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 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make 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 http://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 (http://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 (http://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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public 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]


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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 http://www.miaxoptions.com/rule-filings, at MIAX's 
principal office, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend 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 (http://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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make 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