Self-Regulatory Organizations: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange LLC To Amend Its Fee Schedule, 42178-42183 [2018-17849]
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42178
Federal Register / Vol. 83, No. 161 / Monday, August 20, 2018 / Notices
Exchange has not received any written
comments from members or other
interested parties.
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)
of the Act 17 and paragraph (f) of Rule
19b–4 thereunder.18 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.
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:
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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–
CboeEDGX–2018–032 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–CboeEDGX–2018–032. 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 website (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 website viewing and
printing in the Commission’s Public
17 15
U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f).
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Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2018–032 and
should be submitted on or before
September 10, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Robert W. Errett,
Deputy Secretary.
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The Commission is
extending this 45-day time period. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,5
designates October 1, 2018, as the date
by which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NYSEArca–2018–40).
[FR Doc. 2018–17833 Filed 8–17–18; 8:45 am]
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Robert W. Errett,
Deputy Secretary.
BILLING CODE 8011–01–P
[FR Doc. 2018–17831 Filed 8–17–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83844; File No. SR–
NYSEArca–2018–40]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on a Proposed Rule Change Regarding
Investments of the REX BKCM ETF
August 14, 2018.
On June 26, 2018, NYSE Arca, Inc.
(‘‘NYSE Arca’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change
relating to investments of the REX
BKCM ETF. The proposed rule change
was published for comment in the
Federal Register on July 3, 2018.3 The
Commission has received no comments
on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 83546
(June 28, 2018), 83 FR 31214 (July 3, 2018).
4 15 U.S.C. 78s(b)(2).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83847; File No. SR–MIAX–
2018–23]
Self-Regulatory Organizations: Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by Miami
International Securities Exchange LLC
To Amend Its Fee Schedule
August 14, 2018.
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 August 7, 2018, 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 website at
1 15
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5 Id.
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 83, No. 161 / Monday, August 20, 2018 / Notices
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend the
Fee Schedule to modify certain aspects
of the following fees that apply to MIAX
Options Market Makers: 3 (i) The
Monthly Trading Permit fees; and (ii)
the MEI Port fees. The Exchange also
proposes to amend the list of MIAX
Select Symbols 4 contained in the
Priority Customer Rebate Program 5 of
the Exchange’s Fee Schedule to delete
an obsolete reference.
The Exchange issues Trading Permits
that confer the ability to transact on the
Exchange.6 Currently, the Exchange
assesses the following monthly fees for
MIAX Options Market Maker Trading
Permits: (i) $7,000 for Market Maker
Assignments in up to 10 option classes
or up to 20% of option classes by
volume; (ii) $12,000 for Market Maker
3 The term ‘‘Market Makers’’ refers to ‘‘Lead
Market Makers,’’ ‘‘Primary Lead Market Makers’’
and ‘‘Registered Market Makers’’ collectively. See
Exchange Rule 100.
4 The term ‘‘MIAX Select Symbols’’ means
options overlying AAL, AAPL, AIG, AMAT, AMD,
AMZN, BA, BABA, BB, BIDU, BP, C, CAT, CBS,
CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE,
GILD, GLD, GM, GOOGL, GPRO, HAL, HTZ, INTC,
IWM, JCP, JNJ, JPM, KMI, KO, MO, MRK, NFLX,
NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG,
S, SPY, T, TSLA, USO, VALE, VXX, WBA, WFC,
WMB, WY, X, XHB, XLE, XLF, XLP, XOM, and
XOP.
5 See Section 1(a)(iii) of the Fee Schedule for a
complete description of the Program.
6 There is no limit on the number of Trading
Permits that may be issued by the Exchange;
however, the Exchange has the authority to limit or
decrease the number of Trading Permits it has
determined to issue provided it complies with the
provisions set forth in Rule 200(a) and Section
6(c)(4) of the Exchange Act. See 15 U.S.C.
78(f)(c)(4). For a complete description of MIAX
Options Trading Permits, see MIAX Rule 200.
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Assignments in up to 40 option classes
or up to 35% of option classes by
volume; (iii) $17,000 for Market Maker
Assignments in up to 100 option classes
or up to 50% of option classes by
volume; and (iv) $22,000.00 for Market
Maker Assignments in over 100 option
classes or over 50% of option classes by
volume up to all option classes listed on
MIAX Options.7 For the calculation of
these monthly Trading Permit fees, the
number of classes is defined as the
greatest number of classes the Market
Maker was assigned to quote in on any
given day within the calendar month
and the class volume percentage is
based on the total national average daily
volume in classes listed on MIAX
Options in the prior calendar quarter.8
Newly listed option classes are
excluded from the calculation of the
monthly Market Maker Trading Permit
fee until the calendar quarter following
their listing, at which time the newly
listed option classes will be included in
both the per class count and the
percentage of total national average
daily volume.
The Exchange assesses Market Makers
the monthly Trading Permit fee based
on the greatest number of classes listed
on MIAX Options that the Market Maker
was assigned to quote on any given day
within a calendar month and the
applicable fee rate that is the lesser of
either the per class basis or percentage
of total national average daily volume
measurement. Members receiving
Trading Permits during the month will
be assessed Trading Permit fees
according to this schedule, except that
the calculation of the Trading Permit fee
for the first month in which the Trading
Permit is issued will be pro-rated based
on the number of trading days occurring
after the date on which the Trading
Permit was in effect during that first
month divided by the total number of
trading days in such month multiplied
by the monthly rate.
The Exchange recently modified the
Trading Permit fees to provide lower
fees to Market Makers that execute less
volume than a certain volume threshold
in certain Trading Permit Tier levels.9 In
7 See
the Fee Schedule, Section 3(b).
Exchange will use the following formula to
calculate the percentage of total national average
daily volume that the Market Maker assignment is
for purposes of the Market Maker trading permit fee
for a given month:
Market Maker assignment percentage of national
average daily volume = [total volume during the
prior calendar quarter in a class in which the
Market Maker was assigned]/[total national volume
in classes listed on MIAX Options in the prior
calendar quarter].
9 See Securities Exchange Act Release No. 82868
(March 13, 2018), 83 FR 12063 (March 19, 2018)
(SR–MIAX–2018–08).
42179
particular, for Market Makers that fall
within the following Trading Permit fee
levels, which represent the 3rd or 4th
levels of the fee table: (i) Market Maker
Assignments in up to 100 option classes
or up to 50% of option classes by
volume, or (ii) Market Maker
Assignments in over 100 option classes
or over 50% of option classes by volume
up to all option classes listed on MIAX
Options; and whose total monthly
Market Maker executed volume during
the relevant month is less than 0.075%
of the total monthly executed volume
reported by OCC in the market maker
account type for MIAX–listed option
classes for that month, the Exchange
assesses a Trading Permit fee of $15,500
instead of the fee otherwise applicable
to such level.10
The Exchange now proposes to
further modify its Trading Permit fees
by lowering the monthly Market Maker
executed volume threshold requirement
from less than 0.075% to less than
0.060% of total monthly executed
volume reported by OCC in the Market
Maker account type for MIAX–listed
option classes for that month, and
which fall within the 3rd or 4th levels
of the fee table. Accordingly, the
Exchange proposes for these Monthly
Trading Permit Fee levels, if the Market
Maker’s total monthly executed volume
during the relevant month is less than
0.060% of the total monthly executed
volume reported by OCC in the Market
Maker account type for MIAX–listed
option classes for that month, then the
fee will be $15,500 instead of the fee
otherwise applicable to such level. This
is a proposed change to the Trading
Permit fees for Market Makers that fall
within the 3rd or 4th levels of the fee
table.
The proposed adjustment to the
threshold is based on an assessment of
recent Market Maker volume trends on
the Exchange. Specifically, the
Exchange determined that, due to lower
total monthly executed volume
executed by certain larger-scale Market
Makers, certain larger-scale Market
Markers could potentially receive the
lower fees, which lower fees were
intended only to apply to smaller-scale
Market Makers. Therefore, the Exchange
8 The
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10 For example, if Market Maker 1 elects to quote
the top 40 option classes which consist of 58% of
the total national average daily volume in the prior
calendar quarter, the Exchange would assess
$12,000 to Market Maker 1 for the month which is
the lesser of ‘up to 40 classes’ and ‘over 50% of
classes by volume up to all classes listed on MIAX.’
If Market Maker 2 elects to quote the bottom 1000
option classes which consist of 10% of the total
national average daily volume in the prior quarter,
the Exchange would assess $7,000 to Market Maker
2 for the month which is the lesser of ‘over 100
classes’ and ‘up to 20% of classes by volume.’
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believes that it is reasonable, equitable,
and not unfairly discriminatory to
adjust the monthly Market Maker
executed volume threshold requirement
from less than 0.075% to less than
0.060% of total monthly executed
volume reported by OCC in the Market
Maker account type for MIAX–listed
option classes for that month, so that
such lower fees will continue to apply
to only smaller-scale Market Makers.
The Exchange believes that by
continuing to offer lower fees to Market
Makers that execute less volume than a
certain volume threshold in certain
Trading Permit Tier levels, the
Exchange will retain and attract smallerscale Market Makers, which are an
integral component of the option
industry marketplace, but have been
decreasing in number in recent years,
due to industry consolidation and lower
market maker profitability. Since these
smaller-scale Market Makers execute
less volume overall, the Exchange
believes it is reasonable and appropriate
to offer such Market Makers (that are
willing to quote the majority or entirety
of the market) lower fees.
Similarly, the Exchange also proposes
to modify its MEI Port fees assessable to
Market Makers. Currently, MIAX
Options assesses monthly MEI Port fees
on Market Makers based upon the
number of classes or class volume
accessed by the Market Maker. Market
Makers are allocated two (2) Full
Service MEI Ports 11 and two (2) Limited
Service MEI Ports per matching
engine 12 to which they connect. The
Exchange currently assesses the
following MEI Port fees: (a) $5,000 for
Market Maker Assignments in up to 5
option classes or up to 10% of option
classes by volume; (b) $10,000 for
Market Maker Assignments in up to 10
option classes or up to 20% of option
classes by volume; (c) $14,000 for
Market Maker Assignments in up to 40
option classes or up to 35% of option
classes by volume; (d) $17,500 for
Market Maker Assignments in up to 100
11 Full Service MEI Ports provide Market Makers
with the ability to send Market Maker quotes,
eQuotes, and quote purge messages to the MIAX
Options System. Full Service MEI Ports are also
capable of receiving administrative information.
Market Makers are limited to two Full Service MEI
Ports per matching engine.
12 A ‘‘matching engine’’ is a part of the MIAX
Options electronic system that processes options
quotes and trades on a symbol-by-symbol basis.
Some matching engines will process option classes
with multiple root symbols, and other matching
engines will be dedicated to one single option root
symbol (for example, options on SPY will be
processed by one single matching engine that is
dedicated only to SPY). A particular root symbol
may only be assigned to a single designated
matching engine. A particular root symbol may not
be assigned to multiple matching engines.
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option classes or up to 50% of option
classes by volume; and (e) $20,500 for
Market Maker Assignments in over 100
option classes or over 50% of option
classes by volume up to all option
classes listed on MIAX Options.13 The
Exchange also currently charges $100
per month for each additional Limited
Service MEI Port per matching engine
for Market Makers over and above the
two (2) Limited Service MEI Ports per
matching engine that are allocated with
the Full Service MEI Ports. The Full
Service MEI Ports, Limited Service MEI
Ports and the additional Limited Service
MEI Ports all include access to the
Exchange’s Primary and Secondary data
centers and its Disaster Recovery center.
For the calculation of the monthly MEI
Port fees that apply to Market Makers,
the number of classes is defined as the
greatest number of classes the Market
Maker was assigned to quote in on any
given day within the calendar month
and the class volume percentage is
based on the total national average daily
volume in classes listed on MIAX
Options in the prior calendar quarter.14
Newly listed option classes are
excluded from the calculation of the
monthly MEI Port fee until the calendar
quarter following their listing, at which
time the newly listed option classes will
be included in both the per class count
and the percentage of total national
average daily volume.
The Exchange assesses Market Makers
the monthly MEI Port fees based on the
greatest number of classes listed on
MIAX Options that the Market Maker
was assigned to quote on any given day
within a calendar month and the
applicable fee rate that is the lesser of
either the per class basis or percentage
of total national average daily volume
measurement.
The Exchange recently modified the
MEI Port fees to provide lower fees to
Market Makers that execute less volume
than a certain volume threshold in
certain MEI Port fee levels.15 In
particular, for Market Makers that fall
within the following MEI Port fee levels,
which represent the 4th or 5th levels of
the fee table: Market Makers that have
(i) Assignments in up to 100 option
classes or up to 50% of option classes
by volume, or (ii) Assignments in over
13 See
the Fee Schedule, Section 5(d)(ii).
14 The Exchange will use the following formula to
calculate the percentage of total national average
daily volume that the Market Maker assignment is
for purposes of the MEI Port fee for a given month:
Market Maker assignment percentage of national
average daily volume = [total volume during the
prior calendar quarter in a class in which the
Market Maker was assigned]/[total national volume
in classes listed on MIAX Options in the prior
calendar quarter].
15 See supra note 9.
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100 option classes or over 50% of
option classes by volume up to all
option classes listed on MIAX Options;
and whose total monthly Market Maker
executed volume during the relevant
month is less than 0.075% of the total
monthly executed volume reported by
OCC in the market maker account type
for MIAX-listed option classes for that
month, the Exchange assesses a fee of
$14,500 instead of the fee otherwise
applicable to such level.16
The Exchange now proposes to
further modify its MEI Port fees by
lowering the monthly volume threshold
requirement from less than 0.075% to
less than 0.060% of total monthly
Market Maker executed volume reported
by OCC in the Market Maker account
type for MIAX-listed option classes for
that month, and which fall within the
4th or 5th levels of the fee table.
Accordingly, the Exchange proposes for
these MEI Port Fee levels, if the Market
Maker’s total monthly executed volume
during the relevant month is less than
0.060% of the total monthly executed
volume reported by OCC in the Market
Maker account type for MIAX-listed
option classes for that month, then the
fee will be $14,500 instead of the fee
otherwise applicable to such level. This
is a proposed change to the MEI Port
fees for Market Makers that fall within
the 4th or 5th levels of the fee table.
The proposed adjustment to the
threshold is based on an assessment of
recent Market Maker volume trends on
the Exchange. Specifically, the
Exchange determined that, due to lower
total monthly executed volume
executed by certain larger-scale Market
Makers, certain larger-scale Market
Markers could potentially receive the
lower fees, which lower fees were
intended only to apply to smaller-scale
Market Makers. Therefore, the Exchange
believes that it is reasonable, equitable,
and not unfairly discriminatory to
adjust the monthly Market Maker
executed volume threshold requirement
from less than 0.075% to less than
0.060% of total monthly executed
volume reported by OCC in the Market
Maker account type for MIAX-listed
option classes for that month, so that
such lower fees will continue to apply
16 For example, if Market Maker 1 elects to quote
the top 40 option classes which consist of 58% of
the total national average daily volume in the prior
calendar quarter, the Exchange would assess
$14,000 to Market Maker 1 for the month which is
the lesser of ‘up to 40 classes’ and ‘over 50% of
classes by volume up to all classes listed on MIAX.’
If Market Maker 2 elects to quote the bottom 1000
option classes which consist of 10% of the total
national average daily volume in the prior quarter,
the Exchange would assess $5,000 to Market Maker
2 for the month which is the lesser of ‘over 100
classes’ and ‘up to 10% of classes by volume.’
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to only smaller-scale Market Makers.
The Exchange believes that by
continuing to offer lower fees to Market
Makers that execute less volume than a
certain volume threshold in certain MEI
Port fee levels, the Exchange will retain
and attract smaller-scale Market Makers,
which are an integral component of the
option industry marketplace, but have
been decreasing in number in recent
years, due to industry consolidation and
lower market maker profitability. Since
these smaller-scale Market Makers
execute less volume overall, the
Exchange believes it is reasonable and
appropriate to offer such Market Makers
(that are willing to quote the majority or
entirety of the market) lower fees.
The Exchange also proposes to amend
the list of MIAX Select Symbols
contained in the Priority Customer
Rebate Program of the Exchange’s Fee
Schedule to delete an obsolete
reference. Specifically, the Exchange
proposes to delete the symbol ‘‘NQ’’
associated with NQ Mobile Inc. The
Exchange notes that, as a result of a
recent corporate action, NQ changed its
name, trading symbol, CUSIP, and
business model. The company is now
known as Link Motion Inc. (‘‘LKM’’).17
The Exchange determined not to replace
NQ with LKM, for business reasons.
Therefore, NQ should be removed from
the list of MIAX Select Symbols. By
removing NQ from the list of MIAX
Select Symbols, it will help to ensure
that there is no confusion amongst
market participants and will clarify that
LKM is not a MIAX Select Symbol.
The Exchange initially filed the
proposal on July 31, 2018 (SR–MIAX–
2018–17). That filing was withdrawn
and replaced with the current filing
(SR–MIAX–2018–23).
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 18
in general, and furthers the objectives of
Section 6(b)(4) and 6(b)(5) of the Act 19
in particular, in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among Exchange
Members and issuers and other persons
using any facility or system which the
Exchange operates or controls. The
Exchange also believes the proposal
furthers the objectives of Section 6(b)(5)
of the Act 20 in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
17 The change became effective on March 14,
2018.
18 15 U.S.C. 78f(b).
19 15 U.S.C. 78f(b)(4)(5).
20 15 U.S.C. 78f(b)(5).
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perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest and is
not designed to permit unfair
discrimination between customer,
issuers, brokers and dealers.
The Exchange believes that the
proposed modification to the Trading
Permit fees is consistent with Section
6(b)(4) of the Act in that it is reasonable,
equitable and not unfairly
discriminatory. The proposed
modification to the Trading Permit fees
is reasonable in that, by continuing to
offer lower fees to Market Makers that
execute less volume than a certain
volume threshold in certain Trading
Permit Tier levels, the Exchange will
retain and attract smaller-scale Market
Makers, which are an integral
component of the option industry
marketplace, but have been decreasing
in number in recent years, due to
industry consolidation and lower
market maker profitability. Since these
smaller-scale Market Makers execute
less volume overall, the Exchange
believes it is reasonable and appropriate
to offer such Market Makers (that are
willing to quote the majority or entirety
of the market) lower fees. The Exchange
also believes that its proposal is
consistent with Section 6(b)(5) of the
Act because it will be uniformly applied
to all Market Makers that execute less
volume on the Exchange, as determined
and measured by a uniform, objective,
quantitative volume amount. The
Exchange notes that the proposed
changes to Trading Permit fees apply
only to the two highest tiers on the Fee
Schedule. The Exchange believes that
this is consistent with Section 6(b)(5) of
the Act because it will allow for smallerscale Market Makers, that execute less
volume overall, to still be incentivized
to quote the majority or entirety of the
market, without paying the higher fees,
which would be assessed to a Market
Maker with a total monthly executed
volume during the relevant month of
greater than the proposed 0.060% of the
total monthly executed volume reported
by OCC in the market maker account
type for MIAX-listed option classes for
that month. The proposed Trading
Permit fees are fair and equitable and
not unreasonably discriminatory
because they apply equally to all
similarly situated Market Makers
regardless of type and access to the
Exchange is offered on terms that are
not unfairly discriminatory.
The Exchange also believes that the
proposed modification to the Trading
Permit fees is reasonable in that it is
based on an assessment of recent Market
Maker volume trends on the Exchange.
PO 00000
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42181
Specifically, the Exchange determined
that, due to lower total monthly
executed volume executed by certain
larger-scale Market Makers, certain
larger-scale Market Markers could
potentially receive the lower fees, which
lower fees were intended only to apply
to smaller-scale Market Makers.
Therefore, the Exchange believes that it
is reasonable, equitable, and not
unfairly discriminatory to adjust the
monthly Market Maker executed volume
threshold requirement from less than
0.075% to less than 0.060% of total
monthly executed volume reported by
OCC in the Market Maker account type
for MIAX-listed option classes for that
month, so that such lower fees will
continue to apply to only smaller-scale
Market Makers. The Exchange believes
that by continuing to offer lower fees to
Market Makers that execute less volume
than a certain volume threshold in
certain Trading Permit Tier levels, the
Exchange will retain and attract smallerscale Market Makers, which are an
integral component of the option
industry marketplace, but have been
decreasing in number in recent years,
due to industry consolidation and lower
market maker profitability. Since these
smaller-scale Market Makers execute
less volume overall, the Exchange
believes it is reasonable and appropriate
to offer such Market Makers (that are
willing to quote the majority or entirety
of the market) lower fees.
The Exchange believes that the
proposed modification to the MEI Port
fees is consistent with Section 6(b)(4) of
the Act in that it is reasonable, equitable
and not unfairly discriminatory. The
proposed modification to the MEI Port
fees is reasonable in that, by continuing
to offer lower fees to Market Makers that
execute less volume than a certain
volume threshold in certain MEI Port
fee levels, the Exchange will retain and
attract smaller-scale Market Makers,
which are an integral component of the
option industry marketplace, but have
been decreasing in number in recent
years, due to industry consolidation and
lower market maker profitability. Since
these smaller-scale Market Makers
execute less volume overall, the
Exchange believes it is reasonable and
appropriate to offer such Market Makers
(who are willing to quote the majority
or entirety of the market) lower fees.
The Exchange also believes that its
proposal is consistent with Section
6(b)(5) of the Act because it will be
uniformly applied to all Market Makers
that execute less volume on the
Exchange, as determined and measured
by a uniform, objective, quantitative
volume amount. The Exchange notes
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Federal Register / Vol. 83, No. 161 / Monday, August 20, 2018 / Notices
that the proposed changes to MEI Port
fees apply only to the two highest tiers
of the Fee Schedule. The Exchange
believes that this is consistent with
Section 6(b)(5) of the Act because it will
allow for smaller-scale Market Makers,
that execute less volume overall, to still
be incentivized to quote the majority or
entirety of the market, without paying
the higher fees, which would be
assessed to a Market Maker with a total
monthly executed volume during the
relevant month of greater than the
proposed 0.060% of the total monthly
executed volume reported by OCC in
the market maker account type for
MIAX-listed option classes for that
month. The proposed MEI Port fees are
fair and equitable and not unreasonably
discriminatory because they apply
equally to all similarly situated Market
Makers regardless of type and access to
the Exchange is offered on terms that are
not unfairly discriminatory.
The Exchange also believes that the
proposed modification to the MEI Port
fees is reasonable in that it is based on
an assessment of recent Market Maker
volume trends on the Exchange.
Specifically, the Exchange determined
that, due to lower total monthly
executed volume executed by certain
larger-scale Market Makers, certain
larger-scale Market Markers could
potentially receive the lower fees, which
lower fees were intended only to apply
to smaller-scale Market Makers.
Therefore, the Exchange believes that it
is reasonable, equitable, and not
unfairly discriminatory to adjust the
monthly Market Maker executed volume
threshold requirement from less than
0.075% to less than 0.060% of total
monthly executed volume reported by
OCC in the Market Maker account type
for MIAX–listed option classes for that
month, so that such lower fees will
continue to apply to only smaller-scale
Market Makers. The Exchange believes
that by continuing to offer lower fees to
Market Makers that execute less volume
than a certain volume threshold in
certain MEI Port fee levels, the
Exchange will retain and attract smallerscale Market Makers, which are an
integral component of the option
industry marketplace, but have been
decreasing in number in recent years,
due to industry consolidation and lower
market maker profitability. Since these
smaller-scale Market Makers execute
less volume overall, the Exchange
believes it is reasonable and appropriate
to offer such Market Makers (that are
willing to quote the majority or entirety
of the market) lower fees.
Furthermore, the proposal to delete
the symbol NQ from the list of MIAX
Select Symbols contained in the Priority
VerDate Sep<11>2014
19:04 Aug 17, 2018
Jkt 244001
Customer Rebate Program is consistent
with Section 6(b)(4) of the Act because
the proposed change will benefit
investors by providing them an
accurate, up-to-date list of MIAX Select
Symbols contained in the Priority
Customer Rebate Program on the Fee
Schedule. The Exchange believes that
the credit for transactions in the select
symbols is reasonably designed because
it continues to incentivize providers of
Priority Customer order flow to send
that Priority Customer order flow to the
Exchange in order to receive a credit in
a manner that enables the Exchange to
improve its overall competitiveness and
strengthen its market quality for all
market participants. Additionally, the
Exchange believes that its decision not
to list the symbol LKM, which replaced
NQ, is reasonably designed to increase
the competitiveness of the Exchange
with other options exchange in that the
Exchange does not believe the symbol
LKM should be included as a higher
volume symbol in the MAIX Select
Symbol program. The Exchange also
believes that its proposal is consistent
with Section 6(b)(5) of the Act because
it will apply equally to all Priority
Customer orders in the select symbols.
All similarly situated Priority Customer
orders in the select symbols are subject
to the same rebate schedule, and access
to the Exchange is offered on terms that
are not unfairly discriminatory. In
addition, the Program is equitable and
not unfairly discriminatory because,
while only Priority Customer order flow
qualifies for the Program, an increase in
Priority Customer order flow will bring
greater volume and liquidity, which
benefit all market participants by
providing more trading opportunities
and tighter spreads.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
rule changes will increase both
intermarket and intramarket
competition by continuing to enable
smaller-scale Market Makers that are
willing to quote the entire marketplace
(or a substantial amount of the entire
marketplace) access to the Exchange at
a lower fee. By continuing to offer lower
fees to Market Makers that execute less
volume than a certain volume threshold
at certain fee levels, the Exchange
believes that it will retain and attract
smaller-scale Market Makers, which are
an integral component of the option
industry marketplace, but have been
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
decreasing in number in recent years,
due to industry consolidation and lower
market maker profitability. Since these
smaller-scale Market Makers execute
less volume overall, the Exchange
believes it is reasonable and appropriate
to offer such Market Makers lower fees.
The Exchange also believes that
removing the symbol NQ from the
MIAX Select Symbols and not replacing
it with symbol LKM will not impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act. The Exchange
believes that the proposed rule change
will increase both intermarket and
intramarket competition by providing
investors an accurate, up-to-date list of
MIAX Select Symbols contained in the
Priority Customer Rebate Program on
the Fee Schedule and by continuing to
provide increased incentives only for
higher volume symbols that the
Exchange believes will increase the
competitiveness of the Exchange with
other options exchange that also offer
increased incentives to higher volume
symbols.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges and to attract order flow to
the Exchange. The Exchange believes
that the proposed rule changes reflect
this competitive environment because
they modify the Exchange’s fees in a
manner that continues to encourage
market participants to register as Market
Makers on the Exchange, to provide
liquidity and to attract order flow. To
the extent that this purpose is achieved,
all the Exchange’s market participants
should benefit from the improved
market liquidity.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,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
21 15
22 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
20AUN1
Federal Register / Vol. 83, No. 161 / Monday, August 20, 2018 / Notices
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.
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–MIAX–2018–23, and
should be submitted on or before
September 10, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Jill M. Peterson,
Assistant Secretary.
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–2018–23 on the subject line.
daltland on DSKBBV9HB2PROD 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:
[FR Doc. 2018–17849 Filed 8–17–18; 8:45 am]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rules 6.4–O
and 6.4A–O
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MIAX–2018–23. 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 website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
VerDate Sep<11>2014
19:04 Aug 17, 2018
Jkt 244001
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83837; File No. SR–
NYSEArca–2018–59]
August 14, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
3, 2018, NYSE Arca, Inc. (‘‘Exchange’’ or
‘‘NYSE Arca’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rules 6.4–O and 6.4A–O. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
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.
1 15
PO 00000
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Fmt 4703
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42183
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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to amend
Rules 6.4–O (Series of Options Open for
Trading) and 6.4A–O (Select Provisions
of the Options Listing Procedures
Plan)—or OLPP—to conform to recently
approved changes to the OLPP.4
The Exchange, which is one of the
Participant Exchanges 5 to the OLPP,
currently has rules that are designed to
incorporate the requirements of the
OLPP. All Participant Exchanges have
similar such (essentially uniform) rules
to ensure consistency and compliance
with the OLPP. The Exchange proposes
to modify such rules to reflect the recent
updates as described below.
Addition of Long-Term Equity Options
(‘‘LEAPS’’)
First, the OLPP has been amended to
change the earliest date on which new
January LEAPS on equity options,
options on Exchange Traded Funds
(‘‘ETF’’), or options on Trust Issued
Receipts (‘‘TIR’’) may be added to a
single date (from three separate
months).6 As noted in the OLPP Notice,
in the past there were operational
concerns related to adding new January
LEAPs series for all options classes on
which LEAPs were listed on a single
trading day.7 And, the addition of new
series in a pre-electronic trading
environment was a manual process. To
4 See Securities Exchange Act Release Nos. 82235
(December 7, 2017), 82 FR 58668 (December 13,
2017) (order approving the Fourth Amendment to
the OLPP); 81893 (October 18, 2017), 82 FR 49249
(‘‘OLPP Notice’’).
5 In addition to the Exchange, the ‘‘Participant
Exchanges’’ are: Chicago Board Options Exchange,
Incorporated (now known as Cboe Exchange, Inc.),
on behalf of the BATS Exchange, Inc. (now known
as Cboe BZX Exchange, Inc.); Box Options
Exchange, LLC; C2 Exchange, Incorporated (now
known as Cboe C2 Exchange, Inc.); EDGX Exchange,
Inc. (now known as Cboe EDGX Exchange, Inc.);
Miami International Securities Exchange, LLC;
MIAX PEARL, LLC; Nasdaq BX, Inc.; Nasdaq
GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC;
Nasdaq Options Market, LLC; Nasdaq PHLX, LLC;
and NYSE American, LLC.
6 The Exchange proposes to modify Rule 6.4–O(d)
to include the title Long-Term Equity Option Series
(LEAPS), to consolidate LEAPS requirements into
one paragraph, and to delete extraneous references
to LEAPS in current paragraphs (d) and (e) to Rule
6.4–O. See proposed Rule 6.4–O(d). Consistent with
this change, the Exchange also proposes to retitle
current paragraph (f) as (e). See proposed Rule 6.4–
O(f).
7 See supra n. 4, 82 FR 49249, at 49249.
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]]>Agencies
[Federal Register Volume 83, Number 161 (Monday, August 20, 2018)]
[Notices]
[Pages 42178-42183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17849]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83847; File No. SR-MIAX-2018-23]
Self-Regulatory Organizations: Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by Miami International
Securities Exchange LLC To Amend Its Fee Schedule
August 14, 2018.
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 August 7, 2018, 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
website at
[[Page 42179]]
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 Fee Schedule to modify certain
aspects of the following fees that apply to MIAX Options Market Makers:
\3\ (i) The Monthly Trading Permit fees; and (ii) the MEI Port fees.
The Exchange also proposes to amend the list of MIAX Select Symbols \4\
contained in the Priority Customer Rebate Program \5\ of the Exchange's
Fee Schedule to delete an obsolete reference.
---------------------------------------------------------------------------
\3\ The term ``Market Makers'' refers to ``Lead Market Makers,''
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
\4\ The term ``MIAX Select Symbols'' means options overlying
AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BB, BIDU, BP, C, CAT,
CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD, GM,
GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO, MRK,
NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY, T, TSLA,
USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF, XLP, XOM, and
XOP.
\5\ See Section 1(a)(iii) of the Fee Schedule for a complete
description of the Program.
---------------------------------------------------------------------------
The Exchange issues Trading Permits that confer the ability to
transact on the Exchange.\6\ Currently, the Exchange assesses the
following monthly fees for MIAX Options Market Maker Trading Permits:
(i) $7,000 for Market Maker Assignments in up to 10 option classes or
up to 20% of option classes by volume; (ii) $12,000 for Market Maker
Assignments in up to 40 option classes or up to 35% of option classes
by volume; (iii) $17,000 for Market Maker Assignments in up to 100
option classes or up to 50% of option classes by volume; and (iv)
$22,000.00 for Market Maker Assignments in over 100 option classes or
over 50% of option classes by volume up to all option classes listed on
MIAX Options.\7\ For the calculation of these monthly Trading Permit
fees, the number of classes is defined as the greatest number of
classes the Market Maker was assigned to quote in on any given day
within the calendar month and the class volume percentage is based on
the total national average daily volume in classes listed on MIAX
Options in the prior calendar quarter.\8\ Newly listed option classes
are excluded from the calculation of the monthly Market Maker Trading
Permit fee until the calendar quarter following their listing, at which
time the newly listed option classes will be included in both the per
class count and the percentage of total national average daily volume.
---------------------------------------------------------------------------
\6\ There is no limit on the number of Trading Permits that may
be issued by the Exchange; however, the Exchange has the authority
to limit or decrease the number of Trading Permits it has determined
to issue provided it complies with the provisions set forth in Rule
200(a) and Section 6(c)(4) of the Exchange Act. See 15 U.S.C.
78(f)(c)(4). For a complete description of MIAX Options Trading
Permits, see MIAX Rule 200.
\7\ See the Fee Schedule, Section 3(b).
\8\ The Exchange will use the following formula to calculate the
percentage of total national average daily volume that the Market
Maker assignment is for purposes of the Market Maker trading permit
fee for a given month:
Market Maker assignment percentage of national average daily
volume = [total volume during the prior calendar quarter in a class
in which the Market Maker was assigned]/[total national volume in
classes listed on MIAX Options in the prior calendar quarter].
---------------------------------------------------------------------------
The Exchange assesses Market Makers the monthly Trading Permit fee
based on the greatest number of classes listed on MIAX Options that the
Market Maker was assigned to quote on any given day within a calendar
month and the applicable fee rate that is the lesser of either the per
class basis or percentage of total national average daily volume
measurement. Members receiving Trading Permits during the month will be
assessed Trading Permit fees according to this schedule, except that
the calculation of the Trading Permit fee for the first month in which
the Trading Permit is issued will be pro-rated based on the number of
trading days occurring after the date on which the Trading Permit was
in effect during that first month divided by the total number of
trading days in such month multiplied by the monthly rate.
The Exchange recently modified the Trading Permit fees to provide
lower fees to Market Makers that execute less volume than a certain
volume threshold in certain Trading Permit Tier levels.\9\ In
particular, for Market Makers that fall within the following Trading
Permit fee levels, which represent the 3rd or 4th levels of the fee
table: (i) Market Maker Assignments in up to 100 option classes or up
to 50% of option classes by volume, or (ii) Market Maker Assignments in
over 100 option classes or over 50% of option classes by volume up to
all option classes listed on MIAX Options; and whose total monthly
Market Maker executed volume during the relevant month is less than
0.075% of the total monthly executed volume reported by OCC in the
market maker account type for MIAX-listed option classes for that
month, the Exchange assesses a Trading Permit fee of $15,500 instead of
the fee otherwise applicable to such level.\10\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 82868 (March 13,
2018), 83 FR 12063 (March 19, 2018) (SR-MIAX-2018-08).
\10\ For example, if Market Maker 1 elects to quote the top 40
option classes which consist of 58% of the total national average
daily volume in the prior calendar quarter, the Exchange would
assess $12,000 to Market Maker 1 for the month which is the lesser
of `up to 40 classes' and `over 50% of classes by volume up to all
classes listed on MIAX.' If Market Maker 2 elects to quote the
bottom 1000 option classes which consist of 10% of the total
national average daily volume in the prior quarter, the Exchange
would assess $7,000 to Market Maker 2 for the month which is the
lesser of `over 100 classes' and `up to 20% of classes by volume.'
---------------------------------------------------------------------------
The Exchange now proposes to further modify its Trading Permit fees
by lowering the monthly Market Maker executed volume threshold
requirement from less than 0.075% to less than 0.060% of total monthly
executed volume reported by OCC in the Market Maker account type for
MIAX-listed option classes for that month, and which fall within the
3rd or 4th levels of the fee table. Accordingly, the Exchange proposes
for these Monthly Trading Permit Fee levels, if the Market Maker's
total monthly executed volume during the relevant month is less than
0.060% of the total monthly executed volume reported by OCC in the
Market Maker account type for MIAX-listed option classes for that
month, then the fee will be $15,500 instead of the fee otherwise
applicable to such level. This is a proposed change to the Trading
Permit fees for Market Makers that fall within the 3rd or 4th levels of
the fee table.
The proposed adjustment to the threshold is based on an assessment
of recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange
[[Page 42180]]
believes that it is reasonable, equitable, and not unfairly
discriminatory to adjust the monthly Market Maker executed volume
threshold requirement from less than 0.075% to less than 0.060% of
total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply to only smaller-scale Market
Makers. The Exchange believes that by continuing to offer lower fees to
Market Makers that execute less volume than a certain volume threshold
in certain Trading Permit Tier levels, the Exchange will retain and
attract smaller-scale Market Makers, which are an integral component of
the option industry marketplace, but have been decreasing in number in
recent years, due to industry consolidation and lower market maker
profitability. Since these smaller-scale Market Makers execute less
volume overall, the Exchange believes it is reasonable and appropriate
to offer such Market Makers (that are willing to quote the majority or
entirety of the market) lower fees.
Similarly, the Exchange also proposes to modify its MEI Port fees
assessable to Market Makers. Currently, MIAX Options assesses monthly
MEI Port fees on Market Makers based upon the number of classes or
class volume accessed by the Market Maker. Market Makers are allocated
two (2) Full Service MEI Ports \11\ and two (2) Limited Service MEI
Ports per matching engine \12\ to which they connect. The Exchange
currently assesses the following MEI Port fees: (a) $5,000 for Market
Maker Assignments in up to 5 option classes or up to 10% of option
classes by volume; (b) $10,000 for Market Maker Assignments in up to 10
option classes or up to 20% of option classes by volume; (c) $14,000
for Market Maker Assignments in up to 40 option classes or up to 35% of
option classes by volume; (d) $17,500 for Market Maker Assignments in
up to 100 option classes or up to 50% of option classes by volume; and
(e) $20,500 for Market Maker Assignments in over 100 option classes or
over 50% of option classes by volume up to all option classes listed on
MIAX Options.\13\ The Exchange also currently charges $100 per month
for each additional Limited Service MEI Port per matching engine for
Market Makers over and above the two (2) Limited Service MEI Ports per
matching engine that are allocated with the Full Service MEI Ports. The
Full Service MEI Ports, Limited Service MEI Ports and the additional
Limited Service MEI Ports all include access to the Exchange's Primary
and Secondary data centers and its Disaster Recovery center. For the
calculation of the monthly MEI Port fees that apply to Market Makers,
the number of classes is defined as the greatest number of classes the
Market Maker was assigned to quote in on any given day within the
calendar month and the class volume percentage is based on the total
national average daily volume in classes listed on MIAX Options in the
prior calendar quarter.\14\ Newly listed option classes are excluded
from the calculation of the monthly MEI Port fee until the calendar
quarter following their listing, at which time the newly listed option
classes will be included in both the per class count and the percentage
of total national average daily volume.
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\11\ Full Service MEI Ports provide Market Makers with the
ability to send Market Maker quotes, eQuotes, and quote purge
messages to the MIAX Options System. Full Service MEI Ports are also
capable of receiving administrative information. Market Makers are
limited to two Full Service MEI Ports per matching engine.
\12\ A ``matching engine'' is a part of the MIAX Options
electronic system that processes options quotes and trades on a
symbol-by-symbol basis. Some matching engines will process option
classes with multiple root symbols, and other matching engines will
be dedicated to one single option root symbol (for example, options
on SPY will be processed by one single matching engine that is
dedicated only to SPY). A particular root symbol may only be
assigned to a single designated matching engine. A particular root
symbol may not be assigned to multiple matching engines.
\13\ See the Fee Schedule, Section 5(d)(ii).
\14\ The Exchange will use the following formula to calculate
the percentage of total national average daily volume that the
Market Maker assignment is for purposes of the MEI Port fee for a
given month:
Market Maker assignment percentage of national average daily
volume = [total volume during the prior calendar quarter in a class
in which the Market Maker was assigned]/[total national volume in
classes listed on MIAX Options in the prior calendar quarter].
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The Exchange assesses Market Makers the monthly MEI Port fees based
on the greatest number of classes listed on MIAX Options that the
Market Maker was assigned to quote on any given day within a calendar
month and the applicable fee rate that is the lesser of either the per
class basis or percentage of total national average daily volume
measurement.
The Exchange recently modified the MEI Port fees to provide lower
fees to Market Makers that execute less volume than a certain volume
threshold in certain MEI Port fee levels.\15\ In particular, for Market
Makers that fall within the following MEI Port fee levels, which
represent the 4th or 5th levels of the fee table: Market Makers that
have (i) Assignments in up to 100 option classes or up to 50% of option
classes by volume, or (ii) Assignments in over 100 option classes or
over 50% of option classes by volume up to all option classes listed on
MIAX Options; and whose total monthly Market Maker executed volume
during the relevant month is less than 0.075% of the total monthly
executed volume reported by OCC in the market maker account type for
MIAX-listed option classes for that month, the Exchange assesses a fee
of $14,500 instead of the fee otherwise applicable to such level.\16\
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\15\ See supra note 9.
\16\ For example, if Market Maker 1 elects to quote the top 40
option classes which consist of 58% of the total national average
daily volume in the prior calendar quarter, the Exchange would
assess $14,000 to Market Maker 1 for the month which is the lesser
of `up to 40 classes' and `over 50% of classes by volume up to all
classes listed on MIAX.' If Market Maker 2 elects to quote the
bottom 1000 option classes which consist of 10% of the total
national average daily volume in the prior quarter, the Exchange
would assess $5,000 to Market Maker 2 for the month which is the
lesser of `over 100 classes' and `up to 10% of classes by volume.'
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The Exchange now proposes to further modify its MEI Port fees by
lowering the monthly volume threshold requirement from less than 0.075%
to less than 0.060% of total monthly Market Maker executed volume
reported by OCC in the Market Maker account type for MIAX-listed option
classes for that month, and which fall within the 4th or 5th levels of
the fee table. Accordingly, the Exchange proposes for these MEI Port
Fee levels, if the Market Maker's total monthly executed volume during
the relevant month is less than 0.060% of the total monthly executed
volume reported by OCC in the Market Maker account type for MIAX-listed
option classes for that month, then the fee will be $14,500 instead of
the fee otherwise applicable to such level. This is a proposed change
to the MEI Port fees for Market Makers that fall within the 4th or 5th
levels of the fee table.
The proposed adjustment to the threshold is based on an assessment
of recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange believes that it is reasonable, equitable, and
not unfairly discriminatory to adjust the monthly Market Maker executed
volume threshold requirement from less than 0.075% to less than 0.060%
of total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply
[[Page 42181]]
to only smaller-scale Market Makers. The Exchange believes that by
continuing to offer lower fees to Market Makers that execute less
volume than a certain volume threshold in certain MEI Port fee levels,
the Exchange will retain and attract smaller-scale Market Makers, which
are an integral component of the option industry marketplace, but have
been decreasing in number in recent years, due to industry
consolidation and lower market maker profitability. Since these
smaller-scale Market Makers execute less volume overall, the Exchange
believes it is reasonable and appropriate to offer such Market Makers
(that are willing to quote the majority or entirety of the market)
lower fees.
The Exchange also proposes to amend the list of MIAX Select Symbols
contained in the Priority Customer Rebate Program of the Exchange's Fee
Schedule to delete an obsolete reference. Specifically, the Exchange
proposes to delete the symbol ``NQ'' associated with NQ Mobile Inc. The
Exchange notes that, as a result of a recent corporate action, NQ
changed its name, trading symbol, CUSIP, and business model. The
company is now known as Link Motion Inc. (``LKM'').\17\ The Exchange
determined not to replace NQ with LKM, for business reasons. Therefore,
NQ should be removed from the list of MIAX Select Symbols. By removing
NQ from the list of MIAX Select Symbols, it will help to ensure that
there is no confusion amongst market participants and will clarify that
LKM is not a MIAX Select Symbol.
---------------------------------------------------------------------------
\17\ The change became effective on March 14, 2018.
---------------------------------------------------------------------------
The Exchange initially filed the proposal on July 31, 2018 (SR-
MIAX-2018-17). That filing was withdrawn and replaced with the current
filing (SR-MIAX-2018-23).
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \18\ in general, and
furthers the objectives of Section 6(b)(4) and 6(b)(5) of the Act \19\
in particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Exchange Members and
issuers and other persons using any facility or system which the
Exchange operates or controls. The Exchange also believes the proposal
furthers the objectives of Section 6(b)(5) of the Act \20\ in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest and is not designed to permit unfair
discrimination between customer, issuers, brokers and dealers.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(4)(5).
\20\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed modification to the Trading
Permit fees is consistent with Section 6(b)(4) of the Act in that it is
reasonable, equitable and not unfairly discriminatory. The proposed
modification to the Trading Permit fees is reasonable in that, by
continuing to offer lower fees to Market Makers that execute less
volume than a certain volume threshold in certain Trading Permit Tier
levels, the Exchange will retain and attract smaller-scale Market
Makers, which are an integral component of the option industry
marketplace, but have been decreasing in number in recent years, due to
industry consolidation and lower market maker profitability. Since
these smaller-scale Market Makers execute less volume overall, the
Exchange believes it is reasonable and appropriate to offer such Market
Makers (that are willing to quote the majority or entirety of the
market) lower fees. The Exchange also believes that its proposal is
consistent with Section 6(b)(5) of the Act because it will be uniformly
applied to all Market Makers that execute less volume on the Exchange,
as determined and measured by a uniform, objective, quantitative volume
amount. The Exchange notes that the proposed changes to Trading Permit
fees apply only to the two highest tiers on the Fee Schedule. The
Exchange believes that this is consistent with Section 6(b)(5) of the
Act because it will allow for smaller-scale Market Makers, that execute
less volume overall, to still be incentivized to quote the majority or
entirety of the market, without paying the higher fees, which would be
assessed to a Market Maker with a total monthly executed volume during
the relevant month of greater than the proposed 0.060% of the total
monthly executed volume reported by OCC in the market maker account
type for MIAX-listed option classes for that month. The proposed
Trading Permit fees are fair and equitable and not unreasonably
discriminatory because they apply equally to all similarly situated
Market Makers regardless of type and access to the Exchange is offered
on terms that are not unfairly discriminatory.
The Exchange also believes that the proposed modification to the
Trading Permit fees is reasonable in that it is based on an assessment
of recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange believes that it is reasonable, equitable, and
not unfairly discriminatory to adjust the monthly Market Maker executed
volume threshold requirement from less than 0.075% to less than 0.060%
of total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply to only smaller-scale Market
Makers. The Exchange believes that by continuing to offer lower fees to
Market Makers that execute less volume than a certain volume threshold
in certain Trading Permit Tier levels, the Exchange will retain and
attract smaller-scale Market Makers, which are an integral component of
the option industry marketplace, but have been decreasing in number in
recent years, due to industry consolidation and lower market maker
profitability. Since these smaller-scale Market Makers execute less
volume overall, the Exchange believes it is reasonable and appropriate
to offer such Market Makers (that are willing to quote the majority or
entirety of the market) lower fees.
The Exchange believes that the proposed modification to the MEI
Port fees is consistent with Section 6(b)(4) of the Act in that it is
reasonable, equitable and not unfairly discriminatory. The proposed
modification to the MEI Port fees is reasonable in that, by continuing
to offer lower fees to Market Makers that execute less volume than a
certain volume threshold in certain MEI Port fee levels, the Exchange
will retain and attract smaller-scale Market Makers, which are an
integral component of the option industry marketplace, but have been
decreasing in number in recent years, due to industry consolidation and
lower market maker profitability. Since these smaller-scale Market
Makers execute less volume overall, the Exchange believes it is
reasonable and appropriate to offer such Market Makers (who are willing
to quote the majority or entirety of the market) lower fees. The
Exchange also believes that its proposal is consistent with Section
6(b)(5) of the Act because it will be uniformly applied to all Market
Makers that execute less volume on the Exchange, as determined and
measured by a uniform, objective, quantitative volume amount. The
Exchange notes
[[Page 42182]]
that the proposed changes to MEI Port fees apply only to the two
highest tiers of the Fee Schedule. The Exchange believes that this is
consistent with Section 6(b)(5) of the Act because it will allow for
smaller-scale Market Makers, that execute less volume overall, to still
be incentivized to quote the majority or entirety of the market,
without paying the higher fees, which would be assessed to a Market
Maker with a total monthly executed volume during the relevant month of
greater than the proposed 0.060% of the total monthly executed volume
reported by OCC in the market maker account type for MIAX-listed option
classes for that month. The proposed MEI Port fees are fair and
equitable and not unreasonably discriminatory because they apply
equally to all similarly situated Market Makers regardless of type and
access to the Exchange is offered on terms that are not unfairly
discriminatory.
The Exchange also believes that the proposed modification to the
MEI Port fees is reasonable in that it is based on an assessment of
recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange believes that it is reasonable, equitable, and
not unfairly discriminatory to adjust the monthly Market Maker executed
volume threshold requirement from less than 0.075% to less than 0.060%
of total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply to only smaller-scale Market
Makers. The Exchange believes that by continuing to offer lower fees to
Market Makers that execute less volume than a certain volume threshold
in certain MEI Port fee levels, the Exchange will retain and attract
smaller-scale Market Makers, which are an integral component of the
option industry marketplace, but have been decreasing in number in
recent years, due to industry consolidation and lower market maker
profitability. Since these smaller-scale Market Makers execute less
volume overall, the Exchange believes it is reasonable and appropriate
to offer such Market Makers (that are willing to quote the majority or
entirety of the market) lower fees.
Furthermore, the proposal to delete the symbol NQ from the list of
MIAX Select Symbols contained in the Priority Customer Rebate Program
is consistent with Section 6(b)(4) of the Act because the proposed
change will benefit investors by providing them an accurate, up-to-date
list of MIAX Select Symbols contained in the Priority Customer Rebate
Program on the Fee Schedule. The Exchange believes that the credit for
transactions in the select symbols is reasonably designed because it
continues to incentivize providers of Priority Customer order flow to
send that Priority Customer order flow to the Exchange in order to
receive a credit in a manner that enables the Exchange to improve its
overall competitiveness and strengthen its market quality for all
market participants. Additionally, the Exchange believes that its
decision not to list the symbol LKM, which replaced NQ, is reasonably
designed to increase the competitiveness of the Exchange with other
options exchange in that the Exchange does not believe the symbol LKM
should be included as a higher volume symbol in the MAIX Select Symbol
program. The Exchange also believes that its proposal is consistent
with Section 6(b)(5) of the Act because it will apply equally to all
Priority Customer orders in the select symbols. All similarly situated
Priority Customer orders in the select symbols are subject to the same
rebate schedule, and access to the Exchange is offered on terms that
are not unfairly discriminatory. In addition, the Program is equitable
and not unfairly discriminatory because, while only Priority Customer
order flow qualifies for the Program, an increase in Priority Customer
order flow will bring greater volume and liquidity, which benefit all
market participants by providing more trading opportunities and tighter
spreads.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
proposed rule changes will increase both intermarket and intramarket
competition by continuing to enable smaller-scale Market Makers that
are willing to quote the entire marketplace (or a substantial amount of
the entire marketplace) access to the Exchange at a lower fee. By
continuing to offer lower fees to Market Makers that execute less
volume than a certain volume threshold at certain fee levels, the
Exchange believes that it will retain and attract smaller-scale Market
Makers, which are an integral component of the option industry
marketplace, but have been decreasing in number in recent years, due to
industry consolidation and lower market maker profitability. Since
these smaller-scale Market Makers execute less volume overall, the
Exchange believes it is reasonable and appropriate to offer such Market
Makers lower fees. The Exchange also believes that removing the symbol
NQ from the MIAX Select Symbols and not replacing it with symbol LKM
will not impose any burden on competition not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will increase both intermarket and intramarket
competition by providing investors an accurate, up-to-date list of MIAX
Select Symbols contained in the Priority Customer Rebate Program on the
Fee Schedule and by continuing to provide increased incentives only for
higher volume symbols that the Exchange believes will increase the
competitiveness of the Exchange with other options exchange that also
offer increased incentives to higher volume symbols.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its fees to remain
competitive with other exchanges and to attract order flow to the
Exchange. The Exchange believes that the proposed rule changes reflect
this competitive environment because they modify the Exchange's fees in
a manner that continues to encourage market participants to register as
Market Makers on the Exchange, to provide liquidity and to attract
order flow. To the extent that this purpose is achieved, all the
Exchange's market participants should benefit from the improved market
liquidity.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\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
[[Page 42183]]
summarily may temporarily suspend such rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(3)(A)(ii).
\22\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MIAX-2018-23 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2018-23. 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 website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MIAX-2018-23, and should be submitted on
or before September 10, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2018-17849 Filed 8-17-18; 8:45 am]
BILLING CODE 8011-01-P
