Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Its Fee Schedule, 61866-61869 [2015-26027]

Download as PDF 61866 Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b–4(f)(6) thereunder.11 The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange stated that waiver of the operative delay will permit the Exchange to correct outmoded references without delay, thereby promoting clarity in the Exchange rules and reducing potential investor confusion. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.12 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. 10 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 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). tkelley on DSK3SPTVN1PROD with NOTICES 11 17 VerDate Sep<11>2014 16:39 Oct 13, 2015 Jkt 238001 Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–76098; File No. SR–MIAX– 2015–58] • 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– NYSEArca–2015–90 on the subject line. 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 7, 2015. 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–NYSEArca–2015–90. 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 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– NYSEArca–2015–90, and should be submitted on or before November 4, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–26035 Filed 10–13–15; 8:45 am] 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 28, 2015, 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 ‘‘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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule to change the transaction BILLING CODE 8011–01–P 1 15 13 17 PO 00000 CFR 200.30–3(a)(12). Frm 00077 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\14OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 14OCN1 61867 Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices fee rebates for Priority Customer 3 orders submitted by Members that meet certain percentage thresholds of national customer volume in multiply-listed option classes listed on MIAX in the Priority Customer Rebate Program (the ‘‘Program’’).4 Priority Customer Rebate Program Currently, the Exchange credits each Member the per contract amount resulting from each Priority Customer order transmitted by that Member that is executed electronically on the Exchange in all multiply-listed option classes (excluding Qualified Contingent Cross Orders,5 mini-options,6 Priority Customer-to-Priority Customer Orders, PRIME Auction Or Cancel Responses, PRIME Contra-side Orders, PRIME Orders for which both the Agency and Contra-side Order are Priority Customers,7 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 tiered percentage thresholds in a month as described in the Priority Customer Rebate Program table.8 For each Priority Customer order transmitted by that Member and executed electronically on the Exchange, MIAX will continue to credit each member at the per contract rate for option classes that are not in MIAX Select Symbols (as defined below). For each Priority Customer order transmitted by that Member and executed electronically on the Exchange in MIAX Select Symbols (as defined below), MIAX will continue to credit each Member at the separate per contract rate for MIAX Select Symbols.9 For each Priority Customer order submitted into the PRIME Auction as a PRIME Agency Order, MIAX will continue to credit each member at the separate per contract rate for PRIME Agency Orders.10 The volume thresholds are calculated based on the customer volume over the course of the month. Volume will be recorded for and Percentage thresholds of national customer volume in multiply-listed options classes listed on MIAX (Monthly) Tier Tier Tier Tier 1 2 3 4 credits will be delivered to the Member Firm that submits the order to the Exchange. The amount of the rebate is calculated beginning with the first executed contract at the applicable threshold per contract credit with rebate payments made at the highest achieved volume tier for each contract traded in that month. For example, under the current Program, a Member that executes a number of Priority Customer contracts above 1.75% of the national customer volume in multiply-listed options during a particular calendar month currently receives a credit of $0.21 for each Priority Customer contract in both non-Select Symbols and Select Symbols executed during that month, even though there are lower incremental percentages for lower volume tiers leading up to the 1.75% volume threshold. The current Priority Customer Rebate Program table designates the following monthly volume tiers and corresponding per contract credits: Per contract credit (non-select symbols) 0.00%–0.50% .................................................................................................................... Above 0.50%–1.00% ......................................................................................................... Above 1.00%–1.75% ......................................................................................................... Above 1.75% ..................................................................................................................... Per contract credit for PRIME agency order $0.00 $0.10 $0.21 $0.21 $0.10 $0.10 $0.10 $0.10 Proposal The Exchange proposes to decrease the per contract credit for transactions in MIAX Select Symbols for tier 3. tkelley on DSK3SPTVN1PROD with NOTICES The $0.21 per contract credit described in Tier 4 is applied to each contract traded in both non-Select Symbols and Select Symbols in that month, beginning with the first contract executed in a particular month if the Tier 4 volume threshold is achieved. $0.00 $0.10 $0.15 $0.21 Per contract credit in MIAX select symbols Currently, the Exchange credits $0.21 per contract for qualifying Priority Customer transactions in MIAX Select Symbols in tier 3. The Exchange proposes to decrease the per contract credit for transactions in MIAX Select Symbols to $0.20 for the tier 3 volume threshold. The Exchange also proposes to increase the per contract credit for transactions in MIAX Select Symbols for tier 4. Currently, the Exchange credits $0.21 per contract for qualifying Priority Customer transactions in MIAX Select Symbols in tier 4. The Exchange proposes to increase the per contract credit for transactions in MIAX Select Symbols to $0.24 for the tier 4 volume threshold. Specifically, the new per contract credits will be as set forth in the following table: 3 The term ‘‘Priority Customer’’ means a person or entity that (i) is not a broker or dealer in securities, and (ii) does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial accounts(s). See Exchange Rule 100. 4 See Securities Exchange Act Release Nos. 75856 (September 8, 2015), 80 FR 55158 (September 14, 2015)(SR–MIAX 2015–53); 75631 (August 5, 2015), 80 FR 48382 (August 6, 2015) (SR–MIAX–2015–51); 74758 (April 17, 2015), 80 FR 22756 (April 23, 2015)(SR–MIAX–2015–27); 74007 (January 9, 2015), 80 FR 1537 (January 12, 2015) (SR–MIAX–2014– 69); 72799 (August 8, 2014), 79 FR 47698 (August 14, 2014) (SR–MIAX–2014–40); 72355 (June 10, 2014), 79 FR 34368 (June 16, 2014) (SR–MIAX– 2014–25); 71698 (March 12, 2014), 79 FR 15185 (March 18, 2014) (SR–MIAX–2014–12); 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). 5 A Qualified Contingent Cross Order is comprised of an originating order to buy or sell at least 1,000 contracts, or 10,000 mini-option contracts, that is identified as being part of a qualified contingent trade, as that term is defined in Interpretations and Policies .01 below, coupled with a contra-side order or orders totaling an equal number of contracts. A Qualified Contingent Cross Order is not valid during the opening rotation process described in Rule 503. See Exchange Rule 516(j). 6 A mini-option is a series of option contracts with a 10 share deliverable on a stock, Exchange Traded Fund share, Trust Issued Receipt, or other Equity Index-Linked Security. See Exchange Rule 404, Interpretations and Policies .08. 7 The MIAX Price Improvement Mechanism (‘‘PRIME’’) is a process by which a Member may electronically submit for execution (‘‘Auction’’) an order it represents as agent (‘‘Agency Order’’) against principal interest, and/or an Agency Order against solicited interest. For a complete description of PRIME and of PRIME order types and responses, see Exchange Rule 515A. 8 See Fee Schedule Section (1)(a)(iii). 9 See Securities Exchange Release Nos. 75856 (September 8, 2015), 80 FR 55158 (September 14, 2015)(SR–MIAX 2015–53); 75631 (August 5, 2015), 80 FR 48382 (August 6, 2015) (SR–MIAX–2015–51); 74291 (February 18, 2015), 80 FR 9841 (February 24, 2015)(SR–MIAX–2015–09); 74288 (February 18, 2015), 80 FR 9837 (February 24, 2015) (SR–MIAX– 2015–08); 71700 (March 12, 2014), 79 FR 15188 (March 18, 2014) (SR–MIAX–2014–13); 72356 (June 10, 2014), 79 FR 34384 (June 16, 2014) (SR–MIAX– 2014–26); 72567 (July 8, 2014), 79 FR 40818 (July 14, 2014) (SR–MIAX–2014–34); 73328 (October 9, 2014), 79 FR 62230 (October 16, 2014) (SR–MIAX– 2014–50). 10 See Securities Exchange Release No. 72943 (August 28, 2014), 79 FR 52785 (September 4, 2014) (SR–MIAX–2014–45). VerDate Sep<11>2014 16:39 Oct 13, 2015 Jkt 238001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\14OCN1.SGM 14OCN1 61868 Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices Percentage thresholds of national customer volume in multiply-listed options classes listed on MIAX (Monthly) Tier Tier Tier Tier 1 2 3 4 0.00%–0.50% .................................................................................................................... Above 0.50%–1.00% ......................................................................................................... Above 1.00%–1.75% ......................................................................................................... Above 1.75% ..................................................................................................................... The Exchange believes that the proposed new monthly credits should provide incentives for Members to direct greater Priority Customer trade volume to the Exchange in Select Symbols at the highest volume threshold. The proposed new monthly per contract credits will apply to MIAX Select Symbols,11 with the per contract credit increasing for certain monthly volume thresholds. The monthly per contract rebate will decrease to $0.20 for all contracts executed in Select Symbols in tier 3 in order to incentivize Members to trade such number of contracts per month in Select Symbols which will earn them the proposed higher rebate in tier 4. Accordingly, the monthly per contract rebate will increase to $0.24 for all contracts executed in Select Symbols in tier 4. All other aspects of the Program will remain unchanged. The Exchange is not proposing any change to the per contract credit for non-Select Symbols or for PRIME Agency Orders. Consistent with the current Fee Schedule, the Exchange will continue to aggregate 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 will adjust the national customer volume in multiplylisted options for the duration of the outage. A Member may request to receive its credit under the Priority Customer Rebate Program as a separate direct payment. The purpose of the proposed rule change is to encourage Members to tkelley on DSK3SPTVN1PROD with NOTICES Per contract credit (non-select symbols) 11 The term ‘‘MIAX Select Symbols’’ means options overlying AA, AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BBRY, BIDU, BP, C, CAT, CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD, GM, GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO, MRK, NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY, SUNE, T, TSLA, USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF, XLP, XOM, XOP and YHOO. See Fee Schedule, note 13. VerDate Sep<11>2014 16:39 Oct 13, 2015 Jkt 238001 direct greater Priority Customer trade volume to the Exchange in Select Symbols at the highest volume threshold and to compete with other options exchanges that have similar rebates.12 The Exchange believes that increased Priority Customer volume in Select Symbols at the highest volume threshold will attract more liquidity to the Exchange, which benefits all market participants. Increased retail customer order flow should attract professional liquidity providers (Market Makers), which in turn should make the MIAX marketplace an attractive venue where Market Makers will submit narrow quotations with greater size, deepening and enhancing the quality of the MIAX marketplace. This should provide more trading opportunities and tighter spreads for other market participants and result in a corresponding increase in order flow from such other market participants. The specific volume thresholds of the Program’s tiers are set based upon business determinations and an analysis of current volume levels. The volume thresholds are intended to incentivize firms to increase the number of Priority Customer orders they send to the Exchange so that they can achieve the next threshold, and to encourage new participants to send Priority Customer orders as well. Increasing the number of orders sent to the Exchange will in turn provide tighter and more liquid markets, and therefore attract more business overall. Similarly, the different credit rates at the different tier levels are based on an analysis of current revenue and volume levels and are intended to provide increasing ‘‘rewards’’ to MIAX participants for increasing the volume of Priority Customer orders sent to, and Priority Customer contracts executed on, the Exchange. The specific amounts of the tiers and rates are set in order to encourage suppliers of Priority Customer order flow to reach for higher tiers. The credits paid out as part of the program will be drawn from the general 12 See, e.g., Securities Exchange Act Release No. 75702 (August 14, 2015), 80 FR 50685 (August 20, 2015) (SR–PHLX–2015–68). PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 $0.00 $0.10 $0.15 $0.21 Per contract credit in MIAX select symbols Per contract credit for PRIME agency order $0.00 $0.10 $0.20 $0.24 $0.10 $0.10 $0.10 $0.10 revenues of the Exchange.13 The Exchange calculates volume thresholds on a monthly basis. The Exchange proposes to implement the proposed changes to the Fee Schedule effective as of October 1, 2015. 2. Statutory Basis The Exchange 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 Section 6(b)(4) of the Act 15 in particular, in that it is an equitable allocation of reasonable fees and other charges. The Exchange believes that the proposal is equitable and not unfairly discriminatory. The Program and the proposed decrease in the per contract rebate for all contracts executed in Select Symbols in tier 3 is reasonably designed because it will encourage Members to send increased volume of Priority Customer order flow in Select Symbols in order to reach the highest volume threshold, thereby receiving the greater per contract credit. The proposed increase in the per contract rebate for all contracts executed in Select Symbols in tier 4 is reasonably designed because it will reward those providers of higher volume Priority Customer order flow in Select Symbols to the Exchange with the greater per contract credit for achieving volume tier 4. The Exchange believes that the proposed changes in the per contract rate for Select Symbols should improve market quality for all market participants. The proposed changes to the rebate program are fair and equitable and not unreasonably discriminatory because they apply equally to all Priority Customer orders in Select Symbols. All similarly situated Priority Customer orders are subject to the same rebate schedule, and access to the Exchange is offered on terms that are not unfairly discriminatory. Furthermore, the proposed changes in 13 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 is in effect. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(4). E:\FR\FM\14OCN1.SGM 14OCN1 Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices tkelley on DSK3SPTVN1PROD with NOTICES credits for all contracts executed in Select Symbols in tiers 3 and 4 are equitable and not unfairly discriminatory because the proposed rates and changes encourage Members to direct increased amounts of Priority Customer contracts in Select Symbols to the Exchange in order to achieve the highest volume threshold thereby receiving the largest per contract credit. Market participants want to trade with Priority Customer order flow. To the extent Priority Customer order flow is increased by the proposal, market participants will increasingly compete for the opportunity to trade on the Exchange including sending more orders and providing narrower and larger sized quotations in the effort to trade with such Priority Customer order flow. The resulting increased volume and liquidity will benefit all Exchange 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 result in any burden on competition that is 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 encouraging Members to direct their Priority Customer orders in Select Symbols to the Exchange, which should enhance the quality of quoting and increase the volume of contracts traded on MIAX. Respecting the competitive position of non-Priority Customers, the Exchange believes that this rebate program should provide additional liquidity that enhances the quality of its markets and increases the number of trading opportunities on MIAX for all participants, including non-Priority Customers, who will be able to compete for such opportunities. This should benefit all market participants and improve competition on the Exchange. 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 and rebates 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 encourages market participants to direct an increased volume of customer order flow, to provide liquidity, and as a result to attract additional transaction VerDate Sep<11>2014 16:39 Oct 13, 2015 Jkt 238001 volume to the Exchange. Given the robust competition for volume among options markets, many of which offer the same products, enhancing the existing volume based customer rebate program to attract a higher volume of order flow is consistent with the goals of the Act. The Exchange believes that the proposal will enhance competition, because market participants will have another additional pricing consideration in determining where to execute orders and post liquidity if they factor the benefits of the proposed 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,16 and Rule 19b–4(f)(2) 17 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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–2015–58 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. 16 15 17 17 PO 00000 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). Frm 00080 Fmt 4703 Sfmt 4703 61869 All submissions should refer to File Number SR–MIAX–2015–58. 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– 2015–58 and should be submitted on or before November 4, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–26027 Filed 10–13–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. IC–31864; File No. 812–14479] ARK ETF Trust, et al.; Notice of Application October 7, 2015. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c–1 under the Act, under sections 6(c) and 17(b) of the Act for an AGENCY: 18 17 E:\FR\FM\14OCN1.SGM CFR 200.30–3(a)(12). 14OCN1

Agencies

[Federal Register Volume 80, Number 198 (Wednesday, October 14, 2015)]
[Notices]
[Pages 61866-61869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26027]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76098; File No. SR-MIAX-2015-58]


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 7, 2015.
    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 28, 2015, 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.
---------------------------------------------------------------------------

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

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

    The Exchange is filing a proposal to amend the MIAX Options Fee 
Schedule (the ``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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to change the 
transaction

[[Page 61867]]

fee rebates for Priority Customer \3\ orders submitted by Members that 
meet certain percentage thresholds of national customer volume in 
multiply-listed option classes listed on MIAX in the Priority Customer 
Rebate Program (the ``Program'').\4\
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    \3\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s). See Exchange Rule 
100.
    \4\ See Securities Exchange Act Release Nos. 75856 (September 8, 
2015), 80 FR 55158 (September 14, 2015)(SR-MIAX 2015-53); 75631 
(August 5, 2015), 80 FR 48382 (August 6, 2015) (SR-MIAX-2015-51); 
74758 (April 17, 2015), 80 FR 22756 (April 23, 2015)(SR-MIAX-2015-
27); 74007 (January 9, 2015), 80 FR 1537 (January 12, 2015) (SR-
MIAX-2014-69); 72799 (August 8, 2014), 79 FR 47698 (August 14, 2014) 
(SR-MIAX-2014-40); 72355 (June 10, 2014), 79 FR 34368 (June 16, 
2014) (SR-MIAX-2014-25); 71698 (March 12, 2014), 79 FR 15185 (March 
18, 2014) (SR-MIAX-2014-12); 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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Priority Customer Rebate Program
    Currently, the Exchange credits each Member the per contract amount 
resulting from each Priority Customer order transmitted by that Member 
that is executed electronically on the Exchange in all multiply-listed 
option classes (excluding Qualified Contingent Cross Orders,\5\ mini-
options,\6\ Priority Customer-to-Priority Customer Orders, PRIME 
Auction Or Cancel Responses, PRIME Contra-side Orders, PRIME Orders for 
which both the Agency and Contra-side Order are Priority Customers,\7\ 
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 tiered percentage thresholds in a month as described in 
the Priority Customer Rebate Program table.\8\ For each Priority 
Customer order transmitted by that Member and executed electronically 
on the Exchange, MIAX will continue to credit each member at the per 
contract rate for option classes that are not in MIAX Select Symbols 
(as defined below). For each Priority Customer order transmitted by 
that Member and executed electronically on the Exchange in MIAX Select 
Symbols (as defined below), MIAX will continue to credit each Member at 
the separate per contract rate for MIAX Select Symbols.\9\ For each 
Priority Customer order submitted into the PRIME Auction as a PRIME 
Agency Order, MIAX will continue to credit each member at the separate 
per contract rate for PRIME Agency Orders.\10\ The volume thresholds 
are calculated based on the customer volume over the course of the 
month. Volume will be recorded for and credits will be delivered to the 
Member Firm that submits the order to the Exchange.
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    \5\ A Qualified Contingent Cross Order is comprised of an 
originating order to buy or sell at least 1,000 contracts, or 10,000 
mini-option contracts, that is identified as being part of a 
qualified contingent trade, as that term is defined in 
Interpretations and Policies .01 below, coupled with a contra-side 
order or orders totaling an equal number of contracts. A Qualified 
Contingent Cross Order is not valid during the opening rotation 
process described in Rule 503. See Exchange Rule 516(j).
    \6\ A mini-option is a series of option contracts with a 10 
share deliverable on a stock, Exchange Traded Fund share, Trust 
Issued Receipt, or other Equity Index-Linked Security. See Exchange 
Rule 404, Interpretations and Policies .08.
    \7\ The MIAX Price Improvement Mechanism (``PRIME'') is a 
process by which a Member may electronically submit for execution 
(``Auction'') an order it represents as agent (``Agency Order'') 
against principal interest, and/or an Agency Order against solicited 
interest. For a complete description of PRIME and of PRIME order 
types and responses, see Exchange Rule 515A.
    \8\ See Fee Schedule Section (1)(a)(iii).
    \9\ See Securities Exchange Release Nos. 75856 (September 8, 
2015), 80 FR 55158 (September 14, 2015)(SR-MIAX 2015-53); 75631 
(August 5, 2015), 80 FR 48382 (August 6, 2015) (SR-MIAX-2015-51); 
74291 (February 18, 2015), 80 FR 9841 (February 24, 2015)(SR-MIAX-
2015-09); 74288 (February 18, 2015), 80 FR 9837 (February 24, 2015) 
(SR-MIAX-2015-08); 71700 (March 12, 2014), 79 FR 15188 (March 18, 
2014) (SR-MIAX-2014-13); 72356 (June 10, 2014), 79 FR 34384 (June 
16, 2014) (SR-MIAX-2014-26); 72567 (July 8, 2014), 79 FR 40818 (July 
14, 2014) (SR-MIAX-2014-34); 73328 (October 9, 2014), 79 FR 62230 
(October 16, 2014) (SR-MIAX-2014-50).
    \10\ See Securities Exchange Release No. 72943 (August 28, 
2014), 79 FR 52785 (September 4, 2014) (SR-MIAX-2014-45).
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    The amount of the rebate is calculated beginning with the first 
executed contract at the applicable threshold per contract credit with 
rebate payments made at the highest achieved volume tier for each 
contract traded in that month. For example, under the current Program, 
a Member that executes a number of Priority Customer contracts above 
1.75% of the national customer volume in multiply-listed options during 
a particular calendar month currently receives a credit of $0.21 for 
each Priority Customer contract in both non-Select Symbols and Select 
Symbols executed during that month, even though there are lower 
incremental percentages for lower volume tiers leading up to the 1.75% 
volume threshold.
    The current Priority Customer Rebate Program table designates the 
following monthly volume tiers and corresponding per contract credits:

----------------------------------------------------------------------------------------------------------------
                                                                   Per contract                    Per contract
 Percentage thresholds of national customer volume in multiply-    credit  (non-   Per contract     credit for
        listed options classes listed on MIAX  (Monthly)              select      credit in MIAX   PRIME agency
                                                                     symbols)     select symbols       order
----------------------------------------------------------------------------------------------------------------
Tier 1 0.00%-0.50%..............................................           $0.00           $0.00           $0.10
Tier 2 Above 0.50%-1.00%........................................           $0.10           $0.10           $0.10
Tier 3 Above 1.00%-1.75%........................................           $0.15           $0.21           $0.10
Tier 4 Above 1.75%..............................................           $0.21           $0.21           $0.10
----------------------------------------------------------------------------------------------------------------

    The $0.21 per contract credit described in Tier 4 is applied to 
each contract traded in both non-Select Symbols and Select Symbols in 
that month, beginning with the first contract executed in a particular 
month if the Tier 4 volume threshold is achieved.
Proposal
    The Exchange proposes to decrease the per contract credit for 
transactions in MIAX Select Symbols for tier 3. Currently, the Exchange 
credits $0.21 per contract for qualifying Priority Customer 
transactions in MIAX Select Symbols in tier 3. The Exchange proposes to 
decrease the per contract credit for transactions in MIAX Select 
Symbols to $0.20 for the tier 3 volume threshold.
    The Exchange also proposes to increase the per contract credit for 
transactions in MIAX Select Symbols for tier 4. Currently, the Exchange 
credits $0.21 per contract for qualifying Priority Customer 
transactions in MIAX Select Symbols in tier 4. The Exchange proposes to 
increase the per contract credit for transactions in MIAX Select 
Symbols to $0.24 for the tier 4 volume threshold.
    Specifically, the new per contract credits will be as set forth in 
the following table:

[[Page 61868]]



----------------------------------------------------------------------------------------------------------------
                                                                   Per contract                    Per contract
 Percentage thresholds of national customer volume in multiply-    credit  (non-   Per contract     credit for
        listed options classes listed on MIAX  (Monthly)              select      credit in MIAX   PRIME agency
                                                                     symbols)     select symbols       order
----------------------------------------------------------------------------------------------------------------
Tier 1 0.00%-0.50%..............................................           $0.00           $0.00           $0.10
Tier 2 Above 0.50%-1.00%........................................           $0.10           $0.10           $0.10
Tier 3 Above 1.00%-1.75%........................................           $0.15           $0.20           $0.10
Tier 4 Above 1.75%..............................................           $0.21           $0.24           $0.10
----------------------------------------------------------------------------------------------------------------

    The Exchange believes that the proposed new monthly credits should 
provide incentives for Members to direct greater Priority Customer 
trade volume to the Exchange in Select Symbols at the highest volume 
threshold.
    The proposed new monthly per contract credits will apply to MIAX 
Select Symbols,\11\ with the per contract credit increasing for certain 
monthly volume thresholds. The monthly per contract rebate will 
decrease to $0.20 for all contracts executed in Select Symbols in tier 
3 in order to incentivize Members to trade such number of contracts per 
month in Select Symbols which will earn them the proposed higher rebate 
in tier 4. Accordingly, the monthly per contract rebate will increase 
to $0.24 for all contracts executed in Select Symbols in tier 4.
---------------------------------------------------------------------------

    \11\ The term ``MIAX Select Symbols'' means options overlying 
AA, AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BBRY, BIDU, BP, C, 
CAT, CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD, 
GM, GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO, 
MRK, NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY, 
SUNE, T, TSLA, USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF, 
XLP, XOM, XOP and YHOO. See Fee Schedule, note 13.
---------------------------------------------------------------------------

    All other aspects of the Program will remain unchanged. The 
Exchange is not proposing any change to the per contract credit for 
non-Select Symbols or for PRIME Agency Orders. Consistent with the 
current Fee Schedule, the Exchange will continue to aggregate 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 will adjust the national 
customer volume in multiply-listed options for the duration of the 
outage. A Member may request to receive its credit under the Priority 
Customer Rebate Program as a separate direct payment.
    The purpose of the proposed rule change is to encourage Members to 
direct greater Priority Customer trade volume to the Exchange in Select 
Symbols at the highest volume threshold and to compete with other 
options exchanges that have similar rebates.\12\ The Exchange believes 
that increased Priority Customer volume in Select Symbols at the 
highest volume threshold will attract more liquidity to the Exchange, 
which benefits all market participants. Increased retail customer order 
flow should attract professional liquidity providers (Market Makers), 
which in turn should make the MIAX marketplace an attractive venue 
where Market Makers will submit narrow quotations with greater size, 
deepening and enhancing the quality of the MIAX marketplace. This 
should provide more trading opportunities and tighter spreads for other 
market participants and result in a corresponding increase in order 
flow from such other market participants.
---------------------------------------------------------------------------

    \12\ See, e.g., Securities Exchange Act Release No. 75702 
(August 14, 2015), 80 FR 50685 (August 20, 2015) (SR-PHLX-2015-68).
---------------------------------------------------------------------------

    The specific volume thresholds of the Program's tiers are set based 
upon business determinations and an analysis of current volume levels. 
The volume thresholds are intended to incentivize firms to increase the 
number of Priority Customer orders they send to the Exchange so that 
they can achieve the next threshold, and to encourage new participants 
to send Priority Customer orders as well. Increasing the number of 
orders sent to the Exchange will in turn provide tighter and more 
liquid markets, and therefore attract more business overall. Similarly, 
the different credit rates at the different tier levels are based on an 
analysis of current revenue and volume levels and are intended to 
provide increasing ``rewards'' to MIAX participants for increasing the 
volume of Priority Customer orders sent to, and Priority Customer 
contracts executed on, the Exchange. The specific amounts of the tiers 
and rates are set in order to encourage suppliers of Priority Customer 
order flow to reach for higher tiers.
    The credits paid out as part of the program will be drawn from the 
general revenues of the Exchange.\13\ The Exchange calculates volume 
thresholds on a monthly basis.
---------------------------------------------------------------------------

    \13\ 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 is in effect.
---------------------------------------------------------------------------

    The Exchange proposes to implement the proposed changes to the Fee 
Schedule effective as of October 1, 2015.
2. Statutory Basis
    The Exchange 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 Section 6(b)(4) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposal is equitable and not 
unfairly discriminatory. The Program and the proposed decrease in the 
per contract rebate for all contracts executed in Select Symbols in 
tier 3 is reasonably designed because it will encourage Members to send 
increased volume of Priority Customer order flow in Select Symbols in 
order to reach the highest volume threshold, thereby receiving the 
greater per contract credit. The proposed increase in the per contract 
rebate for all contracts executed in Select Symbols in tier 4 is 
reasonably designed because it will reward those providers of higher 
volume Priority Customer order flow in Select Symbols to the Exchange 
with the greater per contract credit for achieving volume tier 4. The 
Exchange believes that the proposed changes in the per contract rate 
for Select Symbols should improve market quality for all market 
participants. The proposed changes to the rebate program are fair and 
equitable and not unreasonably discriminatory because they apply 
equally to all Priority Customer orders in Select Symbols. All 
similarly situated Priority Customer orders are subject to the same 
rebate schedule, and access to the Exchange is offered on terms that 
are not unfairly discriminatory. Furthermore, the proposed changes in

[[Page 61869]]

credits for all contracts executed in Select Symbols in tiers 3 and 4 
are equitable and not unfairly discriminatory because the proposed 
rates and changes encourage Members to direct increased amounts of 
Priority Customer contracts in Select Symbols to the Exchange in order 
to achieve the highest volume threshold thereby receiving the largest 
per contract credit. Market participants want to trade with Priority 
Customer order flow. To the extent Priority Customer order flow is 
increased by the proposal, market participants will increasingly 
compete for the opportunity to trade on the Exchange including sending 
more orders and providing narrower and larger sized quotations in the 
effort to trade with such Priority Customer order flow. The resulting 
increased volume and liquidity will benefit all Exchange 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 
result in any burden on competition that is 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 encouraging Members to direct their Priority 
Customer orders in Select Symbols to the Exchange, which should enhance 
the quality of quoting and increase the volume of contracts traded on 
MIAX. Respecting the competitive position of non-Priority Customers, 
the Exchange believes that this rebate program should provide 
additional liquidity that enhances the quality of its markets and 
increases the number of trading opportunities on MIAX for all 
participants, including non-Priority Customers, who will be able to 
compete for such opportunities. This should benefit all market 
participants and improve competition on the Exchange.
    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 and rebates 
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 encourages market 
participants to direct an increased volume of customer order flow, to 
provide liquidity, and as a result to attract additional transaction 
volume to the Exchange. Given the robust competition for volume among 
options markets, many of which offer the same products, enhancing the 
existing volume based customer rebate program to attract a higher 
volume of order flow is consistent with the goals of the Act. The 
Exchange believes that the proposal will enhance competition, because 
market participants will have another additional pricing consideration 
in determining where to execute orders and post liquidity if they 
factor the benefits of the proposed 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,\16\ and Rule 19b-4(f)(2) \17\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MIAX-2015-58 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2015-58. 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-2015-58 and should be 
submitted on or before November 4, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26027 Filed 10-13-15; 8:45 am]
BILLING CODE 8011-01-P
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