Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 62230-62233 [2014-24542]

Download as PDF 62230 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Notices proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b–4(f)(6) 10 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),11 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The NYSE has asked the Commission to waive the 30-day operative delay so that the proposal may become operative on filing. The Commission believes that waiving the 30-day operative delay is consistent with the public interest and investor protection, as it removes references to a rule that has been deleted by NYSE. This change will make NYSE’s rules more accurate. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal effective on filing.12 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 13 of the Act to determine whether the proposed rule change 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: asabaliauskas on DSK5VPTVN1PROD with NOTICES Electronic Comments 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–NYSE–2014–55. 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 (https://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 NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE– 2014–55 and should be submitted on or before November 6, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–24539 Filed 10–15–14; 8:45 am] • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2014–55 on the subject line. CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 12 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 13 15 U.S.C. 78s(b)(2)(B). BILLING CODE 8011–01–P Jkt 235001 Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule October 9, 2014. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 26, 2014, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, 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. 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 text of the proposed rule change is available on the Exchange’s Web site at https://www.miaxoptions.com/filter/ wotitle/rule_filing, at MIAX’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1. Purpose 11 17 17:19 Oct 15, 2014 [Release No. 34–73328; File No. SR–MIAX– 2014–50] A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 10 17 VerDate Sep<11>2014 SECURITIES AND EXCHANGE COMMISSION The Exchange proposes to amend the Priority Customer Rebate Program (the 1 15 14 17 PO 00000 CFR 200.30–3(a)(12). Frm 00139 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\16OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 16OCN1 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES ‘‘Program’’) 3 to expand the number of option classes that qualify for a per contract credit for transactions in MIAX Select Symbols.4 Under the Program, the Exchange credits each Member the per contract amount set forth in the Fee Schedule resulting from each Priority Customer 5 order transmitted by that Member which is executed on the Exchange in all multiply-listed option classes (excluding mini-options, Priority Customer-to-Priority Customer Orders, PRIME AOC Responses, PRIME Contraside Orders, PRIME Orders for which both the Agency and Contra-side Order are Priority Customers, and executions related to contracts that are routed to one or more exchanges in connection with the Options Order Protection and Locked/Crossed Market Plan referenced in MIAX Rule 1400), provided the Member meets certain volume thresholds in a month. For each Priority Customer order submitted into the PRIME Auction as a PRIME Agency Order, MIAX shall credit each member at the separate per contract rate for PRIME Agency Orders; however, no rebates will be paid if the PRIME Agency Order executes against a Contraside Order which is also a Priority Customer. The volume thresholds are calculated based on the customer average daily volume over the course of the month. Volume is recorded for and credits are delivered to the Member Firm that submits the order to the Exchange. The Exchange aggregates the contracts resulting from Priority Customer orders transmitted and executed electronically on the Exchange from affiliated Members for purposes of the thresholds above, provided there is at least 75% common ownership between the firms as reflected on each firm’s Form BD, Schedule A. In the 3 See Securities Exchange Act Release Nos. 72567 (July 8, 2014), 79 FR 40818 (July 14, 2014) (SR– MIAX–2014–34); 72356 (June 10, 2014), 79 FR 34384 (June 16, 2014) (SR–MIAX–2014–26); 71698 (March 12, 2014), 79 FR 15185 (March 18, 2014) (SR–MIAX–2014–12); 71700 (March 12, 2014), 79 FR 15188 (March 18, 2014) (SR–MIAX–2014–13); 71283 (January 10, 2014), 79 FR 2914 (January 16, 2014) (SR–MIAX–2013–63); 71009 (December 6, 2013), 78 FR 75629 (December 12, 2013) (SR– MIAX–2013–56). 4 The term ‘‘MIAX Select Symbols’’ currently means options overlying AA, AAL, AAPL, AIG, AMZN, AZN, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM. 5 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 accounts(s). See MIAX Rule 100. VerDate Sep<11>2014 17:19 Oct 15, 2014 Jkt 235001 event of a MIAX System outage or other interruption of electronic trading on MIAX, the Exchange adjusts the national customer volume in multiplylisted options for the duration of the outage. A Member may request to receive its credit under the Program as a separate direct payment. The Exchange proposes modifying the Program to expand the number of option classes that qualify for a per contract credit for transactions in MIAX Select Symbols. MIAX Select Symbols currently include options overlying AA, AAL, AAPL, AIG, AMZN, AZN, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM. The Exchange proposes to modify the MIAX Select Symbols to add BABA. Thus, the Exchange will credit each Member the per contract rate set forth in the table located in the Fee Schedule resulting from each Priority Customer order transmitted by that Member executed on Exchange in AA, AAL, AAPL, AIG, AMZN, AZN, BABA, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM. The per contract credit would be in lieu of the applicable credit that would otherwise apply to the transaction based on the volume thresholds. The Exchange notes that all the other aspects of the Program would continue to apply to the credits (e.g., the aggregation of volume of affiliates, exclusion of contracts that are routed to away exchanges, exclusion of mini-options . . . etc.).6 For example, if Member Firm ABC, Inc. (‘‘ABC’’) has enough Priority Customer contracts to achieve 0.5% of the national customer volume in multiply-listed option contracts during the month of October, ABC will receive a credit of $0.15 for each Priority 6 See MIAX Options Fee Schedule, p. 3. See also Securities Exchange Act Release Nos. 72798 (August 8, 2014), 79 FR 47695 (August 14, 2014) (SR–MIAX–2014–41); 72567 (July 8, 2014), 79 FR 40818 (July 14, 2014) (SR–MIAX–2014–34); 72356 (June 10, 2014), 79 FR 34384 (June 16, 2014) (SR– MIAX–2014–26); 71698 (March 12, 2014), 79 FR 15185 (March 18, 2014) (SR–MIAX–2014–12); 71700 (March 12, 2014), 79 FR 15188 (March 18, 2014) (SR–MIAX–2014–13); 71283 (January 10, 2014), 79 FR 2914 (January 16, 2014) (SR–MIAX– 2013–63); 71009 (December 6, 2013), 78 FR 75629 (December 12, 2013) (SR–MIAX–2013–56). PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 62231 Customer contract executed in the month of October. However, any qualifying Priority Customer transactions during such month that occurred in AA, AAL, AAPL, AIG, AMZN, AZN, BABA, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM would be credited at the $0.20 per contact rate versus the standard credit of $0.15. Similarly, if Member Firm XYZ, Inc. (‘‘XYZ’’) has enough Priority Customer contracts to achieve 2.5% of the national customer volume in multiplylisted option contracts during the month of October, XYZ will receive a credit of $0.18 for each Priority Customer contract executed in the month of October. However, any qualifying Priority Customer transactions during such month that occurred in AA, AAL, AAPL, AIG, AMZN, AZN, BABA, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM would be credited at the $0.20 per contact rate versus the standard credit of $0.18. The purpose of the amendment to the Program is to further encourage Members to direct greater Priority Customer trade volume to the Exchange in these high volume symbols. Increased Priority Customer volume will provide for greater liquidity, which benefits all market participants on the Exchange. The practice of incentivizing increased retail customer order flow in order to attract professional liquidity providers (Market-Makers) is, and has been, commonly practiced in the options markets. As such, marketing fee programs,7 and customer posting incentive programs,8 are based on attracting public customer order flow. The practice of providing additional incentives to increase order flow in high volume symbols is, and has been, commonly practiced in the options markets.9 The Program similarly intends 7 See MIAX Fee Schedule, Section 1(b). NYSE Arca, Inc. Fees Schedule, page 4 (section titled ‘‘Customer Monthly Posting Credit Tiers and Qualifications for Executions in Penny Pilot Issues’’). 9 See International Securities Exchange, LLC, Schedule of Fees, p. 6 (providing reduced fee rates for order flow in Select Symbols); NASDAQ OMX 8 See E:\FR\FM\16OCN1.SGM Continued 16OCN1 62232 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Notices to attract Priority Customer order flow, which will increase liquidity, thereby providing greater trading opportunities and tighter spreads for other market participants and causing a corresponding increase in order flow from such other market participants in these select symbols. Increasing the number of orders sent to the Exchange will in turn provide tighter and more liquid markets, and therefore attract more business overall. The credits paid out as part of the program will be drawn from the general revenues of the Exchange.10 The Exchange calculates volume thresholds on a monthly basis. asabaliauskas on DSK5VPTVN1PROD with NOTICES 2. Statutory Basis The Exchange believes that its proposal to amend its fee schedule is consistent with Section 6(b) of the Act 11 in general, and furthers the objectives of Section 6(b)(4) of the Act 12 in particular, in that it is an equitable allocation of reasonable fees and other charges among Exchange members. The Exchange believes that the proposal to modify the Program to expand the number of option classes that qualify for the credit for transactions in MIAX Select Symbols is fair, equitable and not unreasonably discriminatory. The credit for transactions in the select symbols is reasonably designed because it will incent providers of Priority Customer order flow to send that Priority Customer order flow to the Exchange in order to receive a credit in a manner that enables the Exchange to improve its overall competitiveness and strengthen its market quality for all market participants. The Program which provides increased incentives in high volume select symbols is also reasonably designed to increase the competitiveness of the Exchange with other options exchanges that also offer increased incentives to higher volume symbols. The proposed changes to the rebate Program are fair and equitable and not unreasonably discriminatory because it will apply equally to all Priority Customer orders in the select symbols. All similarly situated Priority Customer orders in the select symbols PHLX, Pricing Schedule, Section I (providing a rebate for adding liquidity in SPY); NYSE Arca, Inc. Fees Schedule, page 4 (section titled ‘‘Customer Monthly Posting Credit Tiers and Qualifications for Executions in Penny Pilot Issues’’). 10 Despite providing credits under the Program, the Exchange represents that it will continue to have adequate resources to fund its regulatory program and fulfill its responsibilities as a selfregulatory organization while the Program will be in effect. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 17:19 Oct 15, 2014 Jkt 235001 are subject to the same rebate schedule, and access to the Exchange is offered on terms that are not unfairly discriminatory. In addition, the Program is equitable and not unfairly discriminatory because, while only Priority Customer order flow qualifies for the Program, an increase in Priority Customer order flow will bring greater volume and liquidity, which benefit all market participants by providing more trading opportunities and tighter spreads. 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. The Exchange believes that the proposed change would increase both intermarket and intramarket competition by incenting Members to direct their Priority Customer orders in the select symbols to the Exchange, which will enhance the quality of quoting and increase the volume of contracts traded here in those symbols. To the extent that there is additional competitive burden on non-Priority Customers or trading in non-select symbols, the Exchange believes that this is appropriate because the proposed changes to the rebate program should incent Members to direct additional order flow to the Exchange and thus provide additional liquidity that enhances the quality of its markets and increases the volume of contracts traded here in those symbols. To the extent that this purpose is achieved, all the Exchange’s market participants should benefit from the improved market liquidity in such select symbols. Enhanced market quality and increased transaction volume that results from the anticipated increase in order flow directed to the Exchange will benefit all market participants and improve competition on the Exchange in such select symbols. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and to attract order flow to the Exchange. The Exchange believes that the proposed rule change reflects this competitive environment because it reduces the Exchange’s fees in a manner that encourages market participants to direct their customer order flow, to provide liquidity, and to attract additional transaction volume to the PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 Exchange. Given the robust competition for volume among options markets, many of which offer the same products, implementing a volume based customer rebate program to attract order flow like the one being proposed in this filing is consistent with the above-mentioned goals of the Act. This is especially true for the smaller options markets, such as MIAX, which is competing for volume with much larger exchanges that dominate the options trading industry. MIAX has a nominal percentage of the average daily trading volume in options, so it is unlikely that the customer rebate program could cause any competitive harm to the options market or to market participants. Rather, the customer rebate program is a modest attempt by a small options market to attract order volume away from larger competitors by adopting an innovative pricing strategy. The Exchange notes that if the rebate program resulted in a modest percentage increase in the average daily trading volume in options executing on MIAX, while such percentage would represent a large volume increase for MIAX, it would represent a minimal reduction in volume of its larger competitors in the industry. The Exchange believes that the proposal will help further competition, because market participants will have yet another additional option in determining where to execute orders and post liquidity if they factor the benefits of a customer rebate program into the determination. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.13 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. 13 15 E:\FR\FM\16OCN1.SGM U.S.C. 78s(b)(3)(A)(ii). 16OCN1 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Notices 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: [FR Doc. 2014–24542 Filed 10–15–14; 8:45 am] BILLING CODE 8011–01–P • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– MIAX–2014–50 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–MIAX–2014–50. 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 (https://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– 2014–50 and should be submitted on or before November 6, 2014. [Release No. 34–73326; File No. SR–MIAX– 2014–51] 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 October 9, 2014. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 29, 2014, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, 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. 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 text of the proposed rule change is available on the Exchange’s Web site at https://www.miaxoptions.com/filter/ wotitle/rule_filing, at MIAX’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:19 Oct 15, 2014 Jkt 235001 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 SECURITIES AND EXCHANGE COMMISSION Electronic Comments asabaliauskas on DSK5VPTVN1PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. 62233 PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 The Exchange proposes to amend the Fee Schedule to reduce several testing and certification fees, and System connectivity fees for non-Members. Specifically, the Exchange proposes to: (i) Eliminate the Member and nonMember API testing and certification fee for AIS; 3 (ii) eliminate the non-Member networking connectivity fee for AIS; (iii) eliminate the AIS Port fees; (iv) add a monthly fee for Internal Distributors and External Distributors of AIS; and (v) clarify that non-Member fees that apply to Third Party Vendors and Service Bureaus also apply to other nonMembers. API Testing and Certification The Exchange assesses a one-time Application Programming Interface (‘‘API’’) testing and certification fee on Members and non-Members for AIS. Specifically, the Exchange assesses a one-time API Testing and Certification fee of $1,000.00 Members and $1,000.00 on third party vendors 4 and Service Bureaus 5 whose software interfaces with MIAX software in order to receive the AIS market data feed. The 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, the Exchange. The Exchange plans on migrating the AIS data feed to a multicast data format and thus will no longer need to assess 3 AIS market data feed includes: Opening imbalance condition information; opening routing information; Expanded Quote Range information, as provided in MIAX Rule 503(f)(5); Post-Halt Notification, as provided in MIAX Rule 504(d); and Liquidity Refresh condition information, as provided in MIAX Rule 515(c)(2). This additional information (the ‘‘administrative information’’) is included in the ToM feed and is not top of market information. The administrative information is also currently available to MIAX Market Makers via connectivity with the MIAX Express Interface (‘‘MEI’’), for which they are assessed connectivity fees. 4 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. 5 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. E:\FR\FM\16OCN1.SGM 16OCN1

Agencies

[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Notices]
[Pages 62230-62233]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24542]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73328; File No. SR-MIAX-2014-50]


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

October 9, 2014.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on September 26, 2014, Miami International 
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee 
Schedule.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Priority Customer Rebate Program 
(the

[[Page 62231]]

``Program'') \3\ to expand the number of option classes that qualify 
for a per contract credit for transactions in MIAX Select Symbols.\4\
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    \3\ See Securities Exchange Act Release Nos. 72567 (July 8, 
2014), 79 FR 40818 (July 14, 2014) (SR-MIAX-2014-34); 72356 (June 
10, 2014), 79 FR 34384 (June 16, 2014) (SR-MIAX-2014-26); 71698 
(March 12, 2014), 79 FR 15185 (March 18, 2014) (SR-MIAX-2014-12); 
71700 (March 12, 2014), 79 FR 15188 (March 18, 2014) (SR-MIAX-2014-
13); 71283 (January 10, 2014), 79 FR 2914 (January 16, 2014) (SR-
MIAX-2013-63); 71009 (December 6, 2013), 78 FR 75629 (December 12, 
2013) (SR-MIAX-2013-56).
    \4\ The term ``MIAX Select Symbols'' currently means options 
overlying AA, AAL, AAPL, AIG, AMZN, AZN, BP, C, CBS, CLF, CMCSA, 
EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, 
HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, 
PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, 
WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM.
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    Under the Program, the Exchange credits each Member the per 
contract amount set forth in the Fee Schedule resulting from each 
Priority Customer \5\ order transmitted by that Member which is 
executed on the Exchange in all multiply-listed option classes 
(excluding mini-options, Priority Customer-to-Priority Customer Orders, 
PRIME AOC Responses, PRIME Contra-side Orders, PRIME Orders for which 
both the Agency and Contra-side Order are Priority Customers, and 
executions related to contracts that are routed to one or more 
exchanges in connection with the Options Order Protection and Locked/
Crossed Market Plan referenced in MIAX Rule 1400), provided the Member 
meets certain volume thresholds in a month. For each Priority Customer 
order submitted into the PRIME Auction as a PRIME Agency Order, MIAX 
shall credit each member at the separate per contract rate for PRIME 
Agency Orders; however, no rebates will be paid if the PRIME Agency 
Order executes against a Contra-side Order which is also a Priority 
Customer. The volume thresholds are calculated based on the customer 
average daily volume over the course of the month. Volume is recorded 
for and credits are delivered to the Member Firm that submits the order 
to the Exchange. The Exchange aggregates the contracts resulting from 
Priority Customer orders transmitted and executed electronically on the 
Exchange from affiliated Members for purposes of the thresholds above, 
provided there is at least 75% common ownership between the firms as 
reflected on each firm's Form BD, Schedule A. In the event of a MIAX 
System outage or other interruption of electronic trading on MIAX, the 
Exchange adjusts the national customer volume in multiply-listed 
options for the duration of the outage. A Member may request to receive 
its credit under the Program as a separate direct payment.
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    \5\ 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 accounts(s). See MIAX Rule 
100.
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    The Exchange proposes modifying the Program to expand the number of 
option classes that qualify for a per contract credit for transactions 
in MIAX Select Symbols. MIAX Select Symbols currently include options 
overlying AA, AAL, AAPL, AIG, AMZN, AZN, BP, C, CBS, CLF, CMCSA, EBAY, 
EEM, EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, 
IWM, IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, 
QCOM, QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, 
XHB, XLE, XLF, XLP, XLU and XOM. The Exchange proposes to modify the 
MIAX Select Symbols to add BABA. Thus, the Exchange will credit each 
Member the per contract rate set forth in the table located in the Fee 
Schedule resulting from each Priority Customer order transmitted by 
that Member executed on Exchange in AA, AAL, AAPL, AIG, AMZN, AZN, 
BABA, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, FXI, GE, 
GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, MO, MRK, 
NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, SUNE, T, 
TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU and XOM. 
The per contract credit would be in lieu of the applicable credit that 
would otherwise apply to the transaction based on the volume 
thresholds. The Exchange notes that all the other aspects of the 
Program would continue to apply to the credits (e.g., the aggregation 
of volume of affiliates, exclusion of contracts that are routed to away 
exchanges, exclusion of mini-options . . . etc.).\6\
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    \6\ See MIAX Options Fee Schedule, p. 3. See also Securities 
Exchange Act Release Nos. 72798 (August 8, 2014), 79 FR 47695 
(August 14, 2014) (SR-MIAX-2014-41); 72567 (July 8, 2014), 79 FR 
40818 (July 14, 2014) (SR-MIAX-2014-34); 72356 (June 10, 2014), 79 
FR 34384 (June 16, 2014) (SR-MIAX-2014-26); 71698 (March 12, 2014), 
79 FR 15185 (March 18, 2014) (SR-MIAX-2014-12); 71700 (March 12, 
2014), 79 FR 15188 (March 18, 2014) (SR-MIAX-2014-13); 71283 
(January 10, 2014), 79 FR 2914 (January 16, 2014) (SR-MIAX-2013-63); 
71009 (December 6, 2013), 78 FR 75629 (December 12, 2013) (SR-MIAX-
2013-56).
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    For example, if Member Firm ABC, Inc. (``ABC'') has enough Priority 
Customer contracts to achieve 0.5% of the national customer volume in 
multiply-listed option contracts during the month of October, ABC will 
receive a credit of $0.15 for each Priority Customer contract executed 
in the month of October. However, any qualifying Priority Customer 
transactions during such month that occurred in AA, AAL, AAPL, AIG, 
AMZN, AZN, BABA, BP, C, CBS, CLF, CMCSA, EBAY, EEM, EFA, EWJ, FB, FCX, 
FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, IYR, JCP, JPM, KO, 
MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, QQQ, S, SIRI, SPY, 
SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, XLE, XLF, XLP, XLU 
and XOM would be credited at the $0.20 per contact rate versus the 
standard credit of $0.15. Similarly, if Member Firm XYZ, Inc. (``XYZ'') 
has enough Priority Customer contracts to achieve 2.5% of the national 
customer volume in multiply-listed option contracts during the month of 
October, XYZ will receive a credit of $0.18 for each Priority Customer 
contract executed in the month of October. However, any qualifying 
Priority Customer transactions during such month that occurred in AA, 
AAL, AAPL, AIG, AMZN, AZN, BABA, BP, C, CBS, CLF, CMCSA, EBAY, EEM, 
EFA, EWJ, FB, FCX, FXI, GE, GILD, GLD, GM, GOOG, GOOGL, HTZ, INTC, IWM, 
IYR, JCP, JPM, KO, MO, MRK, NFLX, NOK, NQ, PBR, PCLN, PFE, PG, QCOM, 
QQQ, S, SIRI, SPY, SUNE, T, TSLA, USO, VALE, WAG, WFC, WMB, WY, XHB, 
XLE, XLF, XLP, XLU and XOM would be credited at the $0.20 per contact 
rate versus the standard credit of $0.18.
    The purpose of the amendment to the Program is to further encourage 
Members to direct greater Priority Customer trade volume to the 
Exchange in these high volume symbols. Increased Priority Customer 
volume will provide for greater liquidity, which benefits all market 
participants on the Exchange. The practice of incentivizing increased 
retail customer order flow in order to attract professional liquidity 
providers (Market-Makers) is, and has been, commonly practiced in the 
options markets. As such, marketing fee programs,\7\ and customer 
posting incentive programs,\8\ are based on attracting public customer 
order flow. The practice of providing additional incentives to increase 
order flow in high volume symbols is, and has been, commonly practiced 
in the options markets.\9\ The Program similarly intends

[[Page 62232]]

to attract Priority Customer order flow, which will increase liquidity, 
thereby providing greater trading opportunities and tighter spreads for 
other market participants and causing a corresponding increase in order 
flow from such other market participants in these select symbols. 
Increasing the number of orders sent to the Exchange will in turn 
provide tighter and more liquid markets, and therefore attract more 
business overall.
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    \7\ See MIAX Fee Schedule, Section 1(b).
    \8\ See NYSE Arca, Inc. Fees Schedule, page 4 (section titled 
``Customer Monthly Posting Credit Tiers and Qualifications for 
Executions in Penny Pilot Issues'').
    \9\ See International Securities Exchange, LLC, Schedule of 
Fees, p. 6 (providing reduced fee rates for order flow in Select 
Symbols); NASDAQ OMX PHLX, Pricing Schedule, Section I (providing a 
rebate for adding liquidity in SPY); NYSE Arca, Inc. Fees Schedule, 
page 4 (section titled ``Customer Monthly Posting Credit Tiers and 
Qualifications for Executions in Penny Pilot Issues'').
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    The credits paid out as part of the program will be drawn from the 
general revenues of the Exchange.\10\ The Exchange calculates volume 
thresholds on a monthly basis.
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    \10\ Despite providing credits under the Program, the Exchange 
represents that it will continue to have adequate resources to fund 
its regulatory program and fulfill its responsibilities as a self-
regulatory organization while the Program will be in effect.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \12\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to modify the Program to 
expand the number of option classes that qualify for the credit for 
transactions in MIAX Select Symbols is fair, equitable and not 
unreasonably discriminatory. The credit for transactions in the select 
symbols is reasonably designed because it will incent providers of 
Priority Customer order flow to send that Priority Customer order flow 
to the Exchange in order to receive a credit in a manner that enables 
the Exchange to improve its overall competitiveness and strengthen its 
market quality for all market participants. The Program which provides 
increased incentives in high volume select symbols is also reasonably 
designed to increase the competitiveness of the Exchange with other 
options exchanges that also offer increased incentives to higher volume 
symbols. The proposed changes to the rebate Program are fair and 
equitable and not unreasonably discriminatory because it will apply 
equally to all Priority Customer orders in the select symbols. All 
similarly situated Priority Customer orders in the select symbols are 
subject to the same rebate schedule, and access to the Exchange is 
offered on terms that are not unfairly discriminatory. In addition, the 
Program is equitable and not unfairly discriminatory because, while 
only Priority Customer order flow qualifies for the Program, an 
increase in Priority Customer order flow will bring greater volume and 
liquidity, which benefit all market participants by providing more 
trading opportunities and tighter spreads.

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. The Exchange believes that the 
proposed change would increase both intermarket and intramarket 
competition by incenting Members to direct their Priority Customer 
orders in the select symbols to the Exchange, which will enhance the 
quality of quoting and increase the volume of contracts traded here in 
those symbols. To the extent that there is additional competitive 
burden on non-Priority Customers or trading in non-select symbols, the 
Exchange believes that this is appropriate because the proposed changes 
to the rebate program should incent Members to direct additional order 
flow to the Exchange and thus provide additional liquidity that 
enhances the quality of its markets and increases the volume of 
contracts traded here in those symbols. To the extent that this purpose 
is achieved, all the Exchange's market participants should benefit from 
the improved market liquidity in such select symbols. Enhanced market 
quality and increased transaction volume that results from the 
anticipated increase in order flow directed to the Exchange will 
benefit all market participants and improve competition on the Exchange 
in such select symbols. The Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges and to attract 
order flow to the Exchange. The Exchange believes that the proposed 
rule change reflects this competitive environment because it reduces 
the Exchange's fees in a manner that encourages market participants to 
direct their customer order flow, to provide liquidity, and to attract 
additional transaction volume to the Exchange. Given the robust 
competition for volume among options markets, many of which offer the 
same products, implementing a volume based customer rebate program to 
attract order flow like the one being proposed in this filing is 
consistent with the above-mentioned goals of the Act. This is 
especially true for the smaller options markets, such as MIAX, which is 
competing for volume with much larger exchanges that dominate the 
options trading industry. MIAX has a nominal percentage of the average 
daily trading volume in options, so it is unlikely that the customer 
rebate program could cause any competitive harm to the options market 
or to market participants. Rather, the customer rebate program is a 
modest attempt by a small options market to attract order volume away 
from larger competitors by adopting an innovative pricing strategy. The 
Exchange notes that if the rebate program resulted in a modest 
percentage increase in the average daily trading volume in options 
executing on MIAX, while such percentage would represent a large volume 
increase for MIAX, it would represent a minimal reduction in volume of 
its larger competitors in the industry. The Exchange believes that the 
proposal will help further competition, because market participants 
will have yet another additional option in determining where to execute 
orders and post liquidity if they factor the benefits of a customer 
rebate program into the determination.

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\13\ 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).

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[[Page 62233]]

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MIAX-2014-50 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2014-50. 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 (https://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-2014-50 and should be 
submitted on or before November 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24542 Filed 10-15-14; 8:45 am]
BILLING CODE 8011-01-P
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