Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 13157-13161 [2017-04600]
Download as PDF
<![CDATA[
Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices
proposed amendment simply gives
TPHs initiating AIM auctions the
ability, when utilizing the auto-match
feature, to guarantee price improvement
beyond the NBBO (if 50 standard option
contracts or 500 mini-option contracts
or greater) or beyond one cent/one
minimum increment better than the
NBBO (if less than 50 standard option
contracts or 500 mini-option contracts,
which generally protects investors and
the public interest by giving Agency
Orders the possibility of receiving better
execution prices.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
B. impose any significant burden on
competition; and
C. become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 9 and Rule 19b–4(f)(6) 10 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 will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
asabaliauskas on DSK3SPTVN1PROD with 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:
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2017–018 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–CBOE–2017–018. 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–CBOE–
2017–018, and should be submitted on
or before March 30, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04604 Filed 3–8–17; 8:45 am]
13157
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80148; File No. SR–MIAX–
2017–10]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule
March 3, 2017.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
thereunder,2 notice is hereby given that
on February 24, 2017, Miami
International Securities Exchange LLC
(‘‘MIAX Options’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
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/rulefilings, 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.
Electronic Comments
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
1. Purpose
The Exchange proposes to amend the
Market Maker Sliding Scale (defined
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
1 15
10 17
VerDate Sep<11>2014
17:43 Mar 08, 2017
BILLING CODE 8011–01–P
11 17
Jkt 241001
PO 00000
CFR 200.30–3(a)(12).
Frm 00069
Fmt 4703
Sfmt 4703
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\09MRN1.SGM
09MRN1
13158
Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices
contract transaction fee amount.4 The
Sliding Scale applies to all MIAX
Options Market Makers for transactions
in all products (except for mini-options,
for which there are separate product
fees), with fees established for option
classes in the Penny Pilot Program 5
(‘‘penny option classes’’) and separate
fees for non-penny option classes, and
further based on whether the Market
Maker is acting as a ‘‘maker’’ or a
‘‘taker’’ 6 in simple orders. Market
Makers that place resting liquidity, i.e.,
quotes or orders on the MIAX Options
System,7 are assessed the ‘‘maker’’ fee.
Market Makers that execute against
(remove) resting liquidity are assessed a
higher ‘‘taker’’ fee. This is distinguished
from traditional ‘‘maker-taker’’ models
where ‘‘makers’’ typically receive a
rebate and ‘‘takers’’ are assessed a fee;
the Exchange instead assesses lower
transaction fees to ‘‘makers’’ as
compared to ‘‘takers,’’ similar to the
below) contained in its Fee Schedule to
increase certain ‘‘taker’’ fees for certain
tiers assessed to MIAX Options Market
Makers,3 as described below.
Section (1)(a)(i) of the Fee Schedule
sets forth the Exchange’s Market Maker
Sliding Scale for Market Maker
Transaction Fees (the ‘‘Sliding Scale’’).
The Sliding Scale assesses a per contract
transaction fee on a Market Maker for
the execution of simple orders and
quotes (collectively, ‘‘simple orders’’)
and complex orders and quotes
(collectively, ‘‘complex orders’’). The
amount of the transaction fee is based
on the Market Maker’s percentage of
total national market maker volume in
all options classes that trade on the
Exchange during a particular calendar
month, and the Exchange aggregates the
volume executed by Market Makers in
both simple orders and complex orders
for purposes of determining the
applicable tier and corresponding per
manner implemented at other
exchanges.8
Further, the Exchange provides
discounted transaction fees for
Members 9 and their qualified
Affiliates 10 that achieve certain volume
thresholds through the submission of
Priority Customer 11 orders under the
Exchange’s Priority Customer Rebate
Program (‘‘PCRP’’),12 which is set forth
on two tables: One setting forth the
transaction fees applicable to Members
and their Affiliates that are in PCRP
Volume Tier 3 or higher; and the other
setting forth the transaction fees
applicable to Members and their
Affiliates that are not in PCRP Volume
Tier 3 or higher. The Sliding Scale also
includes maker and taker fees in both
tables in each tier for simple orders in
penny option classes and non-penny
option classes.
The current Sliding Scale tables are as
follows:
MEMBERS AND THEIR AFFILIATES IN PRIORITY CUSTOMER REBATE PROGRAM VOLUME TIER 3 OR HIGHER
Simple
Per contract fee
for penny
classes
Tier
Complex
Per contract fee
for non-penny
classes
Percentage thresholds
Maker
Taker
Maker
Taker
Per contract
fee for
penny
classes
Per contract
fee for
non-penny
classes
Per contract
surcharge for
removing liquidity
against a resting
priority customer
complex order on
the strategy book
for penny and
non-penny
classes
All MIAX Market Makers
asabaliauskas on DSK3SPTVN1PROD with NOTICES
1
2
3
4
5
............
............
............
............
............
$0.00–0.075 ...........................
Above 0.075–0.60 .................
Above 0.60–1.00 ...................
Above 1.00–1.50 ...................
Above 1.50 ............................
$0.21
0.15
0.08
0.04
0.02
3 The term ‘‘Market Makers’’ refers to Lead Market
Makers (‘‘LMMs’’), Primary Lead Market Makers
(‘‘PLMMs’’), and Registered Market Makers
(‘‘RMMs’’) collectively. See Exchange Rule 100. A
Directed Order Lead Market Maker (‘‘DLMM’’) and
Directed Primary Lead Market Maker (‘‘DPLMM’’) is
a party to a transaction being allocated to the LMM
or PLMM and is the result of an order that has been
directed to the LMM or PLMM. See Fee Schedule,
note 2.
4 The calculation of the volume thresholds does
not include QCC Orders, PRIME AOC Responses,
and unrelated MIAX Market Maker quotes or
unrelated MIAX Market Maker orders that are
received during the Response Time Interval and
executed against the PRIME Order. See Fee
Schedule, page 2. For a further discussion of these
exclusions, see Securities Exchange Act Release No.
78299 (July 12, 2016), 81 FR 46734 (July 18,
2016)(SR–MIAX–2016–20).
5 See Securities Exchange Act Release No. 78080
(June 15, 2016), 81 FR 40377 (June 21, 2016) (SR–
MIAX–2016–16).
6 See Securities Exchange Act Release No. 78519
(August 9, 2016), 81 FR 54162 (August 15, 2016)
(SR–MIAX–2016–21).
VerDate Sep<11>2014
17:43 Mar 08, 2017
Jkt 241001
$0.23
0.22
0.15
0.06
0.04
$0.25
0.19
0.12
0.08
0.06
$0.30
0.27
0.20
0.12
0.10
7 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
8 The Exchange notes that similar maker-taker
pricing is implemented at International Securities
Exchange, LLC (‘‘ISE’’). ISE’s Schedule of Fees,
Section I, assesses maker fees to ISE market makers
in its select symbols that are lower than its taker
fees. ISE’s fees are distinguished from the MIAX
Options fees because the ISE fees apply to ISE
market maker orders sent to ISE by ISE Electronic
Access Members, whereas the Exchange’s fees
apply to quotes and orders submitted by Market
Maker.
9 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
10 For purposes of the MIAX Options Fee
Schedule, the term ‘‘Affiliate’’ means an affiliate of
a Member of at least 75% common ownership
between the firms as reflected on each firm’s Form
BD, Schedule A (‘‘Affiliate’’). See Fee Schedule,
note 1.
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
$0.25
0.19
0.12
0.07
0.05
$0.29
0.23
0.16
0.11
0.09
$0.10
0.10
0.10
0.10
0.10
11 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
A ‘‘Priority Customer Order’’ means an order for the
account of a Priority Customer. See Exchange Rule
100.
12 Under the PCRP, MIAX Options credits each
Member the per contract amount resulting from
each Priority Customer order transmitted by that
Member which is executed electronically on the
Exchange in all multiply-listed option classes
(excluding QCC Orders, 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 Exchange Rule 1400), provided the
Member meets certain percentage thresholds in a
month as described in the Priority Customer Rebate
Program table. See Fee Schedule, Section (1)(a)iii.
E:\FR\FM\09MRN1.SGM
09MRN1
13159
Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices
MEMBERS AND THEIR AFFILIATES NOT IN PRIORITY CUSTOMER REBATE PROGRAM VOLUME TIER 3 OR HIGHER
Simple
Per contract fee
for penny
classes
Tier
Complex
Per contract fee
for non-penny
classes
Percentage thresholds
Maker
Taker
Maker
Taker
Per contract
fee for
penny
classes
Per contract
fee for
non-penny
classes
Per contract
surcharge for
removing liquidity
against a resting
priority customer
complex order on
the strategy book
for penny and
non-penny
classes
All MIAX Market Makers
1
2
3
4
5
............
............
............
............
............
0.00–0.075 .............................
Above 0.075–0.60 .................
Above 0.60–1.00 ...................
Above 1.00–1.50 ...................
Above 1.50 ............................
$0.23
0.17
0.10
0.06
0.04
$0.25
0.24
0.17
0.08
0.06
$0.27
0.21
0.14
0.10
0.08
$0.32
0.29
0.22
0.14
0.12
$0.25
0.19
0.12
0.07
0.05
$0.29
0.23
0.16
0.11
0.09
$0.10
0.10
0.10
0.10
0.10
The Exchange proposes to increase
the taker fees as set forth in both tables
below:
MEMBERS AND THEIR AFFILIATES IN PRIORITY CUSTOMER REBATE PROGRAM VOLUME TIER 3 OR HIGHER
Simple
Per contract fee
for penny
classes
Tier
Complex
Per contract fee
for non-penny
classes
Percentage thresholds
Maker
Taker
Maker
Taker
Per contract
fee for
penny
classes
Per contract
fee for
non-penny
classes
Per contract
surcharge for
removing liquidity
against a resting
priority customer
complex order on
the strategy book
for penny and
non-penny
classes
All MIAX Market Makers
1
2
3
4
5
............
............
............
............
............
$0.00–0.075 ...........................
Above 0.075–0.60 .................
Above 0.60–1.00 ...................
Above 1.00–1.50 ...................
Above 1.50 ............................
$0.21
0.15
0.08
0.04
0.02
$0.23
0.22
0.19
0.18
0.17
$0.25
0.19
0.12
0.08
0.06
$0.30
0.27
0.23
0.22
0.21
$0.25
0.19
0.12
0.07
0.05
$0.29
0.23
0.16
0.11
0.09
$0.10
0.10
0.10
0.10
0.10
MEMBERS AND THEIR AFFILIATES NOT IN PRIORITY CUSTOMER REBATE PROGRAM VOLUME TIER 3 OR HIGHER
Simple
Per contract fee
for penny
classes
Tier
Complex
Per contract fee
for non-penny
classes
Percentage thresholds
Maker
Taker
Maker
Taker
Per contract
fee for
penny
classes
Per contract
fee for
non-penny
classes
Per contract
surcharge for
removing liquidity
against a resting
priority customer
complex order on
the strategy book
for penny and
non-penny
classes
All MIAX Market Makers
asabaliauskas on DSK3SPTVN1PROD with NOTICES
1
2
3
4
5
............
............
............
............
............
$0.00–0.075 ...........................
Above 0.075–0.60 .................
Above 0.60–1.00 ...................
Above 1.00–1.50 ...................
Above 1.50 ............................
$0.23
0.17
0.10
0.06
0.04
The Exchange has determined to
substantially reduce the magnitude of
volume discounts that Market Makers
achieve in Tiers 3, 4, and 5, as a taker
for Members who are in the Priority
Customer Rebate Program Volume Tier
3 or Higher and for Members who are
not in the Priority Customer Rebate
VerDate Sep<11>2014
17:43 Mar 08, 2017
Jkt 241001
$0.25
0.24
0.21
0.20
0.19
$0.27
0.21
0.14
0.10
0.08
$0.32
0.29
0.25
0.24
0.23
Program Volume Tier 3 or Higher. This
significant, volume-based discount was
designed to incentivize Market Makers
to act as a taker on the Exchange.13 For
business and competitive reasons, the
13 See Securities Exchange Act Release No. 78519
(August 9, 2016), 81 FR 54162 (August 15,
2016)(SR–MIAX–2016–21).
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
$0.25
0.19
0.12
0.07
0.05
$0.29
0.23
0.16
0.11
0.09
$0.10
0.10
0.10
0.10
0.10
Exchange now believes it is appropriate
to reduce the magnitude of discounts.
The Exchange is not eliminating the
discounts entirely, but narrowing the
ranges between the highest fee (assessed
for Tier 1) and fees assessed in Tiers 3,
4, and 5) in each of the two tables. The
proposed Market Maker taker fees are
E:\FR\FM\09MRN1.SGM
09MRN1
13160
Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices
generally in line with the Market Maker
taker fees charged by other exchanges
for executing simple orders at similar
volume levels, including Exchanges that
don’t offer a volume discount for market
maker taker volume.14
The proposed rule change is
scheduled to become operative March 1,
2017.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 15 in general, and
furthers the objectives of Sections
6(b)(4) of the Act,16 in that it is an
equitable allocation of reasonable fees
and other charges among Exchange
Members and other persons using its
facilities, and Section 6(b)(5) of the
Act,17 in that it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
to remove impediments to and perfect
the mechanisms of a free and open
market and a national market system
and, in general, to protect investors and
the public interest.
The proposed taker fee increase for
the various tiers is equitable and not
unfairly discriminatory because all
similarly situated Market Makers are
subject to the same fees and access to
the Exchange is offered on terms that are
not unfairly discriminatory. The
Exchange initially set its taker fees at
the various volume levels based upon
business determinations and an analysis
of current taker fees and volume levels
at other exchanges. When the Exchange
initially adopted taker fees,18 it set its
higher tier taker fees much lower than
other exchanges in order to encourage
its Market Makers to reach for higher
volume levels in order to achieve greater
discounts. For competitive and business
14 See ISE Schedule of Fees, Section I (ISE
assesses Market Makers a taker fee of .44 per
contract in Select Symbols); see also ISE Gemini
(‘‘Gemini’’) Schedule of Fees, Section I (Gemini
assesses Market Makers a taker fee of $.49 per
contract in penny option classes and SPY for Tiers
1 through 3, with Tier 1 being total affiliated
member ADV of up to 99,999 contracts, Tier 2 being
total affiliated member ADV of between 100,00 [sic]
and 224,999 contracts and Tier 3 being total
affiliated member ADV of between 225,000 and
349,999 contracts and $.48 per contact in penny
options classes and SPY for Tier 4, which is total
affiliated member ADV of 350,000 contracts or
more); see further Bats BZX Options Exchange
(‘‘BATS’’) Fee Schedule, p. 1 (BATS assesses
Market Maker a taker fee of $.50 per contract in
penny option classes and 1.07 per contract in nonpenny option classes).
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(4).
17 15 U.S.C. 78f(b)(5).
18 See supra note 13.
VerDate Sep<11>2014
17:43 Mar 08, 2017
Jkt 241001
reasons, the Exchange believes that it no
longer needs to offer such deep
discounts in the higher tiers and desires
to narrow the range between the lower
and higher tiers with respect to the taker
fees. The Exchange also believes that it
is appropriate to increase taker fees to
be more in line with competing
exchanges. The Exchange notes that the
increased taker fees are comparable to
those assessed by other exchanges and
that even with the increase, the
Exchange’s taker fees are still less than
those assessed by such exchanges.19
The Exchange’s proposal to assess a
higher fee to Market Makers that take
liquidity in penny option and nonpenny option classes is also reasonable,
equitable and not unfairly
discriminatory under the Act. While
distinguished from the traditional
‘‘maker-taker’’ fee model under which
an exchange pays a per-contract rebate
to their members to encourage them to
place resting liquidity by providing
quotes and orders (‘‘maker’’) on their
trading systems and assessing a fee that
executes against a resting order
(‘‘taker’’), the Exchange assesses a
reduced fee for ‘‘makers’’ as compared
to ‘‘takers’’ rather than giving the
‘‘maker’’ a rebate.
The Exchange believes that the makertaker pricing model is an important
competitive tool for exchanges and
directly or indirectly can provide better
prices for investors. Such pricing
models may narrow the MIAX Options
Bid and Offer (‘‘MBBO’’) because the
reduced fee for ‘‘makers’’ effectively
subsidizes, and thus encourages, the
posting of liquidity, while the
assessment of lower fees in higher tiers
to ‘‘takers’’ encourages Market Makers to
provide order flow. The Exchange
believes that this pricing model
provides Market Makers with greater
incentive to either match or improve
upon the best price displayed on MIAX
Options, all to the benefit of investors
and the public in the form of improved
execution prices.
Further, the Exchange’s assessment of
a higher fee to Market Makers who
remove liquidity is reasonable, equitable
and not unfairly discriminatory and
follows a similar line of reasoning. It is
common practice among options
exchanges to differentiate between fees
for adding liquidity and fees for
removing liquidity, and such
differentiation has been accepted as not
unfairly discriminatory under the Act.20
The Exchange believes that the
differentiation in pricing between
‘‘makers’’ and ‘‘takers’’ is appropriate,
19 See
Frm 00072
Fmt 4703
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
proposed fee structure is intended to
promote narrower spreads and
encourage the posting of liquidity
(instead of taking liquidity), and thus
should promote better prices. The
proposed rule change should enable the
Exchange to attract, and compete for,
order flow with other exchanges and the
higher fees for removing liquidity will
encourage Market Makers to submit
order flow that adds liquidity, not
removes it.
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. The
Exchange believes that the proposed
rule changes reflect this competitive
environment because they modify the
Exchange’s fees in a manner that
encourages market participants to
provide liquidity and to send order flow
to the Exchange rather than remove
liquidity from the market place.
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.
supra note 14.
20 Id.
PO 00000
because ‘‘takers’’ remove liquidity and
benefit disproportionately from their
executions as compared to ‘‘makers,’’
without assuming the obligations that
‘‘makers’’ assume in making continuous,
two-sided markets, and without
engaging in competitive price discovery
and improvement in the same manner
as ‘‘makers.’’ Liquidity removers benefit
from the price and size discovery
function that liquidity providers have
performed in posting their quotations
and orders, and when executing against
resting liquidity, a ‘‘taker’’ is not taking
the risk of an order or quote sitting
unexecuted on the Book. The Exchange
believes for these reasons that assessing
a higher ‘‘taker’’ fee for the various tiers
for simple orders is equitable,
reasonable and not unfairly
discriminatory, and thus consistent with
the Act.
Sfmt 4703
E:\FR\FM\09MRN1.SGM
09MRN1
Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices
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,21 and Rule
19b–4(f)(2) 22 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:
asabaliauskas on DSK3SPTVN1PROD with NOTICES
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–2017–10 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MIAX–2017–10. 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
21 15
22 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
17:43 Mar 08, 2017
Jkt 241001
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–MIAX–
2017–10, and should be submitted on or
before March 30, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04600 Filed 3–8–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80154; File Nos. SR–
NYSEMKT–2016–52 and SR–NYSEArca–
2016–103]
Self-Regulatory Organizations; NYSE
MKT LLC; NYSE Arca Inc.; Order
Approving Proposed Rule Changes To
Extend the Time Within Which a
Member, Member Organization, an ATP
Holder, OTP Holder, or OTP Firm Must
File a Uniform Termination Notice for
Securities Industry Registration (‘‘Form
U5’’)
March 3, 2017.
I. Introduction
On June 16, 2016, NYSE MKT LLC
(‘‘NYSE MKT’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) 1 of the Securities Exchange Act
of 1934 (‘‘Act’’) 2 and Rule 19b–4
thereunder,3 a proposed rule change to
extend the time within which a member
or member organization, or an Amex
Trading Permit Holder (‘‘ATP Holder’’)
must file a Form U5, or any
amendments thereto. The proposed rule
change was published for comment in
the Federal Register on July 7, 2016.4
On July 14, 2016, NYSE Arca, Inc.
(‘‘NYSE Arca’’) (NYSE MKT and NYSE
Arca, each an ‘‘Exchange’’) filed with
the Commission, a proposed rule change
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 See Securities Exchange Act Release No. 78198
(June 30, 2016), 81 FR 44363 (‘‘NYSE MKT
Notice’’).
1 15
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
13161
to extend the time within which an
Options Trading Permit Holder (‘‘OTP
Holder’’) or Options Trading Permit
Firm (‘‘OTP Firm’’) must file a Form U5,
or any amendments thereto. The
proposed rule change was published for
comment in the Federal Register on July
27, 2016.5 The Commission received
two comment letters regarding the
proposals.6 NYSE responded to the
NASAA Letter on August 12, 2016.7
On October 5, 2016, the Commission
instituted proceedings to determine
whether to approve or disapprove the
proposed rule changes.8 The
Commission received four additional
comment letters regarding the
proposals.9 NYSE responded to the OIA
Letter on October 26, 2016.10 On
December 21, 2016, the Commission
designated a longer period of time to
determine whether to approve or
disapprove the proposed rule changes.11
Thereafter the Commission received one
additional comment letter.12 NYSE
submitted a response on January 16,
2017.13 This order approves the
proposed rule changes.
II. Description of the Proposals
NYSEMKT–2016–52
As set forth in the NYSE MKT Notice,
NYSE MKT proposes to amend its rules
regarding when a member, member
5 See Securities Exchange Act Release No. 78381
(July 21, 2016), 81 FR 49286 (‘‘NYSE Arca Notice’’).
6 See letters from Judith Shaw, President, North
American Securities Administrators Association,
Inc., dated August 3, 2016 (‘‘NASAA Letter’’) and
Rick A. Fleming, Investor Advocate and Tracey L.
McNeil, Ombudsman, Office of the Investor
Advocate, Commission, dated October 3, 2016
(‘‘OIA Letter’’), to Brent J. Fields, Secretary,
Securities and Exchange Commission.
7 See letter from Elizabeth K. King, General
Counsel and Corporate Secretary, New York Stock
Exchange LLC (‘‘NYSE’’) dated August 12, 2016
(‘‘NYSE Letter I’’), to Brent J. Fields, Secretary,
Commission.
8 See Securities Exchange Act Release No. 79055,
81 FR 70460 (October 12, 2016).
9 See letters from Kevin Zambrowicz, Associate
General Counsel, Securities Industry and Financial
Markets Association, dated October 19, 2016
(‘‘SIFMA Letter’’), Michele Van Tassel, President,
Association of Registration Management (‘‘ARM’’),
dated November 4, 2016 (‘‘ARM Letter I’’), Edwin
L. Reed, Deputy Director, Alabama Securities
Commission, dated November 14, 2016 (‘‘ASC
Letter’’), and Mike Rothman, President, NASAA,
dated November 16, 2016 (‘‘NASAA Response’’) to
Brent J. Fields, Secretary, Commission.
10 See letter from Elizabeth K. King, General
Counsel and Corporate Secretary, NYSE, dated
October 26, 2016 (‘‘NYSE Letter II’’) to Brent J.
Fields, Secretary, Commission.
11 See Securities Exchange Act Release No. 79645,
81 FR 95679 (December 28, 2016).
12 See letter from Michele Van Tassel, President,
ARM, dated January 4, 2017 (‘‘ARM Letter II’’) to
Brent J. Fields, Secretary, Commission.
13 See letter from Elizabeth K. King, General
Counsel and Corporate Secretary, NYSE, dated
January 16, 2017 (‘‘NYSE Letter III’’) to Brent J.
Fields, Secretary, Commission.
E:\FR\FM\09MRN1.SGM
09MRN1
]]>Agencies
[Federal Register Volume 82, Number 45 (Thursday, March 9, 2017)]
[Notices]
[Pages 13157-13161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-04600]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80148; File No. SR-MIAX-2017-10]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
March 3, 2017.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on February 24, 2017, Miami International
Securities Exchange LLC (``MIAX Options'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend 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/rule-filings, at MIAX's
principal office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Market Maker Sliding Scale
(defined
[[Page 13158]]
below) contained in its Fee Schedule to increase certain ``taker'' fees
for certain tiers assessed to MIAX Options Market Makers,\3\ as
described below.
---------------------------------------------------------------------------
\3\ The term ``Market Makers'' refers to Lead Market Makers
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered
Market Makers (``RMMs'') collectively. See Exchange Rule 100. A
Directed Order Lead Market Maker (``DLMM'') and Directed Primary
Lead Market Maker (``DPLMM'') is a party to a transaction being
allocated to the LMM or PLMM and is the result of an order that has
been directed to the LMM or PLMM. See Fee Schedule, note 2.
---------------------------------------------------------------------------
Section (1)(a)(i) of the Fee Schedule sets forth the Exchange's
Market Maker Sliding Scale for Market Maker Transaction Fees (the
``Sliding Scale''). The Sliding Scale assesses a per contract
transaction fee on a Market Maker for the execution of simple orders
and quotes (collectively, ``simple orders'') and complex orders and
quotes (collectively, ``complex orders''). The amount of the
transaction fee is based on the Market Maker's percentage of total
national market maker volume in all options classes that trade on the
Exchange during a particular calendar month, and the Exchange
aggregates the volume executed by Market Makers in both simple orders
and complex orders for purposes of determining the applicable tier and
corresponding per contract transaction fee amount.\4\ The Sliding Scale
applies to all MIAX Options Market Makers for transactions in all
products (except for mini-options, for which there are separate product
fees), with fees established for option classes in the Penny Pilot
Program \5\ (``penny option classes'') and separate fees for non-penny
option classes, and further based on whether the Market Maker is acting
as a ``maker'' or a ``taker'' \6\ in simple orders. Market Makers that
place resting liquidity, i.e., quotes or orders on the MIAX Options
System,\7\ are assessed the ``maker'' fee. Market Makers that execute
against (remove) resting liquidity are assessed a higher ``taker'' fee.
This is distinguished from traditional ``maker-taker'' models where
``makers'' typically receive a rebate and ``takers'' are assessed a
fee; the Exchange instead assesses lower transaction fees to ``makers''
as compared to ``takers,'' similar to the manner implemented at other
exchanges.\8\
---------------------------------------------------------------------------
\4\ The calculation of the volume thresholds does not include
QCC Orders, PRIME AOC Responses, and unrelated MIAX Market Maker
quotes or unrelated MIAX Market Maker orders that are received
during the Response Time Interval and executed against the PRIME
Order. See Fee Schedule, page 2. For a further discussion of these
exclusions, see Securities Exchange Act Release No. 78299 (July 12,
2016), 81 FR 46734 (July 18, 2016)(SR-MIAX-2016-20).
\5\ See Securities Exchange Act Release No. 78080 (June 15,
2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16).
\6\ See Securities Exchange Act Release No. 78519 (August 9,
2016), 81 FR 54162 (August 15, 2016) (SR-MIAX-2016-21).
\7\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\8\ The Exchange notes that similar maker-taker pricing is
implemented at International Securities Exchange, LLC (``ISE'').
ISE's Schedule of Fees, Section I, assesses maker fees to ISE market
makers in its select symbols that are lower than its taker fees.
ISE's fees are distinguished from the MIAX Options fees because the
ISE fees apply to ISE market maker orders sent to ISE by ISE
Electronic Access Members, whereas the Exchange's fees apply to
quotes and orders submitted by Market Maker.
---------------------------------------------------------------------------
Further, the Exchange provides discounted transaction fees for
Members \9\ and their qualified Affiliates \10\ that achieve certain
volume thresholds through the submission of Priority Customer \11\
orders under the Exchange's Priority Customer Rebate Program
(``PCRP''),\12\ which is set forth on two tables: One setting forth the
transaction fees applicable to Members and their Affiliates that are in
PCRP Volume Tier 3 or higher; and the other setting forth the
transaction fees applicable to Members and their Affiliates that are
not in PCRP Volume Tier 3 or higher. The Sliding Scale also includes
maker and taker fees in both tables in each tier for simple orders in
penny option classes and non-penny option classes.
---------------------------------------------------------------------------
\9\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\10\ For purposes of the MIAX Options Fee Schedule, the term
``Affiliate'' means an affiliate of a Member of at least 75% common
ownership between the firms as reflected on each firm's Form BD,
Schedule A (``Affiliate''). See Fee Schedule, note 1.
\11\ The term ``Priority Customer'' means a person or entity
that (i) is not a broker or dealer in securities, and (ii) does not
place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s). A
``Priority Customer Order'' means an order for the account of a
Priority Customer. See Exchange Rule 100.
\12\ Under the PCRP, MIAX Options credits each Member the per
contract amount resulting from each Priority Customer order
transmitted by that Member which is executed electronically on the
Exchange in all multiply-listed option classes (excluding QCC
Orders, 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 Exchange Rule 1400),
provided the Member meets certain percentage thresholds in a month
as described in the Priority Customer Rebate Program table. See Fee
Schedule, Section (1)(a)iii.
---------------------------------------------------------------------------
The current Sliding Scale tables are as follows:
Members and Their Affiliates in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex
-----------------------------------------------------------------------------------------------------------------
Per contract fee for penny Per contract fee for non-penny Per contract
classes classes surcharge for
---------------------------------------------------------------- removing
liquidity
Percentage against a
Tier thresholds Per contract Per contract resting priority
fee for penny fee for non- customer complex
Maker Taker Maker Taker classes penny classes order on the
strategy book
for penny and
non-penny
classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX Market Makers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............... $0.00-0.075......... $0.21 $0.23 $0.25 $0.30 $0.25 $0.29 $0.10
2............... Above 0.075-0.60.... 0.15 0.22 0.19 0.27 0.19 0.23 0.10
3............... Above 0.60-1.00..... 0.08 0.15 0.12 0.20 0.12 0.16 0.10
4............... Above 1.00-1.50..... 0.04 0.06 0.08 0.12 0.07 0.11 0.10
5............... Above 1.50.......... 0.02 0.04 0.06 0.10 0.05 0.09 0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 13159]]
Members and Their Affiliates Not in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex
-----------------------------------------------------------------------------------------------------------------
Per contract fee for penny Per contract fee for non-penny Per contract
classes classes surcharge for
---------------------------------------------------------------- removing
liquidity
Percentage against a
Tier thresholds Per contract Per contract resting priority
fee for penny fee for non- customer complex
Maker Taker Maker Taker classes penny classes order on the
strategy book
for penny and
non-penny
classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX Market Makers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............... 0.00-0.075.......... $0.23 $0.25 $0.27 $0.32 $0.25 $0.29 $0.10
2............... Above 0.075-0.60.... 0.17 0.24 0.21 0.29 0.19 0.23 0.10
3............... Above 0.60-1.00..... 0.10 0.17 0.14 0.22 0.12 0.16 0.10
4............... Above 1.00-1.50..... 0.06 0.08 0.10 0.14 0.07 0.11 0.10
5............... Above 1.50.......... 0.04 0.06 0.08 0.12 0.05 0.09 0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Exchange proposes to increase the taker fees as set forth in
both tables below:
Members and Their Affiliates in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex
-----------------------------------------------------------------------------------------------------------------
Per contract fee for penny Per contract fee for non-penny Per contract
classes classes surcharge for
---------------------------------------------------------------- removing
liquidity
Percentage against a
Tier thresholds Per contract Per contract resting priority
fee for penny fee for non- customer complex
Maker Taker Maker Taker classes penny classes order on the
strategy book
for penny and
non-penny
classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX Market Makers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............... $0.00-0.075......... $0.21 $0.23 $0.25 $0.30 $0.25 $0.29 $0.10
2............... Above 0.075-0.60.... 0.15 0.22 0.19 0.27 0.19 0.23 0.10
3............... Above 0.60-1.00..... 0.08 0.19 0.12 0.23 0.12 0.16 0.10
4............... Above 1.00-1.50..... 0.04 0.18 0.08 0.22 0.07 0.11 0.10
5............... Above 1.50.......... 0.02 0.17 0.06 0.21 0.05 0.09 0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Members and Their Affiliates Not in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex
-----------------------------------------------------------------------------------------------------------------
Per contract fee for penny Per contract fee for non-penny Per contract
classes classes surcharge for
---------------------------------------------------------------- removing
liquidity
Percentage against a
Tier thresholds Per contract Per contract resting priority
fee for penny fee for non- customer complex
Maker Taker Maker Taker classes penny classes order on the
strategy book
for penny and
non-penny
classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX Market Makers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............... $0.00-0.075......... $0.23 $0.25 $0.27 $0.32 $0.25 $0.29 $0.10
2............... Above 0.075-0.60.... 0.17 0.24 0.21 0.29 0.19 0.23 0.10
3............... Above 0.60-1.00..... 0.10 0.21 0.14 0.25 0.12 0.16 0.10
4............... Above 1.00-1.50..... 0.06 0.20 0.10 0.24 0.07 0.11 0.10
5............... Above 1.50.......... 0.04 0.19 0.08 0.23 0.05 0.09 0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Exchange has determined to substantially reduce the magnitude
of volume discounts that Market Makers achieve in Tiers 3, 4, and 5, as
a taker for Members who are in the Priority Customer Rebate Program
Volume Tier 3 or Higher and for Members who are not in the Priority
Customer Rebate Program Volume Tier 3 or Higher. This significant,
volume-based discount was designed to incentivize Market Makers to act
as a taker on the Exchange.\13\ For business and competitive reasons,
the Exchange now believes it is appropriate to reduce the magnitude of
discounts. The Exchange is not eliminating the discounts entirely, but
narrowing the ranges between the highest fee (assessed for Tier 1) and
fees assessed in Tiers 3, 4, and 5) in each of the two tables. The
proposed Market Maker taker fees are
[[Page 13160]]
generally in line with the Market Maker taker fees charged by other
exchanges for executing simple orders at similar volume levels,
including Exchanges that don't offer a volume discount for market maker
taker volume.\14\
---------------------------------------------------------------------------
\13\ See Securities Exchange Act Release No. 78519 (August 9,
2016), 81 FR 54162 (August 15, 2016)(SR-MIAX-2016-21).
\14\ See ISE Schedule of Fees, Section I (ISE assesses Market
Makers a taker fee of .44 per contract in Select Symbols); see also
ISE Gemini (``Gemini'') Schedule of Fees, Section I (Gemini assesses
Market Makers a taker fee of $.49 per contract in penny option
classes and SPY for Tiers 1 through 3, with Tier 1 being total
affiliated member ADV of up to 99,999 contracts, Tier 2 being total
affiliated member ADV of between 100,00 [sic] and 224,999 contracts
and Tier 3 being total affiliated member ADV of between 225,000 and
349,999 contracts and $.48 per contact in penny options classes and
SPY for Tier 4, which is total affiliated member ADV of 350,000
contracts or more); see further Bats BZX Options Exchange (``BATS'')
Fee Schedule, p. 1 (BATS assesses Market Maker a taker fee of $.50
per contract in penny option classes and 1.07 per contract in non-
penny option classes).
---------------------------------------------------------------------------
The proposed rule change is scheduled to become operative March 1,
2017.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \15\ in general, and furthers the
objectives of Sections 6(b)(4) of the Act,\16\ in that it is an
equitable allocation of reasonable fees and other charges among
Exchange Members and other persons using its facilities, and Section
6(b)(5) of the Act,\17\ in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed taker fee increase for the various tiers is equitable
and not unfairly discriminatory because all similarly situated Market
Makers are subject to the same fees and access to the Exchange is
offered on terms that are not unfairly discriminatory. The Exchange
initially set its taker fees at the various volume levels based upon
business determinations and an analysis of current taker fees and
volume levels at other exchanges. When the Exchange initially adopted
taker fees,\18\ it set its higher tier taker fees much lower than other
exchanges in order to encourage its Market Makers to reach for higher
volume levels in order to achieve greater discounts. For competitive
and business reasons, the Exchange believes that it no longer needs to
offer such deep discounts in the higher tiers and desires to narrow the
range between the lower and higher tiers with respect to the taker
fees. The Exchange also believes that it is appropriate to increase
taker fees to be more in line with competing exchanges. The Exchange
notes that the increased taker fees are comparable to those assessed by
other exchanges and that even with the increase, the Exchange's taker
fees are still less than those assessed by such exchanges.\19\
---------------------------------------------------------------------------
\18\ See supra note 13.
\19\ See supra note 14.
---------------------------------------------------------------------------
The Exchange's proposal to assess a higher fee to Market Makers
that take liquidity in penny option and non-penny option classes is
also reasonable, equitable and not unfairly discriminatory under the
Act. While distinguished from the traditional ``maker-taker'' fee model
under which an exchange pays a per-contract rebate to their members to
encourage them to place resting liquidity by providing quotes and
orders (``maker'') on their trading systems and assessing a fee that
executes against a resting order (``taker''), the Exchange assesses a
reduced fee for ``makers'' as compared to ``takers'' rather than giving
the ``maker'' a rebate.
The Exchange believes that the maker-taker pricing model is an
important competitive tool for exchanges and directly or indirectly can
provide better prices for investors. Such pricing models may narrow the
MIAX Options Bid and Offer (``MBBO'') because the reduced fee for
``makers'' effectively subsidizes, and thus encourages, the posting of
liquidity, while the assessment of lower fees in higher tiers to
``takers'' encourages Market Makers to provide order flow. The Exchange
believes that this pricing model provides Market Makers with greater
incentive to either match or improve upon the best price displayed on
MIAX Options, all to the benefit of investors and the public in the
form of improved execution prices.
Further, the Exchange's assessment of a higher fee to Market Makers
who remove liquidity is reasonable, equitable and not unfairly
discriminatory and follows a similar line of reasoning. It is common
practice among options exchanges to differentiate between fees for
adding liquidity and fees for removing liquidity, and such
differentiation has been accepted as not unfairly discriminatory under
the Act.\20\ The Exchange believes that the differentiation in pricing
between ``makers'' and ``takers'' is appropriate, because ``takers''
remove liquidity and benefit disproportionately from their executions
as compared to ``makers,'' without assuming the obligations that
``makers'' assume in making continuous, two-sided markets, and without
engaging in competitive price discovery and improvement in the same
manner as ``makers.'' Liquidity removers benefit from the price and
size discovery function that liquidity providers have performed in
posting their quotations and orders, and when executing against resting
liquidity, a ``taker'' is not taking the risk of an order or quote
sitting unexecuted on the Book. The Exchange believes for these reasons
that assessing a higher ``taker'' fee for the various tiers for simple
orders is equitable, reasonable and not unfairly discriminatory, and
thus consistent with the Act.
---------------------------------------------------------------------------
\20\ Id.
---------------------------------------------------------------------------
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 proposed fee
structure is intended to promote narrower spreads and encourage the
posting of liquidity (instead of taking liquidity), and thus should
promote better prices. The proposed rule change should enable the
Exchange to attract, and compete for, order flow with other exchanges
and the higher fees for removing liquidity will encourage Market Makers
to submit order flow that adds liquidity, not removes it.
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. The
Exchange believes that the proposed rule changes reflect this
competitive environment because they modify the Exchange's fees in a
manner that encourages market participants to provide liquidity and to
send order flow to the Exchange rather than remove liquidity from the
market place.
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.
[[Page 13161]]
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,\21\ and Rule 19b-4(f)(2) \22\ 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.
---------------------------------------------------------------------------
\21\ 15 U.S.C. 78s(b)(3)(A)(ii).
\22\ 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-2017-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2017-10. 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-MIAX-2017-10, and should be
submitted on or before March 30, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------
\23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04600 Filed 3-8-17; 8:45 am]
BILLING CODE 8011-01-P
