option 
classes, $4,500.00 per month for a Trading Permit for an RMM assignment 
in up to 250 option classes, or $6,000.00 per month for a Trading 
Permit for an RMM assignment in all option classes listed on MIAX.
    For the calculation of the monthly RMM Trading Permit Fees, the 
number of classes is defined as the greatest number of classes the RMM 
was assigned to quote in on any given day within the calendar month.
    Primary Lead Market Makers (``PLMMs'') and Lead Market Makers 
(``LMMs'') will be assessed the same monthly Trading Permit fees 
applicable to RMMs described above. In addition to the RMM Trading 
Permit fees, PLMMs and LMMs will be assessed an additional $1,000.00 
per month for a Trading Permit. Thus, an LMM or PLMM will be assessed 
$4,000.00 per month for a Trading Permit for an LMM or PLMM assignment 
in up to 100 option classes, $5,500.00 per month for a Trading Permit 
for an LMM or PLMM assignment in up to 250 option classes, or $7,000.00 
per month for a Trading Permit for an LMM or PLMM assignment in all 
option classes listed on MIAX.
    MIAX monthly Trading Permit Fees are generally lower than monthly 
trading permit fees in place at CBOE and the NASDAQ OMX PHLX LLC 
(``PHLX''). The $1,000 monthly Trading Permit fee assessed to EEMs is 
lower than the CBOE's monthly electronic access trading permit fee 
($1,600) and the PHLX's monthly permit fee for members ($2,000). The 
Monthly Trading Permit Fees assessed to MIAX Market Makers is readily 
comparable to and lower than the monthly fees in place at PHLX for 
Remote Streaming Quote Traders ($5,000 per month for less than 100 
classes, $8,000 per month for more than 100 classes and less than 999 
classes, and $11,000 per month for 1,000 or more classes).
    Members receiving Trading Permits during the month will be assessed 
Trading Permit Fees according to the above schedule, except that the 
calculation of the Trading Permit fee for the first month in which the 
Trading Permit is issued will be pro-rated based on the number of 
trading days occurring after the date on which the Trading Permit was 
in effect during that first month divided by the total number of 
trading days in such month multiplied by the monthly rate.
    Testing and Certification Fees:
a. API Testing and Certification Fee
Members
    MIAX will assess a one-time Application Programming Interface 
(``API'') testing and certification fee on EEMs and Market Makers. An 
API makes it possible for Member software to communicate with MIAX 
software applications, and is subject to Member testing with, and 
certification by, MIAX. API testing and certification includes for EEMs 
testing all available order types, new order entry, order management, 
order throughput and mass order cancellation. For Market Makers, API 
testing and certification also includes testing of all available quote 
types, quote throughput, quote management and cancellation, Aggregate 
Risk Manager settings and triggers, and confirmation of quotes within 
the trading engines.
    The one-time MIAX API Testing and Certification fees are based upon 
the category of Member being tested and certified. EEMs will be 
assessed a one-time API Testing and Certification fee of $1,000.00. 
Market Makers will be assessed a one-time API Testing and Certification 
fee of $2,500.00. The fee represents costs incurred by the Exchange as 
it works with each Member while testing and certifying that the 
Member's software systems communicate properly with MIAX. MIAX has set 
a one-time fee rather than an hourly rate used by some of the other 
exchanges so MIAX Members will know the full cost for the service prior 
to beginning to use such services. Until recently, PHLX charged hourly 
fees for use of its testing facility--a fee of $285 per hour for active 
connection testing during normal operating hours and $333 per hour for 
testing after normal hours.\4\ MIAX's one-time fees are comparable and 
more cost effective to the Members than hourly rates at other 
exchanges.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 63257 (November 5, 
2010) 75 FR 69493 (November 12, 2010) (SR-PHLX 2010-155) Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Amend 
Fees Assessed for Use of the Testing Facility.
---------------------------------------------------------------------------

    In order to provide an incentive to prospective Members to apply 
early for

[[Page 4177]]

membership and to engage in API testing and certification such that 
they will be able to trade options on MIAX as soon as possible, API 
Testing and Certification fees will be waived for all EEMs and Market 
Makers that apply for MIAX membership and complete API testing and 
certification on or before January 31, 2013. EEMs and Market Makers 
that apply for MIAX membership or complete API testing and 
certification on or after February 1, 2013 are subject to the Member 
API Testing and Certification Fees as described above.
Non-Members
    MIAX will assess a one-time API Testing and Certification fee of 
$5,000.00 on third party vendors \5\ and Service Bureaus \6\ whose 
software interfaces with MIAX software. As with Members, an API makes 
it possible for third party vendors' and Service Bureaus' software to 
communicate with MIAX software applications, and is subject to testing 
with, and certification by, MIAX. The higher fee charged to such non-
Members reflects the greater amount of time spent by MIAX employees 
testing and certifying non-Members. It has been MIAX's experience that 
Member testing takes less time than non-Member testing because Members 
have more experience testing these systems with exchanges; generally 
fewer questions and issues arise during the testing and certification 
process. Also, because third party vendors and Service Bureaus are 
redistributing data and reselling services to other Members and market 
participants the number and types of scenarios that need to be tested 
are more numerous and complex than those tested and certified for a 
single Member.
---------------------------------------------------------------------------

    \5\ Third party vendors are subscribers of MIAX's market and 
other data feeds, which they in turn use for redistribution 
purposes. Third party vendors do not provide connectivity and 
therefore are not subject to Network testing and certification.
    \6\ A Service Bureau is a technology provider that offers and 
supplies technology and technology services to a trading firm that 
does not have its own proprietary system. The technology and 
technology services supplied by Service Bureaus includes both 
software applications and connectivity, thus Service Bureaus are 
subject to both API testing and certification and Network testing 
and certification.
---------------------------------------------------------------------------

b. Member Network Testing and Certification Fee
    As described below under Connectivity Fees, MIAX will establish 
electronic communication connections with Members and will assess 
Members a one-time Testing and Certification Fee of $1,000.00 per 
Member for a one Gigabit connection, and $4,000.00 per Member for a ten 
Gigabit connection. Members will not be charged a Testing and 
Certification Fee for any additional connections they obtain since the 
additional connections will be from the same source and will have the 
same internal technology.
c. Non-Member Network Testing and Certification Fee
    MIAX will establish electronic connections with and will assess 
Service Bureaus and Extranet Providers \7\ a one-time Testing and 
Certification Fee of $2,000.00 for the initial one Gigabit connection 
and $1,000 for each additional one Gigabit connection. In addition, 
MIAX will assess Service Bureaus and Extranet Providers a Testing and 
Certification Fee of $6,000.00 for the initial ten Gigabit connection 
and $4,000.00 for each additional ten Gigabit connection.
---------------------------------------------------------------------------

    \7\ An Extranet Provider is a technology provider that connects 
with MIAX systems and in turn provides such connectivity to MIAX 
participants that do not connect directly with MIAX. Extranet 
Providers do not provide software interfaces with MIAX software 
applications, thus Extranet Providers are not subject to API testing 
and certification.
---------------------------------------------------------------------------

    The Member and non-Member Network Testing and Certification fees 
represent installation and support costs incurred by the Exchange as it 
works with each Member and non-Member to make sure there are 
appropriate electronic connections with MIAX. MIAX has set a one-time 
fee for testing so MIAX Members and non-Members will know the full cost 
for the service prior to beginning to use such services. The higher fee 
charged to non-Members reflects the greater amount of time spent by 
MIAX employees testing and certifying non-Members. It has been MIAX's 
experience that Member network connectivity testing takes less time 
than non-Member network connectivity testing because Members have more 
experience testing these systems with exchanges; generally fewer 
questions and issues arise during the testing and certification 
process. In addition, non-Members are charged a discounted Network 
Testing and Certification Fee for additional connections because each 
connection will be used by different customers of the non-Member 
Service Bureaus and Extranet Providers and will need to be individually 
tested requiring more Exchange resources for testing and certification.
    Connectivity Fees:
    MIAX will assess fees to Members, Service Bureaus, and Extranet 
Providers for electronic connections \8\ between those entities and 
MIAX. The Connectivity fees are based upon the amount of bandwidth that 
will be used by the Member, Service Bureau, or Extranet Provider. MIAX 
currently offers connectivity with one (1) Gigabit, which connects the 
Member, Service Bureau, or Extranet Provider to MIAX using a copper 
cable, and ten (10) Gigabits, using fiber optic connections.
---------------------------------------------------------------------------

    \8\ For purposes of this proposed rule change, the terms 
``connectivity'' and ``connections'' refer to the physical 
connections between Member and non-Member electronic networks and 
the MIAX systems.
---------------------------------------------------------------------------

a. Member Network Connectivity Fee
    MIAX will assess a monthly Member Network Connectivity fee of 
$1,000 for a one Gigabit connection, and $5,000 for a ten Gigabit 
connection. MIAX charges a higher fee for a ten Gigabit connection due 
the higher costs of the fiber optic connection. MIAX's monthly Member 
Network Connectivity fee is comparable to monthly fees charged for 
similar connectivity at CBOE ($1,250 for a one Gigabit connection and 
$4,500 for a ten Gigabit connection) and PHLX ($2,100 for a one Gigabit 
connection and $5,000 for a ten Gigabit connection).
    The first monthly Member Network Connectivity fee for all Members 
will be assessed on a pro-rata basis, which is the number of trading 
days remaining in the month divided by the total number of trading days 
in the first month in which the fee was in effect multiplied by the 
monthly rate. Thereafter, the Member Network Connectivity fee will be 
pro-rated for new Members based on the number of trading days on which 
the Member used the connectivity in its first month of trading on MIAX, 
divided by the total number of trading days in such month multiplied by 
the monthly rate.
b. Non-Member Network Connectivity Fee
    MIAX will assess a monthly non-Member Network Connectivity fee to 
Service Bureaus and Extranet Providers of $2,000.00 for a one Gigabit 
connection, and $10,000.00 for a ten Gigabit connection. MIAX's monthly 
Non-Member Network Connectivity fee is comparable to monthly fees 
charged for similar connectivity at CBOE ($2,500 for a one Gigabit 
connection and $7,500 for a ten Gigabit connection). MIAX assesses a 
higher fee to Service Bureaus and Extranet Providers than to Members to 
reflect the fact that Service Bureaus and Extranet Providers serve as 
conduits to MIAX Members and non-Members that do not have their own 
proprietary systems or do not directly connect to MIAX. The Service 
Bureaus and Extranet Providers recover the cost of the MIAX Network 
Connectivity fee

[[Page 4178]]

from their customers, resulting in a lower overall fee to Members and 
non-Members using the services of such third party providers.
    The non-Member Network Connectivity fee for the first month of 
trading on MIAX will be assessed on a pro-rata basis in the same manner 
as the Member Network Connectivity fee described above.
c. Pass-Through of External Connectivity Fees
    MIAX will assess External Connectivity fees to Members and non-
Members that establish connections with MIAX through a third-party. 
Fees charged to MIAX by third-party external vendors on behalf of a 
Member or non-Member connecting to MIAX (including cross-connects),\9\ 
will be passed through to the Member or non-Member. External 
Connectivity fees include one-time set-up fees and monthly charges 
charged to MIAX by a third-party.
---------------------------------------------------------------------------

    \9\ A ``cross-connect'' occurs when the affected third-party 
system is sited at the same data center where MIAX systems are 
sited, and the third-party connects to MIAX through the data center, 
rather than connecting directly to MIAX outside of the data center.
---------------------------------------------------------------------------

    The purpose of the External Connectivity fee is to recoup costs 
incurred by MIAX in establishing connectivity with external vendors 
acting on behalf of a Member or non-Member. MIAX will only pass-through 
the actual costs it is charged by the third-party external vendors.
d. Port Fees
    Once network connectivity is established, MIAX will assess fees for 
access and services used by Members, Service Bureaus and Extranet 
Providers. Known as ``Ports'', MIAX provides two types: a Financial 
Information Exchange (``FIX'') Port,\10\ which allows Members to 
electronically send orders in all products traded on the Exchange and 
the MIAX Express Interface (``MEI'') \11\ Port, which allows Market 
Makers to submit electronic quotes to the Exchange. MIAX will assess 
monthly MEI Port fees on Market Makers based upon the number of MIAX 
matching engines \12\ used by the Market Maker. Each Market Maker will 
be allocated two MEI quoting ports for each matching engine they use. 
For example, a Market Maker that wishes to make markets in just one 
symbol would require the two MEI quoting ports in a single matching 
engine; a Market Maker wishing to make markets in all symbols traded on 
MIAX would require the two MEI quoting ports in each of the Exchange's 
matching engines. The FIX Port and the MEI Port each include access to 
MIAX's primary and secondary data centers and its disaster recovery 
center. The proposed monthly Port Fees described below are scheduled to 
be implemented beginning January 1, 2013.
---------------------------------------------------------------------------

    \10\ A FIX Port is an interface with MIAX systems that enables 
the Port user (typically an EEM or a Market Maker) to submit orders 
electronically to MIAX.
    \11\ MIAX Express Interface is a connection to MIAX systems that 
enables Market Makers to submit electronic quotes to MIAX.
    \12\ A ``matching engine'' is a part of the MIAX electronic 
system that processes options quotes and trades on a symbol-by-
symbol basis. Some matching engines will process option classes with 
multiple root symbols, and other matching engines will be dedicated 
to one single option root symbol (for example, options on SPY will 
be processed by one single matching engine that is dedicated only to 
SPY options). A particular root symbol may only be assigned to a 
single designated matching engine. A particular root symbol may not 
be assigned to multiple matching engines.
---------------------------------------------------------------------------

FIX Port Fees
    MIAX will assess monthly FIX Port fees on Members based upon the 
number of FIX Ports used by the Member submitting orders to MIAX. 
Although one FIX Port gives access to all products traded on MIAX, some 
Members may choose to use more than one FIX Port. MIAX will assess a 
monthly FIX Port fee of $250.00 for the first FIX Port provided to the 
user, $150.00 per FIX Port for the second through fifth FIX Port 
provided to the user (if applicable), and $50.00 per FIX Port for the 
sixth FIX Port and any additional FIX Ports provided to the user (if 
applicable). MIAX's monthly FIX Port fees are comparable to the Order 
Entry Port Fee charged by PHLX ($500 per month per mnemonic with no 
discount for multiple Ports), which includes a fee for assigning and 
maintaining mnemonics. MIAX charges a separate fee for assigning and 
maintaining mnemonics (known as Member Participant Identifier or 
``MPID''). Taken together, the MIAX monthly FIX Port and the MPID fees 
are less than the PHLX's monthly Order Entry Port Fee.
MEI Port Fees
    MIAX will assess a monthly MEI Port fee of $1,000.00 for the first 
matching engine on which the Market Maker has the two ports, $500.00 
each for the second through fifth matching engines on which the Market 
Maker has the two ports (if applicable), and $250.00 each for the sixth 
matching engine and any additional matching engines on which the Market 
Maker has the two ports (if applicable).
    MEI Port fees will be capped at $1,000 per month per Market Maker 
until the first full calendar month during which MIAX lists and trades 
options overlying at least 100 underlying securities. Once MIAX begins 
listing and trading options overlying at least 100 underlying 
securities, MIAX will assess MEI Port fees as described above. MEI Port 
fees will be assessed for the entire month during which MIAX begins 
trading, regardless of the number of trading days that have already 
occurred during such month prior to the commencement of trading on 
MIAX. MEI Port fees will be assessed on a month-by-month basis.
e. MPID Fees
    MIAX will assess monthly Member Participant Identifier (``MPID'') 
\13\ fees on EEMs, based upon the number of MPIDs assigned to a 
particular EEM in a given month. EEMs will be assessed a monthly MPID 
fee of $200.00 for the first MPID assigned, $100.00 each for the second 
through fifth MPID assigned, and $50.00 each for the sixth MPID and any 
additional MPIDs assigned. MIAX assess MPID fees to cover the 
administrative costs it incurs in assigning and managing these 
identifiers for each EEM. As discussed above, MIAX's monthly MPID fee 
together with its FIX Port fee are similar to and lower than the PHLX's 
monthly Order Entry Port fee. The proposed monthly MPID Fees described 
above are scheduled to be implemented beginning January 1, 2013.
---------------------------------------------------------------------------

    \13\ An MPID is a code used in the MIAX system to identify the 
participant to MIAX and to the participant's Clearing Member 
respecting trades executed on MIAX. Participants may use more than 
one MPID.
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2. Statutory Basis
    MIAX believes that its proposal to amend its Fee Schedule is 
consistent with Section 6(b) of the Act \14\ in general, and furthers 
the objectives of Sections 6(b)(4) and 6(b)(5) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4) and 78f(b)(5).
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    The Exchange believes its one-time Membership Application fees are 
reasonable, equitable and not unfairly discriminatory. As described in 
the Purpose section, the one-time application fees are comparable to 
application fees in place at other options exchanges and are designed 
to recover costs associated with the processing of such applications. 
Market Maker applicants are charged slightly more than EEM applicants 
because of the additional work involved in processing a Market Maker's 
application. MIAX believes it is

[[Page 4179]]

reasonable and equitable to waive the fee to applicants who apply for 
membership on or before January 31, 2013. The waiver of such fees 
provides incentives to interested applicants to apply early for MIAX 
membership, which provides MIAX with potential order flow and liquidity 
providers as it begins operations. The waiver will apply equally to all 
applicants.
    The Exchange believes its Trading Permit fees are reasonable, 
equitable and not unfairly discriminatory. The Trading Permit fees are 
lower than comparable fees at other exchanges as described in the 
Purpose section above. The differentiation between Trading Permit fees 
charged to EEMs and Market Makers reflects the additional Exchange 
access provided to Market Makers and the additional technical, 
regulatory and administrative costs associated with Market Makers' use 
of the Exchange and its services.
    MIAX believes its API and Network Testing and Certification fees 
are a reasonable allocation of its costs and expenses among its Members 
and other persons using its facilities since it is recovering the costs 
associated with providing such infrastructure testing and certification 
services. MIAX believes it is reasonable, equitable and not unfairly 
discriminatory to assess different API and Network Testing and 
Certification fees to EEMs and Market Makers. The interface between 
Market Maker quoting software and MIAX systems is assessed higher API 
and Network Testing and Certification fees because the Market Maker 
software interface is more complex and has more functionality to 
validate than the EEM's software interface requiring an increased level 
of support and expertise. MIAX therefore believes that the higher 
Member API and Network Testing and Certification fees applicable to 
Market Makers are not unfairly discriminatory.
    Additionally, MIAX believes it is reasonable, equitable and not 
unfairly discriminatory to assess different API and Network Testing and 
Certification fees to Members and non-Members. The higher fee charged 
to non-Members reflects the greater amount of time spent by MIAX 
employees testing and certifying non-Members. It has been MIAX's 
experience that Member testing takes less time than non-Member testing 
because Members have more experience testing these systems with 
exchanges; generally fewer questions and issues arise during the 
testing and certification process. Also, with respect to API testing 
and certification because third party vendors and Service Bureaus are 
redistributing data and reselling services to other Members and market 
participants the number and types of scenarios that need to be tested 
are more numerous and complex than those tested and certified for 
Members. In addition, MIAX believes it is reasonable, equitable and not 
unfairly discriminatory to assess non-Members a discounted Network 
Testing and Certification Fee for additional connections because each 
connection will be used by different customers of the non-Member 
Service Bureaus and Extranet Providers and will need to be individually 
tested requiring more Exchange resources for testing and certification. 
Members will not be charged for additional connections because 
additional network testing and certification will generally not be 
necessary since the additional connections will be from the same source 
and will have the same internal technology.
    The Exchange believes that the proposed Connectivity Fees in 
general constitute an equitable allocation of fees, and are not 
unfairly discriminatory, because they allow the Exchange to recover 
costs associated with offering access through the network connections 
and access and services through the Ports, responding to customer 
requests, configuring MIAX systems, programming API user specifications 
and administering the various services. Access to MIAX market will be 
offered on fair and non-discriminatory terms. The proposed Connectivity 
Fees are also expected to offset the costs MIAX incurs in maintaining, 
and implementing ongoing improvements to the trading systems, including 
connectivity costs, costs incurred on gateway software and hardware 
enhancements and resources dedicated to gateway development, quality 
assurance, and technology support. The Exchange believes that its 
proposed fees are reasonable in that they are competitive with those 
charged by other exchanges. MIAX assesses a higher fee to Service 
Bureaus and Extranet Providers than to Members to reflect the fact that 
Service Bureaus and Extranet Providers serve as conduits to MIAX 
Members and/or non-Members that do not have their own proprietary 
systems or do not directly connect to MIAX. For the one monthly Network 
Connectivity Fee charged by MIAX, Service Bureaus and Extranet Provider 
may in turn provide connectivity to a number of Members and/or non-
Members. The Service Bureaus and Extranet Providers recover the cost of 
the MIAX Network Connectivity Fee, plus a premium, from their 
customers, which can still result in a lower overall fee to each Member 
and/or non-Member using the services of such third party providers. In 
allocating its costs among Members and users of its services, MIAX 
believes it is equitable to seek to recover a greater portion of those 
costs from Service Bureaus and Extranet Providers who profit from the 
reselling of those Network Connectivity services.
    MIAX believes it is reasonable, equitable and not unfairly 
discriminatory to pass-through External Connectivity fees to Members 
and non-Members that establish connections with MIAX through a third-
party. MIAX will only pass-through the actual costs it is charged by 
third-party external vendors. MIAX believes it is reasonable and 
equitable to recover costs charged it on behalf of a Member or non-
Member that establishes connections with MIAX through a third party.
    MIAX believes it is reasonable, equitable and not unfairly 
discriminatory to assess FIX and MEI Port Fees on Members who use such 
services--the FIX Port enables Members to submit orders electronically 
to the Exchange for processing and the MEI Port enables Market Makers 
to submit quotes to the Exchange for processing. The amount charged for 
the MEI Port is higher because it is more complex and has more 
functionality than the FIX Port. Therefore, MIAX believes the higher 
fee for the MEI Port is not unfairly discriminatory. The Exchange 
believes that its proposed fees are reasonable in that they are 
competitive with those charged by other exchanges.
    The Exchange believes its fees for MPIDs are reasonable, equitable 
and not unfairly discriminatory in that they apply to all EEMs assigned 
MPID equally and allow the Exchange to recover operational and 
administrative costs in assigning and maintaining such services. The 
Exchange believes that its proposed fees are reasonable in that they 
are competitive with those charged by other exchanges.
    The Exchange believes that it is appropriate to include in this fee 
filing fees being assessed on non-Members such as the Connectivity fees 
and the API and Network Testing and Certification fees described above. 
Recent amendments to paragraph (A) of Section 19(b)(3) \16\ of the 
Exchange Act now allow all self-regulatory organization rule proposals 
establishing or changing dues, fees or other charges to become 
immediately effective upon filing regardless of whether such dues, fees 
or other charges are imposed on

[[Page 4180]]

members of the self-regulatory organization, non-members, or both.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must establish 
fees that are competitive with other exchanges. For the reasons 
described above, the Exchange believes that the proposed amendments to 
the MIAX Options Fee Schedule appropriately reflect this competitive 
environment.

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. Unilateral action by MIAX in 
establishing fees for services provided to its Members and others using 
its facilities will not have an impact on competition. As a new entrant 
in the already highly competitive environment for equity options 
trading, MIAX does not have the market power necessary to set prices 
for services that are unreasonable or unfairly discriminatory in 
violation of the Exchange Act. MIAX's proposed fees for Membership and 
Systems Connectivity, as described herein, are comparable to and 
generally lower than fees charged by other options exchanges for the 
same or similar services.

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

    Written comments were neither 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.\17\ 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.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 rule-comments@sec.gov. Please include 
File Number SR-MIAX-2012-05 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-MIAX-2012-05. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Number SR-MIAX-2012-05 and should be 
submitted on or before February 8, 2013.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00967 Filed 1-17-13; 8:45 am]
BILLING CODE 8011-01-P