Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 9567-9573 [2019-04806]
Download as PDF
<![CDATA[
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
commenter would be faced with a
choice of absorbing the fee and raising
its operating costs, or passing the fee
through to its customers, forcing its
prices to become less competitive.22
IV. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Change and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 23 to determine
whether the proposed rule change
should be approved or disapproved.
Institution of proceedings is appropriate
at this time in view of the legal and
policy issues raised by the proposed
rule change. Institution of proceedings
does not indicate that the Commission
has reached any conclusions with
respect to any of the issues involved.
Rather, the Commission seeks and
encourages interested persons to
comment on the proposed rule change,
and provide the Commission with
arguments to support the Commission’s
analysis as to whether to approve or
disapprove the proposed rule change.
Pursuant to Section 19(b)(2)(B) of the
Act,24 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for
additional analysis of, and input from a
commenter with respect to, the
proposed rule change’s consistency with
Section 17A of the Act,25 and the rules
thereunder, including the following
provisions: (i) Section 17A(b)(3)(F) of
the Act,26 which requires, among other
things, that the rules of a clearing
agency must be designed to promote the
prompt and accurate clearance and
settlement of securities transactions;
and (ii) Section 17A(b)(3)(I) of the Act,27
which requires that the rules of a
clearing agency do not impose any
burden on competition not necessary or
appropriate in furtherance of the
purpose of the Act.
amozie on DSK9F9SC42PROD with NOTICES
V. Request for Written Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposed rule change. In particular, the
Commission invites the written views of
interested persons concerning whether
22 See
23 15
id.
U.S.C. 78s(b)(2)(B).
24 Id.
25 15
U.S.C. 78q–1.
U.S.C. 78q–1(b)(3)(F).
27 15 U.S.C. 78q–1(b)(3)(I).
26 15
VerDate Sep<11>2014
16:53 Mar 14, 2019
Jkt 247001
9567
the proposed rule change is consistent
with Sections 17A(b)(3)(F) and (I) of the
Act, cited above, or any other provision
of the Act, or the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4(g) under the Act,28 any
request for an opportunity to make an
oral presentation.29
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposed rule change should be
approved or disapproved by April 5,
2019. Any person who wishes to file a
rebuttal to any other person’s
submission must file that rebuttal by
April 15, 2019. Comments may be
submitted by any of the following
methods:
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 such
filings also will be available for
inspection and copying at the principal
office of DTC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). 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–DTC–
2018–010 and should be submitted on
or before April 5, 2019. Rebuttal
comments should be submitted by April
15, 2019.
Electronic Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Eduardo A. Aleman,
Deputy Secretary.
• 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–
DTC–2018–010 on the subject line.
[FR Doc. 2019–04809 Filed 3–14–19; 8:45 am]
BILLING CODE 8011–01–P
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–DTC–2018–010. 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
28 17
CFR 240.19b–4(g).
19(b)(2) of the Act grants to the
Commission flexibility to determine what type of
proceeding—either oral or notice and opportunity
for written comments—is appropriate for
consideration of a particular proposal by a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
29 Section
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85283; File No. SR–MIAX–
2019–11]
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 11, 2019.
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 28, 2019, 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.
30 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\15MRN1.SGM
15MRN1
9568
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
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’’) to adopt
transaction fees and rebates for SPIKES
index option orders and quotes
(collectively ‘‘orders’’), and for
transactions involving SPY options on
SPIKES settlement day, as described
below. The Exchange also proposes to
make a technical clarification to its Fee
Schedule.
The Exchange initially filed the
proposal on February 15, 2019 (SR–
MIAX–2019–04). That filing has been
withdrawn and replaced with the
current filing (SR–MIAX–2019–11).
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings, at MIAX’s principal office, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
amozie on DSK9F9SC42PROD with NOTICES
1. Purpose
The Exchange proposes to amend the
Fee Schedule to adopt transaction fees
and rebates for SPIKES index options
orders, and for transactions involving
SPY options on SPIKES settlement day,
as described below. The Exchange also
proposes to make a technical
clarification to its Fee Schedule. The
Exchange notes, by way of background,
that on June 28, 2018, the Exchange
filed with the Commission a proposal to
list and trade on the Exchange, options
on the SPIKESTM Index, a new index
that measures expected 30-day volatility
of the SPDR S&P 500 ETF Trust
(commonly known and referred to by its
ticker symbol, ‘‘SPY’’).3 Accordingly,
3 See Securities Exchange Act Release No. 84417
(October 12, 2018), 83 FR 52865 (October 18, 2018)
VerDate Sep<11>2014
16:53 Mar 14, 2019
Jkt 247001
the Exchange is proposing to adopt
transaction fees and rebates that will
apply to Exchange Members 4 for
transactions involving SPIKES index
options, and for transactions involving
SPY options on SPIKES settlement day.
All order fees will be charged on a per
contract per side basis.
The Exchange proposes to exclude
SPIKES index options volume from a
variety of fee and rebate programs and
their calculation, in the Fee Schedule.
Specifically, SPIKES index options
volume will not count towards: the
Priority Customer Rebate Program, the
Market Maker Transaction Fees Sliding
Scale of fees and rebates, or the
Professional Rebate Program. The
Exchange notes the reason a proprietary
product would often be included in or
excluded from certain programs is
because the Exchange has expended
considerable resources to develop and
maintain a proprietary product, such as
SPIKES. Thus, the Exchange proposes to
make technical clarifications to existing
fee and rebate programs to exclude
SPIKES index options volume from
such programs. Lastly, the Exchange
proposes to adopt new Section 1)a)xi),
SPIKES, on the Fee Schedule to
establish transaction fees and rebates
that the Exchange will assess for
transactions in SPIKES index options.
Simple and Complex Fees
The Exchange is proposing to adopt
new Section (1)(a)(xi), SPIKES, on the
Fee Schedule to establish transaction
fees and rebates for executions in
SPIKES index options for different
Origin types. More specifically, the
Exchange is proposing both Maker and
Taker fees for Simple orders, and fees
for Simple Opening orders. Market
participants that place resting liquidity,
i.e., quotes or orders on the MIAX
Options System,5 are assessed the
‘‘maker’’ fee (each a ‘‘Maker’’). Market
participants that execute against
(remove) resting liquidity are assessed a
higher ‘‘taker’’ fee (each a ‘‘Taker’’). This
is distinguished from traditional makertaker models where makers typically
receive a rebate and takers are assessed
a fee; the Exchange instead assesses
lower transaction fees to its Makers as
compared to its Takers, similar to the
(SR–MIAX–2018–14) (Order Granting Approval of a
Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the
Exchange Options on the SPIKESTM Index).
4 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.
5 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
manner implemented at other
exchanges.6 As an incentive for market
participants to provide liquidity on the
Exchange, the Exchange’s Maker fees are
lower than its Taker fees.
With respect to Simple Maker fees,
the Exchange proposes that Priority
Customers,7 Market Makers, and Firm
Proprietary orders will be charged a
$0.00 fee; and that Non-MIAX Market
Makers, Broker-Dealers, and Public
Customers that are not Priority
Customers be charged a $0.10 fee. With
respect to Simple Taker fees, the
Exchange proposes that Priority
Customers will be charged a $0.00 fee;
Non-MIAX Market Makers, BrokerDealers, and Public Customers that are
not Priority Customers be charged a
$0.25 fee; and Market Makers and Firm
Proprietary orders be charged a $0.20
fee. Additionally, the Exchange
proposes that Taker fees for options
with a premium price of $0.10 or less
will be charged $0.05 per contract, with
respect to Market Makers and Firm
Proprietary orders, which is similar to
the pricing model used by the Cboe
Exchange, Inc. (‘‘Cboe’’).8 Furthermore,
for Simple Opening orders, the
Exchange proposes that Priority
Customers be charged a $0.00 fee; and
Market Makers, Non-MIAX Market
Makers, Broker-Dealers, Firm
Proprietary orders, and Public
Customers that are not Priority
Customers be charged a $0.15 fee.
Additionally, the Exchange proposes to
charge a per contract, per leg fee for
complex orders which will be $0.01 for
Marker Makers, Non-MIAX Market
Makers, Broker-Dealers, Firm
Proprietary orders, and Public
Customers that are not Priority
Customers. The Exchange proposes to
charge a $0.00 fee for Priority Customer
complex orders. The Exchange is not
proposing a different Maker and Taker
fee for each Origin type. Instead, the
Exchange will assess one per contract,
per leg fee of $0.01 for complex orders.
Finally, with respect to Simple and
Complex fees, the Exchange proposes a
Simple/Complex Large Trade Discount.
An order/quote that exceeds the size
threshold, tied to a Single Order/Quote
ID, will have the relevant fees apply to
the contracts at and below the size
threshold for Simple and Complex
6 The Exchange notes that similar maker-taker
pricing is implemented at Nasdaq ISE Options 7,
Section 3, Regular Order Fees and Rebates.
7 A ‘‘Priority Customer’’ means a person or entity
that (i) is not a broker or dealer in securities, and
(ii) does not place more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial accounts(s). A ‘‘Priority
Customer Order’’ means an order for the account of
a Priority Customer.
8 See Cboe Exchange, Inc. Fee Schedule, Pg.2.
E:\FR\FM\15MRN1.SGM
15MRN1
9569
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
volume; no fees shall apply to the
number of contracts executed above the
threshold, with certain exceptions. For
example, the Large Trade Discount does
not apply to volume from Priority
Customer orders, Maker orders, SPIKES
Opening orders, and the Surcharge.
Specifically, the Exchange proposes
that, for any single order/quote, no fee
shall apply to the number of contracts
executed above the first 175,000
contracts for Market Makers, Non-MIAX
Market Makers, Broker-Dealers, Firm
Proprietary orders, and Public
Customers that are not Priority
Customers. The Exchange does not
propose that such a discount apply to
Priority Customer orders because, as
proposed, the Exchange is currently
charging Priority Customers a $0.00 fee
for these volume segments.
The Exchange believes that the
proposed transaction fees for Simple
and Complex orders on SPIKES index
options are reasonable, and have been
set at an initial level that is favorable to
market participants and are designed to
encourage market participants to
provide liquidity for SPIKES index
options on the Exchange. As proposed,
the SPIKES Simple and Complex
transaction fee table will be as follows:
SIMPLE AND COMPLEX FEES
Simple
maker
Origin
Priority Customer ..............................
Market Maker ....................................
Non-MIAX Market Maker ..................
Broker-Dealer ....................................
Firm Proprietary ................................
Public Customer that is Not a Priority
Customer.
Simple
taker
$0.00
0.00
0.10
0.10
0.00
0.10
Simple
opening
$0.00
* 0.20
0.25
0.25
* 0.20
0.25
Simple/complex
large trade discount threshold +
Complex ∼
$0.00
0.15
0.15
0.15
0.15
0.15
$0.00
0.01
0.01
0.01
0.01
0.01
0.
First
First
First
First
First
175,000
175,000
175,000
175,000
175,000
contracts.
contracts.
contracts.
contracts.
contracts.
* Taker fees for options with a premium price of $0.10 or less will be charged $0.05 per contract.
∼ All fees are per contract per leg.
+ Tied to Single Order/Quote ID. For any single order/quote, no fee shall apply to the number of contracts executed above the Simple/Complex
Large Trade Discount Threshold. This discount does not apply to Priority Customer orders, Maker orders, SPIKES Opening orders, and the
Surcharge.
PRIME and cPRIME Fees
As part of the Exchange’s proposal to
adopt new Section (1)(a)(xi), the
Exchange further proposes to establish
transaction fees related to PRIME and
cPRIME orders in SPIKES. Specifically,
the Exchange proposes to establish a fee
for initiating orders in the amount of
$0.10 for Market Makers, Non-MIAX
Market Makers, Broker-Dealers, Firm
Proprietary orders, and Public
Customers that are not Priority
Customers. The Exchange proposes to
charge Priority Customers a fee of $0.00
for initiating orders. Further, the
Exchange proposes to establish a fee for
contra-side orders for all Origin types in
the amount of $0.20 and a fee for
responder-side orders in the amount of
$0.25. Finally, the Exchange proposes to
establish a break-up credit for all Origin
types in the amount of $0.15. With all
of the proposals, the SPIKES PRIME and
cPRIME transaction fee table will be as
follows:
PRIME AND cPRIME FEES
Origin
Initiating
Priority Customer .............................................................................................
Market Maker ...................................................................................................
Non-MIAX Market Maker .................................................................................
Broker-Dealer ...................................................................................................
Firm Proprietary ...............................................................................................
Public Customer that is Not a Priority Customer ............................................
amozie on DSK9F9SC42PROD with NOTICES
Surcharge
The Exchange further proposes to
establish an Index License Surcharge
(‘‘Surcharge’’) of $0.075. The Surcharge
will apply to any contract that is
executed by an Origin except Priority
Customer in Simple, Complex, PRIME
and cPRIME, and will apply per
contract side, per leg in order to recoup
the costs associated with listing this
proprietary product. Other exchanges
charge a similar fee for proprietary
index options.9 The Exchange notes,
VerDate Sep<11>2014
16:53 Mar 14, 2019
Jkt 247001
$0.00
0.10
0.10
0.10
0.10
0.10
however, that the Surcharge will be
waived for the ‘‘Waiver Period.’’ The
Exchange proposes to define ‘‘Waiver
Period’’ to mean, for purposes of Section
(1)(a)(xi) of the Fee Schedule, the period
of time from the launch of trading of
SPIKES options until such time that the
Exchange submits a filing to terminate
the Waiver Period. The Exchange will
issue a Regulatory Circular announcing
the end of the Waiver Period at least
fifteen (15) days prior to the termination
of the Waiver Period and effective date
of such Surcharge.
9 See Cboe Exchange, Inc Fee Schedule, Specified
Proprietary Index Options Rate Table—Underlying
Symbol List A and Sector Indexes; see also Nasdaq
ISE Options 7, Section 5 C.
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
Contra
$0.20
0.20
0.20
0.20
0.20
0.20
Responder
$0.25
0.25
0.25
0.25
0.25
0.25
Break-up
($0.15)
(0.15)
(0.15)
(0.15)
(0.15)
(0.15)
SPIKES Settlement Day SPY Opening
Auction Fees in SPY Options
The Exchange further proposes to
adopt fees for the Opening Process in
SPY options that will only be applicable
on SPIKES settlement day. Specifically,
these fees will be charged to each side
of all trades occurring in the SPY
Opening in the expiration month used
to determine SPIKES settlement on
settlement day only; in lieu of any other
fees in the Fee Schedule. To be clear,
volume in settlement day SPY Opening
options, as they are still multiply-listed,
will continue to count towards the
volume calculation of the variety of fee
and rebate programs as noted above.
E:\FR\FM\15MRN1.SGM
15MRN1
9570
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
the Response Time Interval and
executed against a cPRIME Order
(‘‘cPRIME Participating Quote or
Order’’)).’’ In order to clarify that this
explanatory paragraph would not apply
to singly-listed options on the SPIKES
Index, the Exchange proposes to modify
this sentence as follows: ‘‘[v]olume
thresholds are based on the total
national Market Maker volume of any
multiply-listed options classes with
traded volume on MIAX during the
month in simple and complex orders
(excluding QCC and cQCC Orders,
PRIME and cPRIME 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 (‘‘PRIME
Participating Quotes or Orders’’) and
unrelated MIAX Market Maker complex
SPIKES SETTLEMENT DAY SPY
quotes or unrelated MIAX Market Maker
OPENING AUCTION FEES
complex orders that are received during
the Response Time Interval and
SPY
opening
Origin
executed against a cPRIME Order
orders ¤
(‘‘cPRIME Participating Quote or
Priority Customer ..................
$0.00 Order’’)),’’ by adding the words
Market Maker ........................
0.03 ‘‘multiply-listed.’’ The Exchange
Non-MIAX Market Maker ......
0.06 believes that by adding this additional
Broker-Dealer .......................
0.06
wording, it will be clear that the volume
Firm Proprietary ....................
0.03
in singly-listed options is not counted
Public Customer that is Not
a Priority Customer ...........
0.06 towards reaching the Market Maker
Sliding Scale Tier thresholds of both
¤ These fees will be charged to each side of tables.
all trades occurring in the SPY opening in the
Further, the Exchange notes that
expiration month used to determine SPIKES
settlement on settlement day only; in lieu of Section 2 of the Fee Schedule,
any other fees in the Fee Schedule.
Regulatory Fees, generally applies to
transactions in options. However,
Technical Clarification
Section (2)(a), Sales Value Fee, will not
The Exchange also proposes to make
be assessed to transactions in SPIKES
a technical clarification to the
index options because pursuant to 17
explanatory paragraph below the Market CFR 240.31, ‘‘[a]ny sale of an option on
Maker Transaction Fees, Market Maker
a security index (including both a
Sliding Scale, Members and Their
narrow-based security index and a nonAffiliates Not In Priority Customer
narrow-based security),’’ is an exempt
Rebate Program Volume Tier 3 or Higher sale, and therefore, not subject to the
fee table, located in Section (1)(a)(i) of
Sales Value Fee.
the Fee Schedule. Currently, the first
Finally, the fees found in Section 3,
sentence of the explanatory paragraph
Membership Fees, Section 4, Testing
provides that ‘‘[v]olume thresholds are
and Certification Fees, Section 5,
based on the total national Market
System Connectivity Fees, and Section
Maker volume of any options classes
6, Market Data Fees, will all be
with traded volume on MIAX during the applicable to transactions in SPIKES
month in simple and complex orders
index options and will be treated like
(excluding QCC and cQCC Orders,
any other class of options.
PRIME and cPRIME AOC Responses,
2. Statutory Basis
and unrelated MIAX Market Maker
The Exchange believes that its
quotes or unrelated MIAX Market Maker
proposal to amend its Fee Schedule is
orders that are received during the
consistent with Section 6(b) of the Act 11
Response Time Interval and executed
in general, and furthers the objectives of
against the PRIME Order (‘‘PRIME
Section 6(b)(4) of the Act 12 in
Participating Quotes or Orders’’) and
unrelated MIAX Market Maker complex particular, in that it provides for the
quotes or unrelated MIAX Market Maker equitable allocation of reasonable dues,
complex orders that are received during fees and other charges among Exchange
amozie on DSK9F9SC42PROD with NOTICES
The purpose for adopting lower,
separate fees for these SPY transactions
is to encourage Market Makers and other
market participants that need to unwind
a SPIKES hedge to participate in the
Opening Auction, by making the pricing
more attractive. Specifically, market
participants holding short, hedged
SPIKES options could liquidate that
hedge by selling their SPY options
series, while traders holding long,
hedged SPIKES options could liquidate
their hedge by buying SPY option series.
These market participants may liquidate
their hedges by submitting SPIKES
strategy orders in the appropriate SPY
option series during the SPIKES Special
Settlement Auction 10 on the SPIKES
expiration/final settlement date. The
fees will be assessed as follows:
Members and issuers and other persons
using its facilities. The Exchange also
believes the proposal furthers the
objectives of Section 6(b)(5) of the Act 13
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.
The Exchange believes that the
proposed fee structure for transactions
in SPIKES index options is consistent
with Section 6(b)(4) of the Act in that it
is reasonable, equitable and not unfairly
discriminatory. The proposed fee
structure is reasonably designed because
it is intended to incentivize market
participants to transact in SPIKES index
options on the Exchange, which enables
the Exchange to improve its overall
competitiveness and strengthen its
market quality for all market
participants. The Exchange believes that
the proposed maker-taker model is an
important competitive tool for
exchanges and, directly or indirectly,
can provide better prices for investors.
The Exchange will assess lower
transaction fees to its Makers as
compared to its Takers as an incentive
for market participants to provide
liquidity on the Exchange. The
Exchange believes this will encourage
greater order flow from all market
participants, which will in turn bring
greater volume and liquidity to the
Exchange, which benefits all market
participants by providing more trading
opportunities and tighter spreads.
SPIKES index option transaction fees
are also reasonably designed because
the proposed fees and rebates are
similar to the ones the Exchange
assesses for multiply-listed options, and
are within the range of fees and rebates
assessed by other exchanges employing
similar fee structures for singly-listed
options.14 Other competing exchanges
offer different fees and rebates for
transactions in singly-listed options in a
manner similar to this proposal.15
The fee and rebate structure is
reasonable, equitable, and not unfairly
discriminatory because it will apply
equally to Priority Customer orders,
Market Maker orders, Non-MIAX Market
Maker orders, Broker Dealer orders,
Firm Proprietary orders, and Public
Customers that are not Priority
Customers orders, in each respective
category of SPIKES index option orders;
13 15
10 See
Exchange Rule 503, Interpretations and
Policies .03.
VerDate Sep<11>2014
16:53 Mar 14, 2019
Jkt 247001
U.S.C. 78f(b)(5).
supra notes 6, 8 and 9.
15 See id.
11 15
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(4).
PO 00000
Frm 00095
Fmt 4703
14 See
Sfmt 4703
E:\FR\FM\15MRN1.SGM
15MRN1
amozie on DSK9F9SC42PROD with NOTICES
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
for both Simple and Complex orders,
and PRIME and cPRIME orders, and for
transactions involving SPY options on
SPIKES settlement day. All similarly
situated categories of participants are
subject to the same transaction fee and
rebate schedule, and access to the
Exchange is offered on terms that are
not unfairly discriminatory.
The Exchange believes that it is
equitable and not unfairly
discriminatory to adopt fees for the
Opening Process in SPY options that
will only be applicable on SPIKES
settlement day to encourage Market
Makers and other market participants
that need to unwind a SPIKES hedge to
participate in the Opening Auction, by
making the pricing more attractive.
Specifically, market participants
holding short, hedged SPIKES options
could liquidate that hedge by selling
their SPY options series, while traders
holding long, hedged SPIKES options
could liquidate their hedge by buying
SPY option series. These market
participants may liquidate their hedges
by submitting SPIKES strategy orders in
the appropriate SPY option series
during the SPIKES Special Settlement
Auction on the SPIKES expiration/final
settlement date.
The exchanges in general have
historically aimed to improve markets
for investors and develop various
features within market structure for
customer benefit. The Exchange assesses
Priority Customers lower or no
transaction fees because Priority
Customer order flow enhances liquidity
on the Exchange for the benefit of all
market participants. Priority Customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts Market
Makers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants.
The Exchange believes that it is
equitable and not unfairly
discriminatory that Firm Proprietary
orders are assessed lower Maker and
Taker fees for Simple orders, and for
transactions involving SPY options on
SPIKES settlement day, than other
Origin types because the Exchange
believes that Firm Proprietary order
flow enhances liquidity on the
Exchange for the benefit of all market
participants. Specifically, Firm
Proprietary order flow liquidity benefits
all market participants by providing
more robust trading opportunities,
which attract Market Makers. An
increase in the activity of those market
participants in turn facilitates tighter
VerDate Sep<11>2014
16:53 Mar 14, 2019
Jkt 247001
spreads, which may cause an additional
corresponding increase in order flow
from other market participants. The
Maker and Taker fees offered to Firm
Proprietary orders are intended to
attract more Firm Proprietary order
volume to the Exchange. Moreover, all
fee amounts listed as applying to Firm
Proprietary orders will be applied
equally to all Firm Proprietary Orders.
The Exchange further believes that it
is equitable and not unfairly
discriminatory to assess lower Maker
and Taker fees to Market Makers for
Simple orders, and for transactions
involving SPY options on SPIKES
settlement day, as compared to other
market participants because Market
Makers, unlike other market
participants, take on a number of
obligations, including quoting
obligations that other market
participants do not have. Further,
Market Makers have added market
making and regulatory requirements,
which normally do not apply to other
market participants. For example,
Market Makers have obligations to
maintain continuous markets, engage in
a course of dealings reasonably
calculated to contribute to the
maintenance of a fair and orderly
market, and to not make bids or offers
or enter into transactions that are
inconsistent with a course of dealing.
Further, these lower Maker and Taker
fees offered to Market Makers are
intended to incent Market Makers to
quote and trade more on the Exchange,
thereby providing more liquidity and
trading opportunities for all market
participants. Additionally, the proposed
Maker and Taker fees for Market Makers
will be applied equally to all Market
Makers It should also be noted that all
fee amounts described herein are
intended to attract greater order flow to
the Exchange in SPIKES options, which
should therefore serve to benefit all
Exchange market participants.
The Exchange further believes that its
proposal to charge a Surcharge of
$0.075, which applies to any contract
that is executed by an Origin except
Priority Customer in Simple, Complex,
PRIME and cPRIME, is reasonable
because it will help recoup costs
associated with listing a proprietary
product. Further, the Exchange believes
the Surcharge is equitable and not
unfairly discriminatory because the
Exchange will apply the same Surcharge
for all similarly situated Members in a
similar manner. The Exchange also
believes it is equitable and not unfairly
discriminatory to not assess the
Surcharge to Priority Customer orders in
SPIKES options because Priority
Customer orders bring valuable liquidity
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
9571
to the market, which in turn benefits
other market participants. Other
exchanges charge a similar fee for
proprietary index options.16 The
Exchange believes that establishing a
Waiver Period for application of the
Surcharge is reasonable, equitable, and
not unfairly discriminatory because it
provides an incentive for Members to
send orders to the Exchange, as the
Surcharge fee will not apply during the
Waiver Period. All similarly situated
categories of participants are subject to
the same Waiver Period, and access to
the Exchange is offered on terms that are
not unfairly discriminatory.
Moreover, the Exchange believes that
assessing all other market participants
that are not Priority Customers a higher
transaction fee than Priority Customers
for orders in SPIKES index options is
reasonable, equitable, and not unfairly
discriminatory because these types of
market participants are more
sophisticated and have higher levels of
order flow activity and system usage.
This level of trading activity draws on
a greater amount of system resources
than that of Priority Customers. Further,
the Exchange believes it is equitable and
not unfairly discriminatory to assess all
other market participants that are not
Priority Customers, Market Makers, or
Firm Proprietary orders a higher Simple
Maker fee for orders in SPIKES options
because Priority Customers, Market
Makers, and Firm Proprietary orders
bring valuable liquidity to the market.
An increase in the activity of these
market participants in turn facilitates
tighter spreads, which may cause an
additional corresponding increase in
order flow from other market
participants, which in turn benefits the
market as a whole.
The Exchange believes that excluding
singly-listed transactions from the
number of options contracts executed
on the Exchange by any Member for
purposes of the volume thresholds in
multiply-listed options transactions is
reasonable, equitable, and not unfairly
discriminatory because participating
Members could otherwise collect the
rebates offered and meet volume
thresholds for the programs that did not
contemplate singly-listed volume at the
time of creation, and which have
different transaction fees charged on the
Exchange.
The Exchange believes that the
proposed technical changes are
consistent with Section 6(b)(5) of the
Act because they are designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanisms of a free and
16 See
E:\FR\FM\15MRN1.SGM
supra note 9.
15MRN1
amozie on DSK9F9SC42PROD with NOTICES
9572
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
open market and a national market
system and, in general to protect
investors and the public interest. The
Exchange believes it is appropriate to
make the proposed technical changes to
its Fee Schedule so that Exchange
Members have a clear and accurate
understanding of the meaning and
application of the Exchange’s Fee
Schedule.
The Exchange believes that charging
lower Taker fees to Market Makers and
Firm Proprietary orders for options that
have a premium price of $0.10 or less
(such options are charged $0.05 per
contract, versus $0.20 per contract) is
reasonable, equitable, and not unfairly
discriminatory because otherwise such
fees could be greater than the option
premium itself. The Exchange believes
that it is equitable and not unfairly
discriminatory to assess lower Taker
fees to Market Makers as compared to
Non-MIAX Market Makers and BrokerDealers because Market Makers, unlike
other market participants, take on a
number of obligations, including
quoting obligations that other market
participants do not have. Further,
Market Makers have added market
making and regulatory requirements,
which normally do not apply to other
market participants. For example,
Market Makers have obligations to
maintain continuous markets, engage in
a course of dealings reasonably
calculated to contribute to the
maintenance of a fair and orderly
market, and to not make bids or offers
or enter into transactions that are
inconsistent with a course of dealing.
Non-MIAX Market Makers and BrokerDealers tend to be takers of liquidity, as
opposed to providers of liquidity.
Additionally, the Exchange believes
that it is equitable and not unfairly
discriminatory to assess lower Taker
fees to Firm Proprietary orders for
options that have a premium price of
$0.10 or less (such options are charged
$0.05 per contract, versus $0.20 per
contract), as compared to Non-MIAX
Market Makers and Broker-Dealers
because Firm Proprietary order flow
enhances liquidity on the Exchange for
the benefit of all market participants.
Specifically, Firm Proprietary order
flow liquidity benefits all market
participants (as Firm Proprietary orders
are generally providers of liquidity) by
providing more robust trading
opportunities, which attract Market
Makers and Priority Customers. An
increase in the activity of those market
participants in turn facilitates tighter
spreads, which may cause an additional
corresponding increase in order flow
from other market participants. The
lower Taker fees offered to Firm
VerDate Sep<11>2014
16:53 Mar 14, 2019
Jkt 247001
Proprietary orders are intended to
attract more Firm Proprietary order
volume to the Exchange. Non-MIAX
Market Makers and Broker-Dealers tend
to be takers of liquidity, as opposed to
providers of liquidity. The Exchange
notes that Cboe also has similar pricing
in place for its VIX options where it
does not provide a discount to nonmarket makers and broker-dealers.17
The Exchange believes that offering
Members a Large Trade Discount is
reasonable, equitable, and not unfairly
discriminatory because it provides an
incentive for Members to submit large
sized liquidity to the Exchange, which
will benefit all market participants. All
similarly situated categories of
participants are subject to the same
discount (except for Priority Customers
which are not charged a transaction fee
otherwise, so no discount is necessary),
and access to the Exchange is offered on
terms that are not unfairly
discriminatory.
The PRIME and cPRIME fee and
rebate structure is reasonable, equitable,
and not unfairly discriminatory because
it will apply equally to Priority
Customer orders, Market Maker orders,
Non-MIAX Market Maker orders, Broker
Dealer orders, Firm Proprietary orders,
and Public Customers that are not
Priority Customers orders, in each
respective category of PRIME and
cPRIME orders. All similarly situated
categories of participants are subject to
the same transaction fee and rebate
schedule, and access to the Exchange is
offered on terms that are not unfairly
discriminatory. The PRIME and cPRIME
fee and rebate structure is reasonably
designed because it is intended to
incentivize market participants to send
complex orders in SPIKES options to
the Exchange in order to participate in
the price improvement mechanism in a
manner that enables the Exchange to
improve its overall competitiveness and
strengthen its market quality for all
market participants.
The fee and rebate structure for
transactions involving SPY Opening
orders for options that are used in the
calculation of the SPIKES Index on final
settlement day is reasonable, equitable,
and not unfairly discriminatory because
it will apply equally to Priority
Customer orders, Market Maker orders,
Non-MIAX Market Maker orders, Broker
Dealer orders, Firm Proprietary orders,
and Public Customers that are not
Priority Customers orders, in each
respective category of such orders. All
similarly situated categories of
17 See Cboe Fees Schedule, p. 2, Specified
Proprietary Options Rate Table—Underlying
Symbol List A and Sector Indexes.
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
participants are subject to the same
transaction fee and rebate schedule, and
access to the Exchange is offered on
terms that are not unfairly
discriminatory.
The Exchange believes that it is
equitable and not unfairly
discriminatory to adopt fees for the
Opening Process in SPY options that
will only be applicable on SPIKES
settlement day to encourage Market
Makers and other market participants
that need to unwind a SPIKES hedge to
participate in the Opening Auction, by
making the pricing more attractive.
Specifically, market participants
holding short, hedged SPIKES options
could liquidate that hedge by selling
their SPY options series, while traders
holding long, hedged SPIKES options
could liquidate their hedge by buying
SPY option series. These market
participants may liquidate their hedges
by submitting SPIKES strategy orders in
the appropriate SPY option series
during the SPIKES Special Settlement
Auction on the SPIKES expiration/final
settlement date.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
change will enhance the
competitiveness of the Exchange
relative to other exchanges that offer
their own singly-listed products. The
Exchange believes that the proposed
fees and rebates for transactions in
SPIKES index options, and for
transactions involving SPY options on
SPIKES settlement day, are not going to
have an impact on intra-market
competition based on the total cost for
participants to transact in such order
types versus the cost for participants to
transact in other order types available
for trading on the Exchange. As noted
above, the Exchange believes that the
proposed pricing for transactions in
SPIKES index options, and for
transactions involving SPY options on
SPIKES settlement day, is comparable to
and within the range of fees and rebates
charged by the Exchange’s competitors
offering singly-listed products.18
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
18 See
E:\FR\FM\15MRN1.SGM
supra notes 6, 8 and 9.
15MRN1
Federal Register / Vol. 84, No. 51 / Friday, March 15, 2019 / Notices
fees to remain competitive with other
exchanges and to attract order flow to
the Exchange. The Exchange believes
that the proposed rule change reflects
this competitive environment because it
establishes a fee structure in a manner
that encourages market participants to
direct their order flow, to provide
liquidity, and to attract additional
transaction volume to the Exchange.
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,19 and Rule
19b–4(f)(2) 20 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:
amozie on DSK9F9SC42PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
MIAX–2019–11 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–2019–11. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
19 15
20 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
16:53 Mar 14, 2019
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–2019–11 and should
be submitted on or before April 5, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–04806 Filed 3–14–19; 8:45 am]
BILLING CODE 8011–01–P
thereunder,2 a proposed rule change to
revise FINRA Rule 4512 (Customer
Account Information) to permit the use
of electronic signatures and to also
clarify the scope of the rule.
The proposed rule change was
published for comment in the Federal
Register on December 17, 2018.3 The
Commission received two comment
letters regarding the proposed rule
change, both supporting the proposed
rule change.4 On January 30, 2019 the
Commission extended the time to
approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to disapprove the proposed
rule change to March 17, 2019.5 For the
reasons discussed below, the
Commission is approving the proposed
rule change.
II. Description of the Proposed Rule
Change 6
FINRA proposed to amend paragraph
(a)(3) of FINRA Rule 4512 (Customer
Account Information) to permit the use
of electronic signatures and to clarify
the scope of the rule.
With respect to a discretionary
customer account maintained by a
member, FINRA Rule 4512(a)(3)
currently requires a member to obtain a
manual dated signature of each named,
natural person authorized to exercise
discretion in the account. FINRA stated
that because the rule only applies to
discretionary accounts maintained by a
member, the named natural person
would inevitably be an associated
person of the firm.7 Consequently, to
2 17
U.S.C. 240.19b–4.
Securities Exchange Act Release No. 84788
(Dec. 11, 2018), 83 FR 64609 (Dec. 17, 2018) (File
No. SR–FINRA–2018–040) (‘‘Notice’’).
4 See Letters from Paul J. Tolley, Senior Vice
President, Chief Compliance Officer,
Commonwealth Financial Network, dated
December 31, 2018 (‘‘Commonwealth Letter’’); and
Kevin Zambrowicz, Associate General Counsel &
Managing Director, SIFMA, dated January 7, 2019
(‘‘SIFMA Letter’’).
5 See Securities Exchange Act Release No. 85003
(Jan. 30, 2019), 84 FR 1809 (Feb. 5, 2019) (File No.
SR–FINRA–2018–040) (‘‘Extension’’).
6 The subsequent description of the proposed rule
change is substantially excerpted from FINRA’s
description in the Notice. See Notice, 83 FR 64609–
10.
7 There is a corresponding requirement under
NASD Rule 2510 (Discretionary Accounts)
prohibiting members and their registered
representatives from exercising any discretionary
power in a customer’s account unless the customer
has given prior written authorization to a stated
individual or individuals, and the account has been
accepted by the firm as evidenced in writing by the
firm or a designated partner, officer or manager of
the firm. These signatures need not be manual. In
addition, SEA Rule 17a–3(a)(17)(ii) requires that, for
discretionary accounts with a natural person,
broker-dealers maintain a record containing the
dated signature of each natural person to whom
3 See
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85282; File No. SR–FINRA–
2018–040]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change Relating to
FINRA Rule 4512 (Customer Account
Information)
March 11, 2019.
I. Introduction
On November 28, 2018, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
21 17
1 15
Jkt 247001
9573
PO 00000
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
Frm 00098
Fmt 4703
Sfmt 4703
Continued
E:\FR\FM\15MRN1.SGM
15MRN1
]]>Agencies
[Federal Register Volume 84, Number 51 (Friday, March 15, 2019)]
[Notices]
[Pages 9567-9573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04806]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85283; File No. SR-MIAX-2019-11]
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 11, 2019.
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 28, 2019, 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.
---------------------------------------------------------------------------
[[Page 9568]]
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'') to adopt transaction fees and rebates
for SPIKES index option orders and quotes (collectively ``orders''),
and for transactions involving SPY options on SPIKES settlement day, as
described below. The Exchange also proposes to make a technical
clarification to its Fee Schedule.
The Exchange initially filed the proposal on February 15, 2019 (SR-
MIAX-2019-04). That filing has been withdrawn and replaced with the
current filing (SR-MIAX-2019-11).
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings, at MIAX's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule to adopt
transaction fees and rebates for SPIKES index options orders, and for
transactions involving SPY options on SPIKES settlement day, as
described below. The Exchange also proposes to make a technical
clarification to its Fee Schedule. The Exchange notes, by way of
background, that on June 28, 2018, the Exchange filed with the
Commission a proposal to list and trade on the Exchange, options on the
SPIKESTM Index, a new index that measures expected 30-day
volatility of the SPDR S&P 500 ETF Trust (commonly known and referred
to by its ticker symbol, ``SPY'').\3\ Accordingly, the Exchange is
proposing to adopt transaction fees and rebates that will apply to
Exchange Members \4\ for transactions involving SPIKES index options,
and for transactions involving SPY options on SPIKES settlement day.
All order fees will be charged on a per contract per side basis.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 84417 (October 12,
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order
Granting Approval of a Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the Exchange Options
on the SPIKES\TM\ Index).
\4\ 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.
---------------------------------------------------------------------------
The Exchange proposes to exclude SPIKES index options volume from a
variety of fee and rebate programs and their calculation, in the Fee
Schedule. Specifically, SPIKES index options volume will not count
towards: the Priority Customer Rebate Program, the Market Maker
Transaction Fees Sliding Scale of fees and rebates, or the Professional
Rebate Program. The Exchange notes the reason a proprietary product
would often be included in or excluded from certain programs is because
the Exchange has expended considerable resources to develop and
maintain a proprietary product, such as SPIKES. Thus, the Exchange
proposes to make technical clarifications to existing fee and rebate
programs to exclude SPIKES index options volume from such programs.
Lastly, the Exchange proposes to adopt new Section 1)a)xi), SPIKES, on
the Fee Schedule to establish transaction fees and rebates that the
Exchange will assess for transactions in SPIKES index options.
Simple and Complex Fees
The Exchange is proposing to adopt new Section (1)(a)(xi), SPIKES,
on the Fee Schedule to establish transaction fees and rebates for
executions in SPIKES index options for different Origin types. More
specifically, the Exchange is proposing both Maker and Taker fees for
Simple orders, and fees for Simple Opening orders. Market participants
that place resting liquidity, i.e., quotes or orders on the MIAX
Options System,\5\ are assessed the ``maker'' fee (each a ``Maker'').
Market participants that execute against (remove) resting liquidity are
assessed a higher ``taker'' fee (each a ``Taker''). 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 its Makers as compared to
its Takers, similar to the manner implemented at other exchanges.\6\ As
an incentive for market participants to provide liquidity on the
Exchange, the Exchange's Maker fees are lower than its Taker fees.
---------------------------------------------------------------------------
\5\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\6\ The Exchange notes that similar maker-taker pricing is
implemented at Nasdaq ISE Options 7, Section 3, Regular Order Fees
and Rebates.
---------------------------------------------------------------------------
With respect to Simple Maker fees, the Exchange proposes that
Priority Customers,\7\ Market Makers, and Firm Proprietary orders will
be charged a $0.00 fee; and that Non-MIAX Market Makers, Broker-
Dealers, and Public Customers that are not Priority Customers be
charged a $0.10 fee. With respect to Simple Taker fees, the Exchange
proposes that Priority Customers will be charged a $0.00 fee; Non-MIAX
Market Makers, Broker-Dealers, and Public Customers that are not
Priority Customers be charged a $0.25 fee; and Market Makers and Firm
Proprietary orders be charged a $0.20 fee. Additionally, the Exchange
proposes that Taker fees for options with a premium price of $0.10 or
less will be charged $0.05 per contract, with respect to Market Makers
and Firm Proprietary orders, which is similar to the pricing model used
by the Cboe Exchange, Inc. (``Cboe'').\8\ Furthermore, for Simple
Opening orders, the Exchange proposes that Priority Customers be
charged a $0.00 fee; and Market Makers, Non-MIAX Market Makers, Broker-
Dealers, Firm Proprietary orders, and Public Customers that are not
Priority Customers be charged a $0.15 fee. Additionally, the Exchange
proposes to charge a per contract, per leg fee for complex orders which
will be $0.01 for Marker Makers, Non-MIAX Market Makers, Broker-
Dealers, Firm Proprietary orders, and Public Customers that are not
Priority Customers. The Exchange proposes to charge a $0.00 fee for
Priority Customer complex orders. The Exchange is not proposing a
different Maker and Taker fee for each Origin type. Instead, the
Exchange will assess one per contract, per leg fee of $0.01 for complex
orders.
---------------------------------------------------------------------------
\7\ A ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial accounts(s). A ``Priority
Customer Order'' means an order for the account of a Priority
Customer.
\8\ See Cboe Exchange, Inc. Fee Schedule, Pg.2.
---------------------------------------------------------------------------
Finally, with respect to Simple and Complex fees, the Exchange
proposes a Simple/Complex Large Trade Discount. An order/quote that
exceeds the size threshold, tied to a Single Order/Quote ID, will have
the relevant fees apply to the contracts at and below the size
threshold for Simple and Complex
[[Page 9569]]
volume; no fees shall apply to the number of contracts executed above
the threshold, with certain exceptions. For example, the Large Trade
Discount does not apply to volume from Priority Customer orders, Maker
orders, SPIKES Opening orders, and the Surcharge. Specifically, the
Exchange proposes that, for any single order/quote, no fee shall apply
to the number of contracts executed above the first 175,000 contracts
for Market Makers, Non-MIAX Market Makers, Broker-Dealers, Firm
Proprietary orders, and Public Customers that are not Priority
Customers. The Exchange does not propose that such a discount apply to
Priority Customer orders because, as proposed, the Exchange is
currently charging Priority Customers a $0.00 fee for these volume
segments.
The Exchange believes that the proposed transaction fees for Simple
and Complex orders on SPIKES index options are reasonable, and have
been set at an initial level that is favorable to market participants
and are designed to encourage market participants to provide liquidity
for SPIKES index options on the Exchange. As proposed, the SPIKES
Simple and Complex transaction fee table will be as follows:
Simple and Complex Fees
----------------------------------------------------------------------------------------------------------------
Simple/complex
large trade
Origin Simple maker Simple taker Simple opening Complex ~ discount
threshold +
----------------------------------------------------------------------------------------------------------------
Priority Customer............. $0.00 $0.00 $0.00 $0.00 0.
Market Maker.................. 0.00 * 0.20 0.15 0.01 First 175,000
contracts.
Non-MIAX Market Maker......... 0.10 0.25 0.15 0.01 First 175,000
contracts.
Broker-Dealer................. 0.10 0.25 0.15 0.01 First 175,000
contracts.
Firm Proprietary.............. 0.00 * 0.20 0.15 0.01 First 175,000
contracts.
Public Customer that is Not a 0.10 0.25 0.15 0.01 First 175,000
Priority Customer. contracts.
----------------------------------------------------------------------------------------------------------------
* Taker fees for options with a premium price of $0.10 or less will be charged $0.05 per contract.
~ All fees are per contract per leg.
+ Tied to Single Order/Quote ID. For any single order/quote, no fee shall apply to the number of contracts
executed above the Simple/Complex Large Trade Discount Threshold. This discount does not apply to Priority
Customer orders, Maker orders, SPIKES Opening orders, and the Surcharge.
PRIME and cPRIME Fees
As part of the Exchange's proposal to adopt new Section (1)(a)(xi),
the Exchange further proposes to establish transaction fees related to
PRIME and cPRIME orders in SPIKES. Specifically, the Exchange proposes
to establish a fee for initiating orders in the amount of $0.10 for
Market Makers, Non-MIAX Market Makers, Broker-Dealers, Firm Proprietary
orders, and Public Customers that are not Priority Customers. The
Exchange proposes to charge Priority Customers a fee of $0.00 for
initiating orders. Further, the Exchange proposes to establish a fee
for contra-side orders for all Origin types in the amount of $0.20 and
a fee for responder-side orders in the amount of $0.25. Finally, the
Exchange proposes to establish a break-up credit for all Origin types
in the amount of $0.15. With all of the proposals, the SPIKES PRIME and
cPRIME transaction fee table will be as follows:
PRIME and cPRIME Fees
----------------------------------------------------------------------------------------------------------------
Origin Initiating Contra Responder Break-up
----------------------------------------------------------------------------------------------------------------
Priority Customer............................... $0.00 $0.20 $0.25 ($0.15)
Market Maker.................................... 0.10 0.20 0.25 (0.15)
Non-MIAX Market Maker........................... 0.10 0.20 0.25 (0.15)
Broker-Dealer................................... 0.10 0.20 0.25 (0.15)
Firm Proprietary................................ 0.10 0.20 0.25 (0.15)
Public Customer that is Not a Priority Customer. 0.10 0.20 0.25 (0.15)
----------------------------------------------------------------------------------------------------------------
Surcharge
The Exchange further proposes to establish an Index License
Surcharge (``Surcharge'') of $0.075. The Surcharge will apply to any
contract that is executed by an Origin except Priority Customer in
Simple, Complex, PRIME and cPRIME, and will apply per contract side,
per leg in order to recoup the costs associated with listing this
proprietary product. Other exchanges charge a similar fee for
proprietary index options.\9\ The Exchange notes, however, that the
Surcharge will be waived for the ``Waiver Period.'' The Exchange
proposes to define ``Waiver Period'' to mean, for purposes of Section
(1)(a)(xi) of the Fee Schedule, the period of time from the launch of
trading of SPIKES options until such time that the Exchange submits a
filing to terminate the Waiver Period. The Exchange will issue a
Regulatory Circular announcing the end of the Waiver Period at least
fifteen (15) days prior to the termination of the Waiver Period and
effective date of such Surcharge.
---------------------------------------------------------------------------
\9\ See Cboe Exchange, Inc Fee Schedule, Specified Proprietary
Index Options Rate Table--Underlying Symbol List A and Sector
Indexes; see also Nasdaq ISE Options 7, Section 5 C.
---------------------------------------------------------------------------
SPIKES Settlement Day SPY Opening Auction Fees in SPY Options
The Exchange further proposes to adopt fees for the Opening Process
in SPY options that will only be applicable on SPIKES settlement day.
Specifically, these fees will be charged to each side of all trades
occurring in the SPY Opening in the expiration month used to determine
SPIKES settlement on settlement day only; in lieu of any other fees in
the Fee Schedule. To be clear, volume in settlement day SPY Opening
options, as they are still multiply-listed, will continue to count
towards the volume calculation of the variety of fee and rebate
programs as noted above.
[[Page 9570]]
The purpose for adopting lower, separate fees for these SPY
transactions is to encourage Market Makers and other market
participants that need to unwind a SPIKES hedge to participate in the
Opening Auction, by making the pricing more attractive. Specifically,
market participants holding short, hedged SPIKES options could
liquidate that hedge by selling their SPY options series, while traders
holding long, hedged SPIKES options could liquidate their hedge by
buying SPY option series. These market participants may liquidate their
hedges by submitting SPIKES strategy orders in the appropriate SPY
option series during the SPIKES Special Settlement Auction \10\ on the
SPIKES expiration/final settlement date. The fees will be assessed as
follows:
---------------------------------------------------------------------------
\10\ See Exchange Rule 503, Interpretations and Policies .03.
SPIKES Settlement Day SPY Opening Auction Fees
------------------------------------------------------------------------
SPY opening
Origin orders
[curren]
------------------------------------------------------------------------
Priority Customer....................................... $0.00
Market Maker............................................ 0.03
Non-MIAX Market Maker................................... 0.06
Broker-Dealer........................................... 0.06
Firm Proprietary........................................ 0.03
Public Customer that is Not a Priority Customer......... 0.06
------------------------------------------------------------------------
[curren] These fees will be charged to each side of all trades occurring
in the SPY opening in the expiration month used to determine SPIKES
settlement on settlement day only; in lieu of any other fees in the
Fee Schedule.
Technical Clarification
The Exchange also proposes to make a technical clarification to the
explanatory paragraph below the Market Maker Transaction Fees, Market
Maker Sliding Scale, Members and Their Affiliates Not In Priority
Customer Rebate Program Volume Tier 3 or Higher fee table, located in
Section (1)(a)(i) of the Fee Schedule. Currently, the first sentence of
the explanatory paragraph provides that ``[v]olume thresholds are based
on the total national Market Maker volume of any options classes with
traded volume on MIAX during the month in simple and complex orders
(excluding QCC and cQCC Orders, PRIME and cPRIME 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 (``PRIME Participating Quotes or Orders'') and
unrelated MIAX Market Maker complex quotes or unrelated MIAX Market
Maker complex orders that are received during the Response Time
Interval and executed against a cPRIME Order (``cPRIME Participating
Quote or Order'')).'' In order to clarify that this explanatory
paragraph would not apply to singly-listed options on the SPIKES Index,
the Exchange proposes to modify this sentence as follows: ``[v]olume
thresholds are based on the total national Market Maker volume of any
multiply-listed options classes with traded volume on MIAX during the
month in simple and complex orders (excluding QCC and cQCC Orders,
PRIME and cPRIME 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 (``PRIME
Participating Quotes or Orders'') and unrelated MIAX Market Maker
complex quotes or unrelated MIAX Market Maker complex orders that are
received during the Response Time Interval and executed against a
cPRIME Order (``cPRIME Participating Quote or Order'')),'' by adding
the words ``multiply-listed.'' The Exchange believes that by adding
this additional wording, it will be clear that the volume in singly-
listed options is not counted towards reaching the Market Maker Sliding
Scale Tier thresholds of both tables.
Further, the Exchange notes that Section 2 of the Fee Schedule,
Regulatory Fees, generally applies to transactions in options. However,
Section (2)(a), Sales Value Fee, will not be assessed to transactions
in SPIKES index options because pursuant to 17 CFR 240.31, ``[a]ny sale
of an option on a security index (including both a narrow-based
security index and a non-narrow-based security),'' is an exempt sale,
and therefore, not subject to the Sales Value Fee.
Finally, the fees found in Section 3, Membership Fees, Section 4,
Testing and Certification Fees, Section 5, System Connectivity Fees,
and Section 6, Market Data Fees, will all be applicable to transactions
in SPIKES index options and will be treated like any other class of
options.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \11\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \12\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Exchange Members and
issuers and other persons using its facilities. The Exchange also
believes the proposal furthers the objectives of Section 6(b)(5) of the
Act \13\ 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed fee structure for
transactions in SPIKES index options is consistent with Section 6(b)(4)
of the Act in that it is reasonable, equitable and not unfairly
discriminatory. The proposed fee structure is reasonably designed
because it is intended to incentivize market participants to transact
in SPIKES index options on the Exchange, which enables the Exchange to
improve its overall competitiveness and strengthen its market quality
for all market participants. The Exchange believes that the proposed
maker-taker model is an important competitive tool for exchanges and,
directly or indirectly, can provide better prices for investors. The
Exchange will assess lower transaction fees to its Makers as compared
to its Takers as an incentive for market participants to provide
liquidity on the Exchange. The Exchange believes this will encourage
greater order flow from all market participants, which will in turn
bring greater volume and liquidity to the Exchange, which benefits all
market participants by providing more trading opportunities and tighter
spreads. SPIKES index option transaction fees are also reasonably
designed because the proposed fees and rebates are similar to the ones
the Exchange assesses for multiply-listed options, and are within the
range of fees and rebates assessed by other exchanges employing similar
fee structures for singly-listed options.\14\ Other competing exchanges
offer different fees and rebates for transactions in singly-listed
options in a manner similar to this proposal.\15\
---------------------------------------------------------------------------
\14\ See supra notes 6, 8 and 9.
\15\ See id.
---------------------------------------------------------------------------
The fee and rebate structure is reasonable, equitable, and not
unfairly discriminatory because it will apply equally to Priority
Customer orders, Market Maker orders, Non-MIAX Market Maker orders,
Broker Dealer orders, Firm Proprietary orders, and Public Customers
that are not Priority Customers orders, in each respective category of
SPIKES index option orders;
[[Page 9571]]
for both Simple and Complex orders, and PRIME and cPRIME orders, and
for transactions involving SPY options on SPIKES settlement day. All
similarly situated categories of participants are subject to the same
transaction fee and rebate schedule, and access to the Exchange is
offered on terms that are not unfairly discriminatory.
The Exchange believes that it is equitable and not unfairly
discriminatory to adopt fees for the Opening Process in SPY options
that will only be applicable on SPIKES settlement day to encourage
Market Makers and other market participants that need to unwind a
SPIKES hedge to participate in the Opening Auction, by making the
pricing more attractive. Specifically, market participants holding
short, hedged SPIKES options could liquidate that hedge by selling
their SPY options series, while traders holding long, hedged SPIKES
options could liquidate their hedge by buying SPY option series. These
market participants may liquidate their hedges by submitting SPIKES
strategy orders in the appropriate SPY option series during the SPIKES
Special Settlement Auction on the SPIKES expiration/final settlement
date.
The exchanges in general have historically aimed to improve markets
for investors and develop various features within market structure for
customer benefit. The Exchange assesses Priority Customers lower or no
transaction fees because Priority Customer order flow enhances
liquidity on the Exchange for the benefit of all market participants.
Priority Customer liquidity benefits all market participants by
providing more trading opportunities, which attracts Market Makers. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
The Exchange believes that it is equitable and not unfairly
discriminatory that Firm Proprietary orders are assessed lower Maker
and Taker fees for Simple orders, and for transactions involving SPY
options on SPIKES settlement day, than other Origin types because the
Exchange believes that Firm Proprietary order flow enhances liquidity
on the Exchange for the benefit of all market participants.
Specifically, Firm Proprietary order flow liquidity benefits all market
participants by providing more robust trading opportunities, which
attract Market Makers. An increase in the activity of those market
participants in turn facilitates tighter spreads, which may cause an
additional corresponding increase in order flow from other market
participants. The Maker and Taker fees offered to Firm Proprietary
orders are intended to attract more Firm Proprietary order volume to
the Exchange. Moreover, all fee amounts listed as applying to Firm
Proprietary orders will be applied equally to all Firm Proprietary
Orders.
The Exchange further believes that it is equitable and not unfairly
discriminatory to assess lower Maker and Taker fees to Market Makers
for Simple orders, and for transactions involving SPY options on SPIKES
settlement day, as compared to other market participants because Market
Makers, unlike other market participants, take on a number of
obligations, including quoting obligations that other market
participants do not have. Further, Market Makers have added market
making and regulatory requirements, which normally do not apply to
other market participants. For example, Market Makers have obligations
to maintain continuous markets, engage in a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market, and to not make bids or offers or enter into
transactions that are inconsistent with a course of dealing. Further,
these lower Maker and Taker fees offered to Market Makers are intended
to incent Market Makers to quote and trade more on the Exchange,
thereby providing more liquidity and trading opportunities for all
market participants. Additionally, the proposed Maker and Taker fees
for Market Makers will be applied equally to all Market Makers It
should also be noted that all fee amounts described herein are intended
to attract greater order flow to the Exchange in SPIKES options, which
should therefore serve to benefit all Exchange market participants.
The Exchange further believes that its proposal to charge a
Surcharge of $0.075, which applies to any contract that is executed by
an Origin except Priority Customer in Simple, Complex, PRIME and
cPRIME, is reasonable because it will help recoup costs associated with
listing a proprietary product. Further, the Exchange believes the
Surcharge is equitable and not unfairly discriminatory because the
Exchange will apply the same Surcharge for all similarly situated
Members in a similar manner. The Exchange also believes it is equitable
and not unfairly discriminatory to not assess the Surcharge to Priority
Customer orders in SPIKES options because Priority Customer orders
bring valuable liquidity to the market, which in turn benefits other
market participants. Other exchanges charge a similar fee for
proprietary index options.\16\ The Exchange believes that establishing
a Waiver Period for application of the Surcharge is reasonable,
equitable, and not unfairly discriminatory because it provides an
incentive for Members to send orders to the Exchange, as the Surcharge
fee will not apply during the Waiver Period. All similarly situated
categories of participants are subject to the same Waiver Period, and
access to the Exchange is offered on terms that are not unfairly
discriminatory.
---------------------------------------------------------------------------
\16\ See supra note 9.
---------------------------------------------------------------------------
Moreover, the Exchange believes that assessing all other market
participants that are not Priority Customers a higher transaction fee
than Priority Customers for orders in SPIKES index options is
reasonable, equitable, and not unfairly discriminatory because these
types of market participants are more sophisticated and have higher
levels of order flow activity and system usage. This level of trading
activity draws on a greater amount of system resources than that of
Priority Customers. Further, the Exchange believes it is equitable and
not unfairly discriminatory to assess all other market participants
that are not Priority Customers, Market Makers, or Firm Proprietary
orders a higher Simple Maker fee for orders in SPIKES options because
Priority Customers, Market Makers, and Firm Proprietary orders bring
valuable liquidity to the market. An increase in the activity of these
market participants in turn facilitates tighter spreads, which may
cause an additional corresponding increase in order flow from other
market participants, which in turn benefits the market as a whole.
The Exchange believes that excluding singly-listed transactions
from the number of options contracts executed on the Exchange by any
Member for purposes of the volume thresholds in multiply-listed options
transactions is reasonable, equitable, and not unfairly discriminatory
because participating Members could otherwise collect the rebates
offered and meet volume thresholds for the programs that did not
contemplate singly-listed volume at the time of creation, and which
have different transaction fees charged on the Exchange.
The Exchange believes that the proposed technical changes are
consistent with Section 6(b)(5) of the Act because they are designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanisms of a free and
[[Page 9572]]
open market and a national market system and, in general to protect
investors and the public interest. The Exchange believes it is
appropriate to make the proposed technical changes to its Fee Schedule
so that Exchange Members have a clear and accurate understanding of the
meaning and application of the Exchange's Fee Schedule.
The Exchange believes that charging lower Taker fees to Market
Makers and Firm Proprietary orders for options that have a premium
price of $0.10 or less (such options are charged $0.05 per contract,
versus $0.20 per contract) is reasonable, equitable, and not unfairly
discriminatory because otherwise such fees could be greater than the
option premium itself. The Exchange believes that it is equitable and
not unfairly discriminatory to assess lower Taker fees to Market Makers
as compared to Non-MIAX Market Makers and Broker-Dealers because Market
Makers, unlike other market participants, take on a number of
obligations, including quoting obligations that other market
participants do not have. Further, Market Makers have added market
making and regulatory requirements, which normally do not apply to
other market participants. For example, Market Makers have obligations
to maintain continuous markets, engage in a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market, and to not make bids or offers or enter into
transactions that are inconsistent with a course of dealing. Non-MIAX
Market Makers and Broker-Dealers tend to be takers of liquidity, as
opposed to providers of liquidity.
Additionally, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower Taker fees to Firm Proprietary
orders for options that have a premium price of $0.10 or less (such
options are charged $0.05 per contract, versus $0.20 per contract), as
compared to Non-MIAX Market Makers and Broker-Dealers because Firm
Proprietary order flow enhances liquidity on the Exchange for the
benefit of all market participants. Specifically, Firm Proprietary
order flow liquidity benefits all market participants (as Firm
Proprietary orders are generally providers of liquidity) by providing
more robust trading opportunities, which attract Market Makers and
Priority Customers. An increase in the activity of those market
participants in turn facilitates tighter spreads, which may cause an
additional corresponding increase in order flow from other market
participants. The lower Taker fees offered to Firm Proprietary orders
are intended to attract more Firm Proprietary order volume to the
Exchange. Non-MIAX Market Makers and Broker-Dealers tend to be takers
of liquidity, as opposed to providers of liquidity. The Exchange notes
that Cboe also has similar pricing in place for its VIX options where
it does not provide a discount to non-market makers and broker-
dealers.\17\
---------------------------------------------------------------------------
\17\ See Cboe Fees Schedule, p. 2, Specified Proprietary Options
Rate Table--Underlying Symbol List A and Sector Indexes.
---------------------------------------------------------------------------
The Exchange believes that offering Members a Large Trade Discount
is reasonable, equitable, and not unfairly discriminatory because it
provides an incentive for Members to submit large sized liquidity to
the Exchange, which will benefit all market participants. All similarly
situated categories of participants are subject to the same discount
(except for Priority Customers which are not charged a transaction fee
otherwise, so no discount is necessary), and access to the Exchange is
offered on terms that are not unfairly discriminatory.
The PRIME and cPRIME fee and rebate structure is reasonable,
equitable, and not unfairly discriminatory because it will apply
equally to Priority Customer orders, Market Maker orders, Non-MIAX
Market Maker orders, Broker Dealer orders, Firm Proprietary orders, and
Public Customers that are not Priority Customers orders, in each
respective category of PRIME and cPRIME orders. All similarly situated
categories of participants are subject to the same transaction fee and
rebate schedule, and access to the Exchange is offered on terms that
are not unfairly discriminatory. The PRIME and cPRIME fee and rebate
structure is reasonably designed because it is intended to incentivize
market participants to send complex orders in SPIKES options to the
Exchange in order to participate in the price improvement mechanism in
a manner that enables the Exchange to improve its overall
competitiveness and strengthen its market quality for all market
participants.
The fee and rebate structure for transactions involving SPY Opening
orders for options that are used in the calculation of the SPIKES Index
on final settlement day is reasonable, equitable, and not unfairly
discriminatory because it will apply equally to Priority Customer
orders, Market Maker orders, Non-MIAX Market Maker orders, Broker
Dealer orders, Firm Proprietary orders, and Public Customers that are
not Priority Customers orders, in each respective category of such
orders. All similarly situated categories of participants are subject
to the same transaction fee and rebate schedule, and access to the
Exchange is offered on terms that are not unfairly discriminatory.
The Exchange believes that it is equitable and not unfairly
discriminatory to adopt fees for the Opening Process in SPY options
that will only be applicable on SPIKES settlement day to encourage
Market Makers and other market participants that need to unwind a
SPIKES hedge to participate in the Opening Auction, by making the
pricing more attractive. Specifically, market participants holding
short, hedged SPIKES options could liquidate that hedge by selling
their SPY options series, while traders holding long, hedged SPIKES
options could liquidate their hedge by buying SPY option series. These
market participants may liquidate their hedges by submitting SPIKES
strategy orders in the appropriate SPY option series during the SPIKES
Special Settlement Auction on the SPIKES expiration/final settlement
date.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
proposed change will enhance the competitiveness of the Exchange
relative to other exchanges that offer their own singly-listed
products. The Exchange believes that the proposed fees and rebates for
transactions in SPIKES index options, and for transactions involving
SPY options on SPIKES settlement day, are not going to have an impact
on intra-market competition based on the total cost for participants to
transact in such order types versus the cost for participants to
transact in other order types available for trading on the Exchange. As
noted above, the Exchange believes that the proposed pricing for
transactions in SPIKES index options, and for transactions involving
SPY options on SPIKES settlement day, is comparable to and within the
range of fees and rebates charged by the Exchange's competitors
offering singly-listed products.\18\
---------------------------------------------------------------------------
\18\ See supra notes 6, 8 and 9.
---------------------------------------------------------------------------
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
[[Page 9573]]
fees to remain competitive with other exchanges and to attract order
flow to the Exchange. The Exchange believes that the proposed rule
change reflects this competitive environment because it establishes a
fee structure in a manner that encourages market participants to direct
their order flow, to provide liquidity, and to attract additional
transaction volume to the Exchange.
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,\19\ and Rule 19b-4(f)(2) \20\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
\20\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-MIAX-2019-11 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-2019-11. 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-2019-11 and should be submitted on
or before April 5, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04806 Filed 3-14-19; 8:45 am]
BILLING CODE 8011-01-P
