Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 17207-17212 [2019-08211]
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Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 2019 / Notices
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proposed UMBS would present the
same risks to FICC that the existing
Fannie Mae securities and Freddie Mac
securities currently present to FICC
given that the FHFA, Fannie Mae and
Freddie Mac have indicated that the key
characteristics of UMBS will be the
same as Fannie Mae securities as
described in Item II(A)1 above. As a
result, FICC would treat UMBS in the
same manner that it treats Fannie Mae
securities and Freddie Mac securities.
Specifically, the changes would
promote the prompt and accurate
clearance and settlement of securities
because (1) the proposed haircut, which
would be the same as the haircuts for
Fannie Mae securities and Freddie Mac
securities, would protect FICC from the
potential decline in the value of UMBS
in normal and in stressed market
conditions, (2) the proposed Pricing
Rate for CCIT Transactions backed by
UMBS would help to ensure that such
rate is calculated in the same manner as
Fannie Mae securities and Freddie Mac
securities for purposes of a CCIT MRA
transaction, and (3) the proposed
inclusion of UMBS in the GSD
Methodology Document and MBSD
Methodology Document would help to
ensure that UMBS is treated in the same
manner as Fannie Mae securities for risk
management purposes. For these
reasons, FICC believes that the proposed
changes are consistent with the
requirements of the Act, in particular
Section 17A(b)(3)(F), cited above.
(B) Clearing Agency’s Statement on
Burden on Competition
FICC does not believe that the
proposed rule changes would have any
impact, or impose any burden, on
competition because, as described in
Item II(A)1 above, FICC would treat
UMBS in the same manner that it treats
Fannie Mae securities and Freddie Mac
securities (i.e., the same haircut that is
currently applied to Fannie Mae
securities and Freddie Mac securities
would be applied to UMBS; the same
CCIT Pricing Rate that is currently
applied to CCIT Transactions backed by
Fannie Mae securities and Freddie Mac
securities would be applied to CCIT
Transactions backed by UMBS; and the
same risk management that is applied to
Fannie Mae securities and Freddie Mac
securities would be applied to UMBS).
Given this, FICC’s proposed treatment of
UMBS would not give Members an
advantage or a disadvantage if such
Members use UMBS rather than Fannie
Mae securities or Freddie Mac securities
(1) for purposes of satisfying Required
Fund Deposits amounts or (2) to back
CCIT Transactions. Therefore, FICC
does not believe that the proposed rule
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changes would have any impact or
impose any burden on competition.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule Change
Received from Members, Participants, or
Others
FICC has not received or solicited any
written comments relating to this
proposal. FICC will notify the
Commission of any written comments
received by FICC.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 20 and paragraph (f) of Rule
19b–4 thereunder.21 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–
FICC–2019–002 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–FICC–2019–002. 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 FICC 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–FICC–
2019–002 and should be submitted on
or before May 15, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–08204 Filed 4–23–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85693; File No. SR–MIAX–
2019–20]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule
April 18, 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 April 11, 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.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
20 15
U.S.C. 78s(b)(3)(A).
21 17 CFR 240.19b–4(f).
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Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 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 adjust and
adopt certain SPIKES transaction fees.
The Exchange initially filed the
proposal on March 29, 2019 (SR–MIAX–
2019–18). That filing has been
withdrawn and replaced with the
current filing (SR–MIAX–2019–20).
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
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1. Purpose
The Exchange adopted its initial
SPIKES transaction fees on February 15,
2019.3 The Exchange now proposes to
amend the Fee Schedule to adjust and
adopt certain SPIKES transaction fees.
Specifically, the Exchange proposes to
(i) adopt new fees for SPIKES
Combinations; 4 (ii) change the complex
fees so that complex orders are charged
the same fees as simple orders of the
same Origin (and combined in the same
fee table), using the simple maker and
taker fee structure already in place; (iii)
adjust the number of contracts in the
Simple Large Trade Discount Threshold,
adjust the number of contracts in the
Complex Large Trade Discount
Threshold, and create a new, stand3 See Securities Exchange Release No. 85283
(March 11, 2019), 84 FR 9567 (March 15, 2019) (SR–
MIAX–2019–11). (The Exchange initially filed the
proposal on February 15, 2019 (SR–MIAX–2019–
04). That filing was withdrawn and replaced with
(SR–MIAX–2019–11)).
4 A ‘‘Combination’’ is a purchase (sale) of a
SPIKES call option and the sale (purchase) of a
SPIKES put option having the same expiration date
and strike price.
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alone column in the table for the
Complex Large Trade Discount; (iv)
establish a new PRIME Large Trade
Discount and a new cPRIME Large
Trade Discount; and (v) make a nonsubstantive, technical change to the Fee
Schedule.
SPIKES Combinations
The Exchange is proposing to adopt
new transaction fees for SPIKES
Combinations. A SPIKES Combination
is a specific type of complex order,
which will have separate pricing from
all other SPIKES complex orders. The
Exchange is proposing to insert the
definition of a SPIKES Combination
beneath the SPIKES Simple and
Complex Fees table on its Fee Schedule.
Generally, a SPIKES Combination is a
type of complex strategy that is
designed to replicate the exposure
provided by a futures contract.
Accordingly, the Exchange is proposing
to have separate transaction fees for
SPIKES Combinations, which will be
significantly lower than the transaction
fees for all other types of SPIKES
complex orders, with the exception of
complex orders for Priority Customers 5
(which are assessed at the same rate—
$0.00 per contract). For all Origins other
than Priority Customer, the Exchange is
proposing a transaction fee of $0.01 per
contract, per leg for SPIKES
Combinations. Additionally, the
Exchange is proposing to add a note
beneath the SPIKES Simple and
Complex Fees table clarifying that, if a
complex strategy contains both a
Combination component as well as a
non-Combination component, the
portion (i.e., legs) of the complex
strategy that comprises the SPIKES
Combination will be charged at the
Combination rate, and the portion of the
complex strategy that comprises the
non-Combination component will be
charged at the applicable complex rates.
Complex Fees
The Exchange is proposing to change
the complex fees so that complex orders
(other than SPIKES Combinations) are
charged the same fees as simple orders
or quotes of the same Origin (and
combined in the same fee table), using
the simple maker and taker fee structure
already in place. Currently, the
Exchange charges a single fee for
complex orders based on Origin,
regardless of whether such order was a
maker or a taker. As proposed, the
5 The term ‘‘Priority Customer: Means a person or
entity that (i) is not a broker or dealer in securities,
and (ii) does not place more than 390 orders in
listed options per day on average during a calendar
month for its own beneficial account(s). See
Exchange Rule 100.
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Exchange will now charge complex
orders, depending on whether such
order is a maker or a taker, and based
on the Origin. Except for Priority
Customer Origin (which will be
assessed a charge of $0.00 per contract,
whether maker or taker), all Origins will
be charged the same maker or taker rate
for complex orders as the Origin is
currently charged for simple orders or
quotes. For MIAX Market Maker and
Firm Proprietary Origins, the maker rate
is $0.00 and the taker rate is $0.20 per
contract. Additionally, for MIAX Market
Maker and Firm Proprietary Origins,
taker fees for options with a premium
price of $0.10 or less will be charged
$0.05 per contract for Complex orders.
For non-MIAX Market Maker, BrokerDealer, and Public Customer that is not
a Priority Customer Origins, the maker
rate is $0.10 and the taker rate is $0.25
per contract. The Exchange also
proposes to clarify the rates that apply
to all Origins in a Complex Auction.6 In
a Complex Auction, Priority Customer
Origin will be charged the complex
maker rate. Origins that are not a
Priority Customer will be charged the
applicable complex taker rate. The
Exchange proposes to add a note
beneath the Simple and Complex Fees
table clarifying such fee applicability for
quotes/orders executed in a Complex
Auction.
Simple and Complex Large Trade
Discount Thresholds
The Exchange currently has in place
a Simple/Complex Large Trade
Discount. Pursuant to such discount
program, for any single order/quote, no
fee applies to the number of contracts
executed above the threshold amount.
The threshold amount is currently set at
175,000 contracts, and applies to both
simple and complex orders of all
Origins (except for Priority Customer
Origin, which has a threshold amount of
0, because Priority Customer orders are
assessed a fee of $0.00 for simple and
complex volume). The Exchange now
proposes to create a separate Large
Trade Discount Threshold for both
simple and complex orders, and to
lower the threshold amounts for each.
As proposed, a simple order that
reaches the proposed size threshold of
10,000 contracts, tied to a single order,
will have the relevant fees apply to the
contracts at and below the size
threshold for simple volume; no fees
shall apply to the number of contracts
executed above the threshold, with
certain exceptions. As proposed, a
6 A ‘‘Complex Auction’’ is an auction of a
complex order as set forth in Exchange Rule 518(d).
See Exchange Rule 518(a)(3).
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Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 2019 / Notices
changed: The Large Trade Discount does
not apply to volume from Priority
Customer orders, Maker orders, SPIKES
Opening orders, and the Surcharge.
Accordingly, for any simple order/
quote, no fee shall apply to the number
of contracts executed above the first
10,000 contracts for simple orders and
the first 25,000 contracts for complex
orders for Market Makers, Non-MIAX
Market Makers, Broker-Dealers, Firm
complex order that reaches the
proposed size threshold of 25,000
contracts, tied to a single order, will
have the relevant fees apply to the
contracts at and below the size
threshold for complex volume; no fees
shall apply to the number of contracts
executed above the threshold, with
certain exceptions. In the case of each
discount program, the exceptions are
the same and are not proposed to be
Proprietary orders, and Public
Customers that are not Priority
Customers. The Exchange is not
proposing to change that such discount
program does not apply to Priority
Customer orders because, as discussed,
the Exchange is currently charging
Priority Customers a $0.00 fee for these
volume segments.
As proposed, the SPIKES Simple and
Complex Fees table will be as follows:
SIMPLE AND COMPLEX FEES #
Simple/
complex ¥
maker
($)
Origin
Priority Customer ................................................
Market Maker ......................................................
Non-MIAX Market Maker ....................................
Broker-Dealer ......................................................
Firm Proprietary ..................................................
Public Customer that is Not a Priority Customer
Simple/
complex ¥
taker
($)
$0.00
0.00
0.10
0.10
0.00
0.10
$0.00
* 0.20
0.25
0.25
* 0.20
0.25
Simple
opening
($)
Simple
large trade discount
threshold ∂
Combination ∼!
($)
$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 10,000 contracts ...
First 10,000 contracts ...
First 10,000 contracts ...
First 10,000 contracts ...
First 10,000 contracts ...
Complex
large trade discount
threshold ∂
0
First
First
First
First
First
25,000
25,000
25,000
25,000
25,000
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.
∼ A ‘‘SPIKES Combination’’ is a purchase (sale) of a SPIKES call option and sale (purchase) of a SPIKES put option having the same expiration date and strike
price.
! The SPIKES Combination portion of a SPIKES Combination Order will be charged at the Combination rate and other legs will be charged at the Complex rate. 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 or Complex Large Trade Discount Threshold. This discount does not apply to Priority Customer orders, Maker orders, SPIKES Opening orders, and the Surcharge.
¥ For quotes/orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Maker rate. Origins that are not a Priority Customer will be
charged the applicable Complex Taker rate.
PRIME and cPRIME Large Trade
Discounts
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The Exchange further proposes to
establish a Large Trade Discount
program for both PRIME 7 and cPRIME 8
orders in SPIKES. These discount
programs will operate in the same
manner as the discount programs for
simple and complex orders, and will
have the same threshold amounts, with
one exception described below relating
to Priority Customer Origin.
Specifically, the Exchange proposes to
establish a Large Trade Discount
Threshold for PRIME orders in the
amount of 10,000 contracts. A PRIME
order that reaches the proposed size
threshold of 10,000 contracts, tied to a
single order, will have the relevant fees
apply to the contracts at and below the
size threshold for PRIME volume; no
7 PRIME is a process by which a Member may
electronically submit for execution (‘‘Auction’’) an
order it represents as agent (‘‘Agency Order’’)
against principal interest, and/or an Agency Order
against solicited interest. See Exchange Rule
515A(a).
8 cPRIME is the process by which a Member may
electronically submit a ‘‘cPRIME Order’’ (as defined
in Exchange Rule 518(b)(7)) it represents as agent
(a ‘‘cPRIME Agency Order’’) against principal or
solicited interest for execution (a ‘‘cPRIME
Auction’’). See Interpretation and Policy .12 of
Exchange Rule 515A.
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fees shall apply to the number of
contracts executed above the threshold,
with certain exceptions described
below. Since a PRIME order is a paired
order, the transaction fee will be capped
at 10,000 contracts from a single order,
for the Agency Side and Contra Side,
independently. Contracts greater than
the threshold will not be charged the
transaction fee but will continue to be
charged the Surcharge. Responder fees
and Break-up Credits will not be
capped. The Exchange notes that, unlike
the Simple and Complex Large Trade
Discount programs, there is a non-zero
threshold amount for Priority Customer
Origin, which is the same amount as all
other Origins. The purpose for having a
cap for Priority Customer Origin in the
PRIME Large Trade Discount program is
because Priority Customer Origin is
currently assessed a fee of $0.20 per
contract if it is a Contra in the
execution. Therefore, the Exchange
believes it is appropriate to apply the
cap to Priority Customer Origin in this
circumstance.
Similarly, the Exchange proposes to
establish a Large Trade Threshold for
cPRIME orders in the amount of 25,000
contracts. A cPRIME order that reaches
the proposed size threshold of 25,000
contracts, tied to a single order, will
have the relevant fees apply to the
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contracts at and below the size
threshold for cPRIME volume; no fees
shall apply to the number of contracts
executed above the threshold, with
certain exceptions described below.
Since a cPRIME order is a paired order,
the transaction fee will be capped at
25,000 contracts that are traded per
strategy from a single order, for the
Agency Side and for the Contra Side
independently. Contracts greater than
the threshold will not be charged the
transaction fee but will continue to be
charged the Surcharge. Responder fees
and Break-up Credits will not be
capped. The Exchange notes that, unlike
the Simple and Complex Large Trade
Discount programs, there is a non-zero
threshold amount for Priority Customer
Origin, which is the same amount as all
other Origins. The purpose for having a
cap for Priority Customer Origin in the
cPRIME Large Trade Discount program
is because Priority Customer Origin is
currently assessed a fee of $0.20 per
contract if it is a Contra in the
execution. Therefore, the Exchange
believes it is appropriate to apply the
cap to Priority Customer Origin in this
circumstance.
As proposed, the SPIKES PRIME and
cPRIME Fees table will be as follows:
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Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 2019 / Notices
PRIME AND CPRIME FEES #
Initiating
($)
Origin
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)
PRIME
large trade discount threshold ∧
cPRIME
large trade discount threshold ◊
First 10,000
tracts.
First 10,000
tracts.
First 10,000
tracts.
First 10,000
tracts.
First 10,000
tracts.
First 10,000
tracts.
First 25,000
tracts
First 25,000
tracts
First 25,000
tracts
First 25,000
tracts
First 25,000
tracts
First 25,000
tracts
conconconconconcon-
conconconconconcon-
# An Index License Surcharge (‘‘Surcharge’’) of $0.075 will apply to any contract that is executed by an Origin except Priority Customer. The
Surcharge applies per contract side per leg. The Surcharge will be waived for the ‘‘Waiver Period’’ which, for purposes of this Section 1)a)xi) of
the Fee Schedule, means 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.
∧ The transaction fee for SPIKES PRIME will be capped at 10,000 contracts from a single order, for the Agency Side and Contra Side independently. Contracts greater than the threshold will not be charged the transaction fee but will continue to be charged the Surcharge. Responder
fees and Break-up Credits will not be capped.
◊ The transaction fee for SPIKES cPRIME will be capped at 25,000 contracts that are traded per strategy from a single order, for the Agency
Side and for the Contra Side independently. Contracts greater than the threshold will not be charged the transaction fee but will continue to be
charged the Surcharge. Responder fees and Break-up Credits will not be capped.
SPIKES Settlement Day SPY Opening
Auction Fees
SPIKES SETTLEMENT DAY SPY
OPENING AUCTION FEES
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 9
in
general, and furthers the objectives of
Priority Customer ..................
$0.00
10
Market Maker ........................
0.03 Section 6(b)(4) of the Act in
particular,
in
that
it
provides
for the
Non-MIAX Market Maker ......
0.06
Broker-Dealer .......................
0.06 equitable allocation of reasonable dues,
Firm Proprietary ....................
0.03 fees and other charges among Exchange
Public Customer that is Not
Members 11 and issuers and other
a Priority Customer ...........
0.06 persons using its facilities. The
¤ These fees will be charged to each side of Exchange also believes the proposal
all trades occurring in the SPY opening in the furthers the objectives of Section 6(b)(5)
expiration month used to determine SPIKES of the Act 12 in that it is designed to
settlement on settlement day only; in lieu of promote just and equitable principles of
any other fees in the Fee Schedule.
trade, to remove impediments to and
The Exchange proposes to make a
perfect the mechanism of a free and
minor non-substantive technical
open market and a national market
correction to the SPIKES Settlement Day system, and, in general to protect
SPY Opening Auction Fees table. The
investors and the public interest and is
Exchange proposes to amend the
not designed to permit unfair
column heading for SPY Opening
discrimination between customer,
Orders to include Quotes to clarify that
issuers, brokers and dealers.
the fees listed apply to both SPY
SPIKES Combinations and Complex
Opening Quotes and Orders. These fees
Fees
are only applicable on SPIKES
settlement day. The purpose for lower,
The Exchange believes that the
separate fees for these SPY transactions
proposed fee changes for transactions in
is to encourage Market Makers and other
9 15 U.S.C. 78f(b).
market participants that need to unwind
10 15 U.S.C. 78f(b)(4).
a SPIKES hedge to participate in the
11 The term ‘‘Member’’ means an individual or
Opening Auction, by making the pricing
organization approved to exercise the trading rights
more attractive.
associated with a Trading Permit. Members are
The Exchange believes that each of
deemed ‘‘members’’ under the Exchange Act. See
the proposed SPIKES transaction fee
Exchange Rule 100.
12 15 U.S.C. 78f(b)(5).
changes described herein are reasonable
Origin
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in that they are designed to encourage
market participants to provide liquidity
for SPIKES index options on the
Exchange.
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SPY opening
quotes/
orders ¤
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SPIKES Combinations and complex
orders is consistent with Section 6(b)(4)
of the Act in that they are reasonable,
equitable, and not unfairly
discriminatory. The proposed fee
changes are reasonably designed
because they are 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 in SPIKES index
options.
The Exchange believes that it is
reasonable to establish separate pricing
for SPIKES Combinations, in order to
encourage trading in SPIKES
Combinations on the Exchange.
Generally, a SPIKES Combination is a
type of complex strategy that is
designed to replicate the exposure
provided by a futures contract.
Accordingly, the Exchange believes it is
appropriate to have separate transaction
fees for SPIKES Combinations, which
will be significantly lower than the
transaction fees for all other types of
complex orders, with the exception of
complex orders for Priority Customers
(which are assessed at the same rate—
$0.00 per contract). A SPIKES
Combination will be charged lower fees
than a standard SPIKES complex order.
The Exchange also believes combining
complex maker and taker fees with the
respective simple maker and taker fees
simplifies the Exchange’s fee structure,
which benefits investors as it clarifies
the Exchange’s fees and reduces the risk
of confusion.
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The Exchange believes that it is
reasonable, equitable, and not unfairly
discriminatory to apportion Complex
Auction fees among participants by
Origin. Priority Customer Complex
orders will be assessed the Complex
Maker rate of $0.00 per contract, and
Origins that are not a Priority Customer
will be charged the applicable Complex
Taker rate. During a Complex Auction
there is no Maker/Taker distinction,
therefore the Exchange will assign a
role, and applicable fee, based upon
Origin. The Exchange notes that other
exchanges employ this methodology in
similar circumstances.13 The Exchange
believes this a fair and equitable way to
apportion fees among participants in a
Complex Auction.
The proposed SPIKES Combination
fees and complex fees are reasonable,
equitable, and not unfairly
discriminatory because they will apply
similarly 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.
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 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.
Moreover, the Exchange believes that
assessing all other market participants
that are not Priority Customers a higher
transaction fee than Priority Customers
for SPIKES Combinations and complex
orders 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
13 See Nasdaq GEMX Options 7, Section 3,
Footnote 4.
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17:20 Apr 23, 2019
Jkt 247001
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
complex maker and taker fees for orders
in SPIKES options because Priority
Customers, Market Makers, and Firm
Proprietary orders bring valuable
liquidity to the market, which in turn
benefits other market participants.
Priority Customer and Firm Proprietary
order flow enhances liquidity on the
Exchange for the benefit of all market
participants. Specifically, Priority
Customer and Firm Proprietary order
flow liquidity benefits all market
participants (as Priority Customer and
Firm Proprietary orders are generally
providers of liquidity) by providing
more robust 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, which
in turn benefits the market as a whole.
Simple and Complex Large Trade
Discount Thresholds
The Exchange believes reducing the
Large Trade Discount Threshold for
simple orders or quotes from 175,000 to
10,000 is reasonable, equitable, and not
unfairly discriminatory because it
provides an incentive for Members to
submit large sized simple orders or
quotes to the Exchange, which will
benefit all market participants. All
similarly situated categories of
participants are subject to the same
threshold (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. Additionally, the
Exchange believes that creating a
separate Large Trade Discount for
complex orders at 25,000 contracts is
reasonable, equitable, and not unfairly
discriminatory because it provides an
incentive for Members to submit large
sized complex orders to the Exchange,
which will benefit all market
participants. All similarly situated
categories of participants are subject to
the same threshold (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.
PO 00000
Frm 00078
Fmt 4703
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17211
PRIME and cPRIME Large Trade
Discounts
The Exchange believes that offering
Members a Large Trade Discount for
PRIME orders and cPRIME orders with
identical thresholds as those proposed
for simple and complex orders,
respectively, is reasonable, equitable,
and not unfairly discriminatory because
it provides an incentive for Members to
submit large sized PRIME and cPRIME
liquidity to the Exchange, which will
benefit all market participants. All
similarly situated categories of
participants are subject to the same
discount, and access to the Exchange is
offered on terms that are not unfairly
discriminatory.
The Exchange believes that it is
reasonable, equitable, and not unfairly
discriminatory to not cap Responder
fees as there is no cap on corresponding
Break-up Credits. The Exchange
believes it is necessary to provide Breakup Credits in order to incentivize
Members to submit PRIME and cPRIME
orders to the Exchange, which provides
important price improvement
opportunities for Agency orders. The
Exchange notes that other exchanges
exclude response fees from fee caps as
well, including Nasdaq ISE, which
excludes Crossing Orders from the firm
fee cap.14
SPIKES Settlement Day SPY Opening
Auction Fees
The non-substantive technical change
proposed to the column heading for SPY
Opening Orders to include Quotes
promotes just and equitable principles
of trade, removes impediments to and
perfects the mechanism of a free and
open market and a national market
system, and, in general protects
investors and the public interest by
providing additional detail and clarity
regarding fees charged by the Exchange.
It is in the best interest of investors and
the public for fees to be as clear and
concise as possible so that investors and
the public may make informed
decisions regarding their orders.
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.
14 See
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24APN1
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Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 2019 / Notices
These market participants may liquidate
their hedges by submitting SPIKES
strategy orders in the appropriate SPY
option series during the SPIKES Special
Settlement Auction15 on the SPIKES
expiration/final settlement date.
The Exchange believes that 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 similarly 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.
The Exchange currently applies fees
to orders that participate in the SPIKES
Settlement Day SPY Opening Auction.16
The Exchange believes it would not be
unfairly discriminatory to apply an
identical fee structure to quotes that
participate in the SPIKES Settlement
Day SPY Opening Auction. The
Exchange believes that the fee and
rebate structure for transactions
involving SPY Opening Quotes 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 similarly to all Market Makers.
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.
jbell on DSK30RV082PROD with NOTICES
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 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
15 See Exchange Rule 503, Interpretations and
Policies .03.
16 See Securities Exchange Release No. 85283
(March 11, 2019), 84 FR 9567 (March 15, 2019) (SR–
MIAX–2019–11) (Proposal to amend the MIAX
Options Fee Schedule to adopt transaction fees and
rebates for SPIKES index option orders and quotes).
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17:20 Apr 23, 2019
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transact in other order types available
for trading on the Exchange.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues and competing
products if they deem fee levels at a
particular venue to be excessive. In such
an environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges and to
attract order flow to the Exchange. The
Exchange believes that the proposed
rule change reflects this competitive
environment because it is adjusting its
fees in a manner that encourages market
participants to provide liquidity in
SPIKES index options, 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,17 and Rule
19b–4(f)(2) 18 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:
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–2019–20. 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–2019–20 and should
be submitted on or before May 15, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–08211 Filed 4–23–19; 8:45 am]
BILLING CODE 8011–01–P
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–2019–20 on the subject line.
17 15
18 17
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–(f)(2).
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]]>Agencies
[Federal Register Volume 84, Number 79 (Wednesday, April 24, 2019)]
[Notices]
[Pages 17207-17212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08211]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85693; File No. SR-MIAX-2019-20]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
April 18, 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 April 11, 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 17208]]
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 adjust and adopt certain SPIKES
transaction fees. The Exchange initially filed the proposal on March
29, 2019 (SR-MIAX-2019-18). That filing has been withdrawn and replaced
with the current filing (SR-MIAX-2019-20).
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 adopted its initial SPIKES transaction fees on
February 15, 2019.\3\ The Exchange now proposes to amend the Fee
Schedule to adjust and adopt certain SPIKES transaction fees.
Specifically, the Exchange proposes to (i) adopt new fees for SPIKES
Combinations; \4\ (ii) change the complex fees so that complex orders
are charged the same fees as simple orders of the same Origin (and
combined in the same fee table), using the simple maker and taker fee
structure already in place; (iii) adjust the number of contracts in the
Simple Large Trade Discount Threshold, adjust the number of contracts
in the Complex Large Trade Discount Threshold, and create a new, stand-
alone column in the table for the Complex Large Trade Discount; (iv)
establish a new PRIME Large Trade Discount and a new cPRIME Large Trade
Discount; and (v) make a non-substantive, technical change to the Fee
Schedule.
---------------------------------------------------------------------------
\3\ See Securities Exchange Release No. 85283 (March 11, 2019),
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). (The Exchange
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04).
That filing was withdrawn and replaced with (SR-MIAX-2019-11)).
\4\ A ``Combination'' is a purchase (sale) of a SPIKES call
option and the sale (purchase) of a SPIKES put option having the
same expiration date and strike price.
---------------------------------------------------------------------------
SPIKES Combinations
The Exchange is proposing to adopt new transaction fees for SPIKES
Combinations. A SPIKES Combination is a specific type of complex order,
which will have separate pricing from all other SPIKES complex orders.
The Exchange is proposing to insert the definition of a SPIKES
Combination beneath the SPIKES Simple and Complex Fees table on its Fee
Schedule. Generally, a SPIKES Combination is a type of complex strategy
that is designed to replicate the exposure provided by a futures
contract. Accordingly, the Exchange is proposing to have separate
transaction fees for SPIKES Combinations, which will be significantly
lower than the transaction fees for all other types of SPIKES complex
orders, with the exception of complex orders for Priority Customers \5\
(which are assessed at the same rate--$0.00 per contract). For all
Origins other than Priority Customer, the Exchange is proposing a
transaction fee of $0.01 per contract, per leg for SPIKES Combinations.
Additionally, the Exchange is proposing to add a note beneath the
SPIKES Simple and Complex Fees table clarifying that, if a complex
strategy contains both a Combination component as well as a non-
Combination component, the portion (i.e., legs) of the complex strategy
that comprises the SPIKES Combination will be charged at the
Combination rate, and the portion of the complex strategy that
comprises the non-Combination component will be charged at the
applicable complex rates.
---------------------------------------------------------------------------
\5\ The term ``Priority Customer: Means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100.
---------------------------------------------------------------------------
Complex Fees
The Exchange is proposing to change the complex fees so that
complex orders (other than SPIKES Combinations) are charged the same
fees as simple orders or quotes of the same Origin (and combined in the
same fee table), using the simple maker and taker fee structure already
in place. Currently, the Exchange charges a single fee for complex
orders based on Origin, regardless of whether such order was a maker or
a taker. As proposed, the Exchange will now charge complex orders,
depending on whether such order is a maker or a taker, and based on the
Origin. Except for Priority Customer Origin (which will be assessed a
charge of $0.00 per contract, whether maker or taker), all Origins will
be charged the same maker or taker rate for complex orders as the
Origin is currently charged for simple orders or quotes. For MIAX
Market Maker and Firm Proprietary Origins, the maker rate is $0.00 and
the taker rate is $0.20 per contract. Additionally, for MIAX Market
Maker and Firm Proprietary Origins, taker fees for options with a
premium price of $0.10 or less will be charged $0.05 per contract for
Complex orders. For non-MIAX Market Maker, Broker-Dealer, and Public
Customer that is not a Priority Customer Origins, the maker rate is
$0.10 and the taker rate is $0.25 per contract. The Exchange also
proposes to clarify the rates that apply to all Origins in a Complex
Auction.\6\ In a Complex Auction, Priority Customer Origin will be
charged the complex maker rate. Origins that are not a Priority
Customer will be charged the applicable complex taker rate. The
Exchange proposes to add a note beneath the Simple and Complex Fees
table clarifying such fee applicability for quotes/orders executed in a
Complex Auction.
---------------------------------------------------------------------------
\6\ A ``Complex Auction'' is an auction of a complex order as
set forth in Exchange Rule 518(d). See Exchange Rule 518(a)(3).
---------------------------------------------------------------------------
Simple and Complex Large Trade Discount Thresholds
The Exchange currently has in place a Simple/Complex Large Trade
Discount. Pursuant to such discount program, for any single order/
quote, no fee applies to the number of contracts executed above the
threshold amount. The threshold amount is currently set at 175,000
contracts, and applies to both simple and complex orders of all Origins
(except for Priority Customer Origin, which has a threshold amount of
0, because Priority Customer orders are assessed a fee of $0.00 for
simple and complex volume). The Exchange now proposes to create a
separate Large Trade Discount Threshold for both simple and complex
orders, and to lower the threshold amounts for each. As proposed, a
simple order that reaches the proposed size threshold of 10,000
contracts, tied to a single order, will have the relevant fees apply to
the contracts at and below the size threshold for simple volume; no
fees shall apply to the number of contracts executed above the
threshold, with certain exceptions. As proposed, a
[[Page 17209]]
complex order that reaches the proposed size threshold of 25,000
contracts, tied to a single order, will have the relevant fees apply to
the contracts at and below the size threshold for complex volume; no
fees shall apply to the number of contracts executed above the
threshold, with certain exceptions. In the case of each discount
program, the exceptions are the same and are not proposed to be
changed: The Large Trade Discount does not apply to volume from
Priority Customer orders, Maker orders, SPIKES Opening orders, and the
Surcharge.
Accordingly, for any simple order/quote, no fee shall apply to the
number of contracts executed above the first 10,000 contracts for
simple orders and the first 25,000 contracts for complex orders for
Market Makers, Non-MIAX Market Makers, Broker-Dealers, Firm Proprietary
orders, and Public Customers that are not Priority Customers. The
Exchange is not proposing to change that such discount program does not
apply to Priority Customer orders because, as discussed, the Exchange
is currently charging Priority Customers a $0.00 fee for these volume
segments.
As proposed, the SPIKES Simple and Complex Fees table will be as
follows:
Simple and Complex Fees #
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple/ Simple/
complex complex Simple Combination Simple large trade discount Complex large trade discount
Origin [yen] maker [yen] taker opening ($) ~! ($) threshold + threshold +
($) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer................ $0.00 $0.00 $0.00 $0.00 0............................. 0
Market Maker..................... 0.00 * 0.20 0.15 0.01 First 10,000 contracts........ First 25,000 contracts.
Non-MIAX Market Maker............ 0.10 0.25 0.15 0.01 First 10,000 contracts........ First 25,000 contracts.
Broker-Dealer.................... 0.10 0.25 0.15 0.01 First 10,000 contracts........ First 25,000 contracts.
Firm Proprietary................. 0.00 * 0.20 0.15 0.01 First 10,000 contracts........ First 25,000 contracts.
Public Customer that is Not a 0.10 0.25 0.15 0.01 First 10,000 contracts........ First 25,000 contracts.
Priority Customer.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Taker fees for options with a premium price of $0.10 or less will be charged $0.05 per contract.
\ A ``SPIKES Combination'' is a purchase (sale) of a SPIKES call option and sale (purchase) of a SPIKES put option having the same expiration date and
strike price.
\!\ The SPIKES Combination portion of a SPIKES Combination Order will be charged at the Combination rate and other legs will be charged at the Complex
rate. 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 or Complex Large
Trade Discount Threshold. This discount does not apply to Priority Customer orders, Maker orders, SPIKES Opening orders, and the Surcharge.
[yen] For quotes/orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Maker rate. Origins that are not a Priority
Customer will be charged the applicable Complex Taker rate.
PRIME and cPRIME Large Trade Discounts
The Exchange further proposes to establish a Large Trade Discount
program for both PRIME \7\ and cPRIME \8\ orders in SPIKES. These
discount programs will operate in the same manner as the discount
programs for simple and complex orders, and will have the same
threshold amounts, with one exception described below relating to
Priority Customer Origin. Specifically, the Exchange proposes to
establish a Large Trade Discount Threshold for PRIME orders in the
amount of 10,000 contracts. A PRIME order that reaches the proposed
size threshold of 10,000 contracts, tied to a single order, will have
the relevant fees apply to the contracts at and below the size
threshold for PRIME volume; no fees shall apply to the number of
contracts executed above the threshold, with certain exceptions
described below. Since a PRIME order is a paired order, the transaction
fee will be capped at 10,000 contracts from a single order, for the
Agency Side and Contra Side, independently. Contracts greater than the
threshold will not be charged the transaction fee but will continue to
be charged the Surcharge. Responder fees and Break-up Credits will not
be capped. The Exchange notes that, unlike the Simple and Complex Large
Trade Discount programs, there is a non-zero threshold amount for
Priority Customer Origin, which is the same amount as all other
Origins. The purpose for having a cap for Priority Customer Origin in
the PRIME Large Trade Discount program is because Priority Customer
Origin is currently assessed a fee of $0.20 per contract if it is a
Contra in the execution. Therefore, the Exchange believes it is
appropriate to apply the cap to Priority Customer Origin in this
circumstance.
---------------------------------------------------------------------------
\7\ PRIME is a process by which a Member may electronically
submit for execution (``Auction'') an order it represents as agent
(``Agency Order'') against principal interest, and/or an Agency
Order against solicited interest. See Exchange Rule 515A(a).
\8\ cPRIME is the process by which a Member may electronically
submit a ``cPRIME Order'' (as defined in Exchange Rule 518(b)(7)) it
represents as agent (a ``cPRIME Agency Order'') against principal or
solicited interest for execution (a ``cPRIME Auction''). See
Interpretation and Policy .12 of Exchange Rule 515A.
---------------------------------------------------------------------------
Similarly, the Exchange proposes to establish a Large Trade
Threshold for cPRIME orders in the amount of 25,000 contracts. A cPRIME
order that reaches the proposed size threshold of 25,000 contracts,
tied to a single order, will have the relevant fees apply to the
contracts at and below the size threshold for cPRIME volume; no fees
shall apply to the number of contracts executed above the threshold,
with certain exceptions described below. Since a cPRIME order is a
paired order, the transaction fee will be capped at 25,000 contracts
that are traded per strategy from a single order, for the Agency Side
and for the Contra Side independently. Contracts greater than the
threshold will not be charged the transaction fee but will continue to
be charged the Surcharge. Responder fees and Break-up Credits will not
be capped. The Exchange notes that, unlike the Simple and Complex Large
Trade Discount programs, there is a non-zero threshold amount for
Priority Customer Origin, which is the same amount as all other
Origins. The purpose for having a cap for Priority Customer Origin in
the cPRIME Large Trade Discount program is because Priority Customer
Origin is currently assessed a fee of $0.20 per contract if it is a
Contra in the execution. Therefore, the Exchange believes it is
appropriate to apply the cap to Priority Customer Origin in this
circumstance.
As proposed, the SPIKES PRIME and cPRIME Fees table will be as
follows:
[[Page 17210]]
PRIME and cPRIME Fees
--------------------------------------------------------------------------------------------------------------------------------------------------------
PRIME large trade cPRIME large trade
Origin Initiating ($) Contra ($) Responder ($) Break-up ($) discount threshold discount threshold
[caret] [diam]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer.................... $0.00 $0.20 $0.25 ($0.15) First 10,000 contracts.. First 25,000 contracts
Market Maker......................... 0.10 0.20 0.25 (0.15) First 10,000 contracts.. First 25,000 contracts
Non-MIAX Market Maker................ 0.10 0.20 0.25 (0.15) First 10,000 contracts.. First 25,000 contracts
Broker-Dealer........................ 0.10 0.20 0.25 (0.15) First 10,000 contracts.. First 25,000 contracts
Firm Proprietary..................... 0.10 0.20 0.25 (0.15) First 10,000 contracts.. First 25,000 contracts
Public Customer that is Not a 0.10 0.20 0.25 (0.15) First 10,000 contracts.. First 25,000 contracts
Priority Customer.
--------------------------------------------------------------------------------------------------------------------------------------------------------
An Index License Surcharge (``Surcharge'') of $0.075 will apply to any contract that is executed by an Origin except Priority Customer. The Surcharge
applies per contract side per leg. The Surcharge will be waived for the ``Waiver Period'' which, for purposes of this Section 1)a)xi) of the Fee
Schedule, means 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.
[caret] The transaction fee for SPIKES PRIME will be capped at 10,000 contracts from a single order, for the Agency Side and Contra Side independently.
Contracts greater than the threshold will not be charged the transaction fee but will continue to be charged the Surcharge. Responder fees and Break-
up Credits will not be capped.
[diam] The transaction fee for SPIKES cPRIME will be capped at 25,000 contracts that are traded per strategy from a single order, for the Agency Side
and for the Contra Side independently. Contracts greater than the threshold will not be charged the transaction fee but will continue to be charged
the Surcharge. Responder fees and Break-up Credits will not be capped.
SPIKES Settlement Day SPY Opening Auction Fees
SPIKES Settlement Day SPY Opening Auction Fees
------------------------------------------------------------------------
SPY opening
Origin quotes/ 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.
The Exchange proposes to make a minor non-substantive technical
correction to the SPIKES Settlement Day SPY Opening Auction Fees table.
The Exchange proposes to amend the column heading for SPY Opening
Orders to include Quotes to clarify that the fees listed apply to both
SPY Opening Quotes and Orders. These fees are only applicable on SPIKES
settlement day. The purpose for 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.
The Exchange believes that each of the proposed SPIKES transaction
fee changes described herein are reasonable in that they are designed
to encourage market participants to provide liquidity for SPIKES index
options on the Exchange.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \9\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \10\ in particular, in
that it provides for the equitable allocation of reasonable dues, fees
and other charges among Exchange Members \11\ 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 \12\ in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest and is not designed to permit unfair
discrimination between customer, issuers, brokers and dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 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.
\12\ 15 U.S.C. 78f(b)(5).
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SPIKES Combinations and Complex Fees
The Exchange believes that the proposed fee changes for
transactions in SPIKES Combinations and complex orders is consistent
with Section 6(b)(4) of the Act in that they are reasonable, equitable,
and not unfairly discriminatory. The proposed fee changes are
reasonably designed because they are 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 in SPIKES
index options.
The Exchange believes that it is reasonable to establish separate
pricing for SPIKES Combinations, in order to encourage trading in
SPIKES Combinations on the Exchange. Generally, a SPIKES Combination is
a type of complex strategy that is designed to replicate the exposure
provided by a futures contract. Accordingly, the Exchange believes it
is appropriate to have separate transaction fees for SPIKES
Combinations, which will be significantly lower than the transaction
fees for all other types of complex orders, with the exception of
complex orders for Priority Customers (which are assessed at the same
rate--$0.00 per contract). A SPIKES Combination will be charged lower
fees than a standard SPIKES complex order. The Exchange also believes
combining complex maker and taker fees with the respective simple maker
and taker fees simplifies the Exchange's fee structure, which benefits
investors as it clarifies the Exchange's fees and reduces the risk of
confusion.
[[Page 17211]]
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to apportion Complex Auction fees among
participants by Origin. Priority Customer Complex orders will be
assessed the Complex Maker rate of $0.00 per contract, and Origins that
are not a Priority Customer will be charged the applicable Complex
Taker rate. During a Complex Auction there is no Maker/Taker
distinction, therefore the Exchange will assign a role, and applicable
fee, based upon Origin. The Exchange notes that other exchanges employ
this methodology in similar circumstances.\13\ The Exchange believes
this a fair and equitable way to apportion fees among participants in a
Complex Auction.
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\13\ See Nasdaq GEMX Options 7, Section 3, Footnote 4.
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The proposed SPIKES Combination fees and complex fees are
reasonable, equitable, and not unfairly discriminatory because they
will apply similarly 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. 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 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.
Moreover, the Exchange believes that assessing all other market
participants that are not Priority Customers a higher transaction fee
than Priority Customers for SPIKES Combinations and complex orders 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 complex maker and taker fees for orders in SPIKES
options because Priority Customers, Market Makers, and Firm Proprietary
orders bring valuable liquidity to the market, which in turn benefits
other market participants. Priority Customer and Firm Proprietary order
flow enhances liquidity on the Exchange for the benefit of all market
participants. Specifically, Priority Customer and Firm Proprietary
order flow liquidity benefits all market participants (as Priority
Customer and Firm Proprietary orders are generally providers of
liquidity) by providing more robust 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, which in turn benefits the market as a whole.
Simple and Complex Large Trade Discount Thresholds
The Exchange believes reducing the Large Trade Discount Threshold
for simple orders or quotes from 175,000 to 10,000 is reasonable,
equitable, and not unfairly discriminatory because it provides an
incentive for Members to submit large sized simple orders or quotes to
the Exchange, which will benefit all market participants. All similarly
situated categories of participants are subject to the same threshold
(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. Additionally,
the Exchange believes that creating a separate Large Trade Discount for
complex orders at 25,000 contracts is reasonable, equitable, and not
unfairly discriminatory because it provides an incentive for Members to
submit large sized complex orders to the Exchange, which will benefit
all market participants. All similarly situated categories of
participants are subject to the same threshold (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.
PRIME and cPRIME Large Trade Discounts
The Exchange believes that offering Members a Large Trade Discount
for PRIME orders and cPRIME orders with identical thresholds as those
proposed for simple and complex orders, respectively, is reasonable,
equitable, and not unfairly discriminatory because it provides an
incentive for Members to submit large sized PRIME and cPRIME liquidity
to the Exchange, which will benefit all market participants. All
similarly situated categories of participants are subject to the same
discount, and access to the Exchange is offered on terms that are not
unfairly discriminatory.
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to not cap Responder fees as there is no cap on
corresponding Break-up Credits. The Exchange believes it is necessary
to provide Break-up Credits in order to incentivize Members to submit
PRIME and cPRIME orders to the Exchange, which provides important price
improvement opportunities for Agency orders. The Exchange notes that
other exchanges exclude response fees from fee caps as well, including
Nasdaq ISE, which excludes Crossing Orders from the firm fee cap.\14\
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\14\ See Nasdaq ISE, Options 7, Section 6(H).
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SPIKES Settlement Day SPY Opening Auction Fees
The non-substantive technical change proposed to the column heading
for SPY Opening Orders to include Quotes promotes just and equitable
principles of trade, removes impediments to and perfects the mechanism
of a free and open market and a national market system, and, in general
protects investors and the public interest by providing additional
detail and clarity regarding fees charged by the Exchange. It is in the
best interest of investors and the public for fees to be as clear and
concise as possible so that investors and the public may make informed
decisions regarding their orders.
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.
[[Page 17212]]
These market participants may liquidate their hedges by submitting
SPIKES strategy orders in the appropriate SPY option series during the
SPIKES Special Settlement Auction\15\ on the SPIKES expiration/final
settlement date.
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\15\ See Exchange Rule 503, Interpretations and Policies .03.
---------------------------------------------------------------------------
The Exchange believes that 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 similarly 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.
The Exchange currently applies fees to orders that participate in
the SPIKES Settlement Day SPY Opening Auction.\16\ The Exchange
believes it would not be unfairly discriminatory to apply an identical
fee structure to quotes that participate in the SPIKES Settlement Day
SPY Opening Auction. The Exchange believes that the fee and rebate
structure for transactions involving SPY Opening Quotes 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 similarly to all Market Makers.
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.
---------------------------------------------------------------------------
\16\ See Securities Exchange Release No. 85283 (March 11, 2019),
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11) (Proposal to amend the
MIAX Options Fee Schedule to adopt transaction fees and rebates for
SPIKES index option orders and quotes).
---------------------------------------------------------------------------
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 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.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues and
competing products if they deem fee levels at a particular venue to be
excessive. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and to attract
order flow to the Exchange. The Exchange believes that the proposed
rule change reflects this competitive environment because it is
adjusting its fees in a manner that encourages market participants to
provide liquidity in SPIKES index options, 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,\17\ and Rule 19b-4(f)(2) \18\ 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.
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\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
\18\ 17 CFR 240.19b-(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MIAX-2019-20 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-2019-20. 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-2019-20 and should be submitted on
or before May 15, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08211 Filed 4-23-19; 8:45 am]
BILLING CODE 8011-01-P
