Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish Fees for the cToM Market Data Product, 60314-60318 [2021-23671]

Download as PDF 60314 Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments lotter on DSK11XQN23PROD with NOTICES1 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.35 J. Matthew DeLesDernier, Assistant Secretary. 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. [FR Doc. 2021–23672 Filed 10–29–21; 8:45 am] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–93426; File No. SR–MIAX– 2021–50] • 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– EMERALD–2021–34 on the subject line. Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish Fees for the cToM Market Data Product Paper Comments October 26, 2021. • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. Pursuant to 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 October 14, 2021, Miami International Securities Exchange, LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the 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. All submissions should refer to File Number SR–EMERALD–2021–34. 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–EMERALD–2021–34, and should be submitted on or before November 22, 2021. VerDate Sep<11>2014 18:03 Oct 29, 2021 Jkt 256001 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 establish fees for the market data product known as MIAX Complex Top of Market (‘‘cToM’’). 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 35 17 CFR 200.30–3(a)(12). 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 1. Purpose The Exchange proposes to amend Section 6)a) of the Fee Schedule to establish fees for the cToM data product. Background The Exchange previously adopted rules governing the trading of Complex Orders 3 on the MIAX System 4 in 2016.5 At that time, the Exchange also adopted the market data product cToM and expressly waived fees for cToM to provide an incentive to prospective market participants to subscribe to that market data feed.6 The Exchange has not charged fees to cToM subscribers in the nearly five years since it was first available for subscription. In summary, cToM provides subscribers with the same information as the MIAX Top of Market (‘‘ToM’’) data product as it relates to the Strategy Book, 7 i.e., the Exchange’s best bid and offer for a complex strategy, with aggregate size, based on displayable order and quoting interest in the complex strategy on the Exchange. However, cToM provides subscribers with the following additional information that is not included in ToM: (i) The identification of the complex strategies currently trading on the Exchange; (ii) complex strategy last sale information; and (iii) the status of securities underlying the complex strategy (e.g., halted, open, or resumed). cToM is a distinct market data product from ToM. ToM subscribers are not required to subscribe to cToM, and cToM subscribers are not required to subscribe to ToM.8 3 See Exchange Rule 518(a)(5) for the definition of Complex Orders. 4 The term ‘‘System’’ means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. 5 See Securities Exchange Act Release No. 79072 (October 7, 2016), 81 FR 71131 (October 14, 2016) (SR–MIAX–2016–26) (Order Approving a Proposed Rule Change to Adopt New Rules to Govern the Trading of Complex Orders). 6 See Securities Exchange Act Release No. 79146 (October 24, 2016), 81 FR 75171 (October 28, 2016) (SR–MIAX–2016–36) (providing a complete description of the cToM data feed). 7 The ‘‘Strategy Book’’ is the Exchange’s electronic book of complex orders and complex quotes. See Exchange Rule 518(a)(17). 8 See supra note 6. E:\FR\FM\01NON1.SGM 01NON1 Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices lotter on DSK11XQN23PROD with NOTICES1 Proposal The Exchange now proposes to amend Section 6)a) of the Fee Schedule to charge monthly fees to Distributors 9 of cToM. Specifically, the Exchange proposes to assess Internal Distributors $1,250 per month and External Distributors $1,750 per month for the cToM data feed.10 The Exchange notes that the proposed monthly cToM fees for Internal and External Distributor are the same prices that the Exchange charges for its ToM data product, and are identical to the prices the Exchange’s affiliate, MIAX Emerald, LLC (‘‘MIAX Emerald’’) proposes to charge for its cToM product. Further, the proposed prices are similar to or less than competing options exchanges’ prices for their comparable complex order data feed products.11 Like it does today for ToM, MIAX proposes to assess cToM fees on Internal and External Distributors in each month the Distributor is credentialed to use cToM in the production environment. Also, like the Exchange does today for ToM, market data fees for cToM will be reduced for new Distributors for the first month during which they subscribe to cToM, based on the number of trading days that have been held during the month prior to the date on which that subscriber has been credentialed to use cToM in the production environment. Such new Distributors will be assessed a pro-rata percentage of the fees in the table in Section 6)a) of the Fee Schedule, which is the percentage of the number of trading days remaining in the affected calendar month as of the date on which they have been credentialed to use cToM in the production environment, divided by the total 9 A ‘‘Distributor’’ of MIAX data is any entity that receives a feed or file of data either directly from MIAX or indirectly through another entity and then distributes it either internally (within that entity) or externally (outside that entity). All Distributors are required to execute a MIAX Distributor Agreement. See Section 6)a) of the Fee Schedule. 10 The Exchange also proposes to make a minor related change to remove the phrase ‘‘(as applicable)’’ from the explanatory paragraph in Section 6)a). 11 See NYSE American Options Proprietary Market Data Fees, American Options Complex Fees ($1,500 per month Access Fee and $1,000 per month Redistribution Fee), at https:// www.nyse.com/publicdocs/nyse/data/NYSE_ American_Options_Market_Data_Fee_ Schedule.pdf; see also NYSE Arca Options Proprietary Market Data Fees, Arca Options Complex Fees ($1,500 per month Access Fee and $1,000 per month Redistribution Fee), at https:// www.nyse.com/publicdocs/nyse/data/NYSE_Arca_ Options_Proprietary_Data_Fee_Schedule.pdf; Nasdaq PHLX LLC Price List—U.S. Derivatives Data, PHLX Orders Fees (Internal Distributor fee of $3,000 per month and External Distributor fee of $3,500 per month), at https:// www.nasdaqtrader.com/ Trader.aspx?id=DPPriceListOptions#PHLX. VerDate Sep<11>2014 18:03 Oct 29, 2021 Jkt 256001 number of trading days in the affected calendar month. The Exchange initially filed this proposal on June 30, 2021 with the proposed fees to be effective beginning July 1, 2021.12 The First Proposed Rule Change was published for comment in the Federal Register on July 15, 2021.13 Although the Commission did not receive any comment letters on the First Proposed Rule Change, on August 27, 2021, the Commission issued its Suspension of and Order Instituting Proceedings to Determine Whether to Approve or Disapprove Proposed Rule Changes to Establish Fees for the Exchanges’ cToM Market Data Products (relating to the First Proposed Rule Change and a similar filing by the Exchange’s affiliate, MIAX Emerald, to also adopt cToM fees).14 On September 30, 2021, the Exchange withdrew the First Proposed Rule Change and resubmitted its proposal to adopt cToM fees.15 On October 14, 2021, the Exchange withdrew the Second Proposed Rule Change and submitted this proposal to adopt cToM fees. The Exchange also proposes to amend the paragraph below the table of fees for ToM and cToM in Section 6)a) of the Fee Schedule to make a minor, nonsubstantive corrective edit. In particular, the Exchange proposes to delete the phrase ‘‘(as applicable)’’ in the first sentence following the table of fees for ToM and cToM. The purpose of this proposed change is to remove unnecessary text from the Fee Schedule. Implementation The proposed rule change is immediately effective upon filing. 2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act 16 in general, and furthers the objectives of Section 6(b)(4) of the Act 17 in particular, in that it is an equitable allocation of reasonable dues, fees and other charges among its 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 in that it is 12 See Securities Exchange Act Release No. 92359 (July 9, 2021), 86 FR 37393 (July 15, 2021) (SR– MIAX–2021–28) (the ‘‘First Proposed Rule Change’’). 13 Id. 14 See Securities Exchange Act Release No. 92789 (August 27, 2021), 86 FR 49364 (September 2, 2021) (SR–MIAX–2021–28, SR–EMERALD–2021–21) (the ‘‘Suspension Order’’). 15 See SR–MIAX–2021–44 (the ‘‘Second Proposed Rule Change’’). 16 15 U.S.C. 78f(b). 17 15 U.S.C. 78f(b)(4) and (5). PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 60315 designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers and dealers. In adopting Regulation NMS, the Commission granted self-regulatory organizations (‘‘SROs’’) and brokerdealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to consumers, and also spur innovation and competition for the provision of market data. Particularly, cToM further broadens the availability of U.S. option market data to investors consistent with the principles of Regulation NMS. The data product also promotes increased transparency through the dissemination of cToM. Particularly, cToM provides subscribers with the same information as ToM as it relates to the Strategy Book (i.e., the Exchange’s best bid and offer for a complex strategy, with aggregate size, based on displayable order and quoting interest in the complex strategy on the Exchange), but includes the following additional information: (i) The identification of the complex strategies currently trading on the Exchange; (ii) complex strategy last sale information; and (iii) the status of securities underlying the complex strategy (e.g., halted, open, or resumed). The Exchange believes cToM provides a valuable tool that subscribers can use to gain substantial insight into the trading activity in Complex Orders, but also emphasizes such data is not necessary for trading and that such information can be derived from other Exchange sources. Moreover, other exchanges offer similar data products for their own complex market data.18 The Exchange believes that its proposal is reasonable, equitable and not unfairly discriminatory because it is a business decision of each subscriber of cToM whether to subscribe to the feed or not. cTom is also not the exclusive source for Complex Order information from the Exchange and market participants may choose to subscribe to the Exchange’s other data products to receive such information. Specifically, market participants that choose not to subscribe to cToM can derive much, if not all, of the same information provided in the cToM feed from other Exchange sources, including, for example, the MIAX Options Order Feed 18 See supra note 11. E:\FR\FM\01NON1.SGM 01NON1 60316 Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices lotter on DSK11XQN23PROD with NOTICES1 (‘‘MOR’’).19 The following cToM information is provided to subscribers of MOR: The Exchange’s best bid and offer for a complex strategy, with aggregate size, based on displayable order and quoting interest in the complex strategy on the Exchange; the identification of the complex strategies currently trading on the Exchange; and the status of securities underlying the complex strategy (e.g., halted, open, or resumed). In addition to the cToM information contained in MOR, complex strategy last sale information can be derived from the Exchange’s ToM feed based [sic]. Specifically, market participants may deduce that last sale information for multiple trades in related options series that are disseminated via the ToM feed with the same timestamp are likely part of a Complex Order transaction and last sale. The Exchange also notes that no market participant is required by any rule or regulation to utilize the Exchange’s Complex Order functionality or subscribe to the cToM data feed. Further, unlike orders on the Exchange’s Simple Order Book, Complex Orders are not protected and will never trade through Priority Customer 20 orders, thus protecting the priority that is established in the Simple Order Book.21 Additionally, unlike the continuous quoting requirements of Market Makers in the simple order market, there are no continuous quoting requirements respecting Complex Orders. It is a business decision whether market participants utilize Complex Order strategies on the Exchange and whether to purchase cToM data to help effect those strategies. The Exchange believes the proposed fees are reasonable as the proposed fees are both modest and similar to, or even lower than, the fees assessed by other exchanges that provide similar data 19 See MIAX website, Market Data & Offerings, at https://www.miaxoptions.com/market-dataofferings (last visited October 13, 2021). In general, MOR provides real-time ulta-low [sic] latency updates on the following information: New Simple Orders added to the MIAX Order Book; updates to Simple Orders resting on the MIAX Order Book; new Complex Orders added to the Strategy Book (i.e., the book of Complex Orders); updates to Complex Orders resting on the Strategy Book; MIAX listed series updates; MIAX Complex Strategy definitions; the state of the MIAX System; and MIAX’s underlying trading state. 20 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 accounts(s). The term ‘‘Priority Customer Order’’ means an order for the account of a Priority Customer. See Exchange Rule 100. 21 The ‘‘Simple Order Book’’ is the Exchange’s regular electronic book of orders and quotes. See Exchange Rule 518(a)(15). See supra note 5. VerDate Sep<11>2014 18:03 Oct 29, 2021 Jkt 256001 products.22 Indeed, proposing fees that are excessively higher than established fees for similar data products would simply serve to reduce demand for the Exchange’s data product, which as noted, is entirely optional. Like the Exchange’s cToM data product, other exchanges offer similar data products and complex order functionality. As such, if a market participant views another exchange’s complex order functionality and related data feed(s) as more attractive than what is offered by the Exchange, then such market participant can merely choose not to utilize the Exchange’s Complex Order functionality or purchase cToM. Instead, that market participant can utilize similar complex functionality elsewhere and purchase another exchange’s complex data product, which likely offers similar data points, albeit based on that other market’s complex order trading activity. Selling market data, such as cToM, is also a means by which exchanges compete to attract business. If the market deems the proposed fees to be unfair or inequitable, firms can diminish or discontinue their use of the data and/or avail themselves of similar products offered by other exchanges.23 The Exchange therefore believes that the proposed fees for cToM reflect the competitive environment 24 and would be properly assessed on Member or nonMember users. The Exchange also believes the proposed fees are equitable and not unfairly discriminatory as the fees would apply equally to all users who choose to purchase such data. The Exchange’s proposed fees would not differentiate between subscribers that purchase cToM and are set at a modest level that would allow any interested Member or non-Member to purchase such data based on their business needs. The Exchange also believes the proposed cToM fees are reasonable and not unfairly discriminatory because since the Exchange initially established the cToM data product in 2016, all Exchange Members have had the ability to receive the Exchange’s cToM data free of charge for the past five years.25 Since 2016, when the Exchange adopted Complex Order functionality, the Exchange has spent time and resources See supra note 11. See id. 24 Currently, 11 of 16 registered options exchanges compete for complex market share. The Exchange had a complex market share of approximately 12.13% for the month of July 2021 and 10.78% for the month of August 2021. For the months of July and August 2021, no single exchange had a complex market share of more than approximately 20%. 25 See supra note 6. 22 23 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 building out various Complex Order functionality in its System to provide better trading strategies and risk functionality for market participants in order to better compete with other exchanges’ complex functionality and similar data products focused on complex orders.26 The cToM data product allows market participants to better utilize the Exchange’s Complex Order functionality by providing insights into the Exchange’s Complex Order flow. The Exchange currently has 15 subscribers (14 Members and 1 nonMember) for its cToM data product. Each one of these subscribers have not paid any cToM data fees (other than the 2 months in which the First Proposed Rule Change was in effect) but have received the benefit of the Exchange building out its Complex Order functionality to better compete with other exchanges complex functionality. The Exchange notes that no market participant ceased subscribing to the cToM feed since July 1, 2021, the date on which the fees became effective when proposed in the First Proposed Rule Change. The Exchange believes that it is reasonable, equitable and not unfairly discriminatory to assess Internal Distributors fees that are less than the fees assessed for External Distributors for subscriptions to the cToM data feed because Internal Distributors have limited, restricted usage rights to the market data, as compared to External Distributors, which have more expansive usage rights. All Members and non-Members that determine to receive any market data feed of the Exchange (or its affiliates, MIAX PEARL, LLC and MIAX Emerald), must first execute, among other things, the MIAX Exchange Group Exchange Data Agreement (the ‘‘Exchange Data Agreement’’).27 Pursuant to the Exchange Data Agreement, Internal Distributors are restricted to the ‘‘internal use’’ of any market data they receive. This means that Internal 26 See Securities Exchange Act Release Nos. 79405 (November 28, 2016), 81 FR 87086 (December 2, 2016) (SR–MIAX–2016–44) (amendment to clarify the manner in which the System allocates contracts at the end of a Complex Auction); 80089 (February 22, 2017), 82 FR 12153 (February 28, 2017) (SR–MIAX–2017–06) (adopting the Complex MIAX Options Price Collar, an additional price protection feature); 81229 (July 27, 2017), 82 FR 36023 (August 2, 2017) (SR–MIAX– 2017–34) (amendment to ensure price and trade protections apply to Complex Orders); 89085 (June 17, 2020), 85 FR 37719 (June 23, 2020) (SR–MIAX– 2020–16) (adopting new order type, Complex Attributable Order). 27 See Exchange Data Agreement, available at https://miaxweb2.pairsite.com/sites/default/files/ page-files/MIAX_Exchange_Group_Data_ Agreement_09032020.pdf. E:\FR\FM\01NON1.SGM 01NON1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices Distributors may only distribute the Exchange’s market data to the recipient’s officers and employees and its affiliates.28 External Distributors may distribute the Exchange’s market data to persons who are not officers, employees or affiliates of the External Distributor,29 and may charge their own fees for the distribution of such market data. Accordingly, the Exchange believes it is fair, reasonable and not unfairly discriminatory to assess External Distributors a higher fee for the Exchange’s market data products as External Distributors have greater usage rights to commercialize such market data. The Exchange also utilizes more resources to support External Distributors versus Internal Distributors, as External Distributors have reporting and monitoring obligations that Internal Distributors do not have, thus requiring additional time and effort of Exchange staff. The Exchange believes the proposed cToM fees are equitable and not unfairly discriminatory because the fee level results in a reasonable and equitable allocation of fees amongst subscribers for similar services, depending on whether the subscribers is an Internal or External Distributor. Moreover, the decision as to whether or not to purchase market data is entirely optional to all market participants. Potential purchasers are not required to purchase the market data, and the Exchange is not required to make the market data available. Purchasers may request the data at any time or may decline to purchase such data. The allocation of fees among users is fair and reasonable because, if market participants deem the proposed fees to be unfair or inequitable, firms can discontinue their use of the cToM data. Further, the Exchange no longer believes it is necessary to provide cToM data for free to attract market participants since the Exchange’s Strategy Book is now established and the Exchange no longer needs to rely on such waivers to attract market participants to its Complex Order market or cToM subscribers. The Exchange believes that the proposal is equitable and not unfairly discriminatory because the proposed cToM fees will apply to all market participants of the Exchange on a uniform basis. The Exchange also notes that the proposed monthly cToM fees for Internal and External Distributors are the same prices that the Exchange charges for its ToM data product, and are generally lower than other options exchanges’ data feed prices for their comparable data feed products.30 The Exchange believes the proposed change to delete certain text from Section 6)a) of the Fee Schedule promotes just and equitable principles of trade and removes impediments to and perfects the mechanism of a free and open market and a national market system because the proposed change is a non-substantive edit to the Fee Schedule to remove unnecessary text. The Exchange believes that this proposed change will provide greater clarity to Members and the public regarding the Exchange’s Fee Schedule and that it is in the public interest for the Fee Schedule to be accurate and concise so as to eliminate the potential for confusion. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposal will promote competition by permitting the Exchange to sell a data product similar to those offered by other competitor options exchanges.31 The Exchange made Complex Order functionality and cToM available in order to keep pace with changes in the U.S. options industry and evolving customer needs, and believes the data product will continue to contribute to robust competition among national securities exchanges. Other U.S. options exchanges offer complex order functionality and market data products that are substantially similar to that offered by the Exchange. As a result, the Exchange believes this proposed rule change permits fair competition among national securities exchanges. Furthermore, the Exchange operates in a highly competitive environment, and its ability to price cToM is constrained by competition among exchanges that offer similar data products and complex order functionality to their customers. As discussed, there are currently a number of similar products available to market participants and investors. Other U.S. options exchanges offer market data products that are substantially similar to cToM, which the Exchange must consider in its pricing discipline in order to compete for the market data.32 For example, proposing fees that are excessively higher than established fees See supra note 11. Id. 32 Id. 60317 for similar data products would simply serve to reduce demand for the Exchange’s data product, which as discussed, market participants are under no obligation to utilize. In this competitive environment, potential purchasers are free to choose which, if any, similar product to purchase to satisfy their need for market information. As a result, the Exchange believes this proposed rule change permits fair competition among national securities exchanges. The Exchange also does not believe the proposed fees would cause any unnecessary or in appropriate [sic] burden on intermarket competition as other exchanges are free to introduce their own comparable data product and lower their prices to better compete with the Exchange’s offering. The Exchange does not believe the proposed rule change would cause any unnecessary or inappropriate burden on intramarket competition. Particularly, the proposed product and fees apply uniformly to any purchaser, in that it does not differentiate between subscribers that purchase cToM. The proposed fees are set at a modest level that would allow any interested Member or non-Member to purchase such data based on their business needs. The Exchange does not believe that the proposed rule change to make a minor, non-substantive edit to Section 6)a) of the Fee Schedule by deleting unnecessary text will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. This proposed rule change is not being made for competitive reasons, but rather is designed to remedy a minor nonsubstantive issue and will provide added clarity to the Fee Schedule. The Exchange believes that it is in the public interest for the Fee Schedule to be accurate and concise so as to eliminate the potential for confusion on the part of market participants. In addition, the Exchange does not believe the proposal will impose any burden on inter-market competition as the proposal does not address any competitive issues and is intended to protect investors by providing further transparency regarding the Exchange’s Fee Schedule. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others 30 See id. 29 See id. 28 VerDate Sep<11>2014 Written comments were neither solicited nor received. 31 18:03 Oct 29, 2021 Jkt 256001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\01NON1.SGM 01NON1 60318 Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,33 and Rule 19b–4(f)(2) 34 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: lotter on DSK11XQN23PROD with NOTICES1 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–2021–50 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–2021–50. 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 33 34 15 U.S.C. 78s(b)(3)(A)(ii). 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 18:03 Oct 29, 2021 Jkt 256001 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–2021–50, and should be submitted on or before November 22, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.35 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–23671 Filed 10–29–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93428; File No. SR– NASDAQ–2021–040] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Establish the ‘‘Extended Trading Close’’ and a New ‘‘Extended Trading Close’’ Order Type October 26, 2021. I. Introduction On July 12, 2021, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to add Equity 4, Rule (‘‘Rule’’) 4755 and amend Rules 4702 and 4703 to establish the ‘‘Extended Trading Close,’’ as well as the ‘‘ETC Eligible LOC’’ and ‘‘Extended Trading Close’’ order types. The proposed rule change was published for comment in the Federal Register on July 28, 2021.3 On 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 92466 (July 22, 2021), 86 FR 40667. The comment letters received on the proposed rule change are available on the Commission’s website at: https:// www.sec.gov/comments/sr-nasdaq-2021-040/ srnasdaq2021040.htm. 35 1 15 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 September 9, 2021, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On October 25, 2021, the Exchange filed Amendment No. 1 to the proposed rule change, which amended and superseded the proposed rule change as originally filed.6 The Commission is publishing this notice and order to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons and to institute proceedings pursuant to Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. II. Description of the Proposal The Exchange proposes to adopt the Extended Trading Close (‘‘ETC’’), which would be a process during which eligible orders in Nasdaq-listed securities 8 may match and execute at the Nasdaq official closing price (‘‘NOCP’’), as determined by the Nasdaq closing cross or the LULD closing cross (together, the ‘‘Closing Cross’’), for a five-minute period immediately following the Closing Cross.9 According to the Exchange, the ETC would be complementary to the Closing Cross and is not intended or expected to be a substitute for the Closing Cross,10 and it would allow participants an additional 4 15 U.S.C. 78s(b)(2). Securities Exchange Act Release No. 92905, 86 FR 51390 (September 15, 2021). The Commission designated October 26, 2021 as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. 6 In Amendment No. 1, the Exchange modified the scenarios in which executions in the Extended Trading Close would be suspended, and made other conforming and clarifying changes throughout the proposed rule change. Amendment No. 1 is available on the Commission’s website at: https:// www.sec.gov/comments/sr-nasdaq-2021-040/ srnasdaq2021040.htm. 7 15 U.S.C. 78s(b)(2)(B). 8 The Exchange states that it is appropriate to limit participation in the ETC to orders in Nasdaqlisted securities, given the Exchange’s role as the primary listing market and its commitment in investing in and enhancing the Closing Cross (as defined herein) for Nasdaq-listed securities. See Amendment No. 1 at 20. The Exchange also states that the vast majority of participants looking to trade at the closing price participate in the primary listing market’s closing auction and do not route orders to non-primary listing market destinations. See id. 9 See proposed Rule 4755(a)(5). 10 See Amendment No. 1 at 18. The Exchange states that it does not expect the ETC to have an impact on participation in the Closing Cross, and that a number of off-exchange venues already offer their participants the ability to receive the NOCP after the Closing Cross. See id. 5 See E:\FR\FM\01NON1.SGM 01NON1

Agencies

[Federal Register Volume 86, Number 208 (Monday, November 1, 2021)]
[Notices]
[Pages 60314-60318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-23671]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93426; File No. SR-MIAX-2021-50]


Self-Regulatory Organizations; Miami International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Establish Fees for the cToM Market Data Product

October 26, 2021.
    Pursuant to 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 October 14, 2021, Miami International Securities Exchange, LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee 
Schedule (the ``Fee Schedule'') to establish fees for the market data 
product known as MIAX Complex Top of Market (``cToM'').
    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 Section 6)a) of the Fee Schedule to 
establish fees for the cToM data product.

Background

    The Exchange previously adopted rules governing the trading of 
Complex Orders \3\ on the MIAX System \4\ in 2016.\5\ At that time, the 
Exchange also adopted the market data product cToM and expressly waived 
fees for cToM to provide an incentive to prospective market 
participants to subscribe to that market data feed.\6\ The Exchange has 
not charged fees to cToM subscribers in the nearly five years since it 
was first available for subscription.
---------------------------------------------------------------------------

    \3\ See Exchange Rule 518(a)(5) for the definition of Complex 
Orders.
    \4\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \5\ See Securities Exchange Act Release No. 79072 (October 7, 
2016), 81 FR 71131 (October 14, 2016) (SR-MIAX-2016-26) (Order 
Approving a Proposed Rule Change to Adopt New Rules to Govern the 
Trading of Complex Orders).
    \6\ See Securities Exchange Act Release No. 79146 (October 24, 
2016), 81 FR 75171 (October 28, 2016) (SR-MIAX-2016-36) (providing a 
complete description of the cToM data feed).
---------------------------------------------------------------------------

    In summary, cToM provides subscribers with the same information as 
the MIAX Top of Market (``ToM'') data product as it relates to the 
Strategy Book, \7\ i.e., the Exchange's best bid and offer for a 
complex strategy, with aggregate size, based on displayable order and 
quoting interest in the complex strategy on the Exchange. However, cToM 
provides subscribers with the following additional information that is 
not included in ToM: (i) The identification of the complex strategies 
currently trading on the Exchange; (ii) complex strategy last sale 
information; and (iii) the status of securities underlying the complex 
strategy (e.g., halted, open, or resumed). cToM is a distinct market 
data product from ToM. ToM subscribers are not required to subscribe to 
cToM, and cToM subscribers are not required to subscribe to ToM.\8\
---------------------------------------------------------------------------

    \7\ The ``Strategy Book'' is the Exchange's electronic book of 
complex orders and complex quotes. See Exchange Rule 518(a)(17).
    \8\ See supra note 6.

---------------------------------------------------------------------------

[[Page 60315]]

Proposal
    The Exchange now proposes to amend Section 6)a) of the Fee Schedule 
to charge monthly fees to Distributors \9\ of cToM. Specifically, the 
Exchange proposes to assess Internal Distributors $1,250 per month and 
External Distributors $1,750 per month for the cToM data feed.\10\ The 
Exchange notes that the proposed monthly cToM fees for Internal and 
External Distributor are the same prices that the Exchange charges for 
its ToM data product, and are identical to the prices the Exchange's 
affiliate, MIAX Emerald, LLC (``MIAX Emerald'') proposes to charge for 
its cToM product. Further, the proposed prices are similar to or less 
than competing options exchanges' prices for their comparable complex 
order data feed products.\11\
---------------------------------------------------------------------------

    \9\ A ``Distributor'' of MIAX data is any entity that receives a 
feed or file of data either directly from MIAX or indirectly through 
another entity and then distributes it either internally (within 
that entity) or externally (outside that entity). All Distributors 
are required to execute a MIAX Distributor Agreement. See Section 
6)a) of the Fee Schedule.
    \10\ The Exchange also proposes to make a minor related change 
to remove the phrase ``(as applicable)'' from the explanatory 
paragraph in Section 6)a).
    \11\ See NYSE American Options Proprietary Market Data Fees, 
American Options Complex Fees ($1,500 per month Access Fee and 
$1,000 per month Redistribution Fee), at https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf; see also NYSE 
Arca Options Proprietary Market Data Fees, Arca Options Complex Fees 
($1,500 per month Access Fee and $1,000 per month Redistribution 
Fee), at https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Options_Proprietary_Data_Fee_Schedule.pdf; Nasdaq PHLX LLC 
Price List--U.S. Derivatives Data, PHLX Orders Fees (Internal 
Distributor fee of $3,000 per month and External Distributor fee of 
$3,500 per month), at https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#PHLX.
---------------------------------------------------------------------------

    Like it does today for ToM, MIAX proposes to assess cToM fees on 
Internal and External Distributors in each month the Distributor is 
credentialed to use cToM in the production environment. Also, like the 
Exchange does today for ToM, market data fees for cToM will be reduced 
for new Distributors for the first month during which they subscribe to 
cToM, based on the number of trading days that have been held during 
the month prior to the date on which that subscriber has been 
credentialed to use cToM in the production environment. Such new 
Distributors will be assessed a pro-rata percentage of the fees in the 
table in Section 6)a) of the Fee Schedule, which is the percentage of 
the number of trading days remaining in the affected calendar month as 
of the date on which they have been credentialed to use cToM in the 
production environment, divided by the total number of trading days in 
the affected calendar month.
    The Exchange initially filed this proposal on June 30, 2021 with 
the proposed fees to be effective beginning July 1, 2021.\12\ The First 
Proposed Rule Change was published for comment in the Federal Register 
on July 15, 2021.\13\ Although the Commission did not receive any 
comment letters on the First Proposed Rule Change, on August 27, 2021, 
the Commission issued its Suspension of and Order Instituting 
Proceedings to Determine Whether to Approve or Disapprove Proposed Rule 
Changes to Establish Fees for the Exchanges' cToM Market Data Products 
(relating to the First Proposed Rule Change and a similar filing by the 
Exchange's affiliate, MIAX Emerald, to also adopt cToM fees).\14\ On 
September 30, 2021, the Exchange withdrew the First Proposed Rule 
Change and resubmitted its proposal to adopt cToM fees.\15\ On October 
14, 2021, the Exchange withdrew the Second Proposed Rule Change and 
submitted this proposal to adopt cToM fees.
---------------------------------------------------------------------------

    \12\ See Securities Exchange Act Release No. 92359 (July 9, 
2021), 86 FR 37393 (July 15, 2021) (SR-MIAX-2021-28) (the ``First 
Proposed Rule Change'').
    \13\ Id.
    \14\ See Securities Exchange Act Release No. 92789 (August 27, 
2021), 86 FR 49364 (September 2, 2021) (SR-MIAX-2021-28, SR-EMERALD-
2021-21) (the ``Suspension Order'').
    \15\ See SR-MIAX-2021-44 (the ``Second Proposed Rule Change'').
---------------------------------------------------------------------------

    The Exchange also proposes to amend the paragraph below the table 
of fees for ToM and cToM in Section 6)a) of the Fee Schedule to make a 
minor, non-substantive corrective edit. In particular, the Exchange 
proposes to delete the phrase ``(as applicable)'' in the first sentence 
following the table of fees for ToM and cToM. The purpose of this 
proposed change is to remove unnecessary text from the Fee Schedule.
Implementation
    The proposed rule change is immediately effective upon filing.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \16\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \17\ in 
particular, in that it is an equitable allocation of reasonable dues, 
fees and other charges among its 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 in that it is designed to 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general protect investors and the public 
interest and is not designed to permit unfair discrimination between 
customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. Particularly, cToM further broadens the 
availability of U.S. option market data to investors consistent with 
the principles of Regulation NMS. The data product also promotes 
increased transparency through the dissemination of cToM. Particularly, 
cToM provides subscribers with the same information as ToM as it 
relates to the Strategy Book (i.e., the Exchange's best bid and offer 
for a complex strategy, with aggregate size, based on displayable order 
and quoting interest in the complex strategy on the Exchange), but 
includes the following additional information: (i) The identification 
of the complex strategies currently trading on the Exchange; (ii) 
complex strategy last sale information; and (iii) the status of 
securities underlying the complex strategy (e.g., halted, open, or 
resumed). The Exchange believes cToM provides a valuable tool that 
subscribers can use to gain substantial insight into the trading 
activity in Complex Orders, but also emphasizes such data is not 
necessary for trading and that such information can be derived from 
other Exchange sources. Moreover, other exchanges offer similar data 
products for their own complex market data.\18\
---------------------------------------------------------------------------

    \18\ See supra note 11.
---------------------------------------------------------------------------

    The Exchange believes that its proposal is reasonable, equitable 
and not unfairly discriminatory because it is a business decision of 
each subscriber of cToM whether to subscribe to the feed or not. cTom 
is also not the exclusive source for Complex Order information from the 
Exchange and market participants may choose to subscribe to the 
Exchange's other data products to receive such information. 
Specifically, market participants that choose not to subscribe to cToM 
can derive much, if not all, of the same information provided in the 
cToM feed from other Exchange sources, including, for example, the MIAX 
Options Order Feed

[[Page 60316]]

(``MOR'').\19\ The following cToM information is provided to 
subscribers of MOR: The Exchange's best bid and offer for a complex 
strategy, with aggregate size, based on displayable order and quoting 
interest in the complex strategy on the Exchange; the identification of 
the complex strategies currently trading on the Exchange; and the 
status of securities underlying the complex strategy (e.g., halted, 
open, or resumed). In addition to the cToM information contained in 
MOR, complex strategy last sale information can be derived from the 
Exchange's ToM feed based [sic]. Specifically, market participants may 
deduce that last sale information for multiple trades in related 
options series that are disseminated via the ToM feed with the same 
timestamp are likely part of a Complex Order transaction and last sale.
---------------------------------------------------------------------------

    \19\ See MIAX website, Market Data & Offerings, at https://www.miaxoptions.com/market-data-offerings (last visited October 13, 
2021). In general, MOR provides real-time ulta-low [sic] latency 
updates on the following information: New Simple Orders added to the 
MIAX Order Book; updates to Simple Orders resting on the MIAX Order 
Book; new Complex Orders added to the Strategy Book (i.e., the book 
of Complex Orders); updates to Complex Orders resting on the 
Strategy Book; MIAX listed series updates; MIAX Complex Strategy 
definitions; the state of the MIAX System; and MIAX's underlying 
trading state.
---------------------------------------------------------------------------

    The Exchange also notes that no market participant is required by 
any rule or regulation to utilize the Exchange's Complex Order 
functionality or subscribe to the cToM data feed. Further, unlike 
orders on the Exchange's Simple Order Book, Complex Orders are not 
protected and will never trade through Priority Customer \20\ orders, 
thus protecting the priority that is established in the Simple Order 
Book.\21\ Additionally, unlike the continuous quoting requirements of 
Market Makers in the simple order market, there are no continuous 
quoting requirements respecting Complex Orders. It is a business 
decision whether market participants utilize Complex Order strategies 
on the Exchange and whether to purchase cToM data to help effect those 
strategies.
---------------------------------------------------------------------------

    \20\ 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 accounts(s). The term 
``Priority Customer Order'' means an order for the account of a 
Priority Customer. See Exchange Rule 100.
    \21\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes. See Exchange Rule 518(a)(15). 
See supra note 5.
---------------------------------------------------------------------------

    The Exchange believes the proposed fees are reasonable as the 
proposed fees are both modest and similar to, or even lower than, the 
fees assessed by other exchanges that provide similar data 
products.\22\ Indeed, proposing fees that are excessively higher than 
established fees for similar data products would simply serve to reduce 
demand for the Exchange's data product, which as noted, is entirely 
optional. Like the Exchange's cToM data product, other exchanges offer 
similar data products and complex order functionality. As such, if a 
market participant views another exchange's complex order functionality 
and related data feed(s) as more attractive than what is offered by the 
Exchange, then such market participant can merely choose not to utilize 
the Exchange's Complex Order functionality or purchase cToM. Instead, 
that market participant can utilize similar complex functionality 
elsewhere and purchase another exchange's complex data product, which 
likely offers similar data points, albeit based on that other market's 
complex order trading activity.
---------------------------------------------------------------------------

    \22\ See supra note 11.
---------------------------------------------------------------------------

    Selling market data, such as cToM, is also a means by which 
exchanges compete to attract business. If the market deems the proposed 
fees to be unfair or inequitable, firms can diminish or discontinue 
their use of the data and/or avail themselves of similar products 
offered by other exchanges.\23\ The Exchange therefore believes that 
the proposed fees for cToM reflect the competitive environment \24\ and 
would be properly assessed on Member or non-Member users. The Exchange 
also believes the proposed fees are equitable and not unfairly 
discriminatory as the fees would apply equally to all users who choose 
to purchase such data. The Exchange's proposed fees would not 
differentiate between subscribers that purchase cToM and are set at a 
modest level that would allow any interested Member or non-Member to 
purchase such data based on their business needs.
---------------------------------------------------------------------------

    \23\ See id.
    \24\ Currently, 11 of 16 registered options exchanges compete 
for complex market share. The Exchange had a complex market share of 
approximately 12.13% for the month of July 2021 and 10.78% for the 
month of August 2021. For the months of July and August 2021, no 
single exchange had a complex market share of more than 
approximately 20%.
---------------------------------------------------------------------------

    The Exchange also believes the proposed cToM fees are reasonable 
and not unfairly discriminatory because since the Exchange initially 
established the cToM data product in 2016, all Exchange Members have 
had the ability to receive the Exchange's cToM data free of charge for 
the past five years.\25\ Since 2016, when the Exchange adopted Complex 
Order functionality, the Exchange has spent time and resources building 
out various Complex Order functionality in its System to provide better 
trading strategies and risk functionality for market participants in 
order to better compete with other exchanges' complex functionality and 
similar data products focused on complex orders.\26\ The cToM data 
product allows market participants to better utilize the Exchange's 
Complex Order functionality by providing insights into the Exchange's 
Complex Order flow. The Exchange currently has 15 subscribers (14 
Members and 1 non-Member) for its cToM data product. Each one of these 
subscribers have not paid any cToM data fees (other than the 2 months 
in which the First Proposed Rule Change was in effect) but have 
received the benefit of the Exchange building out its Complex Order 
functionality to better compete with other exchanges complex 
functionality. The Exchange notes that no market participant ceased 
subscribing to the cToM feed since July 1, 2021, the date on which the 
fees became effective when proposed in the First Proposed Rule Change.
---------------------------------------------------------------------------

    \25\ See supra note 6.
    \26\ See Securities Exchange Act Release Nos. 79405 (November 
28, 2016), 81 FR 87086 (December 2, 2016) (SR-MIAX-2016-44) 
(amendment to clarify the manner in which the System allocates 
contracts at the end of a Complex Auction); 80089 (February 22, 
2017), 82 FR 12153 (February 28, 2017) (SR-MIAX-2017-06) (adopting 
the Complex MIAX Options Price Collar, an additional price 
protection feature); 81229 (July 27, 2017), 82 FR 36023 (August 2, 
2017) (SR-MIAX-2017-34) (amendment to ensure price and trade 
protections apply to Complex Orders); 89085 (June 17, 2020), 85 FR 
37719 (June 23, 2020) (SR-MIAX-2020-16) (adopting new order type, 
Complex Attributable Order).
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to assess Internal Distributors fees that are 
less than the fees assessed for External Distributors for subscriptions 
to the cToM data feed because Internal Distributors have limited, 
restricted usage rights to the market data, as compared to External 
Distributors, which have more expansive usage rights. All Members and 
non-Members that determine to receive any market data feed of the 
Exchange (or its affiliates, MIAX PEARL, LLC and MIAX Emerald), must 
first execute, among other things, the MIAX Exchange Group Exchange 
Data Agreement (the ``Exchange Data Agreement'').\27\ Pursuant to the 
Exchange Data Agreement, Internal Distributors are restricted to the 
``internal use'' of any market data they receive. This means that 
Internal

[[Page 60317]]

Distributors may only distribute the Exchange's market data to the 
recipient's officers and employees and its affiliates.\28\ External 
Distributors may distribute the Exchange's market data to persons who 
are not officers, employees or affiliates of the External 
Distributor,\29\ and may charge their own fees for the distribution of 
such market data. Accordingly, the Exchange believes it is fair, 
reasonable and not unfairly discriminatory to assess External 
Distributors a higher fee for the Exchange's market data products as 
External Distributors have greater usage rights to commercialize such 
market data. The Exchange also utilizes more resources to support 
External Distributors versus Internal Distributors, as External 
Distributors have reporting and monitoring obligations that Internal 
Distributors do not have, thus requiring additional time and effort of 
Exchange staff. The Exchange believes the proposed cToM fees are 
equitable and not unfairly discriminatory because the fee level results 
in a reasonable and equitable allocation of fees amongst subscribers 
for similar services, depending on whether the subscribers is an 
Internal or External Distributor. Moreover, the decision as to whether 
or not to purchase market data is entirely optional to all market 
participants. Potential purchasers are not required to purchase the 
market data, and the Exchange is not required to make the market data 
available. Purchasers may request the data at any time or may decline 
to purchase such data. The allocation of fees among users is fair and 
reasonable because, if market participants deem the proposed fees to be 
unfair or inequitable, firms can discontinue their use of the cToM 
data.
---------------------------------------------------------------------------

    \27\ See Exchange Data Agreement, available at https://miaxweb2.pairsite.com/sites/default/files/page-files/MIAX_Exchange_Group_Data_Agreement_09032020.pdf.
    \28\ See id.
    \29\ See id.
---------------------------------------------------------------------------

    Further, the Exchange no longer believes it is necessary to provide 
cToM data for free to attract market participants since the Exchange's 
Strategy Book is now established and the Exchange no longer needs to 
rely on such waivers to attract market participants to its Complex 
Order market or cToM subscribers. The Exchange believes that the 
proposal is equitable and not unfairly discriminatory because the 
proposed cToM fees will apply to all market participants of the 
Exchange on a uniform basis. The Exchange also notes that the proposed 
monthly cToM fees for Internal and External Distributors are the same 
prices that the Exchange charges for its ToM data product, and are 
generally lower than other options exchanges' data feed prices for 
their comparable data feed products.\30\
---------------------------------------------------------------------------

    \30\ See supra note 11.
---------------------------------------------------------------------------

    The Exchange believes the proposed change to delete certain text 
from Section 6)a) of the Fee Schedule promotes just and equitable 
principles of trade and removes impediments to and perfects the 
mechanism of a free and open market and a national market system 
because the proposed change is a non-substantive edit to the Fee 
Schedule to remove unnecessary text. The Exchange believes that this 
proposed change will provide greater clarity to Members and the public 
regarding the Exchange's Fee Schedule and that it is in the public 
interest for the Fee Schedule to be accurate and concise so as to 
eliminate the potential for confusion.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Rather, the 
Exchange believes that the proposal will promote competition by 
permitting the Exchange to sell a data product similar to those offered 
by other competitor options exchanges.\31\ The Exchange made Complex 
Order functionality and cToM available in order to keep pace with 
changes in the U.S. options industry and evolving customer needs, and 
believes the data product will continue to contribute to robust 
competition among national securities exchanges. Other U.S. options 
exchanges offer complex order functionality and market data products 
that are substantially similar to that offered by the Exchange. As a 
result, the Exchange believes this proposed rule change permits fair 
competition among national securities exchanges.
---------------------------------------------------------------------------

    \31\ Id.
---------------------------------------------------------------------------

    Furthermore, the Exchange operates in a highly competitive 
environment, and its ability to price cToM is constrained by 
competition among exchanges that offer similar data products and 
complex order functionality to their customers. As discussed, there are 
currently a number of similar products available to market participants 
and investors. Other U.S. options exchanges offer market data products 
that are substantially similar to cToM, which the Exchange must 
consider in its pricing discipline in order to compete for the market 
data.\32\ For example, proposing fees that are excessively higher than 
established fees for similar data products would simply serve to reduce 
demand for the Exchange's data product, which as discussed, market 
participants are under no obligation to utilize. In this competitive 
environment, potential purchasers are free to choose which, if any, 
similar product to purchase to satisfy their need for market 
information. As a result, the Exchange believes this proposed rule 
change permits fair competition among national securities exchanges.
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

    The Exchange also does not believe the proposed fees would cause 
any unnecessary or in appropriate [sic] burden on intermarket 
competition as other exchanges are free to introduce their own 
comparable data product and lower their prices to better compete with 
the Exchange's offering. The Exchange does not believe the proposed 
rule change would cause any unnecessary or inappropriate burden on 
intramarket competition. Particularly, the proposed product and fees 
apply uniformly to any purchaser, in that it does not differentiate 
between subscribers that purchase cToM. The proposed fees are set at a 
modest level that would allow any interested Member or non-Member to 
purchase such data based on their business needs.
    The Exchange does not believe that the proposed rule change to make 
a minor, non-substantive edit to Section 6)a) of the Fee Schedule by 
deleting unnecessary text will result in any burden on competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Act. This proposed rule change is not being made for competitive 
reasons, but rather is designed to remedy a minor non-substantive issue 
and will provide added clarity to the Fee Schedule. The Exchange 
believes that it is in the public interest for the Fee Schedule to be 
accurate and concise so as to eliminate the potential for confusion on 
the part of market participants. In addition, the Exchange does not 
believe the proposal will impose any burden on inter-market competition 
as the proposal does not address any competitive issues and is intended 
to protect investors by providing further transparency regarding the 
Exchange's Fee Schedule.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

[[Page 60318]]

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,\33\ and Rule 19b-4(f)(2) \34\ 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.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \34\ 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 [email protected]. Please include 
File Number SR-MIAX-2021-50 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-2021-50. 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-2021-50, and should be submitted on 
or before November 22, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23671 Filed 10-29-21; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.